0000769218 ifrs-full:CashFlowHedgesMember aeg:RetirementPlansCashGeneratingUnitMember country:USForeignExchangeContractsMember aeg:EurGbpMember ifrs-full:LaterThanOneMonthAndNotLaterThanThreeMonthsMember 2023-01-01 2023-12-31 0000769218 srt:ScenarioPreviouslyReportedMember aeg:IFRS4andIAS39Member aeg:DebtSecuritiesAndMoneyMarketInstrumentsMember 2021-01-01 2021-12-31 0000769218 ifrs-full:CashFlowHedgesMember aeg:InterestRateContractsMember ifrs-full:NotLaterThanOneMonthMember 2022-12-31 0000769218 srt:AmericasMember aeg:OtherCommercialMortgageLoansMember aeg:MortgageLoansMember ifrs-full:AtFairValueMemberCreditRiskMember 2023-12-31 0000769218 aeg:CorporateBondsInvestmentMemberMoneyMarketAndOtherShorttermInstrumentsMember aeg:PrivateLoansMember 2022-12-31InvestmentsForRiskOfPolicyHoldersMember aeg:FinancialAssetsExcludingDerivativesMeasurementCategoryMember 2023-12-31
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-
FORM
20-F
-
(Mark One)
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
2023
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
       
to
       
OR
☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number
1-10882
-
Aegon N.V.Ltd.
(Exact name of Registrant as specified in its charter)
-
Not Applicable
(Translation of Registrant’s name into English)
The NetherlandsBermuda
(Jurisdiction of incorporation or organization)
Aegonplein 50, PO Box 85, 2501 CB The Hague, The Netherlands
(Address of principal executive offices)
J.H.P.M. van Rossum
Executive Vice President and Head of Corporate Financial Center
Aegon N.V.Ltd.
Aegonplein 50, 2501 CB The Hague, The Netherlands
+31-70-3445458
Jurgen.vanRossum@aegon.com
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
 
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common shares, par value EUR 0.12 per share
 
AEG
 
New York Stock Exchange
5.500%
Fixed-to-Floating
Rate
Subordinated Notes due 2048
 
AG48
 
New York Stock Exchange
5.100% Subordinated Notes due 2049
issued by Aegon Funding Company LLC
AEFC
New York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act.
Not applicable
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
Not applicable
(Title of Class)
Table of Contents
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
2,109,430,2291,814,726,912 common shares and 546,196,080389,759,240 common shares B
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act
☒
Yes No
☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
☐
Yes No
☒
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Yes No
☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation
S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
☒
Yes No
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, or an emerging growth company.
See definition of “large accelerated filer, “accelerated filer,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
☒
Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated
filer
☐
Emerging growth company
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards
†
provided pursuant to Section 13(a) of the Exchange Act. 
☐
†
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards
Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
by the registered public accounting firm that prepared or issued its audit report. 
☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements
of the
registrant included in the filing reflect the correction of an error to
previously issued financial statements. 
☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis
of incentive-based
compensation received by any of the registrant’s executive officers
during the relevant recovery period pursuant to §240.10D-1(b)§ 240.10D-1(b). 
☐
Indicate by checkmark which basis of accounting the registrant has used to prepare the financial statements included in this filing
☐
U.S. GAAP
☒
International Financial Reporting Standards as issued by the International Accounting Standards Board
☐
Other
If “other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
☐
Item 17
☐
Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).
☐
Yes No
☒

Table of Contents

LOGO

aegon Helping people live their best lives Annual Report on Form 20-F 2023


Table of Contents
 
 
 
 

Cross reference table Form

20-F

   
1
 Identity of Directors, Senior Management and Advisers  n/an.a.
2
 Offer Statistics and Expected Timetable  n/an.a.
   
3
 Key Information  
 
3A
 [Reserved]Selected financial data  n/a100-101
3B
 Capitalization and indebtedness  n/an.a.
3C
 Reasons for the offer and use of proceeds  n/an.a.
3D
 Risk factors  
360-383
413-435
   
4
 Information on the Company   
4A
 History and development of the Company  
2-3,
8-29,
282-283,
451-452
9-35, 313, 512-513
4B
 Business overview  
89-92,
335-359,
384
91-92, 394-412, 436
4C
 Organizational structure  
2-3,
383-284
314-315
4D
 Property, plants and equipment  385437
4E
4A		 Unresolved Staff Comments  n/an.a.
   
5
 Operating and Financial Review and Prospects   
5A
 Operating results  
102-124
102-106
5B
 Liquidity and capital resources  
83-88,
213-216,
246-247,
256-261,
387
85-90, 231-233, 282-284, 293-295, 439
5C
 Research and development, patent and licenses etc.  n/an.a.
5D
 Trend information  
8-29,
100-124
9-35, 100-120
5E
 Critical accounting estimatesAccounting Estimates  
164-169,
274-278
174-177
   
6
 Directors, Senior Management and Employees   
6A
 Directors and senior management  
42-47
48-53
6B
 Compensation  
57-76,
205-207,
285-286
62-78, 225-227, 315-317
6C
 Board practices  
36-40
42-46
6D
 Employees  
15,
23-25,
93, 197, 386
27-31, 212, 377
6E
 Share ownership  
36-40,
72-73,
320-322
42-46, 75-76, 380-383
6FDisclosure of a registrant’s action to recover erroneously awarded compensationn.a.
   
7
 Major Shareholders and Related Party Transactions   
7A
 Major shareholders  
37-40,
320-322
42-46, 380-383
7B
 Related party transactions  
285-286
315-317
7C
 Interest of experts and counsel  n/an.a.
   
8
 Financial Information   
8A
 Consolidated Statements and Other Financial Information  
126-132,
274-278,
323-329,
376-378,
387
122-130, 384-389, 439
8B
 Significant Changes  n/an.a.
   
9
 The Offer and Listing   
9A
 Offer and listing details  388440
9B
 Plan of distribution  n/an.a.
9C
 Markets  388440
9D
 Selling shareholders  n/an.a.
9E
 Dilution  n/an.a.
9F
 Expenses of the issue  n/an.a.

 

Annual Report on Form 20-F 2023 | 

  
 

   
10 Additional Information   
10A Share capital  n.a.
10B Memorandum and articles of association  441-444
10C Material contracts  445
10D Exchange controls  446
10E Taxation  447-450
10F Dividends and paying agents  n.a.
10G Statement by experts  n.a.
10H Documents on display  513
10I Subsidiary Information  n.a.
10J Annual report to security holders  n.a.
   
11 Quantitative and Qualitative Disclosures About Market Risk  79-84, 85-90, 177-207, 275-282
   
12 Description of Securities Other than Equity Securities  n.a.
   
13 Defaults, Dividend Arrearages and Delinquencies  n.a.
   
14 Material Modifications to the Rights of Security Holders and Use of Proceeds  n.a.
   
15 Controls and Procedures  94-95
   
16A Audit committee financial expert  58
   
16B Code of Ethics  93
   
16C Principal Accountant Fees and Services  451
   
16D Exemptions from the Listing Standards for Audit Committees  n.a.
   
16E Purchases of Equity Securities by the Issuer and Affiliated Purchasers  452
   
16F Change in Registrant’s Certifying Accountant  n.a.
   
16G Corporate Governance  42-46, 444
   
16H Mine Safety Disclosure  n.a.
   
16I Disclosure Regarding Foreign Jurisdictions that Prevent Inspections  n.a.
   
16J Cybersecurity  453-454
   
17 Financial Statements  n.a.
   
18 Financial Statements  122-378, 384-389
   
19 Exhibits  514

Aegon
Annual Report on Form 20-F
2022
2023 | 		 

LOGO

Our purpose

People are living longer, and we welcome the possibilities this brings. We see longevity, aging, and changing life patterns as an opportunity for our customers, our employees, and society as a whole.

As recently as the late 20th century, life consisted of three stages: 20 years of education, 40 years of work, and a short retirement of 15-20 years. Since then, life expectancy has increased globally. This trend is forcing us to rethink what life should look like: when we study, work, take breaks, and switch careers. The idea of a standard path no longer applies; there are as many options as there are lives.

Longer lifespans bring new challenges. But they are also keeping people younger for longer. The old associations with aging – of frailty and inactivity – are being replaced by the expectation that the years after 60 can be the most rewarding. This coincides with a growing awareness of the earth’s finite resources: people are increasingly using their extra time on this planet to find ways to make a positive impact.

Financial services customers are looking to companies to support them in living longer, more varied lives while enabling them to contribute to a better world. At Aegon, we aim to support society’s transition from the traditional three-stage life to a multi-stage life, so that people from all walks of life can make the most of their time on earth. That is why, across our businesses, we are guided and united by a single, clear purpose:

Helping people live their best lives.

Contents 2 About Aegon 6 CEO interview 9 Our strategy 39 Governance and risk management 40 Boards and Governance 79 Risk management 91 Regulation and supervision 97 Financial information 102 Results of operations 122 Financial statements 394 Business overviews 455 Sustainability information 456 Basis of preparation 461 Our material topics 483 Our commitments

 

Table of Contents
 

 About Aegon

   
   

Welcome to Aegon’s Annual Report on Form 20-F

   
10
 Additional Information  
10A
 Share capital n/a
10B
 Memorandum and articles of association 
389-390
10C
 Material contracts 392
10D
 Exchange controls 393
10E
 Taxation 
394-397
10F
 Dividends and paying agents n/a
10G
 Statement by experts n/a
10H
 Documents on display 452
10I
 Subsidiary Information n/a
10J
 Annual Report to Security Holders n/a
   
11
 Quantitative and Qualitative Disclosures About Market Risk 
77-82,
83-88,
169-190,
239-242
12
 Description of Securities Other than Equity Securities n/a
   
13
 Defaults, Dividend Arrearages and Delinquencies n/a
   
14
 Material Modifications to the Rights of Security Holders and Use of Proceeds n/a
15
 Controls and Procedures 
94-95
   
16A
 Audit committee financial expert 
50-53
16B
 Code of Ethics 93
   
16C
 Principal Accountant Fees and Services 398
16D
 Exemptions from the Listing Standards for Audit Committees n/a
   
16E
 Purchases of Equity Securities by the Issuer and Affiliated Purchasers 399
16F
 Change in Registrant’s Certifying Accountant n/a
   
16G
 Corporate Governance 
36-40,
391
16H
 Mine Safety Disclosure n/a
   
16I
 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections n/a
17
 Financial Statements Refer to Item 18
   
18
 Financial Statements 
126-318,
323-329
19
 Exhibits 453
Aegon Annual Report on Form 20-F
2022
Table of Contents
Contents
2
About Aegon
4
2022 milestones
6
CEO letter
8
Our strategy and value creation
33
Governance and risk management
34
Boards and Governance
77
Risk management
89
Regulation and supervision
97
Financial information
102
Results of operations
126
Financial statements
335
Business overviews
400
Non-financial information
401
Basis of preparation
405
Sustainability approach
410
Regulation and compliance
419
Our commitments
427
Task Force on Climate-related Financial Disclosures
434
Value created

VI    
Aegon Annual Report on Form 20-F
2022
Table of Contents
Welcome to Aegon’s Annual Report on Form
20-F
2022

This is Aegon’s Annual Report on Form

20-F
for the year ended December 31, 2022. The2023. This report outlines the challenges and opportunities facing our business todayenvironment and material topics and how we address these through our purpose, vision, and strategy, to steer our business and create long-term value for our stakeholders. The report also contains the 20222023 consolidated financial statements and companystandalone financial statements of Aegon N.V.Ltd. (from page 97)122).

This document contains Aegon’s Annual Report as filed on Form

20-F
(also (also referred to in this document as “Annual Report”) with the United States Securities and Exchange Commission (SEC).

We have prepared the Annual Report on Form 20-F in accordance with requirements of the U.S. Securities and Exchange Commission and the International Financial Reporting Standards, as issued by the IASB.

Aegon prepares its consolidated financial statements in accordance with IFRS and with Part 9 of Book 2 of the Netherlands Civil CodeforCode for purposes of reporting with the U.S. SEC, including financial information contained in this Annual Report on Form

20-F.
Aegon’s accounting policies and its use of various options under IFRS are described in note 2 to the consolidated financial statements.

Other than for SEC reporting, Aegon prepared its Annual Accounts under International Financial Reporting Standards as adopted by the European Union, including the decisions Aegon made with regard to the options available under International Financial Reporting Standards as adopted by the EU

(EU-IFRS).
EU-IFRS
differs from IFRS in respect of certain paragraphs in IAS 39 “Financial Instruments: Recognition and Measurement” regarding hedge accounting for portfolio hedges of interest rate risk. Under
EU-IFRS,
Aegon applies fair value hedge accounting for portfolio hedges of interest rate risk (fair value macro hedges) in accordance with the EU “carve out” version of IAS 39. Under IFRS, hedge accounting for fair value macro hedges cannot be applied to mortgage loans and ineffectiveness arises whenever the revised estimate of the amount of cash flows in scheduled time buckets is either more or less than the original designated amount of that bucket.

This information is prepared by revising the hedge accounting impacts that are applied under the EU “carve out” version of IAS 39. Financial information under IFRS accordingly does not take account of the possibility that had Aegon applied IFRS as its primary accounting framework it might have applied alternative hedge strategies where those alternative hedge strategies could have qualified for IFRS compliant hedge accounting. These decisions could have

resulted in different shareholders’ equity and net income amounts comparedtocompared to those indicated in this Annual Report on Form
20-F.

Due to the completion of the sale of Aegon the Netherlands as per July 4, 2023 the EU “carve out” is no longer applied by Aegon as of that date.

A reconciliation between

EU-IFRS
and IFRS is included in note 2.1 to the consolidated financial statements.

This Annual Report on Form

20-F
includes the following
non-IFRS
financial measure: operating result and addressable expenses. The reconciliation of operating result to the most comparable IFRS measure is presented in note 5 ‘Segment information’ of the consolidated financial statements. Operating result is calculated by consolidating on a proportionate basis the revenues and expenses of Aegon’s joint ventures in Brazil, China, India, the Netherlands, Portugal and Spain and Aegon’s associates in France, the Netherlands and United Kingdom. The information on the following tables also includes the
non-IFRS
financial measure operating result after tax. This is the
after-tax
equivalent of operating result. The reconciliation of addressable expenses to operating expenses, the most comparable IFRS measure, is presented in the section Results of Operations. Operating expenses are all expenses associated with selling and administrative activities (excluding commissions). This includes certain expenses recorded in other charges for segment reporting, including restructuring charges. Addressable expenses are calculated by excluding the following items from operating expenses: direct variable acquisition expenses, restructuring expenses (including expenses related to the operational improvement plan), and expenses related to acquisitions and disposals. Addressable expenses are reported on a constant currency basis.

This report also conforms to Bermudian laws and regulations. As of December 31, 2023, Aegon qualified as a non-residential company under the Dutch Act on Non-Residential Companies. Consequently, this report has been drawn up in line with the requirements laid down in Part 9 Book 2 of the Dutch Civil Code.

Throughout this document, Aegon N.V.Limited (Ltd.) is also referred to as either “Aegon” or “the Company”company”. For the purposes of this report, “member companies” shall mean, with respect to Aegon N.V.Ltd., those companies consolidated in accordance with applicable Dutch and Bermudian legislation relating to consolidated accounts.

References to “NYSE” and “SEC” relate to the New York Stock Exchange and the USU.S. Securities and Exchange Commission respectively. Aegon uses “EUR” and “euro” when referring to the lawful currency of European Monetary Union member states; “USD” and “US dollar” when referring to the lawful currency of the United States, and “GBP”, “UK pound”, and “pound sterling” when referring to the lawful currency of the United Kingdom.

If you have comments or suggestions about this report, please contact our officesheadquarters in The Hague, the Netherlands. Contact details may be found on page 451.512.

 
Aegon Annual Report on Form 20-F
2022
  |  
1

 

Annual Report on Form 20-F 2023 | 1

Table of Contents

LOGO		 
About Aegon
  Governance and risk management  Financial information  Non-financialSustainability information
   
   

About Aegon

Who we are

Aegon is an integrated, diversified, international financial services group. Wegroup with its roots dating back almost 180 years to the first half of the 19th century. Our ambition is to build leading businesses that offer their customers investment, protection, and retirement solutions, always with a clear purpose:

Helping people live their best lives.

This commitment requires a sustainable, future-oriented business that actively considers all stakeholders, including our customers, employees, investors, business partners, and society at large. Our roots date back almost 180 years to the first half of the 19

th
century. Our strategy focuses on three core markets (the United States, the United Kingdom, and the Netherlands
1
), three growth markets (Brazil, China, and Spain & Portugal), and one global asset manager. Aegon’s head officesheadquarters are basedlocated in The Hague, the Netherlands.
Million customers
Women in senior management
2
29
.5
36
%
Employee engagement score
Weighted average carbon intensity
3
70
%
39
0
Netherlands, while the legal seat of the holding company, Aegon Ltd., has been located in Hamilton, Bermuda, since September 30, 2023.

Business overview

Aegon’s portfolio of businesses includes fully owned businesses in the United States and United Kingdom and a global asset manager. Aegon also has insurance joint-ventures in Spain & Portugal, China, and Brazil and asset management partnerships in France and China, and owns a Bermuda-based life insurer, as well as an almost 30% strategic shareholding in the Dutch insurance company, a.s.r.

Aegon allocates capital towardtowards profitable opportunities in its core and growthchosen markets, and Aegon Asset Management. As an international financial services group, we share capital,leverage the talent, knowledge, processes, and technologies acrossof our different businesses. We derive our revenues and earnings from insurance premiums, investment returns, fees, and commissions. For simpler types of solutions, weWe are growing our direct and affiliated distribution capabilities to engage with customers directly.

1 

Million customers

23.9

On October 27, 2022, Aegon announced that it has reached an agreement with a.s.r. to combine its Dutch pension, life and
non-life
insurance, banking, and mortgage origination activities with a.s.r. The closing of the transaction is subject to customary conditions. Based on the required steps, and necessary approvals, the transaction is expected to close

Women in the second half of 2023.senior management1

38%

Weighted average carbon intensity2

338

tCO2e/EURm revenue

Employee engagement score

77%

Operating result3

EUR

1,498

In millions

Free cash flow

EUR

715

In millions

Cash Capital at Holding

EUR

2.4

In billions

Revenue-generating investments

EUR

826

In billions

21 

Please refer to page 2327 and page 40530 onward for further information.

32 

Metric tons CO2e/CO2e/EURm revenue of corporate fixed income and listed equity general account assets. For details on the methodology used, please see our TCFD disclosure (Methodology) on page 433.497.

3

Non-IFRS financial measures. For reconciliation to the most directly comparable IFRS measures, see note 5.

 2  |  Annual Report on Form 20-F 2023

 About Aegon

Aegon’s fully owned businesses

In North America, Aegon operates primarily under two brands: Transamerica in the United States (US) and World Financial Group (WFG) in the US and Canada. Transamerica has two divisions, Workplace Solutions and Individual Solutions. Workplace Solutions offers retirement plan recordkeeping, advisory services, employee benefits, group annuities, collective investment trusts, health savings and flexible savings accounts, individual retirement accounts, and stable value solutions to employers and their employees. Transamerica’s Individual Solutions division offers life insurance, annuities, and mutual funds to retail customers via various distribution channels, including WFG. WFG is an affiliated insurance distribution network of around 74,000 independent agents located across the US and Canada, focused on the distribution of life insurance products to middle-income households.

In the United Kingdom, Aegon is a market-leading investment platform, providing a broad range of investment and retirement solutions to individuals, advisers, and employers. Aegon UK serves its customers through a combination of workplace and retail financial advisers.

Aegon Asset Management (Aegon AM) is an active global investment management business with EUR 305 billion in assets under management for a global client base consisting of pension plans, public funds, insurance companies (including Aegon’s subsidiaries and partnerships), banks, wealth managers, family offices, and foundations. Aegon AM owns 49% of Aegon-Industrial Fund Management Company, a Shanghai-based asset manager offering mutual funds, segregated accounts and advisory services in China. In France, Aegon AM owns 25% of La Banque Postal Asset Management.

Aegon’s partnerships

Aegon creates value through its partnerships by combining strong local partners with Aegon’s international expertise.

In Spain & Portugal, Aegon has a strategic partnership with Banco Santander to distribute life, health, and non-life insurance products through the bank’s branches, with Aegon owning a 51% stake in the joint venture. Aegon Spain’s own distribution channel offers life insurance, health insurance, and pension products.

In China, Aegon owns a 50% stake in Aegon THTF Life Insurance Company, which offers life insurance solutions through a network of branches, primarily in eastern China.

In Brazil, Aegon has a 59.2% economic interest, and 50% of voting common shares, in Mongeral Aegon Group (MAG Seguros), the country’s third-largest independent life insurer. MAG Seguros offers individual protection solutions. Together with Banco Cooperativo do Brasil (Bancoob), MAG Seguros also operates a joint venture company dedicated to providing life insurance and pension products within the Sicoob, Brazil’s largest cooperative financial system.

In July 2023, Aegon completed the transaction to combine its Dutch pension, life and non-life insurance, banking, and mortgage origination activities with a.s.r. The completion of the transaction also marked the beginning of Aegon’s asset management partnership with a.s.r. As part of the transaction, Aegon received EUR 2.2 billion in cash proceeds and a 29.99% strategic shareholding in a.s.r.

Further information on our businesses can be found in the business overview section on pages 9 and 10 of this report.

Annual Report on Form 20-F 2023 | 3

LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

2023 milestones

Q1

§   Aegon’s Extraordinary Meeting of Shareholders (EGM) approves the strategic decision to combine Aegon’s Dutch pension, life and non-life insurance, banking, and mortgage origination operations with a.s.r. to create a leading player in the Dutch market.

§   USA Today selects Transamerica as a top choice for life insurance policies, naming the business the best for living benefits.

§   Transamerica is singled out by Forbes Advisor in the life insurance industry for reliable cash value policy illustrations.

§   In celebration of Aegon’s 20th anniversary in China, Aegon THTF launches its new customer brand, Elite Service Plus, to provide more comprehensive protection for customers with a focus on health and aging care services. In addition, it launches Aegon THTF YiX, a critical illness insurance product designed to address unmet health insurance needs and the high cost threshold of existing commercial health insurance.

§   Aegon hosts an educational webinar to outline its implementation of the accounting standards IFRS 17 and IFRS 9, which took effect on January 1, 2023.

Q2

§   Aegon announces the sale of its UK individual protection book to Royal London, supporting Aegon UK’s focus on its core retail and workplace platform.

§   Aegon completes the sale of Aegon’s insurance, pension, and asset management businesses in Central and Eastern Europe to Vienna Insurance Group.

§   Aegon completes a share buyback program that aims to return EUR 200 million of surplus cash capital to shareholders.

§   Aegon expands its 2025 climate targets to strengthen its commitment to net-zero emissions by 2050 and will reduce the carbon intensity of its directly held real estate investments by 25% by 2025.

§   Aegon strengthens its asset management capabilities by acquiring NIBC’s European collateralized loan obligation (CLO) activities.

§   Aegon’s Capital Markets Day in London unveils the next chapter in the company’s strategy to create leading businesses in investment, protection, and retirement solutions. Transamerica is to accelerate its growth and build America’s leading middle market life insurance and retirement company.

 4  |  Annual Report on Form 20-F 2023

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● About Aegon Q3 Aegon completes the combination of its Dutch pension, life and non-life insurance, banking, and mortgage origination activities with a.s.r. and begins its asset management partnership with a.s.r. ● Aegon announces a EUR 1.5 billion share buyback program, following the completion of the transaction with a.s.r. ● Aegon Asset Management and La Banque Postale extend their partnership to 2035 via their joint venture, La Banque Postale Asset Management (LBP AM), and complete the acquisition of La Financière de l’Échiquier, a French asset manager. ● Aegon announces the sale of its 56% stake in its joint venture in India, Aegon Life Insurance Company, to Bandhan Financial Holdings Limited. ● Aegon increases its economic interest in its Brazilian joint venture, Mongeral Aegon Group, to 59.2%. ● Aegon UK extends its partnership with Nationwide Building Society (NBS) to support its strategy to be the leading digital platform provider in the workplace and retail markets. ● Aegon completes its re-domiciliation to Bermuda, as a result the company became a Bermuda entity: Aegon Ltd. ● Aegon UK is accepted as a signatory to the Financial Reporting Council’s UK Stewardship Code. Q4 ● Aegon’s group supervision transfers to the Bermuda Monetary Authority (BMA). ● Aegon announces its intention to move its headquarters to the World Trade Center office complex at Schiphol Airport, which aligns with Aegon’s identity as an internationally operating financial services company. ● Aegon celebrates 40 years listed on Euronext Amsterdam with gong ceremony at Euronext. ● a.s.r. and Aegon combine art collections to form Stichting Kunst & Historisch Bezit a.s.r. & Aegon. Annual Report on Form 20-F 2023 | 5

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About Aegon Governance and risk management Financial information Sustainability information Lard Friese CEO Aegon Ltd. Positioned to build market leaders In 2023, Aegon completed significant steps in its transformation to create leading businesses in investment, protection, and retirement solutions. We also revealed our plans to accelerate the execution of our strategy as we entered a new chapter in our transformation. 6 | Annual Report on Form 20-F 2023

About Aegon

Aegon took major steps in its transformation in 2023. How do you look back on the year?

It was a historic year for Aegon. While we made progress in several areas, three events stand out to me as major milestones.

First, we closed the transaction to combine our Dutch pension, life and non-life insurance, banking, and mortgage origination activities with a.s.r. In doing so, we created a leading Dutch insurance company, in which we now own an almost 30% strategic shareholding. As part of that transaction, we also began a long-term asset management partnership with a.s.r., further strengthening the leading position of Aegon Asset Management in Alternative Fixed Income and Retirement Investment Solutions in the Netherlands.

In September, we took the historic step of redomiciling our legal seat to Bermuda, while maintaining our headquarters in the Netherlands and remaining a Dutch tax resident. Following the transaction with a.s.r., Aegon no longer had a regulated insurance entity in the Netherlands. This meant that we needed a new group supervisor. Following discussions in our college of supervisors, one of the existing members, the Bermuda Monetary Authority, informed Aegon that it would assume this role if the company moved its legal domicile to Bermuda.

Finally, we held our Capital Markets Day in London, where we presented our strategy for Transamerica to focus on the American middle market, and outlined our plans and financial targets for the next three years as we work toward our ambition to create leading businesses in investment, protection, and retirement solutions.

In another volatile year, how did Aegon navigate the changing market landscape for its stakeholders?

2023 was marked by widespread volatility across the global economy. We saw continued high inflation and rising interest rates, coupled with increased geopolitical instability, from the continued Russian war of aggression against Ukraine to the global energy crisis, and the war between Israel and Hamas.

These events had a direct impact on our stakeholders. Around the world, ordinary households felt the effects of rising living costs and increased financial uncertainty. Moreover, they took place against the backdrop of a society that is living longer and, at the same time, becoming more attuned to challenges such as climate change and inequality.

In this climate of heightened uncertainty, Aegon has continued to do what it does best. This includes navigating the uncertain financial landscape to deliver robust returns for our investors, and also taking steps to help all our stakeholders – whether they are our customers, employees, or local communities – live their best lives.

Reflecting on our financial performance, I’m extremely proud of what we achieved in 2023.

Throughout a year characterized in many places by geopolitical upheaval and economic uncertainty, we maintained a solid commercial momentum, driven by strong performances in our US business, Transamerica, our UK workplace business, and our joint ventures in Brazil and China.

We exceeded our guidance on operating capital generation (OCG) for 2023, with a final result of EUR 1,280 million; our business units remained well capitalized; and we maintained a strong holding company cash position. Our free cash flow amounted to EUR 715 million for the year, enabling us to exceed our guidance for 2023.

2023 also saw us report for the first time under the new IFRS 17 standard. Our operating result for the year was EUR 1,498 million, down from EUR 1,802 million in 2022. This reflected one-time benefits in the previous year, as well as the impact of management actions, such as those announced at our 2023 Capital Markets Day. OCG continues to be the primary lens by which we evaluate our business performance and steer the company.

At the same time, we continued to offer our shareholders attractive capital distributions. As of December 31, 2023, we had completed 54% of our current EUR 1.5 billion share buyback program, and we have proposed a final dividend of 16 cents per share. On this basis, the total dividend paid for the full year 2023 will be 30 cents per share, in line with our target.

What does the next chapter in Aegon’s transformation entail?

A key strategic focus is to ensure that our largest business, Transamerica, reaches its full potential. We are accelerating the company’s growth to build America’s leading middle-market life insurance and retirement company. To achieve this, Transamerica will continue to develop World Financial Group (WFG), its affiliated insurance agency of approximately 74,000 independent agents. We will also invest in Transamerica’s product manufacturing capabilities and operating model to provide a better customer experience and increase sales.

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LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

In addition, we will strengthen Aegon’s UK and our global asset management business and support them in their journeys to build leadership positions. We will also continue to invest in the growth of our various insurance and asset management partnerships.

I am proud that, throughout this period of significant change, we continued to deliver on our purpose of Helping people live their best lives. Key to this has been strengthening the support we provide to our customers, including with the expansion of our product portfolio offered by our US business, Transamerica, as well as a new customer-facing system introduced by Aegon UK.

What other achievements stand out for you?

At the same time, we maintained our solid commercial performance throughout 2023, particularly in our US business, Transamerica. I should add that our good commercial performance, and our solid and consistent capital generation, allowed us to deliver the strong capital return to our shareholders.

This performance, together with the important steps we took in 2023, has given us a solid foundation to continue with the next chapter of our transformation. I would like to thank my colleagues for all of their hard work and dedication which enabled us to achieve so much during these eventful 12 months.

How do the steps Aegon is taking align with the company’s sustainability ambitions?

At Aegon, we believe that sustainability is key to creating a fair and healthy society and getting the best long term results for our customers - enabling them to live their best lives. In 2023, we continued to make progress with our net-zero commitments and our broader sustainability plans. In June, we announced an additional climate goal to reduce the carbon intensity of our directly held real estate investments. We are also taking steps to improve our own climate impact by addressing our operational footprint. And, alongside our range of products offering competitive investment returns, we also increasingly offer responsible investment options for clients wishing to incorporate sustainability into their investment strategy.

Meanwhile, inclusion and diversity (I&D) continues to be an important focus for the company and its stakeholders. It is also an area where we can make an overall positive difference, both as an employer and as a partner in our local communities.

In 2023, Aegon donated more than EUR 7.5 million to community projects to promote financial and social inclusion. In the same spirit, thousands of our colleagues gave their time to good causes in their local communities as part of Aegon’s inaugural company-wide Force for Good Day in May.

I also believe that, as a major financial services company, Aegon has a wider responsibility to help those in need around the world whenever and wherever we can. With this in mind, we donated to relief efforts following the earthquake in Turkey and Syria, and the devastating wildfire in Maui, Hawaii.

What does 2024 hold for Aegon?

2023 was an important year in which we took great steps forward together as a company, but there will be more to come in 2024. I am confident that Aegon now has a robust corporate structure that will enable us to build market-leading businesses. We also have the financial flexibility to invest where we see opportunities for growth. Together with the talent we have across all our businesses, this means that we can remain fully focused on delivering value to all our customers, shareholders, and other stakeholders during 2024.

 8  |  Annual Report on Form 20-F 2023

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Our strategy How we execute our purpose and vision At Aegon, we are taking steps to strengthen our business in the face of our changing business environment and the evolving needs and expectations of our stakeholders. We aim to give people the confidence and flexibility to live their best lives and contribute to a better world. As we work to realize our vision to create leading businesses in investment, protection, and retirement solutions, our strategy also considers the opportunities and challenges our stakeholders face in today’s evolving financial services landscape. Annual Report on Form 20-F 2023 | 9

LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

Guided by our purpose

Our purpose of Helping people live their best lives guides how we engage with both our customers and our wider stakeholder community. We aim to maximize value for all stakeholders by enabling them to seize the opportunities presented by a changing demographic landscape, and to join us in shaping a healthy, equitable world. This approach provides the foundation for Aegon’s vision and strategy, as well as all subsequent business planning and decision-making.

Our solutions for investment, protection, and retirement are designed to help our customers make the most of a longer, multi-stage life and make the right choices for their future. For our workforce, we aim to foster a purpose-led, inclusive culture that leads to rewarding and fulfilling career opportunities. With our suppliers and business partners, we seek to cultivate strong, respectful relationships that enable them to support our customers. For our investors, we focus our efforts on generating predictable, competitive returns. In addition to addressing the needs and expectations of our immediate stakeholders, we seek to have a positive impact on the world around us through our integrated sustainability approach. This includes our long-standing focus on responsible investing, our net-zero commitment, and our focus on fostering a fair and inclusive company.

Building on our strengths

One of our most important resources at Aegon is the deep knowledge and expertise of our global workforce. Across all our businesses and partnerships, we have a clearly defined workforce strategy and culture that aims to attract, preserve, and develop the talent we have within our company. We leverage business synergies across our company and our different markets; for example, through the strong links between businesses that we want to grow and our global asset manager. Similarly, the asset management teams strive to deliver strong investment returns, to support the sound and effective management of the large back books associated with our businesses in run-off.

Aegon supports this strategy at the holding company level by outlining strategy, allocating capital, defining risk appetite, setting targets, and driving strategy implementation. We also take a centralized approach to determining functional mandates, setting policies and frameworks, and providing shareholder services. In tandem with this, Aegon’s businesses develop local strategies and operating plans within the company’s strategic framework and ensure their implementation.

Clear strategic focus, executed through our businesses and partnerships

Since 2020, Aegon has been taking structured steps to become a more focused company with an improved operational performance, a stronger balance sheet, and an enhanced risk profile. The 2023 completion of the combination with a.s.r. concluded the first chapter

Investment proposition

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of Aegon’s transformation journey, enabling us to accelerate the execution of our strategy.

In the Americas, Transamerica, the largest of Aegon’s businesses, is a leading provider of life insurance, retirement, and investment solutions, serving millions of customers with a strong track record of making financial services available to a broad range of customers. We aim to build on this inclusive approach to accelerate Transamerica’s growth and build America’s leading middle-market life insurance and retirement company. Representing approximately 68 million middle-income households, this rapidly growing market is the largest in the US, but it remains relatively underserved by the financial services industry. Transamerica is well positioned to seize the opportunities in this market through its Individual Solutions and Workplace Solutions business lines. Within these business lines, we distinguish between Strategic and Financial Assets. The capital allocation approach centers on the reallocation of capital from Financial Assets to Strategic Assets.

Strategic Assets are businesses with a greater potential for an attractive return on capital, and where Aegon is well positioned for growth. We invest in profitable growth by expanding our customer base with a focus on providing middle-income retail customers with selected life insurance and investment products based on two strategic focus areas. First, Transamerica will invest further in World Financial Group (WFG), its affiliated insurance distribution network of approximately 74,000 independent agents, with plans to grow the number of WFG agents to 110,000 by 2027 while at the same time improving agent productivity. In addition, Transamerica will invest in its product manufacturing capabilities and operating model to position its individual life insurance business for further growth, with distribution through both WFG and third parties.

 10  |  Annual Report on Form 20-F 2023

Our strategy

In Transamerica’s Workplace Solutions division, we aim to increase earnings on in-force from the retirement business to between USD 275 million and USD 300 million by 2027. The retirement business provides recordkeeping, administration and investment services for defined contribution, defined benefit and non-qualified plans, and advice to plan participants and retirement investors. It focuses on mid-market participants and the pooled plan solutions market in the US. Transamerica is also growing its offering of ancillary products and services to plans, participants and retirement investors.

The US Financial Assets are blocks of business that are capital-intensive with relatively low returns on the capital employed. New sales for these blocks are limited and focused on products with higher returns and a moderate risk profile. We aim to maximize the value of these businesses through disciplined risk management and capital management actions. These businesses include Fixed and Variable Annuities with interest rate sensitive riders, and a stand-alone long-term care insurance portfolio. Since mid-2023, the legacy Universal Life portfolio and Single Premium Group Annuities (SPGA) have been added as Financial Assets.

In the United Kingdom, Aegon focuses on providing pension, savings and investment solutions for over 4 million customers, working with financial advisers and employers. Aegon UK is the UK’s largest investment platform, providing workplace pension schemes to over 9,000 employers. In the UK, we aim to sharpen our competitive edge by improving the digital experience for customers, advisers, and employers. In August, Aegon announced an extension of its strategic partnership with Nationwide Building Society (NBS), under which NBS’ financial planning teams will move to Aegon UK. In addition, Aegon UK will continue to provide the platform on which NBS members manage their investments.

Our global asset manager, Aegon Asset Management (Aegon AM) is also an important contributor to our strategy, and we aim to drive its growth and improve profitability. We are implementing a new global technology platform to reduce costs and make Aegon AM more client-focused and scalable. Leveraging our global brand and a global operating platform, Aegon AM operates through Aegon’s local subsidiaries and partnerships, as well as independently in Germany and Hungary. In China, Aegon AM owns 49% of Aegon-Industrial Fund Management Company, an asset manager offering mutual funds, segregated accounts, and advisory services. In France, Aegon AM owns 25% of La Banque Postal Asset Management (LBP AM). In July 2023, Aegon AM and La Banque Postale announced an extension of their asset management joint venture in LBP AM through 2035. Aegon AM participated in LBP AM’s capital raising to support the acquisition of La Financière de l’Échiquier, which will consolidate LBP AM’s market position. Furthermore,

the completion of the transaction with a.s.r. marks the beginning of the related asset management partnership with a.s.r. The partnership will strengthen Aegon AM’s position as a provider of distinct capabilities in retirement-related investment solutions, alternative fixed income investments, and responsible investing.

Aegon will also continue to expand its strong partnership businesses by making the most of their scale and untapped potential. In Spain & Portugal, we will continue to grow the business through our long-standing bancassurance partnership with Banco Santander. We will also invest further in China and Brazil, where we aim to generate growing volumes and earnings, including by expanding distribution. Aegon announced in Q3 that it increased its economic stake in the local joint venture in Brazil to 59.2% to underline its commitment to this market.

In the Netherlands, Aegon completed the transaction to combine its Dutch pension, life and non-life insurance, banking, and mortgage origination activities with a.s.r. in July 2023. As part of the transaction, Aegon received EUR 2.2 billion in cash proceeds and a 29.99% stake in a.s.r. Aegon outlined the framework for its almost 30% shareholding at its June 2023 Capital Markets Day. In principle, Aegon will hold the stake until the a.s.r. share price reflects the intrinsic value, unless value-creating opportunities present themselves.

Transamerica Life (Bermuda), Aegon’s provider of life insurance products and services to affluent and high-net-worth individuals predominantly in Asia and beyond, is managed as a Financial Asset to maximize value and free up excess capital. Its universal life portfolio was internally reinsured to Transamerica in 2022.

A clear model for achieving our vision

We aim to create a resilient, future-fit business: a well-managed and well-respected company that delivers value for its stakeholders, including attractive capital returns to shareholders. While our strategy directly supports this vision, our ambition goes beyond operational or financial performance, as we also aim to have a positive impact on society and the environment.

Achieving this overall vision will involve building on our existing strengths; first and foremost, our proven ability to operate trusted brands and leading retirement platforms in our chosen markets. Aegon provides advanced retirement and asset management solutions, and life insurance and protection products. We deliver these by leveraging our strong foundations in large established markets, as well as in under-penetrated, growing markets.

With this approach, Aegon is well placed to benefit from favorable structural trends and create leading businesses

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LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

in locations where demographic realities require customers to save more. In all our businesses, our customers are the starting point for the development of our financial solutions, and we proactively assess their needs and develop products and services to suit. We then estimate and price the risk to us as a provider. After branding, our products and services are distributed through intermediaries, which include brokers, banks, and financial advisers, or marketed directly to customers.

In exchange for Aegon’s products and services, our customers pay fees or premiums to our businesses, or make deposits on certain pension, savings, and investment products. We earn returns for our customers by investing these premiums and paying out claims and benefits to address the promises and guarantees associated with our insurance products. For non-insurance products such as retirement plans or saving deposits, customers make withdrawals based on pre-agreed terms and conditions. We use the remaining funds to cover our expenses, support new investments, and return profits to our shareholders.

Aegon’s 23.9-million-strong customer base provides a robust foundation from which to expand and develop the business. As a diversified international company, we have the reach to deliver our propositions to a broad range of customers, who will increasingly benefit from more sophisticated and tailored digital services and advice. Our global, integrated asset management business is also an important driver of our continued success, enabling us to grow our share of the overall Assets under Administration over time.

Value-creating capital allocation

Aegon operates a focused business portfolio to deliver success for the company and its stakeholders on the way to realizing its vision. Through our fully owned businesses and partnerships, we strive to be seen as a leader that offers contemporary propositions and outstanding, digitally enabled customer service.

In the US, Aegon’s capital allocation approach centers on reallocating capital from Financial Assets to Strategic Assets. Since the 2020 Aegon Capital Markets Day, USD 1.5 billion has been released from Financial Assets, and we will continue to reduce our exposure to Financial Assets and improve the quantity and quality of our capital generation in the coming years. Additional management actions aim to release another USD 1.2 billion of capital through 2027. The financial flexibility this creates will be prioritized to further reduce exposure to Financial Assets to support additional investment in Strategic Assets.

In April 2023, Aegon UK announced the sale of its UK individual protection book to Royal London. Aegon UK initially reinsured the portfolio to Royal London, and will ultimately transfer legal ownership to Royal London through a Part VII transfer in 2024,

subject to court approval. This supported the strategy to focus on its core Workplace and Retail platform activities in the United Kingdom, as part of Aegon’s ambition to create leading businesses.

In addition, as part of the strategy announced at the Capital Markets Day in December 2020, Aegon has exited various small and niche markets in order to focus on those markets where Aegon is well positioned to create value. This includes the sale of the company’s businesses in Central & Eastern Europe to Vienna Insurance Group AG, which took place over several stages and was completed in June 2023. In addition, Aegon announced in July, the sale of its 56% stake in its business in India to Bandhan Financial Holdings Limited. The transaction was completed on February 23, 2024.

Strong balance sheet

Maintaining a strong balance sheet is a prerequisite for Aegon to achieve its overall vision. It allows us to build leading, advantaged businesses that can actively contribute to a healthier, more equitable society, and create value for our customers and wider stakeholder base in line with our purpose.

Moreover, we maintain a strong balance sheet in order to focus time and energy on increasing the return on capital and the return of capital to shareholders. We have a clear capital management policy in place that informs our capital deployment decisions, which is driven by the Cash Capital at Holding and is supported by reliable remittances from the units. Aegon has a strong and resilient balance sheet with an enhanced risk profile.

Transamerica continues to take in-force management actions on Financial Assets, which aim to release the additional USD 1.2 billion of capital before year-end 2027. The legacy Universal Life Financial Asset portfolio includes a book of Secondary Guarantee Universal Life (SGUL) policies. In July 2023, Transamerica agreed to reinsure USD 1.4 billion of statutory reserves of the SGUL portfolio to Wilton Re. The transaction reduced the business’ exposure to mortality risk while covering approximately 14,000 policies and 12% of the total reserves backing this product line. The transaction generated approximately USD 240 million of capital, of which USD 50 million is from reduced capital requirements. Transamerica is using this capital to support its ongoing management action of buying back up to 40% of the face value of universal life policies that are owned by institutional investors. Together with the previous reinsurance transaction undertaken at the end of 2021, a total of 30% of the net amount at risk and 25% of the statutory reserves backing the SGUL portfolio have now been reinsured.

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 Our strategy

For its Long-Term Care Insurance portfolio, Transamerica has removed the remaining morbidity-improvement assumption and increased the inflation assumption to align with market best practices. Associated with these assumption changes, Transamerica has set up a new rate-increase program seeking approvals for additional actuarially justified-premium rate increases with a combined value of USD 700 million. In the variable annuity portfolio, the dynamic hedging program continued to perform well in 2023, with a hedge effectiveness ratio of 99% and with the volatility of the capital position partly offset by a voluntary reserve. The reserve better aligns the recognition of fees on the variable annuities base contract with the time at which they are earned.

The execution of Transamerica’s strategic plan has the ambition to result in an increase in the capital generation from the in-force Strategic Asset portfolio. Transamerica plans to reinvest part of its earnings on in-force from Strategic Assets in profitable new business opportunities to secure long-term growth. This is anticipated to result in a gradual increase in operating capital generation from Strategic Assets to fund growing remittances to the holding company. Transamerica is targeting mid-single-digit growth in its remittances over the medium term, from a level of USD 550 million in 2023. This should contribute significantly to Aegon’s free cash flow.

Growing capital distributions

Aegon’s dividends aim to grow in line with its sustainable free cash flows. Any capital deployment decisions will consider our deleveraging target, as well as planned management actions to improve and de-risk the company.

We remain disciplined in our management of capital, and any surplus cash flow not used for value-added growth opportunities will be returned to shareholders over time, as demonstrated by the share buyback programs executed in 2023. In January 2023, Aegon repurchased common shares for an amount of EUR 42.5 million in relation to obligations resulting from share-based compensation plans. Furthermore, the company returned surplus cash capital to its shareholders through a EUR 200 million share buyback executed in the first half of 2023. Following the transaction with a.s.r., Aegon also initiated a EUR 1.5 billion share buyback program to offset the dilutive effect of the transaction on free cash flow per share. The program commenced in July 2023 and 54% of the share buyback program had been completed at the end of 2023. In addition, Aegon intends to reduce its gross financial leverage by up to EUR 700 million.

Aegon’s re-domiciliation to Bermuda

Following the transaction with a.s.r., Aegon no longer has a regulated insurance business in the Netherlands. This has resulted in a significant shift in our geographic footprint, with more than 99% of the company’s business activities now taking place outside the European Union1 and therefore not subject to the EU Solvency II regime.

Following consultation with the members of the College of Supervisors, the Bermudian financial services regulator, the Bermuda Monetary Authority (BMA), informed Aegon that it would become the company’s group supervisor if Aegon’s legal domicile were transferred to Bermuda. Bermuda’s highly regarded regulatory regime has been granted equivalence status by both the European Union and the United Kingdom, and it has been designated as a qualified and reciprocal jurisdiction by the National Association of Insurance Commissioners in the United States. We have agreed transitional arrangements with the BMA to provide shareholders with the necessary stability in our capital management framework. For more information on the transitional arrangements, we refer to “Regulation and supervision” on page 91.

In September, we moved our legal seat to Bermuda, which required converting our legal form from a Dutch N.V. into a Bermuda Ltd. As a result, our governance approach became subject to Bermuda law. We have ensured that the interests of Aegon and all its stakeholders continue to be taken into account and that Aegon applies recognized international governance standards while preserving the most material governance principles while also recognizing the change in our business perimeter. The new governance structure includes the move to a single- tier Board with Non-Executive Board members and the CEO as an Executive member. Further details about our governance arrangements can be found on our website.

The transfer of Aegon’s legal seat to Bermuda also allows us to maintain our headquarters in the Netherlands and remain a Dutch tax resident. We have also maintained our listings on Euronext Amsterdam and the New York Stock Exchange (NYSE).

1

Based on total investments on balance sheet on December 31, 2023.

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About Aegon Governance and risk management Financial information Sustainability information Sustainability Sustainability is a central element of our strategy and value creation approach. At Aegon, we believe that people can only live their best lives and seize the opportunities of a longer life in a healthy, livable, and equitable world. Our commitment to sustainability – and how we deliver on it – is shaped by our unique position at the center of the financial services value chain. As an investor and provider of financial products and services, we have a responsibility to address environmental and societal issues that affect a broad range of stakeholders and will shape our future society and future performance. 14 | Annual Report on Form 20-F 2023

Sustainability

Enriching and embedding our sustainability approach

Aegon has a dedicated sustainability approach that is integral to its strategy and takes into account the expectations, knowledge, and perspectives of our stakeholders.

Our approach is underpinned by our sustainability commitments, which include the UN Global Compact (UNGC), the UN Principles for Sustainable Insurance (PSI), and the Principles for Responsible Investment (PRI). The full list of our commitments can be found on our website.

In 2023, we also took steps to further integrate sustainability into our strategy and operations. We see our employees as the starting point for driving our sustainability agenda, and developing their understanding of key sustainability issues is a prerequisite for achieving our goals and preparing for future regulations, risks, and opportunities. In addition, Aegon’s investors increasingly expect the company’s leaders to be educated on sustainability issues and to demonstrate sustainability literacy. In 2023, we made progress towards these goals with the launch of our Sustainability Academy (see text box on the right).

Our sustainability commitments have remained unaltered following the combination of Aegon the Netherlands with a.s.r. and the redomiciliation to Bermuda. Across our business, we remain committed to our net-zero commitments and our inclusion and diversity strategy.

Addressing our priority themes

Climate change and inclusion and diversity (I&D) have been identified by our stakeholders as priority themes where we can have the most significant impact as an organization. These two themes were confirmed by Aegon’s 2023 double materiality assessment (DMA) exercise, which is required under the EU Corporate Sustainability Reporting Directive (CSRD).

Climate change

As an international financial services group, Aegon is well positioned to support society’s transition to a climate-resilient economy and a net-zero world. We have an opportunity to finance the energy transition and climate resilience through our own investments and our responsible investment framework. We also have a responsibility to manage our investments to address potential climate-related risks to our portfolio. As these risks can affect the value of our business, we continue to respond to customer demand by broadening our product portfolio to offer customers a choice of products that can help accelerate the path to net-zero and have climate resilience built in. For example, the Commercial Property Assessed Clean Energy (C-PACE) asset-backed securities, address the need to engage ordinary households and individuals in the transition to a more climate-conscious society.

Launching our Sustainability Academy

At the end of 2023, Aegon launched its Sustainability Academy, a company-wide initiative to bridge the gap between employees’ current awareness of sustainability and the degree of understanding required to fully support the company’s purpose and sustainability ambitions. This global initiative also supports our talent attraction and retention objectives by promoting Aegon as a responsible employer.

The Sustainability Academy provides Aegon employees worldwide with a wide range of learning and development resources focused on sustainability, including webinars and e-learning courses The curriculum focuses on Aegon’s priority themes of climate change, and inclusion and diversity.

The Academy also includes dedicated training modules for Aegon’s senior leaders, offered as part of the Best Life Leadership program. The Sustainability Leadership module aims to engage Aegon’s top 300 leaders in developing their understanding of relevant sustainability issues, managing sustainability-related risks, and capitalizing ethically on the value creation opportunities stemming from being a more sustainable company. A further module addresses the results of our international I&D survey and fosters skills for our senior population on leading through intergenerational difference with a leading London Business School academic and the Dutch United Nations Generation Z representative, preparing Aegon for the workforce of the future.

We are also taking steps to improve our own climate impact by addressing our operational footprint. The specific approaches Aegon has adopted to meet its climate change commitments are discussed on the next page.

In today’s shifting sustainability landscape, we also recognize that our stakeholders hold a broad spectrum of views on the topic of climate change. While Aegon aligns with the scientific consensus on climate change and is actively working to address this critical issue, we continue to respond to customer demand and offer our customers a choice between sustainability-related products and alternatives.

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Our net-zero commitments

Aegon has made a company-wide commitment to transition its general account investment portfolio to net-zero greenhouse gas (GHG) emissions by 2050. Relatedly as further evidence of its corporate commitment, Aegon Ltd. is a signatory of the Net-Zero Asset Owner Alliance (NZAOA).

To drive progress toward our 2050 commitment, we have set intermediate targets. See box out on the right for more information. Additionally, in 2023, we set a new target for our direct real estate investments, whereby Aegon commits to reduce the scope 1 and 2* carbon intensity of its direct real estate investments by 25% by 2025, compared to a 2019 baseline. In 2023, our WACI result was 338 metric tons CO2e/EURm revenue, a 37% reduction against the 2019 baseline. Against our real estate investment target we achieved a 46% reduction in the carbon intensity of directly held real estate investments against the 2019 baseline. Both of these results are ahead of our 2025 targets.

Further to our company-wide net-zero commitment, our UK business has committed to achieving net-zero financed emissions from its pension funds by 2050.

Climate risk analysis

Undertaking regular climate risk analysis is a further element of our climate-mitigation approach. Aegon continues to work with Ortec Finance to conduct an extensive and systematic climate risk assessment for its General and Separate Account assets in all business units. The analysis investigated different climate pathways (orderly and disorderly transitions, failed transitions) to explore potential future climate policies, interventions, and consequences of society’s failure to mitigate climate change. Scenario projections demonstrate resilience of the General Account portfolio to systemic climate risk drivers over a 40-year horizon. This is largely attributable to the high allocation of fixed income assets, limiting the cumulative climate-related impact on returns. Nevertheless, there is considerable uncertainty inherent in long range climate risk projections and monitoring developments in climate science, policy, technology, regulation, and consumer sentiment will remain critical for understanding and adapting to the future.

Operational footprint

Aegon does not maintain energy-or resource-intensive processes as part of its direct business operations. Our operational carbon footprint is small relative to the scope of our investment activities. Nevertheless, we have set firm targets to reduce the carbon footprint of our operations, which is primarily related to greenhouse gas emissions from the natural gas and electricity used by our offices.

Aegon’s 2025 climate change commitments

§   Reduce the weighted average carbon intensity (WACI) of our corporate fixed income and listed equity general account assets by 25% by 2025.

§   Invest USD 2.5 billion in activities to help mitigate climate change or adapt to the associated impacts by 2025.

§   Engage with at least the top 20 corporate carbon emitters in our portfolio by 2025.

§   Reduce the scope 1 and 2 carbon intensity of our directly held real estate investments by 25% by 2025.

§   25% reduction in absolute operational carbon emissions (scope 1 and 2) by 2025 against the 2019 baseline.

The first phase of our targets covers the period up to December 31, 2024. The second phase of Aegon’s near-term emissions reduction plan will cover the period from 2025 to 2030, and the corresponding targets will be finalized in 2024.

By the end of 2023, Aegon had achieved a 68% reduction in its operational carbon footprint compared to the 2019 baseline, well ahead of the target of a 25% reduction by 2025.

The impact of less operational properties together with changing work patterns has had a significant impact in reducing our overall facilities footprint. We will continue to monitor the impact of hybrid working on our carbon footprint.

Inclusion and Diversity

At Aegon, our vision for inclusion and diversity (I&D) underpins our purpose and strategic goals. Our promise to help people live their best lives extends to the many, not the few, and we work hard to further foster equal treatment and opportunity for all stakeholders. This includes our existing employees and customers, as well as job seekers, and future customers who may have traditionally been underserved in financial services.

Driving financial inclusion

World Financial Group (WFG) is an insurance agency with a distribution network of more than 74,000 independent agents, a subsidiary of Transamerica and part of the Aegon group of companies.

*

Scope 1 covers direct emissions from owned or controlled sources while scope 2 covers indirect emissions from the purchase and use of electricity, steam, heating, and cooling.

 16  |  Annual Report on Form 20-F 2023

 Sustainability

WFG has been bridging the gap between lower-income households and financial inclusion for over 20 years by offering access to affordable product choices, financial education, and the ability to create a financial strategy. WFG fulfills Aegon’s purpose of Helping people live their best lives every day through helping countless people from all social and economic backgrounds.

WFG, since its founding, has worked to promote and enable financial literacy in underserved communities while providing unique opportunities to individuals across North America. Because of the inclusive approach, people from all social classes gain financial understanding and learn ways to create a better future for themselves and their families. WFG focuses on outcomes for their clients and agents, such as financial resilience, economic growth, and long-term financial protection.

Building an inclusive and diverse work environment

At Aegon, we are working to build an inclusive and diverse culture that encompasses all aspects of the employee experience, starting with talent attraction. Our approach includes fostering equal treatment for everyone and providing career opportunities to all our employees.

In 2023, Aegon launched its first international I&D Survey. The survey, with relevant observations for the entire company, provides useful data and insights for developing our I&D strategy at a company and business-unit level. And the outcomes will help to capture I&D data directly through the Workday platform, which will be analyzed as part of the Global Employee Survey. The I&D Survey includes questions about the demographic profile of respondents and their experiences in the company. The survey received an overall response rate of 82% and generated approximately 2,000 comments from employees. Key findings from the survey are presented in the box out on page 30.

Our learnings from this and future I&D surveys will be critical in strengthening our I&D approach over the coming years. In the United Kingdom, for example, Aegon is using data and insights from the survey and other sources to develop a more inclusive talent attraction strategy and to evaluate the success of recruitment campaigns against our purpose and I&D objectives.

Aegon’s leaders play an important role in shaping an open and inclusive culture. In 2023, we launched a new internal podcast series, “Tell Your Story”. The series includes audio specials in which Aegon’s senior leaders share their personal insights on inclusion and diversity, where their passion for I&D comes from, and how they promote inclusion through their work. Podcast contributors have included Matt Rider, Chief Financial Officer, and Elisabetta Caldera, Chief Human Resources Officer.

Another key I&D initiative at Aegon is the Race and Cultural Diversity (R&CD) Community, which aims to help create an inclusive environment where colleagues understand diversity and the benefits it brings. Linked to the concept of “allyship” – taking opportunities to support colleagues who don’t necessarily feel included – the R&CD aims to create a network of I&D allies across Aegon. Supported by members of the Executive Committee and Aegon’s leadership team, the community organizes regular online speaker events and Q&As with special guests, as well as “culture cafes” (quarterly events with information on cultural and religious festivals such as Diwali, Carnival, and Ramadan). The R&CD community holds twice-yearly townhall sessions to help colleagues become better allies. Allies also provide feedback on what they would like to see at future R&CD events.

In recent years, Aegon has paid increasing attention to the gender imbalances that persist in the financial services industry, a traditionally male dominated industry. In 2023, we remained committed to meeting the standards and requirements for gender diversity requirements of our respective markets. Headquartered in the Netherlands, Aegon continues to comply with the Gender Diversity at the Top Act. Introduced in 2022, the Act requires Aegon entities incorporated in the Netherlands to have gender-balanced representation on their corporate boards, a requirement that the company met in 2023.

In the US, our Transamerica business continues to be recognized for its stance on gender equality and other aspects of I&D. In 2023, Transamerica was listed as one of the top 75 US-based companies for women in leadership by Seramount, a professional services and research firm focused on diversity, equity, and inclusion (DEI). Seramount recognized Transamerica as a company that champions the advancement of women in the workplace, including succession planning, profit-and-loss roles, gender pay parity, support programs, and flexibility programs. In addition, 2023 saw the Human Rights Campaign award Transamerica a score of 100% on their 2023 Corporate Equality Index (CEI), thereby recognizing the business as a “Best Place to Work for LGBTQ Equality” for the sixth year in a row.

Transamerica’s I&D approach is further enriched by the World Financial Group (WFG) distribution network, which is focusing increasingly on representing the diverse communities it serves. WFG’s licensed independent agents represent more than 75 different spoken languages. In addition, more than 50% of the agent population is female and 65% identify as members of traditionally underrepresented racial/ethnic groups.

Driving our sustainability approach

At Aegon, we use two main mechanisms to drive our sustainability approach, namely responsible investment and offering alternative products with sustainability embedded.

Annual Report on Form 20-F 2023 | 17

LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

Responsible investment

Reducing the carbon intensity of our investments is the single biggest contribution that we can make to the climate transition as a business. Our responsible investment approach includes our commitment to move our general account investment portfolio to net-zero greenhouse gas emissions (see above). At the same time, we seek to provide our clients with choices that support the climate transition through a growing range of products designed to help them align their investment portfolios with net-zero goals.

Moreover, the six Principles for Responsible Investment provide guidance for Aegon’s Responsible Investment Policy. In 2023, the policy was updated and now includes concrete actions on engagement, exclusion, and/or funding criteria in a number of targeted responsible investment focus areas: climate change, human rights, and our tobacco industry exclusions. Aegon’s Responsible Investment Policy will be regularly reviewed to take into account changing industry regulations, best practice, and stakeholder expectations.

In addition, Aegon AM is a member of the Net-Zero Asset Manager Initiative (NZAM), a group of approximately 300 asset managers committed to achieving net-zero greenhouse gas (GHG) emissions by 2050 at the latest.

Responsible investment developments in 2023

The responsible investment landscape continued to evolve in 2023, with a focus on managing financially material climate-related risks in our portfolios and accelerating the low-carbon transition through investment opportunities. During the year, we continued to innovate investment solutions in Aegon AM’s active global investment business.

In its Top Emitter Engagement Program (TEEP), Aegon AM engaged with almost 300 issuers on climate change concerns in 2023. This included 22 companies specifically identified through the Carbon Disclosure Project’s ‘Non-Disclosure Campaign’, which Aegon signed and actively supported. As part of the TEEP we also identified the top 20 corporate carbon emitters in General Account portfolios and targeted them for engagement with the objective of obtaining commitments to set science-based net-zero targets. By the end of 2023 we had engaged with 19 of those companies, well on track to achieve our 2025 target.

Another issue of growing concern to the investment community is the loss of biodiversity and other nature-related impacts, and their linkage to climate change. In 2023, Aegon UK and Aegon AM joined the Nature Action 100, a global initiative focused on driving greater corporate ambition and action to reverse the loss of nature and biodiversity. Aegon AM considers biodiversity impacts as part of its ESG integration approach. It also considers key negative impacts related to biodiversity, including activities that negatively

impact biodiversity-sensitive areas, emissions to water, and hazardous waste, where such data is reliably available.

In 2023, Aegon AM also began the process of reclassifying the Aegon Global Sustainable Sovereign Bond Fund (GSSF) from Article 8 to Article 9 under the Sustainable Finance Disclosure Regulation (SFDR), thereby certifying that the fund has as its objective sustainable investment in line with the UN Sustainable Development Goals (SDGs).

For more information about the role of Aegon AM in Aegon’s responsible investment activities and approach, please refer to the Aegon AM Responsible Investment Framework documents available on the Aegon AM website.

Meanwhile, our US business, Transamerica, continued to make progress on our 2025 commitment to invest USD 2.5 billion in activities that help society mitigate climate change or adapt to its impacts. Approximately USD 1.8 billion has been invested toward this goal and these investments are subject to at least equal screening criteria as our non-goal investments. To learn more about Transamerica’s investment as part of this commitment and their impact on society, see “Sharing value with our stakeholders in 2023” on page 34.

Sustainability in our products

At Aegon, we look for opportunities to integrate sustainability into our product development process and across our product ranges. We seek to offer our customers the choice of sustainable alternatives such as climate transition portfolios aligned with net zero objectives and products focused on investing in sustainable economic activities. To inform and support our product development, we are increasingly conducting customer research on sustainability and ESG investment strategies, including through customer surveys and discussion panels.

In 2023, Aegon expanded its range of sustainability-focused products. In the first quarter of 2023, Aegon AM increased access to sustainability products for its customers, including EUR 100 million of inflows into its Global Short Dated Climate Transition Fund. More broadly, Transamerica continued to integrate ESG considerations into its product offerings, including the launch of several additional ESG sustainable funds in the first quarter of 2023. In December 2023, Aegon AM launched its Global Short Dated High Yield Climate Transition fund.

While offering sustainability-focused solutions is a key component of our product development approach, we remain mindful of the sensitivities surrounding ESG-related financial products and services, ensuring that customers and end-users continue to have access to alternatives.

 18  |  Annual Report on Form 20-F 2023

LOGO

Creating sustainable value for our stakeholders in 2023

LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

Aegon seeks to create long-term value for a wide range of stakeholders, including its customers, employees, business partners, investors, and society at large. In line with our purpose, strategy, and sustainability approach, we see our business as inherently beneficial to society. We believe the value we create as a company is widely shared through our diverse businesses and extensive global workforce. However, we also recognize that certain decisions and actions can also erode value by having a negative effect on our stakeholders or on the environment. Actively identifying and managing potential negative impacts is therefore an integral part of our decision-making, alongside realizing opportunities and positive impacts.

Maturing our double materiality approach

In 2023, Aegon conducted its second double materiality assessment (DMA). Forming part of our broader risk and strategic analysis activities, our DMA is an important tool for identifying and assessing our impacts, risks, and opportunities that have the potential to influence our strategies and practices at the level of the holding company, and across the businesses. The 2023 assessment was also an important step in preparing for the European Union’s CSRD, which will apply to Aegon from the 2024 reporting year. Our process took into account the European Sustainability Reporting Standards (ESRS) methodology1 adopted by the European Commission in July 2023.

Introducing our DMA topics

The table below lists the material topics identified through the DMA process and how they relate to Aegon’s broader sustainability approach. In each case, we describe where the impact of the material topics falls within Aegon’s value chain and how Aegon can contribute to the UN Sustainable Development Goals by addressing the topic.

In addition, the table highlights the actions that Aegon took in 2023 in relation to these material topics. Since the DMA was concluded at the end of 2023, these topics will be added to our priority themes of climate change and inclusion and diversity and addressed further in 2024. For more information on Aegon’s double materiality methodology, please refer to page 456. Our DMA approach will be reviewed annually in light of stakeholder input and the latest assessed risks, opportunities, and impacts. In 2024, we will also further evolve and mature our DMA process by conducting deeper analyses of our value chain and broadening our stakeholder engagement approach.

 Double Materiality Assessment Topics

        

 Topic

      

Climate

change

adaptation &

mitigation

  

Inclusion and

diversity

  

Employee

wellbeing

  

Customer

empowerment

  

Data security

and Privacy

  

Business

conduct

        
  Investments  ✓  ✓     ✓  ✓  ✓
       

 Impact in

 the value

 chain

  Insurance  ✓  ✓     ✓  ✓  ✓
  Operations  ✓  ✓  ✓     ✓  ✓
        
  Supply chain  ✓  ✓        ✓  ✓
       

 More information on actions

  pages 15, 16, 18, 31, 32 & 34  pages 16, 17, 24, 26 - 30, 32 & 35  pages 27-29  pages 24-26  pages 26-27  pages 31, 32, 34 & 35
       

More information on Impacts, Risks and Opportunities and associated indicators

  pages 462 - 464  pages 465 - 466  pages 469 - 471  pages 467 -468  page 472  pages 473 - 475

 Link to

 SDGs

  SDG Topic  

 

LOGO   LOGO   LOGO

 

  

 

LOGO   LOGO

 

  

 

LOGO   LOGO

 

  

 

LOGO   LOGO

 

  

 

LOGO

 

  

 

LOGO

 

       
   SDG Targets  7.2, 7.3, 9.4, 13.1  10.2, 10.4, 5.5  3.4 & 8.5  3.8 & 8.10  16.10  16.6

1

The DMA uses standards that differ from, and are generally broader than, the definition of materiality for Aegon’s SEC reporting obligations.

 20  |  Annual Report on Form 20-F 2023

Creating sustainable value for our stakeholders in 2023

Understanding and engaging with our stakeholders

Identifying the issues and topics that matter to our stakeholders is an important starting point to guide our value creation approach.

At Aegon, we engage with our stakeholders to understand their expectations of us. Our discussions with stakeholders take place across various channels, which are organized at a company-wide and business-unit level according to the requirements of our respective stakeholder groups.

The table below highlights the respective expectations of Aegon’s key stakeholders, as well as the different platforms and channels used to engage with these groups. We also look at the key areas of focus for our stakeholder engagement in 2023, and the steps being taken to address the views and feedback that we receive through our engagements.

CustomersEmployees

Partners and

suppliers

InvestorsSociety

Stakeholder expectations and concerns

§  High-quality products and services that support financial wellbeing

§  Fairly priced, accessible products

§  Quality customer service; (digitally enabled) accessibility

§  Protection of data security and privacy

§Good working conditions

§Flexible working; healthy work-life balance

§Opportunities for career development

§  Equal treatment and opportunities for all

§Good business conduct

§  Fair and timely payments

§  Strong and sustainable capital position

§  Predictable, competitive financial result

§  Attractive, sustainable capital distributions to shareholders

§  Reliable returns to bondholders

§Supporting climate transition (through responsible investments)

§Commitment to reducing operational and carbon footprint (including net-zero commitment)

§Commitments to supporting inclusion and diversity

§Supporting worthwhile causes in Aegon’s local communities

How we engage

§  Customer surveys (led by business units)

§  Customer panels to test ongoing product development

§  Omnichannel customer service portals in our respective markets

§  Customer complaints channels

§  Public websites

§Town halls at company and business-unit level

§Conduct quarterly Global Employee Survey with all employees

§  International I&D Survey

§Speak Up program

§Employee Resource Groups (ERGs)

§  Aegon Works Council

§Encourage suppliers to join the responsible procurement program

§Require adherence with Vendor Code of Conduct

§  Capital Markets Day for analysts and investors

§  General Meetings of shareholders (annual and extraordinary)

§  Regular engagements with institutional investors and equity analysts

§  Participation at financial market conferences and roadshows

§  Public communications in the form of press releases, interviews and media engagement

§Community Investment program

How Aegon is addressing stakeholders’ needs and expectations

§  Product innovation (see page 25)

§  Investing in (digital) customer service channels and platforms (see pages 23 and 24)

§  Improving accessibility of products and services, including by extending reach to new customer groups (see page 26)

§  Via our information security and privacy control framework

§Addressing employee concerns in town halls and regular staff meeting (see page 29)

§  Measuring Aegon’s performance on employee engagement (see page 29)

§Measuring Aegon’s performance on inclusion and diversity (see page 30)

§  Setting clear and transparent targets and delivering on these targets

§  Providing regular updates on financial and strategic performance

§  Publishing ad-hoc updates on strategic and financial developments as needed

§Reducing our operational and investment impact (see page 34)

§Driving inclusion and diversity in our communities (see page 35)

Annual Report on Form 20-F 2023 | 21

LOGO

About Aegon Governance and risk management Financial information Sustainability information How we create value for our stakeholders Our inputs Financial ● Shareholders’ equity: EUR 7.5 billion ● Gross financial leverage: EUR 5.1 billion ● Group Solvency Own Funds: EUR 14.3 billion ● Group Solvency Capital required: EUR 7.4 billion Manufactured ● Our product mix and digital platforms ● Insurance service result: EUR 342 million ● Gross deposits: EUR 169 billion ● Fees and commissions received: EUR 2.2 billion ● New business strain: EUR 798 million ● Revenue-generating investments: EUR 826 billion Intellectual ● Internal processes, systems, and controls ● Knowledge and expertise Human ● Number of employees: 15,658 ● Amount spent on training and development: EUR 5.5 million ● Talent management ● Number of tied agents: 625 Social and relationship ● Number of customers: 23.9 million ● Customer experience programs ● Responsible sourcing and investing philosophy ● Brand equity, purpose, and values ● Relationship with intermediaries, business partners, suppliers, and other key stakeholders (e.g. regulators and NGOs) Natural ● Our commitment to achieving net-zero in 2050 ● Total energy used by company: 40,744 MWh Aegon’s business model Claims and benefits Investments Distribution Solutions development and pricing Tune in Force for good Step up Helping people live their best lives Solutions development and pricing Development of our financial solutions begins with our customers. We assess their needs and develop products and services to suit. We then estimate and price the risk involved for us as a provider. Distribution Our products and services are then branded and marketed, before being distributed via intermediaries that include brokers, banks, and financial advisors. We also sell to our customers directly. Investments In exchange for products and services, customers pay fees or premiums. On certain pension, savings, and investment products, customers make deposits. We earn returns for our customers by investing this money. Claims and benefits We pay out claims, benefits, and retirement plan withdrawals. We use the remaining funds to cover our expenses, support new investments, and deliver profits to our shareholders. 22 | Annual Report on Form 20-F 2023

LOGO

Creating sustainable value for our stakeholders in 2023 Our outputs Outcome for our stakeholders Financial ● Dividends to shareholders: EUR 495 million ● Share buybacks: EUR 1,029 million ● Interest payments to bondholders: EUR 580 million ● Group Solvency ratio: 193% ● Free cash flow: EUR 715 million ● Operating result: EUR 1,498 million Manufactured ● Total retirement outflows: EUR 31.2 billion1 ● Payments to business partners2: EUR 2.4 billion Intellectual ● Our product mix and digital platforms ● Value creating initiatives Human ● Total employment cost: EUR 1.7 billion ● Women in senior management: 38% ● Employee engagement score: 77% Social and relationship ● Assets under management in Responsible Investment Solutions: EUR 134 billion ● Business partnerships and reputation ● Corporate and other paid taxes: EUR 637 million Natural ● Weighted average carbon intensity relating to our general account investment portfolio: 338 metric tons CO2e/EURm revenue for corporate fixed income + listed equity ● Operational carbon footprint: 13,246 metric tons CO2e Customers Aegon seeks to provide its customers with a broad mix of investment, protection, and retirement solutions. We also aim to provide customers with a high-quality service and an enjoyable and efficient customer experience. Through our focus on product innovation, we strive to meet the changing needs of our global customer base. Our approach to product development includes taking steps to include financially and socially diverse customer groups that are comprised of vulnerable customers, minorities, and others traditionally underrepresented in financial services. We also aim to provide honest and transparent product information and to protect data security and privacy during customer interactions. Employees Aegon’s workforce includes full- and part-time employees, as well as agents and other contractors. In all cases, we strive to maintain high levels of employee engagement and wellbeing, and foster a supportive and welcoming work culture. As our workforce’s needs evolve, we pay close attention to attracting, developing, and retaining talent, to ensure our people reach their full potential and live their best working lives. As part of this approach, we seek to foster an inclusive and diverse work environment where people from all backgrounds are treated fairly and equally, and are able to bring their authentic selves to work. Business partners Aegon strives to maintain positive, well-managed relationships with its suppliers and other value chain partners, including distributors, joint venture partners, reinsurers, and sourcing partners. This includes, on the one hand, our focus on ensuring fair pay and working conditions for professionals at the various stages of our value chain. It also includes cultivating positive long-term business relationships that reflect our purpose and behaviors, including our efforts as a company to address climate change and inclusion and diversity. Aegon’s Vendor Code of Conduct is an important tool that enables Aegon to drive alignment with our partners on these issues. Investors Supported by a resilient and sustainable business model, Aegon seeks to provide a consistent and attractive return on investment to its global investors, who include both shareholders and bondholders. Our approach includes paying regular dividends and conducting other forms of appropriate capital distributions to our equity investors, who may also derive value from the performance of our shares, while our bondholders derive value from regular interest payments. Society Aegon’s products and services help to reduce dependency on public pension systems and increase the financial stability of society. At the same time, our relationship with our communities and society at large is an important conduit for addressing key societal and environmental issues, including climate change and social inclusion. Our efforts to support the climate transition, and I&D are embedded in our Global Responsible Investment Policy and Global Community Investment Framework, for example. We also aim to make a positive contribution to the markets and communities in which we operate by maintaining good business conduct through our businesses, as well as through our tax payments, charitable donations, and volunteer work.1 Includes only US retirement plans. 2 Consists of commissions paid to brokers and other intermediaries, and total spend on goods and services. Annual Report on Form 20-F 2023 | 23

LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

Sharing value with our stakeholders in 2023

In the following pages of the report, we detail the actions and decisions we took in 2023 at a company and business unit level to create and preserve value for each of our stakeholder groups. In each case, we describe the issues for each group and how this has shaped our approach to value creation and our efforts to help people live their best lives.

LOGO

Customers

Key performance indicators (KPIs) for this stakeholder group:

 KPIs

Target

for 2023

Performance

in 2023

Target

for 2024   

Significant fines to address cases of mis-selling (EUR)1

0 EUR0 EUR0 EUR

Proportion of employees who completed the annual Information Security training (%)

No target
2023		94%No
target
2024

Empowering our customers through accessible, high-quality products and services is an important starting point for achieving our purpose. As people live longer and their lifestyles change, we aim to give them the tools and knowledge they need to build a secure financial foundation, adapt to changing circumstances, and seize future opportunities. Around the world, Aegon serves customers directly through its wholly owned businesses and partnerships, as well as through an extensive global network of advisors and distributors. Improving access and inclusion is paramount: in an evolving and ever-more diverse society, we want to help as many people as possible enjoy the possibilities of a longer, multi-stage life. We also pay close attention to data security and privacy, given the potential of this material topic to negatively impact our customers if not sufficiently addressed.

Empowering customers through quality customer service

At Aegon, we aim to offer high levels of customer service, designed around our customers’ changing needs. Our businesses continue to invest in new digital tools and platforms to make our products and advice available and intuitive to a growing range of financial services consumers and intermediaries.

In 2023, Aegon UK launched its new public website, supporting consumers, advisers, and employers with a clearer and more personalized customer experience. During the year, Aegon UK also launched the new online experience, which was researched and tested by customers, advisers, and employers, for its Aegon Retirement Choices/ One Retirement propositions, providing users with an intuitive, modern digital experience for viewing and transacting on pension and investment products.

In the US, Transamerica continued to improve the customer experience across its core businesses. Workplace Solutions launched a new cloud-based website experience, including a redesigned account summary page to help retirement plan participants track their account balance and overall performance, and progress toward their personal retirement goals. Workplace Solutions also introduced ConnectedClaimsSM, a holistic customer claims experience solution designed to help employees make better use of work-related benefits and insurance. As well as workers, the concept offers benefits for employers: when employees use their benefits correctly, they have a greater appreciation for the packages their employers offer.

Another important Transamerica milestone was the creation of a dedicated customer experience and marketing organization within the Individual Solutions division. The organization will serve as a center of excellence for developing customer engagement and best practice marketing and sales approaches. The division also established a Digital Experience Delivery team to drive the evolution of the Individual Solutions website, mobile apps, and digital capabilities.

1

Includes any fines for mis-selling in excess of EUR 100,000.

 24  |  Annual Report on Form 20-F 2023

Creating sustainable value for our stakeholders in 2023

Tracking customer experiences, good and bad

We track our customers’ experiences closely to see how to improve and tailor our service. In the United Kingdom, Aegon measures customer satisfaction through Net Promoter Scores (NPS®). The scores are obtained by surveying consumers, as well as advisers and employers, about their experiences with Aegon. In the US, Transamerica conducts an extensive customer survey process supported by RepTrak, a leading reputation intelligence platform. These surveys provide valuable insights into customer satisfaction at various touchpoints across our US business.

In 2023, Transamerica’s Workplace Solutions division also introduced a series of new intercept surveys. Intercept surveys appear as a short questionnaire to randomly selected participants when they log into their account. The questions gather information about customers’ experiences, and the feedback is used to improve the design and structure of the Workplace Solutions website for a better user experience.

Aegon also provides customers with a range of channels to communicate about their experiences and raise potential issues. We receive and consolidate customer complaints through our respective businesses and seek to resolve issues fairly and efficiently. Developing these channels is an important area of investment.

Aegon oversees its complaints-handling processes centrally and tracks the number of complaints received by the business units through a quarterly reporting process led by the Global Compliance function.

Committed to product innovation

We continue to develop and improve our product offering to meet the changing expectations, life patterns, and requirements of financial services customers. Aegon’s businesses take the lead in product development, reflecting the unique and often specialized needs of customer groups in different regions. In 2023, Transamerica launched a new suite of solutions for Aegon’s US customers.

These include Transamerica Choice Pooled Solutions: offered through Workplace Solutions, the solution allows employers to easily select from a variety of retirement plan structures for their employees, depending on the size of the company and its specific needs. Choice Pooled Solutions has also opened up opportunities for Transamerica’s distribution partners to further reduce the coverage gap by offering solutions for employers of all sizes.

In addition, Transamerica’s Individual Solutions business introduced the new Transamerica Financial Choice IULSM (FCIUL), a universal life insurance product designed to maximize policy value accumulation potential. Individual Solutions also upgraded its Financial Foundation IUL® (FFIUL) product to provide distributors with greater flexibility to support end-users. The upgrade includes an enhanced critical illness benefit to help alleviate financial hardship for its policyowners.

In the United Kingdom, Aegon launched a new flexible individual savings account (ISA) product that allows advisers and wealth managers to offer individual savers greater flexibility when investing or withdrawing money. ISAs are an important tax-advantaged product in the UK, particularly for individuals affected by the cost of living crisis. During the year, Aegon UK also launched the first phase of its ‘More ways to save’ initiative through its Workplace business, offering customers access to a wider range of savings and investment products. The second phase, called ‘Other Ways to Save’, is set to follow in 2024 and will include a range of savings solutions for families.

Our products are developed and tested in accordance with our company-wide Market Conduct Compliance Policy, which sets out key requirements and guidance on customer suitability and product testing prior to launch, and the Pricing and Product Development Policy. Aegon also has a structured Product Approval and Review Process (PARP) that all business units must follow. This approach is an important safeguard to support responsible marketing and product development practices across Aegon, ensuring suitable and fairly priced products and avoiding potential mis-selling.

Annual Report on Form 20-F 2023 | 25

LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

Driving financial inclusion

At Aegon, we want to help everyone live a long, healthy, and fulfilling life. As our global communities become more diverse, providing socially inclusive products and services enables us to empower a growing number of customers and meet their specific needs. We pay particular attention to the needs of groups that have traditionally been underserved by financial services. This includes taking steps to support vulnerable customers, such as those on low incomes, by making it easier for them to engage with our products through digital platforms.

At Aegon’s Capital Markets Day in June 2023, Transamerica announced an increased commitment to serving the US middle market, a large and highly diverse demographic market with significant (and often unmet) protection and savings needs. The business aims to expand its reach to middle-market customers through the life insurance product portfolio offered by its Individual Solutions business. Transamerica also intends to leverage the extensive distribution network of Aegon’s affiliated insurance agency, World Financial Group (WFG), by increasing the number of agents in the field who are dedicated to serving middle-market customers.

In addition to the renewed Aegon UK website, the Future Self Tool, developed by Aegon UK and the University of Edinburgh, is another recent digital innovation that helps people imagine what life will be like in retirement and plan accordingly. Aegon UK plans to develop the tool further in 2024. It will also make its financial wellbeing toolkit available to employers to help companies engage with their employees about their financial wellbeing and arrange for Aegon to intervene if needed. As a result of Aegon UK’s work in the area of financial wellbeing, it was named “Financial wellbeing champion of the year” at the 2023 Money Marketing Awards.

Data security and data privacy

Data security and data privacy is a material topic that has potential ramifications for Aegon stakeholders. This includes society at large: given Aegon’s central role in the financial ecosystem, incidents such as cyberattacks and data breaches can lead to far-reaching impacts that extend beyond our direct customers, partners, and employees.

Data security

Aegon’s security policy and governance is designed to prevent cyber threats and minimize the impact of any potential disruption for parties. It includes standardized procedures to remediate data breaches and minimize the influence of future privacy-related incidents.

The Second 50: Preparing customers for a longer, multi-stage life

Longer life spans bring new challenges, but they also keep people younger for longer. Old associations with age – of frailty and inactivity – are being replaced by the expectation that the second half of life can be the most rewarding.

In 2023, Aegon UK began a new research project to explore the impact of longevity and changing lifestyles on people as they transition into later life. The research draws on Aegon’s own research as well as the latest UK national statistics to identify the different ways in which life after 50 will be different. It suggests areas to consider when planning ahead and outlines the key drivers of change within the period of life that Aegon calls the “Second 50”. The findings have been published in a new report aimed at supporting discussions with financial services customers and advisers about the opportunities and challenges of a longer, multi-stage life. The report can be downloaded on the website of Aegon UK.

Our internal Global Information Security Policy aims to preserve the confidentiality, integrity, and availability of information by defining minimum mandatory security requirements. The policy applies to Aegon businesses where Aegon has operational control, covering employees and contractors (workforce). Similar standards apply to Aegon’s joint ventures. The policy is supported by mandatory training in data security.

Aegon’s Global Chief Information Security Officer (CISO) is responsible for the execution and oversight of Aegon’s company-wide information security strategy and day-to-day security operations, whereas information security officers are responsible for execution and oversight in all relevant business units.

The centralized core information security team along with dedicated teams in business units are responsible for the execution of security functions in alignment with global and local regulations. The Global Information Security Advisory Counsel (GISAC) supports collaboration between information security functions on a company and business unit level, as well as with other supporting functions, such as Risk, Audit, and Legal/Privacy.

 26  |  Annual Report on Form 20-F 2023

Creating sustainable value for our stakeholders in 2023

Aegon has a set of information security metrics to measure the outcomes of its information security initiatives, as well as the effectiveness of the existing security controls. Aegon uses these metrics to calculate an overall Information Security Risk Score for the organization. One of the key metrics for data security is the proportion of employees completing annual training on information security. In 2023, 94% of Aegon employees completed this training.

Data privacy

Aegon has policies and procedures in place to support privacy compliance at a company and business unit level. The policies are updated within predefined intervals and supported by a strong privacy control framework to ensure ongoing privacy maturity measurements. Regular audits are conducted to assess compliance with relevant laws, regulations, and policies, as well as the Aegon Privacy Control Framework and its governance.

At Aegon, the Group Chief Privacy Officer is responsible for our data privacy compliance strategy and privacy oversight. Similar to the data security set-up, the Data Protection Officer in the individual business units is responsible for executing the statutory tasks of the Data Protection Officer (DPO) function. The operational privacy teams in relevant business units execute privacy advisory, control testing, and attestations. The Privacy Officers are accountable for privacy compliance at a business unit level. Privacy Officers are often part of the relevant management committees.

One of our key metrics for data protection is the proportion of employees completing specific training on data privacy. In 2023, 97% (2022: 99%) of Aegon’s workforce completed this training.

See page 472 for more details of Aegon’s approach to data security and privacy.

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Employees

Key performance indicators (KPIs)

for this stakeholder group:

 KPIs

Target

for 2023

Performance

in 2023

Target

for 2024

Proportion of

women

in senior

management1(%)

Minimum 38%On track. 38%Minimum 40%

Result of the most

recent

employee

engagement

score2 (%)

At least 72%On track. 77%At least 78%

1

In this context, senior management includes individuals up to two levels below the CEO (three levels for Corporate Center), provided they have direct reports. If the person has no direct reports, but the job title indicates the required seniority, the individual is also considered part of senior management. People working in the “administration” group are excluded from the list, unless their job title indicates the required seniority.

2

The Global Employee Survey is provided through Culture Amp®.

All employees, including those in joint ventures, participate in the survey on a voluntary basis. Employee engagement is measured on a five-point scale (strongly disagree to strongly agree), and it is the average score of four statements:

§The company motivates me to go beyond expectations
§I am proud to work for this company
§I see myself still working at this company in two years’ time
§I would recommend this company as a great place to work

In 2023, three employee surveys were conducted throughout the year including a short check-in survey in Q1, a focused I&D survey for most business units, excluding Transamerica, in Q2, and a full employee survey in Q3. The participation rate for the most recent survey was 78%.

At Aegon, our people are key to how we achieve our purpose and deliver on our strategy and sustainability ambitions. Furthermore, our long-term success depends on maintaining a skilled, motivated, and purpose-driven workforce. In line with our topics, we work hard to ensure the wellbeing of all Aegon employees around the world, including salaried colleagues. Our approach covers the different stages of the employee experience, from promoting employee engagement and good working conditions, to following best practices in attracting, developing, and retaining talent. Meanwhile, we remain committed to building an inclusive and diverse workplace that reflects the changing nature of our customer base and wider society. In 2023, and at a time of immense change for our business, we paid particular attention to the wellbeing of our colleagues and to preserving the positive aspects of Aegon’s culture and heritage, and ways of working.

Annual Report on Form 20-F 2023 | 27

LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

Supporting employee wellbeing and working conditions

2023 was a transformative year, as the combination of Aegon’s Dutch business with a.s.r. created uncertainty for many employees in the Netherlands and beyond. A priority was to support our employees through the transition and to ensure that the process was properly managed with their wellbeing in mind. This included ensuring good working conditions and a seamless transformation for colleagues moving from Aegon to a.s.r., as well as ensuring clear and transparent communication with employees remaining with Aegon.

Following the closing of the transaction in July, Aegon announced its intention to move its global headquarters from The Hague to the World Trade Center (WTC) at Schiphol Airport. From 2025, WTC Schiphol will house all Aegon employees of the headquarters and of the Dutch part of Aegon Asset Management. The new offices will be adapted to meet the needs of all Aegon employees, with good accessibility for people with disabilities. At the same time, Aegon remains committed to its hybrid working model, which offers employees the opportunity to work flexibly to suit their needs and lifestyles while reducing their carbon footprint.

Aegon’s functions and teams are also taking approaches to ensure employee wellbeing. In 2023, Global Technology Services (GTS) employees were provided with a dedicated wellbeing hub. This is an important resource that allows GTS team members – who are often spread across different locations – to find and connect with resources to support their mental, physical, and financial wellbeing.

Investing in talent attraction, development, and retention

We aim to create an attractive work environment and culture through which all colleagues can live their best working lives. In an increasingly competitive labor market, we also prioritize attracting and retaining talented people who have the skills and attributes needed to deliver on our purpose and strategy. To this end, we seek to provide employees with extensive opportunities for personal development and growth, while ensuring that high-quality learning and development opportunities are available to colleagues from all regions, disciplines, and backgrounds. Increasingly, our learning and development strategy closely aligns with our purpose and sustainability approach. For example, we recently launched our company-wide Sustainability Academy to drive awareness and alignment regarding our sustainability approach, including our efforts to address our priority themes and DMA topics (see “Sustainability” on page 15 and onwards).

In 2023, Aegon launched its global learning resource platform, We Learn. The platform offers a wide range of learning resources available in different delivery modes – including e-learning courses, live virtual training, and audio books – allowing participants to choose their preferred learning method. During the year, we also introduced our Global Talent Marketplace (TMP) tool, an AI-powered platform designed to drive internal mobility across our various businesses and geographies. The tool makes it easier for employees to network and explore career opportunities across Aegon, as well as explore and apply for internal roles and temporary projects (gigs). The marketplace concept also builds on Aegon’s existing mentoring programs by matching mentees with suitable mentors who may be on the other side of the world. The TMP not only benefits our organization by making it easier to identify and make the most of hidden talent, but is also an investment in talent attraction and retention as we broaden the opportunities available to current and future Aegon professionals.

We reached a major milestone in our HR strategy in 2023 to unlock talent through the implementation of We Learn. Ensuring that all colleagues around the world have easy access to quality education and training is an important step in promoting learning and development at Aegon. In addition, we continue to provide tailored development opportunities for specific members of our workforce, including our leaders. In 2023, we added new features to our Best Life Leadership Program (BLLP), launched the previous year to inspire and support leaders in steering the organization to uphold Aegon’s purpose and behaviors. For example, we integrated a new virtual coaching tool, powered by EZRA Coaching, with participants receiving virtual coaching from leading external experts. In addition, Aegon enhanced the Pulse program, a company-wide talent-development program that is nurturing our next generation of leaders. The 2023 edition of Pulse included impactful sessions with guest speakers as well as a face-to-face personal development module led by the Oxford Leadership Academy, an international leadership training consultancy. In 2023, we started a new program, “Horizon”, targeted at management. The program offers an enriching experience to create self awareness and strengthen personal leadership.

 28  |  Annual Report on Form 20-F 2023

Creating sustainable value for our stakeholders in 2023

New solutions to drive employee engagement around the world

Aegon maintains a wide range of platforms and channels to listen to its employees and support healthy engagement and communication. These include our regular Global Employee Survey, which provides colleagues across all our businesses with an opportunity to feed their views and concerns back to us and to have their say in the future direction of the company.

In addition, regular town hall meetings are a feature for Aegon colleagues around the world. In 2023, Aegon also expanded its Employee Resource Groups (ERGs), making them open to all Aegon colleagues worldwide. Our ERGs are employee-driven and company-sponsored; they focus on what matters most to employees and enable colleagues with specific backgrounds or interests to ensure Aegon meets their expectations. The range of ERGs is broad and includes groups dedicated to supporting mental health and wellbeing, as well the representation of minority employees. For example, “Aegon Proud” ERGs have been established for LGBTQIA+ colleagues in the United States, the United Kingdom, and the Netherlands.

At the same time, we continued to ensure that our employees are adequately represented in our governance structure and that their needs and expectations are considered in our strategy and day-to-day decision-making. In the United Kingdom, Aegon colleagues can seek representation through the Unite and Aegis unions. Following the completion of the transaction with a.s.r., all remaining Aegon employees in the Netherlands, other than senior management, continue to be covered by a collective labor agreement (CLA). The CLA is an important mechanism to ensure our employees’ needs are taken into account in our strategy and day-to-day decision-making. It includes collective bargaining agreements with trade unions in the Netherlands on equal pay for male and female employees, for example through the Works Council.

Since 2020, Aegon has run a dedicated Speak Up program to protect whistle-blowers and to encourage, guide, and support colleagues in reporting suspected or observed misconduct. We provide mandatory training on Speak Up for all employees, which is tailored to specific roles (for example, leaders’ and managers’ training includes sections on being receptive to people coming forward).

Aegon UK colleagues are tuning in

Organized by Aegon UK, the Big Tune Ins are a series of interactive sessions between Aegon leaders and employees, held at various Aegon locations across the United Kingdom. The sessions give colleagues the opportunity to hear directly from Aegon leadership about new developments through presentations, quizzes, competitions, and other interactive activities. By the end of 2023, 10 Big Tune Ins had been held across three locations in the United Kingdom, reaching more than 1,700 (72,4%) colleagues in the UK.

Aegon has outlined a company-wide I&D strategy that has been adopted by each of its business units. We work to have our policies and actions permeate throughout of the organization and that our leaders, colleagues, and other stakeholders around the world can actively contribute to building a more inclusive and diverse organization. Our I&D strategy builds on the work undertaken in recent years to develop a consistent and coherent way of working for the whole company.

Two fundamental elements of Aegon’s I&D strategy are:

1. Authentic action – the recognition that, as an organization, we are on a journey to improve. We need to turn good intentions into actions to create a positive difference for our people and communities.

2. Starting at the top – the members of Aegon’s senior leadership are expected to act as role models for I&D, including by sharing their own inclusion stories and championing a specific area of diversity excellence among employees.

To this end, Aegon published its current Inclusion & Diversity Policy for the Aegon Ltd. Board of Directors and Executive Committee on September 30, 2023.

The policy aims to deliver a diverse Board composition of at least 30% female representation, as well as diversity among individual members in terms of experience, nationality and age, and their educational, professional and geographical background. By achieving greater diversity, Aegon believes it will enhance decision-making, effectively manage risk, and achieve growth through introducing a different set of perspectives, experiences, and viewpoints.

In 2022, Aegon appointed, for the first time, a Global Head of Inclusion and Diversity. The Executive Committee has agreed an overarching I&D Strategy that brings a coherent and consistent approach to enhancing the diversity and inclusivity of our workplace, and the marketplaces and communities we serve.

Annual Report on Form 20-F 2023 | 29

LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

Aegon Ltd.’s Board of Directors consists of five men and four women, equal to 44.4% female representation, and it represents five nationalities (American, Dutch, Swiss, British and French), and two age groups:

Age: 60-64: 4 / Age: 65-69: 5

Further, the Board members have varied academic and professional backgrounds.

The composition of the Executive Committee at year-end 2023 was eight men and three women, equal to 27.3% female representation (up from 20% in 2021). As a result of the business combination with a.s.r., the number of seats in the Executive Committee has been reduced by one seat. All other positions on the Executive Committee have remained stable in 2023. There are five nationalities represented (American, German, British, Dutch, and Italian) and four different age groups:

Age: 45-49: 2 / Age: 50-54: 5 / Age: 55-59: 1 / Age: 60-64: 3

Our inclusion and diversity pillars

The following pillars are in place to support our I&D strategy:

Workforce: We seek to build a professional culture that engages and welcomes people from all backgrounds and that promotes conscious inclusion.

Employee Resource Groups: Aegon’s Employee Resource Groups (ERGs) provide Aegon employees with a space to address topics of interest and promote employee engagement on issues of company culture and direction. Examples of current ERGs in place at Aegon include Culture, Race and Ethnicity, (Dis)ability, Generations, Proud, Wellbeing, and the Women’s Impact Network. These ERGs are open to all employees, regardless of how they identify.

Workplace: We are actively integrating I&D into our recruitment strategies and leveraging diversity data for meaningful improvement. For example, Transamerica has launched a Talent Acquisition, Inclusion & Diversity Committee that includes an I&D program manager and recruiters from the different Transamerica business units to ensure inclusive hiring practices.

We are continuously taking actions to increase diversity in our talent pipeline, as we recognize that this will provide us with a stronger pool of candidates for positions.

Insights from Aegon’s first international I&D Survey

In 2023, Aegon conducted its first international Inclusion & Diversity Survey. These are some of the key findings from the survey.

§ 25% of respondents belong to one or more minority group (transgender, non-binary, LGBTQIA+, ethnic minority, or disabled).

§ 79% of respondents have a positive view of diversity at Aegon and 79% feel included by the company.

§ Minority groups have a less positive view of I&D at Aegon. Recognizing this, we continue to invest in the actions described throughout this report.

§ Employees aged 50 and over are more likely to have a positive view of I&D at Aegon.

§ Perceptions of inclusivity do not differ between male and female colleagues.

§ There is a strong link between I&D and employee engagement.

Aegon understands the wider benefits of increasing diversity beyond gender, and our I&D strategy focuses on gathering insights on many aspects of diversity, including, for example, disability, generational difference, sexual orientation, and ethnicity. Activities to enhance our position include:

§Conducting a maturity assessment and inclusion survey on our diversity journey providing us with baseline data to track our progress and develop impactful interventions.
§Continuing to set stretched goals for gender diversity in senior management, as part of the Executive Committee’s non-financial performance indicators.
§Embedding inclusive leadership behaviors as part of our flagship Leadership Programs to promote and harness diversity of thought and create a more inclusive workplace.
§Enhancing our Speak Up culture to allow safe escalation of concerns and issues.
§Implementing Talent Marketplace and a global skills and development content provider (We Learn) offering transparent and inclusive access to on-the-job development opportunities and skills-based mentoring.
§Employee Resource Groups to support employees and advance our culture around such areas as mental health, race and ethnicity, sexual orientation, disability, early careers, and veterans affairs.

 30  |  Annual Report on Form 20-F 2023

Creating sustainable value for our stakeholders in 2023

Executive Committee remuneration: Overall, Aegon has continued to make significant progress on increasing the number of women in senior management positions, with an average of 2%-points increase each year from 32% in 2020, achieving our company-wide goal of 38% in 2023. Achievement of this global goal is linked to the non-financial performance indicators of Aegon Ltd.’s Executive Committee members. Women comprised 38% of Aegon’s female leadership as of January 1, 2024.

Collaborating with peers and external experts: We adhere to leading standards and benchmarks in our markets to ensure best practice on I&D. For example, Aegon is a member of Workplace Pride, a global benchmark for measuring LGBTQIA+ policies and practices against peers. Our dedication to building an inclusive workplace continues to be recognized externally. The inclusion organization Workplace Pride awarded Aegon with Ambassador status for the fifth consecutive year for our ranking in its LGBTQIA+ Inclusion benchmark.

Marketplace: We seek to strengthen our I&D values in close dialogue with our customers and communities, creating positive change through surveys, feedback, and benchmarking.

Listening to our customers: We use feedback from our customers and benchmarking information to assess our maturity with regard to I&D. We use this feedback to take action, including by developing new, inclusive products and adjusting our ways of working.

Community investments: As per Aegon’s Global Community Investment Framework, we seek to drive inclusion in our communities by taking steps to empower people financially and socially.

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Partners and suppliers

Aegon’s relationships with its suppliers are an important channel for addressing the issues that matter to the company and its stakeholders. As a financial services company operating at a key position in the value chain, we are in a position to influence sustainability and best practice in our industry, and we create transparency within our supply chain through a process of due diligence and closely monitor the performance of our key suppliers and partners on issues such as climate change and inclusion and diversity. In 2023, we continued to mature our supply chain strategy to embed responsible sourcing practices across our various businesses that reflect our purpose and approach to sustainability. A key step taken during the year was to expand the reach of our responsible procurement assessment program to drive alignment with our suppliers. Meanwhile, significant attention was paid to the renegotiation of Aegon’s contracts with its vendors and suppliers in the Netherlands, following the completion of the a.s.r. transaction.

Working with our value chain to address climate change

In 2023, Aegon’s businesses around the world continued to work closely with their supplier base on topics related to sustainability.

For example, with its Supplier Diversity Program, Transamerica actively seeks out certified diverse suppliers that can provide competitive, high-quality goods and services. In 2023, Transamerica updated its external website to refocus on our supplier diversity program and maintained year-on-year growth in terms of the proportion of our addressable spend invested with diverse suppliers. In 2024, Transamerica will raise awareness of the program across Transamerica and will continue to educate business stakeholders on the benefits of diverse suppliers.

During 2023, Transamerica also initiated outreach to its top suppliers to invite them to participate in its sustainability program, with successful results. Transamerica has incorporated sustainability ratings into its Procurement practice and is working on increasing awareness of the program throughout the company. In 2024, Transamerica has committed to ensure that its top 150 suppliers will participate in sustainability assessments and continues to work to expand the program.

Annual Report on Form 20-F 2023 | 31

LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

In the United Kingdom, Aegon increased the number of existing suppliers with whom it aims to work on sustainability issues from 46 to 50. In 2024, Aegon UK will agree action plans with the cohort and conduct annual assessments of the companies’ sustainability credentials in subsequent years. A key objective of these assessments is to more accurately determine suppliers’ contributions to Aegon’s scope 3* greenhouse gas emissions.

During the year, Aegon UK also organized training for its procurement and supplier management teams through the Carbon Literacy Project. The training aimed to raise employees’ awareness of climate change and mitigation and adaptation strategies. After completion of the training, employees were accredited as being carbon literate through the program.

Across Aegon, we make a concerted effort to spread good sustainability ideas and practices between our diverse teams and locations. In the United Kingdom, for example, Aegon uses a third-party tool to calculate the carbon emissions of its suppliers. We aim to extend the use of this tool to other parts of our business in 2024, driving further alignment in how we assess – and remediate – the environmental footprint of our supply chain.

Maintaining an inclusive and diverse supplier base

At Aegon, we view an inclusive procurement process as a sound basis for healthy business relationships for all parties. We therefore actively foster relationships with a diverse range of suppliers who offer high-quality goods and services with competitive pricing. Above all, it is important that the partners we work with share our progressive approach to inclusion and diversity and that they reflect the diverse customers and communities that we serve. We implement this approach at the business unit level. Through its Supplier Diversity Program, our US business, Transamerica, actively seeks certified diverse suppliers that can provide competitive, high-quality goods and services. In 2023, Transamerica’s public website was updated to provide more information about the program. Meanwhile, the business continued to report year-on-year growth in the percentage of addressable spend allocated to diverse suppliers.

Our distribution partners are another important driver of our inclusion and diversity strategy. In the US in particular, Aegon has a well-developed distribution network of agents through WFG. In 2023, Transamerica took steps to expand and broaden its distribution network to serve more diverse customer groups. The approach included recruiting WFG agents from diverse communities who can meet the needs of customer groups traditionally underserved by financial services companies, such as minorities.

Aligning on sustainability:

Our responsible procurement program

The annual responsible procurement program assessments enable Aegon to monitor the objectives and performance of its suppliers and partners in relation to key ESG issues. This understanding is an important starting point to drive alignment on issues such as climate change and inclusion and diversity within our value chain.

Our responsible procurement program has traditionally been centrally managed by Aegon’s Corporate Procurement function. In 2023, we began the process of integrating the program across our different businesses around the world.

From 2024, all Aegon business units will be required to set and report on responsible procurement -related targets for their respective suppliers, in line with Aegon’s company-wide targets for suppliers. Business units will also be expected to work more closely with suppliers to ensure good business practices throughout their supply chains. With a more coordinated approach, we aim to increase transparency on how our strategic supplier base is performing and how this supports our broader sustainability ambitions as an organization.

Embedding good business conduct

in the supply chain

To ensure good business conduct across its supplier base, Aegon sets high standards for partners and suppliers, which are communicated in the company’s global Vendor Code of Conduct. As stated in the Code, Aegon’s Tier 1 suppliers are required to demonstrate compliance with these standards on an annual basis and are encouraged to register for assessment by the responsible procurement program (see box out above for more information on Aegon’s responsible procurement program).

In addition to promoting the Vendor Code of Conduct, Aegon’s businesses monitor standards for good business conduct in their respective markets, and encourage local partners to comply with these wherever possible. In 2023, Aegon UK became a signatory to the UK Stewardship Code, a voluntary set of guidelines aimed at raising the standard of stewardship practices used by asset owners, managers, and service providers. During the year, the business also continued to encourage critical and local suppliers to become Living Wage Employers, meaning that they are accredited by the Living Wage Foundation for their commitment to pay employees in line with the current cost of living.

*

Scope 3 emissions are all indirect emissions - not included in scope 2 - that occur in the value chain of the reporting company, including both upstream and downstream emissions.

 32  |  Annual Report on Form 20-F 2023

Creating sustainable value for our stakeholders in 2023

LOGO

Investors

In 2023, Aegon continued to make progress against its strategic and financial commitments. We have sharpened our strategic focus, enhanced our risk profile, strengthened our balance sheet, further stabilized our capital ratios, and improved Aegon’s performance. The financial targets for the end of 2023 set at Aegon’s 2020 Capital Markets Day were more than achieved. These achievements demonstrate the enduring strength of our strategy. At our Capital Markets Day in June 2023 in London, we shared the actions we are taking as part of our next chapter, which will lead to attractive and growing returns for our shareholders. It is Aegon’s ambition to increase Transamerica’s value by capturing the opportunities in the US middle market. The strategy will increase both the level and the quality of capital generation from growth in Strategic Assets and from the accelerated reduction of the exposure to Financial Assets. At the same time, we will continue to strengthen the UK and Asset Management businesses and invest in the growth of our various international joint ventures.

Solid financial performance

Building on the progress of its transformation program, in 2023 Aegon published updated financial targets for 2025. We aim to increase the free cash flow from EUR 715 million in 2023 to around EUR 800 million by 2025. Free cash flow is supported by improving the quantity and the quality of operating capital generation. Thanks to several one-time items occurring during the year, operating capital generation of EUR 1.28 billion was above the guidance of more than EUR 1.0 billion for 2023. For 2025, Aegon aims to achieve approximately EUR 1.2 billion in operating capital generation, a target that will be primarily supported by the growth of Aegon’s Strategic Assets in the US. This in turn will support our dividend target of around 40 eurocents per common share in 2025, barring unforeseen circumstances. This target reflects the expected benefits of the a.s.r. transaction and the execution of our US strategy.

In 2023, Aegon increased its interim dividend by 3 eurocents to 14 eurocents per common share and proposed to the Annual General Meeting (AGM) that the final dividend be increased by 4 eurocents to 16 eurocents per common share. We also executed a share buyback program of EUR 200 million in the first half of the year. Following the closing of the transaction with a.s.r. in July, we also initiated a EUR 1.5 billion share buyback program of which 54% was completed by year-end 2023. In total, Aegon delivered EUR 1,525 million in the form of dividends and share buybacks to shareholders in 2023.

Aegon’s gross financial leverage position decreased to EUR 5.1 billion at the end of 2023 compared with 2022, mainly driven by the maturity and repayment of a EUR 500 million senior bond. The gross financial leverage delivered EUR 580 million value in the form of interest payments to bondholders.

Value derived from share performance

Aegon’s share price increased by 8% in 2023. As a result, it outperformed the broader European insurance industry (the STOXX Europe 600 Insurance Index ended the year up by 6%). We believe Aegon’s relative outperformance was driven by a continued progress against our financial commitments and management actions to improve our strategic focus and risk profile. In addition, favorable equity markets and higher interest rates supported the development, despite the pressure on the equity market in the wake of the US banking crisis in the early months of 2023, and negative market sentiment toward Dutch insurance companies following unfavorable court rulings against two of Aegon’s peers in the second half of the year. Our total shareholder return for the year amounted to a gain of 16%. This measure takes into account both dividend payments and share-price performance.

Safeguarding long-term value

As we continue our transformation journey, we are committed to maintaining sufficient capital in our businesses and at the holding. This approach allows Aegon’s management to focus its time and energy on increasing the return on capital, and distributing capital to shareholders. As part of our capital management approach, we will continue to focus on managing the capital positions of our businesses according to their respective operating levels over time.

Capital deployment decisions are driven by Cash Capital at Holding, taking into account our gross financial leverage target and planned management actions to further improve the company’s risk profile. Cash Capital at Holding is supported by free cash flow, which is defined as the amount of cash available from remittances from country units after subtracting the holding funding and operating expenses, with the latter resulting from, for example, paying interest to bondholders.

The operating range for Cash Capital at Holding is EUR 0.5 billion to EUR 1.5 billion. In line with our capital management approach, we have the ambition to reduce Cash Capital at Holding to around the mid-point of the operating range over time by returning capital to shareholders in the absence of value-creating opportunities. As previously indicated, following the completion of the transaction with a.s.r., Aegon will reduce its gross financial leverage to around EUR 5.0 billion. We aim to pay dividends to shareholders in line with the growth of sustainable free cash flow, barring unforeseen circumstances.

Annual Report on Form 20-F 2023 | 33

LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

LOGO

Society

Key performance indicators (KPIs)

for this stakeholder group:

 KPIs  

Target

for 2023

  

Performance

in 2023

  

Target

for 2024

Weighted average carbon intensity for corporate fixed income and listed equity in our general account1 (metric tons CO2e / EURm revenue)

  25% reduction by 2025 against 2019 baseline  Ahead of target. 37% reduction by 2023 against 2019 baseline  25% reduction by 2025 against 2019 baseline

Amount of investments in activities to help mitigate climate change or adapt to the associated impacts by 2025 (USD billion)

  USD 2.5 billion investments by 2025  Slightly behind projected budget. USD 1.8 billion invested.  USD 2.5 billion investments by 2025

Number of engagements with the largest corporate carbon emitters in our investment portfolio by 2025

  Engagement with at least the top 20 corporate carbon emitters by 2025  On track. 19 investees were engaged  Engagement with at least the top 20 corporate carbon emitters by 2025

Carbon intensity of our directly held real estate investments (Scopes 1 and 2) (kgCO2e/m2)

  New target  Ahead of target. 46% reduction by 2023 against 2019 baseline  25% reduction by 2025 against 2019 baseline

Absolute operational carbon emissions (Scopes 1 and 2) (metric tons CO2e)

  25% reduction by 2025 against 2019 baseline  Ahead of target. 68% reduction by 2023 against 2019 baseline  25% reduction by 2025 against 2019 baseline

Proportion of new employees who completed the Code of Conduct attestation

  95%  Ahead of target. 99%  95%

1

Aegon has committed to transitioning its general account* investment portfolio to net-zero greenhouse gas (GHG) emissions by 2050. The commitment includes an intermediate target to reduce the carbon intensity for corporate fixed income and listed equity in our general account by 25% in 2025 compared with 2019. For details on the methodology used, please see the TCFD section (Methodology) on page 486. (* The general account portfolio consists of assets where Aegon can take the investment decisions, considering the legal obligations of Aegon as prescribed by local laws and regulations. A similar approach applies to selected investments where Aegon AM in its capacity of manager takes the investment decisions. For discretionary investments for account of third parties and off-balance sheet investments, the investment decisions are driven by the relevant third parties as well as the legal and/or fiduciary obligations of Aegon, as prescribed by local laws and regulations.)

At Aegon, we seek to add value to society by providing accessible financial solutions that enable people to protect their assets and save for retirement, thereby reducing the burden on public pension and other social systems. At the same time, we look for opportunities to drive positive change at a local or regional level, working with our communities to address key societal issues such as climate change and inclusion and diversity, which can affect people’s ability to live their best lives. In addition, we strive to be a good corporate citizen and maintain good business practices; for example, by paying fair taxes in the markets in which we operate.

Addressing climate change from a societal perspective

Addressing climate change and its impact on society underpins our purpose and sustainability ambitions. In line with our DMA topics and priority themes, we are therefore taking steps to support the climate transition and contribute to a more sustainable, climate-resilient society in partnership with our communities.

Aegon’s responsible investment approach directly supports our climate risk and opportunity management. For example, through our US business, Transamerica, the company has committed to investing USD 2.5 billion by 2025 to support activities that can help society mitigate climate change or adapt to its impacts. In 2023, Transamerica added new climate-related investments to its portfolio. Several of these investments, including Commercial Property Assessed Clean Energy (C-PACE) asset-backed securities, address the need to engage ordinary households and individuals in the transition to a more climate-conscious society. C-PACE is a financing structure in which building owners borrow money to finance projects related to energy efficiency, renewable energy, or energy storage, for example, or storm and seismic hardening.

Transamerica also added to an existing position in the asset-backed securities of the GoodLeap Sustainable Home Improvement Trust. GoodLeap is the leading US point-of-sale platform for sustainable home solutions, enabling homeowners to pay for sustainable home improvements, such as solar panels and energy-efficient windows.

 34  |  Annual Report on Form 20-F 2023

Creating sustainable value for our stakeholders in 2023

Building more inclusive communities and societies

In line with our focus on inclusion and diversity, Aegon’s businesses make community investments to help support people from within the communities in which they operate. Our community investments are also an opportunity for Aegon employees to support Aegon’s purpose and sustainability ambitions by contributing to a healthier and fairer society.

Through our Global Community Investment Framework, we pay particular attention to initiatives that promote social and financial empowerment within our local communities. For social empowerment, we seek partnerships that increase the opportunities and skills of people in our communities, expand their networks, provide access to essential services, and enable them to manage their financial health. For financial empowerment, our partnerships focus on building financial awareness, knowledge, and skills, and giving people the tools to become more financially resilient.

In 2023, Aegon supported 420 charities and good causes. Our donations amounted to EUR 7.6 million, a 16.6% decrease compared with 2022. Much of this investment was driven by our Charitable Donations Standards, which require country units to allocate at least 50% of their annual donations to causes that directly support financial security and personal wellbeing. Aegon employees recorded 20,634 volunteer hours in 2023 (equivalent to EUR 1.5 million, based on volunteers’ average salaries).

Anti-corruption and anti-bribery, including whistleblower protection

Business conduct is a fundamental area of focus for Aegon. The subject is heavily influenced by legal requirements, and includes aspects ranging from business ethics to anti-corruption and bribery, and whistle-blower protection. Further information on these topics can be found on page 473.

Aegon colleagues join forces for Global Force for Good Week

In May 2023, Aegon’s businesses and partnerships around the world came together for the company’s first Global Force for Good Week. More than 2,000 colleagues participated in the event, representing over 20 different Aegon offices. The event was overseen by a global taskforce made up of colleagues from a wide range of backgrounds and disciplines. In total, more than 200 worthy local causes benefitted from Aegon’s support during the week.

Responsible tax

Aegon makes a valuable economic and social contribution to the communities in which it operates through the company’s own tax payments, as well as the collection and payment of third-party taxes. We seek to pay “fair taxes,” namely by paying the right amounts of taxes in the right places. Published online, our Global Tax Policy outlines our approach to responsible tax, which seeks to align the long-term interests of our customers, employees, business partners, investors, and wider society. Aegon adheres to the VNO-NCW Tax Governance Code (as published on https://www.vno-ncw.nl/taxgovernancecode) for further details, please refer to Aegon’s Global Tax Report.

Annual Report on Form 20-F 2023 | 35

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About Aegon Governance and risk management Financial information Sustainability information Performance in 2023 Financial markets in 2023 were dominated by inflation levels above those targeted by central banks, as well as a continued interest rate volatility. Equity markets were volatile as well, but ended the year strong. Adiditionally, markets were influenced by uncertain political situations in several countries: most prominently the continued war in Ukraine, and the escalation of the conflict between Israel and Hamas in the fourth quarter of 2023. 36 | Annual Report on Form 20-F 2023

Performance in 2023

These developments impacted Aegon’s performance during the year. While the UK workplace business saw good new business inflows, the performance of the UK retail and asset management businesses was challenged. Despite this, Aegon maintained solid financial results and strong capital positions. The company delivered on its targets and on the guidance given at the start of the year, reporting for the first time under the new IFRS 9 and IFRS 17 accounting standards. Aegon’s performance this year provides a solid foundation for achieving its 2025 financial targets set out at the Capital Markets Day in June 2023.

Financial performance

The operating result amounted to EUR 1.5 billion in 2023, which was a decrease of 17% compared with 2022. The operating result was determined by the release of the Contractual Service Margin and of the Risk Adjustment, both of which were determined pursuant to IFRS 17, partly offset by experience variances and by the result from onerous contracts. The decrease of the operating result was driven by a decrease in the net investment result following management actions such as the reinsurance of a universal life portfolio and assumption updates, as well as lower revenues from fee business following outflows and adverse market movements. Our net result amounted to a loss of EUR 199 million for 2023. The operating result was more than offset by Other charges from the completion of the transaction with a.s.r. and from model and assumption changes, as well as one-time investments in the US. In addition, realized losses on bond sales contributed unfavorably to the net loss but were offset by gains in the Other Comprehensive Income in shareholders’ equity.

The capital ratios of Aegon’s businesses in the US and UK increased somewhat over the year and remained above their respective operating levels. This underscores the effectiveness of the actions we have taken to improve our risk profile and reduce the volatility of our capital position. This includes management actions on the US Universal Life portfolio – where we reinsured further parts of the portfolio and bought back investor-owned policies – and further approvals for long-term care rate increases. In the UK, the increase of the UK Solvency II ratio mainly reflects a benefit from the risk margin reform by the UK regulator.

Free cash flows decreased from EUR 780 million in 2022 to EUR 715 million in 2023, and contributed – together with the cash proceeds of EUR 2.2 billion from the transaction with a.s.r. – to the increase in Cash Capital at Holding to EUR 2.4 billion by the end of 2023, above the operating range of EUR 0.5 billion to EUR 1.5 billion.

As announced with the transaction, Aegon launched a EUR 1.5 billion share buyback program, of which 54% had been completed at the year-end of 2023. In addition, Aegon has executed a EUR 200 million share buyback program in the first half of the year, in line with its intentions to return surplus cash capital to shareholders. As a result of the transaction with a.s.r., we announced to reduce our gross financial leverage by up to EUR 700 million of which EUR 500 million was implemented by the end of the year bringing the gross financial leverage to EUR 5.1 billion.

As a result of the progress we have made, both strategically and financially, we will propose a final dividend for 2023 of 16 eurocents per common share. This brings the full-year dividend to 30 eurocents per common share, compared with 23 eurocents over 2022.

At our 2023 Capital Markets Day, we set new financial targets for the coming years. We aim for approximately EUR 1.2 billion of operating capital generation in 2025, barring unforeseen circumstances. This reflects an expected increase in new business as we aim to profitably grow our US business. Free cash flow, including the dividends that we expect to receive from a.s.r., is expected to increase to approximately EUR 800 million in 2025. We target a dividend over 2025 of around 40 eurocents per common share, 10 cents more than proposed for 2023.

Further information on our performance in 2023 can be found in the “Results of operations” section on page 102.

Financial targets for 20251

Reduce gross

financial leverage

Around EUR 5.0 billion

Increase operating

capital generation2

Around EUR 1.2 billion

Grow free cash flows

Around EUR 800 million

Increase dividend

to shareholders

Around EUR 0.40 per share

1

Barring unforseen circumstances, and dividend subject to Board and other relevant approvals.

2

Before holding and funding expenses.

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 38  |  Annual Report on Form 20-F 2023

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Governance and risk management 2023 40 Boards and Governance 40 Letter from the Chairman of the Board 42 Corporate governance 47 Sustainability governance 48 Composition of the Board and Executive Committee 54 Report of the Board of Directors 62 Remuneration Report 79 Risk and capital management 79 Risk management 85 Capital and liquidity management 91 Regulation and compliance 91 Regulation and supervision 93 Code of Conduct 94 Controls and procedures Annual Report on Form 20-F 2023 | 39

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About Aegon Governance and risk management Financial information Sustainability information Letter from the Chairman of the Board William Connelly Chairman Board of Directors, Aegon 2023 was another important year of transition as Aegon began a new chapter in its transformation and took further steps to create value for its stakeholders. The year was marked by the completion of several important milestones for Aegon that required the close attention of the Board of Directors. I am pleased with the progress that Aegon is making in its ongoing transformation, and with the commercial momentum in key markets. One such step was the closure of the transaction to combine Aegon’s Dutch pension, life and non-life insurance, banking, and mortgage activities with a.s.r. to create a leading Dutch insurance company. The Board closely monitored the transaction with a.s.r., including the post-closing process. The almost 30% stake in a.s.r. allows Aegon to benefit from the synergies and commercial opportunities this combination will generate. Furthermore, the associated EUR 1.5 billion share buyback program, which uses the majority of the cash proceeds from this transaction, is proceeding well. The completion of the transaction resulted in changes to Aegon’s corporate structure and regulatory landscape. In particular, as the company no longer had a regulated insurance entity in the Netherlands, a new group supervisor was required. Following discussions in the college of supervisors, the Bermuda Monetary Authority (BMA) informed Aegon that it would become its group supervisor if the company were to move its legal domicile to Bermuda. The Board of Directors closely reviewed the implications of the redomiciliation from the perspective of all stakeholders. After extensive discussions with Aegon’s leadership and external advisors, the Board concluded that the proposed move is in the best interest of the company’s stakeholders and provides the company with the stability needed to continue executing its strategy. We therefore strongly supported the change in supervisor as well as the move 40 | Annual Report on Form 20-F 2023

 Letter from the Chairman of the Board

of the company’s legal seat. On behalf of the Board, I would like to thank Aegon’s former group supervisor, the Dutch Central Bank (DNB), for the pleasant and efficient cooperation over the years. We look forward to further fostering a fruitful relationship with our new group supervisor, the Bermuda Monetary Authority.

The redomiciliation of Aegon has also resulted in Aegon adopting a new governance structure. This includes the introduction of a one-tier board, comprising the members of the Supervisory Board under the previous framework – in a non-executive role – and the CEO as an Executive Director. The Board has also been involved in the successful implementation of the new structure. As part of the engagement process with stakeholders on this topic, amendments were made to the governance framework to further enhance shareholder rights. The Board was pleased with the constructive dialogue with stakeholders, as well as the outcome.

Engagements with stakeholders

During this important year of transition, it was more important than ever to maintain close engagement with Aegon’s shareholders and other stakeholders. In addition to the redomiciliation to Bermuda, a key governance issue discussed was the proposed changes to Aegon’s remuneration policy, with the new policy set to be voted on by shareholders at the 2024 Annual General Meeting (AGM).

A highlight of the engagement calendar in 2023 was Aegon’s Capital Markets Day (CMD) in June. In light of the transformation process the company is in, the CMD was an opportunity for Aegon to showcase the strong position and ambitions of its businesses in the United States. Aegon’s leadership also presented its plans and financial targets for the coming three years, which include a meaningful reallocation of capital from Financial Assets to Strategic Assets. This will improve both the risk profile and profitability of the US businesses. The Board of Directors was closely involved in the preparations for the event, which included the official launch of Aegon’s new brand and logo, symbolic of a new era for the company.

Committed to creating value

As we work to ensure the right governance and operational path for the future, Aegon’s leadership and employees remain committed to creating long-term value for all stakeholders and to delivering on the company’s purpose of Helping people live their best lives. This includes not only enabling financial wellbeing for customers, but also having a positive impact on society at large. In 2023, the Board of Directors was pleased to see Aegon make progress on its sustainability ambitions, and particularly on the priority themes of climate change and inclusion and diversity. A notable milestone in Aegon’s commitment to its sustainability approach was the addition of a new climate target to reduce the carbon intensity of Aegon’s directly held real estate investments.

The increased focus on its sustainability approach is in line with the work Aegon undertook during the year to strengthen its non-financial reporting and controls. This includes preparations for the European Union’s Corporate Sustainability Reporting Directive (CSRD), which will apply to Aegon from the 2024 reporting year. The Board welcomes the progress made in this area, including the steps taken to mature the company’s double materiality assessment (DMA) process.

In the area of financial reporting, the implementation of IFRS 17, which became effective in January 2023, was another important focus for the Board of Directors. Having assisted Aegon extensively in preparing for the introduction of the new standards in 2022, our attention turned to the implementation process. The priority was to ensure this was well managed and that the decisions made in relation to the implementation of IFRS 17 were well founded. Following regular discussions with Aegon’s management and our outside advisors on this issue, we are satisfied with the implementation process.

A strong foundation to begin the next chapter

The Board welcomes the steps Aegon took in 2023 to drive the business to its full potential and begin the next chapter of its transformation. We fully support Aegon’s leaders as they take the necessary actions to adapt to a changing environment and deliver on the company’s ambitions. Similarly, the Board members and I are satisfied that we have fulfilled our responsibilities to Aegon and its stakeholders during this pivotal year. Our efforts were supported by the reappointment of Dona Young. The composition and experience of the Board was again a key consideration in this appointment, as we continued to maintain a good balance in terms of gender diversity, nationality, and background. I also welcome the recent proposal to appoint Albert Benchimol to the Board of Directors for a four-year term and the most recent proposal to reappoint Lard Friese as Executive Director and CEO at the upcoming Annual General Meeting of Shareholders (AGM) on June 12, 2024.

On behalf of the members of the Board, I would like to thank Aegon’s employees around the world for their important contribution to the company’s purpose and strategic goals. As always, I am grateful to Aegon’s investors for their continued confidence in the company and its people as we embark together on this next phase of our transformation.

The Hague, the Netherlands, April 3, 2024

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William L. Connelly

Chairman Board of Directors, Aegon

Annual Report on Form 20-F 2023 | 41

LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

Corporate governance

and Corporate Governance Statement

Aegon is a Bermuda exempted company with liability limited by shares, having its registered office in Hamilton, Bermuda. Aegon has its principal place of business in The Hague, the Netherlands, where its headquarters are. Aegon is registered with the Bermuda Registrar of Companies under number 202302830 and the Dutch trade register under number 27076669. Aegon, as a Bermuda company, is subject to Bermuda law and its governance is predominantly determined by Bermuda law, its bye-laws, its memorandum of continuance and its board regulations. On December 31, 2023, Aegon qualified as a non-resident company under the Dutch Non-Resident Company Act, due to which certain Dutch legal requirements, mainly relating to drawing up the annual accounts in accordance with Title 9 of Book 2 of the Dutch Civil Code, will apply. As Aegon is a company established in Bermuda, the Dutch Corporate Governance Code does not apply to Aegon.

The shareholders

Listing and shareholder base

Aegon’s common shares are listed on Euronext Amsterdam and the New York Stock Exchange. Aegon has institutional and retail shareholders around the world. More than three-quarters of shareholders are located in the United States, the Netherlands, and the United Kingdom. Aegon’s largest shareholder is Vereniging Aegon, a Dutch association with a special purpose to protect the broader interests of the company (Aegon) and its stakeholders.

General Meeting of Shareholders

A General Meeting of Shareholders (the “General Meeting”) is held at least once a year and, if deemed necessary, the Board of Directors (the “Board”) of the Company may convene an Extraordinary General Meeting. The main function of the General Meeting is to decide on (re)appointments to the Board, appointment of the auditor, the amendments of the bye-laws, adoption of the remuneration policy, approval of resolutions of the Board entailing a significant change in the identity or character of the Company or its business and any issue of Aegon shares exceeding 10% of Aegon issued share capital unless the Board determines that the issuance of shares is necessary or conducive for purposes of safeguarding, conserving or strengthening the capital position of Aegon.

At every annual General Meeting, the Board shall present shareholders with the annual accounts to be discussed during the meeting. The Board shall also annually present shareholders with a remuneration report that shall be put

to an advisory vote, which shall not be binding on the Board or the Company.

Convocation

A General Meeting must be convened at least 30 days prior to the day of the General Meeting and shall be called by way of a press release and publication on the website. The notice shall specify the place, day and time of the meeting, the record date, means of electronic communication and the agenda of the meeting. General Meetings will be convened by the Board. Shareholders representing at least ten per cent (10%) of the paid-up share capital may request a General Meeting. Shareholders representing at least one per cent (1%) of the issued capital or one hundred (100) or more shareholders jointly may request one or more items to be added to the agenda of a General Meeting. Such a request must be received by the Company not less than six (6) weeks before the General Meeting. Matters that are not reserved for, or do not require a resolution of the General Meeting pursuant to the bye-laws or Bermuda law, may only be included as a non-voting discussion item that shall be non-binding to the company and the board unless otherwise and at its sole discretion determined by the Board.

Record date

The record date is used to determine shareholders’ entitlements with regard to their participation and voting rights in a General Meeting. The record date may be determined by the Board and may not be more than sixty (60) days before or later than twenty (20) business days before the date fixed for the General Meeting of Shareholders.

Attendance

Every shareholder is entitled to attend the General Meeting and vote either in person or by proxy granted in writing. This includes proxies submitted electronically. All shareholders wishing to take part must provide proof of their identity and shareholding and must notify the company ahead of time of their intention to attend the meeting. Aegon also solicits proxies from New York registry shareholders in line with common practice in the United States.

Voting at the General Meeting

At the General Meeting, each common share carries one vote. In the absence of a Special Cause, Vereniging Aegon casts one vote for every 40 common shares B it holds.

 42  |  Annual Report on Form 20-F 2023

 Corporate governance

The Board of Directors

Aegon has a single tier Board consisting of eight Non-Executive Directors and one Executive Director. Details on the composition of the Board can be found on page 48. Subject to the provisions of the Bermuda Companies Act and the Company bye-laws, the Board manages and conducts the business of Aegon and is responsible for the general affairs of the Company, which includes setting the strategy of the Company. The Board may exercise all the powers of the Company except those powers that are required by the Bermuda Companies Act or the Company bye-laws to be exercised by the General Meeting. The members of the Board owe a fiduciary duty to Aegon to act in good faith in their dealings with or on behalf of Aegon and exercise their powers and fulfil the duties of their office honestly. In the exercise of its duties the Board shall take into account the long-term consequences of decisions, sustainability and the interest of all corporate stakeholders. For the purposes of a Director’s duty to act in the way he considers, in good faith, is in the best interests of the Company, the Director shall not be required to regard the benefit of any particular stakeholder interest or group of stakeholder interests as more important than any other.

Composition of the Board

The General Meeting appoints the members of the Board. If the appointment of a member of the Board is proposed by the Board, the General Meeting resolution requires a simple majority of the votes cast, while otherwise, the resolution requires a two-thirds majority of the votes cast, which majority must represent more than half of the of the then issued and outstanding shares.

Members of the Board will be appointed for a term of not more than four years and may be reappointed thereafter. After 12 years, a Non-Executive Director will no longer be considered independent. Aegon aims to ensure that the composition of the company’s Board is in line with Aegon’s Inclusion and Diversity Policy and is as such well-balanced in terms of professional background, geography, gender, and other relevant aspects of this policy. A profile, which is published on aegon.com as schedule to the board regulations, has been established that outlines the required qualifications of the members of the Board. If the removal or suspension of a member of the Board is proposed by the Board, the General Meeting resolution requires a simple majority of the votes cast, while otherwise, the resolution requires a two-thirds majority of the votes cast, which majority must represent at least half (1/2) of the then issued and outstanding shares. The Board determines the remuneration and other terms of service of the Executive Director and the Non-Executive Directors, with due observance of the remuneration policy for the Board. This remuneration policy is adopted by the General Meeting ultimately at the fourth annual general meeting held after the General Meeting in which the remuneration policy was most recently adopted.

The Board may, subject to its control, delegate all powers, authorities, and discretions relating to the day-to-day-operations and general business and affairs of Aegon to Aegon’s Chief Executive Officer (the “CEO”). The Board oversees the execution of its responsibilities and delegated powers, authorities and discretions by the CEO and any other person or committee to which the Board has delegated any of its duties and responsibilities and is ultimately responsible for the fulfillment of the Board’s duties by them.

Committees

The Board has four committees compromising solely of Non-Executive Directors. These committees are the:

§Audit Committee
§Risk Committee
§Compensation and Human Resource Committee
§Nomination and Governance Committee.

Please see page 58 for the composition of the Board’s committees and the Board Report for more information on the functioning of these committees

The Chief Executive Officer

The CEO is a member of the Board of Directors and is responsible for the day-to-day management and general business and affairs of the Company and the Group. In particular, the CEO is entrusted with all of the Board’s powers, authorities, and discretions in relation to the operational running of the Company, particularly powers, authorities, discretions including but not limited to: the operational running of the Company and the Business, developing the Company’s strategy for consideration, determination and approval by the Board and the implementation of such strategy, and managing performance of the business. Lard Friese is the Chief Executive Officer of Aegon.

The Executive Committee

The members of Aegon’s Executive Committee work alongside the CEO and help oversee operational issues and the implementation of Aegon’s strategy. Members are drawn from Aegon’s functional, business, and country units, and have both regional and global responsibilities. This ensures that Aegon is managed as an integrated international business. The Executive Committee provides vital support and expertise in pursuit of the company’s strategic objectives. Please see page 48 for the composition of the Executive Committee.

Capital, significant shareholders, and exercise of control

As a publicly listed company, Aegon is required to provide the following detailed information regarding any structures or measures that may hinder or prevent a third party from acquiring the company or exercising effective control over it.

Annual Report on Form 20-F 2023 | 43

LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

The capital of the company

Aegon has an authorized capital of EUR 720 million, divided into 4 billion common shares and 2 billion common shares B, each with a nominal value of EUR 0.12. As of December 31, 2023, a total of 1,814,726,912 common shares and 389,759,240 common shares B had been issued, whereby the common shares comprise 82% and the common shares B comprise 18% of the issued capital.

Depository receipts for Aegon shares are not issued with the company’s cooperation.

As per the Dutch act regarding the conversion of bearer shares, all 16,040 bearer shares outstanding at December 2020 have been converted into registered shares held by the company as per January 1, 2021. Until January 1, 2026, and upon request of a holder of a certificate of a bearer share, the company will provide the holder of such a valid certificate of a bearer share with a registered share as a replacement of the bearer share.

Each common share carries one vote. There are no restrictions on the exercise of voting rights by holders of common shares.

All issued and outstanding shares B are held by Vereniging Aegon, the company’s largest shareholder. The nominal value of the common shares B is equal to the nominal value of a common share. This means that common shares B also carry one vote per share. However, the voting rights attached to common shares B are subject to restrictions as laid down in the Voting Rights Agreement, under which Vereniging Aegon may cast one vote for every 40 common shares B it holds in the absence of a Special Cause.

The financial rights attached to a common share B are one-fortieth (1/40th) of the financial rights attached to a common share. The rights attached to the shares of both classes are otherwise identical. For the purpose of the issuance of shares, reduction of issued capital, the sale and transfer of common shares B or otherwise, the value or the price of a common share B is determined as one-fortieth (1/40th) of the value of a common share. For such purposes, no account is taken of the difference between common shares and common shares B in terms of the proportion between financial rights and voting rights.

Significant shareholdings

On December 31, 2023, Vereniging Aegon, Aegon’s largest shareholder, held a total of 313,944,810 common shares and 381,813,800 common shares B.

Under the terms of the 1983 Merger Agreement, as amended in May 2013, Vereniging Aegon has the option to acquire additional common shares B. Vereniging Aegon may exercise its call option to keep or restore its total stake to 32.6% of the

voting rights, irrespective of the circumstances that caused the total shareholding to be or become lower than 32.6%.

During 2023, the following agreements have been concluded between Aegon and Vereniging Aegon.

On August 16, 2023, the members of Vereniging Aegon voted to instruct the board of Vereniging Aegon, subject to the board’s fiduciary duties, to vote all of Vereniging Aegon’s Common Shares and Common Shares B (based on one vote per 40 Common Shares B) at Aegon’s next extraordinary general meetings on extraordinary general meetings of September 29, 2023 and September 30, 2023 in favor of Aegon’s redomiciliation from the Netherlands to Bermuda, by way of (i) a conversion into a Luxembourg S.A. followed by (ii) a conversion into a Bermuda Ltd. (the “Redomiciliation”). Following such vote of the members of Vereniging Aegon, the board of Vereniging Aegon is obligated, pursuant to the terms of the Voting Undertaking Agreement, dated as of June 29, 2023, between Aegon and Vereniging Aegon, and subject to the board’s fiduciary duties, to vote all of such shares in favor of the Redomiciliation.

On December 8, 2023, Aegon entered into a share repurchase agreement with Vereniging Aegon, pursuant to which the Vereniging Aegon agreed to participate in the second and third tranche of the Aegon’s current 1.5 billion Euro share buyback program and Aegon agreed to repurchase a certain number of Common Shares from Vereniging Aegon for an aggregate consideration equal to EUR 139.5 million Euro which will be equally distributed over the total number of trading days during the remainder of the current share buy back program of Aegon. The number of Common Shares that Aegon will repurchase from Vereniging Aegon will be determined based on the daily volume-weighted average price per common share on Euronext Amsterdam on a weekly basis.

On December 18, 2023, Aegon repurchased 112,619,440 common shares B from Vereniging Aegon for the amount of EUR 14,804,951.58 based on 1/40th of the Value Weighted Average Price of the common shares of the five trading days preceding this transaction. The repurchase of common shares B was executed to bring the aggregate holding of voting shares by Vereniging Aegon in Aegon more in line with its special cause voting rights of 32.6% following the completion of the Share Buy Back Programs, initiated by Aegon in July 2023 following the completion of the transaction with a.s.r.

For an overview of other significant shareholders, please see paragraph “other major shareholders” in the chapter Major Shareholders on page 383.

 44  |  Annual Report on Form 20-F 2023

Corporate governance

Special control rights

The common shares and the common shares B offer equal full voting rights, as they have equal nominal value (EUR 0.12). The Voting Rights Agreement entered into between Vereniging Aegon and Aegon provides that under normal circumstances, that is, except in the event of a Special Cause, Vereniging Aegon is not allowed to exercise more votes than is proportionate to the financial rights represented by its shares. This means that in the absence of a Special Cause, Vereniging Aegon may cast one vote for every common share it holds and one vote only for every 40 common shares B it holds. In the event of a Special Cause, Vereniging Aegon may cast one vote for every common share and one vote for every common share B.

A Special Cause may include:

§The acquisition by a third party of an interest in Aegon amounting to 15% or more
§A tender offer for Aegon shares, or
§A proposed business combination by any person or group of persons, whether acting individually or as a group, other than in a transaction approved by the company’s Board

If Vereniging Aegon, acting at its sole discretion, determines that a Special Cause has arisen, it must notify the General Meeting of Shareholders. In this event, Vereniging Aegon retains full voting rights on its common shares B for a period limited to six months. Vereniging Aegon would, for that limited period, command 32.6% of the votes at a General Meeting of Shareholders.

Based on the Voting Rights Agreement, Vereniging Aegon has a right to, at its own discretion, take the decision to exercise its full voting rights on common shares B. Vereniging Aegon may exercise this right unilaterally and independent of Aegon and therefore also irrespective of any decisions of the Board of Aegon.

Issue and repurchase of shares

In accordance with Bermuda law, the Board will be authorized to issue Aegon shares up to Aegon Ltd.’s authorized capital. However, the bye-laws determine that any issue of Aegon shares exceeding 10% of Aegon’s issued share capital, requires a resolution of the General Meeting, unless the Board determines that the issuance of shares is necessary or conducive for purposes of safeguarding, conserving or strengthening the capital position of Aegon. As a result, other than in the case as described in the previous sentence, any transaction which would require the issuance of more than 10% of Aegon’s issued share capital will require shareholder approval.

In September 2023, Aegon announced that it will propose an amendment to its bye-laws on the Annual General Meeting 2024, to include in the bye-laws that upon the issuance of common shares, each holder of common shares will have

pre-emptive rights in proportion to the number of common shares held by such shareholder and that the General Meeting can authorize the Board to limit or exclude pre-emptive rights. Annually Aegon will request (i) an authorization to exclude pre-emptive rights for up to 10% of the issued share capital, and (ii) an authorization to exclude pre-emptive rights for share issuances for purposes of safeguarding, conserving, or strengthening Aegon’s capital position. Issuances for equity compensation plans or against a non-cash contribution will be excluded from pre-emptive rights.

Aegon is entitled to acquire its own fully paid-up shares, providing it acts within the parameters set by Bermuda law and the Dutch Non-Resident Companies Act. In September 2023, Aegon confirmed that it will propose an amendment to its bye-laws at the Annual General Meeting of Shareholders 2024, to include in the bye-laws that a resolution to declare a final dividend and a resolution regarding the acquisition of own shares by Aegon will require an authorization from the General Meeting. Aegon will request this authorization annually.

Transfer of shares

There are no restrictions on the transfer of common shares. Common shares B can only be transferred with the prior approval of Aegon’s Board.

Aegon has no knowledge of any agreement between shareholders that might restrict the transfer of shares or the voting rights pertaining to them.

Significant agreements and potential change of control

Aegon is not party to any significant agreements that would take effect, alter, or terminate as a result of a change of control following a public offer for the outstanding shares of the company, other than those customary in financial markets (for example, financial arrangements, loans, and joint venture agreements).

Share plan

Senior executives at Aegon companies and some other employees are entitled to variable compensation of which part is granted in the form of shares. For further details, please see the Remuneration Report on page 62 and note 44 of the notes to Aegon’s consolidated financial statements on page 315. Under the terms of existing share plans the vesting of granted rights is predefined. The shares shall vest as soon as possible in accordance with payroll requirements of the relevant subsidiary after the adoption of the company’s Integrated Annual Report at the Annual General Meeting in the year of vesting of these shares.

Appointing, suspending, or dismissing Board members

The General Meeting appoints the members of the Board. If the appointment of a member of the Board is proposed by the Board, the General Meeting resolution requires

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a simple majority of the votes cast, while otherwise, the resolution requires a two-thirds majority of the votes cast, which majority must represent more than half of the issued share capital. Members of the Board will be appointed for a term of not more than four years. If the removal or suspension of a member of the Board is proposed by the Board, the General Meeting resolution requires a simple majority of the votes cast, while otherwise, the resolution requires a two-thirds majority of the votes cast, which majority must represent more than half of the issued share capital.

Amending the bye-laws

The Board resolves on an amendment of the bye-laws. In order for such amendment to take effect, it must be approved by the General Meeting. An amendment of the memorandum of continuation needs to be approved by the Board and the General Meeting. Under Bermuda law, shareholders who, alone or jointly, represent at least 20%

of Aegon Ltd.’s paid-up share capital or any class thereof have the right to, within 21 days after a resolution to amend the memorandum of continuation has been adopted by the General Meeting, apply to the Supreme Court of Bermuda for an annulment of such amendment of the memorandum of continuation, other than an amendment which alters or reduces Aegon’s share capital as provided in Bermuda law. No application may be made by Shareholders voting in favor of the amendment.

Diversity and Management and Control systems Management and Control Systems relating to financial reporting

Information on Management and control systems relating to the process of financial reporting can be found on page 94.

Diversity

Information on Diversity can be found on page 30.

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Sustainability governance

Sustainability governance

Key roles

Aegon’s Board of Directors has ultimate oversight over sustainability. Through its Nomination and Governance Committee, the Board of Directors is advised and kept appraised of business and regulatory developments regarding sustainability.

Advice on Aegon’s sustainability approach is provided by the Global Sustainability Board (GSB), which is supported by the Corporate Sustainability team. The GSB is a senior management committee established in December 2021, to enhance overall governance and oversight of Aegon’s company-wide approach to sustainability. The GSB meets quarterly and advises the Executive Committee on Aegon’s strategic sustainability approach, including the two priority themes: climate change, and inclusion and diversity. It is chaired by the CEO of the Americas and consists of senior-level representatives from across the company, including five members of the Executive Committee.

The GSB’s core function is to steer and strengthen the sustainability approach across Aegon’s business units, and it is supported by the local sustainability boards. This includes the validation of Aegon’s double materiality assessment as required by the CSRD. This includes the validation of Aegon’s double materiality assessment, which assesses sustainability measures, as required by the CSRD. Key actions include formulating sustainability-focused commitments, key performance indicators (KPIs), and targets; and tracking these.

Incentives

As per our Remuneration Policy for the Executive Director, at least 50% of the CEO variable compensation must be determined by non-financial performance indicators, where at least one must be ESG-related. Moreover, a significant risk or compliance incident related to ESG may result in a malus adjustment or claw-back of the CEO’s variable compensation.

Risk management

The Group Risk & Capital Committee (GRCC) oversees the Financial Risk Management’s climate scenarios that analyze the potential impacts of climate change on our financial accounts. The Non-Financial Risk Committee (NFRC) oversees Risk Governance’s annual climate risk assessment that identifies possible physical and transition risks that could impact Aegon.

The Compliance function conducts Aegon’s biennial Human Rights Risk Assessment. The Compliance function also annually assesses ethics and culture via the Systematic Integrity Risk Assessments (SIRA), part of which is to assure these are in compliance with the Code of Conduct and Aegon’s core values. This is also overseen by the NFRC.

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Composition of the Board and Executive Committee

Members of the Executive Committee1

Lard Friese (1962, Dutch)

CEO and Chairman of the Executive Committee, and executive member of the Board of Directors of Aegon Ltd.

Matthew J. Rider (1963, American)

CFO and member of the Executive Committee

Matt Rider began his career at Banner Life Insurance Company and held various management positions at Transamerica, Merrill Lynch Insurance Group, and ING before joining Aegon. From 2010 to 2013, he was Chief Administration Officer and a member of the Management

Board at ING Insurance, based in the Netherlands. In this role he was responsible for all ING’s insurance and asset management operations, and specifically for Finance and Risk Management.

Mr. Rider joined Aegon on January 1, 2017, and is CFO and member of the Executive Committee of Aegon.

Elisabetta Caldera (1970, Italian)

Chief Human Resources Officer and member of the Executive Committee

Elisabetta Caldera started her career in Human Resources (HR) in 1994 at Foster Wheeler and soon moved to ABB Alstom.

In 2004, she joined Vodafone Italy where she was appointed Human Resources and Organization Director and member of the Management Board Vodafone Italy. Ms. Caldera moved

to Vodafone Group in UK as Human Resources Director for the Global Technology function and finally was appointed as HR Director for Europe Cluster & Egypt in 2018.

Ms. Caldera joined Aegon on June 1, 2021, as Chief HR Officer and is a member of Aegon’s Executive Committee.

Ms. Caldera is a former member of the Supervisory Board of Renantis (formerly known as Falck Renewable).

Will Fuller (1971, American)

CEO of Aegon Americas and member of the Executive Committee

Will Fuller has 30 years of experience in financial services, including life insurance, annuities, retirement plans and wealth management. Prior to joining Aegon, Mr. Fuller served as Executive Vice President of Lincoln Financial Group. His responsibilities included leading growth strategies, product and distribution innovation, and governance. His previous experience also includes Merrill Lynch, where he was responsible for product and distribution for Wealth Management in the Americas.

Mr. Fuller was appointed as a member of Aegon’s Executive Committee in March 2021. He has been actively engaged in the financial services industry, most recently in forming the Alliance for Lifetime Income were he serves as Operating Committee Chairman. Mr. Fuller is a board member of the American Council of Life Insurers and LL Global, Inc. (LIMRA/LOMA), and a former board member of Forum for Investor Advice, Money Management Institute, and Insured Retirement Institute.

1

Per September 30, 2023, Aegon’s Management Board was renamed Executive Committee.

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 Composition of the Board and Executive Committee

Mike Holliday-Williams (1970, British)

CEO of Aegon UK and member of the Executive Committee

Mike Holliday-Williams started his career with WHSmith in 1991 as a graduate trainee, working as a Retail Manager in many UK stores and in Business Development. In 1997, he joined Centrica where he had several general management and marketing roles in British Gas, before becoming the Residential & Marketing Director of Centrica Telecoms/One.Tel in 2004.

In 2006, Mr. Holliday-Williams joined RSA, becoming the UK Managing Director of Personal Lines in 2008, responsible

for MORE THAN, Partnerships, and the Broker businesses. In 2011, he moved to Copenhagen to become the CEO of RSA Group’s Scandinavian businesses, Codan A/S and Trygg-Hansa, and he also became a member of the RSA Group Executive Board. In 2014, he moved to Direct Line Group (DLG) to become MD of the Personal Lines business, joining the Board of DLG in February 2017.

Mr. Holliday-Williams joined Aegon UK in October 2019, to take over as CEO. He became a member of Aegon’s Executive Committee in March 2020.

Astrid Jäkel (1977, German)

Chief Risk Officer and member of the Executive Committee

Astrid Jäkel has 20 years of experience in the European and global insurance sectors. She joined Aegon from the international management consultancy firm Oliver Wyman where she was a partner in the European Insurance and Asset Management Practice, co-leader of the European Insurance Financial Effectiveness team as well as a member of the Board of Oliver Wyman’s Swiss subsidiary. Her consulting work focused on high-impact risk, capital, asset liability and investment management topics. Ms. Jäkel worked

with leading European and global insurers on a broad range of projects to help transform and optimize their risk and balance sheet management capabilities for market, credit, insurance, and non-financial risks.

Ms. Jäkel was appointed CRO of Aegon and member of the Aegon’s Executive Committee in March 2022. Her responsibilities include managing Aegon’s Group Risk and Actuarial functions, along with maintaining the Group’s Risk Management framework and overseeing the risk management capabilities.

Marco Keim (1962, Dutch)

CEO of Aegon International and member of the Executive Committee

Marco Keim began his career with accountancy firm Coopers & Lybrand/Van Dien, before moving to the aircraft manufacturer Fokker Aircraft and NS Reizigers, part of the Dutch railway company, NS Group.

In 1999, he joined Swiss Life in the Netherlands as a member of the Board and was appointed CEO three years later. Mr.

Keim was appointed CEO of Aegon the Netherlands and member of Aegon’s Executive Committee in June 2008. From 2017 to 2020, Mr. Keim headed Aegon’s operations on mainland Europe. Since January 2020, Mr. Keim is responsible for Aegon’s insurance joint ventures in Brazil and China, its businesses in Spain & Portugal, its high-net-worth insurance business, as well as several ventures in Asia.

Mr. Keim is a former member of the Supervisory Board of Eneco Holding N.V.

Onno van Klinken (1969, Dutch)

General Counsel and member of the Executive Committee

Onno van Klinken has almost 30 years’ experience providing legal advice to a range of companies and leading Executive Board offices. Mr. Van Klinken started his career at Allen & Overy, and previously worked for Aegon between 2002 and 2006.

He then served as Corporate Secretary for Royal Numico, before it was acquired by Groupe Danone. His next position was as General Counsel for the Dutch global mail and express group TNT, where he served from 2008 until the legal demerger of the group in 2011. This was followed

by General Counsel positions at D.E. Master Blenders 1753 and Corio N.V.

Mr. Van Klinken rejoined Aegon in 2014 as General Counsel responsible for Group Legal, Compliance, the Board Office, and Government and Policy Affairs. Mr. Van Klinken has been a member of Aegon’s Executive Committee since August 2016. Mr. Van Klinken was appointed member of the Board of Stichting Continuïteit SBM Offshore in December 2016.

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Bas NieuweWeme (1972, Dutch)

Global CEO of Aegon Asset Management and member of the Executive Committee

Bas NieuweWeme was appointed Global CEO of Aegon Asset Management and member of the Executive Committee in June 2019. Having obtained a Master of Laws (2000) and an Executive MBA in 2007, Mr. NieuweWeme has worked in global investment management for more than 20 years.

The majority of this time was spent in various management positions within ING Investment Management Americas and Voya Investment Management. In 2016, he was named Global

Head of the Client Advisory Group and a member of the management team at PGIM Fixed Income and Global Head of the Institutional Relationship Group at PGIM, Prudential Financial’s global investment management business. He serves as Vice-Chairman of the supervisory board of La Banque Postal Asset Management.

He is also a member of the Board of Directors of The Netherlands-America Foundation (NAF), a member of the Leadership Council of AmeriCares, a non-profit disaster relief and global health organization, and a member of the advisory council of Diversity Project Europe.

Duncan Russell (1978, British)

Chief Transformation Officer and member of the Executive Committee

Duncan Russell has worked most of his professional career in the financial services sector, lastly as CFO and Board member at Admiral Financial Services, the financial services subsidiary of Admiral Group, a UK based insurance company, responsible for finance, analytics, funding, credit risk and pricing.

Before joining Admiral Group, Mr. Russell was Head of Group Strategy and Corporate Finance at NN Group N.V., the Netherlands, where he was responsible for capital management, treasury, M&A, and the group’s strategy.

Before joining NN Group N.V., Mr. Russell held various positions at financial services groups in London.

Mr. Russell was appointed Chief Transformation Officer and member of the Executive Committee of Aegon on August 2020.

Deborah Waters (1967, American)

Chief Technology Officer and member of the Executive Committee

Deborah Waters began her career at aerospace group Lockheed Martin in 1989 before moving to software consultancy group Seer Technologies.

In 1995, she joined Citigroup Inc., where she held various technology leadership positions in the intervening years. Most recently she served for over five years as Citi’s Global Head of Private Bank Operations and Technology. Additionally, Ms. Waters was the Head of Inclusion and Diversity for Citi’s Institutional Client Group Operations and Technology.

Previous roles include leading Client Centric and Equities Technology, supporting the Equities, Research, Commercial Bank, Citi Velocity, and Markets Sales businesses. She also served as the Chief Operating Officer for the Markets Technology organization during her tenure there. Before moving to Markets Technology, Ms. Waters managed Markets and Operational Risk Technology for the organization where she started as a developer of risk solutions.

Ms. Waters joined Aegon as of February 2022 as Chief Technology Officer and is a member of Aegon’s Executive Committee. Ms. Waters is member of the Board of Directors of RanMarine Technology BV (not-listed).

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Composition of the Board and Executive Committee

Board of Directors1

William L. Connelly (1958, French)

Chairman of the Board of Directors

Chairman of the Nomination and Governance Committee Member of the Compensation and Human Resource Committee

Bill Connelly started his career at Chase Manhattan Bank, fulfilling senior roles in commercial and investment banking in France, the Netherlands, Spain, the United Kingdom, and the United States. He was appointed to Aegon’s Board

in 2017 and became Chairman in May 2018. His current term ends in 2025.

Mr. Connelly is chairman of the Board of Directors, chairman of the Nomination and Governance Committee and member of the Compensation and Human Resource Committee. Mr. Connelly is an independent Director at the Board of Directors of Société Générale, Chairman of the Board of Directors of Amadeus IT Group S.A., and is a former member of the Board of Directors of Singular Bank, SA. (not listed).

Lard Friese (1962, Dutch)

CEO and Chairman of the Executive Committee, and (executive) member of the Board of Directors

Lard Friese earned a Master of Laws degree at the University of Utrecht. He has worked most of his professional career in the insurance industry, including 10 years at Aegon between 1993 and 2003. He was employed by ING as from 2008, where he held various positions. In July 2014, upon the settlement of the Initial Public Offering of NN Group N.V., he became the CEO of NN Group. During his tenure at NN Group, he led a wide range of businesses in Europe and Asia and created a stable platform for growth and shareholder value.

He has extensive experience in the areas of insurance, investment management, customer centricity, mergers and acquisitions, and business transformation. Mr. Friese was appointed CEO Designate as of March 1, 2020, and has been appointed Executive Director of the Board until the end of the AGM to be held in 2024. Mr. Friese is CEO and Chairman of the Executive Committee of Aegon Ltd.

Mr. Friese is also a member of the Supervisory Board of ASR Nederland N.V. and a member of the Supervisory Board of Pon Holdings B.V. (non-listed). Mr. Friese is also a member of the Board of Directors of The Geneva Association, the leading global think tank for the insurance industry.

Corien M. Wortmann-Kool (1959, Dutch)

Vice Chairman of the Board of Directors

Member of the Audit Committee

Member of the Nomination and Governance Committee

Corien M. Wortmann-Kool was Chairman of the Board of Stichting Pensioenfonds ABP, the Dutch public sector collective pension fund until December 2022, and is a former Member of the European Parliament and Vice President on Financial, Economic and Environmental affairs for the EPP Group (European People’s Party). She was appointed to Aegon’s Board in May 2014, and her current term ends in 2024.

She is Vice Chairman of the Board of Directors, and a member of the Audit Committee and the Nomination and Governance Committee.

Ms. Wortmann-Kool is a member of the Board of Directors of DSM-Firmenich AG., Chairperson of the Supervisory Board of Netspar, and a member of the Advisory Committee of the Financial Markets Authority. She is a former member of the Supervisory Board of Het Kadaster, and a former member of the Supervisory Board of Save the Children Nederland.

1

Per September 30, 2023, Aegon’s Supervisory Board transitioned to the Board of Directors following redomiciliation to Bermuda.

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Mark A. Ellman (1957, American)

Member of the Nomination and Governance Committee

Member of the Risk Committee

Mark A. Ellman is a former Vice Chairman Global Origination of Bank of America/Merrill Lynch. Before joining Bank of America/Merrill Lynch, he held various roles in the US insurance industry. These mostly entailed working in corporate finance at large US financial institutions, where he was engaged in M&A advice and transactions, together

with equity and debt raisings for insurance companies. He was a founding partner of Barrett Ellman Stoddard Capital Partners.

Mr. Ellman was appointed to Aegon’s Board in 2017, and his current term ends in 2025. He is a member of the Risk Committee and the Nomination and Governance Committee. Mr. Ellman was a Non-Executive Director of Aegon USA from 2012 to 2017.

Karen Fawcett (1962, British)

Member of the Risk Committee

Member of the Compensation and Human Resource Committee

Karen Fawcett was formerly CEO Retail, Brand and Marketing for Standard Chartered Bank, which focused primarily on Asia, Africa, and the Middle East. Her broad career across complex global businesses covers wholesale and retail banking, global strategy, technology transformation, and brand and marketing.

Prior to her career in banking, Ms. Fawcett was Partner at global management and information technology consultancy firm Booz, Allen & Hamilton, where she advised

insurers, banks, and asset managers on a wide range of strategic, technological, and operational transformations.

Ms. Fawcett was appointed to Aegon’s Board in May 2022 and her current term ends in 2026. She is a member of the Compensation and Human Resource Committee and a member of the Risk Committee.

Ms. Fawcett holds several non-executive director positions, with a portfolio across financial services and digital transformation, education, and climate change mitigation. These positions are with the following non-listed entities: the LGT Group Foundation; Temus; Global Evergreening Alliance; and BetterTradeOff. Ms. Fawcett is a former member of the Board of Directors of INSEAD.

Jack McGarry (1958, American)

Chairman of the Audit Committee

Member of the Compensation and Human Resource Committee

Jack McGarry is a former actuary who spent the majority of his career at Unum Group, an NYSE-listed provider of workplace financial protection benefits. He has held various leadership roles in risk management, in finance, as CEO of Unum’s business in the United Kingdom, and CEO of Unum’s Closed Block.

His last position at Unum was as Chief Financial Officer (CFO). As CFO, he successfully led the transformation of the

finance organization by outsourcing transactional processes, driving automation across the organization, implementing accounting and financial planning & analysis platforms and modelling, and navigating the company through the implementation of tax reform. This experience underscores his in-depth knowledge of the insurance industry and his integral perspective on managing an insurance company. Mr. McGarry was appointed to Aegon’s Board in June 2021, and his current term ends in 2025. Mr. McGarry is Chairman of the Audit Committee and member of the Compensation and Human Resource Committee.

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 Composition of the Board and Executive Committee

Caroline Ramsay (1962, British)

Chairman of the Risk Committee

Member of the Audit Committee

Caroline Ramsay gained a Master’s degree in Natural Sciences in 1984 at Cambridge. She started her professional career at KPMG in Ipswich and London, where she qualified as a Chartered Accountant in 1987. During her long career, Ms. Ramsay gained substantial experience in Finance and Audit at large insurance companies. In addition to her strong financial background, Ms. Ramsay acquired extensive managerial expertise in executive roles at Norwich Union plc (now Aviva plc) and RSA.

Ms. Ramsay holds various Non-Executive Board positions. In 2013, she joined the board of Scottish Equitable – and as of 2017 also the boards of Aegon UK plc and Cofunds Ltd. – where she served as the Audit Committee Chair until

May 14, 2020. Ms. Ramsay was appointed to Aegon’s Board in May 2020 and her current term ends in 2024. She served as Chairman of the Audit Committee and as a member of the Risk Committee until August 2023 and is currently Chairman of the Risk Committee and a member of the Audit Committee.

Ms. Ramsay is senior independent Director of the Board of Brit Syndicates Ltd. (non-listed), a member of the Board of Directors of Ardonagh Specialty Holdings Ltd. (non-listed), and a member of the Board of Directors of Tesco Underwriting Ltd. (non-listed). Ms. Ramsay is a member of the FCA Regulatory Decisions Committee and member of the Payment Systems Regulator’s Enforcement Decisions Committee. Ms. Ramsay is a former member of the Board of Directors of Aberdeen UK Smaller Companies Growth Trust plc.

Thomas Wellauer (1955, Swiss)

Member of the Audit Committee

Member of the Compensation and Human Resource Committee

Thomas Wellauer started his professional career at McKinsey & Company, where he served as Senior Partner and Practice Leader. He held various executive management positions at multi-industries, including financial services, pharmaceuticals, and chemicals. Among others, he served on the Executive Committees of Winterthur, Credit Suisse, Novartis, and Swiss Re. His most recent position from 2010 to 2019 was Group Chief Operating Officer of Swiss Re. During his career, Mr. Wellauer also served as independent

Director on the boards of several global companies such as Munich Re and Syngenta.

Mr. Wellauer was appointed to Aegon’s Board in May 2020, and his current term ends in 2024. He is a member of the Audit Committee and a member of the Compensation and Human Resource Committee.

Mr. Wellauer is Chairman of the Board of Directors of SIX Group (not listed), and Chairman of the Board of Trustees of the University Hospital Zurich Foundation. Mr. Wellauer is the former Chairman of the International Chamber of Commerce in Switzerland.

Dona D. Young (1954, American)

Chairman of the Compensation and Human Resource Committee

Member of the Nomination and Governance Committee Member of the Risk Committee

Dona D. Young is an executive/board consultant and retired Chairman, President, and Chief Executive Officer of The Phoenix Companies, which was an insurance and asset management company at the time of her tenure. She was appointed to Aegon’s Board in 2013, and her current term will end in 2025.

She is Chairman of the Compensation and Human Resource Committee, member of the Nomination and Governance Committee, and member of the Risk Committee.

Ms. Young is member and Chairman of the Board of Directors of Foot Locker, Inc. Furthermore, Ms. Young is a Director of the Board of Spahn & Rose Lumber Company (not listed), member of the Board of the National Association of Corporate Directors, and independent Director of the Board of Directors of USAA.

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Report of the Board of Directors

On June 30, 2023, Aegon announced its intention to change its legal domicile from the Netherlands to Bermuda to facilitate the transfer of Aegon’s group supervision from the Dutch Central Bank to the Bermuda Monetary Authority. The change in legal domicile was effectuated

following the approval from the Shareholders for the cross-border conversion during the Extraordinary General Meetings of Shareholders held on September 29 and September 30, 2023.

LOGO

Following the redomiciliation, Aegon, as a Bermuda Ltd., is subject to Bermuda law and its governance is predominantly determined by Bermuda law, its Bye-Laws, and its Board Regulations.

Board of Directors

Aegon has a one-tier board consisting of nine Directors. Aegon’s independent Non-Executive Directors are the former Aegon N.V. Supervisory Board members, and Aegon’s CEO, Lard Friese, has joined the Board as the sole Executive Director.

The Board manages and conducts the business of the Company and is responsible for the general affairs of the Company, which includes setting and evaluating the Company’s strategy, management’s policies, and the effectiveness with which management implements its policies and overseeing compliance with legal and regulatory requirements.

The Board has four committees, comprising solely of Non-Executive Directors: the Audit Committee, the Risk Committee, the Nomination and Governance Committee, and the Compensation and Human Resource Committee. The committees report to the Board on their activities, identifying any matters on which they consider action or improvements are needed, and making recommendations to the Board as to the steps to be taken. For more information about the functioning of the committees, please see the Committee Charters on aegon.com.

2023 topics

2023 has been an important year of transition for Aegon and the Board. A significant amount of time was allotted to the items listed below.

Redomiciliation and group supervision

The Board discussed in depth the redomiciliation of the legal seat with management and external advisors during additional meetings outside the regular cycle of meetings. Following the closure of the transaction with a.s.r., Aegon no longer had a regulated insurance business in the Netherlands. Under EU Solvency II insurance regulation, DNB could no longer act as group supervisor and thus a new group supervisor was required. The Board, together with management, explored various options and their viability to support Aegon’s global strategy.

Following discussions in the college of supervisors, the Bermuda Monetary Authority (BMA) informed Aegon that it would become its group supervisor after transferring Aegon’s legal seat to Bermuda. The Board, in close consultation with Aegon’s leadership and external advisors, concluded that the proposed move is in the best interest of the company’s stakeholders and provides the company with the stability needed to continue executing its strategy. The transfer of the legal seat to Bermuda allows Aegon to maintain its headquarters in the Netherlands.

Governance and stakeholder management

The Board and management have engaged extensively with shareholders and other stakeholders on the redomiciliation and the governance structure of Aegon Ltd. The Board has taken into account the feedback received form stakeholders with respect to Aegon’s initial plans regarding governance. Based on the feedback, it was decided to include a binding vote on Aegon Ltd.’s remuneration policy at least every four years, and a binding vote on major acquisitions and divestments in Aegon Ltd.‘s bye-laws. Furthermore, the Board committed to submit for approval to the first Aegon Ltd. general meeting of shareholders to be held in 2024 an amendment to the Aegon Ltd. bye-laws, to include the following provisions: (i) introduction of pre-emptive rights for the issuance of common shares (ii) shareholder approval for

 54  |  Annual Report on Form 20-F 2023

Report of the Board of Directors

share buy-backs and (iii) shareholder approval for annual final dividend payments. It was further taken into account that the redomiciliation allowed the company to maintain its listings on Euronext Amsterdam and the NYSE, bringing stability to our shareholders, and to remain a Dutch tax resident. The Board of Aegon therefore concluded that the move is in the best interest of shareholders, and provides stability for the group to continue to execute upon its announced strategy. More generally, stakeholder engagement continues to be an important topic for the Board and stakeholder interests are taken into account in the decision making process.

Sustainability

Sustainability is a central element of our strategy and an area of specific attention for the Board. The Board has ultimate oversight over sustainability and is advised and kept appraised of business and regulatory developments regarding sustainability through its Nomination and Governance Committee. Other committees also address wider social and governance matters, as linked to their area of responsibility. In 2023, the Board was regularly updated on the progress of Aegon’s Sustainability approach and relevant sustainability developments. These updates included discussions on the double materiality assessment and resultant material sustainability themes, progress on Aegon’s key sustainability metrics and the controls related to sustainability reporting. The wider governance of sustainability is described on page 47 of this report and this structure drives delivery of the Aegon’s sustainability ambitions and alignment on sustainability across the business. The Board supports Aegon’s approach to sustainability and consequently considers sustainability issues in its decision-making.

IFRS 17 accounting

On July 12, 2023, Aegon published its financial supplement for both half-year and full-year 2022 under the IFRS 9 and IFRS 17 accounting standards that became effective on January 1, 2023. The Board had many interactions with management on the implementation of the new accounting standard, the implications for Aegon, and industry comparison. IFRS 17 is the first international accounting standard for insurance contracts and aims to create more consistency and comparability between companies. While the new accounting standard will impact Aegon’s financial reporting, it will not impact its strategy, capital management approach, financial targets, nor its outlook. The Board was well informed about the new accounting standard and frequently discussed the financial IFRS results and disclosures. The Board is very pleased with Aegon’s hard work and proven flexibility which resulted in a well-managed implementation process.

Other 2023 topics

In addition, the Board addressed, among others, the following topics in 2023:

§The implementation of the a.s.r. transaction, including transition reports;

§The one-tier governance structure, including the Bye-laws, the Board Regulations, and other corporate governance matters;

§The remuneration philosophy and framework, executive remuneration, and succession planning;

§Communication and stakeholder management with regard to the redomiciliation;

§The self-evaluation of the 2022 Board performance;

§The global employee survey results and the HR plan;

§The Annual Report 2022;

§The Group target operating model;

§The strategic preparations and communication related to the June 2023 Capital Markets Day, emphasizing the Transamerica strategy, performance, and growth ambitions;

§Brand architecture;

§The regular business updates;

§The group strategic deliberations and considerations;

§The approval of the 2022 financial results, the 2023 interim financial results, and the (interim) dividends;

§The funding plan and funding authorization;

§Capital generation and solvency capital positions;

§Enterprise risk management, information security, and cybersecurity;

§The Budget and Medium Term Plan;

§Human resources, including talent development, organizational health developments, cultural change, and diversity;

§Regulatory changes at both regional and global levels;

§Tax policy and developments;

§Technology and strategy, developments, and innovations; and

§The active management of the business portfolio, including acquisitions, divestments, and balance sheet transactions.

Independent Auditor

During the 2023 AGM, Ernst & Young Accountants LLP was appointed as Aegon N.V.’s independent auditor for the Annual Accounts 2024 through 2028. Following the redomiciliation, the Board proposed for approval to the shareholders meeting the appointment of auditor PricewaterhouseCoopers Accountants N.V. as the independent auditor of Aegon Ltd. for the Annual Accounts of 2023 and to appoint Ernst & Young Accountants LLP as independent auditor of Aegon Ltd. for the Annual Accounts of 2024. Both proposals were approved by the general meeting of shareholders in September 2023.

2024 focus areas

In 2024, Aegon will continue its transformation process. Focus will be on the business units delivering on their ambitions in line with the budget/medium term plan. The Board will closely monitor the growth developments and the

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value creation of the individual business units and the further strengthening of the economic balance sheet. Following the redomiciliation, the Board will discuss enhancements to the governance structure while continuing to comply with new and existing regulations. This includes setting the proposal for a new remuneration framework, and making adjustments to the bye-laws and other corporate governance charters. Other areas of attention relate to (IT) security, data protection, hedging programs, financial and sustainability reporting, (IFRS) accounting, controls, and employee wellbeing. Also, the Board will follow external developments, such as artificial intelligence, and discuss potential risks to the company, such as climate risk, and geopolitical developments.

Process and meetings

The Board and the Committee meetings are scheduled on a regular basis and the agendas are mostly based of a rolling calendar. The meeting schedule is set two years in advance and allows for sufficient flexibility to address both regular and non-routine matters. Board papers are often submitted well in advance of the meetings and are distributed and filed by the board office under the management of the Company Secretary. On the request of the Board, Board (committee) meetings are attended by senior management or others. Minutes of the meetings are made and kept by the Company Secretary.

Composition of the Board

The Composition of the Board is discussed regularly in Board meetings and in particular by the Nomination and Governance Committee. During the 2023 Annual General Meeting held on May 25, 2023, Ms. Dona Young was reappointed as member of the Board for an extended term of two years until the end of the AGM to be held in 2025. At the same time, Mr. Ben Noteboom stepped down as member of the Board. The Board would like to thank Mr. Noteboom for all his years of dedication, contribution, and commitment.

During the Extraordinary General Meeting of Shareholders dated September 29, 2023, all the current Board members were appointed to the Board of Directors of Aegon Ltd. in line with the retirement schedule of the members of the Supervisory Board of Aegon N.V. or with the term for which the Chief Executive Officer was appointed as member of the Executive Board of Aegon N.V.

On November 9, 2023, the Board announced to propose to its 2024 Annual General Meeting the appointment of Mr. Albert Benchimol as a Non-Executive member of the Board of Directors.

On March 1, 2024, the Board announced it intends to nominate Lard Friese for re-election as Executive Director and CEO at the 2024 Annual General Meeting, for a further four years.

An induction program for new Directors is in place. The program is regularly updated to reflect changes in the environment in which Aegon operates, including regulatory changes. The program is tailored to the needs of individual Board members.

An overview of the composition of the Board of Directors in 2023 can be found on page 48 of this Integrated Annual Report. The retirement schedule is available as part of the Board Regulations on aegon.com.

 56  |  Annual Report on Form 20-F 2023

 Report of the Board of Directors

The table underneath depicts, among other things, the tenure, the attendance of the board members, and the number of meetings held.

          unit         2023         2022         % 

Board members1)

                

Board of Directors

                

Executive Board members

                

Total members

     nr      1      2      (50%)  

Average tenure

     years      4      4      (6%) 

Average age

     years      61      60      3% 

Non-executive Board members

                

Total members

     nr      8      9      (11%) 

Proportion of independent non-executive members

     %      100%      n.a.      n.a. 

Average tenure

     years      6      4      33% 

Average age

        years         65         64         2% 

Executive Committee

                

Total members

     nr      11      12      (8%) 

Average tenure

     years      5      4      17% 

Average age

        years         54         52         3% 

Board gender diversity

                

Board of Directors2)

                

Number of women in Board of Directors

     nr      4      n.a.      n.a. 

Proportion of women in Board of Directors

        %         44%         n.a.         n.a. 

Executive Committee3)

                

Number of women in Executive Committee

     nr      3      4      (25%) 

Proportion of women in Executive Committee

        %         27%         33%         (6pp) 

Board oversight

                

Board of Directors

                

Number of regular meetings4)

     nr      2      n.a.      n.a. 

Proportion of regular meetings fully attended

        %         100%         n.a.         n.a. 

Supervisory Board

                

Number of regular Supervisory Board meetings

     nr      5      7      (29%) 

Proportion regular Supervisory Board meetings fully attended

        %         100%         100%         0pp 

Audit Committee

                

Number of meetings

     nr      6      6      0% 

Proportion of meetings fully attended

        %         100%         100%         0pp 

Risk Committee

                

Number of meetings

     nr      5      6      (17%) 

Proportion of meetings fully attended

        %         80%         100%         (20pp) 

Compensation and Human Resource Committee5)

                

Number of meetings

     nr      6      6      0% 

Proportion of meetings fully attended

        %         100%         100%         0pp 

Nomination and Governance Committee

                

Number of meetings

     nr      6      6      0% 

Proportion of meetings fully attended

        %         100%         100%         0pp 

Number of additional meetings/calls6)

     nr      14      17      (18%) 

Proportion of additional meetings/calls fully attended

        %         71%         76%         (5pp) 

1

Aegon changed its governance structure to a one-tier Board of Directors as a consequence of the redomiciliation to Bermuda. The Board of Directors consists of independent Non Executive Board members, previously known as the Supervisory Board, and the Executive Board member - the CEO. The Board of Directors is supported by the Executive Committee, which was previously named Management Board.

2

The Board of Directors includes both an Executive Board member (the CEO) and Non Executive Board members. In previous years, this responsibility was shared between the Executive Board (the CEO and CFO) and Supervisory Board.

3

The Executive Committee was previously named Management Board.

4

As a result of the one-tier board structure and the establishment of the new Board of Directors on September 30, 2023, Supervisory Board meetings did not take place after this date. To make comparisons possible with previous years, the Board of Directors meetings and Supervisory Board meetings for 2023 are reported separately.

5

This committee was previously named the Remuneration Committee.

6

Throughout the year several sub-committee and ad-hoc meetings were scheduled to discuss - among other things - strategy-related topics.

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The Committees

The Board has four committees, comprising solely of Non-Executive Directors: the Audit Committee, the Risk

Committee, the Nomination and Governance Committee, and the Compensation and Human Resource Committee.

The Audit Committee

Board members       2023         2022 

Jack McGarry

        Chairman          V 

Caroline Ramsay

     V       Chairman 

Thomas Wellauer

     V       V 

Corien Wortmann-Kool

        V          V 

The Audit Committee has confirmed that all its members qualified as independent according to Rule 10A-3 of the SEC. The Chairman of the Audit Committee qualifies as a financial expert according to the Sarbanes-Oxley Act in the United States.

Role and responsibilities

Aegon has both an Audit Committee and a Risk Committee. With regard to the oversight of the operation of the risk management framework and risk control systems, including supervising the enforcement of relevant legislation and regulations, the Audit Committee operates in close coordination with the Risk Committee. Certain Board members participate in both committees and a combined meeting of the Audit Committee and Risk Committee is scheduled on an annual basis.

The main role and responsibilities of the Audit Committee are to assist and advise the Board in fulfilling its oversight responsibilities regarding:

§The integrity and quality of the consolidated financial statements for the Group;

§The effectiveness of the design, operation, and appropriateness of the enterprise risk management framework and internal control systems of the Group, including supervising the enforcement of the relevant legislation and regulations, supervising the operation of the code of conduct, and monitoring the internal control over financial reporting;

§The disclosure of financial and non-financial information by the Group, including but not limited to the choice of accounting policies, application, and assessment of the effects of new rules, information about the handling of estimated items in the annual accounts, forecasts, and work of the External and Internal Auditors;

§Compliance with recommendations and observations and following up on comments of Internal and External Auditors, including the review of compliance and complaints (whistleblowing) procedures and reports;

§The role and functioning of the internal audit function;
§The policy of the Company on tax planning;

§Actuarial matters;

§The funding, financing, capital structure and capital reporting of the Group, the Group Capital Plan, the Group Funding Plan, and treasury policies and procedures, including significant financial exposures;

§Applications of information and communication technology, including risks relating to cybersecurity and information security;

§The integrity of the consolidated quarterly, half-yearly, and full-year financial statements and financial reporting processes;

§Internal control systems and the effectiveness of the internal audit process;

§Relationship with the External Auditor, including in particular its appointment, reappointment, or dismissal, qualifications, independence, remuneration, and any services for the Group; and

§The performance of the external auditors and the effectiveness of the external audit process, including monitoring the independence and objectivity of the external auditor.

Other 2023 topics

In 2023, the Audit Committee addressed, among other things, the following topics:

§Financial information, dividend proposals, and financial publications;

§IFRS 17 project updates including parallel runs and status reports;

§The reports from the independent auditor;

§Quarterly update reports from Internal Audit, and the Compliance and Legal functions, including annual plans;

§The annual Speak Up overview;

§The Systematic Integrity Risk Assessment;

§The quarterly IFRS/Solvency control program updates;

§Cash flow testing results;

§The transition process of the newly appointed auditor; and

§Compliance with regulations, including CSRD implementation.

 58  |  Annual Report on Form 20-F 2023

 Report of the Board of Directors

The Risk Committee    
Board members  2023    2022  

Caroline Ramsay

         Chairman     V  

Dona Young

   V           Chairman  

Karen Fawcett

   V     V  

Mark Ellman

   V     V  

Ben Noteboom

   -     V  

Role and responsibilities

The Risk Committee focuses on the effectiveness of the design and operation and the appropriateness of the enterprise risk management framework and internal control systems of Aegon Ltd. This includes:

§Risk strategy;
§Risk tolerance;
§Risk governance structure;
§Risk competencies;
§Product development and pricing;
§Risk assessment;
§Risk responses and internal control effectiveness;
§Risk monitoring; and
§Risk reporting.

Furthermore, the Risk Committee is responsible for reviewing, and advising the Board with respect to, the Risk exposures as they relate to capital, earnings, liquidity, operations, and compliance with risk policies. The Audit Committee primarily relies on the Risk Committee for the topics mentioned above.

The Risk Committee works closely with the Audit Committee. One combined meeting was held in December 2023. The combined meeting focused on the 2024 group risk plan, model validation, information security, including the risk view on high and medium risk applications, and the outcome of the double materiality assessment in light of sustainability reporting.

Other 2023 topics

In 2023, the Risk Committee addressed, among other things the following topics:

§The quarterly risk dashboard, reflecting the risk profile of Aegon based on Financial Risk, Underwriting Risk, and Operational Risk;
§Business updates and the risks related to strategic and operational improvement projects;
§Assumption and model changes, and the actuarial function report;
§Reinsurance;
§The Group Risk Plan;
§Interest rate developments;
§Outsourcing playbooks;
§Information security strategy and metrics, and the IT Risk profile;
§The Aegon the Netherlands disentanglement process and progress relates to the transaction with a.s.r.;
§The redomiciliation to Bermuda and the governance structure of Aegon Ltd.
§Crisis management;
§Macroeconomic risks, exposures, and mitigating actions;
§Business environment scan and the climate risk assessment plan; and
§Risk strategy and limits.

The Nomination and Governance Committee    
Board members  2023   2022  

William Connelly

         Chairman           Chairman  

Mark Ellman

   V     V  

Corien Wortmann-Kool

   V     V  

Dona Young

   V     V  

Role and responsibilities

The Nomination and Governance Committee focusses on the size, composition, and profile of the Board and addresses the functioning, succession, and proposed nomination of Directors, and ensures that the corporate governance structure is in line with the applicable rules and regulations and advises on the responsible business strategy.

This includes:

§Drawing up selection criteria and (re-)appointment procedures for nominations of Directors;
§Preparing selection criteria and appointment procedures and proposal for the nomination of the Chief Executive Officer;
§Updating the Board Profile and periodically assessing the size and composition of the Board, and making a proposal for a composition profile of the Board;
§Assessing the functioning of individual Directors and drawing up a plan for the succession of Directors;

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§Advising on and proposing to the Board candidates to be designated as Chairperson and Vice-Chairperson of the Board;
§Supervising the policy of the Board on the selection criteria and appointment procedures for senior management;
§Periodically discussing any relevant developments within the senior management and advising on any potential appointments of senior management;
§Overseeing the corporate governance structure of the Company and compliance with any applicable corporate governance legislation and regulations;
§Periodically assessing and advising on the responsible business strategy, including sustainability / ESG strategy, as part of the corporate strategy; and
§Overseeing the process of the annual self-evaluation of the Board and each of its committees.

Other 2023 topics

In 2023, the Nomination and Governance Committee addressed the following additional topics:

§A significant amount of time was allocated to the choices and preparations for the new governance structure and set up of the related documentation;
§Discussed potential new candidates for the Board composition;
§Received and discussed several updates on Sustainability; and
§Received updates on corporate governance.

The Compensation and Human Resource Committee

 

    
Board members  2023   2022  

Dona Young

         Chairman     -  

Ben Noteboom

   -          Chairman  

William Connelly

   V     V  

Karen Fawcett

   V     V  

Jack McGarry

   V     V  

Thomas Wellauer

   V     V  

Role and responsibilities

The Compensation and Human Resource Committee CHRC; formerly known as Remuneration Committee, is designated to safeguard the existence of sound remuneration policies and practices within the Group by overseeing the development and execution of these policies and practices in accordance with the applicable rules and regulations. The Compensation and Human Resource Committee (CHRC) assesses in particular the remuneration governance processes, procedures and methodologies adopted, to ensure that the remuneration policies and practices adequately address all types of risks as well as liquidity and capital levels. The Committee also ensures that the overall remuneration policy is consistent with the longer-term strategy of the Company and the longer-term interest of its shareholders, investors, and other stakeholders, as well as the public at large.

This includes, among other:

§Reviewing Aegon’s Global Remuneration Framework, making recommendations on the remuneration policies and advising the Board on the approval and adoption of the Global Remuneration framework;
§Overseeing the remuneration of Executive Directors;
§Reviewing annually a proposal for the remuneration of the Heads of Control Functions;
§Preparing recommendations regarding variable compensation both at the beginning and at the end of the performance year; and
§Preparing the information provided to shareholders on remuneration policies and practices, including the Remuneration Report.

The CHRC oversaw the application, implementation, and approval of Aegon’s Group Global Remuneration Framework and the various policies and procedures related to it. This included:

§Determining the outcome of the 2022 Group Performance Indicators and of the 2022 Individual Performance Indicators for Executive Board members, and allocating variable compensation related to 2022 where required;
§Setting the 2023 Individual Performance Indicators for Executive Board members;
§Setting the 2023 Group Performance Indicators and targets for remuneration purposes;
§Preparing for the 2024 performance indicators;
§Reviewing and/or approving the ex-ante risk assessments and ex-post risk assessments, any exemption requests (for example, sign-on arrangements) under the remuneration policies; and
§Reviewing the related Remuneration Report.

In addition, a significant amount of time was spent on the set-up of a new remuneration framework for approval by the shareholders on the next Annual General Meeting of Shareholders in 2024.

 60  |  Annual Report on Form 20-F 2023

Report of the Board of Directors

Annual Accounts

This Integrated Annual Report includes the Annual Accounts for 2023, which were prepared by the management and discussed by both the Audit Committee and the Board. The Annual Accounts are adopted by the Board.

Acknowledgment

The Board of Directors emphasizes the strategic progress that has been made in 2023 and supports the ongoing transformation of the company. The Board acknowledges the impact of the choices made on Aegon’s employees and Aegon’s stakeholders. Aegon employees continued to gain the trust of our customers by rendering high level services and products. The Board would like to thank the CEO, management, and all employees for the continued focus on strategic and operational improvements.

The Hague, the Netherlands, April 3, 2024

William L. Connelly, Chairman of the Board of Directors of Aegon Ltd.

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Remuneration Report

The 2023 Remuneration Report from our Compensation

and Human Resource Committee on behalf of the Board

Introduction

This report has been prepared by the Compensation and Human Resource Committee of the Board of Directors, which was led by the Committee’s Chairperson Ms. Dona Young and was approved by the Board of Directors (Board).

In the first chapter, the Compensation and Human Resource Committee presents an overview of the business and remuneration highlights in 2023 and a look ahead to 2024. This is followed by chapter two, which contains a general introduction to remuneration at Aegon. The third chapter is the 2023 Non-Executive Director Remuneration Report, which contains a summary of the Non-Executive Director Remuneration Policy that was applicable in 2023 and their remuneration in recent years. In Chapter four, the 2023 Executive Director Remuneration Report provides a summary of the Executive Director Remuneration Policy that was applicable in 2023, the Executive Director remuneration over the recent years, and the 2023 Executive Director performance indicators.

1. Business and remuneration highlights

This chapter presents an overview of the business and remuneration highlights in 2023 and a look ahead to 2024.

2023 Business highlights

In 2023, Aegon continued to make steady progress with its transformation. Commercial momentum was strong in our US strategic assets, UK Workplace platform activities and the International segment. In addition, we continued to make progress in reducing our exposure to Financial Assets. At the same time, our UK Retail and asset management activities remained challenged by adverse macroeconomic conditions. Free cash flows amounted to EUR 715 million in 2023. This was above the guidance provided of around EUR 600 million, in part due to special remittances received from AIFMC, the Chinese asset management joint venture. In 2023, earnings on in-force from the units (so before holding and funding expenses) rose by 21% compared with 2022 to EUR 1,487 million, driven by business growth in US Strategic Assets, and management actions we have taken on US Financial Assets. The market consistent value of new business increased to EUR 688 million compared with EUR 526 million in 2022. This increase was mainly driven by improved results for US Life, benefiting from higher sales and successful repricing of indexed universal life. Retirement plans in the US also contributed favorably, driven by higher written sales and growing assets in the general account stable value proposition.

Business performance highlights  2023   2022  

Free cash flows (in EUR million)

   715     780  

Earnings on In-Force (in EUR million)1)

         1,487           1,229  

Market consistent value of new business (in EUR million)

   688     526  

1

Excludes Holding Company and Funding expenses.

In 2023, Aegon’s Board of Directors consisted of the following Non-Executive members: Mr. William Connelly (Chairman), Ms. Corien Wortmann-Kool (Vice Chairman), Ms. Dona Young, Mr. Mark Ellman, Mr. Thomas Wellauer, Ms. Caroline Ramsay, Mr. Jack McGarry and Ms. Karen Fawcett. Mr. Ben Noteboom stepped down in May 2023. During the Annual General Meeting of Shareholders on June 6, 2024, the Board will propose to appoint Mr. Albert Benchimol to the Board for a term of four years as of June 6, 2024. Mr. Lard Friese, Chief Executive Officer, joined the Board as an Executive Director on September 30, 2023.

2023 Remuneration highlights

At the Annual General Meeting of Shareholders on May 25, 2023, shareholders were asked to cast an advisory vote on the 2022 Remuneration Report. The 2022 Remuneration Report was approved with 97.0% of the votes cast, which was comparable to 2021 (97.5%).

Following Aegon’s redomiciliation from the Netherlands to Bermuda, the remuneration rules from Dutch law and Solvency II no longer applied as of September 30, 2023. Aegon’s Global Remuneration Framework (GRF), the Non-Executive Director Remuneration Policy, and Executive Director Remuneration Policy were designed in accordance with these rules. For the remainder of 2023, the GRF and both policies remained in place, without amendments or restatements.

For serving as an Executive Director as CEO in 2023, Mr. Friese received EUR 1,637,213 in fixed compensation (2022: EUR 1,559,250). This included a 5% increase per January 2023. For that same period, Mr. Friese was allocated EUR 3.9 million in total compensation (2022: EUR 3.6 million).

 62  |  Annual Report on Form 20-F 2023

 Remuneration Report

The 2023 CEO pay ratio was 25.4 (2022: 23.5, 2021: 28.0). This ratio was based on the EU-IFRS remuneration expenses for Mr. Friese and for Aegon’s employees in 2023, which have been audited. The annual expenses for Mr. Friese’s total compensation were EUR 3.5 million (2022: EUR 3.1 million). The average expenses for the employees’ total compensation were EUR 137 thousand (2022: EUR 134 thousand), which were calculated by:

§The total EU-IFRS remuneration expenses for all employees, which are the total employee expenses minus the CEO remuneration expenses: EUR 1,711 million – EUR 3.5 million = EUR 1,707 million.
§Divided by the number of employees in scope, which are the total number of employees minus employees in joint ventures and associates (as their expenses are not included in note 14 given the partial consolidation for these businesses) and minus the CEO: 12,453 = employees.

The Compensation and Human Resource Committee noted that various factors have influenced the CEO pay ratio. Mr. Friese’s 2023 remuneration expenses changed mainly due to an increase in his fixed compensation and because the deferred expenses for his variable compensation have been building up more since his appointment in 2020. The average employee expenses mainly increased due to the impact of exchange rate movements, wage inflation, and the change in population (Aegon Netherlands employees moving to a.s.r.). As these factors can vary from year to year, the Committee does not have a preferred ratio. Instead, all compensation within Aegon (including for the Executive Director(s)) should be in line with the relevant internal and external references for the relative weight of the position, its responsibilities, and characteristics as well as the employee’s qualifications, experience, and performance.

Looking ahead to 2024

At the 2024 Annual General Meeting, the Board will ask Aegon’s shareholders to adopt a Director’s Remuneration Policy which covers the remuneration of Non-Executive and Executive Directors. In accordance with Aegon’s bye-laws, the Board must ask Aegon’s shareholders to adopt a Director’s Remuneration Policy at least every four years. Currently, Aegon has separate Remuneration Policies in place for the Non-Executive and Executive Directors (previously Supervisory Board and Executive Board members respectively) which were adopted by Aegon’s shareholders at the 2020 Annual General Meeting.

2. Remuneration at Aegon in general

This chapter contains a general introduction to Aegon’s Global Remuneration Framework, Human Resources Strategy, Remuneration Principles, the concepts of total compensation and variable compensation, Risk Management in relation to remuneration, and remuneration of Material Risk Takers.

Global Remuneration Framework

Aegon’s Global Remuneration Framework (GRF) was designed in accordance with relevant rules and regulations. . These included the remuneration rules from Dutch law and Solvency II, which no longer applied as of September 30, 2023, following Aegon’s redomiciliation from the Netherlands to Bermuda. All remuneration policies within Aegon are derived from the GRF, such as the Executive Director Remuneration Policy and the local Remuneration Policies of our business units.

Human Resources Strategy

In order to support the Aegon Strategy and local business objectives, the Aegon Group Human Resources Strategy contains the following remuneration-related goals:

§Attract, retain, motivate, and reward a highly qualified, and diverse workforce.
§Align the interests of executives, managers, and all other employees with the business strategy and risk tolerance, the values, and the long-term interests of Aegon.
§Provide a well-balanced and performance-related compensation package to all employees, taking into account shareholder and other stakeholder interests, relevant regulations, the corporate responsibilities, and Aegon’s purpose, values, and behaviors.

Remuneration Principles

Based on the Human Resources Strategy, Aegon has formulated the following Remuneration Principles, which are the foundation for all remuneration policies and practices within the Group.

§First, Aegon’s remuneration is employee-oriented by fostering a sense of value and appreciation in each individual employee, promoting the short- and long-term interests and wellbeing of Aegon’s employees through fair compensation and supporting the career development and mobility of employees.
§Second, it is performance-related by establishing a clear link between pay and performance by aligning objectives and target setting with performance evaluation and remuneration, reflecting individual as well as collective performance in line with Aegon’s long-term interests.
§Third, it is fairness-driven by promoting fairness and consistency in Aegon’s remuneration policies and practices, avoiding discrimination, having gender-neutral policies and practices paying equal for equal work, and by providing total compensation packages in line with an appropriately established peer group at a country and/or functional level.
§And last, Aegon’s remuneration is risk-prudent (see also Risk Management in relation to Remuneration below).

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Risk Management in relation to Remuneration

Remuneration, and specifically variable compensation, may have an impact on risk-taking behaviors of employees and, as such, may undermine effective risk management. The GRF therefore includes additional remuneration rules for the Executive Director, Material Risk Takers, and Staff in Key Functions, as their roles and responsibilities require tailored risk mitigating measures and governance processes. These rules include minimum requirements on deferred pay-out of variable compensation in non-cash instruments, mandatory ex-ante and ex-post risk assessments related to setting individual goals, allocation of variable compensation and pay-out of deferred variable compensation, and malus and claw-back provisions.

Both the Risk Management and Compliance functions are involved in the design and execution of Aegon’s GRF and remuneration policies, such as reviewing proposed updates to the GRF and remuneration policies, reviewing the selection of Material Risk Takers, and executing various risk mitigating measures during the compensation cycle (when the targets are set, before a variable compensation award is allocated, and before and after deferred variable compensation is paid).

Variable compensation

Variable compensation, if any, is capped as a percentage of fixed compensation. These caps were set in accordance with the Dutch Financial Supervision Act and remained in place for the remainder of 2023, when the Dutch Act no longer applied following Aegon’s redomiciliation to Bermuda. For instance, Aegon offered selected Corporate Center employees variable compensation up to 100% of fixed compensation in 2023. And Aegon had obtained shareholder approval at the Annual General Meeting of Shareholders of May 20, 2016, to offer variable compensation up to 200% of fixed compensation to selected senior employees outside the European Economic Area. For senior management, variable compensation is usually paid out in upfront cash and deferred Aegon shares and is subject to malus and claw-back provisions. Aegon’s capital was not adversely impacted by the maximum variable compensation that was paid out.

3. 2023 Non-Executive Director Remuneration Report

The 2023 Non-Executive Director Remuneration Report has been prepared by the Compensation and Human Resource Committee of the Board of Directors in accordance with relevant rules and regulations. The Compensation and Human Resource Committee was led by the Committee’s Chairperson Dona Young. This report was approved by the Board.

This report contains a summary of the Non-Executive Director Remuneration Policy which applied to 2023 and the Non-Executive Directors remuneration over the

recent years. As of September 30, 2023, and aligning with the change of the legal seat of Aegon to Bermuda, the Supervisory Board Remuneration Policy (adopted by Aegon’s shareholders in 2020) was approved to be read as to apply to the Non-Executive Directors and is referred to as the Executive Director Remuneration Policy, without amending or restating the policy. Disclosures of individuals in the Non-Executive Director tables and text below will include those who were previously reported as Supervisory Board members.

Non-Executive Director Remuneration Policy in 2023

Aegon’s Non-Executive Director Remuneration Policy aims to ensure fair compensation and protect the independence of Non-Executive Directors. The Non-Executive Director Remuneration Policy that applied in 2023 was adopted at the Annual General Meeting of Shareholders on May 15, 2020. Since the adoption, this policy has been subject to annual reviews by the Board and no changes have been adopted during this period. The policy remains in place until a new or revised policy has been adopted by the shareholders in accordance with the applicable rules and regulatory requirements from the Insurance Code of Conduct of the Bermuda Monetary Authority. The Board of Directors will submit a proposal to the shareholders to adopt a policy at an Annual Meeting of Shareholders at least every four years.

The policy contributes to Aegon’s strategy, long-term interests, and sustainability through the remuneration of the Non-Executive Directors in various ways:

§The policy provides the Board with the means to attract, motivate, and retain competent, diverse, and experienced Non-Executive Directors for the long term. This is essential for executing Aegon’s strategy and safeguarding and promoting its long-term interests and sustainability.
§Non-Executive Directors receive a fixed remuneration for their responsibilities which does not depend on the Aegon results in order to protect their independence when supervising the manner in which the Executive Director implements the long-term value creation strategy. These responsibilities are part of being member of the Board and its Committees and the position of (Vice) Chairperson of the Board and/or its Committees. The certainty of the fixed compensation also allows Non-Executive Directors to focus on the long-term interest and sustainability of Aegon in their supervisory role.
§The Non-Executive Directors receive fixed remuneration for their activities, such as attending Committee meetings and additional Board meetings, in order to regularly discuss the Aegon strategy, the implementation of the strategy and the principal risks associated with it, while taking into account the broader long-term interests and sustainability of Aegon.
§Non-Executive Directors are only allowed to privately own Aegon Ltd. shares if this is a long-term investment, aligning their interests with Aegon’s long-term interests.

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§   Aegon’s purpose and values at the time, were taken into account by the Board when the last changes to the policy were proposed in 2020.

§   The policy continues to align with our company purpose (helping people live their best lives) and related values (we tune in, we step up, and we are a force for good) which were established in 2022. Furthermore, the Board will take the purpose and values into account when a revised policy is developed in 2024.

The Board has not taken the compensation structures and levels at Aegon into account as the fee-based compensation structure for Non-Executive Directors differs significantly from the Aegon compensation structures and levels.

The Non-Executive Directors are entitled to the following fees (see also the table below):

§   A base fee for membership of the Board. No separate attendance fees are paid to members for attending the regular Board meetings.

§   An attendance fee for each extra Board meeting attended, be it in person or by video and/or telephone conference.

§   A committee fee for members on each of the Board’s Committees.

§   An attendance fee for each Committee meeting attended, be it in person or through video and/or telephone conference.

§   An additional fee for attending meetings that require intercontinental, continental, or US interstate travel between the Non-Executive Director’s home location, and the meeting location.

Base fee for Board membership Non-Executive DirectorsEUR /year 

Chairman

84,000 

Vice-Chairman

52,500 

Member

42,000 
Fee for Board committee membership Non-Executive DirectorsEUR /year 

Chairman of the Audit or Risk Committee

13,650 

Member of the Audit or Risk Committee

8,400 

Chairman of other committees

10,500 

Member of other committees

5,250 
Attendance fees Non-executive DirectorsEUR 

Committee meeting

3,150 

Extra Board meeting

3,150 
Travel feesEUR 

Intercontinental

4,200 

Continental or US interstate

2,100 

Each of these fees is a fixed amount. Each quarter Aegon pays the fees that the Non-Executive Directors earned during that period. Where required, Aegon pays the employer social security contributions in the home country of the Non-Executive Director. The employee social security contributions in the home country, if any, are paid by the Non-Executive Director.

The Non-Executive Directors do not receive any performance or equity-related compensation, and do not accrue pension rights with Aegon.

The Board regularly assesses the competitiveness of the Board’s remuneration structure and levels against peer companies with data provided by Willis Towers Watson. Fo this purpose, the Board selected a primary set of peer group companies according to the following criteria:

§   Industry: Insurance, with a preference for life insurance.

§   Size: Average market capitalization, employees, revenue, and total assets.

§   Geographic scope: Preferably companies that operate globally.

§   Location: Headquarters based in Europe, excluding the United Kingdom (because the Non-Executive Directors typically have different responsibilities compared to their continental European counterparts).

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Based on these criteria, the current peer group consists of the following 16 European insurance companies: Ageas, Assicurazioni Generali, CNP Assurances, Hannover Rueck, Helvetia, MAPFRE, Münchener RE, NN Group, Poste Italiane, Sampo, SCOR, Swiss Life, Swiss Re, Talanx, Vienna Insurance Group, and Zurich Insurance Group. This peer group differs from the European peer group for the Executive Director as a result of excluding the UK companies. The peer group is reviewed each year and may be updated accordingly. The last update of this peer group was in 2022, when the peer group size was increased from 12 to 16 (creating a more balanced selection), Hannover Rueck, Helvetia, Poste Italiane, Sampo, SCOR, and Vienna Insurance Group were added, and Allianz and AXA were removed.

In addition, the Board selects a secondary peer group according to the following criteria, in order to monitor alignment with the General Industry in the Netherlands:

§Industry: General industry and listed on the Amsterdam Euronext exchange.

§Size: Average market capitalization, employees, revenue, and total assets.

§Location: Headquarters based in the Netherlands at the time the peer group is established

Based on these criteria, the current secondary peer group consists of the following 12 companies that have a listing on Euronext Amsterdam: Akzo Nobel, Ahold Delhaize, ASML, DSM, ING Group, Heineken, KPN, NN Group, Philips, Randstad, Signify, and Wolters Kluwer. This peer group is also reviewed each year and was last updated in 2022 (replacing ABN AMRO by Signify). This peer group is identical to the Dutch peer group for the Executive Director.

The Compensation and Human Resource Committee may recommend changes to the fee levels or structure of the Non-Executive Directors, based on the results of a competitiveness review and economic developments. Such recommendations would be discussed by the Board, which can support, revise, or reject them. The Board is allowed to annually index the fees for economic developments in the Netherlands. For any other change to the level or structure of the fees, the shareholders will be asked to adopt the proposed changes at the Annual General Meeting of Shareholders.

The policy contains a temporary derogation clause, with rules which are in accordance with the Dutch Civil Code which applied when the remuneration policy was last amended. This means derogation is only allowed in exceptional circumstances to serve the long-term interest and sustainability of Aegon or to assure its viability, for a limited period of time, when it stays in line with the general spirit of the policy and when the details are disclosed in the next Remuneration Report. This clause was not used in 2023.

Information on Non-Executive Directors and the composition of its four committees can be found in the report of the Board in this Integrated Annual Report 2023.

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 Remuneration Report

Non-Executive Director remuneration in recent years

The table below shows the fees and benefits that have been allocated to and paid for each Non-Executive Director and former Supervisory Board members in the calendar years 2021, 2022, and 2023, in accordance with the Non-Executive

Director Remuneration Policy that applied at the time. There were no deviations from this policy in these years. The table also includes the total IFRS expenses that were recognized for the compensation of the Non-Executive Directors in 2021, 2022, and 2023.

In EUR thousand    Year     Base fees1)     Attendance
fees 2)		     Benefits 3)     

Total

compensation

 

William L. Connelly

     2023      100      98      38      235 
     2022      100      88      29      217 
      2021      95      57      10      162 

Mark A. Ellman

     2023      56      63      17      135 
     2022      56      60      17      132 
      2021      53      45      4      102 

Ben J. Noteboom (up to May 25, 2023)

     2023      25      19      4      48 
     2022      61      66      11      138 
      2021      58      45      4      107 

Corien M. Wortmann - Kool

     2023      66      66      13      145 
     2022      66      79      6      151 
      2021      63      45      4      112 

Dona D. Young

     2023      64      76      25      164 
     2022      61      66      25      152 
      2021      62      51      6      119 

Caroline Ramsay

     2023      64      54      40      157 
     2022      64      82      37      183 
      2021      61      39      21      121 

Thomas Wellauer

     2023      56      63      24      142 
     2022      56      57      24      136 
      2021      53      45      13      111 

Jack McGarry

     2023      58      66      25      150 
     2022      56      76      23      154 
      2021      31      24      6      61 

Karen Fawcett (as of May 31, 2022)

     2023      56      63      29      148 
     2022      32      32      13      77 
                                    

Total compensation

     2023      544      567      215      1,326 
     2022      551      605      184      1,340 
      2021      476      351      69      896 

Recognized IFRS expenses3)

     2023      544      567      215      1,326 
     2022      551      605      184      1,340 
      2021      482      357      72      911 

1

Ben Noteboom retired from the Board as per the AGM of May 25, 2023 and received a pro rated fee. Jack McGarry became Chair of the Audit Committee and Caroline Ramsay became Chair of the Risk Committee as per the AGM of May 25, 2023. Dona Young joined the Compensation & Human Resource Committee as per May 9, 2023, and became Chair of said Committee as per the AGM of May 25, 2023.

2

In 2023, all NEDs have attended the regular Board (Committee) meetings, with the exception of Ben Noteboom, who was absent at the February Risk Committee meeting. There have been several additional (ad-hoc) Board (Committee) calls in 2023, some have been combined and paid as one meeting. Bill Connelly received additional attendance fees and (where applicable) travel fees for his attendance at additional meetings like the combined Audit/Risk Committee meeting of December 7, 2023, and the EGMs of January 17, September 29 and September 30.

3

Benefits cover the travel fees for all Non-Executive Directors and the mandatory employer social security contributions in the home countries of Ms. Ramsay (UK) and Mr. Wellauer (Switzerland).

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The table below presents the total compensation (fees and benefits) that was awarded and due in the last five calendar years on an annualized basis and the year-on-year annual change in total compensation. This compensation was paid in accordance with the Board remuneration policy thatapplied at the time and there were no deviations. In addition, the table shows the Aegon net result, a proxy of the financial and non-financial business performance, the inflation in the Netherlands, and the average employee compensation over the same period.

In EUR thousand  Annualized 1) 2019   2020   2021   2022   2023 

William L. Connelly

  Compensation  169    144    162    217    235 
   Change  42%    (15%)    13%    34%    8% 

Mark A. Ellman

  Compensation  115    98    102    132    135 
   Change  12%    (15%)    5%    30%    2% 

Ben J. Noteboom (up to May 25, 2023)

  Compensation  103    97    107    138    121 
   Change  20%    (6%)    10%    29%    (12%) 

Corien M. Wortmann - Kool

  Compensation  123         111    112    151    145 
   Change  19%    (10%)    1%    35%    (4%) 

Dona D. Young

  Compensation         158    127    119    152    164 
   Change  31%    (20%)    (6%)    28%    8% 

Caroline Ramsay (as of May 15, 2020)

  Compensation  -    108    121    183    157 
   Change  -    -    12%    51%    (14%) 

Thomas Wellauer (as of May 15, 2020)

  Compensation  -    94    111    136    142 
   Change  -    -    18%    22%    5% 

Jack McGarry (as of June 3, 2021)

  Compensation  -    -         105    154    150 
   Change  -    -    -    46%    (3%) 

Karen Fawcett (as of May 31, 2022)

  Compensation  -    -    -         131    148 
   Change  -    -    -    -         13% 

Ben van der Veer (up to May 15, 2020)

  Compensation  118    131    -    -    - 
   Change  17%    11%    -    -    - 

Robert W. Dineen (up to Oct 11, 2019)

  Compensation  101    -    -    -    - 
   Change  1%    -    -    -    - 

Aegon net result based on EU-IFRS2)

  In EUR million  1,525    55    1,701    (2,504)    (199) 

Aegon business performance3)

  Target = 100%  79%    57%    123%    113%    130% 

Inflation in the Netherlands

  Consumer Price Index  2.6%    1.3%    2.7%    10.0%    3.8% 

Average employee compensation 4)

  In EUR thousand  115    110    105    134    137 
   Annual change  11%    (4%)    (5%)    28%    2% 

1

Remuneration amounts are annualized for Non-Executive Directors who joined or left during a calendar year.

2

Up to 2022, Aegon net income is reported under IFRS 4, as of 2023 this is under IFRS 17.

3

The weighted average Aegon financial and non-financial business performance, expressed as a percentage on a performance scale with 50% as threshold, 100% as target and 150% as maximum, as used for the allocation of variable compensation in the applicable year.

4

Consistent with the CEO pay ratio calculation, the average employee compensation is based on the audited total EU-IFRS remuneration expenses for all employees divided by the number of employees in scope for these expenses.

4. 2023 Executive Director Remuneration Report

The 2023 Executive Director Remuneration Report has been prepared by the Compensation and Human Resource Committee of the Board. The Compensation and Human Resource Committee was led by the Committee’s Chairperson Dona Young. This report was approved by the Board of Directors.

This report contains a summary of the Executive Director Remuneration Policy that applied to 2023, the Executive Directors remuneration over the recent years, and the 2023 Executive Director performance indicators. As of September 30, 2023, and aligning with the change of the legal seat of Aegon to Bermuda, the Executive Board Remuneration Policy (adopted by Aegon’s shareholders in 2020) was approved to be read as to apply to the Executive Directors and is referred to as the Executive Director Remuneration

Policy, without amending or restating the policy. Disclosures of individuals in the Executive Director tables and text below will include those who were previously reported as Executive Board members.

Mr. Lard Friese served as Chief Executive Officer throughout 2023, as part of the Executive Board until September 30, 2023, and as Executive Director from October 1, 2023. Mr. Matthew Rider was an Executive Board member until September 30, 2023 and became a member of the Executive Committee as of September 30, 2023. For transparency in this transition year, his 2023 allocated compensation amounts have been disclosed for the complete 2023 plan year.

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Executive Director Remuneration Policy in 2023

The Board has the overall responsibility for Aegon’s Remuneration Policies, including the Executive Director Remuneration Policy. The Executive Director Remuneration Policy that has been applied in 2023 was adopted at the Annual General Meeting of Shareholders on May 15, 2020. Since the adoption, this policy has been subject to annual reviews by the Board of Directors and no changes have been adopted during this period. As of September 30, 2023, the remuneration rules of Dutch Financial Supervision Act and Solvency II no longer apply to this policy, following Aegon’s redomiciliation from the Netherlands to Bermuda. However, the current policy remains in place until a new or revised policy has been adopted by the shareholders in accordance with Aegon’s bye-laws. The Board will submit a proposal to the shareholders to adopt a policy at an Annual Meeting of Shareholders at least every four years.

§Aegon is an integrated, diversified, international financial services group of companies based in Bermuda. We offer investment, protection, and retirement solutions. The policy provides the Board with the means to attract, motivate, and retain Executive Directors who are competent and experienced to run Aegon in this specific context. As the Executive Director is based in the Netherlands, the Policy considers the European insurance peers as well as Dutch general industry peers to be the relevant external reference for Executive Remuneration. The Policy is also influenced by the European and Dutch rules and regulations on (Executive) remuneration.

§Aegon’s purpose and values at the time, were taken into account by the Board when the last changes to the policy were proposed in 2020.

§The policy continued to align with our company purpose (helping people live their best lives) and related behaviors (we tune in, we step up, and we are a force for good) which was introduced in 2022. Furthermore, the Board will take the new purpose and values into account when a new or revised policy is developed.

The Compensation and Human Resource Committee may recommend policy changes to the Board. In that case, the Compensation and Human Resource Committee will conduct scenario analyses to determine the long-term effects on the level and structure of compensation granted to the Executive Director and reports its findings to the Board. The Board can subsequently decide on referring the proposed policy changes to the Annual General Meeting of Shareholders for adoption.

The policy contains a temporary derogation clause, with rules which are in accordance with the Dutch Civil Code which applied when the remuneration policy was last amended. This means derogation is only allowed in exceptional circumstances to serve the long-term interest and sustainability of Aegon or to assure its viability, for a limited period of time, when it stays in line with the general spirit

of the policy and when the details are disclosed in the next Remuneration Report. This clause was not used in 2023.

Total compensation

Total compensation for the Executive Director is defined in the Executive Director Remuneration Policy as a combination of fixed compensation, variable compensation, pension, and other benefits. The Board determines and regularly reviews the appropriate selection of remuneration elements and their (maximum) remuneration level for the Executive Director to ensure the structure remains competitive and provides proper and risk-based incentives in line with Aegon’s risk appetite. The fixed and variable compensation elements and their levels are reviewed at least once a year. The pension arrangements and other benefits and their levels are reviewed at least every four years. In its review, the Board takes the specific role, responsibilities, experience, and expertise of the Executive Director into account as well as internal and external reference information:

§The internal references are the compensation structure and levels of the members of the Executive Committee of Aegon Ltd. And the annual compensation changes of the general employee population and senior managers within Europe and the Netherlands specifically.
§The external references are compensation trends in the market, economic developments (for example, inflation) as well as quantitative assessments of the competitiveness against a peer group of insurance companies in Europe and a peer group of companies based in the Netherlands.
§In addition, the Compensation and Human Resource Committee conducts a scenario analysis in case of a policy change to determine the long-term effect on the Executive Director’s remuneration structure, and reports their findings to the Board.

The European Insurance peer group was selected by the following criteria:

§Industry: Insurance, with a preference for life insurance.

§Size: Average market capitalization, employees, revenue, and total assets.

§Geographic scope: Preferably companies which operate globally.

§Location: Headquarters based in Europe.

Based on these criteria, the current peer group consists of the following 16 European insurance companies: Ageas, Assicurazioni Generali, Aviva, CNP Assurances, Helvetia, Legal & General, MAPFRE, Münchener Re, NN Group, Poste Italiane, SCOR, Swiss Life, Swiss Re, Talanx, Vienna Insurance Group, and Zurich Insurance Group. The last update of this peer group was in 2022, when Helvetia, Poste Italiane, SCOR and Vienna Insurance Group were added, and Allianz, AXA, Prudential, and RSA Insurance Group were removed. This peer group differs from the European peer group for the Non-Executive Directors, as the latter excludes UK companies where Non-Executive Directors typically have different

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responsibilities compared to their continental European counterparts.

The Dutch peer group was selected by the following criteria:

§Industry: General industry and listed on the Amsterdam Euronext exchange.
§Size: Average market capitalization, employees, revenue and total assets.
§Location: Headquartered in the Netherlands at the time the peer group is established.

Based on these criteria, this peer group consists of the following 12 companies: Akzo Nobel, Ahold Delhaize, ASML, DSM, ING Group, Heineken, KPN, NN Group, Philips, Randstad, Signify, and Wolters Kluwer. This peer group is also reviewed each year and was last updated in 2022 (replacing ABN AMRO by Signify).

The Board will review both peer groups annually and will amend them as necessary, within the above-mentioned selection criteria, to ensure they continue to provide a reliable basis for comparison. Any change to the peer group will be disclosed in the Remuneration Report.

The Compensation and Human Resource Committee may recommend changes to the compensation levels of the Executive Director in accordance with the Remuneration Policy, based on the results of this annual total compensation review and on discussions with the Executive Director regarding his remuneration level and structure. Such recommendations would subsequently be discussed by the Board, which can approve, revise, or reject them.

The Board discussed and approved the 2023 total compensation for the Executive Director, after taking the Compensation and Human Resource Committee’s review into consideration.

Fixed compensation

The fixed compensation for the Executive Director is paid in monthly instalments. The policy allows the fixed compensation to be paid in cash and in shares. The Executive Director received his 2023 fixed compensation in cash.

The Board may offer permanent or temporary gross monthly fixed allowances when the Board considers this an appropriate alternative for other remuneration elements.

Variable compensation

The Executive Director is eligible for variable compensation with a target level of 80% of the fixed compensation level (excluding allowances, if applicable), with a threshold level of 50% and a maximum opportunity of 100% of the fixed compensation level.

The variable compensation award is based on performance against a set of performance indicators, weights, and target levels that have been set by the Board at the start of the performance year. The performance indicators contribute to Aegon’s strategy, long-term interests, and sustainability, within Aegon’s risk tolerance statements and should comply with the following rules:

§It contains a mix of financial and non-financial performance indicators, with at least 50% weight allocated to the non-financial performance indicators.
§The maximum weight for unadjusted financial indicators is determined by the Global Remuneration Framework and is currently set at 50%.
§It contains a mix of Aegon and personal performance indicators, which can range in weight between 50-80% and 20-50% respectively, depending on the Aegon priorities of the performance year.
§At least 20% of the indicators has a retrospective three-year performance horizon, while the remainder has a one-year performance horizon.
§The indicators should cover the following mandatory performance indicator categories: shareholders, capital, earnings, growth, stakeholders, ESG, and strategy.

The Compensation and Human Resource Committee and the Executive Director prepare a proposal for the performance indicators, weights, and target levels. These are subsequently reviewed by Aegon’s Risk Management team (that is, the first ex-ante risk assessment) before the Board approves these, to ensure that:

§The performance indicators and weights are in line with the policy.
§The financial performance indicators are consistent with the risk tolerance statements.
§The non-financial performance indicators are consistent with risk tolerance statements, regulatory requirements, reasonable stakeholder expectations, and are supporting sound and responsible business practices and integrity of the products and services delivered.

The Compensation and Human Resource Committee sends the proposal and the first ex-ante risk assessment to the Board of Directors, which can approve, revise, or reject the proposal. After approval, the Executive Director is granted his conditional variable compensation awards for the plan year. This conditional award equals his at target variable compensation level, split between 33.33% upfront cash and 66.67% deferred Aegon shares. The grant price for the shares is equal to the volume weighted average price on the Euronext Amsterdam stock exchange for the period December 15 to January 15 at the start of the plan year.

After the completion of the performance period, the Compensation and Human Resource Committee prepares a recommendation for the allocation of a variable compensation award to the Executive Director. This

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recommendation is based on the actual performance results compared to target levels and takes a second ex-ante risk assessment by the Risk Management team into account. This risk assessment looks into whether there are reasons for a downward adjustment of the intended variable compensation award (malus) which were not take into account yet, such as:

§Significant risk or compliance incident(s);
§Insufficient response to risk incident(s), compliance incident(s), regulatory fine(s) and/or insufficient execution of risk mitigating measures in response to these incidents;
§Breaches of laws and regulations;
§Insufficient evidence of embedding good standards of practice;
§Significant deficiencies or material weaknesses relating to the Sarbanes-Oxley Act; and
§Reputation damage due to risk events.

In this assessment potential risk-mitigating behaviors are also taken into account, such as remaining within risk limits, risk reduction, risk avoidance, risk transfer, and risk response by the Executive Director.

The Compensation and Human Resource Committee sends its recommendation and the second ex-ante risk assessment to the Board, which can approve, revise, or reject the recommendation. This Board decision includes validating that, when taken together, the results of the performance indicators represent a fair reflection of the overall performance of the Executive Director over the performance year.

The allocated variable compensation award is subsequently split between 33.33% upfront cash (that is, paid in the year following the performance year) and 66.67% deferred shares. These shares are deferred for a three-year period after allocation after which they cliff-vest. Before vesting, the Risk Management team executes an ex-post risk assessment which examines whether there are reasons for a downward adjustment of the originally allocated variable compensation award (malus) that were not taken into account yet. This risk assessment takes the same criteria into consideration as the second ex-ante risk assessment. Based on this assessment, the Compensation and Human Resource Committee subsequently prepares a recommendation on how to pay out the deferred portion (that is, unchanged or adjusted downward). The Compensation and Human Resource Committee sends its recommendation and the ex-post risk assessment to the Board. The Board can approve, revise, or reject the recommendation.

Claw-back provision

In November 2023, the Board adopted a compensation recovery policy as required by Rule 10D-1 under the Securities Exchange Act of 1934, as amended, and the corresponding listing standards of the New York Stock Exchange, which provides for the mandatory recovery from

current and former executive officers of incentive-based compensation that was erroneously awarded during the three fiscal years preceding the date that the company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. The amount required to be recovered is the excess of the amount of incentive-based compensation received over the amount that otherwise would have been received had it been determined based on the restated financial measure.

Aegon’s Board can also claw-back variable compensation that has already been paid to the Executive Director in case of a financial restatement or individual gross misconduct. Examples of misconduct include, but are not limited to, a significant breach of laws and/or regulations, use of violence, either verbally or physically, involvement with fraud, corruption or bribery, significant issues due to evident dereliction of duty, and/or discrimination of any kind (for example age or gender).

Pension arrangements

The Executive Director is entitled to pension contributions that equal 40% of their fixed compensation level, which consists of the following three parts:

§Participation in Aegon’s defined contribution pension plan for employees based in the Netherlands, for their eligible earnings up to EUR 128,810 (2023 threshold set by Dutch law).
§Participation in Aegon’s defined contribution pension plan for employees based in the Netherlands, for their fixed income above EUR 128,810.
§An additional gross allowance for pension to make the sum of these three pension contributions equal to 40% of their fixed compensation level.

The Executive Director receives pension contributions that are somewhat higher compared to employees based in the Netherlands and of similar age (approximately 10-15% difference). This is done to achieve a competitive total compensation level.

Other benefits

Other benefits include non-monetary benefits (for example, company car), social security contributions by the employer, and tax expenses borne by Aegon.

Aegon does not grant the Executive Director personal loans, guarantees or other such arrangements, unless in the normal course of business and on terms applicable to all employees, and only with the approval of the Board.

Terms of Engagement

The Executive Directors is appointed for four years and may then be reappointed for successive mandates also for

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a period of four years. The Executive Director has a board agreement with Aegon Ltd., rather than an employment contract. The Executive Director may terminate his board agreement with a notice period of three months. The Board may terminate the board agreement by giving six months’ notice if it wishes to terminate the agreement.

The Board may entitle the Executive Director to a termination payment up to or equal to the total annual fixed compensation level. This payment is not allowed in case of early termination at the initiative of the Executive Director (unless due to imputable acts or omissions of Aegon), imputable acts, or omissions by the Executive or failure of Aegon as a company during the appointment term of the Executive Director. Mr. Friese has a termination clause included in his board agreement.

Executive Director remuneration in recent years

This section provides more details related to the remuneration that has been allocated and paid to the Executive Director and former Executive Board members. It covers the allocated remuneration (2021-2023), the calculation of the 2023 variable compensation, the pay-out schedule of variable compensation (2021-2027), the recognized IFRS expenses for remuneration (2021-2023), the remuneration that was awarded and due in 2022 and 2023, and the annualized total compensation overview (2019-2023).

Allocated remuneration (2021-2023)

The first table shows the remuneration that has been allocated to the Executive Director and former Executive Board members, for the performance years 2021, 2022, and 2023, in accordance with the Executive Director Remuneration Policy that applied at the time. There were no deviations from the policy in these years.

Allocated compensation (in EUR thousand)  

Fixed

compensation

   

Variable

compensation

        Pension        

Other

Benefits

        

Total   

compensation   

Lard Friese

                

20231)

   1,637    1,529         656         87         3,909  

2022

   1,559    1,368      621      77      3,625 

2021

   1,485    1,359         594         77         3,515 

Matt Rider2)

                

20233)

   1,037    969      427      107      2,540 

2022

   988    837      395      66      2,286 

2021

   968    884         387         67         2,306 

All Executive Directors

                

20234)

   409    382         164         22         977 

All Executive Board

                

20235)

   2,006    1,874      812      144      4,836 

2022

   2,547    2,205      1,016      143      5,912 

2021

   2,453    2,243         981         144         5,821 

1

Mr. Friese’s fixed compensation increased with 5% as of January 1, 2023.

2

For transparency in transition year, Mr. Rider’s total compensation reflects the full year in 2023.

3

Mr. Rider’s fixed compensation increased with 5% as of April 1, 2023.

4

The disclosed amounts for 2023 are received in the period that Mr. Friese has been an Executive Director, from October 1, 2023.

5

The disclosed amounts for 2023 are received in the period that Mr. Friese and Mr. Rider had been members of the Executive Board, up to September 30, 2023.

 72  |  Annual Report on Form 20-F 2023

Remuneration Report

Calculation of 2023 variable compensation

Subject to the adoption of the annual accounts by Board on April 3, 2024, Mr. Friese has been awarded EUR 1,529 thousand in conditional variable compensation for the 2023 performance year (93% of fixed compensation)

and Mr. Rider EUR 969 thousand (93%). The following table shows how this award compares to the minimum, target and maximum variable compensation opportunity levels and how the award will be paid out.

2023 variable compensation  Minimum        Target        Maximum        Result   Pay-out

Lard Friese

                

In % of fixed compensation

   50%         80%         100%         93%   

In total (EUR thousand)

   819      1,310      1,637      1,529   Split in 33.33% cash and 66.67% shares

In cash (EUR thousand)

   273      437      546      510   Paid upfront in 2024

In shares1)

   112,924         180,679         225,849         210,943   Deferred for 3 years (2027)

Matt Rider2)

                

In % of fixed compensation

   50%      80%      100%      93%   

In total (EUR thousand)

   519      830      1,037      969   Split in 33.33% cash and 66.67% shares

In cash (EUR thousand)

   173      277      346      323   Paid upfront in 2024

In shares1)

   71,553         114,485         143,106         133,661   Deferred for 3 years (2027)

1

The 2023 grant price of the shares was EUR 4.833, which is equal to the volume weighted average price on the Euronext Amsterdam stock exchange for the period December 15, 2022 to January 13, 2023. After vesting in 2027, these shares are subject to an additional 2-year holding period.

2

For transparency in this transition year, this discloses Mr. Rider’s full year of variable compensation, as Mr Rider was part of the Executive Board until September 30, 2023.

The 2023 variable compensation awards for Mr. Friese (as the Executive Director) and Mr. Rider (as former Executive Board member) were based on a mix of 70% Group performance and 30% personal performance, for which the results are summarized in the first table below. The Group performance is initially measured on a 50-100-150% performance scale, which is used internally to fund the employee bonus pools. The total Group performance result on this scale is subsequently converted in a result on the 50-80-100% scale that applies to the variable compensation

of the Executive Director. For 2023, the unadjusted Group performance result was 139%. However, it was agreed to adjust the Group performance result to 130% as a better reflection of the Group’s 2023 performance. This equaled a result of 92% on the 50-80-100% scale. The personal performance results are directly scored on the 50-80-100% scale. The tables below, contain more detailed information on the Group and personal performance indicators respectively.

                         For Aegon bonus pools   
2023 Group performance indicators    Weight        Target       Outcome     Result1)  

Relative total shareholder return (2021-2023)

     10%      Rank 5     Rank 3      150%  

Earnings on in-force

     10%          1,388         1,487      118% 

ABS Addressable expense savings

     10%      100%     156%      150% 

ABS Revenue growth

     10%      100%     106%      114% 

Free cash flows (2021-2023)

     20%      2,100     2,224      131% 

Market consistent value of new business

     10%      545     688      144% 

ABS Timely L4 and L5 approval

     10%      100%     137%      150% 

Weighted average carbon intensity

     10%      (23%)     (37%)      150% 

Employee engagement

     10%         72%        77%      150% 

Total performance result

                               139% 

1

The Group performance results are measured on a 50-100-150% performance scale, which is used for the funding of the bonus pools for our employees.

             Lard Friese                  Matt Rider  
2023 individual performance indicators Weight       Result        Weight        Result  

Group performance1)

  70%      92%         70%         92%  

Strategic Roadmap development and execution

  25%      100%      10%      100% 

Women in senior management

  5%      80%      5%      80% 

Financial strategy execution

                      15%         100% 

Total performance result

            93%                   93% 

1

The abovementioned Group performance result of 130% equals 92% on the 50-80-100% performance scale that applies to the Executive Director.

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2023 Aegon performance indicatorsDefinition
Free cash flowsFree cash flows represent cash flows from remittances from the units less the Holding funding and operating expenses. For 2023 it will be measured on a retrospective 3-year performance period (2021-2023). The 2021-2023 target is equal to the 2021-2023 cumulative free cash flows target that was disclosed at the Capital Markets Day in December 2020 and the updated guidance, excluding Aegon the Netherlands.
Relative total shareholder returnAegon’s position relative to 7 US and 7 non-US peers when looking at Total Shareholder Return for a retrospective 3-year performance period (2021-2023). These peers were selected for being the most similar to Aegon based on their index listing, industry classification, 5 year monthly Beta, Market Capitalization and Total Revenue1).
Earnings on In-ForceRepresents the capital that is generated by the business units from their In-Force business in 2023. It is based on the definition of Operating Capital Generation, but excludes the New Business Strain, Release of Required Capital in the business units, and Holding & Funding expenses at Group level. The 2023 target is based on the 2023 budget, excluding Aegon the Netherlands.
Market consistent value of new businessRepresents how much value the sale of new insurance policies is generating for the company. This value represents the present value of our best estimate of incoming premiums and outgoing claims, benefits and expenses related to these new sales. The 2023 target is based on the 2023 budget, excluding Aegon the Netherlands.
Addressable expenses savings from cost initiativesMeasures the addressable expense savings delivered by cost initiatives in 2023. The 2023 target is based on the 2023 budget, excluding Aegon the Netherlands.
Revenue growth from growth initiativesMeasures the revenue growth delivered by growth initiatives in 2023. The 2023 target is based on the 2023 budget, excluding Aegon the Netherlands.
Timely execution of initiativesMeasures the timely operational completion of cost and growth initiatives.
Weighted average carbon intensityMeasures the weighted average carbon intensity reduction by the end of 2023, compared to our 2019 baseline, excluding Aegon the Netherlands.
Employee engagementEmployee engagement as measured in the global employee survey, excluding at Aegon the Netherlands.
Strategic Roadmap development and executionStrategic Roadmap development and execution, such as to further enhance the growth prospects for the strategic assets and successfully combine Aegon the Netherlands with a.s.r.
Women in senior managementMeasures the percentage of women in Aegon’s senior management layer worldwide, excluding at Aegon the Netherlands.
Finance strategy executionComplete the 2023 milestones from the Finance Strategy.

1

Relative Total Shareholder Return peer group results for 2021-2023: 1. Unum Group, 2. Principal Financial Group, 3. Aegon, 4. Assicurazioni Generali, 5. Prudential Financial, 6. MetLife, 7. Aviva, 8. Allianz (replaced Athene as of Mar 9, 2021), 9. ASR, 10. Brighthouse, 11. Equitable, 12. NN, 13. Phoenix, 14. Prudential Plc, 15. Lincoln National.

 74  |  Annual Report on Form 20-F 2023

 Remuneration Report

Lard FrieseTargetResult on 50-80-100% scale
Strategic Roadmap development and executionStrategic Roadmap development and execution, such as to further enhance the growth prospects for the strategic assets and successfully combine Aegon the Netherlands with a.s.r.100%. Successfully completed the redomiciliation of Aegon to Bermuda, including the transfer of group supervision to a new regulator, and implementation of new bye-laws and governance. Completed the combination of Aegon’s Dutch business with a.s.r. to create a leader in the Dutch insurance market, which also marked the beginning of Aegon’s asset management partnership with a.s.r. Completed the divestment of Aegon’s businesses in Poland and Romania, which was the final step to complete the full transaction in the CEE. Announced the divestment of Aegon’s interests in its joint venture in India, and announced the divestment of its UK protection business. Realized bolt-on acquisitions in the UK (Nationwide Building Society’s financial planning service), in Asset Management (NIBC’s European Collateralized Loan Obligation activities and La Financière de l’Échiquier through its joint venture with LBP), and extended the stake in MAG in Brazil. At the Capital Markets Day presented the key strategic focus of ensuring Transamerica reaches its full potential, focusing on profitable growth and investments in Strategic Assets while improving the risk profile and maximizing the value of Financial Assets.
Women in Senior ManagementIncrease the number of women in Aegon’s senior management layer worldwide to at least 38%.80%. At the end of 2023, 38% of the people in Aegon’s senior management layer were women.
Matt RiderTargetResult on 50-80-100% scale
Strategic Roadmap development and executionStrategic Roadmap development and execution, such as to further enhance the growth prospects for the strategic assets and successfully combine Aegon the Netherlands with a.s.r.100%. Successfully completed the redomiciliation of Aegon to Bermuda, including the transfer of group supervision to a new regulator, and implementation of new bye-laws and governance. Completed the combination of Aegon’s Dutch business with a.s.r. to create a leader in the Dutch insurance market, which also marked the beginning of Aegon’s asset management partnership with a.s.r. Completed the divestment of Aegon’s businesses in Poland and Romania, which was the final step to complete the full transaction in the CEE. Announced the divestment of Aegon’s interests in its joint venture in India, and announced the divestment of its UK protection business. Realized bolt-on acquisitions in the UK (Nationwide Building Society’s financial planning service), in Asset Management (NIBC’s European Collateralized Loan Obligation activities and La Financière de l’Échiquier through its joint venture with LBP), and extended the stake in MAG in Brazil. At the Capital Markets Day presented the key strategic focus of ensuring Transamerica reaches its full potential, focusing on profitable growth and investments in Strategic Assets while improving the risk profile and maximizing the value of Financial Assets.
Women in Senior ManagementIncrease the number of women in Aegon’s senior management layer worldwide to at least 38%.80%. At the end of 2023, 38% of the people in Aegon’s senior management layer were women.
Finance strategy executionComplete the 2023 milestones from the Finance strategy.100%. Successfully complete all milestones related to the implementation of IFRS 17, the implementation of the sustainability reporting roadmap, and the continued monitoring of Aegon’s transformation program.

Pay-out schedule variable compensation (2020-2027)

The following tables show for the current Executive Director and former Executive Board members how much variable compensation has been paid in shares and cash respectively in 2021, 2022, and 2023 and how much conditional variable compensation is scheduled to be paid out in the coming years. The vesting price of the shares were: EUR 3.934 on June 3, 2021, EUR 4.973 on May 31, 2022, and EUR 4.274 on May 25, 2023. Shares for the plan years from 2020 onwards are subject to an additional two-year holding period after pay-out.

The Executive Director has a time-based shareholding requirement of five years after the initial allocation of their variable compensation in shares (that is, a three-year deferral period before vesting and an additional two-year holding period after vesting). Additionally, Mr. Friese voluntarily agreed to a minimum shareholding requirement of 100% of his fixed compensation level, once this level has been achieved. For this purpose, both vested and unvested shares that have been allocated as compensation will be included in the count, with the unvested share allocations valued at what they would be worth after tax. For the vested share allocations, this tax has already been deducted and paid. After the allocation of the 2023 variable compensation award, Mr. Friese will hold 173% of his fixed compensation in shares based on the opening share price on March 1, 2024.

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                  Years of vesting                    
          
Shares by plan year  VWAP 1)   2021   2022   2023   2024   2025   2026   2027   Total 

Lard Friese

                  

2020

   EUR 4.083    -    -    -    103,580    -    -    -    103,580 

2021

   EUR 3.293    -    -    -    -    275,182    -    -    275,182 

2022

   EUR 4.491    -    -    -    -    -    203,072    -    203,072 

2023

   EUR 4.833    -    -    -    -    -    -    210,943    210,943 
          

Total number of shares

        -    -    -    103,580    275,182    203,072    210,943      

Matt Rider

                  

2017

   EUR 5.246    9,508    -    -    -    -    -    -    9,508 

2018

   EUR 5.405    14,054    14,054    -    -    -    -    -    28,108 

2019

   EUR 4.162    17,847    17,847    17,847    -    -    -    -    53,541 

2020

   EUR 4.083    -    -    -    104,547    -    -    -    104,547 

2021

   EUR 3.293    -    -    -    -    178,961    -    -    178,961 

2022

   EUR 4.491    -    -    -    -    -    124,273    -    124,273 

2023

   EUR 4.833    -    -    -    -    -    -    133,661    133,661  
          

Total number of shares

        41,409    31,901    17,847    104,547    178,961    124,273    133,661      

Alex Wynaendts

                  

2017

   EUR 5.246    21,866    -    -    -    -    -    -    21,866 

2018

   EUR 5.405    19,656    19,656    -    -    -    -    -    39,312 

2019

   EUR 4.162    25,174    25,174    25,174    -    -    -    -    75,522 

2020

   EUR 4.083    -    -    -    49,346    -    -    -    49,346 
          

Total number of shares

        66,696    44,830    25,174    49,346    -    -    -      

1

This is the volume weighted average price (VWAP) of Aegon on the Euronext Amsterdam stock exchange for the period December 15 to January 15. For instance for the 2023 plan year, this is the VWAP for the period December 15, 2022 to January 15, 2023.

          
Cash by plan year (in EUR)  2021        2022        2023        2024        Total 

Lard Friese 2020

   211,431          -          -          -          211,431 

2021

   -      452,981      -      -      452,981 

2022

   -      -      455,880      -      455,880 

2023

   -      -      -      509,669      509,669 
          

Total cash

   211,431         452,981         455,880         509,669           

Matt Rider 2017

   49,878      -      -      -      49,878 

2018

   75,964      75,964      -      -      151,928 

2019

   74,278      74,278      74,278      -      222,834 

2020

   213,404      -      -      -      213,404 

2021

   -      294,589      -      -      294,589 

2022

   -      -      278,984      -      278,984 

2023

   -      -      -      322,946      322,946  
          

Total cash

   413,524         444,831         353,262         322,946           

Alex Wynaendts 2017

   114,710      -      -      -      114,710 

2018

   106,243      106,243      -      -      212,486 

2019

   104,772      104,772      104,772      -      314,316 

2020

   100,725      -      -      -      100,725 
          

Total cash

   426,450         211,015         104,772         -           

 76  |  Annual Report on Form 20-F 2023

 Remuneration Report

Recognized IFRS expenses of remuneration (2021-2023)

The following table contains the recognized IFRS expenses of the remuneration of the Executive Director and former Executive Board members in the calendar years 2021, 2022, and 2023. These numbers deviate from

the above-mentioned allocated remuneration amounts, as the deferred parts of variable compensation and Mr. Friese’s sign-on arrangement are expensed over multiple calendar years, and the shares are included at their fair value instead of the grant price.

IFRS expenses for compensation (In EUR thousand)  

Fixed

compensation

        

Variable

compensation

        Pension        

Other

Benefits

        Total 

Lard Friese

                     

 20231)

   1,641      1,106         656         87         3,489  

 20221)

   1,586      864      621      77      3,149 

 20211)

   1,576      692      594      77      2,939 

Matt Rider

                  

 20232)

   1,037      607      427      107      2,179 

 2022

   988      594      395      66      2,044 

 2021

   968         583         387         67         2,005 

All Executive Directors

                  

 20233)

   410         276         164         22         872 

All Executive Directors

                  

 20234)

   2,009      1,285      812      145      4,251 

 2022

   2,574      1,459      1,016      143      5,193 

 2021

   2,545         1,275         981         144         4,944 

1

2023 includes the fixed compensation expenses for the sign-on arrangement of EUR 3,468 that Mr. Friese received when joining Aegon in March 2020.

These expenses were EUR 27 thousand in 2022 and EUR 91 thousand in 2021.

2

For transparency in transition year, this discloses Mr. Rider’s full year of compensation expenses.

3

The disclosed amounts for 2023 are received in the period that Mr. Friese has been an Executive Director, from October 1, 2023.

4

The disclosed amounts for 2023 are received in the period that Mr. Friese and Mr. Rider had been members of the Executive Board, up to September 30, 2023.

Awarded and due remuneration (2022-2023)

In line with the European guidelines on the standardized presentation of the remuneration report, the remuneration that was awarded and due to the Executive Director and former Executive Board members in the calendar years 2022 and 2023 can be found in the table below.

These amounts were awarded and due in accordance with the relevant policy that applied at the time and there were no deviations.

             Fixed   Variable                    
In EUR thousand           Salary   Benefits   Upfront1)   Deferred2)   One-off   Pension   Total   Ratio Fixed/Variable3) 

Lard Friese

   2023     1,637    87    456    —     115    656    2,951      81% / 19%  
   20224)     1,559    77    453    —     199    621    2,910    78% / 22% 

Matt Rider

   20235)     1,037    107    279    151    —     427    2,001    79% / 21% 
    2022        988    66    295    309    —     395    2,053    71% / 29% 

1

The upfront cash and share payments of variable compensation that was allocated for the previous performance year. The shares are valued at their price at vesting. For example, the upfront cash and shares of the 2021 variable compensation award that were paid in 2022.

2

The deferred cash and share payments of the variable compensation that was allocated for performance years before the previous performance year. The shares are valued at their price at vesting. For example, the deferred cash and shares of the 2018-2019 variable compensation awards that were paid in 2022.

3

Fixed (the numerator) is the sum of Salary, Benefits and Pension divided by the Total. Variable (the denominator) is the sum of Upfront, Deferred and One-off divided by the Total.

4

The one-off item concerns the payments of the 2020 sign-on arrangement that were deferrred for two years (EUR 57 thousand in cash and 28,692 shares at a vesting price of EUR 4.973).

5

For transparency in a transition year, this discloses Mr. Rider’s full year of 2023 as Mr. Rider was a memer of the Executive Board up to September 30, 2023.

Annual Report on Form 20-F 2023 | 77

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Annualized total compensation overview (2019-2023)

The table below shows the total compensation that was awarded and due in the last five calendar years on an annualized basis and the year-on-year annual change in total compensation. Please note that therefore several amounts are on annual basis, and not reflecting actual amounts for the period during which the individual served as Executive Director or Executive Board member.

These amounts were awarded and due in accordance with the Executive Director Remuneration Policy that applied at the time and there were no deviations. Additionally, the table shows the Aegon net result, a proxy of the financial and non-financial business performance, the vesting price of the Aegon shares, the inflation in the Netherlands and the average employee compensation over the same period.

In EUR thousand  Annualized  2019       2020       2021       2022       2023  

Lard Friese

  Awarded and due   -        2,719        2,748        2,910        2,951 
  Change   -     -     1%     6%     1% 

Matt Rider

  Awarded and due   1,799     1,824     2,052     2,053     2,001 
  Change   8%     1%     12%     0%     (3%) 

Alex Wynaendts

  Awarded and due   3,806     3,268     -     -     - 
   Change   (23%)        (14%)        -        -        - 

Aegon net result (EU-IFRS)1)

  In EUR million   1,525     55     1,701     (2,504)     (199) 

Aegon business performance2)

  Target = 100%   79%     57%     123%     113%     130% 

Vesting price Aegon shares

  In EUR   4.287     2.079     3.934     4.973     4.274 

Inflation in the Netherlands

  Consumer Price Index      2.6%     1.3%     2.7%     10.0%     3.8%  

Average employee compensation3)

  In EUR thousand   115     110     105     134     137 
   Annual change   11%        (4%)        (5%)        28%        2% 

1

Up to 2022, Aegon net income is reported under IFRS 4, as of 2023 this is under IFRS 17.

2

The weighted average Aegon financial and non-financial business performance, expressed as a percentage on a performance scale with 50% as threshold, 100% as target and 150% as maximum, as used for the allocation of variable compensation in the applicable year.

3

Consistent with the CEO pay ratio calculation, the average employee compensation is based on the audited total EU-IFRS remuneration expenses for all employees divided by the number of employees in scope for these expenses.

2024 Executive Director performance indicators

Upon the 2024 Annual General Meeting, the 2024 variable compensation metrics for the Executive Director will be disclosed as part of the Directors’ Remuneration Policy that will be proposed for adoption by the shareholders.

 78  |  Annual Report on Form 20-F 2023

Risk management

Risk management

As an insurance group, Aegon manages risk for the benefit of its customers and other stakeholders. The company is exposed to a range of financial, underwriting and operational risks. Aegon’s risk management and internal control systems are designed to ensure that these risks are managed effectively and efficiently in a way that is aligned with the company’s strategy.

For Aegon, risk management involves:

§Understanding risks that the company faces
§Maintaining a group-wide framework through which the risk-return trade-off associated with these risks can be assessed
§Maintaining risk tolerances and supporting policies to limit exposure to a particular risk or combination of risks
§Monitoring risk exposures and actively maintaining oversight of the company’s overall risk and solvency positions

This section provides a description of Aegon’s risk management framework.

Enterprise Risk Management (ERM) framework

Aegon’s ERM framework is designed and applied to identify risks that may affect Aegon and manage individual and aggregate risks within Aegon’s set risk tolerances. The ERM framework covers the ERM components as identified by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The ERM framework applies to all of Aegon’s businesses for which it has operational control.

Risk strategy, risk appetite statement and risk tolerances

The formulation of the risk strategy starts with the principle that taking a risk should be based on serving a customer’s need. The competence to manage the risk is assessed and Aegon’s risk preferences are formulated, considering Aegon’s risk capacity. The process results in a targeted risk profile, reflecting the risks Aegon wants to assume, and the risks Aegon would like to avoid or mitigate.

Aegon’s risk appetite statement and risk tolerances are established to assist management in carrying out

Aegon’s strategy within the boundaries of the resources available to Aegon. Aegon’s risk appetite statement is to:

“Fulfill our promises towards our customers and other stakeholders by delivering sustainable and growing long-term free cash flow through strong resilience in solvency and liquidity, with a healthy balance in exposures, and by running a responsible business with effective controls.”

Following from the risk appetite statement, risk tolerances are defined on:

§Solvency, including Cash Capital at Holding and capital generation, to ensure that Aegon remains solvent even under adverse scenarios;
§Liquidity, to ensure that Aegon has sufficient liquidity even under extreme scenarios;
§Risk balance, to ensure a healthy balance of risk exposures; and
§Responsible business with effective controls, which acknowledges an acceptable level of operational risk and stresses a low tolerance for (lack of) actions that could lead to material adverse risk events that result in breaking promises or not meeting reasonable expectations of customers, legal and regulatory breaches, reputational damage, financial detriment or financial misstatement.

The tolerances are further developed into measures, thresholds and indicators that have to be complied with to remain within the tolerances.

Risk universe

Aegon’s risk universe is structured to reflect the type of risks to which the company is exposed. The identified risk categories are financial risk (for example, interest rate risk and credit risk), underwriting risk (for example, mortality and morbidity risk and policyholder behavior), and operational risk (for example, fraud, business disruption, processing, and privacy risks). Specific risk types are identified within these risk categories. These risks, internal or external, may affect the company’s operations, earnings, share price, value of its investments, or the sale of certain products and services. In the context of Aegon’s risk strategy, a risk appetite is set for the three identified risk categories (see table below).

Risk categoryDescriptionAppetite

Underwriting

The risk of incurring losses when actual experience deviates from Aegon’s best estimate assumptions on mortality, longevity, morbidity, policyholder behavior, P&C claims and expenses used to price products and establish technical provisions.Medium to high - Underwriting risk is Aegon’s core business and meets customer needs.

Financial

The risk of incurring financial losses due to movements in financial markets and the market value of balance sheet items. Elements of financial risk are credit risk, inflation risk, investment risk, interest rate risk and currency risk.Low to medium - Accepted where it meets customer needs and the risk return profile is acceptable.

Operational

The risk of losses resulting from inadequate or failed internal processes and controls, people and systems or from external events, such as processing errors, legal and compliance issues, natural or man-made disasters, and cybercrime.Low - Accepted as a necessary condition of conducting business, but mitigated as much as possible in an economically efficient manner.

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Risk identification and risk assessment

Aegon has identified a risk universe that captures all known material risks to which the company is exposed. To assess all risks, Aegon maintains a documented, consistent methodology for measuring risks. The risk metrics are embedded in Aegon’s key reports and are used for decision making.

Risk response

Aegon distinguishes the following risk responses, which are particularly relevant where risks are out of tolerance:

§Risk acceptance: The risk is accepted by management;

§Risk control: The risk is reduced by reducing the exposure, by improving processes and existing controls or by introducing new controls;

§Risk transfer: The risk is reduced by insuring the company against the risk or by outsourcing activities to third parties; or

§Risk avoidance: Activities that are the source of the risk are terminated.

Risk monitoring and reporting

Risks are monitored regularly and reported internally on at least a quarterly basis. The impact of key financial, underwriting, and operational risk drivers on earnings and capital is shown in the quarterly risk dashboards for the various risk types, both separately and on an aggregate basis.

Risk exposures are compared with the measures and indicators as defined by Aegon’s risk tolerance statements. Reporting also includes compliance and incident reporting. Finally, the main risks derived from Aegon’s strategy and day-to-day business are discussed, as well as forward-looking points for attention. If necessary, mitigating actions are taken and documented.

Risk control

A system of effective controls is required to mitigate the risks identified. In Aegon’s ERM framework, risk control includes risk governance, risk policies, internal control framework, model validation, risk framework embedding, risk culture, and compliance.

Change risk management

The ERM framework including the operational risk universe is applicable to all change initiatives and special projects across Aegon. In 2023, Aegon combined the Dutch operations with a.s.r. and consequently redomiciled its legal seat to Bermuda. The risk function provided oversight over both projects and prepared independent risk opinions to the Board with further monitoring of open items.

Most significant risks

The most significant risks Aegon faces in terms of exposures and required capital are:

§Financial markets risks (particularly related to credit, equity, and interest rates)

§Underwriting risks (particularly related to mortality and morbidity risks and policyholder behavior)

§Operational risks (particularly related to reputation and continuity of operations)

Description of risk types

Financial market risks

Credit risk

Credit risk is the risk of loss resulting from the default by, or failure to meet contractual obligations of, issuers and counterparties. Aegon also considers credit risk to include spread risk, that is, a decline in the value of a bond, loan or mortgage due to a widening of credit spreads. Having a well-diversified investment portfolio means that Aegon can accept credit spread risk to earn a liquidity premium on assets that match liabilities. The focus is on high-quality securities with low expected defaults because Aegon has a low appetite for default risk.

Equity market risk and other investment risks

Aegon runs the risk that the market value of its investments changes. Investment risk affects Aegon’s direct investments in the general account, indirect investments for the account of policyholders and agreements where Aegon relies on counterparties, such as reinsurance and derivative counterparties.

Aegon has a low preference for investments in equity securities via the general account. Equity investments generate an equity risk premium over the long run, but in combination with a high capital charge result in a relatively low return on capital. Aegon accepts equity exposure through fee-based business in the separate accounts and mutual funds. Aegon has experience and expertise in managing complex investment guarantees and leverages this capability by providing customers access to a range of investment strategies and guaranteed benefits. Although Aegon accepts equity exposure via guarantee products, its preference is to hedge this risk as much as possible. Other investment risks include real estate exposure in the general account, and indirectly via property funds invested for the account of policyholders.

Interest rate risk

Aegon is exposed to interest rates as both its assets and liabilities are sensitive to movements in long-term and short-term interest rates, as well as to changes in the volatility of interest rates. Aegon may accept interest rate risk in order to meet customer needs. However, as no spread is earned on interest rate risk, Aegon prefers to mitigate the risk to the extent possible.

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Risk management

Currency exchange rate risk

As an international company, Aegon conducts business in different currencies and is therefore exposed to movements in currency exchange rates. Foreign currency exposure exists primarily when policies are denominated in currencies other than the issuer’s functional currency. Currency risk in the investment portfolios backing insurance and investment liabilities is managed using asset-liability matching principles. Assets allocated to equity are held in local currencies to the extent shareholders’ equity is required to satisfy regulatory and self-imposed capital requirements. Currency exchange rate fluctuations therefore affect the level of shareholders’ equity as a result of converting local currencies into euros (EUR), the company’s reporting currency. The company holds its capital base in various currencies in amounts that correspond to the book value of individual business units.

Inflation risk

Aegon is exposed to inflation risk through inflation-linked benefits offered on some of the products sold by Aegon’s insurance entities such as pensions or long-term care products. In addition, Aegon is exposed to cost inflation through its expense base. Aegon prefers to mitigate the risk to the extent possible.

Liquidity risk

Aegon needs to maintain sufficient liquidity to meet short-term cash demands, not only under normal conditions, but also in the event of a crisis. To that end, Aegon has put a strong liquidity management framework in place. The company considers extreme liquidity stress scenarios, including the possibility of prolonged “frozen” capital markets, an immediate and permanent rise in interest rates, and elevated policyholder withdrawals.

Please refer to note 4 “Financial Risk” of Aegon’s financial statements for more information.

Underwriting risk

Underwriting risk relates to the products sold by Aegon’s insurance entities and is the risk of incurring losses when actual experience deviates from Aegon’s best estimate assumptions on mortality, morbidity, policyholder behavior, Property & Casualty (P&C) claims and expenses. Aegon has a preference to selectively grow underwriting risk, but this must work hand-in-hand with a strong underwriting process. Aegon’s earnings depend, to a significant degree, on the extent to which claims experience is consistent with assumptions used to price products and establish technical provisions. Changes in, among other things, morbidity, mortality, longevity trends, and policyholder behavior may have a considerable impact on the company’s income. Assumptions used to price products and establish technical provisions are reviewed on a regular basis. Please refer to note 3 “Critical accounting estimates and judgment

in applying accounting policies” to Aegon’s consolidated financial statements for further information.

Operational risk

Like other companies, Aegon faces operational risk resulting from operational failures or external events, such as processing errors, inaccuracies in models used, negative behavior by personnel, non-compliance to laws and regulations, and natural or man-made disasters, including climate change. In addition, major programs or organizational transformations may also increase the potential for operational risks. Aegon’s systems and processes are designed to support complex products and transactions, and to help protect against such issues as system failures, business disruption, financial crime, and breaches of information security. Aegon monitors and analyses these risks, and retains flexibility to update and revise where necessary. Aegon’s operational risk universe distinguishes as risk types: business risk; legal, regulatory, conduct, and compliance risks; tax risk; financial crime risk; processing risk; information technology and business disruption risks; people risk; and facility risk. These level 1 risk types are split into more granular level 2 risk types. The more granular risk types include, among others, information security risk, conduct risk, fraud risk, modelling risk, and physical damage risk.

Sustainability risk

Sustainability risk, including climate risk, is not considered a separate risk type but is a risk driver that impacts multiple risks. Sustainability is explicitly part of Aegon’s risk taxonomy, embedded in its ERM framework and incorporated in the relevant risk policies. Sustainability has financial, underwriting, business, legal, regulatory, conduct and compliance risk angles. For example, climate change can impact future investment returns. The legal, regulatory, conduct and compliance risk angles relate to the ability to comply with relevant legal and regulatory requirements. The importance of handling sustainability risk effectively and expeditiously is expected to further increase, also given the increasing importance of sustainability for all stakeholders including society, investors, customers, and regulators.

Fraud risk

Fraud Risk is interpreted broadly in Aegon and relates both to operational types of fraud and financial reporting related fraud.

Operational types of fraud are divided between internal and external fraud, that is, fraud committed by employees and fraud committed by others, with external fraud further specified as intermediary fraud or fraud committed by third parties. To combat operational types of fraud, Aegon has put policies in place and reports internally on its adherence to these policies. To enable the Executive Committee and Board of Directors to assess fraud risks, Compliance departments report quarterly on fraud events. In its annual

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Systematic Integrity Risk Analysis (SIRA), Aegon analyzes both its exposure to fraud, and its residual risks, taking into account all measures Aegon has put in place to combat fraud. Where gaps are found, additional measures are put in place.

Furthermore, Aegon has an established process in place to assess and confirm effective controls are in place concerning fraud in financial reporting. This assessment is performed annually and is based on a set of mandatory scenarios. In addition, the assessment is required to be performed by all Aegon subsidiaries.

Business environment scan

In addition to managing these various types of risk, Aegon performs a business environment scan. The aim is to identify emerging, fundamental/structural trends, risks, and opportunities in our operating environment, which could have significant impact on value creation and Aegon’s financial strength, competitive position, or reputation. It is a critical, cross-functional exercise that looks beyond impact to assess the potential of topics that influence value protection and creation. The scan is performed as a check on the ongoing appropriateness of the risk universe, to ensure the completeness of Aegon’s risk assessment as well as to provide input for ongoing strategy development. The scan takes into account the relationship and interconnectivity between risks and opportunities and the impact on business objectives.

Topic identification, mapping, and selection are based on desk research, interviews with internal and external experts, and management selection. Topic areas can include, among others, geopolitics, macro- and financial economics, technology, regulations and supervision, customer preferences, product markets, market conduct and ESG. Outcomes can be used for materiality reporting, as input for Aegon’s strategy process and for possible follow-up in terms of further analysis, tracking, or as a global project.

Risk governance framework

Aegon’s risk management is based on clear, well-defined risk governance. The goals of risk governance are to:

§Define roles and responsibilities, and risk reporting procedures for decision-makers

§Institute a proper system of checks and balances

§Provide a consistent framework for managing risk in line with the targeted risk profile

§Facilitate risk diversification

Governance structure

Aegon’s risk management framework is represented across all levels of the organization. This ensures a coherent and integrated approach to risk management throughout the company. Similarly, Aegon has a comprehensive range

of group-wide risk policies that detail specific operating guidelines and limits. These policies include legal, regulatory, and internally set requirements, and are designed to keep overall risk-specific exposures to a manageable level. Any breach of policy limits or warning levels triggers remedial action or heightened monitoring. Further risk policies may be developed at a local level to cover situations specific to particular business units.

Aegon’s risk management governance structure has four layers:

§The Board of Directors (Board) and its Risk Committee

§The CEO and the Executive Committee

§The Group Risk & Capital Committee (GRCC) and its sub-committees

§The local Risk & Capital Committees

The Risk Committee reports to the Board on topics related to the ERM framework and the internal control system. This includes:

§Risk strategy, risk tolerance, and risk governance;

§Product development and pricing;

§Risk assessment;

§Risk responses and internal control effectiveness;

§Risk monitoring; and

§Risk reporting.

The Risk Committee works closely with the Board of Directors Audit Committee (Audit Committee).

For a description of the main roles and responsibilities of the Risk Committee see the section on the Risk Committee on page 59 of the Report of the Board of Directors in this Annual Report.

It is the responsibility of the CEO and the Group’s Chief Risk Officer (CRO) to inform the Board of any risk that directly threatens the solvency, liquidity, or operations of the company.

The CEO has overall responsibility for risk management. The CEO adopts the risk strategy, risk governance, risk tolerance, and material changes in risk methodology and risk policies. The Group’s CRO has a standing invitation to attend the CEO meeting and has a direct reporting line to the Board to discuss ERM and related matters. The CRO is also a member of the Executive Committee.

The Executive Committee oversees a broad range of strategic and operational issues. While the CEO is Aegon’s statutory Executive Director, the Executive Committee provides vital support and expertise in safeguarding Aegon’s strategic goals. The Executive Committee discusses and sponsors ERM, in particular the risk strategy, risk governance, risk tolerance, and the introduction of new risk policies.

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Risk management

The CEO and Executive Committee are supported by the Group Risk & Capital Committee (GRCC). The GRCC is Aegon’s most senior risk committee. It is responsible for managing Aegon’s balance sheet at the global level, and is in charge of risk oversight, risk monitoring, and risk management -related decisions on behalf of the CEO and in line with its charter. The GRCC ensures risk-taking is within Aegon’s risk tolerances; that the capital position is adequate to support financial strength and regulatory requirements, and that capital is properly allocated. The GRCC informs the CEO about any identified (near) breaches of overall tolerance levels that threaten the risk balance, as well as any potential threats to the company’s solvency, liquidity, or operations.

The GRCC has three sub-committees: the ERM framework, Accounting and Actuarial Committee (ERMAAC), the Non-Financial Risk Committee (NFRC) and the Model Validation Committee (MVC).

The purpose of the ERMAAC is to assist the GRCC, CEO, and Executive Committee with financial risk framework setting and maintenance across all group-level balance sheet bases, including policies, standards, guidelines, methodologies, and assumptions.

The purpose of the NFRC is to assist the GRCC, CEO and Executive Committee with non-financial risk framework setting and maintenance, including policies, standards, guidelines, and methodologies, and to act as a formal discussion and information-exchange platform on matters of concern regarding non-financial risk management.

The MVC is responsible for approving all model validation reports across Aegon. This is an independent committee that reports to the GRCC and the CEO to provide information on model integrity and recommendations on how to further strengthen these models.

Aegon’s business units have a Risk, or Risk and Capital committee, and an Audit committee. The responsibilities and prerogatives of the committees are aligned with those of the company-level committees and further elaborated in their respective charters, which are tailored to local circumstances.

In addition to the four layers described above, Aegon has an established group-wide Risk function. It is the mission of the Risk function to ensure the continuity of the company by safeguarding the value of existing business, protecting Aegon’s balance sheet and reputation, and supporting the creation of sustainable value for all stakeholders.

In general, the objective of the Risk function is to support the CEO, Executive Committee, Board, and business unit boards in ensuring that the company reviews, assesses, understands, and manages its risk profile. Through oversight, the Risk

function ensures the company-wide risk profile is managed in line with Aegon’s risk tolerances, and stakeholder expectations are managed under both normal business conditions and adverse conditions caused by unforeseen negative events.

The following roles are important in order to realize the objective of the Risk function:

§Advising on risk-related matters including risk tolerance, risk governance, risk methodology, and risk policies
§Supporting and facilitating the development, incorporation, maintenance, and embedding of the ERM framework and sound practices
§Monitoring and challenging the implementation and effectiveness of ERM practices

In the context of these roles, the Risk function has the following responsibilities:

ERM Framework

§The overarching ERM Framework supports Aegon’s corporate strategy and enables management to effectively deal with uncertainty and the associated risk-return trade-offs.

Global Risk Appetite (GRA)

§The GRA is linked to and supports Aegon’s strategy and purpose and translates these into risk tolerances and risk limits.

Risk identification and assessment

§All material risks are captured and classified in Aegon’s risk universe. An emerging risk process is in place to ensure that risk universe remains up to date and complete. Risk assessment includes risk measurement across valuation and reporting metrics and feeds into Aegon’s risk strategy, including risk preferences and risk profile considerations.

Risk governance

§A risk governance framework is in place across all levels of the company, including formal committees, committee charters, memberships across relevant functions, and escalation procedures.

Policies and standards

§Risk policies and standards set out requirements, roles and responsibilities, and processes to manage risks across the risk universe.

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Risk framework embedding

§The ERM Framework is embedded in Aegon’s key business areas. The Own Risk Self-Assessment (ORSA)1 unites the risk and capital management and the business planning processes across Aegon and aligns these to its strategy. The risk strategy is aligned with the business strategy, the strategy execution is closely monitored, and risks are identified on time to ensure strong delivery in a safe and timely manner.

Risk oversight

§Major business (and risk) decisions are risk-based; properly risk-informed and, where relevant, challenged by the Risk function to protect the balance sheet and proper customer conduct.

Risk monitoring and reporting

§Risks across the risk universe are monitored and reported.

Risk culture

§Risk culture is embedded across the company.

§Risk culture encompasses the awareness of employees, management, and leadership of relevant risks and how risks are managed.

Aegon’s group-wide and business unit risk management staff structure is fully integrated. Business unit CROs have either a direct reporting line to the Group CRO or one of the CROs that reports directly to the Group CRO.

Keeping ERM framework up to date and effective

Aegon continuously works on keeping its ERM framework up-to-date, effective and fit-for-purpose. The annual risk development plan outlines priorities for the year and rationalizes activities that align with Aegon’s strategy and vision. Policies, charters and other governance documents are regularly reviewed and updated where necessary. Also, activities such as the Business Environment Scan provide an internal and external perspective on the risk universe and will signal where updates are required. For example, sustainability risk, including climate risk has been incorporated more explicitly into our risk taxonomy and relevant risk and business policies and processes. In addition, internal processes such as policy attestation verify compliance with policies. Non-compliance requires remediating action plans, which are actively monitored to ensure execution.

Internal control system

Aegon has developed an internal control system that serves to facilitate its compliance with applicable laws, regulations (for example Sarbanes-Oxley Act and Solvency II), and administrative processes, and the effectiveness and efficiency of operations with regard to its objectives, in addition to the availability and reliability of financial and non-financial information. The overall internal control system ensures appropriate control activities for key processes, and the documentation and reporting of administrative and accounting information. A key element of the internal control system is to facilitate action planning and embed continuous improvement regarding the internal control environment throughout the organization. The internal control system is embedded through policies and frameworks such as the ERM Framework, Model Validation Framework, Operational Risk Management (ORM) Framework, and Information Technology Framework. Aegon’s internal control system is considered more encompassing in scope than the Integrated Framework issued by COSO on which criteria for the internal control system are based.

In relation to the Information Technology Framework, as some of the core processes and systems shift from legacy on-premises environment to the cloud, Aegon has established a strategy to manage cloud risk. This includes defining key elements of cloud governance, cloud security strategy, as well as integrating cloud control requirements into our IT Control Framework.

In 2023, risk management and internal control topics were discussed by the relevant management committees and bodies, including the Executive Committee, Risk Committee, and the Audit Committee. An analysis of internal and external audit reports and risk reviews revealed no material weaknesses. As a result, no significant changes or major improvements were made or planned to the risk management and internal control systems.

1

Based on the redomicilation of Aegon to Bermuda, the ORSA will be replaced by the Group Solvency Self-Assessment (GSSA) in 2024.

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Capital and liquidity management

Capital and liquidity management

Guiding principles

The management of capital and liquidity is of vital importance for Aegon, for its customers, investors in Aegon securities, and for Aegon’s other stakeholders. In line with its risk tolerance, the goal of Aegon’s capital and liquidity management is to promote strong and stable capital adequacy levels for its businesses, in addition to maintaining adequate liquidity to ensure the company is able to meet its obligations.

Aegon follows a number of guiding principles in terms of capital and liquidity management:

§Promoting strong capital adequacy in Aegon’s businesses and operating units

§Managing and allocating capital efficiently in support of the strategy and in line with its risk tolerance

§Maintaining an efficient capital structure, with an emphasis on optimizing Aegon’s cost of capital

§Maintaining adequate liquidity in both the operating units and the Holding to ensure that the company is able to meet its obligations by enforcing stringent liquidity risk policies

§Maintaining continued access to international capital markets on competitive terms

Aegon believes that the combination of these guiding principles strengthens the company’s ability to withstand adverse market conditions, enhances its financial flexibility, and serves both the short-term and the long-term interests of the company, its customers, and other stakeholders.

The management and monitoring of capital and liquidity is firmly embedded in Aegon’s Enterprise Risk Management (ERM) framework.

Management of capital

Aegon’s capital management framework is based on adequate capitalization of its operating units, Cash Capital at Holding, and leverage.

Capital adequacy of Aegon’s operating units

Aegon manages capital in its operating units at levels sufficient to absorb moderate shocks without impacting the remittances to the Group. These moderate shocks could be caused by various factors, including general economic conditions, financial markets risks, underwriting risks, changes in government regulations, and legal and arbitration proceedings. To mitigate the impact of such factors on the ability of operating units to pay remittances to the Group, Aegon established an operating level of capital in each of the units: 400% Risk-Based Capital (RBC) Company Action Level (CAL) in the US and 150% Solvency Capital Requirement (SCR) in the UK; based on UK Solvency II. Aegon manages capital in the units to their respective operating levels over-the-cycle.

After investments have been made in new business to generate organic growth, capital generated by Aegon’s operating units is available for distribution to the holding company. In addition to an operating level, Aegon established a minimum dividend payment level of capital in each of the units: 350% RBC CAL in the US and 135% SCR in the UK; based on UK Solvency II. As long as the capital position of the unit is above this minimum dividend payment level, the unit is expected to pay remittances to the Group.

When the operating unit’s capital position approaches the minimum dividend payment level, capital management tools will be used to ensure that units will remain well capitalized. The frequent monitoring of actual and forecasted capitalization levels of its operating units is an important element in Aegon’s capital framework in order to actively maintain adequate capitalization levels.

The regulatory capital requirement, minimum dividend payment level, operating level, and actual capitalization for Aegon’s main operating units at December 31, 2023 are included in the following table:

      
Capital requirements  

Regulatory capital

requirement

   

Minimum dividend

payment level

   Operating level        Actual
capitalization		 

US RBC CAL ratio

   100%    350%    400%         432% 

Scottish Equitable Plc (UK) Solvency II ratio

   100%    135%    150%         187% 

For more details on the capital ratios and the movement thereof, see note 37 “Capital management and solvency” in Aegon’s consolidated financial statements.

Improving risk-return profile

Aegon has an active global reinsurance program designed to optimize the risk-return profile of insurance risks. In addition, Aegon monitors the risk-return profile of new

business written, withdrawing products that do not create value for its stakeholders.

Aegon continues to take measures to improve its risk-return profile. Particularly in the United States, several actions were taken to strengthen the capital position and reduce the volatility of the local capital positions.

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Management actions US

As announced during the June 2023 Capital Markets Day, Transamerica aims to improve the quantum and quality of its capital generation, while reducing its exposure to Financial Assets. During 2023, Transamerica has made good progress in implementing its plans.

Regarding Strategic Assets these include:

§Transamerica has agreed upon an earn-out arrangement with certain key founders of World Financial Group (WFG). This will improve the value creation by the growth of the distribution network;

§Transamerica has insourced the administration to facilitate the anticipated growth.

As part of the strategy rolled out on the CMD, the legacy Universal Life portfolio and Single Premium Group Annuities (SPGA) have been added as a Financial Asset. Transamerica aims to release capital employed in Financial Assets in part through in-force management actions. During 2023 the following management actions related to the Financial Asset portfolio were executed:

§Rate increase programs in Long-Term Care with a total value of approvals achieved since the beginning of 2023 amounts to USD 245 million, which is 35% of the USD 700 million target set at the 2023 CMD.

§The US RBC ratio volatility from Variable Annuities was substantially reduced by actions taken in 2022. In the second half-year of 2023, the dynamic hedging program for the Variable Annuities guaranteed benefits was expanded to also hedge statutory lapse and mortality margins. This has reduced the sensitivity of the RBC ratio to equity markets further.

§In July 2023, Transamerica reinsured USD 1.4 billion of Secondary Guarantee Universal Life (SGUL) statutory reserves to Wilton Re. The transaction reduced exposure to mortality risk and covered around 14,000, representing 12% of the total reserves backing this product line.

§In 2022, Transamerica set-up a dedicated entity to repurchase institutionally owned universal life policies to reduce mortality risk of the overall portfolio. By 2027, Transamerica aims to have purchased 40% of the USD 7 billion face value of institutionally owned universal life policies that were in-force at the end of 2021. At the end of 2023, the company had purchased 23% of the face value of institutionally owned universal life policies, focusing on older age policies with large face amounts. Since inception in 2022, Transamerica has purchased policies for more than USD 800 million, and in the meantime used the proceeds from terminated policies to purchase further policies.

§Reserves have been strengthened by reducing its captive financing through the recapture of certain policy blocks from two captives in the third quarter.
§Transamerica reinsured a portfolio of Fixed Deferred Annuities with USD 4.6 billion of reserves from Transamerica Life Insurance Company (TLIC) to a new affiliated Bermuda-based reinsurance entity. This will allow the block to be managed under a more market consistent framework, and will reduce capital volatility.

Cash Capital at Holding and liquidity management

Liquidity management is a fundamental building block of Aegon’s overall financial planning and capital allocation processes. Liquidity is managed both centrally and at the operating unit level and is coordinated centrally at Aegon Ltd.

The ability of the holding company to meet its cash obligations depends on the amount of liquid assets on its balance sheet and on the ability of the operating units to pay remittances to the holding company. In order to ensure the holding company’s ability to fulfill its cash obligations, to maintain sufficient flexibility to provide capital and liquidity support to Aegon’s operating units, and to provide stability in external dividends, the company manages Cash Capital at Holding, including Aegon’s centrally managed (unregulated) holding companies, to an operating range of EUR 0.5 billion to EUR 1.5 billion.

The main sources of liquidity in Cash Capital at Holding are remittances from operating units and proceeds from divestitures. In addition, contingent internal and external liquidity programs are maintained to provide additional safeguards against extreme unexpected liquidity stresses.

Aegon uses the cash flows from its operating units to pay for holding expenses, including funding costs. The remaining free cash flow is available to execute the company’s strategy, to strengthen the balance sheet through deleveraging or make capital injections into units as required, to make acquisitions, to fund dividends on its shares, and to return capital to shareholders, if possible, all subject to maintaining targeted Cash Capital at Holding. Aegon aims to pay out a sustainable dividend to enable equity investors to share in its performance.

When determining whether to declare or propose a dividend, Aegon’s Board of Directors balances prudence with offering an attractive return to shareholders. This is particularly important during adverse economic and/or financial market conditions. Furthermore, Aegon’s operating units are subject to local insurance regulations that could restrict remittances to be paid to the holding company. There is no requirement or assurance that Aegon will declare and pay any dividends.

On December 31, 2023, Aegon held a balance of EUR 2.4 billion in Cash Capital at Holding, compared to EUR 1.6 billion on December 31, 2022. Details on the movement are included in note 37 “Capital management and solvency” in Aegon’s consolidated financial statements.

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Capital and liquidity management

Liquidity management

The company’s liquidity risk policy sets guidelines for its operating companies and the Holding in order to achieve a prudent liquidity profile and to meet cash demands under extreme conditions. Aegon’s liquidity is invested in accordance with the company’s internal risk management policies. Aegon believes that its Cash Capital at Holding, backed by its external funding programs and facilities, is ample for the company’s present requirements.

Aegon maintains a liquidity policy that requires all business units to project and assess their sources and uses of liquidity over a two-year period under normal and severe business and market scenarios. This policy ensures that liquidity is measured and managed consistently across the company, and that liquidity stress management plans are in place.

Aegon’s operating units are engaged in life insurance and pensions business, which are long-term activities with relatively illiquid liabilities and generally matching assets. Liquidity consists of liquid assets held in investment portfolios, in addition to inflows generated by maturing assets, coupons and premium payments, and customer deposits.

Leverage

Aegon uses leverage to lower the cost of capital that supports businesses in the company, thereby contributing to a more effective and efficient use of capital. In managing the use of leverage throughout the company, Aegon has implemented a Leverage Use Framework as part of its broader ERM framework.

Financial leverage

Aegon defines gross financial leverage as debt or debt-like funding issued for general corporate purposes and for capitalizing Aegon’s business units. Gross financial leverage includes hybrid instruments, and subordinated and senior debt. In 2023, Aegon achieved its goal to reduce its gross financial leverage to around EUR 5.0 billion, as announced during the June 2023 Capital Markets Day. Gross financial leverage was EUR 5.1 billion per December 31, 2023, after a EUR 500 million reduction in gross financial leverage in December 2023 funded from the proceeds of the a.s.r. transaction.

The following are metrics that Aegon assesses in managing leverage:

§Gross financial leverage ratio

§Fixed charge coverage

§Various rating agency leverage metrics

§Other metrics, including gross financial leverage divided by operating capital generation

Aegon’s gross financial leverage ratio is calculated by dividing gross financial leverage by total capitalization. Aegon’s total capitalization consists of the following components:

§Shareholders’ equity based on IFRS as adopted by the EU

§Non-controlling interests and shares related to long-term incentive plans that have not yet vested

§Contractual service margin, excluding joint-ventures and associates, net of tax

§Gross (or total) financial leverage

Aegon’s fixed charge coverage is a measure of the company’s ability to service its financial leverage. It is calculated as the sum of the operating result and interest expenses on financial leverage divided by interest payments on financial leverage. The fixed charge coverage includes the impact of interest rate hedging.

Operational leverage

Although operational leverage is not considered part of Aegon’s total capitalization, it is an important source of liquidity and funding. Operational leverage relates primarily to the use of a Federal Home Loan Bank (FHLB) facility.

Funding and back-up facilities

The majority of Aegon’s financial leverage is issued by Aegon Ltd., the parent company. A limited number of other Aegon companies have also issued debt securities, but for the most part these securities are guaranteed by Aegon Ltd.

To support the need for Letters of Credit (LOCs) and to enhance its liquidity position, Aegon maintains backup credit and LOC facilities with international lenders. The company’s principal arrangements comprise a EUR 1.7 billion syndicated revolving credit facility and an LOC facility of USD 1.5 billion. The syndicated revolving credit facility matures in 2025. The LOC facility matures in 2026. In addition, Aegon also maintains a number of shorter-dated bilateral backup liquidity facilities.

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Rating agency ratings

Aegon’s objective is to maintain strong financial strength ratings in its main operating units, and this plays an important role in determining the company’s overall capital

management strategy. Aegon maintains strong financial strength ratings from several international rating agencies for its operating units.

December 31, 2023Aegon Ltd.Aegon USAAegon UK 

S&P Global1)

Financial strength

A+A+ 

Long-term issuer

BBB+

Senior debt

BBB+

Subordinated debt

BBB-

Moody’s Investors Service

Financial strength

A1

Long-term issuer

Baa1

Senior debt

Baa1

Subordinated debt

Baa2

A.M. Best

Financial strength

A

1  At December 31, 2023, the outlook on S&P’s ratings was negative. S&P changed the outlook from negative to stable in February 2024.

Aegon Group Solvency Ratio

Following the transfer of Aegon’s legal domicile to Bermuda on September 30, 2023, group supervision moved from the Dutch Central Bank ( DNB) to the Bermuda Monetary Authority (BMA). Aegon’s group solvency ratio under the Bermuda solvency framework is broadly aligned with that under the previously applied Solvency II framework during a transition period until the end of 2027. This includes the method to translate Transamerica’s capital position into the group solvency position. For more information about group solvency and recent developments, please refer to section “Regulation and supervision”.

Aegon’s Group solvency ratio was 193% on December 31, 2023, compared to 208% on December 31, 2022. The decrease in Group solvency ratio is driven by the EUR 1,500 million share buyback related to the transaction with a.s.r. The Group solvency ratio includes Aegon UK based on the local UK Solvency II regulation, including the recent reform of the risk margin calculation. For more details, please refer to note 37 “Capital management and solvency” to Aegon’s consolidated financial statements.

    December 31, 2023 1)        December 31, 2022 

Group Eligible Own Funds

   14,250      16,332 

Group SCR

   7,366      7,844 

Group solvency ratio

   193%         208% 

1  The solvency ratios are estimates and are not final until filed with the respective supervisory authority.

 

      

Sensitivities

Aegon calculates the sensitivities of its capital ratios as part of its capital management framework. The following table provides an overview of the sensitivities (downward and upward) to certain parameters and their estimated impact on the capital ratio. Aegon has a 29.98% stake in a.s.r. following the completion of the transaction. The impact from this 29.98% stake has been excluded in the sensitivities of the Group solvency ratio.

Please note that the sensitivities listed in the tables below represent sensitivities to Aegon’s position at the balance sheet date. The sensitivities reflect single shocks, where other

elements remain unchanged. Real-world market impacts (for example, 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 table. The sensitivities assume deferred tax asset (DTA) admissibility. Under certain adverse scenarios and where applicable, part of DTAs could become inadmissible. While this would increase the sensitivities relative to the published sensitivities, the DTAs would still be recoverable over time. In the sensitivities of the Americas, part of the DTAs was inadmissible per December 31, 2023.

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Capital and liquidity management

    Scenario       Group   Americas2)   SE Plc 
            20231)      2022      2023      2022      2023      2022 

Equity markets

   (25%)     (5%)     (4%)     (14%)     (15%)     7%     10% 

Equity markets

   +25%     0%     0%     3%     7%     (6%)     (8%) 

Interest rates

   -50bps     0%     2%     1%     0%     (1%)     0% 

Interest rates

   +50bps     (1%)     (2%)     1%     1%     1%     (2%) 

Govt spreads

   -50bps     0%     1%     n.a.     n.a.     2%     1% 

Govt spreads

   +50bps     (1%)     (1%)     n.a.     n.a.     (2%)     (2%) 

Non-govt spreads

   -50bps     1%     1%     0%     (2%)     1%     0% 

Non-govt spreads

   +50bps     (1%)     (2%)     0%     1%     0%     (1%) 

US Credit Defaults 3)

   ~3x long-term average     (3%)     n.a.     (6%)     n.a.     n.a.     n.a. 

US Credit Migration on 10% of assets 4)

   1 big letter downgrade     (3%)     n.a.     (8%)     n.a.     n.a.     n.a. 

Longevity

   +5%        (4%)        (3%)        (10%)        (4%)        (1%)        (1%) 

1

Excluding impact from 29.98% stake in a.s.r..

2

The sensitivities are presented on a Solvency II equivalent basis, after application of the conversion methodology to US regulated (life) companies.

3

Defaults equivalent to three times the long-term average over 12 months period, of which one third is reflected in operating capital generation and the remainder in this scenario; equivalent to a 1-in-10 scenario.

4

Downgrade of 10% of the US general account by one big rating letter, equivalent to a 1-in-10 scenario.

Equity sensitivities

Aegon is exposed to the risk of a downturn in equity markets. This is mainly a consequence of indirect equity exposure in the Americas.

In the Americas, equity sensitivities are primarily driven by the variable annuity (VA) business, where base contract fees are charged as a percentage of underlying funds, many of which are equity based. While guaranteed benefits are fully hedged for equity risk, the indirect equity exposure associated with the base contract fees is not. The asymmetry between the impacts of up and down shocks is caused by reserve flooring in the variable annuity business. The variable annuity voluntary reserve that was set up in 2022 provides a dampening of the RBC ratio sensitivity towards equity movements. The impacts are quite in line with last year.

Interest rates sensitivities

Aegon’s group solvency ratio is not very sensitive to movements in interest rates given the asset liability management and hedging programs that are in place.

In the Americas, a decrease in interest rates leads to higher reserves for variable annuities and universal life products, which are offset by payoffs from interest rate hedging programs. For the Americas, interest rate sensitivity results are quite stable due to Clearly Defined Hedging Strategy implemented in 3Q 2021 (net of SSAP108 deferrals). The SSAP 108 deferral reduces non-economic statutory surplus volatility by deferring the breakage between the reserves and hedge movement on TLIC. There is a deferral of net loss (creating an asset) in up rate shocks and a deferral of net gain (creating a liability) in down rate shocks to the balance sheet of the TLIC legal entity and this is generally amortized over a 10-year period.

For SE Plc, the main insurance entity of Aegon UK, exposure to lower interest rates leads to higher required capital on mortality, expense and policyholder lapse risks which is partly offset by gains on the swaps held in the general account. There is one key driver for the changes in sensitivity, which is the sale of the Protection Business, mainly lowering the Own Funds impact in interest rate sensitivities.

Spread sensitivities

The non-government spread sensitivities include shocks on corporate bonds and structured instruments. Overall, Aegon is exposed to the risk of widening credit spreads, which results in lower asset valuations. Aegon as a whole has little exposure to changes in government spreads. The exposure in the Americas is negligible, and there is a slight risk in SE Plc.

The solvency ratio of the Americas shows hardly any impact from spread widening/narrowing, which results from a higher/ lower discount rate used for valuing employee pension plan liabilities offset by the negative/positive impact from lower fixed asset values.

Exposure to government spread sensitivities is driven by SE Plc, which is exposed to spreads widening due to the reduction in the value of fixed-income assets.

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Credit default and migration sensitivities

Previously, the credit sensitivity of the Americas reflected the impact of credit defaults and rating migrations on assets held in the general account portfolio. Credit sensitivities were updated to reflect the 1-in-10 impact of defaults and migrations separately. Defaults represent the annual impact of a level three times the long-term average with 1/3 in OCG and the remainder as a shock impact. Ratings migrations are equivalent to 10% of the general account portfolio dropping one letter grade. Under the default sensitivity, the credit impairments reduce the value of credit exposures and increase the amount of required capital. The downward rating migrations of credit instruments increase the amount of required capital.

Longevity sensitivities

All main business units contribute to the company-wide risk that people will live longer than the expectations embedded in our provisions.

For the Americas, the longevity sensitivity widened compared to 2022. This is driven by movements in Health, as mortality assumptions for both active and disabled lives were updated in 1H2023, with decreasing sufficiency impacts. The shock impact change is mostly driven by the erosion of sufficiency, which went down as a result of the 1H 2023 assumption update in the Americas.

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 Regulation and supervision

Regulation and supervision

Individually regulated Aegon companies are each subject to prudential supervision in their respective home countries and therefore are required to maintain a minimum solvency margin based on local requirements. In addition, Aegon as a whole is subject to prudential requirements on a group basis, including capital, internal governance, risk management, reporting, and disclosure requirements.

Developments in 2023

Following completion of the combination of the Aegon NL business with a.s.r.’s business operations in the Netherlands on July 4, 2023, Aegon no longer had a regulated insurance entity in the Netherlands. After an interim period during which the Dutch Central Bank (DNB) continued to fulfill the role of Aegon’s group supervisor, Aegon’s legal domicile transferred to Bermuda. Consequently, the role of group supervision moved to the Bermuda Monetary Authority (BMA) as of October 1, 2023.

Single-entity level Solvency II supervision continues to applicable in respect of Aegon’s regulated EEA insurance entities in Spain and Portugal. Aegon’s Asset Management activities in the Netherlands have continued to be supervised by the Authority Financial Markets (AFM) and DNB.

In addition, subgroup supervision is exercised by the UK Prudential Regulatory Authority with respect to entities established in the United Kingdom as subsidiaries of Aegon Europe Holding B.V. on the basis of the relevant provisions of the UK regulatory regime for insurers.

For other individual regulated subsidiaries, there is no change in the applicable regulatory regime and legal requirements as a result of the redomiciliation of Aegon’s top holding company.

Group Supervision

Following the redomiciliation, Aegon’s group supervision is exercised by the BMA and, accordingly, the relevant Bermudian laws and regulations concerning group supervision are applicable.

The Bermuda Insurance Act 1978 and related regulations provide the BMA with broad authority to perform its group supervisor role with a wide range of functions and supervisory activities, including but not limited to (i) coordinate the gathering of information and dissemination of relevant or essential information for going concerns and emergency situations (including information which is important for the supervisory task of other competent authorities), (ii) review and assess the financial situation of the group, (iii) assess the compliance with the rules on solvency and on risk concentration and intra-group transactions of the group, (iv) assess the system of governance of the group, (v) plan and coordinate supervisory activities in cooperation with

other competent authorities concerned, (vi) coordinate any enforcement action against the group and its members and (vii) plan and coordinate meetings of the college of supervisors of the Aegon Group. Bermuda’s regulatory regime is well recognized, having been granted equivalent status by the EU under the Solvency II regime, and by the UK under its own Solvency UK regime. It has also been designated as a qualified jurisdiction and reciprocal jurisdiction by the US National Association of Insurance Commissioners (NAIC).

Group Solvency

In Bermuda, Aegon’s group solvency ratio and surplus under the Bermuda solvency framework will be broadly in line with that under the Solvency II Regime during a transition period until the end of 2027. After the transition period, Aegon will fully adopt the Bermudian solvency framework.

Insurance companies are required to determine technical provisions at a value that corresponds with the current exit value of their obligations towards policyholders and other beneficiaries of insurance and reinsurance contracts. The calculation of the technical provisions is based on market-consistent information where possible. The value of the technical provisions is equal to the sum of a best estimate and a risk margin. The discount rate at which technical provisions are calculated and other parameters may have an important effect on the amount and volatility of own funds (the excess of assets over liabilities).

Insurers and reinsurers are required to hold eligible own funds to ensure that they are able to meet their obligations over the next 12 months with a probability of at least 99.5% (that is, the ability to withstand a 1-in-200-year event). This objective is called the Solvency Capital Requirement (SCR). Insurance companies are allowed to use: (a) a standard formula to calculate their SCR; (b) a self-developed internal model; for which the approval of supervisory authorities is required; or (c) a partial internal model (PIM); a combination of the standard formula and an internal model that also requires approval of supervisory authorities. An internal model should better reflect the actual risk profile of the insurance company than the standard formula. Aegon Ltd. uses a PIM. In addition to the SCR, insurance companies must also calculate a Minimum Capital Requirement (MCR). This represents a lower level of financial security than the SCR, below which the level of eligible own funds held by the insurance company is not allowed to drop. An irreparable breach of the MCR would lead to the withdrawal of an insurance company’s license. Insurance companies are required to hold eligible own funds against the SCR and MCR.

During the transition period, Aegon uses a combination of the two methods – Accounting Consolidation and Deduction & Aggregation – to calculate the Group Solvency ratio. For insurance entities domiciled outside the EEA for

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which provisional or full equivalence applies, such as the United States, Aegon uses the Deduction and Aggregation method, based on local regulatory requirements, to translate these into the Group Solvency position. US insurance entities are included in Aegon’s group solvency calculation in accordance with local US Risk-Based Capital (RBC) requirements. Actual solvency levels are included in note 37 “Capital management and solvency” in Aegon’s consolidated financial statements. Aegon’s UK insurance subsidiaries have been incorporated into the Aegon’s Solvency calculation in accordance with UK Solvency II standards, including Aegon UK’s approved Partial Internal Model.

Designation as Internationally Active Insurance Group

Aegon retains its designation as an Internationally Active Insurance Group (IAIG) in accordance with the principles of ComFrame (the Common Framework for the Supervision of IAIGs). The provisions of ComFrame must be implemented in local legislation in order to have a binding effect. To the extent Bermudian regulations require these provisions for IAIGs these provisions are applicable. This also applies to the Insurance Capital Standard (ICS) which is being developed as a consolidated group-wide capital standard for IAIGs; The ultimate goal of the ICS is a single ICS that includes a common methodology by which it achieves comparable outcomes across jurisdictions. The key elements of the ICS include valuation, capital resources, and capital requirements. Ongoing work is intended to lead to improved convergence over time. It must be adopted by the Bermudian jurisdiction to be formally applicable.

Bermuda’s group supervision framework reflects international developments and principles for insurance group supervision adopted by the International Association of Insurance Supervisors (IAIS). The Insurance Amendment Act 2021 introduced the concept of an IAIG to meet the principles and standards of ComFrame. The Insurance Amendment Act 2021 amended the Insurance Act 1978 to make provision for supervisory requirements relating to the

administration of IAIGs in Bermuda. Once designated as an IAIG, the IAIG is subject to any rules that the BMA may make prescribing prudential or technical standards to the IAIG, and will continue to be subject to any other requirements of group supervision.

Aegon closely monitors all regulatory requirements resulting from its designation as an IAIG. As an example, we have monitored the Insurance Amendment Act 2023. This amendment to the Insurance Act 1978 was passed in May 2023; it empowers the BMA to require insurance groups to develop a recovery plan. The amendment also empowers the BMA to designate, for the purposes of supervision, a member company of an IAIG as its ‘head of the IAIG’.

In November 2019, the IAIS adopted the Holistic Framework for the assessment and mitigation of systemic risk in the insurance sector. The Holistic Framework consists of an enhanced set of supervisory policy measures and powers of intervention, an annual IAIS global monitoring exercise, and an assessment of consistent implementation of supervisory measures. The provisions of the Holistic Framework must be implemented in local legislation in order to have a binding effect.

Bermuda’s Insurance Act has been amended to give the BMA powers to make rules for recovery planning, and the BMA is finalizing requirements for recovery plans. In 2025, the BMA plans to publicly consult on the design and implementation of an insurance resolution regime in line with the standards of the IAIS.

Future laws and regulations

Aegon has taken note of reforms to Bermuda’s prudential regime, many of which will become applicable in 2024. Aegon further continues to closely monitor all regulatory requirements and changes to them, both at the consolidated level and at the level of individual regulated subsidiaries. In addition to prudential regulatory requirements, this includes ESG-related legislation, such as the Corporate Sustainability Reporting Directive, the Taxonomy Regulation, the Sustainable Finance Disclosure Regulation.

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Code of Conduct

Code of Conduct

Aegon’s Code of Conduct embodies the company’s values and helps ensure that all employees act ethically and responsibly and is available at aegon.com.

It prescribes a mandatory set of standards for how Aegon employees should conduct business, comply with all applicable laws and regulations, and exercise sound judgment in reaching ethical business decisions in the long-term interests of Aegon’s stakeholders.

Aegon’s Code of Conduct applies to all Directors, officers, and employees of all Aegon companies around the world (regardless of the contractual basis of their employment), including associate companies and joint ventures that are majority owned and/or controlled by Aegon Ltd. Companies in which Aegon does not hold a majority stake will be expected to either adopt the Aegon Code of Conduct or implement an equivalent code.

All Aegon employees must certify that they have read and understood the Code of Conduct, and agree to abide by it. Employees are also required to follow mandatory training on a regular basis to help embed the principles of the Code in the way they work.

Any waivers to the Aegon Code made to Directors or Executive officers must be approved by the Aegon Ltd. Board of Directors or its Audit Committee. Waivers may only be granted in exceptional circumstances and will be promptly disclosed to our shareholders in accordance with applicable laws and stock exchange requirements. Aegon has elected to comply with home country practice and disclose any waivers to the Aegon Code in the Form 20-F instead of disclosing such waivers to shareholders within four business days pursuant to the NYSE rules. No waivers were requested or given during 2023.

Aegon Speak Up: Reporting misconduct

Breaching laws and regulations, the Code of Conduct, or internal policies and procedures may have serious

consequences for the company and its staff, its customers, shareholders, and business partners, and may also have a serious impact on the financial system or the public interest. Aegon’s ambition is to be a trusted long-term partner to all its stakeholders, and therefore, the company would like to be made aware of any suspected unlawful, unethical, or otherwise improper conduct that could be harmful to the company and its stakeholders. Effective detection and resolution of such conduct will help sustain its business and ensure long-term value creation for all stakeholders.

Aegon implemented Aegon Speak Up to demonstrate its commitment to staff and other stakeholders that it encourages people to report any concerns regarding potential misconduct and will not tolerate reprisals for making a good faith report.

Aegon Speak Up provides a safe environment for anyone who wishes to raise a concern about suspected or observed misconduct that involves Aegon.

For this purpose, Aegon has contracted with an independent third party to host a secure reporting channel for employees and others to report potential misconduct. Reports can be submitted online or via toll-free telephone lines in all the countries in which Aegon conducts business (24 hours a day, seven days a week). Reporters can choose to remain anonymous. If an issue is found upon investigation, appropriate management action is taken to resolve the issue and prevent it from happening again.

It is important that people feel supported and protected by the company for bringing issues to the attention of management that may be harmful to the reputation and integrity of the company, its employees, or other stakeholders. Aegon has established specific measures to provide support, and to address situations that present a risk of reprisal. Reporters who believe they have experienced retaliation are encouraged to immediately bring the issue to the attention of the Group Compliance Officer.

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Controls and procedures

Disclosure controls and procedures

At the end of the period covered by this Annual Report on Form 20-F, Aegon’s management carried out an evaluation, under the supervision and with the participation of its Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of Aegon’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, Aegon’s CEO and CFO concluded that, as of December 31, 2023, the disclosure controls and procedures were effective. There have been no material changes in the company’s internal controls, or in other factors, that could significantly affect internal control over financial reporting subsequent to the end of the period covered by this Annual Report on Form 20-F.

Due to the listing of Aegon shares on the New York Stock Exchange, Aegon is required to comply with the US Securities and Exchange Commission regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act, or SOX 404. These regulations require that Aegon’s CEO (the Chairman of the Executive Board) and CFO report on and certify the effectiveness of Aegon’s internal control over financial reporting on an annual basis. Furthermore, external auditors are required to provide an opinion on the management assessment of Aegon’s internal control over financial reporting. The SOX 404 statement by management is stated below, followed by the report of the external auditor.

Management’s annual report on internal control over financial reporting

Aegon’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Aegon’s internal control over financial reporting is a process designed under the supervision of Aegon’s principal executive and financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of its published financial statements. Internal control over financial reporting includes policies and procedures that:

§Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
§Provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with generally accepted accounting principles;
§Provide reasonable assurance that receipts and expenditures are made only in accordance with the authorizations of management and directors of the company; and
§Provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on Aegon’s financial statements would be prevented or detected in a timely manner.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

Management assessed the effectiveness of Aegon’s internal control over financial reporting as of December 31, 2023.

In making its assessment management used the criteria established in “Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission” (COSO, 2013 framework).

Besides enhancements to our internal control over financial reporting related to the transaction with a.s.r. and the adoption of IFRS 9 and IFRS 17, there were no other changes to our internal control over financial reporting during the year ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Based on the assessment, management concluded that, in all material aspects, the internal control over financial reporting was effective as of December 31, 2023. They have reviewed the results of its work with the Audit Committee of the Board of Directors.

Attestation report of the registered public accounting firm

Management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2023, was audited by PricewaterhouseCoopers Accountants N.V., an independent registered public accounting firm, as stated in their report included on page 390.

 94  |  Annual Report on Form 20-F 2023

Controls and procedures

Management’s assessment of going concern

Aegon’s management has adopted a going concern basis, in preparing the consolidated financial statements, on the reasonable assumption that the company is, and will be, able to continue its normal course of business in the foreseeable future.

Relevant facts and circumstances, relating to the consolidated financial position on December 31, 2023, were assessed in order to reach the going concern assumption. The main areas assessed are financial performance, capital adequacy, financial flexibility, liquidity, and access to capital markets, together with the factors likely to affect Aegon’s future development, performance, and financial position. Commentary on these is set out in the “Capital and liquidity management”, “Risk management”, “Results of operations” and “Business overview” sections in this Annual Report on Form 20-F. Aegon’s CEO and CFO concluded that the going concern assumption is appropriate on the basis of the financial performance of the company, its continued ability to access capital markets, adequate solvency ratios, and the level of leverage and Cash Capital at Holding.

The Hague, the Netherlands, April 3, 2024

The Executive Director and CFO of Aegon Ltd.

Lard Friese, CEO

Matthew J. Rider, CFO

Annual Report on Form 20-F 2023 | 95

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 96  |  Annual Report on Form 20-F 2023

LOGO
Financial information 2023 Annual Report on Form 20-F 2023 | 97
Table of Contents
LOGO
Table of contents
Financial information
100
Selected financial data
102
Results of operations
107
Balance sheet items
109
Capital position
111
Business updates 2023
111
∎ Business updates Americas
115
∎ Business updates United Kingdom
117
∎ Business updates International
119
∎ Business updates Asset Management
Consolidated financial statements of Aegon Ltd.
121
Exchange rates
122
Consolidated income statement of Aegon Ltd.
124
Consolidated statement of comprehensive income of Aegon Ltd.
126
Consolidated statement of financial position of Aegon Ltd.
127
Consolidated statement of changes in equity of Aegon Ltd.
130
Consolidated cash flow statement of Aegon Ltd.
Notes to the consolidated financial statements
131
1   General information
131
2   Material accounting policy information
174
3   Critical accounting estimates and judgment in applying accounting policies
177
4   Financial risks
207
5   Segment information
216
6   Insurance revenue
216
7   Insurance service expenses
217
8   Net income / (expenses) on reinsurance held
218
9   Insurance net investment result
223
10   Other net investment result
224
11   Financing net investment result
225
12   Fees and commission income
225
13   Other operating expenses
227
14   Other income / (charges)
228
15   Income tax
229
16   Earnings per share
230
17   Dividend per common share
231
18   Cash and cash equivalents
233
19   Investments
235
20   Derivatives
244
21   Investments in joint ventures and associates
248
22   Deferred expenses
248
23   Other assets and receivables
252
24   Intangible assets
253
25   Shareholders’ equity
258
26   Other equity instruments
259
27   Subordinated borrowings
260
28   Trust pass-through securities
260
29   Insurance contracts, reinsurance contracts held and investment contracts with discretionary participating features
282
30   Investment contracts without discretionary participating features
282
31   Borrowings
283
32   Provisions
284
33   Defined benefit plans
290
34   Deferred tax
292
35   Other liabilities
292
36   Accruals
293
37   Capital management and solvency
295
38   Fair value
306
39   Commitments and contingencies
309
40   Transfers of financial assets
312
41   Offsetting, enforceable master netting arrangements and similar agreements
313
42   Companies and businesses acquired and divested
314
43   Group companies
315
44   Related party transactions
317
45   Held for sale and discontinued operations
325
46   Comparative information 2021
363
47   Events after the reporting period
 98  |  Annual Report on Form 20-F 2023
Table of Contents
Financial statements of Aegon Ltd.
365
Income statement of Aegon Ltd.
366
Statement of financial position of Aegon Ltd.
Notes to the financial statements of Aegon Ltd.
367
1   General information
367
2   Material accounting policies information
368
3   Investment income
368
4   Results from financial transactions
369
5   Commissions and expenses
369
6   Interest charges and related fees
369
7   Income tax
369
8   Shares in group companies
370
9   Loans to group companies
370
10   Non-current assets
370
11   Receivables
370
12   Other current assets
370
13   Share capital
372
14   Shareholders’ equity
375
15   Other equity instruments
376
16   Subordinated borrowings
376
17   Long-term borrowings
376
18   Current liabilities
376
19   Commitments and contingencies
377
20   Number of employees
377
21   Auditor’s remuneration
377
22   Events after the reporting period
378
23   Proposal for profit appropriation
Other information
379
Profit appropriation
380
Major shareholders
Other financial information
384
Schedule I
385
Schedule II
387
Schedule III
388
Schedule IV
389
Schedule V
390
Auditor’s report on the Annual Report on Form 20-F
Additional information
394
Overview of Americas
401
Overview of United Kingdom
405
Overview of International
410
Overview of Asset Management
413
Risk factors Aegon Ltd.
436
Compliance with regulations
437
Property, plant and equipment
438
Employees and labor relations
439
Group dividend policy
440
The offer and listing
441
Memorandum and Bye-Laws
444
Differences between Bermuda and US company laws
445
Material contracts
446
Exchange controls
447
United States tax consequences to holders of shares
451
Principal accountant fees and services
452
Purchases of equity securities by the issuer and affiliated purchasers
453
Cybersecurity
Annual Report on Form 20-F 2023 | 99
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Selected financial data
The financial results in this Annual Report are based on Aegon’s consolidated financial statements, which have been prepared in accordance with International Financial Reporting Standards as issued by the IASB (IFRS).
Application of the accounting policies in the preparation of the financial statements requires management to apply judgment involving assumptions and estimates concerning future results or other developments, including the likelihood, timing or amount of future transactions or events. There can be no assurance that actual results will not differ materially from those estimates. Accounting policies that are critical to the presentation of the financial statements and that require complex estimates or significant judgment are described in the notes to th
e
consolidated financial statements.
A summary of historical financial data is provided in the table below. It is important to read this summary in conjunction with the consolidated financial statements and related notes (see pages
122-363)
of this Annual Report.
Selected consolidated income statement information
In EUR millions (except per share amount)  
 
    2023
     2022 
3)
     2021 
4)
      2020 
4)
     2019 
4)
 
Amounts based upon IFRS
       
Insurance service result   342   430   n.a.    n.a.   n.a. 
Net investment result   (139)   329   n.a.    n.a.   n.a. 
Other result   (894)   (173)   n.a.    n.a.   n.a. 
Premium income
1)
   n.a.   n.a.   13,731    14,105   16,015 
Investment income
1)
   n.a.   n.a.   4,893    5,087   5,319 
Total revenues
1)
   n.a.   n.a.   21,091    21,318   23,597 
Result before tax from continuing operations   (391)   827   1,164    (958)   1,197 
Net result from continuing and discontinued operations   (199)   (540)   2,029    (135)   1,236 
Earnings per common share
2)
       
Basic   (0.12)   (0.30)   0.94    (0.09)   0.56 
Diluted   (0.12)   (0.30)   0.94    (0.09)   0.56 
Earnings per common share B
2)
       
Basic   -   (0.01)   0.02    -   0.01 
Diluted   -   (0.01)   0.02    -   0.01 
Earnings per common share from continuing operations
2)
       
Basic   (0.11)   0.34   0.48    (0.33)   0.45 
Diluted   (0.11)   0.34   0.48    (0.33)   0.45 
Earnings per common share B from continuing operations
2)
       
Basic   -   0.01   0.01    (0.01)   0.01 
Diluted   -   0.01   0.01    (0.01)   0.01 
1 Premium income, investment income and total revenues are financial statements line items no longer applicable under IFRS 17.
2 Earnings in the above table refers to Net result.
3 2022 comparatives have been restated due to the initial application of IFRS 9 and IFRS 17, see note 2 of the consolidated financial statements for further details on the changes in accounting policies.
4 2021-2019 comparatives have not been restated as IFRS only requires 1 year of comparatives related to the initial application of IFRS 9 and IFRS 17.
5 n.a. in above table should be read as “not applicable”.
 100  |  Annual Report on Form 20-F 2023
Table of Contents
Selected financial data 
Selected consolidated balance sheet information
In EUR millions  
 
   2023
      2022 
1)
      2021 
2)
      2020 
2)
      2019 
2)
 
Amounts based upon IFRS
          
Assets held for sale   432    88,664    -    -    - 
Investments   266,382    254,759    408,784    380,713    372,350 
Total assets   301,581    380,711    468,252    443,814    439,769 
Shareholders’ equity   7,475    8,815    23,813    22,018    21,842 
Reinsurance contracts   16,000    16,669    20,992    18,910    20,253 
Insurance contracts   177,262    176,083    273,745    257,587    258,595 
Investments contracts with DPF   21,594    21,055    n.a.    n.a.    n.a. 
Investments contracts without DPF   75,266    65,227    n.a.    n.a.    n.a. 
Liabilities held for sale   389    83,959    -    -    - 
1 2022 comparatives have been restated due to the initial application of IFRS 9 and IFRS 17, see note 2 for further details on the changes in accounting policies.
2 2021-2019 comparatives have not been restated as IFRS only requires 1 year of comparatives related to the initial application of IFRS 9 and IFRS 17.
3 n.a. in above table should be read as “not applicable”.
Number of common shares
In thousands  
 
2023
  2022  2021  2020  2019 
Balance on January 1    2,109,430    2,106,313    2,098,114    2,105,139    2,095,648 
Stock dividends   -   13,782   10,665   2,466   9,491 
Shares withdrawn   (294,703)   (10,665)   (2,466)   (9,491)   - 
      
Balance at end of period
  
 
1,814,727
 
 
 
2,109,430
 
 
 
2,106,313
 
 
 
2,098,114
 
 
 
2,105,139
 
Number of common shares B
In thousands  
 
2023
  2022  2021  2020  2019 
Balance on January 1       546,196       568,839       571,795       585,022      585,022 
Shares withdrawn   (156,437)   (22,643)   (2,956)   (13,227)   - 
      
Balance at end of period
  
 
389,759
 
 
 
546,196
 
 
 
568,839
 
 
 
571,795
 
 
 
585,022
 
Dividends
Aegon declared interim and final dividends on common shares for the years 2019 through 2023, with the exception of the 2019 final dividend, in the amounts set forth in the following table. As previously announced, Aegon has moved to a cash only dividend as from the 2022 final dividend. The 2023 interim dividend amounted to EUR 0.14 per common share and EUR 0.0035 per common share B, which has financial rights attached to it of 1/40th of a common share. The interim dividend was paid on September 27, 2023. At the General Meeting of Shareholders currently scheduled for June 12, 2024, the Board of Directors will, in line with its earlier announcement and barring unforeseen circumstances, propose a final dividend of EUR 0.16 per common share, and EUR 0.004 per common share B. The final dividend for 2023 will bring the total dividend for 2023 to EUR 0.30 per common share and EUR 0.0075 per common share B. Dividends in US dollars are calculated based on the foreign exchange reference rate (WM/Reuters closing spot exchange rate fixed at 5.00 pm Central European Summer Time (“CEST”)) on the
US-ex
dividend day.
   EUR per common share   USD per common share 
Year
    Interim        Final       Total      Interim       Final       Total  
2019   0.15   0.00 
1)
    0.15    0.17    -    0.17 
2020   0.06    0.06    0.12    0.07    0.07    0.14 
2021   0.08    0.09    0.17    0.09    0.10    0.19 
2022   0.11    0.12    0.23    0.11    0.13    0.24 
2023   0.14    0.16 
2)
    0.30    0.15           
1 Aegon waived the 2019 final dividend of EUR 0.16 to strengthen its balance sheet and improve its risk profile.
2 Proposed
Annual Report on Form 20-F 2023  |  101 
Table of Contents
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Results of operations
This Annual Report on Form
20-F
includes the following
non-IFRS
financial measure: operating result and addressable expenses.
The reconciliation of operating result to the most comparable IFRS measure is presented in note 5 “Segment information” of the consolidated financial statements. Operating result reflects Aegon’s profit before tax from underlying business operations and mainly excludes components that relate to accounting mismatches that are dependent on market volatility or relate to events that are considered outside the normal course of business. Operating result is calculated by consolidating on a proportionate basis Aegon’s joint ventures and associated companies, except for its associate a.s.r. The information on the following tables also includes the
non-IFRS
financial measure operating result after tax. This is the
after-tax
equivalent of operating result.
The reconciliation of addressable expenses to operating expenses, the most comparable IFRS measure, is presented in this section. Operating expenses are all expenses associated with selling and administrative activities (excluding commissions). This includes certain expenses recorded in other charges for segment reporting, including restructuring charges. Addressable expenses are calculated by excluding the following items from operating expenses: amounts attributable to insurance acquisition cash flows, restructuring expenses (including expenses related to the operational improvement plan), expenses in joint ventures and associates and expenses related to acquisitions and disposals. Addressable expenses are reported on a constant currency basis.
Aegon’s senior management is compensated based in part on Aegon’s results against targets using the
non-IFRS
measures presented in this report. While many other insurers in Aegon’s peer group present substantially similar
non-IFRS
measures, the
non-IFRS
measures presented in this document may nevertheless differ from the
non-IFRS
measures presented by other insurers. There is no standardized meaning to these measures under IFRS or any other recognized set of accounting standards and readers are cautioned to consider carefully the different ways in which Aegon and its peers present similar information before making a comparison. Aegon believes the
non-IFRS
measures present within this report, when read together with Aegon’s reported IFRS financial statements, provide meaningful supplemental information for the investing public. This enables them to evaluate Aegon’s businesses after eliminating the impact of current IFRS accounting policies for financial instruments and insurance contracts, which embed a number of accounting policy alternatives that companies may select in presenting their results (as companies may use different local generally accepted accounting principles (GAAPs)), and this may make the comparability difficult between time periods.
For the discussion on our operating results and addressable expenses for the year ended December 31, 2022 compared to the year ended December 31, 2021, please see the Results of operations on pages 102-124 in Annual Report on Form 20-F 2022.
 102  |  Annual Report on Form 20-F 2023
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Results overview 2023
Results overview 2023
Results overview
Amounts in EUR millions
  
 
    2023
       2022 
1)
  
%  
US Individual Solutions
   851   1,116  
 
(24)
 
US Workplace Solutions
   256   318  
 
(19)
 
Americas
  
 
1,107
 
 
 
1,433
 
 
 
(23)
 
United Kingdom
  
 
214
 
 
 
211
 
 
 
1
 
Global Platforms
   23   51  
 
(54)
 
Strategic Partnerships
   121   142  
 
(14)
 
Asset Management
  
 
145
 
 
 
193
 
 
 
(25)
 
Spain & Portugal
   86   88  
 
(3)
 
China (ATHTF)
   16   26  
 
(37)
 
Brazil
   45   25  
 
76
 
TLB
   54   82  
 
(34)
 
Other
   (6)   (20)  
 
71
 
International
  
 
196
 
 
 
202
 
 
 
(3)
 
Holding and other activities
  
 
(163
) 
 
 
(237
) 
 
 
31
 
Operating result
  
 
1,498
 
 
 
1,802
 
 
 
(17)
 
Fair value items
   76   (218)  
 
n.m.
 
Realized gains / (losses) on investments
   (659)   (481)  
 
(37)
 
Net impairments
   (92)   (122)  
 
24
 
Non-operating
items
  
 
(675
) 
 
 
(820
) 
 
 
18
 
Other income / (charges)
   (1,140)   (1,366)  
 
17
 
Result before tax
  
 
(317
) 
 
 
(384
) 
 
 
18
 
Income tax
   118   (156)  
 
n.m.
 
Net result
  
 
(199
) 
 
 
(540
) 
 
 
63
  
Interest on financial leverage classified as equity after tax
   (48)   (36)  
 
(34)
 
Net result after interest on financial leverage classified as equity
  
 
(247
) 
 
 
(576
) 
 
 
57
 
Average common shareholders’ equity
   8,174   10,585  
 
(23)
 
Return on Equity
2)
  
 
14.7%
 
 
 
13.0%
 
 
Americas
   1,525   1,447  
 
5
 
United Kingdom
   376   366  
 
2
 
Asset Management
   371   366  
 
1
 
International
   127   127  
 
-
 
Holding and other activities
   121   116  
 
4
 
Addressable expenses
3)
  
 
    2,519
 
 
 
     2,422
 
 
 
       4
 
Operating expenses
  
 
3,307
 
 
 
3,229
 
 
 
2
 
1 
2022 comparatives have been restated due to the initial application of IFRS 9 and IFRS 17, see note 2 for further details on the changes in accounting policies.
2 
Operating result after tax and after interest on financial leverage classified as equity / average common shareholders’ equity
3 
Addressable expenses for all reporting periods are reported at constant currency at the current period foreign exchange rate.
 
Annual Report on Form 20-F 2023  |  103 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Net result
The net result for 2023 was a loss of EUR 199 million, an improvement compared to the 2022 net loss of EUR 540 million, since the latter was driven by an impairment loss from classifying Aegon the Netherlands as held for sale following the transaction with a.s.r.
For 2023, the result before tax amounted to a loss of EUR 317 million as the operating result was more than offset by Other charges and
non-operating
items. The tax benefit for the year amounted to EUR 118 million, mainly driven by the dividends received deduction and tax credits in the Americas.
Operating result
Aegon’s operating result decreased by 17% compared to 2022 to EUR 1,498 million, mostly driven by the Americas, and reflects previously executed management actions and
one-time
benefits in the prior year.
Americas
The operating result from the Americas decreased by 23% to EUR 1,107 million in 2023 from EUR 1,433 million in 2022. In local currency, the operating result from the Americas decreased by 21% to USD 1,197 million in 2023. This decrease was partly driven by the insurance net investment result decreasing by USD 261 million to USD 437 million due to lower asset levels, a reinsurance transaction, and
non-recurring
benefits in the prior year period. In addition, the contribution of the release of Contractual Service Margin (CSM) and Risk Adjustment was USD 80 million lower compared with 2022. The experience variance on expenses was unfavorable by USD 63 million compared with a favorable variance in 2022. Unfavorable claims and policyholder experience adjustments of USD 370 million in 2023 compared with USD 543 million in 2022. New business from onerous contracts amounted to USD 29 million, up USD 15 million from the prior year. The Other insurance result reflects mainly expenses not directly related to the issuance and maintenance of insurance contracts. For 2023, this amounted to a charge of USD 199 million compared with a charge of USD 150 million in the prior year. The operating result for
non-insurance
business increased by 6% to USD 394 million compared with 2022, mostly driven by growth of earnings from WFG.
∎
In Individual Solutions the operating result decreased to USD 920 million in 2023, a decrease of USD 255 million compared with the prior year period. This was mainly driven by a decrease of the net investment result. First, asset levels in Financial Assets decreased as a result of management actions taken, including the reinsurance of a universal life portfolio in July 2023. Secondly, a model update resulted in a
non-recurring
benefit in the net investment result in 2022. And thirdly, interest accretion on Individual Life liabilities increased over the period, driven by growth in Strategic Assets. This growth was partly offset by a decrease in interest accretion in Financial Assets as the book runs off. Mortality claims experience was USD 144 million unfavorable. Morbidity claims payment experience that is reflected in the operating result was USD 65 million worse than expected, however better than expected claim terminations and claims incidence experience increased future profits as reflected in the CSM, which increased by USD 177 million. The remaining unfavorable experience adjustments of USD 142 million were attributable to the impact of other policyholder behavior on onerous contracts. WFG’s operating result increased by USD 38 million compared with the prior year to USD 161 million in 2023. This came as a result of continued growth of revenues following more sales from a growing number of agents.
∎
In Workplace Solutions, the operating result decreased by USD 57 million compared with the prior year to USD 277 million in 2023. The
run-off
of the Single Premium Group Annuities portfolio contributed to the decrease of the operating result. The
non-insurance
operating result of Retirement Plans decreased by USD 4 million to USD 131 million. This was partly offset by a benefit from higher investment income on general account stable value investments. Experience adjustments of USD 19 million in Workplace Solutions were more unfavorable in the year compared with 2022, and arose mainly from unfavorable lapse and morbidity experience in Workplace Health products, which compared with marginally positive morbidity experience in 2022.
United Kingdom
The operating result from the United Kingdom increased by 1% compared with 2022 to EUR 214 million. In local currency, the operating result increased by 4%, over the same period to GBP 186 million. The operating result benefitted from favorable equity markets and higher interest rates resulting in higher investment results. There was a partial offset from the sale of the protection business to Royal London, which mainly manifests itself as a reduced release of CSM. Inflationary pressures on expenses resulted in higher losses in the fee business, but also led to a decrease of the operating result in the unit linked insurance business as expenses were higher than reflected in the expense assumptions.
 104  |  Annual Report on Form 20-F 2023
Table of Contents
2 
 
Results overview 2023
 
Asset management
The operating result from Aegon AM amounted to EUR 145 million in 2023, a decrease of 25% compared with 2022. The decrease was driven by lower management fees in both Global Platforms and Strategic Partnerships due to lower asset balances due to adverse market conditions, outflows and margin pressure at AIFMC, Aegon’s Chinese asset management joint venture, following a regulatory change. This was partly offset by the positive impact on operating result from the asset management partnership with a.s.r., the expansion of the CLO business and the expansion of the LBP AM joint venture.
International
The operating result from the International segment decreased by 3% to EUR 196 million compared with EUR 202 million in 2022. The decrease was mainly driven by a lower operating result from TLB following the internal reinsurance transaction between TLB and Transamerica in 2022. China also showed a decrease in operating result driven by higher reinsurance expenses, while also reflecting the impact of a less favorable asset mix. The operating result from Spain & Portugal decreased slightly, and included the impact of the sale of the 50% stake in the Spanish insurance joint venture with Liberbank in 2022. Brazil recorded a higher operating result, resulting from business growth, favorable claims experience and an increase of Aegon’s economic stake in the joint venture. The sale of the business in India also increased the International operating result as the loss generated by this business was reported under Other charges since the announcement.
Holding
The operating result from the Holding was a loss of EUR 163 million, and mainly reflected funding and operating expenses. The result from the Holding improved by EUR 74 million compared with 2022 driven by higher returns on Cash Capital at Holding due to both higher interest rates and a higher balance, and an unfavorable
one-time
item in 2022.
Non-operating
items
The result from
non-operating
items amounted to a loss of EUR 675 million in 2023, mainly as a result of realized losses on investments.
Fair value items
Fair value items were a gain of EUR 76 million, mainly driven by the Americas and partly offset by fair value losses in the United Kingdom.
In the Americas, fair value items amounted to a gain of EUR 138 million in 2023, driven by a gain in Variable Annuities as favorable markets led to gains on onerous contracts. There was a partial offset from fair value investments, mainly driven by the underperformance of alternative investments.
In the United Kingdom, fair value items amounted to a loss of EUR 76 million in 2023 and reflect the negative revaluations of hedges used to protect the solvency position and the impact of higher interest rates.
Realized losses on investments
Realized losses on investments amounted to EUR 659 million and were driven by the Americas. There, realized losses on investments amounted to EUR 683 million, which were fully offset by gains in Other Comprehensive Income and had no impact on shareholders’ equity. This was driven in part by the sale of assets in the context of the reinsurance of a universal life portfolio to Wilton Re and in part as a consequence of management actions to preserve existing tax benefits, as well as to enable a reduction of short-term variable rate borrowings.
Net impairments
Net impairments for the Group were EUR 92 million. These were driven by EUR 62 million of net impairments in the Americas from ECL balance increases, mainly from a more conservative economic forecast in the ECL model and from purchases of new debt instruments. In International, net impairments of EUR 23 million related mainly to write-offs in the India associate prior to the announcement of its divestment in July 2023.
Annual Report on Form 20-F 2023  |  105 
Table of Contents
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Other charges
Other charges amounted to EUR 1.1 billion, and were driven by the Americas.
Other charges in the Americas amounted to EUR 961 million, in line with what was announced at the 2023 Capital Markets Day. These were driven by EUR 515 million charges related to assumption and model updates, around half of which were related to the regular annual expense assumption review in the fourth quarter of 2023 reflecting recent expense experience. In addition, other charges included EUR 446 million of restructuring charges, investments related to the Life operating model, adjustment to litigation provisions to account for settlements in the second half of 2023, and restructuring of an
earn-out
agreement with a founding WFG agent in the first half of 2023.
In International, Other charges of EUR 110 million were driven by a book loss from the completion of the divestment of Aegon’s businesses in Romania and Poland.
The result from the completion of the transaction with a.s.r and Aegon’s resulting stake in a.s.r. led to an Other income of EUR 45 million in 2023.
Expenses
Operating expenses increased by 2%, or EUR 78 million, compared to 2022 to EUR 3,307 million. Next to increased addressable expenses, this was due to an increase in restructuring expenses, mainly driven by the
one-time
investments in Transamerica in its efficient operating model in order to improve customer service and product manufacturing. These more than offset the favorable impacts from a reduction in IFRS 17 project expenses and currency movements.
Addressable expenses, which is on a constant currency basis, increased by 4% when compared to 2022, to EUR 2,519 million. This is mainly driven by increased expenses in the Americas, and reflects higher expenses related to the Life operating model including the insourcing of various functions following the strategy announced at the 2023 CMD.
The reconciliation from operating expenses from continuing operations to addressable expenses is presented in the table below.
    
Note 
   
 
2023
  2022  
Insurance-related employee expenses
     604   637 
Non-insurance-related
employee expenses
     1,107   1,059 
Insurance-related administrative expenses
     551   594 
Non-insurance-related
administrative expenses
     780   669 
Operating expenses for IFRS reporting
     3,042  
 
2,959
 
Discontinued operations - intercompany elimination
     (12)   (19) 
Operating expenses related to joint ventures and associates
     276   289 
Operating expenses in result of operations
     3,307  
 
3,229
 
Operating expenses related to joint ventures and associates
     (276)   (289) 
Amounts attributed to insurance acquisition cashflows
     (49)   (53) 
Restructuring expenses
     (238)   (39) 
Operational improvement plan expenses
     (213)   (340) 
Acquisition and disposals
     (9)   (33) 
Netting expenses / income
     (4)   - 
Adjusting FX effect
     1   (53) 
    
Addressable expenses
       
 
     2,519
 
 
 
     2,422
  
 106  |  Annual Report on Form 20-F 2023
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Balance sheet items
Balance sheet items
Balance sheet items
Amounts in EUR millions  
2023
  2022  %  
Shareholders’ equity
   7,475  
 
8,815
 
 
 
(15)
 
Gross financial leverage
   5,064   5,621  
 
(10)
 
Gross financial leverage ratio (%)
   26.5%   25.7%     
Americas
   5,063   5,801  
 
(13)
 
United Kingdom
   1,194   1,300  
 
(8)
 
International
   129   121  
 
7
 
Eliminations
   16   5  
 
      n.m.
  
Contractual Service Margin (CSM)
1)
(pro-forma
after tax)
  
 
      6,403
  
 
 
       7,227
  
 
 
(11)
 
1 
On IFRS basis, i.e. excluding joint ventures & associates.
Contractual Service Margin (CSM)
Amounts in EUR millions  
2023
  2022 
1)
  %  
CSM balance at beginning of period
   9,128  
 
11,841
 
 
 
(23)
 
New business
   430   496  
 
(13)
 
CSM release
   (954)   (1,291)  
 
26
 
Accretion of interest
   237   258  
 
(8)
 
Claims and policyholder experience variance
   (107)   108  
 
n.m.
 
Non-financial
assumption changes
   (282)   (4)  
 
n.m.
 
Non-disaggregated
risk adjustment
   (364)   803  
 
n.m.
 
Market impact on unhedged risk of VFA products
   700   (865)  
 
n.m.
 
Net exchange differences
   (202)   398  
 
n.m.
 
Transfer to disposal groups
   (26)   (2,515)  
 
99
 
Other movements
   (309)   (101)  
 
      n.m.
  
CSM balance at end of period
  
 
      8,251
 
 
 
       9,128
 
 
 
(10)
 
Shareholders’ equity
As of December 31, 2023, shareholders’ equity was EUR 7.5 billion following EUR 1.5 billion of capital returns; a decrease of EUR 1.3 billion compared with December 31, 2022. On a per share basis, shareholders’ equity decreased to EUR 4.27, compared with EUR 4.46 as of December 31, 2022.
Gross financial leverage
Gross financial leverage reduced by EUR 0.6 billion in 2023, leading to a gross financial leverage of EUR 5.1 billion on December 31, 2023; in line with the deleveraging target of around EUR 5.0 billion. This reduction was driven by
the redemption of 
EUR 500 million senior debt that matured in December 2023.
As part of its capital management, Aegon announced it intends to call the EUR 700 million
30-year
Tier 2 subordinated note at the first call date (April 25, 2024) and to refinance it.
Contractual Service Margin
The CSM amounted to EUR 8.3 billion per December 31, 2023, a decrease of EUR 0.9 billion compared with December 31, 2022.
The CSM release of EUR 954 million was mainly driven by the
run-off
of the Financial Assets in the Americas and of the traditional book in the UK. New business contributed EUR 430 million to the CSM, driven by the business growth in the US.
Annual Report on Form 20-F 2023  |  107 
Table of Contents
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Non-financial
assumption changes decreased the CSM by EUR 282 million, driven by the US, where the impact of updated morbidity assumptions – reflecting the removal of the morbidity improvement assumption and an increase in the inflation assumption for long-term care – and mortality assumptions was partly offset by the impact of updated expense assumptions. Unfavorable claims and policyholder experience variance amounted to EUR 107 million and was driven by the US. Markets had a favorable impact for products accounted for under the variable fee approach (VFA), primarily variable annuities in the US and the unit-linked business in the UK, increasing the CSM by EUR 700 million. Various other changes, including EUR 227 million from a reinsurance transaction with Wilton Re in the US and the impact of changes to the Risk Adjustment – which are reflected in the CSM – had a negative impact of EUR 664 million on the CSM.
Americas
In the Americas, the CSM balance at the end of 2023 amounted to EUR 6,4 billion, or USD 7.1 billion in local currency, a decrease of USD 0.7 billion compared with December 31, 2022.
Reflecting Transamerica’s strategy, the CSM balance of Strategic Assets increased by USD 611 million during 2023 to USD 2,803 million at the end of 2023. This was mainly driven by a favorable impact from
non-financial
assumption changes of USD 366 million, mainly from expense assumption updates which changed the level and mix of allocated expenses to the benefit of Strategic Assets. In addition, new business contributed USD 422 million to the CSM which was only partly offset by the release of CSM of USD 216 million in 2023. Favorable claims and policyholder experience contributed USD 113 million to the CSM, partly offsetting the experience variance in the operating result. As an offsetting item, the Risk Adjustment was negatively impacted by the loss of diversification benefits following the transaction with a.s.r.
The CSM balance of Financial Assets decreased by USD 1.3 billion in the same period to USD 4.3 billion at the end of 2023, mainly driven by the
run-off
of the book leading to a CSM release of USD 605 million and by the reinsurance transaction with Wilton Re on a part of the Universal Life block, which reduced the CSM balance by USD 246 million. The removal of the morbidity improvement assumption and an increase in the inflation assumption for long-term care were partly offset by an increase of CSM from long-term care premium rate increases. The update of expense assumptions had an unfavorable impact on Financial Assets, resulting in an overall negative impact of USD 698 million of non financial assumption changes in the year 2023. Unfavorable impacts from claims and policyholder experience variances and a higher Risk Adjustment – due to the loss of diversification benefits following the transaction with a.s.r. – were more than offset by interest accretion on the CSM and favorable market impacts on Variable Annuities.
 108  |  Annual Report on Form 20-F 2023
Table of Contents
Capital position
Capital position
Main capital ratios
Amounts in EUR millions  
 
2023
  2022  
% 
United States (USD)
    
Available capital   8,106   7,984  
 
2
  
Required capital   1,878   1,877  
 
-
 
US RBC ratio
  
 
432%
 
 
 
425%
 
    
Scottish Equitable plc (UK) (GBP)
    
Own funds   2,220   1,993  
 
        11
 
SCR   1,190   1,182  
 
1
 
UK SE Solvency II ratio
  
 
187%
 
 
 
169%
 
    
Aegon Ltd. (EUR)
    
Eligible own funds   14,250   16,332  
 
(13)
 
Consolidated Group SCR         7,366          7,844   
 
(6)
 
Group Solvency ratio
  
 
193%
 
 
 
208%
 
    
Cash Capital at Holding
Amounts in EUR millions  
 
2023
  2022  % 
Beginning of period
   1,614  
 
1,279
 
 
 
26
 
Americas   514   520  
 
(1)
 
United Kingdom   121   117  
 
3
 
Asset Management   104   161  
 
(35)
 
International   155   55  
 
184
 
Dividend received from a.s.r.   68   -  
 
n.m.
 
The Netherlands   -   180  
 
n.m.
 
Holding and other activities   -   -  
 
n.m.
 
Gross remittances
  
 
962
 
 
 
1,033
 
 
 
(7)
 
Funding and operating expenses   (247)   (254)  
 
3
 
Free cash flow
  
 
715
 
 
 
780
 
 
 
(8)
 
Divestitures and acquisitions   2,139   798  
 
168
 
Capital injections   (89)   (54)  
 
(63)
 
Capital flows from / (to) shareholders   (1,525)   (713)  
 
(114)
 
Net change in gross financial leverage   (500)   (417)  
 
(20)
 
Other   32   (56)  
 
      n.m.
 
End of period
  
 
     2,387
 
 
 
      1,614
 
 
 
48
  
Maintaining a strong balance sheet is a prerequisite for Aegon to achieve its financial and strategic objectives. It allows the company to build leading, advantaged businesses that create value for its customers, shareholders, and other stakeholders. Aegon has a clear capital management framework in place that informs its capital deployment decisions. This framework is based on maintaining an adequate capitalization of its business units, Cash Capital at Holding, and gross financial leverage.
Annual Report on Form 20-F 2023  |  109 
Table of Contents
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Capital Ratios
US RBC Ratio
The estimated RBC ratio in the US increased from 425% on December 31, 2022, to 432% on December 31, 2023, and remained above the operating level of 400%. During 2023, market movements had a positive impact on the RBC ratio, mainly from tightening credit spreads and interest rates movements.
One-time
items and management actions had a negative impact, driven by three elements. First, the
set-up
of a Bermuda affiliated reinsurance entity – required capital funded by Transamerica Life Insurance Company (TLIC), and the subsequent reinsurance of a block of Fixed Deferred Annuities had a negative impact. Second, management actions announced at Aegon’s 2023 CMD and executed in 2023 reduced the RBC ratio by 20%-points. Third, other smaller
one-time
items on balance had an unfavorable impact. The negative impact of these three elements was partly offset by the recognition of the statutory available and required capital of two captive insurance companies in TLIC’s capital position. Operating capital generation contributed favorably to the US RBC ratio and more than offset remittances to the Holding.
UK Solvency II ratio
The estimated UK Solvency II ratio for Scottish Equitable Plc increased from 169% on December 31, 2022, to 187% on December 31, 2023, and remained above the operating level of 150%. This was driven by a regulatory change in the UK that lowered the risk margin and thereby increased the available capital, which increased the ratio by 28%-points. The annual assumption update and market movements both had a slight negative impact on the ratio. A positive impact from operating capital generation was more than offset by the impact from remittances to the Holding and the funding of the acquisition of Nationwide Building Society’s advisory business.
Group Solvency ratio
The estimated group solvency ratio decreased from 208% on December 31, 2022, to 193% on December 31, 2023. This was mainly a reflection of the a.s.r. transaction – including the consolidation methodology – and the associated share buyback, following the completion of the transaction on July 4, 2023. Capital generation after holding expenses amounted to EUR 1.3 billion, and was partly offset by the deduction of 2023 interim and the proposed 2023 final dividend. Market movements had a negative impact of EUR 148 million.
One-time
items were favorable at EUR 429 million, and notably included the impact of the regulatory change regarding the risk margin in the UK, while also reflecting impacts from the a.s.r. stake. There was a partial offset from investments made in Strategic Assets and the impact of the annual assumption updates, both in the US.
Aegon’s group solvency ratio per December 31, 2023 is the first since Aegon’s legal domicile transferred to Bermuda on 1 October 2023. Consequently, group supervision moved from the Dutch Central Bank (DNB) to the Bermuda Monetary Authority (BMA). Aegon expects its group solvency ratio and surplus under the Bermuda solvency framework to be broadly in line with that under the Solvency framework during a transition period until the end of 2027.
Cash capital at Holding and free cash flow
Aegon’s Cash Capital at Holding increased during 2023 from EUR 1,614 million to EUR 2,387 million. This increase was largely due to proceeds from acquisitions and divestitures, driven by EUR 2.2 billion of cash proceeds from completing the transaction with a.s.r., as announced on July 4, 2023. The capital returns to shareholders totaled EUR 1.5 billion, of which over EUR 1 billion related to share buyback programs; driven by the program that was launched upon the completion of the a.s.r. transaction. It also included the payments of the 2022 final and 2023 interim dividend. Furthermore, in December 2023 a EUR 500 million senior bond matured and was redeemed. Free cash flow amounted to EUR 715 million and included a special remittance of EUR 75 million from AIFMC, Aegon’s Chinese asset management joint venture, as well as the a.s.r. interim dividend. Other items combined had a negative impact of EUR 57 million.
 110  |  Annual Report on Form 20-F 2023
Table of Contents
Business updates – Americas
Business updates 2023
Business update Americas
   Amounts in USD millions    
    
2023
  2022  
% 
Strategic Assets KPIs
    
World Financial Group (WFG)
    
Number of licensed agents (end of period)   73,719   62,637  
 
18
 
Number of multi-ticket agents (end of period)   36,232   32,343  
 
12
 
Transamerica’s market share in WFG (US Life)   64%   62%  
 
3
 
Individual Life
    
Earnings on
in-force
(Individual Life excl. WFG and Universal Life)
   664   509  
 
30
 
New business strain   334   303  
 
10
 
Retirement Plans
    
Earnings on
in-force
(Retirement Plans excl. SPGA annuities)
   80   101  
 
(21)
 
Written sales
mid-sized
plans
   6,709   3,901  
 
72
 
Net deposits/(outflows)
mid-sized
plans
   1,175   (4,437)  
 
n.m.
 
Individual Retirement Accounts AuA   10,408   8,413  
 
24
 
General Account Stable Value AuA   11,074   10,052  
 
10
 
Financial Assets KPIs
    
Operating Capital Generation
1)
   273   69  
 
     n.m.
 
Capital employed in Financial Assets (at 400% RBC ratio)        3,875        4,083  
 
(5)
 
Variable Annuities dynamic hedge effectiveness ratio (%)
2)
   99%   97%  
 
1
 
NPV of LTC rate increases approved since
end-2022
   245   n.a.  
 
n.a.
 
New business KPIs
    
Individual Solutions   486   431  
 
13
 
Workplace Solutions   68   67  
 
2
 
New life sales (recurring plus 1/10 single)
  
 
554
 
 
 
498
 
 
 
11
 
New premium production accident & health insurance   105   133  
 
(21)
 
Individual Solutions   (6,756)   (9,040)  
 
25
 
Workplace Solutions   (4,950)   (7,902)  
 
37
 
Net deposits/(outflows)
  
 
(11,706
) 
 
 
(16,942
) 
 
 
31
  
1 Includes the capital generation of Universal Life for all periods. The classification of Universal Life has been changed to Financial Assets at the 2023 Capital Markets Day.
2 Dynamic Hedge effectiveness ratio (%) represents the hedge effectiveness on targeted risk, in particular impact from linear equity and interest rate movements.
3 n.a. in above table should be read as “not applicable”.
Exchange rates
   Weighted average rate    Closing rate from 
Per 1 EUR  2023   2022    
 December 31,
2023
   
 December 31,
2022
 
USD       1.0813       1.0534     1.1047    1.0673  
Transamerica – Aegon’s business in the United States – has a long and proud history of making financial services available to the many, not just the few. The company aims to accelerate growth and build America’s leading middle market life insurance and retirement company.
Annual Report on Form 20-F 2023  |  111 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Business update Individual Solutions
To build the Individual Solutions business, Transamerica’s strategy focuses on two areas. First, Transamerica is investing further in World Financial Group (WFG), its wholly owned life insurance agency. Its ambition is to increase the number of WFG agents to 110,000 by 2027, while at the same time improving agent productivity. Second, Transamerica is investing in its product manufacturing capabilities and operating model to position its Individual Life insurance business for further growth, with distribution through both WFG and third parties.
World Financial Group
Driven by continued recruiting and training efforts, the number of WFG agents increased by 18% compared with
year-end
2022 to 73,719 licensed agents at the end of 2023. Over the same period, agent productivity improved, with the number of multi-ticket agents – those selling more than one life policy per 12 months – increasing by 12% to 36,232 agents at
year-end
2023. Transamerica’s market share in the WFG distribution channel in the US amounted to 64% in 2023, an increase of 2%-points compared with 2022, building on the consistent service experience for WFG agents and products tailored to the middle market.
New life insurance sales
Transamerica targets around USD 750 million of annual new life sales by 2027. In 2023, the Individual Solutions business generated new life sales of USD 486 million, an increase of 13% compared with the prior year. This represents the highest level of sales volume in the past eight years; and more than two thirds of those sales was generated by WFG.
The increase in new life sales was driven by the indexed universal life product line, which is the main Transamerica product marketed by WFG. Increased sales in the brokerage channel supported growth of term life sales, while whole life sales were broadly stable compared with 2022.
Individual Life – operating capital generation contributions
Transamerica aims to increase the earnings on
in-force
from Individual Life, excluding the contributions from WFG and the legacy Universal Life portfolio, to between USD 700 and 725 million for the full-year 2027. In 2023, earnings on
in-force
were USD 664 million, an increase of 30% compared with the prior year, mainly reflecting a growing contribution from indexed universal life and traditional life products over recent years.
Capital requirements and acquisition costs related to increased new life sales drove an increase in new business strain, which represents a drag on the current period’s operating capital generation but results in future earnings on
in-force.
New business strain for Individual Life increased from USD 303 million in 2022 to USD 334 million in the current year.
Net deposits
Net outflows for Individual Solutions amounted to USD 6.8 billion in 2023, compared with net outflows of USD 9.0 billion in 2022.
Net outflows for Mutual Funds improved from USD 3.3 billion in 2022 to USD 1.2 billion in the reporting year. Gross deposits decreased by 27% compared with the prior year, due to investors preferring shorter term and less risky investments in the face of market uncertainty.
Net outflows in Variable Annuities amounted to USD 4.5 billion in 2023 compared with USD 4.8 billion in the prior year, in line with expectations for this Financial Asset. Gross deposits in Variable Annuities increased with 73% to USD 1.7 billion in 2023, mainly from growing sales in registered index-linked annuities (RILA) and in products with limited guarantees. This was more than offset by higher surrenders, which nonetheless remained in line with long-term best estimates.
Net outflows in the
run-off
Fixed Annuities book amounted to USD 1.1 billion this year compared with USD 0.9 billion in 2022. This was driven by higher surrender rates and withdrawals, although surrender rates remained below long-term best estimates.
 112  |  Annual Report on Form 20-F 2023
Table of Contents
Business updates – Americas
Business update Workplace Solutions
In the Workplace Solutions business, Transamerica provides recordkeeping and investment services for US defined contribution plans, as well as advice to plan participants. The business aims to increase profitability by growing assets in the general account stable value proposition, focusing on
mid-sized
and pooled plans, and delivering managed advice and other ancillary products and services. This is expected to positively impact earnings on
in-force
from the retirement business to between USD 275 and 300 million in 2027.
Retirement Plans – earnings on
in-force
In 2023, the Retirement Plan business – excluding the single premium guaranteed annuities (SPGA) business – contributed USD 80 million of earnings on
in-force.
This was a decrease of USD 21 million compared with the prior year, mainly due to higher employee and technology related expenses in the year.
Written sales of
mid-sized
plans
Written sales of
mid-sized
plans amounted to USD 6.7 billion in 2023, an increase of 72% compared with the prior year period. This was driven by growth in sales of both single employer plans and pooled plans.
Net deposits
Retirement Plans saw net continued outflows of USD 4.7 billion in 2023 compared with net outflows of USD 7.7 billion in the prior year. This change was driven by net deposits for
mid-sized
plans of USD 1.2 billion in the reporting year compared with net outflows of USD 4.4 billion in 2022, which was impacted by the loss of a large multi-employer plan. Gross deposits of
mid-sized
plans decreased by USD 1.0 billion to USD 9.3 billion in 2023, due to lower recurring deposits following the aforementioned contract loss. Large-market plans reported net outflows while gross deposits increased due to higher takeover and recurring deposits, withdrawals increased from more contract discontinuances which led to overall net outflows. An increasing portion of eligible participant withdrawals were rolled over to Transamerica individual retirement accounts (IRAs) leading to net deposits which were also supported by asset consolidation and other customer retention efforts.
Account balances
Transamerica aims to grow and diversify revenue streams by expanding both the general account stable value product and IRAs to USD 16 billion and USD 18 billion of assets under management, respectively, by 2027. Assets under management in the general account stable value product increased by 10% from USD 10.1 billion at the end of 2022 to USD 11.1 billion on December 31, 2023. The general account stable value product provides principal protection for customers and is attractive in the current interest rate environment. IRA account balances increased by 24% compared with the end of 2022 to USD 10.4 billion on December 31, 2023, driven by efforts to retain assets from retirement plans, additional customer deposits, and favorable equity markets over the past year.
New life sales
New life sales in Workplace Solutions amounted to USD 68 million, 1% higher than the prior year period.
New premium production accident & health
For accident & health insurance, new premium production was USD 105 million, a decrease of 21% compared with 2022.
Annual Report on Form 20-F 2023  |  113 
 
Table of Contents
 
About Aegon  Governance and risk management  
Financial information
  Sustainability information
   
   
 
 
Business update Financial Assets –
in-force
management
Financial Assets are blocks of business that are capital intensive with relatively low returns on the capital employed. New sales for these blocks are limited and focus on products with higher returns and moderate risk profiles. Transamerica is actively managing variable annuities with interest rate sensitive riders, fixed annuities, SPGAs, the legacy universal life book, and long-term care portfolios as Financial Assets. Transamerica is taking
in-force
management actions on Financial Assets which are expected to reduce the capital employed by USD 1.2 billion, which, in addition to the assumed organic
run-off,
would lead to USD 2.2 billion of capital employed by
year-end
2027.
Universal Life
The legacy Universal Life portfolio includes a portfolio of Secondary Guarantee Universal Life (SGUL) policies. In July 2023, Transamerica reinsured another USD 1.4 billion of SGUL statutory reserves to Wilton Re. The transaction reduced exposure to mortality risk and covered around 14,000 policies, representing 12% of the total reserves backing this product line. In total, the transaction generated USD 240 million of capital, of which USD 50 million comes from a reduction in required capital.
Transamerica used this capital to further fund its ongoing management action of purchasing institutionally owned universal life policies in order to reduce the mortality risk of the overall portfolio. By 2027, Transamerica aims to have purchased 40% of the USD 7 billion face value of institutionally owned universal life policies that were
in-force
at the end of 2021. At the end of 2023, the company had purchased 23% of the face value of institutionally owned universal life policies, focusing on older age policies with large face amounts. Since inception in 2022, Transamerica has purchased policies for more than USD 800 million, and in the meantime used the proceeds from terminated policies to purchase further policies.
Variable Annuities
The portfolio of variable annuities with significant interest sensitive benefit riders is a legacy block that will run off over time, and that has been
de-risked
by dynamically hedging all guaranteed benefits embedded in the contracts. In 2023, the hedge program was 99% effective, continuing its strong track record of managing the financial market risks embedded in the guarantees. In the second half-year of 2023, the dynamic hedging program for the Variable Annuities guaranteed benefits was expanded to also hedge statutory lapse and mortality margins. This has reduced the sensitivity of the RBC ratio to equity markets further, and has released around USD 80 million of capital employed with minimal impact on future operating capital generation.
Fixed Annuities
The fixed annuities portfolio is a Financial Asset that will run off relatively quickly over time. In the second half of 2023, Transamerica reinsured a portfolio of Fixed Deferred Annuities with USD 4.6 billion of reserves from Transamerica Life Insurance Company (TLIC) to a new affiliated Bermuda-based reinsurance entity. This will allow the block to be managed under a more market consistent framework and is expected to reduce capital volatility. The new Bermuda-based entity also provides strategic flexibility with respect to future Financial Assets management actions.
Long-term care insurance
Transamerica is actively managing its long-term care business, primarily through premium rate increase programs. The company continues to work with state regulators to get pending and future actuarially justified rate increases approved. At the 2023 CMD, Aegon announced its intention to achieve an additional net present value of USD 700 million of premium rate increases. The total value of state approvals for premium rate increases achieved since the beginning of 2023 amounts to USD 245 million, which is 35% of the new target.
Operating capital generation from Financial Assets
Financial Assets had USD 3.9 billion of capital employed on December 31, 2023, a decrease of USD 0.2 billion compared with December 31, 2022, mainly driven by favorable market impacts in the variable annuities portfolio and the expansion of the dynamic hedging program for the Variable Annuities guaranteed benefits to include the lapse and mortality margins. Operating capital generation in the reporting year amounted to USD 273 million for Financial Assets. This compares favorably with USD 69 million operating capital generation from Financial Assets in 2022 and is somewhat higher compared with the guidance of around USD 0.2 billion operating capital generation per year from Financial Assets. This can mainly be attributed to higher operating capital generation from Long-Term Care due to favorable morbidity claims experience, as well as a favorable change in release of required capital as a result of lower premiums and incurred claims.
 114  |  Annual Report on Form 20-F 2023
Table of Contents
Aegon’s core markets
Business updates – United Kingdom
Business update United Kingdom
   Amounts in GBP millions   
    
      2023
        2022  
      %
 
Retail platform   (3,058)   (877)  
 
n.m.
 
Workplace Solutions platform   1,814   2,223  
 
(18)
 
Total platform business
  
 
(1,244
) 
 
 
1,346
 
 
 
n.m.
 
Traditional products   (1,196)   (961)  
 
(24)
 
Total platform and traditional business
  
 
(2,441
) 
 
 
385
 
 
 
n.m.
 
Institutional   2,492   (2,743)  
 
n.m.
 
Total net deposits/(outflows)
  
 
52
 
 
 
(2,358
) 
 
 
n.m.
 
New life sales (recurring plus 1/10 single)   9   22  
 
(60)
 
Strategic KPIs
    
Annualized revenues gained/(lost) on net deposits   (16)   (9)  
 
(73)
 
Platform expenses / AuA (bps)   24 bps   21 bps     
Exchange rates
       Weighted average rate        Closing rate from 
Per 1 EUR          2023          2022    December 31, 2023    December 31, 2022 
Pound Sterling   0.8698    0.8528    0.8665    0.8872 
Annual Report on Form 20-F 2023  |  115 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
In the United Kingdom, Aegon aims to become the leading digital platform provider in the workplace and retail markets, and to drive forward its pension and investment propositions for the benefit of all of its customers, advisers, and employers.
Strategic developments
In April 2023, Aegon announced the sale of its UK individual protection book to Royal London. Aegon UK has reinsured the portfolio to Royal London and will ultimately transfer legal ownership to Royal London through a Part VII transfer in 2024, subject to court approval. The individual protection book has been closed for new business.
In August, 2023, Aegon announced an extension of its strategic partnership with Nationwide Building Society (NBS), under which NBS’ financial planning teams moved to Aegon UK. In addition, under the extended partnership with NBS, Aegon UK will continue to provide the platform on which NBS members manage their investments. The transaction, which supports Aegon’s strategy to focus on its core Retail and Workplace platform activities in the UK, was completed in February, 2024.
Business update
Net deposits
Net deposits in the Workplace segment of the platform amounted to GBP 1.8 billion in 2023 compared with net deposits of GBP 2.2 billion in 2022. The decrease was driven by the anticipated departure of a large, low margin scheme of GBP 0.9 billion in the second half of 2023 which partially offset the impact of onboarding of new schemes and higher net deposits on existing schemes. For Retail, net outflows amounted to GBP 3.1 billion in 2023 compared with net outflows of GBP 0.9 billion in 2022. This reflects reduced customer activity because of the current macro-economic environment, as well as an industry-wide reduction of transfers from defined benefit to defined contribution pensions.
Net outflows in Traditional products amounted to GBP 1.2 billion, as this book gradually runs off. For the Institutional business, net deposits amounted to GBP 2.5 billion in 2023, driven by the onboarding of a large client in the first half of 2023, whereas net outflows amounted to GBP 2.7 billion in 2022. The Institutional business is
low-margin
and net deposits for this business can be lumpy.
Annualized revenues gained / (lost) on net deposits
Annualized revenues lost on net deposits amounted to GBP 16 million for 2023, predominantly due to the gradual
run-off
of the traditional product portfolio in addition to net outflows in the Retail channel, partially offset by revenues gained on net deposits in the Workplace channel.
Platform expenses as a percentage of assets under administration
Platform expenses as a percentage of assets under administration (AuA) amounted to 24 basis points in 2023 and increased compared with 2022. This was mostly driven by higher employee and administration expenses which more than offset the impact from higher assets under administration, which were predominantly due to favorable markets.
 116  |  Annual Report on Form 20-F 2023
Table of Contents
Business updates – International

 In the United States, Aegon operates primarily under two brands: Transamerica and World Financial Group Insurance Agency, an affiliated insurance agency. Transamerica has two divisions, Workplace Solutions and Individual Solutions. Workplace Solutions offers retirement plan recordkeeping, advisory services, employee benefits, group annuities, collective investment trusts, health savings and flexible savings accounts, individual retirement accounts, and stable value solutions to employers and their employees. Through several distribution channels, Transamerica’s Individual Solutions division offers life insurance, annuities, and mutual funds to retail customers.
 

 
In the Netherlands, Aegon focuses on life insurance, long-term savings, pension and annuity solutions, and mortgages. The Workplace Solutions business focuses on
new-style
defined contribution pension solutions, associated disability services, and pensions administration. Under the Knab brand, Aegon provides digital banking solutions. In 2022, we announced that Aegon the Netherlands will be combined with a.s.r. to create a leading Dutch insurance company
1
.
In the United Kingdom, Aegon is the market-leading investment platform, providing a broad range of investment, retirement solutions, and protection products to individuals, advisers, and employers. Aegon UK accesses customers through the workplace and retail financial advisers.
Aegon’s growth markets

In China, Aegon owns a 50% stake in Aegon THTF Life Insurance Company, which offers life insurance solutions through a network of branches, primarily in eastern China.

In Brazil, Aegon has a 54.9% economic interest, inclusive of 50% of voting common shares, in Mongeral Aegon Group (MAG Seguros), the country’s third-largest independent life insurer. MAG Seguros offers individual protection solutions. Together with Banco Cooperativo do Brasil (Bancoob), MAG Seguros also operates a joint venture company dedicated to providing life insurance and pension products within the Sicoob, Brazil’s largest cooperative financial system.

In Spain & Portugal, Aegon has a strategic partnership with Banco Santander to distribute life, health, and
non-life
insurance products through the bank’s branches, with Aegon owning a 51% stake in the joint venture. Aegon Spain’s own distribution channel offers life insurance, health insurance, and pension products.
One global asset manager

Aegon Asset Management (Aegon AM) is an active global investment business that manages assets of EUR 293 billion for a global client base consisting of pension plans, public funds, insurance companies (including Aegon’s subsidiaries), banks, wealth managers, family offices, and foundations. Aegon AM is active in Aegon’s core and growth markets, as well as in France, Germany, and Hungary. Aegon AM owns 49% of Aegon-Industrial Fund Management Company, a Shanghai-based asset manager.
Business update International
Amounts in EUR millions  
2023
   2022   
%
 
Spain & Portugal
   46    56   
 
(18)
 
China
   103    87   
 
19
 
Brazil
   144    105   
 
37
 
TLB and others
   21    6   
 
n.m.
 
New life sales (recurring plus 1/10 single)
  
 
314
 
  
 
253
 
  
 
24
 
New premium production accident & health insurance
   65    35   
 
83
 
New premium production property & casualty insurance
            69             82   
 
         (16)
 
Aegon’s operations in small and niche markets
Exchange rates
   Weighted average rate  Closing rate from 
Per 1 EUR  2023  2022  December 31, 2023  December 31, 2022 
USD
   1.0813   1.0534   1.1047   1.0673 
Chinese Yuan Renminbi
   7.6602   7.0810   7.8344   7.4192 
Hungarian Forint
   381.6327   391.1604   382.2150   400.4500 
Brazil Real
   5.4009   5.4388   5.3659   5.6348 
Indian Rupee
          89.3086          82.7290         91.9221         88.2936 
In Spain & Portugal, China and Brazil, Aegon operatesis investing in profitable growth. Transamerica Life Bermuda (TLB) is classified as a small numberFinancial Asset, for which Aegon is maximizing its value through active
in-force
management, disciplined risk management, and capital management actions, while continuing to make profitable sales on a selective basis. Its closed block of businesses that areuniversal life insurance liabilities is reinsured by Transamerica.
sub-scale
Strategic developments
or active in small or niche markets and are managed with tight capital and a bias to exit. Since 2020, we have been exiting various
sub-scale
positions globally. These include ourIn 2023, Aegon announced the completion of the divestment of its businesses in Central & Eastern Europe, which have been soldPoland and Romania to Vienna Insurance Group AG.AG Wiener Versicherung Gruppe (VIG). This concluded the full sale of Aegon’s insurance, pension and asset management business in Central and Eastern Europe to VIG. Aegon also sold the Japanese and Hong Kong operations of Aegon Insights, its direct-marketing business that has been in
run-off
since 2017. Furthermore, Aegon announced the sale of its 56% stake in its Indian associate, Aegon Life Insurance Company (ALIC), to Bandhan Financial Holdings Limited, an Indian financial services company. The subsequent transaction is being closed over several stages and is expectedwas completed on February 23, 2024. These sales underscore Aegon’s commitment to be completedexit
non-core
businesses.
In line with Aegon’s strategy to invest in 2023 pendinggrowth assets where it can achieve the required local regulatory approvals. In 2022,highest returns for its stakeholders, Aegon decided that for Transamerica Life (Bermuda)has increased its economic stake in its Brazilian life insurance partnership, Mongeral Aegon Group (MAG), the best pathby approximately 4% to maximizing value involves the internal reinsurance of the universal life portfolio to Transamerica. This approach will ensure better alignment and management of risk, and free up excess capital. In other59.2%.
sub-scale
and niche markets, such as India, Aegon’s businesses operate with tight capital and a focus on expense management.
Further information on our businesses can be found in the business overview section on page 335 of this report.
 
   
Aegon Annual Report on Form 20-F
2022
2023  |  
3
117 		 
 
Table of Contents

 
About Aegon
  Governance and risk management  
Financial information        Non-financial
  Sustainability information
   
   
 
 
Business update
New life sales
New life sales increased by 24% compared with 2022 to EUR 314 million.
2022 milestones
∎
 
Q1
Q2

◆
Following Russia’s invasionNew life sales in Spain & Portugal decreased by EUR 10 million to EUR 46 million due to the divestment of Ukraine, Aegon announces it will not make future investmentsAegon’s stake in companies basedits joint venture with Liberbank, and reduced demand for mortgage-linked life sales in Russia or Belarus, and that it will update its Responsible Investment Policy accordingly.Santander Life driven by increased interest rates.
 
◆
∎
 
Transamerica completes its
lump-sum
buyout program with an 18%
take-up
rate. The program had been made availableNew life sales in China increased by EUR 17 million to certain policyholdersEUR 103 million mainly driven by success in the bancassurance and brokerage channels following the relaxation of variable annuitiesthe country’s
COVID-19
measures at the beginning of the year. This was partly offset by the negative impact of a new pricing regulation related to insurance products with guaranteed minimum income benefits.
interest rates in the second half of the year.
 
◆
∎
 
Aegon-Industrial Fund Management Company,In Brazil, new life sales increased by EUR 39 million to EUR 144 million mainly as a result of business growth in both group and individual products, while also reflecting Aegon’s asset management joint venture in China, receives the Excellence Award for Corporate Social Responsibility from the
Shanghai Daily
newspaper.
increased economic stake.
 
◆
∎
 In the Netherlands, Aegon lends its supportFor TLB and others, new life sales improved to the Stap vooruit (“Step forward”) program, an initiativeEUR 21 million driven by 14 NGOs to help people at risk of experiencing debt-related poverty to develop their financial resilience.higher indexed universal life sales in Singapore and Bermuda.
New premium production for
non-life
business
◆
New premium production for accident & health insurance amounted to EUR 65 million, an increase of 83% compared with 2022, driven by business growth in Spain & Portugal in all Spanish sales channels, in particular from health products.
New premium production for property & casualty insurance decreased by 16% to EUR 69 million driven by Spain & Portugal from reduced sales of lower margin funeral products, while higher interest rates led to lower demand for mortgages resulting in fewer household policies being sold.
Transamerica earns a score of 100% in the Human Rights Campaign Foundation’s 2022 Corporate Equality Index (CEI), which measures workplace equality for LGBTQ+ employees.
 
◆
Aegon completes the divestment of its Hungarian businesses to Vienna Insurance Group AG Wiener Versicherung Gruppe (VIG). This is the first step in the completion of the sale of Aegon’s insurance, pension, and asset management businesses in Central & Eastern Europe to VIG for EUR 830 million, as announced in November 2020.
 
◆
Transamerica acquires TAG Resources, strengthening its competitive position in the pooled retirement plan market, a key strategic growth driver for the business.
◆
Aegon completes a tender offer for selected subordinated notes, which was more successful than initially anticipated. A total of EUR 429 million of subordinated notes were repurchased, reducing Aegon N.V.’s gross financial leverage
1
into the targeted range of EUR
5.0-5.5 billion.
◆
Aegon UK transfers GBP 3 billion of customer assets into strategies that consider environmental, social, and governance (ESG) credentials, as part of Aegon’s commitment to transition its default
UK-based
pension funds to net zero by 2050.
◆
Aegon completes the divestment of its business in Turkey to VIG. This is the second step in the completion of the sale of Aegon’s businesses in Central & Eastern Europe to VIG.
◆
Aegon AM is named Responsible Investor of the Year in the asset manager category at the Insurance Asset Risk Awards 2022 - UK & Europe.
◆
Effective the second quarter of 2022, Aegon AM partnered with Taurus Investment Holding in the launch of a USD 600 million venture in the United States to acquire
value-add
multifamily dwellings and transition them to
low-carbon,
energy-efficient buildings.
◆
Aegon is included in the newly launched AEX ESG Index, consisting of companies included in the two main indices of the Euronext Amsterdam Stock Exchange that demonstrate best ESG practices.
◆
Transamerica adds to its growing suite of workplace financial wellness solutions with the Emergency Savings Account product, enabling employers to help staff save for unexpected events and improve their financial wellbeing.
 
1 
Aegon defines gross financial leverage as debt or debt-like funding issued for general corporate purposes and for capitalizing Aegon’s business units. Gross financial leverage includes hybrid instruments, and subordinated and senior debt.
 118  |  Annual Report on Form 20-F 2023
4
Aegon Annual Report on Form 20-F
2022
 
Table of Contents
 
 
About AegonBusiness updates – Asset Management
   
   
Business update Asset Management
Amounts in EUR millions 
2023
  2022  
%
 
General Account  1,191   (9,742)  
 
n.m.
 
Affiliate  (916)   (2,061)  
 
56
 
Third Party  (621)   (3,798)  
 
84
 
Global Platforms
 
 
(347
) 
 
 
(15,601
) 
 
 
98
 
Strategic Partnerships  (2,727)   3,569  
 
n.m.
 
Net deposits/(outflows)
 
 
(3,074
) 
 
 
(12,032
) 
 
 
74
 
Strategic KPIs
   
Annualized revenues gained/(lost) on net deposits - Global Platforms  1   (23)  
 
n.m.
 
General Account  70,024   91,457  
 
(23)
 
Affiliate  39,674   61,174  
 
(35)
 
Third Party  139,821   83,045  
 
68
 
Global Platforms
 
 
249,519
 
 
 
235,677
 
 
 
6
 
Strategic Partnerships  55,483   57,429  
 
(3)
 
Assets under Management
 
 
       305,002
 
 
 
       293,106
 
 
 
       4
 
Exchange rates
   Weighted average rate  Closing rate from 
Per 1 EUR  2023   2022  December 31, 2023   December 31, 2022 
USD   1.0813    1.0534   1.1047    1.0673 
Pound Sterling   0.8698    0.8528   0.8665    0.8872 
Hungarian Forint   381.6327    391.1604   382.2150    400.4500 
Chinese Yuan Renminbi          7.6602          7.0810          7.8344          7.4192 
Aegon Asset Management (Aegon AM) aims to improve efficiency and drive growth through third-party assets and by increasing the share of proprietary investment solutions in the affiliate business.
Strategic developments
In April, 2023, Aegon AM reached an agreement to buy NIBC Bank’s North Westerly European Collateralized Loan Obligation (CLO) management activities. The transaction was closed in June and resulted in Aegon AM acquiring NIBC’s
UK-based
team and CLO platform consisting of three CLOs with assets under management of circa EUR 1.2 billion. The move allows Aegon AM to accelerate its ambitions, with the aim of becoming a leader in the European CLO market next to its successful and growing US CLO franchise.
In April, 2023, Aegon AM also entered into a strategic partnership with Lakemore Partners to drive the growth of its US CLO platform. Lakemore will provide equity for the issuance of multiple CLOs in the coming years and in return will gain preferred access to Aegon AM’s pipeline of new issue CLO transactions.
In July 2023, Aegon AM and La Banque Postale announced an extension of their asset management joint venture in LBP AM through 2035, in which Aegon AM holds a 25% stake. Aegon AM participated in LBP AM’s capital raising to support the acquisition of La Financière de l’Echiquier, which will consolidate LBP AM’s market position. The extension of the joint venture, as well as participation in the capital raising, fits into Aegon’s strategy of investing in – and growing – its various successful joint ventures.
In July, 2023 Aegon also announced the completion of the transaction with a.s.r. and the beginning of its related asset management partnership. Aegon AM now manages the illiquid investments that are part of the general account of the combined businesses, as well as a.s.r.’s mortgage funds and the PPI assets of Aegon Cappital. The partnership strengthens Aegon AM’s position as a provider of distinct capabilities in retirement-related investment solutions, alternative fixed income investments and responsible investing, and is revenue and earnings accretive.
 
 
Q3
Q4

◆
Aegon’s digital-only bank in the Netherlands, Knab, celebrates its 10
th
anniversary. The bank grew its
fee-paying
customer base by over 44,000 to 346,000 in 2022. The
10-year
milestone is shared with Aegon Cappital, which was established as the Netherlands’ first Premium Pension Institution in 2012, and has since grown to become the market leader. Today, Aegon Cappital administers pension plans for more than 5,600 employers in the Netherlands with a 99% retention rate.
◆
Transamerica teams up with Smart and Finhabits to expand retirement plan coverage for underserved (small) businesses and their employees. The new program offers a simple, bilingual, and affordable alternative to state-mandated retirement plans in California and other US states.
◆
Transamerica achieves its target of USD 450 million long-term care rate increases and continues to work with state regulators to get pending and future actuarially justified rate increases approved.
◆
Aegon announces it will combine its Dutch operations with a.s.r. The combination will create a leading Dutch insurance company. This marks a pivotal step towards Aegon’s ambition to build leaders in its chosen markets.
◆
Aegon completes the divestment of its 50% stake in the Spanish insurance joint venture with Liberbank to Unicaja Banco as announced in May 2022.
◆
Aegon appoints a Global Head of Inclusion and Diversity. Her responsibilities include creating the conditions for a diverse and inclusive working environment in line with Aegon’s purpose and sustainability approach.
◆
Transamerica Life (Bermuda) reinsures a closed block life insurance portfolio with Transamerica to better align and manage risks and free up excess capital.
◆
Transamerica announces it will maintain full ownership of the variable annuities portfolio in the near term and maximize its value through active management.
◆
Aegon completes the final tranche of the EUR 300 million share buyback program announced following the completion of the sale of the company’s Hungarian operations.
◆
The number of licensed life agents in World Financial Group grows to more than 62,000, a 20% increase compared with the fourth quarter of 2021, adding to the strength of this distribution channel.
   
Aegon Annual Report on Form 20-F
2022
2023  |  
5
119 		 
Table of Contents

LOGO		 
About Aegon
  Governance and risk management  
Financial information        Non-financial
  Sustainability information
   
   
Aegon AM has decided to further simplify its activities in Global Platforms to improve efficiency and profitability. Focus lies on three core competencies: growth in real assets and alternative fixed income assets, being a recognized leader in responsible investing and helping partners with retirement and fiduciary solutions to build market leading retirement platforms. As a result, Aegon AM is rationalizing its product set and has taken cost reduction measures.
Business update
Net deposits
Third-party net outflows in Global Platforms amounted to EUR 0.6 billion in 2023 compared with net outflows of EUR 3.8 billion in 2022. Net deposits in the Dutch mortgage fund and other fixed income products were more than offset by outflows in other asset classes.
Third-party net outflows in Strategic Partnerships amounted to EUR 2.7 billion in 2023 compared with net deposits of EUR 3.6 billion in 2022, and were split evenly between the Chinese asset management joint venture AIFMC and the European asset management joint venture LBP AM. The driver for net outflows at AIFMC was weak investor sentiment in China, resulting in lower gross deposits and higher outflows compared to 2022. For LBP AM net outflows in 2023 were driven by significant withdrawals of low margin business from a former shareholder, despite higher gross deposits over the year in part due to the acquisition by LBP AM of La Financière de l’Echiquier.
Net deposits from the general account were EUR 1.2 billion in 2023, compared with net outflows of EUR 9.7 billion in 2022. Net outflows in 2022 were largely attributable to rising interest rates, which led to redemptions.
Net outflows from affiliates amounted to EUR 0.9 billion in 2023 and were driven by the gradual
run-off
of the traditional insurance book in the UK. This compares with elevated levels of net outflows in 2022, which then amounted to EUR 2.1 billion.
Annualized revenues gained / (lost) on net deposits
Annualized revenues gained on net deposits for Global Platforms amounted to EUR 0.8 million for 2023, driven by a more favorable asset mix.
Assets under management
Assets under management increased by EUR 12 billion compared with December 31, 2022, to EUR 305 billion. The impact of favorable markets and the positive balance of assets exchanged between Aegon AM and a.s.r. more than offset unfavorable currency impacts and third-party net outflows.
Following the closure of the transaction with a.s.r., the assets managed by Aegon AM that previously related to Aegon the Netherlands’ General Account (EUR 17.8 billion) and Affiliates (EUR 24.4 billion) are now recorded as Third-party assets. Furthermore, as part of the asset management partnership, Aegon AM and a.s.r. have exchanged assets, whereby Aegon AM has taken over the management of EUR 16.2 billion of illiquid assets and a.s.r.’s mortgage funds, and Aegon AM has transferred to a.s.r. EUR 9.6 billion of core fixed income assets.
 
 
CEO letter
 120  |  Annual Report on Form 20-F 2023

6    
Aegon Annual Report on Form 20-F
2022
Table of Contents
 
 
About AegonExchange rates 
  
 
Exchange rates
Exchange rates on December 31,
        
 
2023
   2022 
          EUR   USD   GBP   EUR   USD   GBP 
1  EUR     -    1.1047    0.8665    -    1.0673    0.8872 
1  USD     0.9052    -      0.7844    0.9369    -      0.8313 
1  GBP       1.1541      1.2749    -      1.1271      1.2030    - 
Weighted average exchange rates
        
 
2023
   2022 
          EUR   USD   GBP   EUR   USD   GBP 
1  EUR     -      1.0813      0.8698    -    1.0534    0.8528 
1  USD       0.9248    -    0.8044      0.9493    -      0.8096 
1  GBP     1.1497    1.2432    -    1.1726      1.2352    - 
Annual Report on Form 20-F 2023  |  121 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
  
 
Consolidated income statement of Aegon Ltd.
For the year ended December 31
Amounts in EUR million (except per share data)  
Note
   
 
     2023
       2022 
1)
 
Continuing operations
     
Insurance revenue  
 
6
 
   10,386   11,251 
Insurance service expenses  
 
7,13
 
   (10,226)   (11,097) 
Net income / (expenses) on reinsurance held  
 
8
 
   182   275 
Insurance service result
    
 
342
 
 
 
430
 
Interest revenue on financial instruments calculated using the effective interest method     2,738   2,898 
Interest revenue on financial instruments measured at FVPL     737   575 
Other investment income     1,283   1,153 
Results from financial transactions     12,302   (29,505) 
Impairment (losses) / reversals     (86)   (95) 
Insurance finance income / (expenses)     (17,650)   25,005 
Net reinsurance finance income / (expenses) on reinsurance held     699   599 
Interest expenses        (218)   (97) 
Insurance net investment result
  
 
9
 
  
 
(196
) 
 
 
532
 
Interest revenue on financial instruments calculated using the effective interest method     599   409 
Interest revenue on financial instruments measured at FVPL     89   49 
Other investment income     550   411 
Results from financial transactions     6,929   (10,656) 
Impairment (losses) / reversals     (33)   (43) 
Investment contract income / (expenses)     (7,851)   9,808 
Interest expenses        (45)   (3) 
Other net investment result
  
 
10
 
  
 
238
 
 
 
(26
) 
Interest charges     (182)   (182) 
Other financing income        -   5 
Financing net investment result
  
 
11
 
  
 
(182
) 
 
 
(178
) 
Total net investment result
    
 
(139
) 
 
 
329
 
Fees and commission income  
 
12
 
   2,163   2,272 
Other operating expenses  
 
13
 
   (3,000)   (2,786) 
Other income / (charges)  
 
14
 
   (57)   341 
Other result
    
 
(894
) 
 
 
(173
) 
Result before share in profit / (loss) of joint ventures, associates and tax
     (691)   585 
Share in profit / (loss) of joint ventures     196   252 
Share in profit / (loss) of associates        103   (11) 
Result before tax from continuing operations
    
 
(391
) 
 
 
827
 
Income tax (expense) / benefit  
 
15
 
   209   (71) 
Net result from continuing operations
    
 
(182
) 
 
 
756
 
Discontinued operations
     
Net result from discontinued operations        (17)   (1,296) 
Net result from continuing and discontinued operations
    
 
(199
) 
 
 
(540
) 
Net income/ (loss) attributes to:
     
Net result attributable to owners of Aegon Ltd.     (179)   (570) 
Non-controlling
interests
     (20)   29 
Earnings per share (EUR per share)
  
 
16
 
   
Basic earnings per common share     (0.12)   (0.30) 
Basic earnings per common share B     -   (0.01) 
Diluted earnings per common share     (0.12)   (0.30) 
Diluted earnings per common share B     -   (0.01) 
Earnings per share (EUR per share) from continuing operations
     
Basic earnings per common share from continuing operations     (0.11)   0.34 
Basic earnings per common share B from continuing operations     -   0.01 
Diluted earnings per common share from continuing operations     (0.11)   0.34 
Diluted earnings per common share B from continuing operations        -   0.01 
1 Comparatives have been restated due to the initial application of IFRS 9 and IFRS 17. Note 2 includes further details on the changes in accounting policies.
 
 122  |  Annual Report on Form 20-F 2023
Table of Contents
A new chapter
Consolidated financial statements of Aegon Ltd.  
Consolidated income statement of Aegon Ltd. - Continued
Based on IFRS the 2022 comparative information is restated for AegonIFRS 9 and IFRS 17. In line with IFRS, the 2021 comparative information is not restated for IFRS 9 and IFRS 17 and presented as comparatives below.
Amounts in EUR millions (except per share data)  
    Note
        2021 
Continuing operations
    
Premium income  
 
46.4
 
   13,731 
Investment income  
 
46.5
 
   4,893 
Fee and commission income  
 
46.6
 
   2,454 
Other revenues        13 
Total revenues
    
 
21,091
 
Income from reinsurance ceded  
 
46.7
 
   4,263 
Results from financial transactions  
 
46.8
 
   24,715 
Other income  
 
46.9
 
   49 
Total income
    
 
50,119
 
Premiums paid to reinsurers  
 
46.4
 
   3,418 
Policyholder claims and benefits  
 
46.10
 
   40,097 
Profit sharing and rebates  
 
46.11
 
   8 
Commissions and expenses  
 
46.12
 
   5,286 
Impairment charges / (reversals)  
 
46.13
 
   16 
Interest charges and related fees  
 
46.14
 
   246 
Other charges  
 
46.15
 
   101 
Total charges
    
 
49,172
 
   
Result before share in profit / (loss) of joint ventures, associates and tax
    
 
947
 
Share in profit / (loss) of joint ventures     232 
Share in profit / (loss) of associates        (15) 
Result before tax from continuing operations
    
 
1,164
 
Income tax (expense) / benefit  
 
46.16
 
   (95) 
Net result from continuing operations
    
 
1,069
 
Discontinued operations
          
Net result from discontinued operations
  
 
46.22
 
  
 
960
 
Net result from continuing and discontinued operations
    
 
2,029
 
Net result attributable to:
    
Owners of Aegon Ltd     1,980 
Non-controlling
interests
     50 
Earnings per share (EUR per share)
  
 
46.17
 
  
Basic earnings per common share     0.94 
Basic earnings per common share B     0.02 
Diluted earnings per common share     0.94 
Diluted earnings per common share B     0.02 
Basic earnings per common share from continuing operations     0.48 
Basic earnings per common share B from continuing operations     0.01 
Diluted earnings per common share from continuing operations     0.48 
Diluted earnings per common share B from continuing operations        0.01 
Annual Report on Form 20-F 2023  |  123 
Against this challenging backdrop, we moved forward with executing the strategy first announced at our Capital Markets Day in late 2020. Building on the hard work and progress of the previous year, we took steps to improve the company’s operating performance and financial resilience, by further strengthening our balance sheet and reducing our risk profile.
Moreover, we made important progress with our operational improvement plan aimed at improving our performance through a combination
Table of expense savings and growth initiatives. At the end of 2022, we exceeded the targeted improvement of our operating result a year earlier than expected. Similarly, we realized our free cash flow target for the 2021–2023 period a year earlier than expected. In addition, we finalized the divestment of our businesses in Hungary and Turkey, enabling us to buy back EUR 300 million worth of shares and realize our deleveraging target.
Building on this foundation, our ambition remains to be a high-performance company that will be a leader in its chosen markets. In October 2022, we took a pivotal step in this direction, with the decision to combine the company’s Dutch pension, life and
non-life
insurance, banking, and mortgage origination activities with those of a.s.r. to create a leading Dutch insurance company. I see this transaction as marking the end of the first stage of our transformation. While the next chapter will bring significant changes for many Aegon colleagues, it also comes with new opportunities, and I feel assured that all those involved can look forward to a bright future in a strong combined business.
Investing in our markets
Meanwhile, we took further steps on our path to create leading businesses in other markets. In the United States, we continued to invest in building on Transamerica’s advantageous position in pension plans offered through employers, and in individual life insurance. For our US Individual Solutions business, this resulted in a 20% increase in new life sales, as targeted management actions led to strong growth in the World Financial Group distribution channel.
We maintained our momentum in the United Kingdom, where we continued to focus on sustaining profitable growth in the retail and workplace channels of our platform. Unfavorable market developments led to third-party net outflows in our global asset manager as customers in the Global Platforms channel freed up liquidity in a rising interest rate environment which was not fully offset by continued net deposits in our Strategic Partnerships. In addition, we identified new opportunities to develop our business in our growth markets of Brazil, China, and Spain & Portugal, with the latter achieving sales growth of 18% in its bancassurance channel.Contents
Despite the clear headway made this past year, there is still much work to be done to complete the next stages of our transformation. Aegon’s priority across each of its markets remains to deliver value to all stakeholders, including the environment and society at large. This sentiment, already embodied by our purpose and strengthened sustainability commitments, is further evidenced by the launch of Aegon’s Sustainability Roadmap 2025, a process led by our newly established Global Sustainability Board. The roadmap will help to embed sustainability more strongly and consistently within our organization, to help Aegon become a more sustainable business by 2025.
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
I am especially pleased to see our priority themes of climate change and inclusion and diversity reflected increasingly in our
day-to-day
activities. In 2022, we took the first steps in our commitment to transitioning our general account investment portfolio to
net-zero
greenhouse gas emissions by 2050, and we are well on track to meet our 2025 target of a 25% reduction in the carbon intensity of our corporate fixed income and listed equity assets. In addition, we introduced further measures to become a more inclusive and diverse organization, including by appointing a Global Head of Inclusion and Diversity.
Indebted to our employeesConsolidated statement of comprehensive income of Aegon Ltd.
For the year ended December 31
Amounts in EUR millions  
    Note
         
2023
        2022
1)
 
Net result from continuing and discontinued operations
    
 
(199
) 
 
 
(540
) 
Items that will not be reclassified to profit or loss:
     
Gains/ (losses) on investments in equity instruments (FVOCI)     -   (1) 
Changes in revaluation reserve real estate held for own use     (2)   (1) 
Remeasurements of defined benefit plans     (160)   (44) 
Income tax relating to items that will not be reclassified     30   (5) 
Discontinued operations that will not be reclassified2)     38   704 
Insurance items that may be reclassified subsequently to profit or loss:
     
Gains / (losses) on financial assets measured at FVOCI  
 
9
 
   1,311   (14,571) 
Gains / (losses) transferred to income statement on disposal of financial assets measured at FVOCI  
 
9
 
   577   488 
Insurance finance expenses / (income)  
 
9
 
   (1,626)   18,680 
Reinsurance finance income / (expenses)  
 
9
 
   349   (4,672) 
Changes in cash flow hedging reserve     (185)   (241) 
Income tax relating to items that may be reclassified     (95)   108 
Items that may be reclassified subsequently to profit or loss:
     
Gains / (losses) on financial assets measured at FVOCI     225   (1,703) 
Gains / (losses) on disposal of financial assets measured at FVOCI     129   58 
Changes in cash flow hedging reserve     (7)   49 
Movement in foreign currency translation and net foreign investment hedging reserves     (85)   137 
Equity movements of joint ventures     (2)   (35) 
Equity movements of associates     (7)   2 
Disposal of group assets  
 
42
 
   (9)   149 
Income tax relating to items that may be reclassified     (72)   333 
Discontinued operations that may be reclassified     12   (344) 
Other        -   40 
Total other comprehensive income / (loss)
       
 
421
 
 
 
(870
)
Total comprehensive income / (loss)
    
 
222
 
 
 
(1,410
)
Total comprehensive income/ (loss) attributable to:
     
Owners of Aegon Ltd.     259   (1,450)
Non-controlling
interests
        (37)   41 
1 Comparatives have been restated due to the initial application of IFRS 9 and IFRS 17. Note 2 includes further details on the changes in accounting policies.
2 Consists of remeasurement of defined benefit plans
 124  |  Annual Report on Form 20-F 2023
That we have made progress on so many fronts, and performed well in such challenging circumstances, speaks not only to the strength
Table of our strategy, but equally to the resilience and hard work of our people around the world. Building a strong, future-proof organization is very much a team effort, and with the easing of the
COVID-19Contents
pandemic, I am very pleased to see our employees returning to our offices, supported by our new hybrid way of working.
Thanks to these talented and dedicated colleagues, as well as our strong balance sheet and focused strategy, I feel confident about the future, and the opportunities that lie ahead for our company and its stakeholders. That said, we must never lose sight of our purpose as we navigate new challenges in an increasingly uncertain world. I would like to thank all our stakeholders for their continued contributions and commitment as we continue this journey together in 2023 and beyond.
The Hague, the Netherlands, March 22, 2023
Consolidated financial statements of Aegon Ltd.  
Consolidated statement of comprehensive income of Aegon Ltd. - Continued
Based on IFRS the 2022 comparative information is restated for IFRS 9 and IFRS 17. In line with IFRS, the 2021 comparative information is not restated for IFRS 9 and IFRS 17 and presented as comparatives below.
Amounts in EUR millions   2021
Net result from continuing and discontinued operations
2,029
Items that will not be reclassified to profit or loss:
Changes in revaluation reserve real estate held for own use(5) 
Remeasurements of defined benefit plans345
Income tax relating to items that will not be reclassified(77) 
Discontinued operations that will not be reclassified133
Items that may be reclassified subsequently to profit or loss:
Gains / (losses) on revaluation of
available-for-sale
investments
(1,328) 
(Gains) / losses transferred to income statement on disposal and impairment of
available-for-sale
investments
(336) 
Changes in cash flow hedging reserve(228) 
Movement in foreign currency translation and net foreign investment hedging reserves1,240
Equity movements of joint ventures25
Equity movements of associates(5) 
Disposal of group assets8
Income tax relating to items that may be reclassified390
Discontinued operations that may be reclassified23
Other15
Total other comprehensive income / (loss)
200
Total comprehensive income / (loss)
2,229
Total comprehensive income/ (loss) attributable to:
Owners of Aegon Ltd2,168
Non-controlling
interests
61
Annual Report on Form 20-F 2023  |  125 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Consolidated statement of financial position of Aegon Ltd.
On December 31
Amounts in EUR million  
Note
       
2023
       2022 
1)
     January 1, 2022 
1)
 
Assets
        
Cash and cash equivalents  
 
18
 
   4,074    3,402    6,861 
Assets held for sale / disposal groups  
 
45
 
   432    88,664    - 
Investments  
 
19
 
   266,382    254,759    409,444 
Derivatives  
 
20
 
   1,429    2,771    8,843 
Investments in joint ventures  
 
21
 
   1,430    1,430    1,715 
Investments in associates  
 
21
 
   2,906    165    1,289 
Reinsurance contract assets  
 
29
 
   16,608    16,939    21,322 
Insurance contract assets  
 
29
 
   185    36    110 
Defined benefit assets  
 
33
 
   103    87    119 
Reimbursement rights  
 
33
 
   20    -    - 
Deferred tax assets  
 
34
 
   2,350    2,433    2,164 
Deferred expenses  
 
22
 
   447    452    428 
Other assets and receivables  
 
23
 
   4,712    9,153    6,679 
Intangible assets  
 
24
 
   504    420    585 
Total assets
       
 
301,581
 
  
 
380,711
 
  
 
459,560
 
Equity and liabilities
        
Shareholders’ equity  
 
25
 
   7,475    8,815    11,018 
Other equity instruments  
 
26
 
   1,951    1,943    2,363 
Issued capital and reserves attributable to owners of Aegon Ltd.
    
 
9,426
 
  
 
10,758
 
  
 
13,381
 
Non-controlling
interests
        129    176    196 
Group equity
    
 
9,554
 
  
 
10,935
 
  
 
13,577
 
Subordinated borrowings  
 
27
 
   2,244    2,295    2,194 
Trust pass-through securities  
 
28
 
   111    118    126 
Reinsurance contract liabilities  
 
29
 
   608    270    471 
Insurance contract liabilities  
 
29
 
   177,446    176,120    290,066 
Investment contract liabilities with discretionary participating features  
 
29
 
   21,594    21,055    27,392 
Investment contracts without discretionary participating features  
 
30
 
   75,266    65,227    92,364 
Derivatives  
 
20
 
   2,479    5,175    7,138 
Borrowings  
 
31
 
   2,356    4,051    9,661 
Provisions  
 
32
 
   83    100    193 
Defined benefit liabilities  
 
33
 
   669    496    3,944 
Deferred gains     6    7    7 
Deferred tax liabilities  
 
34
 
   57    30    8 
Liabilities held for sale / disposal groups  
 
45
 
   389    84,183    - 
Other liabilities  
 
35
 
   8,390    10,278    11,883 
Accruals  
 
36
 
   328    372    537 
Total liabilities
       
 
292,026
 
  
 
369,777
 
  
 
445,983
 
Total equity and liabilities
       
 
301,581
 
  
 
380,711
 
  
 
459,560
 
1 Comparatives have been restated due to the initial application of IFRS 9 and IFRS 17. Note 2 includes further details on the changes in accounting policies.
Lard Friese
Chief Executive Officer
CEO of Aegon
 
 
 126  |  Annual Report on Form 20-F 2023
Aegon Annual Report on Form 20-F
2022
  |  
7
 

About Aegon
        Governance and risk management        Financial information        Non-financial information

8    
Aegon Annual Report on Form 20-F
2022
Table of Contents
 
 
Our strategy and value creation
Consolidated financial statements of Aegon Ltd.  
   
   
Consolidated statement of changes in equity of Aegon Ltd.
For the year ended December 31, 2023
Amounts in EUR millions  
Note
  LOGO  LOGO  LOGO  LOGO  LOGO  LOGO  LOGO  LOGO  LOGO  LOGO 
On January 1, 2023
2)
    7,172   7,103   (4,532)   (890)   653   1,943   (691)   10,758   176   10,935 
Net result recognized in the income statement    -   (179)   -   -   -   -   -   (179)   (20)   (199) 
Other comprehensive income:
            
Items that will not be reclassified to profit or loss:
            
Changes in revaluation reserve real estate held for own use    -   -   (2)   -   -   -   -   (2)  -  (2) 
Remeasurements of defined benefit plans    -   -   -   (160)   -   -   -   (160)  -  (160) 
Disposal of group assets    -   (634)   -   -   -   -   634   -  -  - 
Income tax relating to items that will not be reclassified    -   -   -   30   -   -   -   30  -  30 
Discontinued operations that will not be reclassified
3)
    -   -   -   -   -   -   38   38  -  38 
Insurance items that may be reclassified
subsequently to profit or loss
            
Gains / (losses) on financial assets measured at FVOCI    -   -   1,311   -   -   -   -   1,311   -   1,311 
Gains / (losses) transferred to income statement on disposal of financial assets measured at FVOCI    -   -   577   -   -   -   -   577   -   577 
Insurance finance expenses / (income)    -   -   (1,626)   -   -   -   -   (1,626)   -   (1,626) 
Reinsurance finance income / (expenses)    -   -   349   -   -   -   -   349   -   349 
Changes in cash flow hedging reserve    -   -   (185)   -   -   -   -   (185)   -   (185) 
Income tax relating to items that may be reclassified    -   -   (95)   -   -   -   -   (95)   -   (95) 
Items that may be reclassified subsequently to
profit or loss:
            
Gains / (losses) on financial assets measured at FVOCI    -   -   225   -   -   -   -   225   -   225 
Gains / (losses) on disposal of financial assets measured at FVOCI    -   -   129   -   -   -   -   129   -   129 
Changes in cash flow hedging reserve    -   -   (7)   -   -   -   -   (7)   -   (7) 
Movements in foreign currency translation and net foreign investment hedging reserves    -   -   142   14   (236)   -   -   (80)   (5)   (85) 
Equity movements of joint ventures    -   -   -   -   (2)   -   -   (2)   -   (2) 
Equity movements of associates    -   -   -   -   (7)   -   -   (7)   -   (7) 
Disposal of group assets    -   9   20   -   (32)   -   7   4   (12)   (9) 
Income tax relating to items that may be reclassified    -   -   (75)   -   3   -   -   (72)   -   (72) 
Discontinued operations that may be reclassified
3)
    -   -   -   -   -   -   12   12   -   12 
Other    -   -   -   -   -   -   -   -   1   - 
            
Total other comprehensive income / (loss)
      
 
-
 
 
 
(625
) 
 
 
762
 
 
 
(116
) 
 
 
(274
) 
 
 
-
 
 
 
691
 
 
 
438
 
 
 
(17
) 
 
 
421
 
Total comprehensive income / (loss) for 2023
   
 
-
 
 
 
(804
) 
 
 
762
 
 
 
(116
) 
 
 
(274
) 
 
 
-
 
 
 
691
 
 
 
259
 
 
 
(37
) 
 
 
222
 
Shares withdrawn    (54)   54   -   -   -   -   -   -   -   - 
Issuance and purchase of treasury shares    -   (1,052)   -   -   -   -   -   (1,052)   -   (1,052) 
Dividends paid on common shares    -   (495)   -   -   -   -   -   (495)   -   (495) 
Coupons on perpetual securities    -   (48)   -   -   -   -   -   (48)   -   (48) 
Incentive plans    -   (5)   -   -   -   8   -   3   -   3 
Change in ownership non-controlling interest       -   -   -   -   -   -   -   -   (11)   (11) 
On December 31, 2023
   
25,26
   
7,118
   
4,753
   
(3,770
)
 		  
(1,006
)
 		  
379
   
1,951
   
-
   
9,426
   
129
   
9,554
 
1 Issued capital and reserves attributable to owners of Aegon Ltd.
2 Opening balance as per January 1, 2023 has been restated due to the initial application of IFRS 9 and IFRS 17. Note 2 includes further details on the changes in accounting policies.
3 The lines “Discontinued operations that will not be reclassified” and “Discontinued operations that may be reclassified” include EUR 675 million and EUR 16 million respectively of reclassifications from opening reserves to the column “Reserve of discontinued operations held for sale”.
 
 
Guided by our purpose
Our purpose of
Helping people live their best lives
guides how we engage and work with our customers and our wider stakeholder base. At Aegon, we aim to maximize value for all stakeholders by enabling them to capture the opportunities offered by a changing demographic landscape, and to join us in shaping a healthy, equitable world. This approach provides the foundation for Aegon’s vision and strategy, as well as all subsequent business planning and decision-making.
Our solutions for investment, protection, and retirement are designed to help our customers make the most of a longer, multi-stage life and make the right choices for their future. For our workforce, we aim to foster a
purpose-led,
inclusive culture that leads to rewarding and fulfilling career opportunities. With our business partners, we seek to cultivate strong, respectful relationships that enable them to support our customers. For our investors, we focus our efforts on generating predictable, competitive returns. We manage this alongside our ambition to have a positive impact on the world around us through our integrated sustainability approach, which includes our long-standing focus on responsible investing, and our
net-zero
commitment.
Realizing our vision
Our vision is to be a leader in investment, protection, and retirement solutions. At the same time, we aim to create a resilient,
future-fit
business: a well-managed and well-respected company that delivers value for all its stakeholders, including attractive, sustainable capital distributions to shareholders. Whereas our strategy directly supports this vision, our focus goes beyond operational or financial performance. We seek to achieve the financial objectives of our direct operations and investment activities alongside our ambition to have a positive impact on society and the environment.
Realizing this future vision will involve building on our existing strengths; first and foremost, our proven ability to operate trusted brands and leading retirement platforms around
Investment proposition

the world. Aegon has strong foundations in advanced retirement and global asset management solutions, protection solutions, as well as in under-penetrated growth markets. We are well placed to benefit from favorable structural trends and become a leader in our chosen markets, where demographic realities and volatile financial markets require customers to save more. In addition, we have a growing presence in large growth markets such as China and Brazil.
Our base of 29.5 million customers is a firm foundation to expand and evolve our business. We have the global reach to deliver our propositions to our customers, who will increasingly benefit from more sophisticated and tailored digital services and advice. Our global, integrated asset management business is key to our continued success, enabling us to grow our share of the overall assets under management over time.
   
Aegon Annual Report on Form 20-F
2022
2023  |  
9
127 		 
 
LOGO 
About Aegon
Governance and risk management  
Financial information        Non-financial
  Sustainability information
   
   
Value-creating capital allocation
Consolidated statement of changes in equity of Aegon Ltd.
We are creating a more focused business portfolio to deliver success for us and our stakeholders as we take steps to realize our vision. A central element of this approach isFor the reallocation of capital from our Financial Assets to our Strategic Assets in our three core markets, as well as to our three growth markets, and our global asset manager. We want to be seen as a leader that offers contemporary propositions and outstanding, digitally-enabled customer service.year ended December 31, 2022
The organization of Aegon’s core and growth markets is explained in the box out Our portfolio.
In October 2022, Aegon and a.s.r. reached an agreement to combine the Aegon the Netherlands business with a.s.r.’s business to create a leading Dutch insurance company. As part of the transaction, Aegon will receive a cash consideration and a 29.99% strategic share interest in the combination, with associated governance rights. Through its stake in the company, Aegon will benefit from a.s.r.’s improved operating capital generation and capital synergies.
Aegon believes that the combination will result in a strong, well-diversified Dutch insurance company that will be able to deliver a broad range of attractive products and services, with significant synergies and long-term benefits for customers, business partners, employees, and shareholders. As such, the combination represents a major step in Aegon’s ambition to become a leader in its chosen markets.
In parallel, we continue to operate a small number of businesses that are
sub-scale
or active in small or niche markets and are managed with tight capital and a bias to exit. Since 2020, we have been exiting various
sub-scale
positions globally. These include our businesses in Central & Eastern Europe, which have been sold to Vienna Insurance Group AG. This transaction is being closed over several stages and is expected to be completed in 2023 pending the required local regulatory approvals. In 2022, Aegon decided that for Transamerica Life (Bermuda), the best path to maximizing value involves the internal reinsurance of the universal life portfolio to Transamerica. This approach will ensure better alignment and management of risk, and free up excess capital. Transamerica Life (Bermuda) will continue to provide capital-light products to its customers as an alternative to interest-rate-sensitive products. In other
sub-scale
and niche markets, such as India, Aegon’s businesses operate with tight capital and a focus on expense management.
Our portfolio
Aegon has narrowed its strategic focus to three core markets, three growth markets, and one global asset manager.
Core markets
We have three core markets – the United States, the Netherlands, and the United Kingdom. Within our core markets, we distinguish between Strategic Assets and Financial Assets.
Strategic Assets
are businesses with a greater potential for an attractive return on capital, and where Aegon is well-positioned for growth. In these businesses, Aegon will invest in profitable growth by expanding its customer base and increasing its margins. These businesses are:
◆
Amounts in EUR millions United States: Individual Solutions (selected life insurance products, investment products, and mutual funds), and Workplace Solutions (middle-market retirement plans and voluntary employee benefits);
◆The Netherlands: Workplace Solutions, mortgage origination, and banking;
◆United Kingdom: Workplace and Retail platform business, and protection.
Financial Assets are blocks of business that are capital-intensive with relatively low returns on capital employed. New sales for these blocks are limited and focused on products with higher returns and a moderate risk profile. We aim to maximize the value of these businesses through disciplined risk management and capital management actions. These businesses are:
◆United States: Fixed and Variable Annuities with interest-rate-sensitive riders, and stand-alone long-term care;
◆The Netherlands: term life, individual deferred annuities, and defined benefit group pensions.
Growth markets
Aegon focuses on three attractive growth markets – China, Brazil, and Spain & Portugal – that we will continue to access through our successful partnerships. Together with our partners, we will develop these businesses and capture the growth potential they provide while leveraging our global expertise and capabilities.
Aegon Asset Management
Aegon Asset Management is an active global investment business with approximately EUR 293 billion in assets under management. Leveraging our global brand and a global operating platform, Aegon AM operates in our core and growth markets as well as in France, Germany, and Hungary. In China, Aegon AM owns 49% of Aegon-Industrial Fund Management Company, an asset manager offering mutual funds, segregated accounts, and advisory services.
10    Note
 LOGO LOGOLOGOLOGOLOGOLOGOLOGOLOGOLOGOLOGO
Aegon Annual Report
Opening balance IAS 39 / IFRS 4 on Form 20-FJanuary 1, 2022
20222)
 7,35411,8926,442(2,199) 3252,363-26,17619626,372
Table of Contents
IFRS 9/17 opening balance impacts-3,707(9,021) -(67) --(12,795) -(12,795) 
Restated opening balance on January 1, 2022
7,3548,185(2,580) (2,199) 2582,363-13,38119613,577Net result recognized in the income statement-(569) -----(569) 29(540) 
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Gains/ (losses) on investments in equity instruments (FVOCI)--(1) ----(1) -(1) Change in fair value attributable to change in the credit risk of financial liability (FVPL)----------Changes in revaluation reserve real estate held for own use-16(17) ----(1) -(1) Remeasurements of defined benefit plans---(44) ---(44) -(44) Income tax relating to items that will not be reclassified---(5) ---(5) -(5) 
Discontinued operations that will not be reclassified
3)
---1,379--(675) 704-704
Insurance items that may be reclassified subsequently to profit or loss
Gains / (losses) on financial assets measured at FVOCI--(14,571) ----(14,571) -(14,571) 
Gains / (losses) transferred to income statement on disposal of financial assets measured at FVOCI--488----488-488
Insurance finance expenses / (income)--18,680----18,680-18,680
Reinsurance finance income / (expenses)--(4,672) ----(4,672) -(4,672) 
Changes in cash flow hedging reserve--(241) ----(241) -(241) 
Income tax relating to items that may be reclassified--108----108-108
Items that may be reclassified subsequently to profit or loss:
Gains / (losses) on financial assets measured at FVOCI--(1,703) ----(1,703) -(1,703) 
Gains / (losses) on disposal of financial assets measured at FVOCI--58----58-58
Changes in cash flow hedging reserve--49----49-49
Movements in foreign currency translation and net foreign investment hedging reserves--(174) (20) 320--12512137
Equity movements of joint ventures----(35) --(35) -(35) 
Equity movements of associates----2--2-2
Disposal of group assets--14-135--149-149
Income tax relating to items that may be reclassified--345-(12) --333-333
Discontinued operations that may be reclassified
3)
--(315) -(14) -(16) (344) -(344) 
Other-40-----40(0) 40
Total other comprehensive income / (loss)
-
 
 
Our strategy and value creation
57
 
Clear strategic focus,
building on our strengths
We have identified several areas of our business in our different markets, together with corresponding actions, that will best contribute to profitable growth and create value for our customers, shareholders, and other stakeholders in the years ahead.
In the United States, the largest of our core markets, we aim to harness the current market dynamics that play into the historical strengths and presence of Transamerica. Our Workplace Solutions division is well positioned for growth in terms of volume and earnings, and we will further invest in growth with a focus on small and
mid-sized
employers. The Individual Solutions division will invest in selected individual life, accumulation, and investment products and leverage our strong distribution capabilities in this large market.
In the Netherlands, following the transaction with a.s.r., the combined group will have a leading position in the Dutch pension market, become the market leader in disability insurance, and the number three player in property and casualty insurance. Furthermore, it will have enhanced scale in the origination and servicing of Dutch mortgages.
In the United Kingdom, where we are a market leader in workplace solutions and financial advice platforms, we aim to sharpen our competitive edge by improving the digital experience for customers, advisors, and employers.
We regard our global asset manager as an important contributor to realizing our strategy, and we aim to advance its growth. We are moving toward a global
new-technology
platform to drive expenses down and make Aegon AM more scalable and client-focused.
In Aegon’s growth markets, we will continue to expand our businesses by making the most of the scale and untapped potential of these regions. Our strong local partnerships are key to this ambition. In Spain & Portugal, for instance, we continue to grow the business via our long-standing bancassurance partnership with Banco Santander. We will invest further in China and Brazil, where we aim to generate growing volumes and earnings, including by expanding distribution.
One of Aegon’s most important resources is the deep knowledge and expertise of its global workforce. We have a clearly defined workforce strategy and culture, through which we aim to preserve and develop our human and intellectual capital. Strong leadership is at the heart of this approach. In line with our strategy, regular talent reviews now take place with every Aegon leader to ensure their competencies and skillsets directly support their assignment in their respective business unit. More widely, we are stepping up our efforts to develop our people, hire new talent where appropriate, and invest in execution capabilities and skills. Intensifying the organizational rhythm in this way allows Aegon to shift to a high-performance culture.
Our expertise and capabilities travel across our markets, as what works for one region or customer group can also work well in another. A key focus of our strategy is therefore to leverage business synergies across our company and our different markets. For example, the link between our Strategic Assets and our global asset manager is strong. Likewise, Aegon AM’s teams strive to deliver strong investment returns, to support the sound and effective management of the large back books of our Financial Assets. Clear strategies and decisive actions will make these connections even stronger and more powerful in the years ahead.
We implemented the concept of “accountability within a clear framework,” which enables faster decision-making and provides clear accountabilities. Within this model, Aegon Group outlines strategy, allocates capital, defines risk appetite, sets targets, and drives strategy implementation. In addition, Aegon takes a centralized approach to determine functional mandates, set policies and frameworks, and provide shareholder services. Our business units develop local strategies and operating plans within the company’s strategic framework and ensure their implementation.
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1,310
 
Strong balance sheet and growing capital distributions
We maintain a strong balance sheet to be able to focus our time and energy on increasing our return on capital and the return of capital to shareholders. We have a clear capital management policy in place that informs our capital deployment decisions. The capital deployment of the company is driven by the Cash Capital at Holding and is supported by reliable remittances from the units. To strengthen our balance sheet, reduce our risk profile, and make Aegon more resilient, we have reduced our gross financial leverage to its target range.
In 2022, Aegon finalized the transaction to divest its Hungarian and Turkish operations, providing financial flexibility to reduce its financial leverage through a successful debt tender offer. In addition, we returned surplus cash capital to our shareholders via a EUR 300 million share buyback executed in three tranches over 2022.
Meanwhile, Aegon continued to pursue a range of actions to strengthen its capital position and reduce the volatility of the company’s solvency ratios. These included updating the valuation of certain life insurance reserves in the United States in the second quarter of 2022. This action, which was enabled by a multi-year model enhancement program, significantly strengthened Transamerica’s capital position. In addition, Aegon has freed up capital by reinsuring the universal life portfolio of Transamerica Life (Bermuda), our Asian
high-net-worth
business, to Transamerica. To further reduce its risk exposure, in 2022 Aegon successfully completed a
lump-sum
buy out program for certain variable annuity policies in Transamerica. Furthermore, Aegon achieved its extended target of USD 450 million rate increases for long-term care policies and will continue to work to get pending and future actuarially justified rate increases approved.
We continue to take actions to maximize the value of our Financial Assets. Based on extensive analysis, we have concluded that the best option with respect to the US variable annuity portfolio is to continue to own and actively manage it, at least in the near term. Engagements with third parties, and the extensive work undertaken, provide confidence in Aegon’s actuarial assumptions, hedging strategy, and approach to managing the portfolio. The dynamic hedging program, which we expanded in 2021 to include all variable annuity guarantees, continued to perform well in difficult markets during 2022 with a hedge effectiveness ratio of 97%. To further reduce the volatility of the capital position for regulatory reporting, we have decided to establish a voluntary reserve to
better
align the recognition of fees on the variable annuities base contract with when they are earned.
Aegon’s dividends are typically expected to grow in line with sustainable free cash flows. Additional capital deployment
Improving operational performance
In 2020, we began taking concrete steps to transform the company to improve our long-term performance and ensure we continue to create value for our customers, shareholders, and other stakeholders. We have executed a rigorous and granular company-wide operational improvement plan that comprised 1,199 specific initiatives. The aim of the plan was to improve Aegon’s operating performance by reducing costs, expanding margins, and growing profitably. Of the 1,199 initiatives executed between the launch of the operational improvement plan in 2020 and the end of 2022, 921 were related to expense savings.
As of
year-end
2022, the operational improvement plan has resulted in an operating result uplift of EUR 627 million outperforming our expectations one year earlier than expected. Compared with the base year 2019, Aegon recorded a benefit from expense initiatives of EUR 366 million, or 92% of the savings targeted for 2023. Growth initiatives contributed EUR 262 million to the operating result. This is well above our target, and required less additional expenses than originally envisaged. As a result, Aegon achieved a greater net reduction in expense savings than the company had targeted.
Given the overall success of the program, and in light of upcoming changes to the group’s structure and reporting due to the transaction with a.s.r., Aegon has decided to close out the reporting on the operational improvement program. At the same time, improving efficiency, and driving commercial momentum remain key focus areas for Aegon going forward.
decisions will consider our deleveraging target, as well as planned management actions to improve and
de-risk
the company.
We remain disciplined in our management of capital, and any surplus cash flows that are not used for value-added growth opportunities will be returned to shareholders over time, as demonstrated by the share buyback program executed in 2022. Following the completion of the transaction with a.s.r.,
Aegon anticipates that it will return EUR 1.5 billion of the cash proceeds to shareholders, barring unforeseen circumstances, to offset the dilutive effect of the transaction on free cash flow per share. Furthermore, the company intends to reduce its gross financial leverage by up to EUR 700 million.
Maintaining a strong balance sheet is a prerequisite for Aegon to achieve its vision and its sustainability ambitions. It allows us to build leading, advantaged businesses in our core and growth markets that can actively contribute to a healthier, more equitable society, and create value for our customers and wider stakeholder base in line with our purpose.
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Our strategy and value creation
Sustainability
Aegon has a unique opportunity, and responsibility, to help create a healthy, equitable world. Our approach to sustainability is key to helping people live their best lives and protecting the future for all of us. We believe we have a responsibility to be part of global efforts to mitigate the threats presented by climate change and to capture the opportunities offered by moving to a more sustainable and equitable world. In 2022, we continued our efforts to integrate sustainability criteria into our products and activities, in line with stakeholders’ expectations. This included the adoption of our Sustainability Roadmap 2025 which will drive lasting value creation for our company and its stakeholders.
Addressing stakeholders’ expectations
At Aegon, we engage with our stakeholders to identify relevant sustainability issues. We consider the potential impact of sustainability issues on our business, as well as the societal and environmental impact we have as an organization in relation to these issues. In 2022, Aegon initiated its first double materiality assessment (DMA
1
) as one of the steps toward meeting the requirements of the Corporate Sustainability Reporting Directive (CSRD; see also page 413). The assessment process covered a range of sustainability topics and reconfirmed climate change and inclusion and diversity as the main areas of focus for our sustainability agenda. These two key themes, chosen as our priority themes in 2021, create lasting value for our stakeholders and are areas where we can have an impact through our investments, products, and operations while also minimizing risk for Aegon and our stakeholders. Other material topics, also identified during the double materiality assessment, are included in our wider sustainability approach.
Sustainability priority themes
In 2022, we took significant steps toward our ambitions for both our priority themes: climate change and inclusion and diversity. Furthermore, we are integrating these themes into our policies, and taking steps with our responsible investment approach to deliver further progress. This includes engaging with investors and collaborating with industry partners through initiatives such as the Principles of Responsible Investment (PRI; see page 16).
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Aegon’s 2025 climate change commitments:
◆
  Reduce the weighted average carbon intensity (WACI) of our corporate fixed income and listed equity general account assets by 25% by 2025.
◆
  Invest USD 2.5 billion in activities to help mitigate climate change or adapt to the associated impacts by 2025.
◆
  Engage with at least the top 20 corporate carbon emitters in the portfolio by 2025.
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2022 climate performance indicators
◆
  Weighted average carbon intensity of our corporate fixed income and listed equity general account assets: 390 metric tons CO
2
e/EURm revenue
2
◆
  20% reduction in WACI against 2019
◆
  Operational carbon footprint
3
16,999 metric tons CO
2
e
◆
  Reduction of operational carbon footprint against 2019: 59%
◆
  Green electricity purchased: 94%
Climate change
Climate change is a topic that has increasing significance for Aegon and its stakeholders. As a diversified financial services business, Aegon is well positioned to support society’s transition to a climate-resilient economy and a
net-zero
world through various means. We have opportunities to finance the energy transition and climate resilience through our proprietary investments and responsible investment framework. We also have a responsibility to manage our investments to take account of climate risk. In addition, we offer our customers products that accelerate the path to net zero and have climate resilience built into them. We also take steps to improve our own climate impact by addressing our operational footprint.
Net-Zero
Asset Owner Alliance commitment
In November 2021, Aegon announced its company-wide commitment to transitioning its general account investment portfolio to
net-zero
greenhouse gas (GHG) emissions by 2050. In this context, we joined the
Net-Zero
Asset Owner Alliance (NZAOA), a
UN-convened
group of institutional investors committed to decarbonization. To drive progress
1 
At Aegon, we assess trends and developments on a regular basis to understand how they may impact our business and our stakeholders. We conduct a Business Environment Scan (BES) to identify emerging structural trends, risks, and opportunities with the potential to impact our financial strength and competitive position. Topics and developments identified through the BES are also factored into the Double Materiality Assessment (DMA), initiated by Aegon in 2022. The DMA complements the BES by enabling us to evaluate a range of sustainability-related topics, that have a high impact on Aegon and/or on which Aegon can impact society and the environment.
2 
For details on the methodology used, please see our TCFD disclosure (Methodology) on page 427.
3 
For details on the methodology used, please see footnote 12 Society: Operational footprint on page 446.
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toward our 2050 commitment, we have set various targets, including the reduction of the weighted average carbon intensity (WACI) of our corporate fixed income and listed equity general account assets by 25% by 2025. In 2022, the weighted average carbon intensity of our own investment portfolio’s corporate fixed income and listed equity assets reduced by 20% compared with our 2019 baseline. This is the result of carbon considerations being further integrated into our investment processes, so we are on track to meet our 25% reduction target by 2025.
In line with the NZAOA Target Setting Protocol, at the end of 2022 Aegon added new targets to its overall commitment. These included publicly announcing our ambition to engage with (at least) the 20 biggest GHG emitters in our investment portfolio to encourage them to reduce their footprint. We have also committed to investing to help mitigate climate change or adapt to the associated impacts by 2025. For our climate change commitments, see the Box out Aegon’s 2025 climate change commitments on page 13.
In addition to our NZAOA commitments, Aegon has a number of other sustainability commitments, including to the UN Global Compact (UNGC), the UN Principles for Sustainable Insurance (PSI), and the Principles for Responsible Investment. A list of our commitments is available on page 419 of this report and on our website here:
Our commitments | Aegon.
Climate risk analysis
Undertaking regular climate risk analysis is a further key element of our climate-mitigation approach.
Aegon worked with Ortec Finance for a second consecutive year to conduct an extensive and systematic climate risk assessment for its general and separate account assets across all business units. The analysis investigated three plausible climate pathways (orderly, disorderly, and failed transitions) to explore potential future climate policies, interventions, and consequences of society’s failure to mitigate climate change.
Modeling results continue to indicate that Aegon’s general account portfolio remains resilient against key systemic climate risk drivers across all modeled climate scenarios over a
40-year
horizon. This is largely attributed to the high allocation of fixed income assets, which serves to limit the cumulative climate-related impact on returns.
Continuing to monitor developments in climate science, policy, technology, regulation, and consumer sentiment will remain critical for understanding and adapting to the future.
Sustainable financial services
We are increasingly integrating sustainability into our product development process, offering sustainable and Environmental, Social, and Governance (ESG)-focused alternatives and considering impact investing for the benefit
of the climate and inclusion and diversity across different product ranges. We also promote active ownership by engaging on topics of climate risk. For example, we encourage the companies in which we invest on behalf of customers to use the Task Force on Climate-related Financial Disclosures (TCFD) guidelines for reporting. Additional information on our responsible investment activities, including recent product launches, is provided in the section on responsible investment on page 16.
In 2022, we expanded our range of sustainability-focused products. In the United Kingdom, we continued the process of transitioning a proportion of default funds to more sustainable strategies by incorporating new
ESG-focused
funds. We have now transitioned more than GBP 15 billion into such strategies and over 2022 the proportion of core default assets invested in ESG funds increased from 39% to 53%. In addition, we have created ESG “hubs” for customers, advisers, and employers. More widely, we continued to perform our regular customer assessments on sustainability preferences and differentiate how we educate our clients on key sustainability topics.
We continue to offer our customers financial services solutions that help address climate issues. As part of its strategy, our mortgage business in the Netherlands, Aegon Hypotheken, is taking steps toward an energy-neutral mortgage portfolio, through which it will only finance
zero-on-the-meter
homes by 2050. Its customers are able to finance up to 106% of the value of a home, 6% of which can be used toward sustainable improvements. They also receive personalized information through the MyAegon app to help make their homes more sustainable.
Working with partners
As a central component of the financial services value chain, at Aegon we see it as our responsibility to work with our distribution and supply chain partners to promote sustainable practices wherever possible. As part of this approach, we strive to work with partners who share our values and can demonstrate accountability in terms of their environmental stewardship and climate mitigation. 50% of Aegon’s top 25 suppliers participate voluntarily in EcoVadis, a business sustainability ratings provider. In addition, we engage with our leading suppliers and distribution partners on sustainability topics ranging from climate change and Aegon’s
net-zero
commitments to inclusion and diversity, and governance. Further information on Aegon’s responsible supply chain approach can be found in “Sharing value with our stakeholders” on page 25.
In 2022, “Milieudefensie” (Friends of the Earth) published a report rating the climate action plans of 29 major Dutch companies. The report took a critical stance on certain aspects of Aegon’s sustainability ambitions, citing the company’s underperformance versus its peers
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Our strategy and value creation
on its emission targets and exclusion policy, as well as the transparency of our engagements with investee companies. In response, Aegon engaged in a constructive dialog with “Milieudefensie” to discuss our strategy and approach to sustainability. We also had discussions with a number of other NGOs and interest groups on our sustainability strategy and roadmap.
Reducing our operational carbon footprint
While we do not operate energy- or resource-intensive processes as part of our direct business operations, GHG emissions are generated via the natural gas and electricity used by our facilities. We have therefore set firm targets to reduce the carbon footprint of our operational activities. At the end of 2022, Aegon had achieved a 59% reduction in our operational carbon footprint1 versus the 2019 baseline, putting us well ahead of our goal of a 25% reduction by 2025. Our emissions also fell by 22% on a
year-on-year
basis in 2022. The impact of changing work patterns is a significant factor in reducing our facilities’ footprint. Therefore, we will continue to monitor the impact of hybrid working on our carbon footprint.
Inclusion and diversity
Aegon’s vision for inclusion and diversity is to build a fair and inclusive company, where we overcome obstacles to participation and increase our diversity. Where everyone has a sense of belonging, everyone plays a role in fostering inclusion, and we can all live our best life, in our workplace, our marketplace, and our communities.
As part of our transformation journey, we adopted a company-wide strategy on inclusion and diversity in 2022 and our business units have signed up to our vision. We aim to ensure our policies and actions permeate all parts of the organization, and that our leaders, colleagues, and other stakeholders worldwide can each make an active contribution to building a more inclusive and diverse organization.
Our inclusion and diversity strategy builds on the work undertaken in recent years to develop a consistent and coherent way of working for the whole company.
Two fundamental elements of Aegon’s inclusion and diversity strategy are:
1.
Authentic action
– the recognition that, as an organization, we are on a journey to improve. We need to turn good intentions into actions to create a positive difference for our people and communities.
2.
Starting at the top
– the members of Aegon’s senior leadership are expected to act as role models for inclusion and diversity, including by sharing their own inclusion stories and championing a specific area of diversity excellence among employees.
1
Scope 1 and scope 2 emissions.
 
 
 
Transamerica’s Employee395
Resource Groups have their say
Around the world, Aegon’s Employee Resource Groups (ERG) play an important role in making sure all employees have a say in the company’s future direction and that their specific needs are met during our transformation program. Our US business, Transamerica, has 12 ERGs, the first of which, the Women’s Impact Network, was launched in 2012.
In 2022, we provided new development opportunities for the leaders of our ERGs. At the start of the year, the leaders of the 12 groups gathered with their executive sponsors for Transamerica’s first annual ERG leader summit to present their annual plans and discuss opportunities for
cross-ERG
collaborations. Then, on August 10, the ERG leaders met with Transamerica CEO, Will Fuller, and Aegon CEO, Lard Friese, to discuss their groups’ respective accomplishments, challenges, and opportunities. This was followed by a development workshop featuring Johns Hopkins Carey Business School on “Managing in a Diverse and Global World” and leaders from the 12 Transamerica ERGs.
 
 
 
In 2022, we appointed a Global Head of Inclusion and Diversity, who joins our Global HR Leadership Team and Global Sustainability Board (GSB). Among other priorities, the appointee is responsible for overseeing progress on Aegon’s I&D ambitions. A specific area of attention is maintaining a healthy gender balance at a senior management level across Aegon’s business units. In the Netherlands, specifically, Aegon is actively taking steps to increase female leadership participation, in line with the “Diversity at the Top” Act, which took effect in January 2022.
Wider progress on inclusion and diversity topics is monitored through Aegon’s Global Employee Survey. The third quarter edition of the survey showed positive increases for two key metrics: 78% of employees responded favorably to a set of questions on openness and inclusion, compared with 74% in the third quarter of 2021, while 76% answered favorably on the topic of diversity and equity, up from 72%.
The specific actions and initiatives Aegon took in 2022 to address inclusion and diversity are detailed in “Sharing value with our stakeholders”, on page 20.
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Responsible investment at Aegon
One of the most significant ways Aegon can have an impact on sustainability topics is via responsible investment. We recognize our responsibility to limit the negative impacts of our investments on society or the environment. We apply this ethos to our own general account investments and use our influence to encourage similar standards in the investment decisions made by our customers. By taking an active approach to responsible investment, we seek to reduce the risks to our business and explore ways to serve the interests of our customers and society at large.
In 2022, Aegon became an asset-owner signatory to the United Nations-convened Principles for Responsible Investment (see below). This commitment prompted us to review the underlying processes of our company-wide Responsible Investment Policy. We are taking steps to refresh the policy, by introducing engagement with asset managers, establishing clearer reporting expectations, and delineating our approach to sustainability topics. For topics such as ESG integration, we take a “do no significant harm” approach whereas this policy will drive proactive steps through targets, engagement, and exclusions. The policy applies to all general account investments where Aegon has full management control.
Key responsible investment activities in 2022
In 2022, the responsible investment landscape continued to evolve rapidly, with climate action as the primary concern and with extensive regulatory change taking place to drive increased transparency, monitor progress, and address greenwashing. We continued to innovate investment solutions through Aegon Asset Management’s active global investment business.
Much of the focus was on managing climate-related risks and accelerating the
low-carbon
transition, areas that are increasingly becoming integral to our investment and stewardship processes. We evolved our Short Dated Investment Grade Bond Fund to focus on the transition to a
net-zero
global economy. The fund was renamed as the Aegon Global Short Dated Climate Transition Fund and is classified under Article 8 of the European Union’s Sustainable Finance Disclosure Regulation. It provides clients with a clear targeted approach, including historical and forward-looking analysis, to ensuring their portfolios are aligned with the climate transition and
net-zero
objectives.
Our prioritization of responsible investment was further reflected in the steady progress of important capacity building projects during the year. For example, Aegon AM enhanced its ESG materiality framework together with Aegon’s Credit Research team. We also strengthened our policies, procedures, and practices to better align with new disclosure requirements in the European Union.
Asset manager:
Our solutions
Aegon Asset Management has a Responsible Investment Framework that reflects the key elements of our Responsible Investment Policy, as well as similar policies put forward by Aegon AM’s clients. The framework is structured as follows:
◆
ESG integration
– Material ESG factors are fundamental to our investment decision-making across all Aegon AM portfolios. By integrating ESG considerations into traditional financial analysis, the Aegon AM research team arrives at an independent view of an issuer’s fundamentals.
◆
Active ownership
– Aegon actively engages with investee companies to improve their ESG profile and address sustainability issues. We also exercise our shareholder voting rights to support our engagement efforts and enhance long-term value creation for all stakeholders.
◆
Solutions
– Aegon AM provides a range of responsible investment solutions to pursue ESG objectives alongside financial returns, based on four categories:
1) exclusion-based strategies
2)
best-in-class
strategies
3) sustainability-themed strategies
4) impact investments
Further information about Aegon Asset Management’s activities can be found in the dedicated Responsible Investment Report published by Aegon AM.
Aegon joins Aegon AM
as a signatory to the Principles
for Responsible Investment
The Principles for Responsible Investment (PRI) is a United Nations-supported international network of financial institutions working together to implement its six aspirational principles. The “Principles” provide a
de-facto
industry standard that encourages companies to incorporate ESG issues into their investment practices. In 2022, Aegon became a company-wide signatory to the PRI, joining Aegon AM. Committing to the Principles will help us to align our responsible investment approach with market best practice, enabling us to continue to meet the expectations of our stakeholders.
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The roadmap and governance to realize our sustainability ambitions
Our sustainability roadmap 2025 sets out the steps we are taking to deliver against our two priority themes of climate change and inclusion and diversity, as well as the other material topics identified through our materiality assessment. Specific colleagues and teams are entrusted with ensuring the milestones of the roadmap are met. The development of the Sustainability Roadmap was overseen by the Global Sustainability Board, which is also responsible for updating the roadmap annually through to 2025 and measuring progress against our targets. 2022 was the first full operational year for Aegon’s company-wide GSB, which was established in November 2021 to enhance governance and oversight of Aegon’s sustainability approach. The Board’s core function is to steer and strengthen the sustainability agenda across Aegon’s country units, elevating sustainable practices across our business operations. The GSB is currently chaired by the Chief Executive Officer (CEO) of Transamerica, Will Fuller.
Governance structure for sustainability at Aegon
In 2022, Aegon established a series of Local Sustainability Boards to guide its sustainability approach in the company’s core country units. The chairs of the respective Boards are also members of the GSB. This governance structure drives delivery of the roadmap and alignment on sustainability across the business, by ensuring that sustainability-related actions and decisions taken at a company level are consistent with those taken across Aegon’s business units, and vice versa.
Enhancing our sustainability reporting program
A key part of assessing the success of our roadmap will be regular reporting against our priority themes and other material topics. In addition, increased sustainability-related legislation and regulation will impact Aegon’s corporate reporting and disclosure requirements. This is particularly the case in the European Union, which has witnessed the accelerated development of new legislation, including the CSRD.
In 2022, we further enhanced our Sustainability Reporting Program, building on the process initiated the previous year. The program aims to meet evolving regulatory requirements, provide data for rating agencies, and support our Sustainability Roadmap and other ESG commitments. Responsibility for sustainability reporting was extended beyond Aegon’s Global Corporate Sustainability Team to include the company’s finance function, which has been tasked with collecting
non-financial
data, establishing processes and controls, and implementing robust reporting tooling.
2022 was a transitional year as Aegon took steps to prepare for the forthcoming CSRD requirements. We are proactively making
non-mandatory
disclosures, and we carried out an inaugural double materiality assessment. Aegon will undertake a
follow-up
DMA exercise in 2023 and plans to conduct new assessments biennially, thereby regularly reviewing our list of material topics, capturing valuable stakeholder input, and preparing the company to be fully compliant with the CSRD requirements for the first reporting year 2024.

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Value creation
1
Our inputs

ncial leverage: EUR 5.6 billion • Solvency II Own Funds: EUR 16.3 billion • Solvency II Capital required: EUR 7.8 billion Manufactured • Our product mix and digital platforms • Gross premium income: EUR 14.8 billion • Gross deposits: EUR 194 billion • Fees and commissions received: EUR 2.9 billion • Investment income: EUR 7.3 billion • Revenue-generating investments: EUR 747 billion Intellectual • Internal processes, systems, and controls • Knowledge and expertise Human • Number of employees: 19,087 • Amount spent on training and development: EUR 10.9 million • Talent management • Number of tied agents: 2,475 Social and relationship • Number of customers: 29.5 million • Customer experience programs • Responsible sourcing and investing philosophy • Brand equity, purpose, and values • Relationship with intermediaries, business partners, suppliers, and other key stakeholders (e.g. regulators and NGOs) Natural • Our commitment to achieve net zero in 2050 • Total energy used by company: 55,256 MWh Aegon’s business model [Graphic Appears Here] Solutions development and pricing Development of our financial solutions begins with our customers. We assess their needs and develop products and services to suit. We then estimate and price the risk involved for us as a provider. Distribution Our products and services are then branded and marketed, before being distributed via intermediaries that include brokers, banks, and financial advisors. We also sell to our customers directly. Investments In exchange for products and services, customers pay fees or premiums. On certain pension, savings, and investment products, customers make deposits. We earn returns for Claims our customers and benefits by investing this money. We pay out claims, benefits, and retirement plan withdrawals. We use the remaining funds to cover our expenses, support new investments, and deliver profits to our shareholders. 1 Value creation is the balance of value created, preserved, and eroded.
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Our outputs
Outcome for our stakeholders

ndividuals to take control of their finances and save for their own retirement, reducing their Natural reliance on public pension systems and increasing financial stability • Weighted average carbon intensity in wider society. At the same time, we aim to have a positive impact relating to our general account on the communities in which we operate, through tax payments, investment portfolio: 390 metric tons charitable donations, and volunteer work. More widely, Aegon seeks CO e/EURm revenue for corporate to support a fair, equitable, and sustainable future society by actively fixed2 income + listed equity addressing climate change, inclusion and diversity, and other • Operational carbon footprint: prominent environmental and societal concerns. Practical examples 16,999 metric tons CO e of this include Aegon’s net-zero commitment and responsible 2 investment approach. 1 Business partners consists of commissions paid to brokers and other intermediaries, premiums paid to reinsurers, and total spend on goods and services.
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About Aegon
Governance and risk management        Financial information        Non-financial information
Sharing value
with our stakeholders
At Aegon, our focus is on creating long-term value for a broad range of stakeholders, including our customers, employees, business partners, investors, and society at large. As underpinned by our purpose, strategy, and sustainability approach, we see our business as inherently beneficial to society and people’s lives. We believe the value we create as an organization is widely shared. However, we also recognize that certain decisions and actions can also erode value by having a negative effect on our stakeholders or on the environment. The active identification and management of potentially negative consequences is, therefore, an integral part of our decision-making.
Addressing climate change and inclusion and diversity have been identified by our stakeholders as strategic sustainability priorities for our business in the coming years. Given the complex ecosystem in which we operate, there are a number of additional sustainability-related topics that are material to our business and may influence our ability to create value for our stakeholders.
In the following pages of the report, we describe the impact of many of the material topics on our main stakeholder groups, as well as the actions and decisions we took in 2022 to create and preserve value for each group.
Aegon employs a coordinated approach to address each material topic. For topics that primarily affect specific stakeholder groups, we describe our approach in the relevant section of this part of the report (for example, see “Customers” on page 20 for details of our approach to Responsible products).

Customers
As Aegon customers embark on longer and more complex life journeys, we are developing new customer propositions, tools, and solutions to meet their changing needs and expectations. This includes enhancing interactions with all customers, whether intermediaries or end users, through a broad selection of engagement channels and platforms. As well as engaging with our existing customers, we are expanding our reach to underserved individuals and communities, while working to improve financial literacy, education, and awareness in all parts of society.
Enhancing the customer experience
In 2022, we took further steps to meet the changing needs of our growing customer base, with a view to improving customer satisfaction and maximizing attraction and retention. In addition to our focus on product development, we also looked at ways to further enhance the customer experience with an increased selection of (digital) engagement platforms and channels.
In the United States, our Transamerica business operates a Premier Services Group team to provide individual case management support for the most loyal and
top-producing
agents of the World Financial Group (WFG) distribution channel. This team enables agents to handle customer requests more directly and quickly with the help of a dedicated service employee, thereby enhancing the agent’s and the customer’s experience with Transamerica. Furthermore, Transamerica significantly reduced the average wait times and call transfers in its call centers by working closely with an external partner. Transamerica also added new products to the iGO
e-App
®
, a digital application making it quicker and easier for agents to apply for life insurance.
In the United Kingdom, we also continued to digitalize our customer-facing processes with the launch of a new dashboard to help advisers onboard new clients. The online solution allows advisers to receive and store servicing documents, submit and track applications, and provide a policy start date.
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Elsewhere, our
Brazil-based
joint venture MAG Seguros introduced a new platform for managing complaints via Reclame Aqui, the country’s most visited complaints and reputation site. Meanwhile, our Spain & Portugal business unit took further steps to improve the customer journey by redesigning the purchasing process for insurance products to be more personalized and user-friendly. Aegon’s health insurance customers in the region have also received new features, including a telemedicine service that allows policyholders to speak to a doctor from the comfort of their own home.
We measure customer satisfaction in our core markets in terms of benchmarked Net Promoter Scores (SM) (NPS
®
), which are obtained by surveying customers about their experiences. We aim for scores that are in line with, or above, the average of our industry peers. Aegon’s quality control process for NPS
®
, including the approach and methodology, is centrally ensured, while individual business units are responsible for commissioning field studies, monitoring and communicating results, as well as guiding and monitoring
follow-up
actions or improvement programs.
In 2022, Aegon’s businesses in its core markets saw mixed NPS outcomes. Our US business, Transamerica, performed in line with the market average, while Aegon UK and Aegon the Netherlands were below the market average.
Despite increasing market-wide customer concerns in the United States, as shown by the decrease in market NPS
®
, Transamerica still performed in line with the market average for both life and retirement. In the United Kingdom, the NPS
®
outcome was in line with expectations, given service challenges during the year and customer concerns relating to financial market unrest throughout 2022.
The NPS
®
improvement realized by Aegon the Netherlands in recent years is slowing. Despite an improved customer service experience during the past few years, there is still a lack of emotional connection with the customer, which is even more relevant in these times of economic uncertainty.
For further details of Aegon’s NPS
®
outcomes, please see page 406 of this Annual Report.
What does financial wellbeing look like to you?
With people living longer, it is time to rethink the traditional industry concept of financial security. In the United Kingdom, Aegon is building on its previous work with the Initiative for Financial Wellbeing and Edinburgh University, by advancing research on the topic of financial wellbeing.
Our conclusion is that being financially well is about more than just money; to live their best life, people also need to take steps to improve their financial mindset. For example, the research shows that the more clearly someone can visualize their future financial status, the more likely they are to achieve the kind of retirement they want. We have therefore identified 10 different building blocks that contribute to an individual’s financial wellbeing:
◆
 Money building blocks: income, long-term savings, a strong safety net, debt, assets
◆
 Mindset building blocks: happiness, future self, written plans, social comparisons, long-term perspective
A series of customer-focused applications are being designed around these concepts. In 2022, we began developing the second iteration of the Future Self Tool, which helps future retirees envisage what life will look like after retirement. Aegon UK also updated its website with articles, podcasts, and other informative content on the subject of financial wellbeing.
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Governance and risk management        Financial information        Non-financial information
Reaching more customers through responsible products
At Aegon, our purpose of
Helping people live their best lives
extends to the many, not the few. We aim to help all customers enjoy a long, healthy, fulfilling life, including individuals such as
low-income
earners, who have traditionally been underserved by the financial services industry. Around the world, we have dedicated policies in place to protect vulnerable customers. These go hand in hand with our strict processes for product development and lifecycle management, to ensure that the products we design meet the specific needs of our customers. We also focus on distribution. Through our partnership with World Financial Group, we serve customers in the US market who include first- or second-generation immigrants who may require financial advice in their native language.
At the same time, we recognize we can do more to be more inclusive in our product offering, and provide a broader range of responsible investment and protection solutions. As part of our Sustainability Roadmap 2025, we will conduct further research to determine how we can better serve our customers with responsible solutions and translate our findings into new or existing propositions.
The events of 2022 further underlined the importance of our responsible products approach, as high inflation and the rising cost of living began to have an impact on consumers in our core and growth markets. At the start of the year, WinSocial, our Brazilian insurtech platform, presented its expanded portfolio of life micro-insurance products aimed at customers typically penalized or excluded by the insurance market due to
pre-existing
health conditions. As well as diabetes patients, the new portfolio also covers people with HIV, hypertension, and obesity, as well as those with a history of breast, prostate, and
non-melanoma
skin cancer.
In the Netherlands, we continued to offer a “bespoke service” for customers experiencing difficulties paying their mortgage, which aims to help people identify the root cause of their financial issues. Aegon the Netherlands also continued to offer flexibility to mortgage customers experiencing challenging life circumstances, such as divorce, gaps in their state pension, or the death of a loved one. Meanwhile, we increased the accessibility of our Dutch digital banking platform, Knab, by extending our investing service to include self-employed individuals and by introducing a “workation” insurance product for entrepreneurs looking to take time out from their careers.
The success of Aegon’s responsible products approach is measured by the company’s ability to provide transparent product information in line with industry regulation. The sustainability performance indicator we use in relation to this material topic is the number of significant fines we receive in relation to the
mis-selling
of products. In 2022, no significant fines were imposed on Aegon.
Promoting financial awareness, and health and wellbeing
Communication is an important driver of quality customer relationships at Aegon. Furthermore, providing clear and transparent information directly supports our approach to responsible products, by making it easier for people everywhere to engage with products and services that can support their financial health, together with their wider wellbeing.
At the end of 2022, the US Congress passed two important pieces of legislation intended to enhance financial awareness and encourage retirement savings. The first, the SECURE 2.0 Act, is a broadly supported package of retirement-related reforms primarily aimed at encouraging small business owners to offer qualified retirement plans to their employees either through pooled plan arrangements or individual plans. Transamerica is a leading record keeper of pooled plan solutions and is optimistic that this legislation will result in more people saving for their financial futures.
The second, the Registered Index Linked Annuity Act (RILA), requires the Securities and Exchange Commission to finalize a RILA-specific registration statement that should allow issuers like Transamerica to register new products and changes to existing products more quickly and provide consumers with more tailored product disclosures.
In the Netherlands, the new style defined contribution pension provider, Aegon Cappital, organized webinars to help pension plan participants get to know the business and better understand the workings of Aegon’s pension schemes. Furthermore, our Transamerica Employee Benefits business launched an email-based wellness campaign to help intermediary customers, including brokers and employers, engage with company employees on relevant issues. Topics included strategies for people to improve their financial wellbeing and overall health, as well as advice regarding health screenings and wellness benefit riders, and filing health insurance claims.
A further focus during the year was on helping existing and prospective Aegon customers to develop their general financial literacy and their understanding of issues with the potential to impact their long-term financial security.
In 2021, Aegon acquired Pension Geeks, a
UK-based
educational platform aimed at fostering engagement with financial topics. 2022 saw the launch of Pension Geeks TV and a new financial education platform. Pension Geeks also facilitates Pension Awareness Week, an industry-wide event aimed at promoting the importance of pensions and investing.
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Employees
Aegon’s success depends on maintaining a skilled, motivated, and
purpose-led
workforce. Our employees are the starting point for how we add value to our stakeholders and realize our purpose. In an evolving operating landscape, our focus is on helping our people develop themselves and adapt to the changing world around us. At the same time, we are working to build an inclusive and diverse workplace culture in which people can be their true selves, and that reflects the diversity of the communities we serve.
Engaging our global (hybrid) workforce
Maintaining an engaged and aligned workforce remained a top priority in 2022, as our organization continues to change shape due to our transformation program, as well as the ongoing transition to hybrid working. Over 2022, our employee engagement increased by two points to 70%. This is driven by significant improvements in areas previously identified as drivers for engagement, one of which is leadership. Employees increasingly experience that leaders have a vision for the company and see leaders role-modeling the vision. As a result the outcome for “Leadership” increased by four points against the previous year to 61%.
The introduction of our new purpose greatly contributed to providing employees with vision and perspective. At the start of the year, we introduced the new purpose to all employees via a company-wide virtual launch event. Our next step was to help our teams and country units around the world embed the purpose, along with our accompanying Best Life behaviors (see the box out Our Best Life behaviors on page 23), in their respective work practices and programs. As part of our Perform and Develop cycle, employees set self-development goals that require them to address a specific behavior and reflect on their progress at the end of the year. The identified behaviors also provide the foundation for our renewed recognition program, with colleagues encouraged to recognize peers who embody the behaviors in their
day-to-day
activities.
In our regular employee surveys, we also track how our culture is developing. In the third-quarter 2022 edition of the survey - only nine months after the launch - 71% of Aegon employees agreed that they know what the new purpose and behaviors are.
Our Best Life behaviors
We tune in
◆
  We serve a diverse, ever-changing world and work tirelessly to stay relevant
◆
  We are curious and never stop learning from our customers, each other, and the wider world
◆
  We ensure all people around us feel seen, heard, and valued
We step up
◆
  We are a company of ambitious, positive problem-solvers who get things done
◆
  We excel by committing, following through, and finishing what we start
◆
  We are a team, not a group of individuals.Collaboration is our life force
We are a force for good
◆
  It is our duty to leave things better than we find them
◆
  We speak up, ask for help, and think before we act
◆
  We prove our integrity daily, through our words and actions
In 2022, the easing of the
COVID-19
pandemic throughout much of the world enabled Aegon to reopen many of its locations. We have embraced hybrid working as we believe it helps our people to have a full professional life. A healthy balance between working in and out of the office helps us to stay tuned in and perform at our best. To help people adjust back to a life that also includes the office, we strengthened our hybrid working model, which now offers people specific guidance and advice according to their role.
Recent survey results show that 90% of Aegon employees feel they are working productively as part of the new hybrid way of working. Also important is that within the new way of working, the sense of wellbeing is improving. With an increase of five points over the year, employees are increasingly feeling that their stress levels are manageable. Given that there remains a discrepancy between the percentage of people who have positive experiences working remotely (93%) versus working in the office (67%), we continue to explore ways to make the office an engaging and impactful place to be.
To that end, employees are encouraged to use their time in the office in ways that directly support business objectives. Aegon’s leaders are also asked to be a visible and accessible presence in the office wherever possible. In all locations and offices, a wide variety of events and opportunities are created to maintain and strengthen connections and collaboration.
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About Aegon
Governance and risk management        Financial information        Non-financial information
Toward the end of 2022, the announcement that Aegon will combine its Dutch businesses with a.s.r. was particularly felt by employees in the Netherlands, Asset Management, and Corporate Center. Given time to absorb these changes, the power of the combination is widely recognized by employees. For individuals, the changes inevitably lead to uncertainty which is why there is a strong focus on communications and a commitment to bring clarity where and when we can. At the same time, disentangling the Dutch businesses and managing the transition to a.s.r. creates unique professional opportunities for people at all levels.
A focus on talent management
Across Aegon, a further priority remained equipping people with the necessary capabilities and leadership skills to support Aegon’s transformation journey and meet the changing needs of the business. A focus on people development is also key to employee engagement. Employees increasingly see career development opportunities for themselves at Aegon, reflected in a 5 points increase in 2022. In spite of the increase, we still score below benchmark and we will continue our focus in 2023. During 2022, senior leaders took part in the Best Life Leadership program, which aims to provide leaders with the inspiration, challenge, and support they need to steer the organization and its people in living Aegon’s purpose and behaviors. In the United Kingdom, we introduced a new program to help colleagues with the ambition of becoming a people manager. So far, of 97 participants of the Aspiring Managers Program, 34% have stepped into a managerial role since participating in the program.
We also completed our employee-focused capability-building program, Ability2Execute, which aims to help people develop essential implementation capabilities and skills. Worldwide,
one-third
of all Aegon employees have taken part in the program, which provides people with virtual learning sessions on a wide range of professional development topics, including effective prioritization, structured communications, and change management.
In an increasingly challenging labor market, the need to attract, retain, and develop high-quality talents has become all the more important in 2022. In the United States, Transamerica expanded its university relations and internship programs. The number of interns taking part in these programs grew from 115 in 2021 to 160, while the proportion of participants taking up positions with Aegon on completing their internship doubled from 15% in 2021 to 30% in 2022. We also sponsored the introduction of new technical programs at local universities, to help drive the awareness of our brand on campus.
Mentoring at Aegon AM
At Aegon, we believe that mentoring plays a key role in building an inclusive culture. Experience shows us that when employees experience mentorship from peers, they are more likely to feel included at work regardless of formal inclusion systems in place.
In early 2022, Aegon Asset Management launched Aegon’s first digital mentoring platform as a pilot for colleagues globally. The platform is open to all Aegon AM employees, who can join as a mentor or mentee, or both, with some 300 employees taking part within the first six months of launch. It has helped colleagues identify strengths and areas for development, lead change, and cope with difficult situations, and helped to prepare aspiring leaders of the business.
Building an inclusive and diverse organization
At Aegon, we are working to build an inclusive and diverse culture that encompasses all aspects of the employee experience, starting with talent attraction. In recent years, specific attention has been directed toward addressing the gender imbalances that persist in financial services. In 2022, Aegon’s country units continued to refine their hiring practices with a focus on inclusive recruitment, through gender-balanced candidate slates and interview panels. Furthermore, Aegon Asset Management continued to develop its partnerships with early careers programs, such as Girls are Investors and Investment 20/20, with a focus on creating a more inclusive investment industry. Aegon AM also took part in the launch of the Future Female Fund Managers Programme, a
UK-led
initiative to address female under-representation in fund management.
During the year, Aegon UK also set a long-term gender-diversity target to achieve a 50:50 gender split at all levels of the business, and helped to launch the Accelerating Change Together (ACT) research program organized by Women in Banking and Finance (WIBF). For year one of ACT, the focal point was the “Missing Middle,” a research program exploring the lack of a strong female talent pipeline into senior financial services roles. Subsequent findings have led to the development of the GOOD FINANCE Framework to help companies create a more supportive work environment for their employees. Aegon UK is currently implementing several of the Framework’s recommendations, including encouraging flexible and autonomous working styles and helping managers to develop an empathetic and inclusive leadership style.
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Indeed, people development plays a central role in shaping a more inclusive culture at Aegon. In 2022, Aegon AM extended its Inclusive Leadership training program, with 150 senior leaders from across the business taking part in specialized development, while education on inclusion and diversity was made mandatory for all existing employees as well as new joiners. The company also launched a program to educate people on the differences between national cultures, to enhance collaboration between international colleagues. Transamerica invested in developing employee resource groups (ERGs; see Sustainability, page 15), in keeping with the approach taken in Aegon’s other core markets.
More generally, as our workforce and communities become more diverse, at Aegon we are taking steps to create a more inclusive and supportive environment for our employees. In 2022, Aegon the Netherlands expanded its employee leave policies. All employees in the Netherlands are now entitled to the various types of care leave set forth in the Dutch “Work and Care Act” (WAZO). Furthermore, they are allowed to exchange up to two Dutch national holidays per year for holidays befitting their specific religious or cultural background, such as Eid
al-Fitr,
Chinese New Year, or Passover. During the year, Aegon AM also introduced gender-neutral parental leave for its
UK-based
employees.
In the United States, we underlined our commitment to fostering racial equality in our local communities by donating to relevant causes via the Transamerica Foundation, as well as by making a public statement in support of racial equity. Transamerica also scored a perfect 100 on the Corporate Equality Index (CEI) rating, earning a “Best Place to Work for LGBTQ Equality” designation for the sixth year in a row.
New legislation came into force in the Netherlands in 2022 aiming to improve the gender diversity on corporate boards of listed and large companies. The Act on Gender Diversity at the Top requires Aegon the Netherlands to set ambitious targets for gender diversity, create a plan to achieve those targets and report on progress. Please refer to page 417 for further details on what the Act entails and how we are complying with it.

Partners and suppliers
At Aegon, we seek to maintain a diverse global network of like-minded partners and suppliers who align with our purpose and values. These partnerships support our ambition to operate a successful and responsible business and create long-term value for all our stakeholders. In 2022, we continued to follow best- practice ESG criteria and requirements as part of our supplier selection and development activities, as well as our ordering processes. With this approach, we aim to improve the impact of our supply chains on society and the environment, while also delivering commercial and reputational benefits for the companies we work with.
Building a responsible supply chain
Building a responsible and transparent supply chain is central to our sustainability ambitions and is a key element of our Sustainability Roadmap 2025 (see “Sustainability”, page 14). As a diversified global business, Aegon seeks to drive company-wide alignment in this area, with tools such as the Vendor Code of Conduct. Our progress on this important topic is measured through sustainability performance indicators that have been jointly defined by Aegon’s Procurement and Finance teams.
In 2022, the Procurement team expanded its EcoVadis program. With the support of this leading sustainability ratings platform, the program seeks to contribute to the Sustainability Roadmap 2025 by increasing transparency surrounding the sustainability performance of Aegon’s strategic supplier base. By the end of 2022, the EcoVadis program covered 72% of our procurement expenditure involving the 250 largest vendors to our organization, up from 59% in 2021, while the total vendor expenditure coverage increased from 51% to 64%. Further indicators regarding the program can be found on page 440 of this Annual Report.
During the year, Aegon also undertook the tendering process for the mandatory rotation of its auditor, a thorough process involving all business units. The outcome is that Ernst & Young Accountants LLP (EY) will be appointed as Aegon’s new auditor, effective January 1, 2024, pending approval at the 2023 Annual General Meeting of Shareholders. The tender’s selection criteria emphasized the composition of the proposed supplier teams, supporting our ambition to help increase the diversity of our supply chains. During the process, the bidding audit firms changed the composition of their teams to meet our inclusion and diversity requirements.
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About Aegon
Governance and risk management        Financial information        Non-financial information
Third-party risk management at
Aegon the Netherlands
Aegon remains accountable for ensuring business continuity and reliable service for its customers, even when outsourcing critical activities. At the end of 2021, Aegon the Netherlands initiated a program to further improve its third-party risk management capabilities, with a view to increasing role clarity when selecting third parties, and monitoring and exiting supplier relationships. The program ensures that multiple disciplines, including Business Owners, Procurement & Vendor Management, Information Security, Privacy Office, and Risk and Compliance, all contribute to assessing and anticipating the inherent risks to our supply chain.
To ensure business continuity for its customers, Aegon must be prepared to manage a range of potential scenarios, from cyberthreats, to third parties experiencing a default situation. New regulation, such as the European Union’s impending Digital Operational Resilience Act (DORA), highlights the importance of further maturing our approach to third-party risk management and due diligence, and embedding this more firmly in our procurement processes.
Working with responsible vendors
in the United Kingdom
In the United Kingdom, Aegon has committed to various initiatives to support responsible procurement and supply chain stewardship. We work closely with our partners to promote high standards of business conduct, as reflected in our Vendor Code of Conduct. Aegon’s Tier 1 suppliers must provide evidence that they meet these standards on an annual basis and are encouraged to register for assessment by EcoVadis, the leading sustainability ratings platform, or with an assessment body of their choice. Aegon UK is also a member of Social Enterprise UK, a membership body that helps businesses include social enterprises in their supply chains. In 2022, expenditure on social enterprises as part of our UK procurement activities met our target of GBP 100,000.
In 2021, Aegon UK was formally recognized as a Living Wage Employer. The business has since been working with its
on-site
suppliers in the United Kingdom to make positive changes to their remuneration structures as part of their internal pay review cycles. The proposed increase is intended to reflect the rise in the real living wage, as announced by the UK government in September 2022.
In 2022, Aegon UK identified 46 existing suppliers that it aims to collaborate with on matters related to sustainability. 50% of the potential suppliers are already undertaking sustainability assessments via EcoVadis or an equivalent provider, and 57% have made public commitments to reach net zero. Aegon UK will spend time working with each company to understand their potential contribution to the company’s scope 3 emissions and to agree on plans to reduce those contributions in future years.
Promoting supplier diversity at Transamerica
Through its Supplier Diversity Program, Transamerica actively seeks out certified diverse suppliers that can provide competitive, high-quality goods and services. In 2022, we undertook a concentrated effort to further expand our portfolio of registered diverse suppliers in the United States and maintain
year-on-year
growth in terms of the proportion of our addressable spend invested with diverse suppliers.
During the year, Transamerica also explored other strategies to reduce the environmental impact of its procurement activities. These included reducing the print, paper, and carbon emissions associated with mailing correspondence to clients and prospects, as well as working with third-party suppliers to digitize information for policyholders and agents through online self-service portals. In 2022, Transamerica eliminated the need for over three million envelopes by combining mailings into a single envelope, saving USD 1.4 million in expenses.
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Investors
In 2022, Aegon made further progress in delivering on its strategic and financial commitments, despite an uncertain economic landscape and volatile financial markets. Against this challenging backdrop, we performed well, a testament to the strength of our strategy.
Solid financial performance
Building on the progress made on its transformation program, Aegon increased its expectations for cumulative free cash flow over the 2021–2023 period from between EUR 1.4 and 1.6 billion to at least EUR 2.2 billion. Our units also delivered operating capital generation of EUR 1.5 billion, significantly above the EUR 1.2 billion guidance for 2022 provided at the start of the year. This allows us to target a dividend of around 30 eurocents per common share over 2023, barring unforeseen circumstances. We increased the dividend target from 25 eurocents per common share previously. This also reflects the anticipated benefits from the transaction with a.s.r., including the expectation that the transaction will be accretive to free cash flows per share once the announced deleveraging and capital return to shareholders is completed.
In 2022, Aegon increased its interim dividend by 3 eurocents to 11 eurocents per common share and will propose to increase the final dividend by 3 eurocents to 12 eurocents per common share at the 2023 Annual General Meeting of Shareholders. In addition, we executed a share buyback program of EUR 300 million in three tranches between the second and fourth quarter of 2022. In total, Aegon delivered EUR 713 million in the form of dividends and share buybacks to shareholders in 2022.
At the end of 2022, Aegon had a gross financial leverage position of EUR 5.6 billion. This delivered EUR 223 million value in the form of interest payments to bondholders.
Value derived from share performance
Aegon’s share price rose by 7% in 2022. This resulted in the company outperforming the wider European insurance industry, with the STOXX Europe 600 Insurance Index ending the year down by 2%. We believe the relative overperformance was supported by the appreciation of the US dollar, progress made on our operational improvement plan, and management actions to improve our risk profile. Our total shareholder return for the year amounted to a gain of 12%. This measure considers the payment of dividends as well as share-price performance.
Safeguarding long-term value
We are taking steps to further strengthen our balance sheet. This allows for attractive and sustainable capital deployment decisions, which generate value for our investors over the longer term. With the debt tender offer executed in 2022, Aegon reduced its financial leverage by EUR 429 million during the year. This enabled us to achieve our gross financial leverage target of between EUR 5.0 billion and EUR 5.5 billion, accounting for the fact that this target was set at an EUR/USD exchange rate of 1.20.
Capital deployment decisions are driven by Cash Capital at Holding, taking into account our gross financial leverage target range and planned management actions to further improve the company’s risk profile. Cash Capital at Holding is supported by free cash flow, which is defined as the amount of cash available from remittances from country units after subtracting the holding funding and operating expenses, the latter resulting from paying interest to bondholders, for example. At Aegon, we seek to distribute free cash flow to shareholders over time, unless we invest it in value-creating opportunities. We expect to pay dividends to shareholders in line with growth in sustainable free cash flow, barring unforeseen circumstances.
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About Aegon
Governance and risk management        Financial information        Non-financial information

Society
As an investment provider and responsible business, Aegon can play a central role in addressing a range of social and environmental issues. Increasingly, we see opportunities to use our influence to help create a healthier, more equitable, and more inclusive world. We seek to add value through our community investments and volunteering efforts, as well as by helping individuals and communities take steps toward a cleaner, healthier planet.
Working with society to tackle climate change
At Aegon, we aim to use our influence at the center of the financial services value chain to effect positive change and address key societal issues that are affecting our stakeholders. Increasingly, our focus is on tackling the growing impact of climate change on the environment and society.
In tandem with company-wide efforts to tackle climate change, including through its investment activities (see “Sustainability,” page 16), Aegon also works closely with customers, partners, and communities at a local level to support the transition to a more sustainable and climate-resilient society. In March, Aegon Asset Management
co-launched
a new USD 600 million decarbonization venture in the United States. The partnership will see Aegon and its joint venture partners, private equity firm Taurus Investment Holdings, acquire
value-add
multifamily properties. The homes will then be converted into
low-carbon,
energy-efficient buildings by deploying modern clean-energy technologies such as community solar installations.
In October, Aegon and Taurus closed their second and third multifamily investments under the new venture, in the Tampa and Orlando submarkets. Elsewhere in the United States, Transamerica and Aegon Asset Management became the primary investors and anchor tenants in a new community solar garden in Iowa (see box out Helping to bring clean energy to the community in Cedar Rapids).
Responsible tax
Aegon makes a valuable economic and social contribution to the communities in which it operates through the company’s own tax payments as well as the collection and payment of third-party taxes. We seek to pay “fair taxes,” namely by paying the right amounts of tax in the right places. Published online, our Global Tax Policy outlines our approach to responsible tax, which seeks to align the long- term interests of our customers, employees, business
 
 
Helping to bring clean energy to the community in Cedar Rapids
 
(691
In July 2022,
US-based
energy company, Alliant Energy, welcomed Transamerica and Aegon Asset Management as anchor tenants in a new
4.5-megawatt
solar garden being constructed close to Transamerica’s offices in Cedar Rapids, Iowa. Transamerica and Aegon Asset Management have committed to purchasing 60% of the garden’s solar blocks.
The solar garden will not only supply clean energy to the Transamerica facilities, but also to homes in Cedar Rapids and local
non-profit
organizations. One of the main beneficiaries will be Cedar Valley Habitat for Humanity, a
non-profit
housing ministry dedicated to providing affordable homes for local families. Alliant Energy will donate solar blocks to the charity, and expects to issue up to USD 600,000 in energy bill credits to Habitat for Humanity’s participating residents over the garden’s
20-year
lifespan.
partners, investors, and wider society. In 2021, we also began publishing a Global Tax Report to provide a comprehensive overview of our approach to tax and our tax contributions on a
country-by-country
basis. Aegon adheres to the VNO-NCW Tax Governance Code, as published on https://www.vno-ncw.nl/taxgovernancecode; for further details, please refer to Aegon’s Global Tax Report.
Investing in our communities
As in previous years, in 2022 Aegon’s business units supported local causes that align with the company’s purpose and ambitions. Our community investment initiatives are aimed at serving and strengthening our local communities on the one hand, while also enabling our employees to engage with their communities and promote our purpose and sustainability approach.
In 2022, Aegon supported 493 charities and good causes. Our donations amounted to EUR 10.6 million, a 13% increase compared with 2021. Much of this investment was driven by our Charitable Donations Standards, which require country units to allocate at least 50% of their annual donations to causes that directly support financial security and personal wellbeing. Aegon employees recorded 16,911 volunteer hours in 2022 (equivalent to EUR 1.2 million, based on volunteers’ average salaries).
Recent challenges such as the war in Ukraine and the rising cost of living have made our charitable contributions more important than ever. In February 2022, Aegon made a company-wide donation of EUR 1 million to the Red Cross to support the humanitarian effort for Ukraine and its citizens.
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Aegon Annual Report on Form 20-F
2022
Table of Contents
Our strategy and value creation
Cybersecurity and data protection
Cybersecurity and data protection is a material topic that has potential ramifications for all Aegon stakeholders. This includes wider society: given our central role in the financial ecosystem, incidents such as cyberattacks and data breaches can lead to
far-reaching
impacts that extend beyond our direct customers and partners.
Aegon’s coordinated security governance approach is designed to prevent cyber issues and minimize the impact of any potential disruption for all parties. It includes standardized procedures to remediate data breaches and minimize the influence of future privacy-related incidents.
The core elements of our governance approach for cybersecurity include:
◆Global Chief Information Security Officer (CISO) responsible for the execution and oversight of Aegon’s company-wide security strategy and
day-to-day
security operations.
◆Information security officers responsible for execution and oversight in all relevant business units.
◆Dedicated information security teams in business units responsible for the execution of security functions in alignment with global and local regulations.
◆Global Information Security Advisory Counsel (GISAC) to support collaboration between information security functions on a company and business unit level, as well as with other supporting functions, such as Risk, Audit, and Legal/Privacy.
In 2022, Aegon introduced a set of new information security metrics to measure the outcomes of its security initiatives, as well as the effectiveness of the existing security controls. One of our key metrics for cybersecurity is the proportion of employees completing annual training on information security. In 2022, 95% of Aegon employees completed this training.
To secure and monitor data privacy compliance, Aegon has policies and procedures in place to support privacy compliance at a company and business unit level. The policies are updated within predefined intervals and supported by a strong privacy control framework to ensure ongoing privacy maturity measurements. Regular audits are conducted to assess compliance with relevant laws, regulations, and policies, as well as the Aegon Privacy Control Framework and its governance. Each breach is carefully assessed and remediation is applied as close to the event as possible. Following a breach, a root cause assessment is executed, so that Aegon can learn from the event and implement sustainable improvements to limit potential recurrence.
The core elements of our governance approach for data privacy include:
◆Group Chief Privacy Officer, responsible for privacy compliance strategy and privacy oversight.
◆Data Protection Officers in individual business units, responsible for executing the statutory tasks of the Data Privacy Office (DPO) function.
◆Operational privacy teams in relevant business units, to execute privacy advisory, control testing, and attestations.
◆Privacy Executives, accountable for privacy compliance at a business unit level. Privacy Executives are often part of the Executive Board or relevant management committees.
One of our key metrics for data protection is the proportion of employees completing specific training on personal data security. In 2022, 98% of Aegon employees completed this training.
See page 360 for more details of Aegon’s approach to cybersecurity and data protection.
Aegon Annual Report on Form 20-F
2022
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Table of Contents
About Aegon
Governance and risk management        Financial information        Non-financial information
Performance in 2022
Financial markets in 2022 were dominated by high inflation levels and rising interest rates. The more restrictive central bank policy combined with the
fall-out
from the war in Ukraine led to a deterioration of the global economic outlook. Credit spreads generally widened and important equity markets declined during the year as a result.
These developments negatively impacted Aegon’s financial results. Despite challenging market circumstances, we made significant progress in further strengthening our balance sheet and in improving our operational performance. We made steady progress against our 2023 targets, meeting the targeted cumulative free cash flow for the period 2021 to 2023 a year ahead of schedule, overdelivering on the operating result benefit from the operational improvement plan, and reducing the financial leverage to within the targeted range. We also announced the combination of the businesses of Aegon the Netherlands with a.s.r. to create a leading Dutch insurance company.
Financial performance
The operating result amounted to EUR 1.9 billion in 2022 and was stable compared with 2021. The result was supported by expense savings, benefits from growth initiatives, improved claims experience, and strengthening of the US dollar. This was offset by lower fees due to adverse market movements and outflows in Variable Annuities and Asset Management. Our net result amounted to a loss of EUR 1.4 billion for 2022, mainly driven by higher Other charges in 2022 as a result of an impairment loss related to the transaction with a.s.r.
Despite volatile markets, each of our three main units increased their capital ratios compared with year-end 2021 and remained above their respective operating level. This underscores the effectiveness of the actions we have taken to improve our risk profile and to reduce the volatility of our capital position. This includes setting up a voluntary reserve for Variable Annuities, a
lump-sum
buy-out
program for certain variable annuity products, achieving additional long-term care rate increases, and freeing up capital by reinsuring the legacy universal life portfolio of Transamerica Life (Bermuda) to Transamerica.
We also completed the divestment of our business in Hungary in 2022. This provided us with the financial flexibility to buy back shares for an amount of EUR 300 million and to execute a EUR 429 million tender offer for certain subordinated bonds. This lowered our gross financial leverage to within the deleveraging target range of EUR 5.0 to EUR 5.5 billion, based on the euro/US dollar exchange rate when we set our deleveraging target. Free cash flows increased from
EUR 729 million in 2021 to EUR 780 million in 2022, and contributed to the increase in Cash Capital at Holding to EUR 1.6 billion at the end of 2022, above the operating range of EUR 0.5 billion to EUR 1.5 billion. We have therefore announced a new EUR 200 million share buyback program, underscoring our disciplined capital management and commitment to return surplus capital to our shareholders.
As of
year-end
2022, the operational improvement plan has resulted in an operating result uplift of EUR 627 million, with 92% of targeted expense savings achieved, compared with the target of a EUR 550 million uplift by the end of 2023.
As a result of the progress we have made, both strategically and financially, we will propose a final dividend for 2022 of 12 eurocents per common share. This brings the full-year dividend to 23 eurocents per common share, compared with 17 eurocents over 2021.
We will continue to make further progress in delivering on our strategic objectives and financial targets. We expect at least EUR 1 billion of operating capital generation from our units outside the Netherlands in 2023, barring unforeseen circumstances. This reflects an expected increase in new business strain as we aim to profitably grow our US business. Free cash flow, excluding remittances from Aegon the Netherlands but including the interim dividend that we expect to receive from a.s.r. in 2023, is expected to amount to around EUR 600 million in 2023. We target a dividend over 2023 of around 30 eurocents per share, 5 cents more than we communicated at the 2020 Capital Markets Day.
Further information on our performance in 2022 can be found in the Results of operations section on page 102.
Financial targets 2021-2023
Reduce leverage
) 
 
 
EUR
5.0-5.5 billion
Gross financial leverage target
(1,450
Implement
expense savings
) 
 
 
EUR 400 million41
Lower addressable expenses vs. 2019
 
Increase free
cash flows
 
 
(1,410
EUR
1.4-1.6 billion
Cumulative free cash flows over 2021-2023) 
Distribute capital
to shareholders
Shares issued		 
Around EUR 0.30 dividend
per share over 2023
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2022
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Our strategy and value creation
  
Non-financial
performance
In line with Aegon’s purpose, the
non-financial
performance of the company is a key element of how we support people to live their best lives. In 2021, we strengthened our vision on sustainability and in 2022 we further integrated this approach in our performance. We delivered on this by completing our initial double materiality assessment, embedding the new governance model for sustainability, and developing the Sustainability Roadmap 2025.
Following the good progress in 2021, our new sustainability governance has enabled us to establish a wide range of activities, targets, and milestones for our
non-financial
performance. We continued with the migration of sustainability reporting to our finance department, bringing our
non-financial
reporting practices more in line with the financial performance reporting. We have also built upon the level of ambition for our two priority themes, climate change and inclusion and diversity, setting new targets and allocating clear responsibility for progress with sustainability leaders across the business.
Our initial double materiality assessment confirmed our priority themes as the most material for our business. We continued to develop our reporting process for key
non-financial
performance metrics, to support transparency, to give a clear view of progress on these topics, and to ensure we are prepared for incoming regulatory requirements. Particularly, we are building a clearer view of performance on the KPIs we introduced in 2021 for our priority themes.
With regard to climate change, our weighted average carbon intensity (WACI) for our corporate fixed income and listed equity in our general account assets is showing a reduction that is in line to meet our 2025 goal. We have also reduced our absolute operational carbon emissions and are on track to meet our target.
For inclusion and diversity, the KPI for the percentage of women in senior management is increasing and we are making further progress on this topic through the newly-adopted company-wide strategy on inclusion and diversity.
With these metrics, we are building a better view of our performance toward our sustainability ambitions. We are also maturing our approach and increasing our skills and experience in
non-financial
performance reporting. To ensure we continue to report on the most material topics for our business we will regularly review the topics deemed material and the resultant
non-financial
KPIs to ensure transparency and clarity of performance on the issues of most concern to our stakeholders.
The rationale for our
non-financial
KPIs is detailed below.
1.
Aegon wants to be there for its customers. This means providing solutions that create long-term value and developing products and services that fully meet their needs and expectations at every stage of their lives.
Customer satisfaction in each of our core markets, which is measured by benchmarked Net Promoter Score(SM), should be in line with or above the average of those of our industry peers.
Our US business, Transamerica, performed in line with the market average, while Aegon UK and Aegon the Netherlands were below the market average. The performance in Aegon UK reflects service challenges during the year. Market uncertainty has also led to customer concerns across all our markets.
2
For us to deliver on our promises to all our stakeholders, it is important that our employees are fully engaged and motivated to contribute to this task.
The employee engagement score in 2022 increased by 2%-points to 70%. All the main drivers of engagement (leadership, recognition, career, and levels of stress) improved compared to 2021. We believe this has been driven by the launch of our revitalized purpose and behaviors.
3
At Aegon, we value a diverse workforce, because we believe including different perspectives is critical for richer debates and innovation.
The proportion of female representation among our senior management increased from 34% to 36% in 2022.
4
Aegon seeks to ensure the reduction of the weighted average carbon intensity of the company’s investment portfolio, in line with our
net-zero
ambitions.
In 2022, the weighted average carbon intensity of our own investment portfolio reduced by 20% compared with 2019. This means we are on track to meet our target for a 25% reduction in the carbon intensity of our corporate fixed income and listed equity in our general account by 2025.
5
Aegon is aiming to reduce our absolute operational carbon emissions (scopes 1&2).
In 2022, the operational carbon footprint fell by 59%. This is well ahead of our target of a 25% reduction in absolute operational carbon emissions by 2025, compared with the 2019 baseline.
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2022
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About Aegon
Governance and risk management        Financial information        Non-financial information
To further embed the above
non-financial
KPIs in our operations, the KPIs were reflected in the remuneration targets set at both a company-wide and individual level in 2022. The remuneration targets for our Executive Board members are required to be comprised of at least 50%
non-financial
performance indicators, of which sustainability has been a mandatory performance indicator category since 2020. In 2022, 17% of the performance indicators for Aegon’s Executive Board members were related to sustainability. The indicators covered the further integration of sustainability into the company strategy, employee engagement, and the increased presence of women in senior management.
Further information on our
non-financial
performance in 2022 can be found in the table
Non-financial
key performance indicators on page 400 of the
Non-financial
information section in this report.
Non-financial
targets 2023-2024
Customers
•
  Customer satisfaction in each of our core markets (measured by benchmarked Net Promoter Score
(SM)
) should be in line with or above the average of our peers
Employees
1
•
  A 72% employee engagement score for 2023, measured through our Global Employee Survey
•
  Minimum level of 38% of female representation amongst our senior management for 2023
Society
•
  At least 25% reduction in weighted average carbon intensity of our corporate fixed income and listed equity in our general account by 2025
•
  25% reduction in absolute operational carbon emissions (Scopes 1&2) by 2025 against 2019 baseline
•
  Invest USD 2.5 billion in activities to help mitigate climate change or adapt to the associated impacts by 2025
•
  Engage with at least the top 20 corporate carbon emitters in the portfolio by 2025
1
Aegon the Netherlands has been placed
out-of-scope
due to the expected divestment.
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2022
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Aegon Annual Report on Form 20-F
2022
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About Aegon
Governance and risk management
Financial information        Non-financial information
Letter from our
Supervisory Board Chairman

Table of Contents
Letter from our Supervisory Board Chairman
Naturally, the transaction will also affect many of the company’s employees. Change is never easy; however, I am confident that the combination with a.s.r. will create excellent opportunities for Aegon’s workforce in the Netherlands, while also championing Aegon’s proud Dutch heritage and local roots.
Building leading positions
This important transaction is just one example of how Aegon is pursuing its strategic priority of building leading positions in its chosen markets. Looking ahead, the company continues to execute growth initiatives in its other core markets, as well as in its growth markets, Brazil, China, and Spain & Portugal, and through its global asset manager.
In the United States, Aegon will continue to build on Transamerica’s leading positions in both individual life insurance and the workplace pension business, investing capital to increase its market share profitably in selected product lines. In addition, Transamerica will continue to take management actions to further improve its risk-return profile. In the United Kingdom, meanwhile, Aegon is pursuing the profitable growth of the various distribution channels of its leading platform business by improving customer propositions, service capabilities, and digital experience for advisors, employers, and consumers. Furthermore, Aegon Asset Management will be able to leverage its global capabilities through its exclusive long-term partnership with a.s.r. for managing part of the combination’s assets. In its growth markets, Aegon will continue to look to invest capital in value-adding growth opportunities.
Listening to Aegon’s employees
As the organization changes shape, Aegon’s ability to attract and retain talented people becomes increasingly important. In 2022, the Supervisory Board connected with Aegon employees on topics ranging from engagement to wellbeing, through talent sessions, employee gatherings, and regular meetings and visits.
These interactions highlight how Aegon is helping employees transition to new ways of working in the post-pandemic era. As offices have reopened, the company has strengthened its hybrid working model, and now offers employees specific guidance according to their role. Encouragingly, recent survey results indicate that 90% of Aegon employees are now working productively via the new setup.
Toward a strong and sustainable business
More widely, I welcome the steps Aegon is taking to address sustainability, and particularly the priority themes of inclusion and diversity and climate change, as identified by stakeholders. During the year, the Supervisory Board discussed, and closely monitored Aegon’s progress in realizing its
Net-Zero
Asset Owner Alliance commitments.
Aegon is also strengthening its
non-financial
reporting and controls, and the Supervisory Board is enthused by the advancements being made in this area.
In the financial reporting sphere, the Supervisory Board participated in multiple deep-dive sessions about the implications and implementation of IFRS 17, which will apply to financial reporting after January 1, 2023. As part of our responsibilities, we have also been closely involved in the tender procedure to elect a new external auditor for the company as per the mandatory rotation requirements. After a sound and thorough selection process, we were pleased to recommend the appointment of Ernst & Young Accountants LLP (EY), subject to approval at the 2023 Annual General Meeting of Shareholders.
The Supervisory Board recognizes the importance of risk and compliance, and we are closely monitoring ongoing efforts to address these topics, with the support of relevant committees.
The Supervisory Board’s efforts were supported by the addition of a new member, Karen Fawcett, and the reappointment of Corien Wortmann-Kool. The composition of the Board was again a key consideration in these appointments, as we continued to maintain a good balance in terms of gender diversity, nationality, and background. I also welcome the recent appointments of Astrid Jäkel and Deborah Waters to the Management Board, in their respective capacities of Chief Risk Officer and Chief Technology Officer.
On behalf of all members of the Supervisory Board, I again thank all Aegon employees for their valuable contributions to Aegon’s purpose and strategic priorities. I also express my gratitude to the company’s investors for their continued trust and confidence.
The Hague, the Netherlands, March 22, 2023
William L. Connelly
Supervisory Board Chairman, Aegon
     
A detailed report on the Supervisory Board and its activities during the year can be found on page 48 of this Annual Report.
Aegon Annual Report on Form 20-F
2022
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35
Table of Contents
About Aegon
Governance and risk management
Financial information        Non-financial information
Corporate governance
Aegon is incorporated and based in the Netherlands. As a company established and listed in the Netherlands, Aegon must comply with Dutch law and is subject to the Dutch Corporate Governance Code.
Aegon is governed by three corporate bodies:
◆General Meeting of Shareholders
◆Supervisory Board
◆Executive Board
Aegon also has a Management Board. This works in unison with the Executive Board and helps to oversee operational issues and the implementation of Aegon’s strategy. Aegon’s corporate governance structure is the responsibility of both the Supervisory Board and the Executive Board. Any substantive change to this structure is submitted to the General Meeting of Shareholders for discussion.
The shareholders
Listing and shareholder base
Aegon’s common shares are listed on Euronext Amsterdam and the New York Stock Exchange. Aegon has institutional and retail shareholders around the world. More than three-quarters of shareholders are located in Aegon’s three main markets, the United States, the Netherlands, and the United Kingdom. Aegon’s largest shareholder is Vereniging Aegon, a Dutch association with a special purpose to protect the broader interests of the company (Aegon N.V.) and its stakeholders.
General Meeting of Shareholders
A General Meeting of Shareholders is held at least once a year and, if deemed necessary, the Supervisory or Executive Board of the company may convene an Extraordinary General Meeting of Shareholders. The main function of the General Meeting of Shareholders is to decide on matters such as the adoption of annual accounts, the approval of dividend payments, and (re)appointments to the Supervisory Board and Executive Board of Aegon.
Convocation
General Meetings of Shareholders are convened by public notice at least 42 days before the meeting. The convocation states the time and location of the meeting, the record date, the agenda items, and the procedures for admittance to the meeting and representation at the meeting by means of a written proxy. Those shareholders who alone or jointly represent at least 1% of Aegon’s issued capital or a block of shares worth at least EUR 100 million may request items be added to the agenda of a General Meeting of Shareholders. In accordance with Aegon’s Articles
of Association, such a request will be granted if it is received in writing at least 60 days before the meeting, and if there are no important interests of the company that dictate otherwise.
Record date
The record date is used to determine shareholders’ entitlements with regard to their participation and voting rights. In accordance with Dutch law, the record date is 28 days before the day of the General Meeting of Shareholders.
Attendance
Every shareholder is entitled to attend the General Meeting to speak and vote, either in person or by proxy granted in writing. This includes proxies submitted electronically. All shareholders wishing to take part must provide proof of their identity and shareholding and must notify the company ahead of time of their intention to attend the meeting. Aegon also solicits proxies from New York registry shareholders in line with common practice in the United States.
Voting at the General Meeting
At the General Meeting, each common share carries one vote. In the absence of a Special Cause, Vereniging Aegon casts one vote for every 40 common shares B it holds.
Supervisory Board
Aegon’s Supervisory Board oversees the management of the Executive Board, in addition to the company’s business and corporate strategy. The Supervisory Board must take into account the interests of all Aegon stakeholders. The Supervisory Board operates according to the principles of collective responsibility and accountability.
Composition of the Supervisory Board
Members of the Supervisory Board are appointed by the General Meeting of Shareholders, following nomination by the Supervisory Board itself. Aegon aims to ensure that the composition of the company’s Supervisory Board is in line with Aegon’s diversity policy for the Supervisory Board, Executive Board and Management Board and is as such well-balanced in terms of professional background, geography, gender, and other relevant aspects of the diversity policy. A profile, which is published on aegon.com, has been established that outlines the required qualifications of its members. Supervisory Board members are appointed for a four-year term and may then be reappointed for another
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Aegon Annual Report on Form 20-F
2022
Table of Contents
Corporate governance
four-year period. Subsequently, a Supervisory Board member can be reappointed again for a period of two years, and then extended by two years at the most. Supervisory Board members are no longer eligible for (re)appointment after reaching the age of 70, unless the Supervisory Board decides to make an exception. Remuneration of the Supervisory Board members is determined by the General Meeting of Shareholders. In 2022, no transactions were concluded between the company and any of the Supervisory Board members. Furthermore, the company did not provide loans or issue guarantees to any members of the Supervisory Board. At present, Aegon’s Supervisory Board consists of nine members, all of whom qualify as independent in accordance with the Dutch Corporate Governance Code.
Committees
The Supervisory Board also oversees the activities of its committees. These committees are composed exclusively of Supervisory Board members and deal with specific issues related to Aegon’s financial accounts, risk management, sustainability, executive remuneration, and appointments. These committees are the:
◆Audit Committee
◆Risk Committee
◆Remuneration Committee
◆Nomination and Governance Committee
Executive Board
Aegon’s Executive Board is charged with the overall management of the company and is therefore responsible for developing and executing Aegon’s strategy. Additionally, it is responsible for managing the company’s risk profile and overseeing any relevant sustainability issues. Each member has duties related to his or her specific area of expertise.
Aegon’s Articles of Association determine that for certain decisions the Executive Board must seek prior approval from the Supervisory Board and/or the approval of the General Meeting of Shareholders. In addition, the Supervisory Board may also subject other Executive Board decisions to its prior approval.
Composition of the Executive Board
Aegon’s Executive Board consists of Lard Friese, who is Chief Executive Officer (CEO) and Chairman of the Executive Board, and Matt Rider, who is Chief Financial Officer (CFO).
The number of Executive Board members and their terms of employment are determined by the company’s Supervisory Board. Executive Board members are appointed by the General Meeting of Shareholders for a four-year term, following nomination by the Supervisory Board.
The members of the Executive Board have an engagement agreement with the company rather than an employment
contract. The company’s Remuneration Policy for the Executive Board limits exit arrangements to a maximum of one year of the fixed component of the salary.
In 2022, no transactions were concluded between the company and either member of the Executive Board. Furthermore, the company did not provide any loans to, or issue guarantees in favor of either of the members of the Executive Board.
Management Board
Aegon’s Executive Board is assisted in its work by the company’s Management Board, which had 12 members, including the members of the Executive Board per December 31, 2022. Aegon’s Management Board is composed of Lard Friese, Matt Rider, Elisabetta Caldera, Will Fuller, Mike Holliday-Williams, Allegra van Hövell-Patrizi, Astrid Jäkel, Marco Keim, Onno van Klinken, Bas NieuweWeme, Duncan Russell and Deborah Waters.
Aegon’s Management Board works in unison with the Executive Board and helps oversee operational issues and the implementation of Aegon’s strategy. Members are drawn from Aegon’s business units and from Aegon’s global functions. The members have both regional and global responsibilities. This ensures that Aegon is managed as an integrated international business. While the Executive Board is Aegon’s sole statutory executive body, the Management Board provides vital support and expertise in pursuit of the company’s strategic objectives.
In the relationship between the Supervisory Board and the Management Board, the CEO shall be the first point of contact for the Supervisory Board and its Chairman. Further, the members of the Boards will act in accordance with the provisions provided therefore in the Management Board Charter, the Executive Board Charter, and the Supervisory Board Charter.
Capital, significant shareholders and exercise of control
As a publicly listed company, Aegon is required to provide the following detailed information regarding any structures or measures that may hinder or prevent a third party from acquiring the company or exercising effective control over it.
The capital of the company
Aegon has an authorized capital of EUR 1,080 million, divided into 6 billion common shares and 3 billion common shares B, each with a nominal value of EUR 0.12. As of December 31, 2022, a total of 2,109,430,229 common shares and 546,196,080 common shares B had been issued.
Depository receipts for Aegon shares are not issued with the company’s cooperation.
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2022
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About Aegon
Governance and risk management
Financial information        Non-financial information
As per the Dutch act regarding the conversion of bearer shares, all 16,040 bearer shares outstanding at December 2020 have been converted into registered shares held by the company as per January 1, 2021. Until January 1, 2026, and upon request of a holder of a certificate of a bearer share, the company will provide the holder of such a valid certificate of a bearer share with a registered share as a replacement of the bearer share.
Each common share carries one vote. There are no restrictions on the exercise of voting rights by holders of common shares.
All issued and outstanding shares B are held by Vereniging Aegon, the company’s largest shareholder. The nominal value of the common shares B is equal to the nominal value of a common share. This means that common shares B also carry one vote per share. However, the voting rights attached to common shares B are subject to restrictions as laid down in the Voting Rights Agreement, under which Vereniging Aegon may cast one vote for every 40 common shares B it holds in the absence of a Special Cause.
The financial rights attached to a common share B are
one-fortieth
(1/40th) of the financial rights attached to a common share. The rights attached to the shares of both classes are otherwise identical. For the purpose of the issuance of shares, reduction of issued capital, the sale and transfer of common shares B or otherwise, the value or the price of a common share B is determined as
one-fortieth
(1/40th) of the value of a common share. For such purposes, no account is taken of the difference between common shares and common shares B in terms of the proportion between financial rights and voting rights.
Significant shareholdings
On December 31, 2022, Vereniging Aegon, Aegon’s largest shareholder, held a total of 315,532,860 common shares and 494,433,240 common shares B.
Under the terms of the 1983 Merger Agreement, as amended in May 2013, Vereniging Aegon has the option to acquire additional common shares B. Vereniging Aegon may exercise its call option to keep or restore its total stake to 32.6% of the voting rights, irrespective of the circumstances that caused the total shareholding to be or become lower than 32.6%.
During 2022, one transaction was concluded between Aegon N.V. and Vereniging Aegon. Execution of this transaction was done in compliance with all requirements of Best Practice 2.7.5 of the Dutch Corporate Governance Code.
On December 15, 2022, Aegon repurchased 43,817,400 common shares B from Vereniging Aegon for the amount of EUR 5,113,578.21 based on 1/40th of the Value Weight Average Price of the common shares of the five trading days preceding this transaction. The repurchase of common shares B was executed to bring the aggregate holding of voting shares by Vereniging Aegon in Aegon more in line with its special cause voting rights of 32.6% following the completion of the Share Buy Back Programs, initiated by Aegon in April 2022 following the completion of the sale of the Hungarian business and initiated in July and October 2022 to neutralize the dilutive effect of the distribution of the final dividend 2021 and the interim dividend 2022 in stock.
Special control rights
As a matter of Dutch corporate law, the common shares and the common shares B offer equal full voting rights, as they have equal nominal value (EUR 0.12). The Voting Rights Agreement entered into between Vereniging Aegon and Aegon provides that under normal circumstances, that is, except in the event of a Special Cause, Vereniging Aegon is not allowed to exercise more votes than is proportionate to the financial rights represented by its shares. This means that in the absence of a Special Cause, Vereniging Aegon may cast one vote for every common share it holds and one vote only for every 40 common shares B it holds. In the event of a Special Cause, Vereniging Aegon may cast one vote for every common share and one vote for every common share B.
A Special Cause may include:
◆The acquisition by a third party of an interest in Aegon N.V. amounting to 15% or more
◆A tender offer for Aegon N.V. shares, or
◆A proposed business combination by any person or group of persons, whether acting individually or as a group, other than in a transaction approved by the company’s Executive and Supervisory Boards
If Vereniging Aegon, acting at its sole discretion, determines that a Special Cause has arisen, it must notify the General Meeting of Shareholders. In this event, Vereniging Aegon retains full voting rights on its common shares B for a period limited to six months. Vereniging Aegon would, for that limited period, command 32.6% of the votes at a General Meeting of Shareholders.
Based on the Voting Rights Agreement, Vereniging Aegon has a right to, at its own discretion, take the decision to exercise its full voting rights on common shares B. Vereniging Aegon may exercise this right unilaterally and independent of Aegon N.V., and therefore also irrespective of any decisions of the Executive Board of Aegon N.V., including any decision
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Corporate governance
whether or not to invoke a
180-
or 250
-day
response time under the Dutch Corporate Governance Code or Civil Code.
Issue and repurchase of shares
New shares may be issued up to the maximum of the company’s authorized capital, following a resolution adopted by the General Meeting of Shareholders. Shares may also be issued following a resolution of the Executive Board, subject to approval by the Supervisory Board, providing, and to the extent that, the Board has been authorized to do so by the General Meeting of Shareholders. A resolution authorizing the Executive Board to issue new shares is usually presented at Aegon’s Annual General Meeting of Shareholders.
Aegon is entitled to acquire its own fully
paid-up
shares, providing it acts within existing statutory restrictions. Shareholders usually authorize the Executive Board to purchase the company’s shares under terms and conditions determined by the General Meeting.
Transfer of shares
There are no restrictions on the transfer of common shares. Common shares B can only be transferred with the prior approval of Aegon’s Supervisory Board.
Aegon has no knowledge of any agreement between shareholders that might restrict the transfer of shares or the voting rights pertaining to them.
Significant agreements and potential change of control
Aegon is not party to any significant agreements that would take effect, alter, or terminate as a result of a change of control following a public offer for the outstanding shares of the company, other than those customary in financial markets (for example, financial arrangements, loans, and joint venture agreements).
Share plan
Senior executives at Aegon companies and some other employees are entitled to variable compensation of which part is granted in the form of shares. For further details, please see the Remuneration Report on page 57 and note 50 of the notes to Aegon’s consolidated financial statements of this Annual Report. Under the terms of existing share plans the vesting of granted rights is predefined. The shares shall vest as soon as possible in accordance with payroll requirements of the relevant subsidiary after the adoption of the company’s Annual Report at the Annual General Meetings of Shareholders in the year of vesting of these shares.
Appointing, suspending or dismissing Board members
The General Meeting of Shareholders appoints members of both the Supervisory and Executive Boards, following nominations by the Supervisory Board. These nominations are binding providing at least two candidates are nominated. The General Meeting of Shareholders may cancel the binding nature of these nominations with a majority of
two-thirds
of votes cast, representing at least one half of Aegon’s issued capital. The General Meeting of Shareholders may, in addition, bring forward a resolution to appoint someone not nominated by the Supervisory Board. In order for the resolution to be adopted, the resolution requires a
two-thirds
majority of votes cast, representing at least one half of Aegon’s issued capital.
Members of Aegon’s Supervisory and Executive Boards may be suspended or dismissed by the General Meeting of Shareholders with a
two-thirds
majority of votes cast, representing at least one half of Aegon’s issued capital, unless the suspension or dismissal has first been proposed by the company’s Supervisory Board in which case the suspension or dismissal can be resolved by the General Meeting of Shareholders with an absolute majority of votes and a limited quorum. A member of the Executive Board may also be suspended by the Supervisory Board, although the General Meeting of Shareholders has the power to annul this suspension.
Amending the Articles of Association
The General Meeting of Shareholders may, with an absolute majority of votes cast, pass a resolution to amend Aegon’s Articles of Association or to dissolve the company, in accordance with a proposal made by the Executive Board and approved by the Supervisory Board.
Dutch Corporate Governance Code
As a company based in the Netherlands, Aegon adheres to the Dutch Corporate Governance Code. The version of the Code applicable to the financial year 2022 is the version that came into force on January 1, 2017. Aegon endorses the Code and strongly supports its principles for sound and responsible corporate governance and long-term value creation. Aegon regards the Code as an effective means to help ensure that the interests of all stakeholders are duly represented and taken into account. It is the responsibility of both the Supervisory Board and the Executive Board to oversee Aegon’s overall corporate governance structure.
In general, Aegon applies the best practice provisions set out in the Code. There is one best practice provision with which Aegon does not fully apply. In this case, Aegon adheres, as much as is possible, to the spirit of the Code.
Aegon Annual Report on Form 20-F
2022
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About Aegon
Governance and risk management
Financial information        Non-financial information
Best Practice 4.3.3
The Dutch Corporate Governance Code recommends that the General Meeting of Shareholders may cancel the binding nature of nominations for appointments of members of the Executive Board and Supervisory Board with an absolute majority of votes and a limited quorum.
Aegon’s position on Best Practice 4.3.3
Aegon’s Articles of Association provide for a larger majority and a higher quorum than those advocated by the Code. Given that the company has no specific anti-takeover measures, the current system is deemed appropriate within the context of the 1983 Merger Agreement under which Aegon was formed. However, to mitigate any possible negative effects stemming from this, the Supervisory Board has decided that, in the absence of any hostile action, it will only make nominations for the appointment of members to the Executive and Supervisory Boards that are
non-binding
in nature.
Corporate Governance Statement
For an extensive review of Aegon’s compliance with the Dutch Corporate Governance Code, please refer to the Corporate Governance Statement on Aegon’s corporate website.
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Sustainability governance
   
-   
Sustainability governance
Key roles
Aegon’s Executive Board has overall responsibility for sustainability. The Supervisory Board has ultimate oversight. Through its Nomination and Governance Committee, the Supervisory Board is advised and kept appraised of business and regulatory developments regarding sustainability.
Advice on Aegon’s sustainability approach is provided by the Global Sustainability Board (GSB), which is supported by the Corporate Sustainability team. The GSB is a senior management committee established in December 2021, to enhance overall governance and oversight of Aegon’s company-wide approach to sustainability. The GSB meets quarterly and advises the Management and Executive Boards on Aegon’s strategic sustainability approach, including the two priority themes: climate change, and inclusion and diversity. It is chaired by the CEO of the Americas and consists of senior-level representatives from across the company, including five members of the Management Board.
The GSB’s core function is to steer and strengthen the sustainability approach across Aegon’s business units, and it is supported by the local sustainability boards. This includes the validation of Aegon’s double materiality assessment, which assesses sustainability matters. Key actions include formulating sustainability-focused
commitments, key performance indicators (KPIs), and targets; and tracking these.
Incentives
As per our Executive Board’s Remuneration Policy, at least 50% of a member’s variable compensation must be determined by
non-financial
performance indicators, where at least one must be
ESG-related.
Moreover, a significant risk or compliance incident related to ESG may result in a malus adjustment or claw-back of a member’s variable compensation.
Risk management
The Group Risk & Capital Committee (GRCC) oversees the Financial Risk function’s climate scenarios that analyze the potential impacts of climate change on our financial accounts. The
Non-Financial
Risk Committee (NFRC) oversees the Operational Risk function’s annual climate risk assessment that identifies possible physical and transition risks that could impact Aegon.
The Compliance function conducts Aegon’s biennial Human Rights Risk Assessment (HRRA). The Compliance function also annually assesses ethics and culture via the Systematic Integrity Risk Assessments (SIRA), part of which is to assure these are not directly or indirectly violating the principles in the Code of Conduct and Aegon’s core values. This is also overseen by the NFRC.
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About Aegon
Governance and risk management
Financial information        Non-financial information
-   
-   
Composition of the Boards
Members of the Executive Board
Lard Friese (1962, Dutch)
CEO and Chairman of the Executive and Management Boards of Aegon N.V.
Lard Friese earned a Master of Law degree at the University of Utrecht. He has worked most of his professional career in the insurance industry, including ten years at Aegon between 1993 and 2003. He was employed by ING as from 2008, where he held various positions. In July 2014, upon the settlement of the Initial Public Offering of NN Group N.V., he became the CEO of NN Group. During his tenure at NN Group, he led a wide range of businesses in Europe
and Asia and created a stable platform for growth and shareholder value.
He has extensive experience in the areas of insurance, investment management, customer centricity, mergers & acquisitions, and business transformation. Mr. Friese was appointed CEO Designate as of March 1, 2020. During the 2020 Annual General Meeting (AGM), he was appointed as member of the Executive Board for a term of four years until the end of the AGM to be held in 2024. Mr. Friese is Chairman of Aegon’s Executive Board and Management Board.
Matthew J. Rider (1963, American)
CFO and member of the Executive and Management Boards of Aegon N.V.
Matt Rider began his career at Banner Life Insurance Company and held various management positions at Transamerica, Merrill Lynch Insurance Group and ING before joining Aegon. From 2010 to 2013, he was Chief Administration Officer and a member of the Management Board at ING Insurance, based in the Netherlands. In this role he was responsible for all of ING’s insurance and
asset management operations, and specifically for Finance and Risk Management. Mr. Rider joined Aegon on January 1, 2017, and was appointed as CFO and member of the Executive Board of Aegon at the Annual General Meeting of Shareholders of Aegon N.V. of May 19, 2017. During the 2021 Annual General Meeting (AGM), Mr. Rider was reappointed for another term of four years until the end of the AGM to be held in 2025.
Members of the Management Board
Lard Friese: see above
Matthew J. Rider: see above
Elisabetta Caldera (1970, Italian)
Chief Human Resources Officer and member of the Management Board of Aegon N.V.
Elisabetta Caldera started her career in HR in 1994 at Foster Wheeler and soon moved to ABB Alstom.
In 2004, she joined Vodafone Italy where she was appointed Human Resources and Organization Director and member of the Management Board Vodafone Italy. Ms. Caldera moved to Vodafone Group in the United Kingdom as Human
Resources Director for the Global Technology function and finally was appointed as HR Director for Europe Cluster & Egypt in 2018.
Ms. Caldera joined Aegon on June 1, 2021 as Chief HR Officer and member of Aegon’s Management Board.
Ms. Caldera was a member of the Supervisory Board of Falck Renewable from 2014 until September 30, 2022.
Will Fuller (1971, American)
CEO of Aegon Americas and member of the Management Board of Aegon N.V.
Will Fuller has almost 30 years of experience in financial services, including life insurance, annuities, retirement plans and wealth management. Prior to joining Aegon, Mr. Fuller
served as Executive Vice President of Lincoln Financial Group. His responsibilities included leading growth strategies, product and distribution innovation, and governance. His previous experience also includes Merrill Lynch, where he was responsible for product and distribution for Wealth Management in the Americas.
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Mr. Fuller was appointed as a member of Aegon’s Management Board in March 2021. He has been actively engaged in the financial services industry, most recently in forming the Alliance for Lifetime Income.
He formerly served as a board member of LL Global, Inc. (LIMRA/LOMA), Forum for Investor Advice, Money Management Institute, and Insured Retirement Institute.
Mike Holliday-Williams (1970, British)
CEO of Aegon UK and member of the Management Board of Aegon N.V.
Mike Holliday-Williams started his career with WHSmith in 1991 as a graduate trainee, working as a Retail Manager in many UK stores and in Business Development. In 1997, he joined Centrica where he had several general management and marketing roles in British Gas, before becoming the Residential & Marketing Director of Centrica Telecoms/One.Tel in 2004.
In 2006, Mr. Holliday-Williams joined RSA, becoming the UK Managing Director of Personal Lines in 2008,
responsible for MORETH>N, Partnerships and the Broker businesses. In 2011, he moved to Copenhagen to become the CEO of RSA Group’s Scandinavian businesses, Codan A/S and Trygg-Hansa, he also became a member of the RSA Group Executive. In 2014, he moved to Direct Line Group (DLG) to become MD of the Personal Lines business, joining the Board of DLG in February 2017.
Mr. Holliday-Williams joined Aegon UK in October 2019, to take over as CEO. He is a member of Aegon’s Management Board since March 2020.
Allegra van Hövell-Patrizi (1974, Italian and Belgian)
CEO of Aegon the Netherlands and member of the Management Board of Aegon N.V.
Allegra van Hövell-Patrizi began her career in 1996 at McKinsey & Company, specializing in financial institutions. After several years as a partner there, she joined F&C Asset Management in 2007 as a member of the Management Committee. In 2009, she joined Prudential plc where she was part of the CEO Office and then later became Group
Risk Director, and a member of the Group Executive Risk Committee, as well as the PUSL Board (within the Prudential plc Group). Mrs. van Hövell-Patrizi joined Aegon at the end of 2015. She was appointed Chief Risk Officer of Aegon N.V. and a member of Aegon’s Management Board in January 2016. Mrs. van Hövell-Patrizi was appointed CEO of Aegon the Netherlands on June 15, 2021. Mrs. van Hövell-Patrizi was a member of the Supervisory Board of LeasePlan (not listed) until March 2022.
Astrid Jäkel (1977, German)
Chief Risk Officer of Aegon N.V. and member of the Management Board of Aegon N.V.
Astrid Jäkel joined Aegon as Chief Risk Officer (CRO) and member of the Management Board of Aegon N.V. on March 1, 2022.
Astrid Jäkel has 20 years of experience in the European and global insurance sectors. She joined Aegon from the international management consultancy firm Oliver Wyman where she was a partner in the European Insurance and Asset Management Practice,
co-leader
of the European Insurance Financial Effectiveness team as well as a member
of the Board of Oliver Wyman’s Swiss subsidiary. Her consulting work focused on high-impact risk, capital, asset liability and investment management topics. Ms. Jäkel worked with leading European and global insurers on a broad range of projects to help transform and optimize their risk and balance sheet management capabilities for market, credit, insurance, and
non-financial
risks.
Her responsibilities include managing Aegon’s Group Risk and Actuarial functions, along with maintaining the Group’s Risk Management framework and overseeing the risk management capabilities.
Marco Keim (1962, Dutch)
CEO of Aegon International and member of the Management Board of Aegon N.V.
Marco Keim began his career with accountancy firm Coopers & Lybrand/Van Dien, before moving to the aircraft manufacturer Fokker Aircraft and NS Reizigers, part of the Dutch railway company, NS Group. In 1999, he joined Swiss Life in the Netherlands as a Member of the Board,
and was appointed CEO three years later. Mr. Keim was appointed CEO of Aegon the Netherlands and member of Aegon’s Management Board in June 2008. From 2017 to 2020, Mr. Keim headed Aegon’s operations in mainland Europe. Mr. Keim is the head of Aegon International and responsible for Aegon’s business in Central and Eastern Europe as well as Asia and Brazil. Mr. Keim is a former member of the Supervisory Board of Eneco Holding N.V.
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About Aegon
Governance and risk management
Financial information        Non-financial information
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-   
Onno van Klinken (1969, Dutch)
General Counsel and member of the Management Board of Aegon N.V.
Onno van Klinken has over 25 years’ experience providing legal advice to a range of companies and leading Executive Board offices. Mr. Van Klinken started his career at Allen & Overy, and previously worked for Aegon between 2002 and 2006. He then served as Corporate Secretary for Royal Numico, before it was acquired by Groupe Danone. His next position was as General Counsel for the Dutch
global mail and express group TNT, where he served from 2008 until the legal demerger of the group in 2011. This was followed by General Counsel positions at D.E. Master Blenders 1753 and Corio N.V. Mr. Van Klinken rejoined Aegon in 2014 as General Counsel responsible for Group Legal, Regulatory Compliance, the Executive Board Office, and Government and Policy Affairs. Mr. Van Klinken has been a member of Aegon’s Management Board since August 2016. Mr. Van Klinken was appointed member of the Board of Stichting Continuïteit SBM Offshore in December 2016.
Bas NieuweWeme (1972, Dutch)
Global CEO of Aegon Asset Management and member of the Management Board of Aegon N.V.
Bas NieuweWeme was appointed Global CEO of Aegon Asset Management and Member of the Aegon N.V. Management Board in June 2019. Having obtained a Master of Laws (2000) and an Executive MBA in 2007, Mr. NieuweWeme has worked in global investment management for 20 years.
The majority of this time was spent in various management positions within ING Investment Management Americas and Voya Investment Management. In 2016, he was named Global Head of the Client Advisory Group and a member
of the management team at PGIM Fixed Income and Global Head of the Institutional Relationship Group at PGIM, Prudential Financial’s global investment management business. He serves as vice-chairman of the supervisory board of La Banque Postal Asset Management and is a member of the Board of Aegon Industrial Fund Management Co., Ltd (China).
He is also a member of the Board of Directors of The Netherlands-America Foundation (NAF) and a member of the leadership council of AmeriCares, a
non-profit
disaster relief and global health organization.
Duncan Russell (1978, British)
Chief Transformation Officer and member of the Management Board of Aegon N.V.
Duncan Russell has worked most of his professional career in the financial services sector, lastly as CFO and Board member at Admiral Financial Services, the financial services subsidiary of Admiral Group, responsible for finance, analytics, funding, credit risk and pricing.
Before joining Admiral Group, Mr. Russell was Head of Group Strategy and Corporate Finance at NN Group
N.V., the Netherlands, where he was responsible for capital management, treasury, M&A, and the group’s strategy.
Before joining NN Group N.V., Mr. Russell held various positions at financial services groups in London.
Mr. Russell was appointed Chief Transformation Officer and member of the Management Board of Aegon N.V. on August 1, 2020.
Deborah Waters (1967, American)
Chief Technology Officer and member of the Management Board of Aegon N.V.
Debbie Waters began her career at the aerospace group Lockheed Martin in 1989 before moving to the software consultancy group Seer Technologies.
In 1995, she joined Citigroup Inc., where she held various technology leadership positions in the intervening years. Most recently she served for over five years as Citi’s Global Head of Private Bank Operations and Technology. Additionally, Ms. Waters was the Head of Inclusion and Diversity for Citi’s Institutional Client Group Operations and Technology.
Previous roles included leading Client Centric and Equities Technology, supporting the Equities, Research, Commercial Bank, Citi Velocity, and Markets Sales businesses. She also served as the Chief Operating Officer for the Markets Technology organization during her tenure. Before moving to Markets Technology, Deborah Waters managed Markets and Operational Risk Technology for the organization where she started as a developer of Risk solutions. Debbie Waters is a
non-executive
director at RanMarine Technology B.V.
(non-listed).
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Composition of the Boards
-   
-   
Members of the Supervisory Board
William L. Connelly (1958, French)
Chairman of the Supervisory Board
Chairman of the Nomination and Governance Committee
Member of the Remuneration Committee
Mr. Connelly started his career at Chase Manhattan Bank, fulfilling senior roles in commercial and investment banking in France, the Netherlands, Spain, the United Kingdom, and the United States. He was appointed to Aegon’s Supervisory Board in 2017 and became Chairman in May 2018 and his current term ends in 2025.
He is also chairman of the Supervisory Board Nomination and Governance Committee and a member of the Supervisory Board Remuneration Committee. Mr. Connelly is an independent director at the Board of Directors of Société Générale, an independent director at the Board of Directors of Singular Bank S.A. (formerly known as Self Trade Bank S.A.,
non-listed)
and Chairman of the Board of Directors of Amadeus IT Group S.A.
Corien M. Wortmann-Kool (1959, Dutch)
Vice Chair of the Supervisory Board
Member of the Audit Committee
Member of the Nomination and Governance Committee
Corien M. Wortmann-Kool is the former Chair of the Board of Stichting Pensioenfonds ABP, the Dutch public sector collective pension fund, until December 2022. Ms. Wortmann-Kool is a former Member of the European Parliament and Vice President on Financial, Economic and Environmental affairs for the EPP Group (European People’s Party). She was appointed to Aegon’s Supervisory Board in May 2014, and her current term ends in 2026.
She is Vice Chair of the Supervisory Board, and a member of the Supervisory Board Audit Committee and the Supervisory Board Nomination and Governance Committee.
Ms. Wortmann-Kool is a member of the Supervisory Board of Royal DSM N.V., and a member of De Autoriteit Financiële Markten Capital Markets Advisory Committee. She was vice president of the European People’s Party until March 2018, a member of the Advisory Council of the Centraal Bureau voor de Statistiek until June 2018, and a member of the Supervisory Board of Het Kadaster until March 2021. Furthermore, she was the Chair of the Board of Trustees of Save the Children Netherlands until January 2022.
Mark A. Ellman (1957, American)
Member of the Nomination and Governance Committee
Member of the Risk Committee
Mark A. Ellman is a former Vice Chairman Global Origination of Bank of America/Merrill Lynch. Before joining Bank of America/Merrill Lynch, he held various roles in the US insurance industry. These mostly entailed working in corporate finance at large US financial institutions, where he was engaged in M&A advice and transactions, together with equity and debt raisings for insurance companies. He was a Managing Director and
Co-Head
of the Global
Financial Institutions Group of Credit Suisse First Boston, and a founding partner of Barrett Ellman Stoddard Capital Partners.
Mr. Ellman was appointed to Aegon’s Supervisory Board in 2017, and his current term ends in 2025. He is a member of the Supervisory Board Risk Committee and the Supervisory Board Nomination and Governance Committee. Mr. Ellman was a
non-executive
director of Aegon USA from 2012 to 2017.
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Issuance and purchase of treasury shares-   
Karen Fawcett (1962, British)
Member of the Risk Committee
Member of the Remuneration Committee
Karen Fawcett was formerly CEO Retail, Brand and Marketing for Standard Chartered Bank, which focused primarily on Asia, Africa, and the Middle East. Her broad career across complex global businesses covers wholesale and retail banking, global strategy, technology transformation, and brand & marketing.
Prior to her career in banking, Ms. Fawcett was Partner at the global management and information technology consultancy firm Booz, Allen & Hamilton, where she advised insurers, banks, and asset managers on a wide range of strategic, technological, and operational transformations.
Ms. Fawcett was appointed to Aegon’s Supervisory Board in May 2022. She is a member of the Supervisory Board Remuneration Committee and a member of the Supervisory Board Risk Committee.
Ms. Fawcett holds several
non-executive
director positions, with a portfolio across financial services & digital transformation, education, and climate change mitigation. These positions are with the following
non-listed
entities: the LGT Group Foundation; Temus; Global Evergreening Alliance; and BetterTradeOff. Ms. Fawcett was a
non-executive
director at INSEAD until December 2022.
Jack McGarry (1958, American)
Member of the Audit Committee
Member of the Remuneration Committee
Jack McGarry is a former actuary who spent the majority of his career at Unum Group, an NYSE-listed provider of workplace financial protection benefits. He has held various leadership roles in risk management, in finance, as CEO of Unum’s business in the United Kingdom, and CEO of Unum’s Closed Block.
His last position at Unum was as Chief Financial Officer. As CFO, he successfully led the transformation
of the finance organization by outsourcing transactional processes, driving automation across the organization, implementing accounting and financial planning & analysis platforms and modeling, and navigating the company through the implementation of tax reform. This experience underscores his
in-depth
knowledge of the insurance industry and his integral perspective on managing an insurance company. During the 2021 AGM, Mr. McGarry was appointed to Aegon’s Supervisory Board, and his current term ends in 2025. Mr. McGarry is a member of the Audit Committee and a member of the Remuneration Committee.
Ben J. Noteboom (1958, Dutch)
Chairman of the Remuneration Committee
Member of the Risk Committee
Ben J. Noteboom worked for Randstad Holding N.V. from 1993 until 2014, where he was appointed member of the Executive Committee in 2001 and became CEO in 2003. Before joining Randstad, Mr. Noteboom worked for Dow Chemical in several international management functions between 1984 and 1993.
He started his career in 1982 at Zurel as a management assistant. He was appointed to Aegon’s Supervisory
Board in May 2015, and his current term ends in 2023. He is Chairman of the Supervisory Board Remuneration Committee and a member of the Supervisory Board Risk Committee.
Mr. Noteboom is Chairman of the Supervisory Board of Royal Vopak N.V. In addition, Mr. Noteboom is the chairman of the Board of Directors of VUmc Cancer Center Amsterdam and the Chairman of Stichting Prioriteit Ordina Groep. Mr. Noteboom is a former member of the Supervisory Boards of Wolters Kluwer N.V. and Royal Ahold Delhaize N.V.
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Caroline Ramsay (1962, British)
Chair of the Audit Committee
Member of the Risk Committee
Mrs. Ramsay gained a master’s degree in Natural Sciences in 1984 at Cambridge. She started her professional career at KPMG in Ipswich and London, where she qualified as a Chartered Accountant in 1987. During her long career, Mrs. Ramsay gained substantial experience in Finance and Audit at large insurance companies. In addition to her strong financial background, Mrs. Ramsay acquired extensive managerial expertise in executive roles at Norwich Union plc (now Aviva plc) and RSA.
Mrs. Ramsay holds various
Non-Executive
Board positions. In 2013, she joined the board of Scottish Equitable – and as of 2017 also the boards of Aegon UK plc and Cofunds Ltd. –
where she served as the Audit Committee Chair until May 14, 2020. Mrs. Ramsay was appointed to Aegon’s Supervisory Board in May 2020 and her current term ends in 2024. She is Chair of the Supervisory Board Audit Committee and a member of the Supervisory Board Risk Committee.
Mrs. Ramsay is a senior independent director of the Board of Brit Syndicates Ltd
(non-listed),
a member of the Board of Directors of Aberdeen UK Smaller Companies Growth Trust Plc, a member of the Board of Directors of Ardonagh Specialty Holdings Ltd.
(non-listed),
and a member of the Board of Directors of Tesco Underwriting Ltd.
(non-listed).
Mrs. Ramsay is a member of the FCA Regulatory Decisions Committee and a member of the Payment Systems Regulator’s Enforcement Decisions Committee.
Thomas Wellauer (1955, Swiss)
Member of the Audit Committee
Member of the Remuneration Committee
Thomas Wellauer started his professional career at McKinsey
& Company, where he served as Senior Partner and Practice Leader. He held various executive management positions across multiple industries, including financial services, pharmaceuticals and chemicals. Among others, he served on the executive committees of Winterthur Insurance, Credit Suisse, Swiss Re, and Novartis. His most recent position from 2010 to 2019 was Group Chief Operating Officer of Swiss Re. During his career, Mr. Wellauer also served as an independent director on the boards of several global companies such as Munich Re and Syngenta.
Mr. Wellauer was appointed to Aegon’s Supervisory Board in May 2020 and his current term ends in 2024. He is a member of the Supervisory Board Audit Committee and a member of the Supervisory Board Remuneration Committee.
Mr. Wellauer is Chairman of the Board of Directors of SIX Group
(non-listed).
In addition, he serves as Chairman of the Board of Trustees of the University Hospital Zurich Foundation and is Chairman of the International Chamber of Commerce in Switzerland.
Dona D. Young (1954, American)
Chair of the Risk Committee
Member of the Nomination and Governance Committee
Dona D. Young is an executive/board consultant and retired Chairman, President and Chief Executive Officer of The Phoenix Companies, which was an NYSE listed insurance and asset management company at the time of her tenure. She was appointed to Aegon’s Supervisory Board in 2013, and her current term will end in 2023.
She is Chair of the Supervisory Board Risk Committee, and a member of the Supervisory Board Nomination and Governance Committee.
Ms. 
Young is a member and Chairman of the Board of Directors of Foot Locker, Inc. Ms. Young, is a member of the board of Spahn and Rose
(non-listed),
and serves as a member of the Board of Directors of USAA
(non-listed.
Furthermore, Ms. Young is a member of the Board of the National Association of Corporate Directors. Ms. Young is a member of the Board of Trustees of Save the Children US
(non-listed)
and served as a member of the Board of Save the Children International and Save the Children Association
(non-listed)
until February 
2023.
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Report of the Supervisory Board
The Supervisory Board is entrusted with supervising and advising the Executive Board regarding the management of the company (“Aegon N.V.”) and overseeing Aegon’s strategy and the general course of its businesses. In the performance of its duties, the Supervisory Board acts in accordance with the interest of the company and takes into account the interest of the company’s stakeholders. This report provides information on how the Supervisory Board performed its duties in 2022.
The Supervisory Board discussed the long-term value creation strategy with the Executive Board and the Management Board. The Supervisory Board was involved in strategic deliberations and decision-making – in particular on the a.s.r, transaction as discussed below – and provided its advice on strategic considerations for the future of Aegon in the interest of all stakeholders. The Supervisory Board monitored the implementation of the strategy by discussing the business progress, risks, opportunities, and achievements on a quarterly basis with management. The Supervisory Board promotes a culture that supports long-term value creation, which is reflected during board meetings and during frequent interactions with local management teams and employees. In order to align on the strategic progress and the general course of affairs, the Chair of the Supervisory Board, Chair of the Audit Committee and the Chair of the Risk Committees are in close contact with the Chief Executive Officer, the Chief Finance Officer and the Chief Risk Officer, respectively.
The Supervisory Board supports the active management of the business portfolio and regularly discusses acquisitions and divestments. During the year and in light of Aegon’s value proposition, the Board discussed various mergers, acquisitions, divestments, and balance sheet transactions. The sale of the Hungarian business to Vienna Insurance Group AG resulted in the financial flexibility to execute a EUR 300 million share buyback program and a debt tender offer. Another transaction to highlight was the sale of Aegon’s 50% stake in the Spanish insurance joint venture with Liberbank to Unicaja Banco.
Aegon to combine its Dutch operations with a.s.r.
On October 27, 2022, Aegon announced it had reached an agreement with a.s.r. to combine its Dutch pension, life and
non-life
insurance, banking, and mortgage origination activities with a.s.r. The combination will create a leading Dutch insurance company. This step enables Aegon to accelerate its strategy and represents a major step in its ambition to become a leader in its chosen markets. The Executive Board and the Supervisory Board considered the financial and
non-financial
aspects of this
transformational transaction during multiple additional board meetings and in close consultation with their respective financial and legal advisors, and concluded that the transaction is in the interest of Aegon and its stakeholders, and promotes the sustainable success of Aegon’s business.
Following the unanimous recommendation of the Executive Board and the Supervisory Board, the shareholders of Aegon voted in favor of the transaction at the Extraordinary General Meeting held on January 17, 2023.
Sustainability
Sustainability is part of the company strategy and an area of specific attention for the Supervisory Board. While the full Supervisory Board bears such responsibility, the Supervisory Board is advised and kept appraised of business and regulatory developments regarding sustainability and ESG through its Nomination and Governance Committee. Other committees also address ESG matters, as linked to their area of responsibility. In 2022, the Supervisory Board requested regular updates on the progress of Aegon’s Sustainability Roadmap and ESG developments. Also, discussions on
non-financial
controls related to sustainability reporting took place and progress updates on the
Net-Zero
Asset Owner Alliance commitments were discussed. The wider governance of sustainability is shown on page 41 of this report and this structure drives delivery of the Aegon’s sustainability ambitions and alignment on sustainability across the business. The Supervisory Board is supporting Aegon’s approach to sustainability and consequently considers ESG issues in its decision-making.
Educational sessions and deep dives
To further broaden the skillset of the Supervisory Board, and in addition to the regular updates and presentations provided by the company, the Supervisory Board participated in several educational sessions and deep dives. In 2022, significant time was spent on, among others, the strategy of the different business units, operations, distribution, people, competitive landscapes, and expense and growth
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initiatives. The Board participated in a session on managing risk and capital in volatile markets. Also, multiple deep dive sessions were organized around the implications and implementation of IFRS 17. Other deep dives related to how the purpose of the company was communicated, data privacy, the retirement strategies of the business units, and the impact of rising interest rates. In addition to the deep dives, the Supervisory Board interacted with talents and employees by participating in talent sessions and employee gatherings during their regular meetings and country visits to the United States and the United Kingdom.
The members of the Supervisory Board gathered general information on industry developments by participating in networks, reading independent reports, and sharing knowledge where appropriate with other Board members within and outside Aegon. Also, the Board took notice of the trending topics provided in the reports of the external auditor. These topics included, for example, economic prospects,
net-zero
commitments, international income tax rules, and asset and wealth management trends.Focus items for 2023.
Focus items for 2023
In 2023, the Supervisory Board will, among others, continue its focus on the management actions that support the creation of long-term value for all stakeholders. Following the announced transaction with a.s.r., significant focus will be on the disentanglement of the relevant businesses from Aegon and other steps required for closing the transaction. Also, attention will be given to the implications of the a.s.r. transaction for the organization, including group supervision. Furthermore, the Supervisory Board will focus on the business strategy, resourcing, customer focus, IT developments, and culture. As in 2022, the Board will closely follow the implementation of IFRS 17, the rotation of the external auditor, and, as a continuous top priority, the developments related to ESG, and sustainability reporting. Other items that will receive special attention in 2023 are continuing the growth in strategic life insurance and retirement businesses, the Capital Markets Day in the second quarter of 2023, and the further acceleration of Aegon’s strategy.
Board review
The Supervisory Board undertakes an internal review of Board effectiveness on an annual basis. An external assessment takes place every three to four years. The external assessment undertaken in 2022 was based on a survey completed by Supervisory Board members and Management Board members, as well as interviews with all Supervisory Board members and several Management Board members. Constructive feedback was provided to the Supervisory Board and to each Supervisory Board member, and the results of the board effectiveness assessment were discussed in February 2023.
The Supervisory Board will act on the observations and recommendations provided in the evaluation report.
The evaluation of the Supervisory Board focused on the following issues: the functioning as a whole; the composition and roles, governance of the company, interactions within the Supervisory Board and with the Executive and Management Boards; the effectiveness of supervision and how the Supervisory Board fulfills its roles as advisor. The general outcome of this evaluation is positive and encourages the Supervisory Board to continue on the same path. The Supervisory Board and its committees perform well. The Supervisory Board acts independently, its members are well-equipped for their duties. There is an open and constructive atmosphere within the Supervisory Board. Furthermore, the information provision by and transparency of the Executive Board were judged positively. The recommendations arising from the evaluation include: structuring educational sessions in line with further education needs; following up on further improvement of meeting materials such as business data; reinforcing the focus on management development and succession planning; and maintaining a tight focus on strategic developments following the a.s.r. transaction.
Outside the presence of the Executive Board, the Supervisory Board reviewed the performance of the individual members of the Executive Board and Management Board over the preceding calendar year in February 2023. In addition, the Executive Board evaluated its own functioning as a whole and that of the individual Executive Board members as well. The performance of the members of the Executive and Management Boards was also discussed regularly during the year by the Supervisory Board.
Regular topics
Results and budget
In February 2022, the Supervisory Board convened to discuss the fourth quarter 2021 results and approved the final dividend for 2021. In March 2022, the Supervisory Board, in the presence of PwC, reviewed and adopted Aegon’s 2021 Annual Report, the consolidated financial statements of Aegon N.V., and the company financial statements of Aegon N.V. In May, August, and November, the Supervisory Board reviewed Aegon’s first, second, and third quarter 2022 results respectively based on the recommendation of the Audit Committee.
In December 2022, the Supervisory Board and Management Board reviewed the company’s Medium Term Plan, which included the budget and capital plan for 2023. The Boards took note of the uncertainties and challenges in the coming years. These included, among others: increased regulatory requirements, execution risk, and developments in the financial markets. After discussing the Medium Term Plan, including Aegon’s capital generation and capital
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projections, the Supervisory Board supported the plan and approved the 2023 budget. The Board also approved the 2023 funding plan and authorized the Executive Board to execute on the plan in 2023.
Legal, compliance, tax, and regulatory affairs
In 2022, the Supervisory Board and the Audit Committee discussed compliance, regulatory, tax, and legal topics in each of Aegon’s business units with management, the General Counsel, the Global Head of Compliance, the Global Head of Tax, and the Global Head of Operational and Model Risk. In particular, the Board discussed the state of the legal and compliance functions, compliance risks, fraud, financial crime, and the tax policy and tax developments. This included Know Your Customer and ultimate beneficial owner requirements, anti-money laundering (AML), and whistleblower reports. An overview of the topics discussed in the field of Risk Management can be found in the Audit Committee and Risk Committee sections below.
The Chairs of the Supervisory Board, the Audit Committee and the Risk Committee held their regular meetings with the group supervisor, the Dutch Central Bank (DNB), in May and November 2022.
Other topics
In addition to the items mentioned above, the following topics – among others – were discussed during the 2022 Supervisory Board meetings:
◆)  The war in Ukraine and the direct and indirect impacts on Aegon’s businesses, customers, and investments
◆Ongoing
COVID-19
developments
◆Selection of the new independent auditor
◆Executive Board and senior management succession planning
◆Executive remuneration, including the remuneration framework
◆Supervisory Board effectiveness and composition
◆Corporate governance matters
◆Human resources, including talent development, organizational health developments, cultural change, and inclusion and diversity
◆Capital generation and solvency capital positions, including management actions, and developments in the financial markets
◆Enterprise risk management, cybersecurity and information security strategies, and the preparedness for global incidents
◆Investor relations, including Aegon’s shareholder base, market analysis and roadshow feedback;
◆Highlighted topics by Supervisory Board Committees
◆Regulatory changes at both a regional and global level
◆Annual Global Employee Survey. The Supervisory Board discussed the outcome of the 2022 survey in detail in the first quarter of 2023;
◆Tax policy and tax developments
◆Technology, including the technology strategy, IT security, technological developments, and innovations
◆HR Plan
◆Group Recovery plan
◆Own Risk and Solvency Assessment
◆Solvency and Financial Condition Report
Corporate governance
Details of the role of the Supervisory Board, Aegon’s corporate governance structure and a summary of how the company complies with the Dutch Corporate Governance Code can be found on pages
36-40
of this Annual Report and in the Corporate Governance Statement published on aegon.com.
Composition of the Supervisory Board and
Executive Board
Supervisory Board
The composition of the Supervisory Board is discussed regularly in Board meetings and in particular by the Nomination and Governance Committee. All members of the Supervisory Board are considered independent under the terms of best practice provisions 2.1.7, 2.1.8, and 2.1.9 of the Dutch Corporate Governance Code. In compliance with the Dutch Corporate Governance Code, members of the Supervisory Board are appointed by shareholders for a term of four years. The option exists to reappoint members for one additional four-year term. A Supervisory Board member can then subsequently be reappointed again for a period of two years, which reappointment may be extended by at most two years. For a reappointment after an eight-year period, reasons will be provided in the report of the Supervisory Board.
An overview of the composition of the Supervisory Board in 2022 can be found on pages
42-47
of this Annual Report. The retirement schedule and other information about members of the Supervisory Board are available on aegon.com.
During the 2022 Annual General Meeting, Ms. Karen Fawcett was appointed as a Supervisory Board member for a term of four years until the end of the AGM to be held in 2026. Ms. Corien Wortmann-Kool was reappointed for another term of two years until the end of the AGM to be held in 2024. Ms. Wortmann-Kool was appointed to Aegon’s Supervisory Board in 2014. She is Vice-Chair of the Supervisory Board, and a member of the Audit Committee and the Nomination and Governance Committee. The Nomination and Governance Committee (without the attendance of Ms. Wortmann-Kool) has discussed Ms. Wortmann-Kool’s qualifications and concluded that she fits the Profile of the Supervisory Board. Ms. Wortmann-Kool is nominated to serve for a third term of two years (in line with the Dutch Corporate Governance Code) because of her broad background in the national and international political, societal, and business
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environment. Moreover, her nomination will provide continuity to the Supervisory Board. Ms. Wortmann-Kool has extensive knowledge of financial sector legislation, such as Solvency II, financial supervision in Europe, and competition policy. Furthermore, she has a wealth of experience with and knowledge of pensions and retirement, asset management, risk management, ESG, and corporate governance.
An induction program for new Supervisory Board members is in place. The program is regularly updated to reflect changes in the environment in which Aegon operates, including regulatory changes. The program is tailored to the needs of individual Board members.
Executive Board
The Executive Board consists of Mr. Lard Friese, Chief Executive Officer (CEO) and Chairman of the Executive Board, and Mr. Matthew J. Rider, Chief Financial Officer (CFO). The appointment schedule and other information about members of the Executive Board are available on aegon.com.
Board meetings
Attendance overview
The 2022 Supervisory Board members’ attendance overview is provided in the table below.
Name
 
Regular SB
meeting
  Audit Committee  Member  Risk Committee  Member  
Combined Audit &
Risk Committee
  
Remuneration
Committee
  Member  
Nomination &
Governance
Committee
  Member  
Additional SB
(sub-committee)
mtgs. /calls
3)
  
Additional Audit
(sub) Committee
mtgs. / calls
3)
 
Total no. of mtgs.  7   5       5       1   6       6             
SB members
1)
                                                
Mr. William Connelly  7/7                       6/6   v   6/6   Chair   10/10     
Mr. Mark Ellman  7/7           5/5   v   1/1           6/6   v   8/9     
Ms. Karen Fawcett
2)
  4/4           2/2   v   1/1   3/3   v           5/5     
Mr. Jack McGarry  7/7   5/5   v           1/1   6/6   v           7/7   7/7 
Mr. Ben Noteboom  7/7           5/5   v   1/1   6/6   Chair           10/10     
Ms. Caroline Ramsay  7/7   5/5   Chair   5/5   v   1/1                   10/10   7/7 
Mr. Thomas Wellauer  7/7   5/5   v           1/1   6/6   v           6/7   1/1 
Ms. Corien Wortmann  7/7   5/5   v           1/1           6/6   v   8/10   7/7 
Ms. Dona Young  7/7           5/5   Chair   1/1           6/6   v   10/10     
1 
The Supervisory Board is a separate independent corporate body, consisting of 9 members on December 31, 2022.
2 
Where a Supervisory Board member retired from the SB, stepped down from a Committee, or was appointed throughout the year, only meetings during his / her tenure are taken into account.
3 
All SB members attended the regular SB (Committee) meetings. Throughout the year,
ad-hoc
meetings have been scheduled to discuss strategy-related topics. Furthermore, several
sub-committees
have been established to discuss - among others - strategy-related topics and the audit tender process. These
ad-hoc
(sub-committee)
meetings were attended by most (applicable) SB members. For remuneration purposes, some of the additional
(sub-committee)
calls have been combined and were considered (and paid) as one meeting.
Members of the Executive Board and Management Board regularly attended the Supervisory Board meetings held in 2022. At the request of the Supervisory Board, other executives attended the meetings to report on specific topics. Representatives from Aegon’s external auditor PwC attended the March 2022 Supervisory Board meeting on Aegon’s 2021 Annual Report. PwC also attended all 2022 Audit Committee
meetings, including the combined Supervisory Board Audit and Risk Committee meeting. Regular Board meetings were preceded or followed by meetings attended only by members of the Supervisory Board and the Chief Executive Officer. Furthermore, the Supervisory Board held meetings without Executive Board or Management Board members present.
   
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Supervisory Board Committees
The Supervisory Board has four Committees that report into the Supervisory Board meetings. Supervisory Board members receive all minutes of the Committee meetings, and the Board discusses the items reported by the Committees.
The four Committees are the:
◆)  Audit Committee
◆Risk Committee
◆Nomination and Governance Committee
◆Remuneration Committee
The Risk Committee is responsible for supervising the activities with respect to the company’s enterprise risk management framework and internal control systems. The Audit Committee primarily relies on oversight and advice from the Risk Committee for these topics, which is in line with the Dutch Corporate Governance Code.
The Audit Committee
The Committee confirmed that all of its members qualified as independent according to Rule
10A-3
of the SEC. The Chair of the Audit Committee qualifies as a financial expert according to the Sarbanes-Oxley Act in the United States and the competence in accounting and auditing according to the Audit Committee Decree 2016 (“Besluit instelling auditcommissie”), section 2(3).
Role and responsibilities
As Aegon has both an Audit Committee and a Risk Committee, the risk management responsibilities outlined in the Dutch Corporate Governance Code are assigned to the Risk Committee. With regard to the oversight of the operation of the risk management framework and risk control systems, including supervising the enforcement of relevant legislation and regulations, the Audit Committee operates in close coordination with the Risk Committee. Certain Board members participate in both committees and a combined meeting of the Audit and Risk Committees is scheduled on an annual basis.
The main role and responsibilities of the Audit Committee are to assist and advise the Supervisory Board in fulfilling its oversight responsibilities regarding:
◆The integrity of the consolidated quarterly, half-yearly and full-year financial statements and financial reporting processes.
◆Internal control systems and the effectiveness of the internal audit process.
◆The performance of the external auditors and the effectiveness of the external audit process, including monitoring the independence and objectivity of the external auditor.
The Audit Committee reports to the Supervisory Board on its activities, identifying any matters about which it considers action or improvements are needed, and making recommendations as to the steps to be taken. For more information about the functioning of the Audit Committee, please see the Audit Committee Charter on aegon.com.
Committee meeting attendance
Audit Committee meetings were attended by, among others, the members of the Audit Committee, Aegon’s Chief Financial Officer, the Head of Corporate Financial Center, the Chief Risk Officer, the Chief Internal Auditor, and partners of PwC, Aegon’s external auditor.
Members of Aegon’s Group Risk, Group Legal, Group
Compliance, Investor Relations, Group Tax, Human Resources, Actuarial, and Business departments regularly attended Audit Committee meetings. Aside from the Audit Committee meetings, additional sessions were held with internal and external auditors, and the Global Head of Compliance, without management being present.
Financial reporting
In discharging their responsibilities with regard to the 2022 interim and full year financial statements, the Audit Committee:
◆Reviewed and discussed the management letter and
follow-up
actions with the Executive and the Management Boards, Internal Audit, and PwC.
◆Discussed PwC’s report leading to a review opinion on the interim financial statements.
◆Considered presentations on various topics by local business unit managers, chief financial officers, Internal Audit, and the compliance and legal functions.
◆Reviewed and discussed areas of significant judgments in the preparation of the financial statements, including, in particular, investment valuation and impairments, accounting changes, economic and actuarial assumption setting, and model validations.
◆Reviewed and approved the internal and external audit plans and monitored execution, including progress in respect of recommendations made.
The Audit Committee was satisfied with the explanations provided by the Executive and Management Boards, Internal Audit, and PwC, and the conclusions reached. Recurring items on the Audit Committee agenda in 2022 were Solvency II developments, controls, capital and liquidity, the quarterly legal and compliance reports, the annual whistleblower overview, and the IFRS 17 implementation progress. Other items included
non-financial
reporting, tax updates, capital plans, funding plans, the systemic integrity risk assessment, the Annual Report, the progress on finance and actuarial modernization programs, the auditor rotation process, and the performance review of the internal audit function and external auditor.
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Risk management and internal controls
With respect to their oversight of internal controls (other than those where oversight is carried out via the Risk Committee), the Audit Committee:
◆Discussed quarterly updates on the activities of the internal audit function, together with details of progress on internal audits with the internal auditor. Areas of focus include, amongst others, the Internal Audit strategy, audit planning process, Internal Audit charter, Internal Audit functional governance, quality assurance reviews, issue tracking and resolution, control environment, and results of audits in the areas of information and cybersecurity, Solvency II, third-party management and administration partnerships, General Data Protection Regulation, performance management and integrity.
◆Reviewed the internal control framework, among others with respect to the Sarbanes-Oxley Act.
◆Discussed the internal control statement with the Executive Board.
External audit effectiveness
The external auditor has been appointed by the shareholder for the period 2021-2023. Aegon has well-established policies on audit effectiveness and independence of auditors that set out, among other things:
◆The review and evaluation of the external auditor and the lead partner of the external audit team on at least an annual basis.
◆
Non-audit
services performed by the external auditor.
◆Rotations of the external auditor.
The Audit Committee established that the policies were properly followed and adhered to. For more information about the policies relating to the effectiveness and independence of the external auditor, please see Annexes A, B and C of the Audit Committee Charter on aegon.com.
Audit rotation process
In 2021, the Audit Committee started the preparations for the mandatory auditor rotation process in line with regulations as the current auditor is nearing the maximum audit term of 10 years, ending after the audit of Aegon’s financial statements over 2023. In 2022, the Audit Committee in close collaboration with the Supervisory Board mandated a Selection Committee to conduct an audit tender process. The Selection Committee consisted of three Audit Committee members and two members of Aegon’s Finance management. The Selection Committee oversaw the execution of the audit tender process which was performed by a Steering Committee supported by a dedicated project team consisting of employees of Corporate Center and Business Units. The amended Audit Directive (2014/56/EU) and the Audit Regulation (537/2014/EU), which prescribe specific requirements on the appointment of statutory auditors or audit firms, have been considered in the audit tender process. In addition, the Selection
Committee considered the report of the AFM published in February 2021, which provides recommendations on the external auditor selection.
The unanimous recommendation from the Selection Committee to the Audit Committee was to propose that EY be elected as Aegon’s external auditor from January 1, 2024. The Selection Committee recommended the appointment for a tenure of five years. The Audit Committee agreed with the recommendation made by the Selection Committee. It was proposed to the Supervisory Board to recommend the Annual General Meeting to appoint EY as the Groups’ next external auditor effective January 1, 2024.
The Risk Committee
Role and responsibilities
The main role and responsibilities of the Risk Committee are to assist and advise the Supervisory Board in fulfilling its oversight responsibilities regarding the effectiveness of the design, operation, and appropriateness of both the Enterprise Risk Management (ERM) framework and the internal control systems of the company and the subsidiaries and affiliates that comprise Aegon. This includes:
◆Risk strategy, risk tolerance, and risk governance
◆Product development and pricing
◆Risk assessment
◆Risk responses and internal control effectiveness
◆Risk limits and monitoring
◆Risk reporting
◆Operational risk, and
◆
Non-financial
risk.
Furthermore, the Risk Committee regularly reviews risk exposures as they relate to capital, earnings, liquidity, operations, and compliance with risk policies. The company’s risk management is an important topic for the Supervisory Board.
The Risk Committee works closely with the Audit Committee. One combined meeting was held in December 2022. The combined meeting focused on the 2023 global risk plan, model validation, credit risk, information security, global incident response plans, and volatility in interest rates.
For more information about the functioning of the Risk Committee, please see the Risk Committee Charter on aegon.com.
Committee meetings attendance
The company’s Chief Executive Officer and Chief Risk Officer attended all the Committee meetings. The Chair of the Risk Committee granted the Global Chief Audit Executive a standing invitation to all the Risk Committee meetings. Other Management Board members and senior managers attended the meetings when relevant to the discussion.
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Risk management and Internal controls
Recurring items on the Risk Committee agenda in 2022 were risk exposure information, risk policy compliance monitoring, risks associated with IT and information security, as well as risks associated with
COVID-19
and strategic change programs in the company. The Risk Committee assessed the effectiveness of the design and operation of the Enterprise Risk Management framework and internal control systems in 2022 by:
◆Discussing the quarterly risk dashboard, including all material group level risks, with the Executive Board, Chief Risk Officer, and relevant senior managers. The material group level risks consisted of financial, underwriting, and operational risks, including cybersecurity and information security risk. Specific attention was paid to the impact of the war in Ukraine, inflation risk, hedging, rapidly rising interest rates, liquidity and credit risk, people risk, and the delivery of the regulatory roadmap of Aegon the Netherlands.
◆Assessing a quarterly dashboard that outlined risks with regard to the execution of the strategic change programs in each region, and how those risks were monitored and mitigated.
◆Reviewing Aegon’s risk appetite, which consists of the risk strategy, risk tolerances and indicators.
◆Reviewing the risk governance structure and risk competencies, including the skills and resources necessary for the risk function.
The Risk Committee spent time on emerging risks and the business environment risks, the identification and monitoring of
non-financial
risks – and in particular related to ESG and sustainability reporting – assumption and model changes, the actuarial function report, data protection, the impact of market risk on the annual budget plan, reinsurance developments, material outsourcing, product and distribution risk, the DNB Risk Score Report, and on a number of important asset and liability management and hedging topics across the company. Also, and on the request of the Risk Committee, deep dives on Information Security per region were provided. In addition, the Risk Committee dedicated time to wider global developments, such as the geopolitical environment, and the development of financial markets in 2022, including global inflation rates. Finally, in the context of the transaction with a.s.r., the Risk Committee discussed the risks in relation to the transaction and the disentanglement of Aegon the Netherlands.
The Nomination and Governance Committee
Role and responsibilities
The main role and responsibilities of the Nomination and Governance Committee are to assist and advise the Supervisory Board in fulfilling its responsibilities in the areas of Human Resources Management and Corporate Governance. This includes:
◆Board member and senior management succession planning.
◆Drawing up selection criteria and procedures for the appointment of Board members, together with supervising the selection criteria and procedures for senior management.
◆Advising on and proposing nominations, appointments, and reappointments.
◆Assessing and advising on the approach to sustainability as part of the corporate strategy and overseeing the execution thereof.
◆Reviewing and updating the Supervisory Board profile and charters for the Supervisory Board and its committees.
◆Periodically assessing the functioning of individual members of the Supervisory Board and the Executive Board.
◆Overseeing the corporate governance structure of the company, compliance with the Dutch Corporate Governance Code and any other applicable corporate governance legislation and regulations.
Committee meetings attendance
In addition to the committee members, these meetings were attended in whole or in part by the CEO, the Global Head of Human Resources, and the General Counsel.
Supervisory Board-related activities
The Nomination and Governance Committee discussed the composition of the Supervisory Board and its Committees, thereby addressing succession planning and diversity. The profiles of Supervisory Board members, as well as their capabilities, also in terms of working collectively with other members of the Supervisory Board, were debated by the Committee.
With the appointment of Ms. Fawcett and the reappointment of Ms. Wortmann-Kool, a well-balanced composition in terms of gender diversity, nationality, and backgrounds has been ensured, which also does justice to the geographical spread of Aegon’s activities.
The Supervisory Board noted the new Act on Diversity and is complying with this Act when addressing (re)appointments. In future searches for a new Supervisory Board member, the Committee continues to adhere to the improved attraction and selection practices, including reaching a broader pool of diverse candidates.
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Coupons on non-cumulative subordinated notes-   
A Supervisory Board competency overview is published on aegon.com.
Executive and Management Board-related activities
During 2022, the Nomination and Governance Committee reviewed the composition of the Management Board and was informed – and consulted on – the succession of Management Board vacancies, and on certain appointments of key management.
The Committee was also kept apprised of major organizational changes, developments in employee engagement, and talent management. Also, the Committee discussed the annual Global Employee Survey, which was conducted at the end of 2022.
Further to the activities mentioned above, the Nomination and Governance Committee discussed senior management team developments and governance matters and structures, also in relation to the material business units and functions.
The Nomination and Governance Committee also reviewed the important outside board positions of the members of the Management and Supervisory Boards and discussed specific appointments to important outside board positions where applicable. The Nomination and Governance Committee has furthermore discussed the potential governance implications of the a.s.r. transaction.
Sustainability
In 2022, the Committee was kept apprised of regulatory and business developments in the area of ESG and discussed the regulatory framework and reporting standards in both Europe and the US, and the impact thereof on Aegon.
The Committee was frequently updated on the development of the Sustainability Roadmap 2025 and discussed, amongst others, the sustainability approach, goals, performance indicators, and the value of the Sustainability Roadmap for both Aegon and Aegon’s stakeholders. The Committee also regularly discussed updates on the
Net-Zero
Asset Owner Alliance commitments.
Diversity
Enhancing diversity in the Executive, Management, and Supervisory Boards is an important goal for Aegon. Selection and appointment are based on expertise, skills, and relevant experience, and the Supervisory Board takes diversity into account with a view to achieving its aim of having a balanced Supervisory, Executive, and Management Board composition.
In 2017, the Supervisory Board adopted a diversity policy for the Executive, Management, and Supervisory Boards. The purpose of the diversity policy is to have a more balanced and diverse composition of the Supervisory Board, the Executive Board, and the Management Board in terms of nationality, age, gender and educational, professional, and geographical background and experience of the individual members. The Committee now strives to have at least 33% female representation in the Supervisory Board, and the combined Executive Board and Management Board.
In 2022, the Committee continued its discussions on the new “Act on Diversity”, which is aimed at improving gender diversity in (boards of) Dutch companies. The Committee reviews the implementation thereof within Aegon. The actions being taken by the company to address the requirements of the Act are covered on page 54 of the Annual Report.
In the current Supervisory Board composition, there are four female members out of nine members in total. This means that Aegon complies with the requirement under Dutch law that at least
one-third
of the Supervisory Board positions should be filled by women and at least
one-third
by men. With the appointment of a new Chief Risk Officer as of March 1, 2022 and the appointment of the new Chief Technology Officer as of February 7, 2022, there are four female members out of twelve Management Board members in total, which means that Aegon achieved the minimum female representation in the Management Board that it strives for.
More information on diversity within the Board is available in the Supervisory Board Composition and Competency overview and in Chapter 7 (Diversity) of the Corporate Governance Statement – as published on aegon.com.
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Table of Contents
About Aegon
Governance and risk management
Financial information        Non-financial information
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The Remuneration Committee
Role and responsibilities
The Remuneration Committee is designated to safeguard sound remuneration policies and practices within the company by overseeing the development and execution of these policies and practices. In order to ensure that the remuneration policies and practices take all types of risks properly into account, in addition to considering liquidity and capital levels, the Remuneration Committee assesses in particular the remuneration governance processes, procedures, and methodologies adopted. Furthermore, the Committee ensures that the overall remuneration policy is adhered to and is consistent with the longer-term strategy of the company and the longer-term interests of its shareholders, investors, and other stakeholders. This includes:
◆Reviewing Aegon’s Global Remuneration Framework and making recommendations on the remuneration policies.
◆Overseeing the remuneration of the Executive Board and Heads of Group Control functions.
◆Preparing recommendations regarding variable compensation both at the beginning and at the end of the performance year.
◆Preparing the information provided to shareholders on remuneration policies and practices, including the Remuneration Report.
The Remuneration Committee oversaw the application, implementation, and approval of Aegon’s Group Global Remuneration Framework and the various policies and procedures related to it, including the Remuneration Policy for Material Risk Takers. The above included:
◆Setting the outcome of the 2021 Group Performance Indicators and of the 2021 Individual Performance Indicators for Executive Board members, and allocating variable compensation related to 2021 where required.
◆Setting the 2022 Individual Performance Indicators for Executive Board members.
◆Setting the 2022 Group Performance Indicators and targets for remuneration purposes.
◆Preparing for the 2023 performance indicators.
◆Reviewing and/or approving the
ex-ante
risk assessments and
ex-post
risk assessments, any exemption requests (for example,
sign-on
arrangements) under the remuneration policies, and changes to the list of Material Risk Takers.
◆Reviewing the related Remuneration Report.
Committee meetings attendance
In addition to the committee members, these meetings were attended in whole or in part by the CEO, the Global Head Human Resources, and the General Counsel.
Annual Accounts
This Annual Report includes the Annual Accounts for 2022, which were prepared by the Executive Board and discussed by both the Audit Committee and the Supervisory Board. The Annual Accounts are signed by the members of the Executive Board and the Supervisory Board and will be placed on the agenda of the 2023 Annual General Meeting of Shareholders for adoption. The Supervisory Board recommends that shareholders adopt the annual accounts.
Acknowledgment
The members of the Supervisory Board would like to encourage the strategic progress that has been made and acknowledges the impact it has on Aegon’s employees and other stakeholders. Despite the level of change, the employees continue to serve Aegon’s customers with full dedication and appreciation. The Supervisory Board would like to thank the Executive Board and management for their efforts in setting and guiding the continuous change.
The Hague, the Netherlands, March 22, 2023
William L. Connelly
Chairman of the Supervisory Board of Aegon N.V.
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Remuneration Report
The 2022 Remuneration Report from our Remuneration Committee, on behalf of the Supervisory Board
Introduction
This report has been prepared by the Remuneration Committee of the Supervisory Board, which was led by the Committee’s Chairman Mr. Ben J. Noteboom and was approved by the Supervisory Board. In the first chapter, the Remuneration Committee presents an overview of the business and remuneration highlights in 2022 and a look ahead to 2023. This is followed by chapter two, which contains a general introduction to remuneration at Aegon. The third chapter is the 2022 Supervisory Board Remuneration Report, which contains a summary of the Supervisory Board Remuneration Policy that was applicable in 2022 and the Supervisory Board remuneration over the recent years. In chapter four, the 2022 Executive Board Remuneration Report provides a summary of the Executive Board Remuneration Policy that was applicable in 2022, the Executive Board remuneration over the recent years, and the 2023 Executive Board performance indicators.
1. Business and remuneration highlights
This chapter presents an overview of the business and remuneration highlights in 2022 and a look ahead to 2023.
2022 Business highlights
Despite challenging market circumstances in 2022, Aegon made significant progress in further strengthening
the balance sheet and in improving the operational performance. Free cash flows increased from EUR 729 million in 2021 to EUR 780 million in 2022. As a result, Aegon met the targeted cumulative free cash flow for the period 2021 to 2023 a year ahead of schedule. The operating result amounted to EUR 1,918 million in 2022 and was stable compared with 2021 (EUR 1,906 million). The result was supported by expense savings, benefits from growth initiatives, improved claims experience, and strengthening of the US dollar. This was offset by lower fees due to adverse market movements and outflows in Variable Annuities and Asset Management. Between the launch of the operational improvement plan and the end of 2022, a total of 1,199 initiatives have been executed, of which 921 are related to expense savings. As of
year-end
2022, the operational improvement plan resulted in EUR 366 million in the addressable expense savings compared with 2019 (was EUR 244 million by the end of 2021). This meant 92% of the targeted expense savings of EUR 400 million by 2023 were achieved. Market consistent value of new business remained broadly stable at EUR 526 million, while it was EUR 538 million in 2021. Improved results for US Life together with favorable currency movements were offset by a reduced result for US Workplace Solutions and by a less favorable product in International, including a lower demand for critical illness products in China.
Business performance highlights                      2022                      2021 
   
Free cash flows (in EUR million)
   780   729 
   
Operating result (in EUR million)
   1,918     1,906   
   
Addressable expense savings (in EUR million)
   366   244 
   
Market consistent value of new business (in EUR million)
   526   538 
2022 Remuneration highlights
At the Annual General Meeting of Shareholders on May 31, 2022, shareholders were asked to cast an advisory vote on the 2021 Remuneration Report. The 2021 Remuneration Report was approved with 97.50% of the votes cast, which was comparable to 2020 (97.99%). The readability of the report was further increased by making the disclosures more concise by combining several tables regarding the allocated remuneration and related IFRS expenses.
In 2022, Aegon paid out EUR 256 million in variable compensation and 38 employees received EUR 1 million or more in total annual compensation (that is, the sum of fixed compensation, variable compensation, and pension
contributions paid in 2022). These employees worked for Aegon’s Corporate Center, Aegon Americas, Aegon UK, and Aegon Asset Management.
For serving as an Executive Board member in 2022, Mr. Friese received EUR 1,559,250 in fixed compensation (2021: EUR 1,485,000) and Mr. Rider received EUR 987,998 (2021: EUR 968,394). For Mr. Friese this included a 5% increase per January 2022. Mr. Rider’s fixed compensation level was not changed during 2022. For that same period, Mr. Friese was allocated EUR 3.6 million in total compensation (2021: EUR 3.5 million) and Mr. Rider EUR 2.3 million (2021: EUR 2.3 million).
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The 2022 CEO pay ratio was 23.5 (2021: 28.0, 2020: 32.2). This ratio was based on the
EU-IFRS
remuneration expenses for Mr. Friese and for Aegon’s employees in 2022, which have been audited. The annual expenses for Mr. Friese’s total compensation were EUR 3.1 million (2021: EUR 2.9 million). The average expenses for the employees’ total compensation were EUR 134 thousand (2021: EUR 105 thousand
1
), which were calculated by:
◆)  The total
EU-IFRS
remuneration expenses for all employees, which are the total employee expenses minus the CEO remuneration expenses: EUR 2,094 million – EUR 3.1 million = EUR 2,091 million.
◆Divided by the number of employees in scope, which are the total number of employees minus employees in joint ventures and associates (as their expenses are not included in note 14 given the partial consolidation for these businesses) and minus the CEO: 19,087 – 3,507 – 1 = 15,579 employees.
The Remuneration Committee took note that various factors have influenced the CEO pay ratio. Mr. Friese’s 2022 remuneration expenses changed mainly due to an increase in his fixed compensation and because the deferred expenses for his variable compensation have been building up more since his appointment in 2020. The average employee expenses mainly increased due to the impact of exchange rate movements, higher inflation, and the impact from a significant change in Aegon’s employee population following the sale of Aegon Hungary, Aegon Turkey, and Aegon Asset Management CEE. As these factors can be different from year to year, the Committee does not have a preferred ratio. Instead, all compensation within Aegon (including for the Executive Board members) should be in line with the relevant internal and external references for the relative weight of the position, its responsibilities, and characteristics as well as the employee’s qualifications, experience, and performance.
Looking ahead to 2023
In accordance with the Executive Board remuneration policy, the fixed compensation levels of Mr. Friese and Mr. Rider have been increased by 5% as of January 2023. Mr. Friese’s fixed compensation changed from EUR 1,559,250 to EUR 1,637,213 and that of Mr. Rider’s from EUR 987,998 to EUR 1,037,397. These increases will keep both aligned with internal and external compensation levels, economic developments (e.g. inflation) and changes to the compensation levels of other senior managers in the Netherlands.
2. Remuneration at Aegon in general
This chapter contains a general introduction to Aegon’s Global Remuneration Framework, Human Resources Strategy, Remuneration Principles, the concepts of total compensation and variable compensation, Risk Management in relation to remuneration, and remuneration of Material Risk Takers.
Global Remuneration Framework
Aegon’s Global Remuneration Framework (GRF) has been designed in accordance with relevant rules and regulations, including the Dutch Financial Supervision Act, the Dutch Civil Code, the Dutch Corporate Governance Code, and the Solvency II Legal Framework. All remuneration policies within Aegon are derived from the GRF, such as the Executive Board Remuneration Policy and the local Remuneration Policies of our business units.
Human Resources Strategy
In order to support the Aegon Strategy and local business objectives, the Aegon Group Human Resources Strategy contains the following remuneration-related goals:
◆Attract, retain, motivate, and reward a highly qualified, and diverse workforce.
◆Align the interests of executives, managers, and all other employees with the business strategy and risk tolerance, the values, and the long-term interests of Aegon.
◆Provide a well-balanced and performance-related compensation package to all employees, taking into account shareholder and other stakeholder interests, relevant regulations, the corporate responsibilities, and Aegon’s purpose, values, and behaviors.
Remuneration Principles
Based on the Human Resources Strategy, Aegon has formulated the following Remuneration Principles, which are the foundation for all remuneration policies and practices within the company.
◆Firstly, Aegon’s remuneration is employee-oriented by fostering a sense of value and appreciation in each individual employee; promoting the short- and long-term interests and wellbeing of Aegon’s employees through fair compensation and supporting the career development and mobility of employees.
◆Secondly, it is performance-related by establishing a clear link between pay and performance by aligning objectives and target setting with performance evaluation and remuneration, reflecting individual as well as collective performance in line with Aegon’s long-term interests.
1
This figure continued to include expenses for the employees of Aegon the Netherlands. Please note that for this reason, the employee expenses deviate from what is disclosed in note 14. In note 14, the employee expenses for employees of Aegon the Netherlands are
out-of-scope,
due to the intended sale of Aegon the Netherlands.
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◆Thirdly, it is fairness-driven by promoting fairness and consistency in Aegon’s remuneration policies and practices, avoiding discrimination, having gender-neutral policies and practices paying equal for equal work, and by providing total compensation packages in line with an appropriately established peer group at a country and/or functional level.
◆And lastly, Aegon’s remuneration is risk-prudent (see also Risk Management in relation to Remuneration below).
Alignment with position in the financial industry and society
Aegon is a large player in the global financial market. In this position Aegon aims to create long-term value for various stakeholders in the societies in which we operate:
Customers:
Aegon seeks to support its customers – who include individuals, as well as group and corporate clients – with a broad mix of investment, protection, and retirement solutions, in addition to smooth and efficient customer experiences. We measure our customers’ satisfaction levels through benchmarked Net Promoter Scores. As part of our wider responsibility to society, we promote financial awareness and good health and wellbeing among financial services users. This ambition goes hand in hand with our responsible products approach; namely, to provide honest and transparent product information and to extend our solutions to underserved groups such as
low-income
earners.
Employees:
Aegon’s workforce comprises full- and part-time employees, as well as tied agents and contractors. In each case, we seek to maintain high levels of employee engagement and wellbeing, and foster a supportive and inclusive work environment. As our staffing needs evolve, we dedicate significant attention to talent management, with a focus on attracting and retaining highly talented employees, and by offering extensive opportunities for training and skills development. Employee engagement and wellbeing are assessed through regular workforce surveys.
Business partners:
Aegon maintains a well-diversified, global supply chain that is made up of distributors, joint venture partners, reinsurers, sourcing partners, and suppliers of goods and services. To this end, we employ responsible supply chain practices that safeguard the interests and wellbeing of all of Aegon’s partners, and seek to cultivate positive long-term business relationships that reflect our purpose and behaviors. The company-wide Vendor Code of Conduct is an important tool that enables Aegon to communicate its expectations and drive alignment along the supply chain on important topics such as environmental stewardship and inclusion and diversity.
Investors:
Supported by a resilient and sustainable business model, Aegon seeks to provide a consistent and attractive return on investment to its global investors, who include both shareholders and bondholders. Our approach includes paying regular dividends and conducting other forms of appropriate capital distributions to our equity investors, who may also derive value from the performance of our shares, while our bondholders derive value from regular interest payments.
Society:
Aegon’s products and services enable individuals to take control of their finances and save for their own retirement, reducing their reliance on public pension systems and increasing financial stability in wider society. At the same time, we aim to have a positive impact on the communities in which we operate, through tax payments, charitable donations, and volunteer work. More widely, Aegon seeks to support a fair, equitable, and sustainable future society by actively addressing climate change, inclusion and diversity, and other prominent environmental and societal concerns. Practical examples of this include Aegon’s
net-zero
commitment and responsible investment approach.
To ensure that Aegon can continue to create this long-term value for our stakeholders, it is critical to attract, retain, motivate, and reward a highly qualified and diverse workforce. Therefore, Aegon aims to offer market-competitive remuneration that takes the specific role, responsibilities, experience and expertise of the individual into account. Remuneration typically consists of fixed compensation, variable compensation (where in line with the local market practice), pension, and other benefits. At hiring, in annual compensation reviews and with promotions, compensation decisions are based on reference information such as: collective labor agreements, internal fixed and variable compensation structures, compensation of direct peers, external benchmark information, compensation trends in the market, and economic developments (for example, inflation).
Risk Management in relation to Remuneration
Remuneration, and specifically variable compensation, may have an impact on risk-taking behaviors of employees and, as such, may undermine effective risk management. The GRF therefore includes additional remuneration rules for Executive Board members, Material Risk Takers
1
and Control Staff, as their roles and responsibilities require tailored risk mitigating measures and governance processes. These rules include minimum requirements on deferred
pay-out
of variable compensation in
non-cash
instruments, mandatory
ex-ante
and
ex-post
risk assessments related to setting individual goals, allocation
1
Aegon selects Group Material Risk Takers for the Aegon N.V. legal entity based on the Solvency II selection criteria. Additionally, legal entities within the company that are directly subject to the Capital Requirements Directive, Solvency Directive, the Alternative Investment Fund Managers Directive, and/or the Undertakings for the Collective Investment in Transferable Securities Directive, select Local Material Risk Takers in accordance with the applicable selection criteria and local regulatory requirements.
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4   
of variable compensation and
pay-out
of deferred variable compensation, and malus and claw-back provisions.
Both the Risk Management and Compliance functions are involved in the design and execution of Aegon’s GRF and remuneration policies, such as reviewing proposed updates to the GRF and remuneration policies, reviewing the selection of Material Risk Takers, and executing various risk mitigating measures during the compensation cycle (when the targets are set, before a variable compensation award is allocated, before and after deferred variable compensation is paid).
Variable compensation
Variable compensation, if any, is capped at an appropriate level as a percentage of fixed compensation. For senior management, variable compensation is usually paid out in upfront cash and deferred Aegon shares and is subject to malus and claw-back provisions. In accordance with the Dutch Financial Supervision Act, Aegon offered selected Corporate Center employees variable compensation up to 100% of fixed compensation in 2022 and continued to comply with the related requirement that at least 75% of its employees within the entire company were employed outside the Netherlands. Aegon also obtained shareholder approval at the Annual General Meeting of Shareholders of May 20, 2016, to offer variable compensation up to 200% of fixed compensation to selected senior employees outside the European Economic Area in positions that, based on local market practice, could receive variable compensation that exceeds 100% of fixed compensation. Aegon’s capital was not adversely impacted by the maximum variable compensation that was paid out.
3. 2022 Supervisory Board Remuneration Report
The 2022 Supervisory Board Remuneration Report has been prepared by the Remuneration Committee of the Supervisory Board in accordance with the Dutch Civil Code (article art 2:135b) and the Dutch Corporate Governance Code. The Remuneration Committee was led by the Committee’s Chairman Ben J. Noteboom. This report was approved by the Supervisory Board.
This report contains a summary of the Supervisory Board Remuneration Policy which applied to 2022 and the Supervisory Board remuneration over the recent years.
Aegon’s Supervisory Board remuneration is subject to various rules and regulations, including the Dutch Financial Supervision Act, the Dutch Civil Code, the Dutch Corporate Governance Code, and the Solvency II Legal Framework.
Supervisory Board Remuneration Policy in 2022
Aegon’s
Supervisory Board Remuneration Policy is aimed at ensuring fair compensation and protecting the independence of the Supervisory Board members. The Supervisory Board Remuneration Policy that has been applied in 2022 was adopted at the Annual General Meeting of Shareholders on May 15, 2020. Since its adoption, this policy has been subject to annual reviews by the Supervisory Board and no changes have been proposed during this period. The policy remains in place until a new or revised policy has been adopted by the shareholders in accordance with the applicable requirements from the Dutch Civil Code
.
The policy contributes to Aegon’s strategy, long-term interests, and sustainability through the remuneration of the Supervisory Board members in various ways:
◆The policy provides the Supervisory Board with the means to attract, motivate, and retain competent, diverse, and experienced Supervisory Board members for the long term. This is essential for executing Aegon’s strategy and safeguarding and promoting its long-term interests and sustainability.
◆Supervisory Board members receive fixed remuneration for their responsibilities that does not depend on Aegon’s results in order to protect their independence when supervising the manner in which the Executive Board members implement the long-term value creation strategy. These responsibilities are part of the membership of the Supervisory Board and its Committees and the position of (Vice) Chairman of the Supervisory Board and/or its Committees. The certainty of the fixed compensation also allows Supervisory Board members in their supervisory role to focus on the long-term interest and sustainability of Aegon.
◆The Supervisory Board members receive fixed remuneration for their activities, such as attending Committee meetings and additional Supervisory Board meetings, in order to regularly discuss the Aegon strategy, the implementation of the strategy and the principal risks associated with it, while taking into account the broader long-term interests and sustainability of Aegon.
◆Supervisory Board members are only allowed to privately own Aegon N.V. shares if this is a long-term investment, aligning their interests with Aegon’s long-term interests.
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The Supervisory Board took Aegon’s position in the financial industry and society, purpose, and values into account when developing the policy and its changes:
◆Aegon is an integrated, diversified, international financial services group based in the Netherlands. We offer investment, protection, and retirement solutions. The policy provides the Supervisory Board with the means to attract, motivate, and retain Supervisory Board members from various countries, predominantly based in the Netherlands and the US. As Aegon is based in the Netherlands, the policy considers the European Insurance peers as well as Dutch General Industry peers to be the relevant external reference for the Supervisory Board member’s Remuneration. The policy is also influenced by the European and Dutch rules and regulations on (Executive) remuneration, which apply to Aegon as a result of its identity (that is, being an insurance firm in Europe and being a listed and financial company in the Netherlands).
◆Aegon’s purpose and values in place at the time were taken into account by the Supervisory Board when the last changes to the policy were proposed in 2020.
◆The policy continues to align with our new company purpose (
helping people live their best lives
) and related values (we tune in, we step up, and we are a force for good). Furthermore, the Supervisory Board will take the new purpose and values into account when a new or revised policy is developed in the future.
The Supervisory Board has not taken the compensation structures and levels at Aegon into account as the
fee-based
compensation structure for Supervisory Board members differs significantly from the Aegon compensation structures and levels.
The Supervisory Board members are entitled to the following fees (see also the table below):
◆A base fee for membership of the Supervisory Board. No separate attendance fees are paid to members for attendance at the regular Supervisory Board meetings.
◆An attendance fee for each extra Board meeting attended, be it in person or by video and/or telephone conference.
◆A committee fee for members on each of the Supervisory Board’s Committees.
◆An attendance fee for each Committee meeting attended, be it in person or through video and/or telephone conference.
◆An additional fee for attending meetings that require intercontinental, continental, or US interstate travel between the Supervisory Board member’s home location, and the meeting location.
Base fee for Supervisory Board membership
                        EUR /year
Chairman
84,000
Vice-Chairman
52,500
Member
42,000
Fee for Supervisory Board committee membership
                        EUR /year
Chairman of the Audit or Risk Committee
13,650
Member of the Audit or Risk Committee
8,400
Chairman of other committees
10,500
Member of other committees
5,250
Attendance fees
EUR
Committee meeting
3,150
Extra Supervisory Board meeting
3,150
Travel fees
EUR
Intercontinental
4,200
Continental or US interstate
2,100
Each of these fees is a fixed amount. Each quarter Aegon pays the fees that the Supervisory Board members earned during that period. Where required, Aegon pays the employer social security contributions in the home country
of the Supervisory Board member. The employee social security contributions in the home country, if any, are paid by the Supervisory Board member.
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The Supervisory Board members do not receive any performance or equity-related compensation, and do not accrue pension rights with Aegon. These measures are designed to ensure the independence of Supervisory Board members and to strengthen the overall effectiveness of Aegon’s corporate governance.
The Supervisory Board regularly assesses the competitiveness of the Supervisory Board’s remuneration structure and levels against peer companies with data provided by Willis Towers Watson. For this purpose, the Supervisory Board selected a primary set of peer group companies according to the following criteria:
◆Industry: Insurance, with a preference for life insurance.
◆Size: Average market capitalization, employees, revenue, and total assets.
◆Geographic scope: Preferably companies that operate globally.
◆Location: Headquarters based in Europe, excluding UK (because the
non-executive
directors typically have different responsibilities compared to their continental European counterparts).
Based on these criteria, the current peer group consists of the following 16 European insurance companies: Ageas, Assicurazioni Generali, CNP Assurances, Hannover Rueck, Helvetia, MAPFRE, Münchener RE, NN Group, Poste Italiane, Sampo, SCOR, Swiss Life, Swiss Re, Talanx, Vienna Insurance Group, and Zurich Insurance Group. This peer group differs from the European peer group for the Executive Board as a result of excluding the UK companies. The peer group is reviewed each year and may be updated accordingly. The last update of this peer group was in 2022, when the peer group size was increased from 12 to 16 (creating a more balanced selection), Hannover Rueck, Helvetia, Poste Italiane, Sampo, SCOR, and Vienna Insurance Group were added, and Allianz and AXA were removed.
In addition, the Supervisory Board selects a secondary peer group according to the following criteria, in order to monitor alignment with the General Industry in the Netherlands:
◆Industry: General industry and listed on the AEX.
◆Size: Average market capitalization, employees, revenue, and total assets.
◆Location: Headquarters based in the Netherlands.
Based on these criteria, the current secondary peer group consists of the following 12 AEX companies: Akzo Nobel, Ahold Delhaize, ASML, DSM, ING Group, Heineken, KPN, NN Group, Philips, Randstad, Signify, and Wolters Kluwer. This peer group is also reviewed each year and was last updated in 2022 (replacing ABN AMRO with Signify). This peer group is identical to the Dutch peer group for the Executive Board.
The Remuneration Committee may recommend changes to the fee levels or structure of the Supervisory Board members, based on the results of a competitiveness review and economic developments in the Netherlands. Such recommendations would be discussed by the Supervisory Board, which can support, revise, or reject them. The Supervisory Board is allowed to annually index the fees for economic developments in the Netherlands. For any other change to the level or structure of the fees, the shareholders will be asked to adopt the proposed changes at the Annual General Meeting of Shareholders.
The policy contains a temporary derogation clause, with rules which are in accordance with the Dutch Civil Code. This means derogation is only allowed in exceptional circumstances to serve the long-term interest and sustainability of Aegon or to assure its viability, for a limited period of time, when it stays in line with the general spirit of the policy and when the details are disclosed in the next Remuneration Report. This clause was not used in 2022.
Information on members of the Supervisory Board and the composition of its four committees can be found in the report of the Supervisory Board in this Annual Report 2022.
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Supervisory Board remuneration in recent years
The table below shows the fees and benefits that have been allocated to and paid for each Supervisory Board member in the calendar years 2020, 2021, and 2022, in accordance with the Supervisory Board remuneration policy that applied at the time. In line with the Supervisory Board Remuneration Policy, the fees have been indexed with 5% in January 2022
compared to the fee levels in January 2020, in response to the economic developments in the intervening period. There were no deviations from this policy in these years. The table also includes the total IFRS expenses that were recognized for the compensation of the Supervisory Board members in 2020, 2021 and 2022.
In EUR thousand              Year           Base fees   Attendance
fees
1)
   Benefits 
2)
   Total
compensation		 
William L. Connelly
   2022    100    88    29    217 
    2021    95    57    10    162 
    2020    95    45    4    144 
Mark A. Ellman
   2022    56    60    17    132 
    2021    53    45    4    102 
    2020    55    39    4    98 
Ben J. Noteboom
   2022    61    66    11    138 
    2021    58    45    4    107 
    2020    58    39    -    97 
Corien M. Wortmann - Kool
   2022    66    79    6    151 
    2021    63    45    4    112 
    2020    63    48    -    111 
Dona D. Young
   2022    61    66    25    152 
    2021    62    51    6    119 
    2020    66    57    4    127 
Caroline Ramsay
   2022    64    82    37    183 
    2021    61    39    21    121 
    2020    38    21    9    68 
Thomas Wellauer
   2022    56    57    24    136 
    2021    53    45    13    111 
    2020    33    21    5    59 
Jack McGarry
   2022    56    76    23    154 
    2021    31    24    6    61 
Karen Fawcett (as of May 31, 2022)
   2022    32    32    13    77 
Ben van der Veer (up to May 15, 2020)
   2020    22    27    -    49 
Total compensation
   2022    551    605    184    1,340 
    2021    476    351    69    896 
    2020    430    297    26    752 
Recognized IFRS expenses
3)
   2022    551    605    184    1,340 
    2021    482    357    72    911 
    2020    459    321    26    806 
1 (61
In 2022, there were four additional Supervisory Board calls and two Supervisory Board
sub-committee
calls, for which the participants received attendance fees. Mr. Connelly received attendance fees for joining the combined audit and risk committee meeting on December 7, 2022 (EUR 3,150) and on December 7, 2021 (EUR 3,000). Mr. Connelly, Mr. Ellman, and Mr. Noteboom received an attendance fee of EUR 3,000 for joining the audit committee call on March 16, 2021. Mr. Connelly received attendance fees for meetings outside the regular Supervisory Board meeting cycle (EUR 18,900 in 2022 and EUR 6,000 in 2021). In 2022, Ms. Ramsay, Ms. Wortmann - Kool, and Mr. McGarry received EUR 18,900 in attendance fees related to the audit tender process. For the same purpose, Mr. Wellauer received EUR 3,150 in attendance fees in 2022.
2 
Benefits cover the travel fees for all Supervisory Board members and the mandatory employer social security contributions in the home countries of Ms. Ramsay (UK) and Mr. Wellauer (Switzerland). Mr. Connelly received travel fees for attending meetings outside the regular Supervisory Board meeting cycle (EUR 8,400 in 2022 and EUR 2.000 in 2021). In 2022, Ms. Ramsay and Mr. McGarry received EUR 2,100 in travel fees related to the audit tender process.
3 
Based on a Decree of the Dutch State Secretary of Finance which came into force as from May 7, 2021, the Supervisory Board fees were not subject to Dutch VAT anymore, retroactively as from June 13, 2019. Therefore, Aegon has not paid Dutch VAT anymore on the fees of the Supervisory Board Members as from Q2 2021. Additionally, Aegon reclaimed VAT for the period Q3 2019 - Q1 2021, except for its Supervisory Board members based in the Netherlands for practical reasons.
)   (61
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) 
About Aegon
Governance and risk management
Financial information        Non-financial information
The table below presents the total compensation (fees and benefits) that was awarded and due in the last five calendar years on an annualized basis and the
year-on-year
annual change in total compensation. This compensation was paid in accordance with the Supervisory Board remuneration
policy that applied at the time and there were no deviations. Additionally, the table shows the Aegon net result, a proxy of the financial and
non-financial
business performance, the inflation in the Netherlands, and the average employee compensation over the same period.
In EUR thousand  
Annualized
1)
            2018             2019             2020            2021  
          2022
 
William L. Connelly
  Compensation   119    169    144   162   217 
   Change   -    42%    (15%)   13%   34% 
Mark A. Ellman
  Compensation   103    115    98   102   132 
   Change   -    12%    (15%)   5%   30% 
Ben J. Noteboom
  Compensation   86    103    97   107   138 
   Change   -    20%    (6%)   10%   29% 
Corien M. Wortmann - Kool
  Compensation   103    123    111   112   151 
   Change   -    19%    (10%)   1%   35% 
Dona D. Young
  Compensation   121    158    127   119   152 
   Change   -    31%    (20%)   (6%)   28% 
Caroline Ramsay (as of May 15, 2020)
  Compensation   -    -    108   121   183 
   Change   -    -    -   12%   51% 
Thomas Wellauer (as of May 15, 2020)
  Compensation   -    -    94   111   136 
   Change   -    -    -   18%   22% 
Jack McGarry (as of June 3, 2021)
  Compensation   -    -    -   105   154 
   Change   -    -    -   -   46% 
Karen Fawcett (as of May 31, 2022)
  Compensation   -    -    -   -   131 
   Change   -    -    -   -   - 
Ben van der Veer (up to May 15, 2020)
  Compensation   101    118    131   -   - 
   Change   -    17%    11%   -   - 
Robert W. Dineen (up to Oct 11, 2019)
  Compensation   101    101    -   -   - 
   Change   -    1%    -   -   - 
Aegon net result based on
EU-IFRS
  In EUR million   741    1,525    55   1,701   (2,504) 
Aegon business performance
2)
  Target = 100%   106%    79%    57%   123%   113% 
Inflation in the Netherlands
  Consumer Price Index   1.7%    2.6%    1.3%   2.7%   10.0% 
Average employee compensation
3)
  In EUR thousand   104    115    110   105   134 
   Annual change   -    11%    (4%)   (5%)   28% 
1 
Remuneration amounts are annualized for Supervisory Board members who joined or left during a calendar year.
2 
The weighted average Aegon financial and
non-financial
business performance, expressed as a percentage on a performance scale with 50% as the threshold, 100% as the target and 150% as the maximum, as used for the allocation of variable compensation in the applicable year.
3 
Consistent with the CEO pay ratio calculation, the average employee compensation is based on the audited total
EU-IFRS
remuneration expenses for all employees divided by the number of employees in scope for these expenses.
4. 2022 Executive Board Remuneration Report
The 2022 Executive Board Remuneration Report has been prepared by the Remuneration Committee of the Supervisory Board in accordance with the Dutch Civil Code (article art 2:135b) and the Dutch Corporate Governance Code. The Remuneration Committee was led by the Committee’s Chairman Ben J. Noteboom. This report was approved by the Supervisory Board.
This report contains a summary of the Executive Board Remuneration Policy that applied to 2022, the Executive Board remuneration over the recent years, and the 2023 Executive Board performance indicators.
Executive Board Remuneration Policy in 2022
The
Supervisory Board has the overall responsibility for Aegon’s Remuneration Policies, including the Executive Board Remuneration Policy. The Executive Board Remuneration Policy that has been applied in 2022 was adopted at the Annual General Meeting of Shareholders on May 15, 2020. Since its adoption, this policy has been subject to annual reviews by the Supervisory Board and no changes have been proposed during this period. The policy remains in place until a new or revised policy has been adopted by the shareholders in accordance with the applicable requirements from the Dutch Civil Code
.
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The current policy contributes to Aegon’s strategy, long-term interests and sustainability through the remuneration of the Executive Board members in various ways:
◆The policy provides the Supervisory Board with the means to attract, motivate, and retain competent and experienced Executive Board members for the long term. This is essential for executing Aegon’s strategy and safeguarding and promoting its long-term interests and sustainability.
◆The leading performance indicator categories for the successful execution of Aegon’s strategy are capital, growth, and strategy. To support the execution of Aegon’s strategy, the policy makes these performance indicator categories mandatory for the Executive Board member.
◆Aegon strives to create long-term value for its stakeholders and the communities in which it operates. Due to the nature of Aegon’s business, value created is often financial, but it may also be social, economic, or environmental. The policy directly aligns Executive Board members’ personal long-term interests with those of Aegon and its shareholders by paying a significant part of the Executive Board members’ variable compensation
(two-thirds)
in shares, which must be held for five years after completion of the performance period. The
pay-out
in these restricted shares is combined with prohibiting Executive Board members using personal hedging strategies or insurance, which could undermine this long-term alignment of interests. Additionally, Executive Board members are aligned with the long-term interests of Aegon, its shareholders, and other stakeholders through the use of mandatory performance indicator categories of earnings, shareholders, and other stakeholders.
◆Aegon is committed to doing business responsibly and in a sustainable way. Variable compensation of Executive Board members can be adjusted downwards (that is, malus) or clawed-back in cases where certain performance has not been achieved in a sustainable way. This includes but is not limited to significant risk and compliance incidents, insufficient response to such incidents and/or insufficient evidence of embedding of good standards of practice, such as sound and responsible business practices, and integrity of products and services delivered. Additionally, the policy makes the performance indicator category environmental, social and governance (ESG), mandatory for Executive Board members to support this approach to doing business.
The Supervisory Board took Aegon’s position in the financial industry and society, purpose, and values into account when developing the policy and its changes:
◆Aegon is an integrated, diversified, international financial services group based in the Netherlands. We offer investment, protection, and retirement solutions. The policy provides the Supervisory Board with the means to attract, motivate, and retain Executive Board members who are competent and experienced to run Aegon in this specific context. As the Executive Board members are based in the Netherlands, the Policy considers the European insurance peers as well as Dutch general industry peers to be the relevant external reference for Executive Remuneration. The Policy is also strongly influenced by the European and Dutch rules and regulations on (Executive) remuneration which apply to Aegon.
◆Aegon’s purpose and values in place at the time were taken into account by the Supervisory Board when the last changes to the policy were proposed in 2020.
◆The policy continued to align with our new company purpose (
helping people live their best lives
) and related values (we tune in, we step up, and we are a force for good). Furthermore, the Supervisory Board will take the new purpose and values into account when a new or revised policy is developed in the future.
Aegon’s Executive Board remuneration is subject to various rules and regulations, including the Dutch Financial Supervision Act, the Dutch Civil Code, the Dutch Corporate Governance Code, and the Solvency II Legal Framework. The most prominent requirements thereof are:
◆The total variable compensation amount that is allocated to an Executive Board member for a performance year cannot exceed 100% of the fixed compensation level.
◆Variable compensation should be based on a mix of Aegon and personal performance, with at least 50% weight on
non-financial
performance.
◆A substantial portion of any variable compensation award should be paid in a
non-cash
instrument (for example, Aegon shares) and should be deferred for at least three years. Additionally, awarded shares should be restricted for five years. With a three-year vesting period, this requires an additional holding period of two years.
◆Aegon can claw-back any variable compensation which has been paid (cash and shares) in specific circumstances such as a material financial restatement or individual gross misconduct.
These are also the main reasons why Aegon operates one Executive Board variable compensation plan per year, with a single variable compensation award which is subsequently split into cash and shares, rather than operating separate Short-Term Incentive (cash) and Long-Term Incentive (share) Plans.
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About Aegon
Governance and risk management
Financial information        Non-financial information
The Remuneration Committee may recommend policy changes to the Supervisory Board. In that case, the Remuneration Committee will conduct scenario analyses to determine the long-term effects on the level and structure of compensation granted to each Executive Board member, and reports their findings to the Supervisory Board. The Supervisory Board can subsequently decide on referring the proposed policy changes to the Annual General Meeting of Shareholders for adoption.
The policy contains a temporary derogation clause, with rules which are in accordance with the Dutch Civil Code. This means derogation is only allowed in exceptional circumstances to serve the long-term interest and sustainability of Aegon or to assure its viability, for a limited period of time, when it stays in line with the general spirit of the policy and when the details are disclosed in the next Remuneration Report. This clause was not used in 2022.
Total compensation
Total compensation for Executive Board members is defined in the Executive Board Remuneration Policy as a combination of fixed compensation, variable compensation, pension, and other benefits. The Supervisory Board determines and regularly reviews the appropriate selection of remuneration elements and their (maximum) remuneration level for Executive Board members to ensure the structure remains competitive and provides proper and risk-based incentives in line with Aegon’s risk appetite. The fixed and variable compensation elements and their levels are reviewed at least once a year. The pension arrangements and other benefits and their levels are reviewed at least every four years. In its review, the Supervisory Board takes the specific role, responsibilities, experience, and expertise of Executive Board members into account as well as internal and external reference information:
◆The internal references are the compensation structure and levels of the members of the Management Board of Aegon N.V. and the annual compensation changes of the general employee population and senior managers within Europe and the Netherlands specifically.
◆The external references are compensation trends in the market, economic developments (for example, inflation) as well as quantitative assessments of the competitiveness against a peer group of insurance companies in Europe and a peer group of companies based in the Netherlands.
◆Additionally, the Remuneration Committee conducts a scenario analysis in case of a policy change to determine the long-term effect on the remuneration structure and level of each Executive Board member, and reports their findings to the Supervisory Board.
The European Insurance peer group was selected by the following criteria:
◆Industry: Insurance, with a preference for life insurance
◆Size: Average market capitalization, employees, revenue, and total assets
◆Geographic scope: Preferably companies that operate globally
◆Location: Headquarters based in Europe
Based on these criteria, the current peer group consists of the following 16 European insurance companies: Ageas, Assicurazioni Generali, Aviva, CNP Assurances, Helvetia, Legal & General, MAPFRE, Münchener Re, NN Group, Poste Italiane, SCOR, Swiss Life, Swiss Re, Talanx, Vienna Insurance Group, and Zurich Insurance Group. The last update of this peer group was in 2022, when Helvetia, Poste Italiane, SCOR and Vienna Insurance Group were added, and Allianz, AXA, Prudential, and RSA Insurance Group were removed. This peer group differs from the European peer group for the Supervisory Board, as the latter excludes UK companies where
non-executive
directors typically have different responsibilities compared to their continental European counterparts.
The Dutch peer group was selected by the following criteria:
◆Industry: general industry and listed on the AEX.Size: Average market capitalization, employees, revenue and total assets
◆Location: Headquarters based in the Netherlands
Based on these criteria, this peer group consists of the following 12 AEX companies: Akzo Nobel, Ahold Delhaize, ASML, DSM, ING Group, Heineken, KPN, NN Group, Philips, Randstad, Signify, and Wolters Kluwer. This peer group is also reviewed each year and was last updated in 2022 (replacing ABN AMRO with Signify).
The Supervisory Board will review both peer groups annually and will amend them as necessary, within the above-mentioned selection criteria, to ensure they continue to provide a reliable basis for comparison. Any change to the peer group will be disclosed in the Remuneration Report.
The Remuneration Committee may recommend changes to the compensation levels of the Executive Board members in accordance with Remuneration Policy, based on the results of this annual total compensation review and on discussions with the Executive Board members regarding their remuneration level and structure. Such recommendations would subsequently be discussed by the Supervisory Board, which can approve, revise, or reject them.
The Supervisory Board discussed and approved the 2022 total compensation for the Executive Board, after taking the Remuneration Committee’s review into consideration.
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Fixed compensation
The fixed compensation for the Executive Board members is paid in monthly installments. The policy allows fixed compensation to be paid in cash and in shares. All Executive Board members received their 2022 fixed compensation in cash.
The Supervisory Board may offer permanent or temporary gross monthly fixed allowances when the Supervisory Board considers this an appropriate alternative for other remuneration elements.
Variable compensation
Executive Board members are eligible for variable compensation with a target level of 80% of the fixed compensation level (excluding allowances, if applicable), with a threshold level of 50% and a maximum opportunity of 100% of the fixed compensation level.
The variable compensation award is based on performance against a set of performance indicators, weights, and target levels that have been set by the Supervisory Board at the start of the performance year. The performance indicators contribute to Aegon’s strategy, long-term interests, and sustainability, within Aegon’s risk tolerance statements and should comply with the following rules:
◆It contains a mix of financial and
non-financial
performance indicators, with at least 50% weight allocated to the
non-financial
performance indicators in accordance with article 1:118.3 of the Dutch Financial Supervision Act.
◆The maximum weight for unadjusted financial indicators is determined by the Global Remuneration Framework and is currently set at 50%.
◆It contains a mix of Aegon and personal performance indicators, which can range in weight between
50-80%
and
20-50%
respectively, depending on the Aegon priorities of the performance year.
◆At least 20% of the indicators have a retrospective three-year performance horizon, while the remainder has a
one-year
performance horizon.
◆The indicators should cover the following mandatory performance indicator categories: shareholders, capital, earnings, growth, stakeholders, ESG, and strategy.
The Remuneration Committee and the Executive Board members prepare a proposal for the performance indicators, weights, and target levels. These are subsequently reviewed by Aegon’s Risk Management team (that is, the first
ex-ante
risk assessment) before the Supervisory Board approves these, to ensure that:
◆The performance indicators and weights are in line with the policy.
◆The financial performance indicators are consistent with the risk tolerance statements.
◆The
non-financial
performance indicators are consistent with risk tolerance statements, regulatory requirements, and reasonable stakeholder expectations, and are supporting sound and responsible business practices and integrity of the products and services delivered.
The Remuneration Committee sends the proposal and the first
ex-ante
risk assessment to the Supervisory Board, which can approve, revise, or reject the proposal. After approval, the Executive Board members are granted their conditional variable compensation awards for the plan year. This conditional award equals their target variable compensation level, split between 33.33% upfront cash and 66.67% deferred Aegon shares. The grant price for the shares is equal to the volume weighted average price on the Euronext Amsterdam stock exchange for the period December 15 to January 15 at the start of the plan year.
After the completion of the performance period, the Remuneration Committee prepares a recommendation for the allocation of a variable compensation award to each Executive Board member. This recommendation is based on the actual performance results compared to target levels and takes a second
ex-ante
risk assessment by the Risk Management team into account. This risk assessment looks into whether there are reasons for a downward adjustment of the intended variable compensation award (malus) which were not take into account yet, such as:
◆Significant risk or compliance incident(s)
◆Insufficient response to risk incident(s), compliance incident(s), regulatory fine(s) and/or insufficient execution of risk mitigating measures in response to these incidents
◆Breaches of laws and regulations
◆Insufficient evidence of embedding good standards of practice
◆Significant deficiencies or material weaknesses relating to the Sarbanes-Oxley Act
◆Reputation damage due to risk events
In this assessment possible risk-mitigating behaviors are also taken into account, such as remaining within risk limits, risk reduction, risk avoidance, risk transfer, and risk response by the Executive Board member.
The Remuneration Committee sends its recommendation and the second
ex-ante
risk assessment to the Supervisory Board, which can approve, revise, or reject the recommendation. This Supervisory Board decision includes validating that, when taken together, the results of the performance indicators represent a fair reflection of the overall performance of the Executive Board member over the performance year.
The allocated variable compensation award is subsequently split between 33.33% upfront cash (that is, paid in the year following the performance year) and 66.67% deferred shares.
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About Aegon
Governance and risk management
Financial information        Non-financial information
These shares are deferred for a three-year period after allocation after which they cliff-vest. Before vesting, the Risk Management team executes an
ex-post
risk assessment which looks into whether there are reasons for a downward adjustment of the originally allocated variable compensation award (malus) which were not taken into account yet. This risk assessment takes the same criteria into consideration as the second
ex-ante
risk assessment. Based on this assessment, the Remuneration Committee subsequently prepares a recommendation on how to pay out the deferred portion (that is, unchanged or adjusted downward). The Remuneration Committee sends its recommendation and the
ex-post
risk assessment to the Supervisory Board. The Supervisory Board can approve, revise, or reject the recommendation.
Claw-back provision
Aegon’s Supervisory Board can claw-back variable compensation that has already been paid to the Executive Board member in case of a material financial restatement or individual gross misconduct, after considering a risk assessment by Aegon’s Risk Management team which looks into whether in hindsight the paid amount should have been lower or nil. Examples of misconduct are, but not limited to, a significant breach of laws and/or regulations, use of violence, either verbally or physically, involvement with fraud, corruption or bribery, significant issues due to evident dereliction of duty, and/or discrimination of any kind (for example age or gender).
Pension arrangements
The Executive Board members are entitled to pension contributions that equal 40% of their fixed compensation level, which consists of the following three parts:
◆Participation in Aegon’s defined contribution pension plan for employees based in the Netherlands, for their eligible earnings up to EUR 114,866 (2022 threshold set by Dutch law).
◆Participation in Aegon’s defined contribution pension plan for employees based in the Netherlands, for their fixed income above EUR 114,866.
◆An additional gross allowance for pension to make the sum of these three pension contributions equal to 40% of their fixed compensation level.
The Executive Board members receive pension contributions that are somewhat higher compared to employees based in the Netherlands and of similar age (approximately
10-15%
difference). This is done to achieve a competitive total compensation level. Please note the Supervisory Board will consider discontinuing the additional gross allowance for new Executive Board members, while ensuring their total compensation level stays competitive, and including this as a policy change in the next update of the Executive Board Remuneration Policy.
Other benefits
Other benefits include
non-monetary
benefits (for example, company car), social security contributions by the employer, and tax expenses borne by Aegon.
Aegon does not grant Executive Board members personal loans, guarantees or other such arrangements, unless in the normal course of business and on terms applicable to all employees, and only with the approval of the Supervisory Board.
Terms of Engagement
Members of the Executive Board are appointed for four years and may then be reappointed for successive mandates also for a period of four years. Executive Board members have a board agreement with Aegon N.V., rather than an employment contract. Members of the Executive Board may terminate their board agreement with a notice period of three months. The Supervisory Board may terminate the board agreement by giving six months’ notice if it wishes to terminate the agreement.
The Supervisory Board may entitle Executive Board members to a termination payment up to or equal to the total annual fixed compensation level. This payment is not allowed in case of early termination at the initiative of the Executive Board member (unless due to imputable acts or omissions of Aegon), imputable acts, or omissions by the Executive or failure of Aegon as a company during the appointment term of the Executive Board members. Mr. Friese and Mr. Rider have a termination clause included in their board agreement. Mr. Wynaendts was not entitled to a termination payment when his board agreement was terminated in 2020.
Executive Board remuneration in recent years
In this section you will find more details related to the remuneration that has been allocated and paid to the Executive Board members. It covers the allocated remuneration (2020-2022), the calculation of the 2022 variable compensation, the
pay-out
schedule of variable compensation (2020-2026), the recognized IFRS expenses for remuneration (2020-2022), the remuneration that was awarded and due in 2021 and 2022, and the annualized total compensation overview (2018-2022).
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Allocated remuneration (2020-2022)
The first table shows the remuneration that has been allocated to the Executive Board members, for the performance years 2020, 2021, and 2022, in accordance
with the Executive Board remuneration policy that applied at the time. There were no deviations from the policy in these years.
Allocated compensation (in EUR thousand)     
Fixed
compensation
 
 

Variable

compensation
 

 
   Pension   
Other
Benefits
  
Total
compensation
Lard Friese
                     
2022
1)
     1,559  1,368    621   77  3,625
2021
     1,485  1,359    594   77  3,515
2020
2)
     931  634    373   49  1,987
Matt Rider
                     
2022
     988  837    395   66  2,286
2021
3)
     968  884    387   67  2,306
2020
     941  640    376   67  2,024
Alex Wynaendts
                     
2020
4)
     496  302    337   97  1,233
All Executive Board members
                     
2022
     2,547  2,205    1,016   143  5,912
2021
     2,453  2,243    981   144  5,821
2020
     2,368  1,577    1,086   213  5,244
1 
Mr. Friese’s fixed compensation increased by 5% as of January 2022.
2 
The disclosed amounts for 2020 cover the period that Mr. Friese has been a member of the Executive Board (as of May 15, 2020), and excludes the
sign-on
arrangement of EUR 1,228 thousand that Mr. Friese received when joining Aegon in March 2020.
3 
Mr. Rider’s fixed compensation increased by 5% as of June 2021.
4 
The disclosed amounts for 2020 cover the period that Mr. Wynaendts has been a member of the Executive Board (until May 15, 2020).
Calculation of 2022 variable compensation
Subject to the adoption of the annual accounts at the General Meeting of Shareholders on May 25, 2023, Mr. Friese has been awarded EUR 1,368 thousand in conditional variable compensation for the 2022 performance year (88% of fixed
compensation) and Mr. Rider EUR 837 thousand (85% of fixed compensation). The following table shows how these awards compare to their minimum, target and maximum variable compensation opportunity levels and how the awards will be paid out.
2022 variable compensation          Minimum           Target           Maximum           Result     
Pay-out
Lard Friese
                       
      
In % of fixed compensation
   50%    80%    100%    88%    
      
In total (EUR thousand)
   780    1,247    1,559    1,368   Split in 33.33% cash and 66.67% shares
      
In cash (EUR thousand)
   260    416    520    456   Paid upfront in 2023
      
In shares
1)
   115,750    185,200    231,500    203,072   Deferred for 3 years (2026)
Matt Rider
                       
      
In % of fixed compensation
   50%    80%    100%    85%    
      
In total (EUR thousand)
   494    790    988    837   Split in 33.33% cash and 66.67% shares
      
In cash (EUR thousand)
   165    263    329    279   Paid upfront in 2023
      
In shares
1)
   73,343    117,349    146,686    124,273   Deferred for 3 years (2026)
1 
The 2022 grant price of the shares was EUR 4.4905, which is equal to the volume-weighted average price on the Euronext Amsterdam stock exchange for the period December 15, 2021 to January 15, 2022. After vesting in 2026, these shares are subject to an additional
2-year
holding period.
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2022
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Table of Contents
About Aegon
Governance and risk management
Financial information        Non-financial information
The 2022 variable compensation awards for both Executive Board members were based on a mix of 70% Group performance and 30% personal performance, for which the results are summarized in the first table below. The Group performance is initially measured on a
50-100-150%
performance scale, which is used internally to fund the employee bonus pools. The total company performance
result on this scale (113%) is subsequently converted in a result on the
50-80-100%
scale that applies to the variable compensation of the Executive Board members (which equals 85%). Their personal performance results are directly scored on the
50-80-100%
scale. The second and third table below contain more detailed information on the Group and personal performance indicators respectively.
For Aegon bonus pools
 
 
2022 Group performance indicators               Weight                Target                Outcome    
            Result 
1)
 
Free cash flows (2021-2022)
   20%    1,000    1,509    150% 
Relative total shareholder return (2020-2022)
   10%    Rank 5    Rank 7    67% 
Operating result
   10%    2,101    1,918    56% 
Addressable expense savings (2021-2022)
   10%    322    366    150% 
Market consistent value of new business
   10%    556    526    93% 
Transformation program: Earnings contribution
   10%    100%    102%    109% 
Transformation program: Timely initiative execution
   10%    100%    103%    108% 
Transformation program: Timely milestone completion
   10%    100%    152%    150% 
Employee engagement
   10%    70%    70%    100% 
Total performance result
                 
 
113%
 
1 
The Group performance results are measured on a
50-100-150%
performance scale, which is used for the funding of the bonus pools for our employees.
         Lard Friese         Matt Rider 
2022 Executive Board performance indicators               Weight                Result                Weight                Result 
Group performance
1)
   70%    85%    70%    85% 
Strategic Roadmap development
   10%    100%    5%    100% 
Execution of capital initiatives in line with Strategic Roadmap
   10%    100%    5%    100% 
Sustainability integration and execution
   5%    80%    5%    80% 
Women in senior management
   5%    80%    5%    80% 
Finance strategy execution
   - - -    - - -    10%    70% 
Total performance result
        88%         85% 
1 
The abovementioned Group performance result of 113% equals 85% on the
50-80-100%
performance scale that applies to the Executive Board members (i.e. with 80% being the target level and 100% the maximum).
70
Aegon Annual Report on Form 20-F
2022
Table of Contents
Remuneration Report
2022 Aegon performance indicatorsDefinition
Free cash flowsFree cash flows represent cash flows from remittances from the units less the Holding funding and operating expenses. The 2021-2022 target was based on the 2021-2023 cumulative free cash flows target that was disclosed at the Capital Markets Day in December 2020 and the updated guidance in February 2021.
Relative total shareholder returnAegon’s position relative to 7 US and 7
non-US
peers when looking at Total Shareholder Return for a retrospective
3-year
performance period (2020-2022). These peers were selected for being the most similar to Aegon based on their index listing, industry classification, 5 year monthly Beta, Market Capitalization and Total Revenue.
1)
Operating resultOperating result reflects our profit before tax from underlying business operations and excludes components that relate to accounting mismatches that are dependent on market volatility, updates to best estimate actuarial and economic assumptions and model updates or events that are considered outside the normal course of business. The 2022 target was based on the 2022 budget.
Addressable expense savingsAddressable expenses are expenses reflected in the operating result, excluding deferrable acquisition expenses, expenses in joint ventures and associates and expenses related to operations in CEE countries. The 2021-2022 target was based on the 2021-2023 savings target that was disclosed at the Capital Markets Day in December 2020.
Market consistent value of new businessRepresents how much value the sale of new insurance policies is generating for the company. This value represents the present value of our best estimate of incoming premiums and outgoing claims, benefits and expenses related to these new sales. The 2022 target was based on the 2022 budget.
Transformation program: Earnings contributionsMeasures the expected cumulative
run-rate
earnings contribution for performance improvement initiatives that moved to the execution phase during the retrospective
3-year
performance period 2020-2022, compared to the cumulative 2020-2022 target in the transformation program.
Transformation program: Timely initiative executionMeasures whether performance improvement initiatives moved to the execution phase in time, compared to the 2022 targets in the transformation program.
Transformation program: Timely milestone completionMeasures the timely milestone completion of the performance improvement initiatives, compared to the 2022 targets in the transformation program.
Employee engagementEmployee engagement as measured in the global employee survey. The 2022 target was 70%.
Strategic Roadmap developmentAssesses how the Strategic Roadmap further evolved for strategic assets and
non-core
assets in 2022.
Execution of capital initiatives in line with Strategic RoadmapAssesses the completion of management actions in relation to financial assets and
non-core
assets in 2022.
Sustainability integration and executionMeasures the degree of complete milestones in 2022 related to further integrating our ESG priorities in Aegon’s strategy, sustainability reporting, and reaching our 2025 carbon emission reduction target.
Women in senior managementMeasures the percentage of women in Aegon’s senior management layer worldwide. The 2022 target was 36%.
Finance strategy executionAssesses the completion of the 2022 milestones from the Finance strategy.
1 
These peers are in order of the 2020-2022 ranking results: 1) Principal Financial Group Inc, 2) Unum Group, 3) MetLife Inc, 4) ASR Nederland NV, 5) NN Group NV, 6) Brighthouse Financial Inc, 7) Aegon NV, 8) Equitable Holdings Inc, 9) Prudential Financial Inc, 10) Swiss Life Holding AG, 11) Athene Holding Ltd / Helvetia Holding*, 12) Assicurazioni Generali SpA, 13) Baloise Holding AG, 14) Prudential PLC, and 15) Lincoln National Corp. This is the blended result of the initial peer Athene and the
back-up
peer Helvetia, which replaced Athene per March 9, 2021, in accordance with our plan rules, following the merger announcement by Athene.
Aegon Annual Report on Form 20-F
2022
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71
Table of Contents
About Aegon
Governance and risk management
Financial information        Non-financial information
Lard FrieseTarget
Result on
50-80-100%
scale
10% Strategic Roadmap Development
Further evolve the Strategic Roadmap for strategic assets and
non-core
assets in 2022.
100%. Announced an agreement to combine Aegon the Netherlands with a.s.r. to create a leading Dutch insurance company, in which Aegon will hold a strategic stake. Identified several areas of our business where we will invest to achieve profitable growth, and create value for our customers, shareholders, and other stakeholders in the years ahead. These include Transamerica’s Workplace Solutions where we will focus on small and
mid-sized
employers, and Individual Solutions where we will invest in selected individual life insurance, accumulation, and investment products, leveraging our strong distribution capabilities.
10% Execution of capital initiatives in line with Strategic Roadmap
Complete management actions in relation to financial assets and
non-core
assets in 2022.
100%. Freed up capital by reinsuring the universal life portfolio of Transamerica Life Bermuda to Transamerica. Reduced our risk exposure by completing a
lump-sum
buyout program for certain Variable Annuity policies in Transamerica, and took steps to reduce the sensitivity of our solvency ratios to equity market movements. Successfully completed the divestment of Aegon Hungary and Turkey to Vienna Insurance Group AG Wiener Versicherung Gruppe. Integrated the operational improvement program into our annual operating cycle.
5% Sustainability integration and execution
Complete milestones in 2022 related to ESG priorities, sustainability reporting and carbon emission reduction.
80%. Adopted the Sustainability Roadmap 2025 to drive lasting value creation for our company and its stakeholders. Further enhanced the Sustainability Reporting Program by making the company’s finance function responsible for delivering sustainability reporting with appropriate controls. Added new targets to Aegon’s climate change commitments.
5% Women in Senior Management
Increase the number of women in Aegon’s senior management layer worldwide to at least 36%.
80%. At the end of 2022, 36% of the people in Aegon’s senior management layer were women.
Matt RiderTarget
Result on
50-80-100%
scale
5% Strategic Roadmap Development
Further evolve the Strategic Roadmap for strategic assets and
non-core
assets in 2022.
100%. Announced an agreement to combine Aegon the Netherlands with a.s.r. to create a leading Dutch insurance company, in which Aegon will hold a strategic stake. Identified several areas of our business where we will invest to achieve profitable growth, and create value for our customers, shareholders, and other stakeholders in the years ahead. These include Transamerica’s Workplace Solutions where we will focus on small and
mid-sized
employers, and Individual Solutions where we will invest in selected individual life insurance, accumulation, and investment products, leveraging our strong distribution capabilities.
5% Execution of capital initiatives in line with Strategic Roadmap
Complete management actions in relation to financial assets and
non-core
assets in 2022.
100%. Freed up capital by reinsuring the universal life portfolio of Transamerica Life Bermuda to Transamerica. Reduced our risk exposure by completing a
lump-sum
buyout program for certain Variable Annuity policies in Transamerica, and took steps to reduce the sensitivity of our solvency ratios to equity market movements. Successfully completed the divestment of Aegon Hungary and Turkey to Vienna Insurance Group AG Wiener Versicherung Gruppe. Integrated the operational improvement program into our annual operating cycle.
5% Sustainability integration and execution
Complete milestones in 2022 related to ESG priorities, sustainability reporting and carbon emission reduction.
80%. Adopted the Sustainability Roadmap 2025 to drive lasting value creation for our company and its stakeholders. Further enhanced the Sustainability Reporting Program by making the company’s finance function responsible for delivering sustainability reporting with appropriate controls. Added new targets to Aegon’s climate change commitments.
5% Women in Senior Management
Increase the number of women in Aegon’s senior management layer worldwide to at least 36%.
80%. At the end of 2022, 36% of the people in Aegon’s senior management layer were women.
10% Finance Strategy Execution
Complete the 2022 milestones from the Finance Strategy.
70%. Not all targeted milestones were completed, mainly due to the work that was required to prepare for combining Aegon the Netherlands with a.s.r. Successfully completed the audit tender process. Developed a multi-year roadmap for the Sustainability Reporting Program and completed its 2022 milestones, which included strengthening its processes and controls.
Pay-out
schedule variable compensation (2019-2026)
The following tables show for each current and former Executive Board member how much variable compensation has been paid in shares and cash respectively in 2020, 2021, and 2022 and how much conditional variable compensation is scheduled to be paid out in the coming years. The vesting price of the shares were: EUR 2.079 on May 15, 2020,
EUR 3.934 on June 3, 2021, and EUR 4.973 on May 31, 2022. In 2020, the
pay-out
schedule of variable compensation changed from tranche-vesting to cliff-vesting. Shares allocated for plan years up to and including 2019 are subject to an additional three-year holding period after
pay-out.
Shares for the plan years from 2020 onwards are subject to an additional
two-year
holding period after
pay-out.
72
Aegon Annual Report on Form 20-F
2022
Table of Contents
Remuneration Report
    Years of vesting 
Shares by plan year  VWAP
1)
   2020   2021   2022   2023   2024   2025   2026   Total 
Lard Friese
2020
   EUR 4.083    -    -    -    -    103,580    -    -    103,580 
2021
   EUR 3.293    -    -    -    -    -    275,182    -    275,182 
2022
   EUR 4.491    -    -    -    -    -    -    203,072    203,072 
Total number of shares
       
 
-
 
  
 
-
 
  
 
-
 
  
 
-
 
  
 
103,580
 
  
 
275,182
 
  
 
203,072
 
     
Matt Rider
2017
   EUR 5.246    9,508    9,508    -    -    -    -    -    19,016 
2018
   EUR 5.405    14,054    14,054    14,054    -    -    -    -    42,162 
2019
   EUR 4.162    35,693    17,847    17,847    17,847    -    -    -    89,234 
2020
   EUR 4.083    -    -    -    -    104,547    -    -    104,547 
2021
   EUR 3.293    -    -    -    -    -    178,961    -    178,961 
2022
   EUR 4.491    -    -    -    -    -    -    124,273    124,273 
Total number of shares
       
 
59,255
 
  
 
41,409
 
  
 
31,901
 
  
 
17,847
 
  
 
104,547
 
  
 
178,961
 
  
 
124,273
 
     
Alex Wynaendts
2015
   EUR 6.106    -    -    -    -    -    -    -    - 
2016
   EUR 5.128    20,361    -    -    -    -    -    -    20,361 
2017
   EUR 5.246    21,866    21,866    -    -    -    -    -    43,732 
2018
   EUR 5.405    19,656    19,656    19,656    -    -    -    -    58,968 
2019
   EUR 4.162    50,345    25,174    25,174    25,174    -    -    -    125,867 
2020
   EUR 4.083    -    -    -    -    49,346    -    -    49,346 
Total number of shares
       
 
112,228
 
  
 
66,696
 
  
 
44,830
 
  
 
25,174
 
  
 
49,346
 
  
 
-
 
  
 
-
 
     
Darryl Button
2016
   EUR 5.128    14,808    -    -    -    -    -    -    14,808 
Total number of shares
       
 
14,808
 
  
 
-
 
  
 
-
 
  
 
-
 
  
 
-
 
  
 
-
 
  
 
-
 
     
1 
This is the volume weighted average price (VWAP) of Aegon on the Euronext Amsterdam stock exchange for the period December 15 to January 15. For instance for the 2022 plan year, this is the VWAP for the period December 15, 2021 to January 15, 2022.
Cash by plan year (in EUR)   2020    2021    2022    2023    Total 
Lard Friese
2020
   -    211,431    -    -    211,431 
2021
   -    -    452,981    -    452,981 
2022
   -    -    -    455,880    455,880 
Total cash
  
 
-
 
  
 
211,431
 
  
 
452,981
 
  
 
455,880
 
     
Matt Rider
2017
   49,878    49,878    -    -    99,756 
2018
   75,964    75,964    75,964    -    227,892 
2019
   148,560    74,278    74,278    74,278    371,394 
2020
   -    213,404    -    -    213,404 
2021
   -    -    294,589    -    294,589 
2022
   -    -    -    278,984    278,984 
Total cash
  
 
274,402
 
  
 
413,524
 
  
 
444,831
 
  
 
353,262
 
     
Alex Wynaendts
2016
   104,412    -    -    -    104,412 
2017
   114,710    114,710    -    -    229,420 
2018
   106,243    106,243    106,243    -    318,729 
2019
   209,548    104,772    104,772    104,772    523,864 
2020
   -    100,725    -    -    100,725 
Total cash
  
 
534,913
 
  
 
426,450
 
  
 
211,015
 
  
 
104,772
 
     
Darryl Button
2016
   74,674    -    -    -    74,674 
Total cash
  
 
74,674
 
  
 
-
 
  
 
-
 
  
 
-
 
     
Aegon Annual Report on Form 20-F
2022
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Table of Contents
About Aegon
Governance and risk management
Financial information        Non-financial information
The Executive Board members have a time-based shareholding requirement of five years after the initial allocation of their variable compensation in shares (that is, a three-year deferral period before vesting and an additional
two-year
holding period after vesting). Additionally, Mr. Friese and Mr. Rider voluntarily agreed to a minimum shareholding requirement of 100% of their fixed compensation level, once they have reached that level. For this purpose, both vested and unvested shares that have been allocated as compensation will be included in the count, with the unvested share allocations valued at what they would be worth after tax. For the vested share allocations, this tax has already been deducted and paid. After the allocation of the 2022 variable compensation award, Mr. Friese will
hold 126% of his fixed compensation in shares and Mr. Rider 169%, based on the opening share price on March 1, 2023.
Recognized IFRS expenses of remuneration (2020-2022)
The following table contains the recognized IFRS expenses of the remuneration of the Executive Board members in the calendar years 2020, 2021, and 2022. These numbers deviate from the above-mentioned allocated remuneration amounts, as the deferred parts of variable compensation and Mr. Friese’s
sign-on
arrangement are expensed over multiple calendar years, and the shares are included at their fair value instead of the grant price.
IFRS expenses for compensation (In EUR thousand)  Fixed
compensation		   Variable
compensation		   Pension   Other
Benefits		   Total 
Lard Friese
                         
2022
1)
   1,586    864    621    77    3,149 
2021
1)
   1,576    692    594    77    2,939 
2020
1)
   1,869    282    373    49    2,572 
Matt Rider
                         
2022
   988    594    395    66    2,044 
2021
   968    583    387    67    2,005 
2020
   941    528    376    67    1,912 
Alex Wynaendts
                         
2020
2)
   496    497    337    97    1,427 
All Executive Board members
                         
2022
1)
   2,574    1,459    1,016    143    5,193 
2021
   2,545    1,275    981    144    4,944 
2020
   3,306    1,307    1,086    213    5,911 
1 
Includes the fixed compensation expenses for the
sign-on
arrangement of EUR 1,228 thousand that Mr. Friese received when joining Aegon in March 2020. These expenses were EUR 27 thousand in 2022, EUR 91 thousand in 2021, and EUR 938 thousand in 2020.
2 
The disclosed amounts for 2020 cover the period that Mr. Wynaendts has been a member of the Executive Board (until May 15, 2020).
Awarded and due remuneration (2021-2022)
In line with the European guidelines on the standardized presentation of the remuneration report, the remuneration that was awarded and due to the Executive Board members
in the calendar years 2021 and 2022 can be found in the table below. These amounts were awarded and due in accordance with the Executive Board remuneration policy that applied at the time and there were no deviations.
       Fixed   Variable                     
In EUR thousand  Salary   Benefits   
Upfront
1
)
   Deferred
2
)		   One-off   Pension   Total   Ratio Fixed/Variable 
3
)		 
Lard Friese
 
2022
4)
   1,559    77    453    —      199    621    2,910    78% / 22% 
  
2021
5)
   1,485    77    211    —      255    594    2,622    82% / 18% 
Matt Rider
 
2022
   988    66    295    309    —      395    2,053    71% / 29% 
  
2021
   968    67    213    363    —      387    1,999    71% / 29% 
1 
The upfront cash and share payments of variable compensation that was allocated for the previous performance year. The shares are valued at their price at vesting. For example, the upfront cash and shares of the 2021 variable compensation award that were paid in 2022.
2 
The deferred cash and share payments of the variable compensation that was allocated for performance years before the previous performance year. The shares are valued at their price at vesting. For example, the deferred cash and shares of the 2018-2019 variable compensation awards that were paid in 2022.
3 
Fixed (the numerator) is the sum of Salary, Benefits and Pension divided by the Total. Variable (the denominator) is the sum of Upfront, Deferred and
One-off
divided by the Total.
4 
The
one-off
item concerns the payments of the 2020
sign-on
arrangement that were deferred for two years (EUR 57 thousand in cash and 28,692 shares at a vesting price of EUR 4.973).
5 
The upfront variable amount covers the
pro-rated
cash bonus payment that was awarded for the period as Executive Board member during 2020 (from May 15 to December 31). The
one-off
item concerns the payments of the 2020
sign-on
arrangement that were deferrred for one year (EUR 105 thousand in cash and 37,980 shares at a vesting price of EUR 3.934).
74
Aegon Annual Report on Form 20-F
2022
Table of Contents
Remuneration Report
Annualized total compensation overview (2018-2022)
The table below shows the total compensation that was awarded and due in the last five calendar years on an annualized basis and the
year-on-year
annual change in total compensation. Please note that therefore several amounts have been annualized, while in practice these were
pro-rated
for the period during which the individual served as an Executive Board member. These amounts were awarded and
due in accordance with the Executive Board remuneration policy that applied at the time and there were no deviations. Additionally, the table shows the Aegon net result, a proxy of the financial and
non-financial
business performance, the vesting price of the Aegon shares, the inflation in the Netherlands and the average employee compensation over the same period.
In EUR thousand  
Annualized
                  2018           2019          2020          2021  
        2022
 
       
Lard Friese
  Awarded and due   -    -   2,719   2,748   2,910 
       
   Change   -    -   -   1%   6% 
       
Matt Rider (as of May 19, 2017)
  Awarded and due   1,670    1,799   1,824   2,052   2,053 
       
   Change   -    8%   1%   12%   0% 
       
Alex Wynaendts
  Awarded and due   4,969    3,806   3,268   -   - 
       
   Change   -    (23%)   (14%)   -   - 
       
Aegon net result
(EU-IFRS)
  In EUR million   741    1,525   55   1,701   (2,504) 
       
Aegon business performance
1)
  Target = 100%   106%    79%   57%   123%   113% 
       
Vesting price Aegon shares
  In EUR   5.848    4.287   2.079   3.934   4.973 
       
Inflation in the Netherlands
  Consumer Price Index   1.7%    2.6%   1.3%   2.7%   10.0% 
       
Average employee compensation
2)
  In EUR thousand   104    115   110   105   134 
       
   Annual change   -    11%   (4%)   (5%)   28% 
1 
The weighted average Aegon financial and
non-financial
business performance, expressed as a percentage on a performance scale with 50% as the threshold, 100% as the target and 150% as the maximum, as used for the allocation of variable compensation in the applicable year.
2 
Consistent with the CEO pay ratio calculation, the average employee compensation is based on the audited total
EU-IFRS
remuneration expenses for all employees divided by the number of employees in scope for these expenses.
2023 Executive Board performance indicators
Looking ahead to the 2023 performance years, the 2023 performance indicators for Mr. Friese and Mr. Rider will be based again on a mix of 70% Group performance and 30%
personal performance. The first table below shows the weight that is assigned to each performance indicator. The second table contains a summary of the performance indicator definitions.
2023 performance indicator weights   For Aegon bonus pools               Lard Friese               Matt Rider 
Group performance
             
Free cash flows (2021-2023)
   20%   14%   14% 
Relative total shareholder return (2021-2023)
   10%   7%   7% 
Earnings on
in-force
   10%   7%   7% 
Market consistent value of new business
   10%   7%   7% 
Addressable expenses savings from cost initiatives
   10%   7%   7% 
Revenue growth from growth initiatives
   10%   7%   7% 
Timely execution of initiatives
   10%   7%   7% 
Weighted average carbon intensity
   10%   7%   7% 
Employee engagement
   10%   7%   7% 
Personal performance
             
Strategic Roadmap development and execution
       25%   10% 
Women in senior management
       5%   5% 
Finance strategy execution
       -   15% 
Total weight
  
 
100
% 
 
 
100
% 
 
 
100
% 
Aegon Annual Report on Form 20-F
2022
|  
75
Table of Contents
About Aegon
Governance and risk management
Financial information        Non-financial information
2023 performance indicators
Definition
Free cash flowsFree cash flows represent cash flows from remittances from the units less the Holding funding and operating expenses. For 2023 it will be measured on a retrospective
3-year
performance period (2021-2023). The 2021-2023 target is equal to the 2021-2023 cumulative free cash flows target that was disclosed at the Capital Markets Day in December 2020 and the updated guidance, excluding Aegon the Netherlands.
Relative total shareholder returnAegon’s position relative to 7 US and 7
non-US
peers when looking at Total Shareholder Return for a retrospective
3-year
performance period (2021-2023). These peers were selected for being the most similar to Aegon based on their index listing, industry classification, 5 year monthly Beta, Market Capitalization and Total Revenue.
1)
Earnings on
In-Force
Represents the capital that is generated by the business units from their
In-Force
business in 2023. It is based on the definition of Operating Capital Generation, but excludes the New Business Strain, Release of Required Capital in the business units, and Holding & Funding expenses at Group level. The 2023 target is based on the 2023 budget, excluding Aegon the Netherlands.
Market consistent value of new businessRepresents how much value the sale of new insurance policies is generating for the company. This value represents the present value of our best estimate of incoming premiums and outgoing claims, benefits and expenses related to these new sales. The 2023 target is based on the 2023 budget, excluding Aegon the Netherlands.
Addressable expenses savings from cost initiativesMeasures the addressable expense savings delivered by cost initiatives in 2023. The 2023 target is based on the 2023 budget, excluding Aegon the Netherlands.
Revenue growth from growth initiativesMeasures the revenue growth delivered by growth initiatives in 2023. The 2023 target is based on the 2023 budget, excluding Aegon the Netherlands.
Timely execution of initiativesMeasures the timely operational completion of cost and growth initiatives.
Weighted average carbon intensityMeasures the weighted average carbon intensity reduction by the end of 2023, compared to our 2019 baseline, excluding Aegon the Netherlands.
Employee engagementEmployee engagement as measured in the global employee survey, excluding at Aegon the Netherlands.
Strategic Roadmap development and executionStrategic Roadmap development and execution, such as to further enhance the growth prospects for the strategic assets and successfully combine Aegon the Netherlands with a.s.r.
Women in senior managementMeasures the percentage of women in Aegon’s senior management layer worldwide, excluding at Aegon the Netherlands.
Finance strategy executionComplete the 2023 milestones from the Finance strategy.
1 
These peers are in order of the 2020-2022 ranking results: 1) Principal Financial Group Inc, 2) Unum Group, 3) MetLife Inc, 4) ASR Nederland NV, 5) NN Group NV, 6) Brighthouse Financial Inc, 7) Aegon NV, 8) Equitable Holdings Inc, 9) Prudential Financial Inc, 10) Swiss Life Holding AG, 11) Athene Holding Ltd / Helvetia Holding*, 12) Assicurazioni Generali SpA, 13) Baloise Holding AG, 14) Prudential PLC, and 15) Lincoln National Corp. This is the blended result of the initial peer Athene and the
back-up
peer Helvetia, which replaced Athene per March 9, 2021, in accordance with our plan rules, following the merger announcement by Athene.
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Risk management
Risk management
As an insurance group, Aegon manages risk for the benefit of its customers and other stakeholders. The company is exposed to a range of underwriting, operational and financial risks. Aegon’s risk management and internal control systems are designed to ensure that these risks are managed effectively and efficiently in a way that is aligned with the company’s strategy.
For Aegon, risk management involves:
◆Understanding risks that the company faces
◆Maintaining a group wide framework through which the risk-return
trade-off
associated with these risks can be assessed
◆Maintaining risk tolerances and supporting policies to limit exposure to a particular risk or combination of risks
◆Monitoring risk exposures and actively maintaining oversight of the company’s overall risk and solvency positions
This section provides a description of Aegon’s risk management framework.
Enterprise Risk Management (ERM) framework
Aegon’s ERM framework is designed and applied to identify risks that may affect Aegon and manage individual and aggregate risks within Aegon’s set risk tolerances. The ERM framework covers the ERM components as identified by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The ERM framework applies to all of Aegon’s businesses for which it has operational control.
Risk strategy, risk appetite statement and risk tolerances
The formulation of the risk strategy starts with the principle that taking a risk should be based on serving a customer’s need. The competence to manage the risk is assessed and Aegon’s risk preferences are formulated, considering Aegon’s risk capacity. The process results in a targeted risk profile, reflecting the risks Aegon wants to assume, and the risks Aegon would like to avoid or mitigate.
Aegon’s risk appetite statement and risk tolerances are established to assist management in carrying out
Aegon’s strategy within the boundaries of the resources available to Aegon. Aegon’s risk appetite statement is to:
“Fulfill our promises towards our customers and other stakeholders by delivering sustainable and growing longterm free cash flow through strong resilience in solvency and liquidity, with a healthy balance in exposures, and by running a responsible business with effective controls.”
Following from the risk appetite statement, risk tolerances are defined on:
◆Solvency, including Cash Capital at Holding and capital generation, to ensure that Aegon remains solvent even under adverse scenarios;
◆Liquidity, to ensure that Aegon has sufficient liquidity even under extreme scenarios;
◆Risk balance, to ensure a healthy balance of risk exposures; and
◆Responsible business with effective controls, which acknowledges an acceptable level of operational risk and stresses a low tolerance for (lack of) actions that could lead to material adverse risk events that result in breaking promises or not meeting reasonable expectations of customers, legal and regulatory breaches, reputational damage, financial detriment or financial misstatement.
The tolerances are further developed into measures, thresholds and indicators that have to be complied with to remain within the tolerances.
Risk universe
Aegon’s risk universe is structured to reflect the type of risks to which the company is exposed. The identified risk categories are financial risk (for example, interest rate risk and credit risk), underwriting risk (for example, mortality and morbidity risk and policyholder behavior), and operational risk (for example, fraud, business disruption and
non-financial
risks). Specific risk types are identified within these risk categories. These risks, internal or external, may affect the company’s operations, earnings, share price, value of its investments, or the sale of certain products and services. In the context of Aegon’s risk strategy, a risk appetite is set for the three identified risk categories (see table below).
Risk
category		DescriptionAppetite
UnderwritingThe risk of incurring losses when actual experience deviates from Aegon’s best estimate assumptions on mortality, longevity, morbidity, policyholder behavior, P&C claims and expenses used to price products and establish technical provisions.Medium to high - Underwriting risk is Aegon’s core business and meets customer needs.
FinancialThe risk of incurring financial losses due to movements in financial markets and the market value of balance sheet items. Elements of financial risk are credit risk, inflation risk, investment risk, interest rate risk and currency risk.Low to medium - Accepted where it meets customer needs and the risk return profile is acceptable.
OperationalThe risk of losses resulting from inadequate or failed internal processes and controls, people and systems or from external events, such as processing errors, legal and compliance issues, natural or
man-made
disasters, and cybercrime.		Low - Accepted as a necessary condition of conducting business, but mitigated as much as possible in an economically efficient manner.
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About Aegon
Governance and risk management
Financial information        Non-financial information
Risk identification and risk assessment
Aegon has identified a risk universe that captures all known material risks to which the company is exposed. To assess all risks, Aegon maintains a documented, consistent methodology for measuring risks. The risk metrics are embedded in Aegon’s key reports and are used for decision making.
Risk response
Aegon distinguishes the following risk responses, which are particularly relevant where risks are out of tolerance:
◆Risk acceptance: The risk is accepted;
◆Risk control: The risk is reduced by reducing the exposure, by improving processes and existing controls or by introducing new controls;
◆Risk transfer: The risk is reduced by insuring the company against the risk or by outsourcing activities to third parties; or
◆Risk avoidance: Activities that are the source of the risk are terminated.
Risk monitoring and reporting
Risks are monitored regularly and reported internally on at least a quarterly basis. The impact of key financial, underwriting, and operational risk drivers on earnings and capital is shown in the quarterly risk dashboards for the various risk types, both separately and on an aggregate basis.
Risk exposures are compared with the measures and indicators as defined by Aegon’s risk tolerance statements. Reporting also includes compliance and incident reporting. Finally, the main risks derived from Aegon’s strategy and
day-to-day
business are discussed, as well as forward-looking points for attention. If necessary, mitigating actions are taken and documented.
Risk control
A system of effective controls is required to mitigate the risks identified. In Aegon’s ERM framework, risk control includes risk governance, risk policies, internal control framework, model validation, risk framework embedding, risk culture, and compliance.
Most significant risks
The most significant risks Aegon faces in terms of exposures and required capital are:
◆Financial markets risks (particularly related to credit, equity, and interest rates)
◆Underwriting risks (particularly related to mortality and morbidity risks and policyholder behavior)
◆Operational risks (particularly related to reputation and continuity of operations).
Description of risk types
Financial market risks
Credit risk
Credit risk is the risk of loss resulting from the default by, or failure to meet contractual obligations of, issuers and counterparties. Aegon also considers credit risk to include spread risk, that is, a decline in the value of a bond, loan or mortgage due to a widening of credit spreads. Having a well-diversified investment portfolio means that Aegon can accept credit spread risk to earn a liquidity premium on assets that match liabilities. The focus is on high-quality securities with low expected defaults because Aegon has a low appetite for default risk.
Equity market risk and other investment risks
Aegon runs the risk that the market value of its investments changes. Investment risk affects Aegon’s direct investments in the general account, indirect investments for the account of policyholders and agreements where Aegon relies on counterparties, such as reinsurance and derivative counterparties.
Aegon has a low preference for investments in equity securities via the general account. Equity investments generate an equity risk premium over the long run, but in combination with a high capital charge result in a relatively low return on capital. Aegon accepts equity exposure through
fee-based
business in the separate accounts and mutual funds. Aegon has experience and expertise in managing complex investment guarantees and leverages this capability by providing customers access to a range of investment strategies and guaranteed benefits. Although Aegon accepts equity exposure via guarantee products, its preference is to hedge this risk as much as possible. Other investment risks include real estate exposure in the general account via Dutch Amvest holdings, and indirectly via property funds invested for the account of policyholders.
Interest rate risk
Aegon is exposed to interest rates as both its assets and liabilities are sensitive to movements in long-term and short-term interest rates, as well as to changes in the volatility of interest rates. Aegon may accept interest rate risk in order to meet customer needs. However, as no spread is earned on interest rate risk, Aegon prefers to mitigate the risk to the extent possible.
Currency exchange rate risk
As an international company, Aegon conducts business in different currencies and is therefore exposed to movements in currency exchange rates. Foreign currency exposure exists primarily when policies are denominated in currencies other than the issuer’s functional currency. Currency risk in the investment portfolios backing insurance and investment liabilities is managed using asset-liability matching principles. Assets allocated
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to equity are held in local currencies to the extent shareholders’ equity is required to satisfy regulatory and self-imposed capital requirements. Currency exchange rate fluctuations therefore affect the level of shareholders’ equity as a result of converting local currencies into euros (EUR), the company’s reporting currency. The company holds its capital base in various currencies in amounts that correspond to the book value of individual business units.
Inflation risk
Aegon is exposed to inflation risk through inflation-linked benefits offered on some of the products sold by Aegon’s insurance entities such as pensions or long-term care products. In addition, Aegon is exposed to cost inflation through its expense base. Aegon prefers to mitigate the risk to the extent possible.
Liquidity risk
Aegon needs to maintain sufficient liquidity to meet short-term cash demands, not only under normal conditions, but also in the event of a crisis. To that end, Aegon has put a strong liquidity management framework in place. The company considers extreme liquidity stress scenarios, including the possibility of prolonged “frozen” capital markets, an immediate and permanent rise in interest rates, and elevated policyholder withdrawals.
Please refer to note 4 “Financial Risk” to Aegon’s financial statements.
Underwriting risk
Underwriting risk relates to the products sold by Aegon’s insurance entities and is the risk of incurring losses when actual experience deviates from Aegon’s best estimate assumptions on mortality, morbidity, policyholder behavior, Property & Casualty (P&C) claims and expenses. Aegon has a preference to selectively grow underwriting risk, but this must work
hand-in-hand
with a strong underwriting process. Aegon’s earnings depend, to a significant degree, on the extent to which claims experience is consistent with assumptions used to price products and establish technical provisions. Changes in, among other things, morbidity, mortality, longevity trends, and policyholder behavior may have a considerable impact on the company’s income. Assumptions used to price products and establish technical provisions are reviewed on a regular basis. Please refer to note 3 “Critical accounting estimates and judgment in applying accounting policies” to Aegon’s consolidated financial statements for further information.
Operational risk
Like other companies, Aegon faces operational risk resulting from operational failures or external events, such as processing errors, inaccuracies in models used, negative behavior by personnel,
non-compliance
to laws and regulations, and natural or
man-made
disasters, including
climate change. In addition, major programs or organizational transformations may also increase the potential for operational risks. Aegon’s systems and processes are designed to support complex products and transactions, and to help protect against such issues as system failures, business disruption, financial crime, and breaches of information security. Aegon monitors and analyses these risks, and retains flexibility to update and revise where necessary. Aegon’s operational risk universe distinguishes as risk types: business risk; legal, regulatory, conduct, and compliance risks; tax risk; financial crime risk; processing risk; information technology and business disruption risks; people risk; and facility risk. These level 1 risk types are split into more granular level 2 risk types. The more granular risk types include, among others, information security risk, conduct risk, fraud risk, modelling risk, and physical damage risk.
Sustainability risk
Sustainability risk is not considered a separate risk type but is a risk driver that impacts multiple risks. Sustainability is explicitly part of Aegon’s risk taxonomy, embedded in its ERM framework and incorporated in the relevant risk policies. Sustainability has financial risk, underwriting, business risk, legal, regulatory, conduct and compliance risk angles. For example, climate change can impact future investment returns The legal, regulatory, conduct and compliance risk angles relate to the ability to comply with relevant legal and regulatory requirements. The importance of handling sustainability risk effectively and expeditiously is expected to further increase, also given the increasing importance of sustainability for all stakeholders including society, investors, customers, and regulators.
Fraud risk
Fraud Risk is interpreted broadly in Aegon and relates both to operational types of fraud and financial reporting related fraud.
Operational types of fraud are distinguished between internal and external fraud, that is, fraud committed by employees and fraud committed by others, with external fraud further specified as intermediary fraud or fraud committed by third parties. To combat operational types of fraud, Aegon has put policies in place and reports internally on its adherence to these policies. To enable Aegon Boards to assess fraud risks, Compliance departments report quarterly on fraud events. In its annual Systematic Integrity Risk Analysis (SIRA), Aegon analyses both its exposure to fraud, and its residual risks, taking into account all measures Aegon has put in place to combat fraud. Where gaps are found, additional measures are put in place.
Furthermore, Aegon has an established process in place to assess and confirm effective controls are in place concerning fraud in financial reporting. This assessment is performed annually and is based on a set of mandatory
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Financial information        Non-financial information
scenarios. In addition, the assessment is required to be performed by all Aegon subsidiaries. In 2022, the assessment confirmed that effective controls were in place to mitigate the risk of fraud in the financial statement process.
Business environment scan
In addition to managing these various types of risk, Aegon performs a business environment scan. The aim is to identify emerging, fundamental/structural trends, risks, and opportunities in our operating environment, which could have significant impact on value creation and Aegon’s financial strength, competitive position, or reputation. It is a critical, cross-functional exercise that looks beyond impact alone to assess the potential of topics to influence value creation. The scan is performed as a check on the ongoing appropriateness of the risk universe, to ensure the completeness of Aegon’s risk assessment as well as to provide input for ongoing strategy development.
Topic identification, mapping, and selection are based on desk research, interviews with internal and external experts, and management selection. Outcomes can be used for materiality reporting, as input for Aegon’s strategy process and for possible
follow-up
in terms of further analysis, tracking, or as a global project.
Risk governance framework
Aegon’s risk management is based on clear, well-defined risk governance. The goals of risk governance are to:
◆Define roles and responsibilities, and risk reporting procedures for decision-makers
◆Institute a proper system of checks and balances
◆Provide a consistent framework for managing risk in line with the targeted risk profile
◆Facilitate risk diversification
Governance structure
Aegon’s risk management framework is represented across all levels of the organization. This ensures a coherent and integrated approach to risk management throughout the company. Similarly, Aegon has a comprehensive range of
group 
wide risk policies that detail specific operating guidelines and limits. These policies include legal, regulatory, and internally set requirements, and are designed to keep overall risk-specific exposures to a manageable level. Any breach of policy limits or warning levels triggers remedial action or heightened monitoring. Further risk policies may be developed at a local level to cover situations specific to particular business units.
Aegon’s risk management governance structure has four layers:
◆The Supervisory Board and the Supervisory Board Risk Committee (SBRC)
◆The Executive Board and the Management Board
◆The Group Risk & Capital Committee (GRCC) and its
sub-committees
◆The local Risk & Capital Committees
The SBRC reports to the Supervisory Board on topics related to the ERM framework and the internal control system. This includes:
◆Risk strategy, risk tolerance, and risk governance;
◆Product development and pricing;
◆Risk assessment;
◆Risk responses and internal control effectiveness;
◆Risk monitoring; and
◆Risk reporting.
The Risk Committee works closely with the Audit Committee.
For a description of the main roles and responsibilities of the SBRC see the section on the Risk Committee on page 51 of the Report of the Supervisory Board in this Annual Report.
It is the responsibility of the Executive Board and the Group’s Chief Risk Officer (CRO) to inform the Supervisory Board of any risk that directly threatens the solvency, liquidity, or operations of the company.
Aegon’s Executive Board has overall responsibility for risk management. The Executive Board adopts the risk strategy, risk governance, risk tolerance, and material changes in risk methodology and risk policies. The Group’s CRO has a standing invitation to attend Executive Board meetings and a direct reporting line to the Supervisory Board to discuss ERM and related matters, and is a member of the Management Board.
The Management Board oversees a broad range of strategic and operational issues. While the Executive Board is Aegon’s statutory executive body, the Management Board provides vital support and expertise in safeguarding Aegon’s strategic goals. The Management Board discusses and sponsors ERM, in particular the risk strategy, risk governance, risk tolerance, and the introduction of new risk policies.
The Executive Board and Management Board are supported by the Group Risk & Capital Committee (GRCC). The GRCC is Aegon’s most senior risk committee. It is responsible for managing Aegon’s balance sheet at the global level, and is in charge of risk oversight, risk monitoring, and risk management -related decisions on behalf of the Executive Board and in line with its charter. The GRCC ensures risk-taking is within Aegon’s risk tolerances; that the capital position is adequate to support financial strength and regulatory requirements, and that capital is properly allocated. The GRCC informs the Executive Board about any identified (near) breaches of overall tolerance levels that
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Risk management
threaten the risk balance, as well as any potential threats to the company’s solvency, liquidity, or operations.
The GRCC has three
sub-committees:
the ERM framework, Accounting and Actuarial Committee (ERMAAC), the
Non-Financial
Risk Committee (NFRC) and the Model Validation Committee (MVC).
The purpose of the ERMAAC is to assist the GRCC, Executive Board, and Management Board with financial risk framework setting and maintenance across all group-level balance sheet bases, including policies, standards, guidelines, methodologies, and assumptions.
The purpose of the NFRC is to assist the GRCC, Executive Board and Management Board with
non-financial
risk framework setting and maintenance, including policies, standards, guidelines, and methodologies, and to act as a formal discussion and information-exchange platform on matters of concern regarding
non-financial
risk management.
The MVC is responsible for approving all model validation reports across Aegon. This is an independent committee that reports to the GRCC and the Executive Board to provide information on model integrity and recommendations on how to further strengthen these models.
Aegon’s business units have a Risk, or Risk and Capital committee, and an Audit committee. The responsibilities and prerogatives of the committees are aligned with those of the company-level committees and further elaborated in their respective charters, which are tailored to local circumstances.
In addition to the four layers described above, Aegon has an established
group 
wide Risk function. It is the mission of the Risk function to ensure the continuity of the company by safeguarding the value of existing business, protecting Aegon’s balance sheet and reputation, and by supporting the creation of sustainable value for all stakeholders.
In general, the objective of the Risk function is to support the Executive Board, Management Board, Supervisory Board, and business unit boards in ensuring that the company reviews, assesses, understands, and manages its risk profile. Through oversight, the Risk function ensures the company-wide risk profile is managed in line with Aegon’s risk tolerances, and stakeholder expectations are managed under both normal business conditions and adverse conditions caused by unforeseen negative events.
The following roles are important in order to realize the objective of the Risk function:
◆Advising on risk-related matters including risk tolerance, risk governance, risk methodology, and risk policies
◆Supporting and facilitating the development, incorporation, maintenance, and embedding of the ERM framework and sound practices
◆Monitoring and challenging the implementation and effectiveness of ERM practices
In the context of these roles, the Risk function has the following responsibilities:
ERM Framework
◆The overarching ERM Framework supports Aegon’s corporate strategy and enables management to effectively deal with uncertainty and the associated risk-return trade-offs.
Global Risk Appetite (GRA)
◆The GRA is linked to and supports Aegon’s strategy and purpose and translates these into risk tolerances and risk limits.
Risk identification and assessment
◆All material risks are captured and classified in Aegon’s risk universe. An emerging risk process is in place to ensure that risk universe remains up to date and complete. Risk assessment includes risk measurement across valuation and reporting metrics and feeds into Aegon’s risk strategy, including risk preferences and risk profile considerations.
Risk governance
◆A risk governance framework is in place across all levels of the company, including formal committees, committee charters, memberships across relevant functions, and escalation procedures.
Policies and standards
◆Risk policies and standards set out requirements, roles and responsibilities, and processes to manage risks across the risk universe.
Risk framework embedding
◆The ERM Framework is embedded in Aegon’s key business areas. The Own Risk Self-Assessment (ORSA) unites the risk and capital management and the business planning processes across Aegon and aligns these to its strategy. The risk strategy is aligned with the business strategy, the strategy execution is closely monitored, and risks are identified on time to ensure strong delivery in a safe and timely manner.
Risk oversight
◆Major business (and risk) decisions are risk-based; properly risk-informed and, where relevant, challenged by the Risk function to protect the balance sheet and proper customer conduct.
Risk monitoring and reporting
◆Risks across the risk universe are monitored and reported.
Risk culture
◆Risk culture is embedded across the company.
◆Risk culture encompasses the awareness of employees, management, and leadership of relevant risks and how risks are managed.
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About Aegon
Governance and risk management
Financial information        Non-financial information
Aegon’s
group-wide and business unit risk management staff structure is fully integrated. Business unit CROs have either a direct reporting line to the Group CRO or one of the CROs that reports directly to the Group CRO
.
Keeping ERM framework up to date and effective
Aegon continuously works on keeping its ERM framework
up-to-date,
effective and
fit-for-purpose.
The annual risk development plan outlines priorities for the year and rationalizes activities that align with Aegon’s strategy and vision. Policies, charters and other governance documents are regularly reviewed and updated where necessary. Also, activities such as the Business Environment Scan provide an internal and external perspective on the risk universe and will signal where updates are required. As an example, sustainability risk, including climate risk has been incorporated more explicitly in our risk taxonomy and relevant risk and business policies and processes. In addition, internal processes like policy attestation verify compliance with policies.
Non-compliance
requires remediating action plans, which are actively monitored to ensure execution. Aegon conducts an internal System of Governance review on a regular basis, as required by Solvency II legislation. The review includes design and effectiveness assessments of Aegon’s system of governance, including risk management. Identified weaknesses and improvement areas following from such reviews are reported, discussed and acted on.
Internal control system
Aegon has developed an internal control system that serves to facilitate its compliance with applicable laws, regulations (for example. Sarbanes-Oxley Act and Solvency II), and administrative processes, and the effectiveness and efficiency of operations with regard to its objectives,
in addition to the availability and reliability of financial and
non-financial
information. The overall internal control system ensures appropriate control activities for key processes, and the documentation and reporting of administrative and accounting information. A key element of the internal control system is to facilitate action planning and embed continuous improvement regarding the internal control environment throughout the organization. The internal control system is embedded through policies and frameworks such as the ERM Framework, Model Validation Framework, Operational Risk Management (ORM) Framework, and Information Technology Framework. Aegon’s internal control system is considered more encompassing in scope than the Integrated Framework issued by COSO on which criteria for the internal control system are based.
In relation to the Information Technology Framework, as some of the core processes and systems shift from legacy
on-premises
environment to the cloud, Aegon has established a strategy to manage cloud risk. This includes defining key elements of cloud governance, cloud security strategy, as well as integrating cloud control requirements into our IT Control Framework.
In 2022, risk management and internal control topics were discussed by the relevant management committees and bodies, including the Management Board, the Executive Board, Supervisory Board Risk Committee (SBRC), and the Supervisory Board Audit Committee (SBAC). An analysis of internal and external audit reports and risk reviews revealed no material weaknesses. As a result, no significant changes or major improvements were made or planned to the risk management and internal control systems.
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Capital and liquidity management
Capital and liquidity management
Guiding principles
The management of capital and liquidity is of vital importance for Aegon, for its customers, investors in Aegon securities, and for Aegon’s other stakeholders. In line with its risk tolerance, the goal of Aegon’s capital and liquidity management is to promote strong and stable capital adequacy levels for its businesses, in addition to maintaining adequate liquidity to ensure the company is able to meet its obligations.
Aegon follows a number of guiding principles in terms of capital and liquidity management:
◆Promoting strong capital adequacy in Aegon’s businesses and operating units
◆Managing and allocating capital efficiently in support of the strategy and in line with its risk tolerance
◆Maintaining an efficient capital structure, with an emphasis on optimizing Aegon’s cost of capital
◆Maintaining adequate liquidity in both the operating units and the Holding to ensure that the company is able to meet its obligations by enforcing stringent liquidity risk policies
◆Maintaining continued access to international capital markets on competitive terms
Aegon believes that the combination of these guiding principles strengthens the company’s ability to withstand adverse market conditions, enhances its financial flexibility, and serves both the short-term and the long-term interests of the company, its customers, and other stakeholders.
The management and monitoring of capital and liquidity is firmly embedded in Aegon’s Enterprise Risk Management (ERM) framework.
Management of capital
Aegon’s capital management framework is based on adequate capitalization of its operating units, Cash Capital at Holding, and leverage.
Capital adequacy of Aegon’s operating units
Aegon manages capital in its operating units at levels sufficient to absorb moderate shocks without impacting the remittances to the Group. These moderate shocks could be caused by various factors, including general economic conditions, financial markets risks, underwriting risks, changes in government regulations, and legal and arbitration proceedings. To mitigate the impact of such factors on the ability of operating units to pay remittances to the Group, Aegon established an operating level of capital in each of the units: 400% Risk-Based Capital (RBC) Company Action Level (CAL) in the US and 150% Solvency Capital Requirement (SCR) for Solvency II units. Aegon manages capital in the units to their respective operating levels
over-the-cycle.
After investments have been made in new business to generate organic growth, capital generated by Aegon’s operating units is available for distribution to the holding company. In addition to an operating level, Aegon established a minimum dividend payment level of capital in each of the units: 350% RBC CAL in the US and 135% SCR for Solvency II. As long as the capital position of the unit is above this minimum dividend payment level, the unit is expected to pay remittances to the Group.
When the operating unit’s capital position approaches the minimum dividend payment level, capital management tools will be used to ensure that units will remain well capitalized. The frequent monitoring of actual and forecasted capitalization levels of its operating units is an important element in Aegon’s capital framework in order to actively maintain adequate capitalization levels.
The regulatory capital requirement, minimum dividend payment level, operating level, and actual capitalization for Aegon’s main operating units at December 31, 2022 are included in the following table:
Capital requirements  Regulatory capital  
requirement  		   Minimum dividend  
payment level  		   Operating level     Actual capitalization   
US RBC CAL ratio
   100%      350%      400%      425%   
NL Life Solvency II ratio
   100%      135%      150%      210%   
Scottish Equitable Plc (UK) Solvency II ratio
   100%      135%      150%      169%   
For more details on the capital ratios and the movement thereof, see note 43 “Capital management and solvency” in Aegon’s consolidated financial statements.
Improving risk-return profile
Aegon has an active global reinsurance program designed to optimize the risk-return profile of insurance risks. In addition, Aegon monitors the risk-return profile of new business written, withdrawing products that do not create value for all stakeholders including policyholders and shareholders.
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About Aegon
Governance and risk management
Financial information        Non-financial information
Aegon continues to take measures to improve its risk-return profile. Particularly in the United States, several actions were taken to strengthen the capital position and reduce the volatility of the local capital positions.
Management actions US
Transamerica – Aegon’s business in the United States – has entered into a series of transactions designed to reduce the volatility of mortality claims on its statutory capital position. Statutory reserves were strengthened through a recapture of a captive reinsurance. Separately, Transamerica has acquired a portfolio of universal life secondary guarantee policies from institutional owners. The primary management actions regarding long-term care are rate increase programs. The total value of approvals achieved since the start of the program stood at USD 471 million at the end of 2022, compared with USD 342 million at the end of 2021. Therefore, the company has achieved the USD 450 million target for this program. This was the upgraded target compared with the targeted USD 300 million value of rate increases that Aegon communicated at the Capital Markets Day in 2020. Transamerica will continue to work with state regulators to get pending and future actuarially justified rate increases approved.
Since the Capital Markets Day in 2020, Transamerica has made good progress on increasing the value of the US variable annuity portfolio through unilateral and bilateral actions, including actions to reduce the sensitivity of the US RBC ratio to financial market movements.
◆In the first quarter of 2022, a program was completed whereby certain policyholders were offered a
lump-sum
payment – exceeding the account value – in return for surrendering their variable annuity policy. The program reduces hedge costs for the remaining variable annuity portfolio and reduces Transamerica’s economic exposure at a price that is more favorable than the price that Aegon believes would be possible to achieve in a transaction with a third party;
◆Transamerica also adopted a long-term implied volatility assumption in April 2022. The long-term implied volatility assumption was higher than the then prevailing implied volatility for the valuation of its variable annuity guarantees. Previously, spikes in short-term volatility could result in more variability in the RBC ratio. Given that implied volatility does tend to revert to the mean over time, the adoption of a long-term volatility assumption will better protect Transamerica’s capital position against short-term market dislocations; and
◆In order to reduce the volatility of the RBC ratio caused by the exposure of base contract fees to equity markets, Transamerica established a voluntary reserve in the fourth quarter of 2022 that more closely aligns the recognition of the fees in capital with when they are earned. This has substantially reduced the sensitivity of Transamerica’s RBC ratio to equity market movements.
In October 2022, Transamerica Life Bermuda (TLB) reinsured its closed block of universal life insurance liabilities with Transamerica. The transaction allows Transamerica to recognize its equity in TLB as available capital for solvency purposes.
Cash Capital at Holding and liquidity management
Liquidity management is a fundamental building block of Aegon’s overall financial planning and capital allocation processes. Liquidity is managed both centrally and at the operating unit level and is coordinated centrally at Aegon N.V.
The ability of the holding company to meet its cash obligations depends on the amount of liquid assets on its balance sheet and on the ability of the operating units to pay remittances to the holding company. In order to ensure the holding company’s ability to fulfill its cash obligations, to maintain sufficient flexibility to provide capital and liquidity support to Aegon’s operating units, and to provide stability in external dividends, the company manages Cash Capital at Holding, including Aegon’s centrally managed (unregulated) holding companies, to an operating range of EUR 0.5 billion to EUR 1.5 billion.
The main sources of liquidity in Cash Capital at Holding are remittances from operating units and divestitures. In addition, contingent internal and external liquidity programs are maintained to provide additional safeguards against extreme unexpected liquidity stresses.
Aegon uses the cash flows from its operating units to pay for holding expenses, including funding costs. The remaining free cash flow is available to execute the company’s strategy, to strengthen the balance sheet through deleveraging or make capital injections into units as required, to make acquisitions, to fund dividends on its shares, and to return capital to shareholders if possible, all subject to maintaining targeted Cash Capital at Holding. Aegon aims to pay out a sustainable dividend to enable equity investors to share in its performance.
When determining whether to declare or propose a dividend, Aegon’s Executive Board balances prudence with offering an attractive return to shareholders. This is particularly important during adverse economic and/or financial market conditions. Furthermore, Aegon’s operating units are subject to local insurance regulations that could restrict remittances
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to be paid to the holding company. There is no requirement or assurance that Aegon will declare and pay any dividends.
On December 31, 2022, Aegon held a balance of EUR 1.6 billion in Cash Capital at Holding, compared to EUR 1.3 billion on December 31, 2021. Details on the movement are included in note 43 “Capital management and solvency” in Aegon’s consolidated financial statements.
Liquidity management
The company’s liquidity risk policy sets guidelines for its operating companies and the Holding in order to achieve a prudent liquidity profile and to meet cash demands under extreme conditions. Aegon’s liquidity is invested in accordance with the company’s internal risk management policies. Aegon believes that its Cash Capital at Holding, backed by its external funding programs and facilities, is ample for the company’s present requirements.
Aegon maintains a liquidity policy that requires all business units to project and assess their sources and uses of liquidity over a
two-year
period under normal and severe business and market scenarios. This policy ensures that liquidity is measured and managed consistently across the company, and that liquidity stress management plans are in place.
Aegon’s operating units are engaged in life insurance and pensions business, which are long-term activities with relatively illiquid liabilities and generally matching assets. Liquidity consists of liquid assets held in investment portfolios, in addition to inflows generated by maturing assets, coupons and premium payments, and customer deposits.
Leverage
Aegon uses leverage to lower the cost of capital that supports businesses in the company, thereby contributing to a more effective and efficient use of capital. In managing the use of leverage throughout the company, Aegon has implemented a Leverage Use Framework as part of its broader ERM framework.
Financial leverage
Aegon defines gross financial leverage as debt or debt-like funding issued for general corporate purposes and for capitalizing Aegon’s business units. Gross financial leverage includes hybrid instruments, and subordinated and senior debt. In 2022, Aegon achieved its goal to reduce its gross financial leverage to a range of EUR 5.0 billion to EUR 5.5 billion, as announced during the December 2020 Capital Markets Day. The range was based on a euro/ US dollar exchange rate of 1.20, and at this exchange rate the gross financial leverage was EUR 5.4 billion per December 31, 2022. Following the close of the a.s.r.
transaction Aegon intends to further reduce its gross financial leverage by up to EUR 700 million.
The following are metrics that Aegon assesses in managing leverage:
◆Gross financial leverage ratio
◆Fixed charge coverage
◆Various rating agency leverage metrics
◆Other metrics, including gross financial leverage divided by operating capital generation
Aegon’s gross financial leverage ratio is calculated by dividing gross financial leverage by total capitalization. Aegon’s total capitalization consists of the following components:
◆Shareholders’ equity, excluding revaluation reserves and cash flow hedge reserves, based on IFRS as adopted by the EU
◆
Non-controlling
interests and shares related to long-term incentive plans that have not yet vested
◆Gross (or total) financial leverage
Aegon’s fixed charge coverage is a measure of the company’s ability to service its financial leverage. It is calculated as the sum of the operating result and interest expenses on financial leverage divided by interest payments on financial leverage. The fixed charge coverage includes the impact of interest rate hedging.
Operational leverage
Although operational leverage is not considered part of Aegon’s total capitalization, it is an important source of liquidity and funding. Operational leverage relates primarily to financing Aegon’s mortgage portfolios through securitizations, warehouse facilities, covered bonds, and the use of a Federal Home Loan Bank (FHLB) facility.
Funding and
back-up
facilities
The majority of Aegon’s financial leverage is issued by Aegon N.V., the parent company. A limited number of other Aegon companies have also issued debt securities, but for the most part these securities are guaranteed by Aegon N.V.
Aegon N.V. has regular access to international capital markets under a USD 6 billion debt issuance program. Access to the capital market in the United States is made possible by a separate shelf registration.
Aegon also has access to domestic and international money markets through its EUR 2.5 billion commercial paper programs. On December 31, 2022, Aegon had no amounts outstanding under these commercial paper programs.
To support its commercial paper programs and need for Letters of Credit (LOCs), and to enhance its liquidity position, Aegon maintains backup credit and LOC facilities with
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international lenders. The company’s principal arrangements comprise a EUR 2 billion syndicated revolving credit facility and an LOC facility of USD 2 billion. The syndicated revolving credit facility matures in 2025. The LOC facility matures in 2026. In addition, Aegon also maintains various shorter-dated bilateral backup liquidity facilities in addition to committed and uncommitted LOC facilities.
Rating agency ratings
Aegon’s objective is to maintain very strong financial strength ratings in its main operating units, and this plays an important role in determining the company’s overall capital management strategy. Aegon maintains strong financial strength ratings from several international rating agencies for its operating units.
December 31, 2022                Aegon N.V.Aegon USAAegon the NetherlandsAegon UK  
S&P Global
1)
            
Financial strengthOn December 31, 2022
  A+A+A+
Long-term issuer
BBB+
Senior debt
BBB+
Subordinated debt
BBB-
Moody’s Investors Service
2)
Financial strength
A1
Long-term issuer
A3
Senior debt
A3
Subordinated debt
Baa1
A.M. Best
1)
Financial strength
A
1 
The outlook on S&P’s ratings is negative. The financial strength rating of Aegon the Netherlands has been placed on CreditWatch with negative implications.
2 
Moody’s Investors Service’s long-term issuer rating, senior debt rating and subordinated debt rating have been placed on review for downgrade.
Aegon Group Solvency Ratio
The Solvency II regulatory framework determines
the regulatory capital requirements for EU-domiciled insurance and reinsurance entities. In Aegon’s Non-EEA (European Economic Area) regions, (re)insurance entities domiciled in third countries deemed either provisionally or fully equivalent (US life insurance entities, Bermuda, and Brazil), the capital requirement is based on local capital requirements. For more information about Solvency II and recent developments, please refer to section “Regulation and supervision”.
As on December 31, 2022, the estimated Solvency II ratio of Aegon amounted to 208%, a decrease of 3%-points since December 31, 2021. This was mainly driven by negative market impacts, share buybacks (including the EUR 200 million share buyback to be executed in the first half of 2023), dividends and a tax charge related to the anticipated settlement of a tax position in connection with the transaction with a.s.r. These impacts were largely offset by operating capital generation and management actions including divestitures. For more details, please refer to note 43 “Capital management and solvency” to Aegon’s consolidated financial statements.
       
December 31, 2022 
1) 
  
 December 31, 2021  
Group Own Funds
    16,332   19,431  
Group SCR
    7,844   9,226  
Group Solvency II ratio
    208%   211%  
1
The Solvency II ratios are estimates and are not final until filed with the respective supervisory authority.
Sensitivities
Aegon calculates the sensitivities of its Solvency II ratios as part of its capital management framework. The following table provides an overview of the sensitivities (downward and upward) to certain parameters and their estimated impact on the Solvency II ratio. Please note that the sensitivities listed in the tables below represent sensitivities to Aegon’s position at the balance sheet date. The sensitivities reflect single shocks – except for the US credit default shock, which also includes assumed rating migration – where other elements remain unchanged.
Real-world market impacts (for example, 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 table. The sensitivities assume deferred tax asset (DTA) admissibility. Under certain adverse scenarios and where applicable, part of DTAs could become inadmissible. While this would increase the sensitivities relative to the published sensitivities, the DTAs would still be recoverable over time. In the US RBC ratio, part of the DTAs was inadmissible per 4Q 2022.
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      Scenario  Group  
Americas
1)
   NL Life   SE Plc 
        
        2022
           2021  
        2022
           2021   
        2022
           2021   
        2022
           2021 
Equity markets
   -25%    (4%)    (8%)   (15%)    (24%)    (1%)    (2%)    10%    2% 
Equity markets
   +25%    0%    2%   7%    14%    (3%)    (1%)    (8%)    (3%) 
Interest rates
   -50bps    2%    (00%)   0%    1%    4%    7%    0%    (2%) 
Interest rates
   +50bps    (2%)    (1%)   1%    0%    (5%)    (8%)    (2%)    1% 
Curve steepening
   +10bps    (0%)    (2%)   n.a.    n.a.    (1%)    (6%)    n.a    n.a. 
Govt spreads excl EIOPA VA
   -50bps    1%    0%   n.a.    n.a.    (2%)    (3%)    1%    4% 
Govt spreads excl EIOPA VA
   +50bps    (1%)    (0%)   n.a.    n.a.    5%    6%    (2%)    (4%) 
Non-govt
spreads excl. EIOPA VA
   -50bps    1%    (10%)   (2%)    (3%)    8%    11%    0%    (9%) 
Non-govt
spreads excl. EIOPA VA
   +50bps    (2%)    (10%)   1%    4%    (8%)    (11%)    (1%)    1% 
US Credit Defaults
2)
   ~+200bps    (18%)    (17%)   (42%)    (38%)    n.a.    n.a.    n.a.    n.a. 
UFR
   -15bps    (1%)    (2%)   n.a.    n.a.    (4%)    (6%)    n.a.    n.a. 
Longevity
3)
   +5bps    (3%)    (5%)   (4%)    (8%)    (6%)    (8%)    (1%)    (2%) 
Mortgage spreads
   -50bps    2%    2%   n.a.    n.a.    6%    6%    n.a.    n.a. 
Mortgage spreads
   +50bps    (2%)    (2%)   n.a.    n.a.    (6%)    (6%)    n.a.    n.a. 
EIOPA VA
   -5bps    0%    0%   n.a.    n.a.    2%    1%    n.a.    n.a. 
EIOPA VA
   +5bps    (0%)    (0%)   n.a.    n.a.    (2%)    (1%)    n.a.    n.a. 
1 
The sensitivities are presented on a Solvency II basis, after application of the conversion methodology to US regulated (life) companies.
2 
Additional 130 bps defaults for 1 year plus assumed rating migration
3 
Reduction of annual mortality rates by 5%
Equity sensitivities
Aegon is exposed to the risk of a downturn in equity markets. This is mainly a consequence of indirect equity exposure in the Americas.
In the Americas, equity sensitivities are primarily driven by the variable annuity (VA) business, where base contract fees are charged as a percentage of underlying funds, many of which are equity based. While guaranteed benefits are fully hedged for equity risk, the indirect equity exposure associated with the base contract fees is not. The asymmetry between the impacts of up and down shocks is caused by reserve flooring in the variable annuity business. The variable annuity voluntary reserve that was set up in 2022 provides a dampening of the RBC ratio sensitivity towards equity movements, which is reflected in these sensitivities.
Interest rates sensitivities
Aegon’s solvency ratio is not very sensitive to movements in interest rates given the asset liability management and hedging programs that are in place.
In the Americas, a decrease in interest rates leads to higher reserves for variable annuities and universal life products, which are offset by payoffs from interest rate hedging programs. The exposure to interest rates has continued to decrease due to reducing the open interest rate duration exposure on the general account.
NL Life hedges interest rate exposure on an economic basis, which results in an over-hedged position on a Solvency II basis. This results in NL Life’s solvency ratio being exposed to rising
interest rates and to steepening of the interest rate curve at the longer end.
For SE Plc, exposure to lower interest rates leads to higher required capital on mortality, expense and policyholder lapse risks which is partly offset by gains on the swaps held in the general account.
Spread sensitivities
The
non-government
spread sensitivities include shocks on mortgages, corporate bonds and structured instruments. For NL Life, the spread sensitivities reflect an internal model feature that mitigates volatility caused by the basis risk between the EIOPA VA reference portfolio and NL Life’s own asset portfolio.
Overall, Aegon is exposed to the risk of widening credit spreads across
non-government,
government, and mortgage instruments, which results in lower asset valuations. The solvency ratio of the Americas is positively impacted by widening spreads, which results in a higher discount rate used for valuing employee pension plan liabilities. For variable annuities, widening credit spreads also lead to lower liabilities, as – since the expansion of the dynamic hedge program in 2021 – an illiquidity premium is used in valuing the liabilities. There is a partial offset, again for variable annuities, from a lower value of separate account fixed-income assets resulting in an addition to reserves reflecting a higher cost of guarantees.
Aegon as a whole has little exposure to changes in government spreads. The exposure in the Americas is negligible, and there are offsetting risks in NL Life and SE Plc. The solvency ratio of NL Life is exposed to government spreads narrowing because the resulting increase of SCR, due to a lower volatility adjustment, outweighs the resulting increased Own Funds from higher bond valuations in terms
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of ratio impact. The solvency ratio of SE Plc is exposed to spread widening which would have a negative impact on the valuation of fixed-income assets.
Exposure to government spread sensitivities is driven by NL Life and SE Plc. NL Life is exposed to spreads narrowing compared to spreads widening last year. This change is due to higher interest rates, the change in composition of the Solvency II ratio over the year (more Own Funds but materially lower SCR) and the sale of sovereigns over the year. The latter was a direct consequence of higher rates as NL Life had liquidity needs to fulfill margin requirements on the Interest Rate swap hedges. SE Plc is exposed to spreads widening due to the reduction in the value of fixed-income assets.
Aegon is exposed to widening mortgage spreads, due to exposure in NL Life, which has an adverse impact on the asset valuation. The Americas credit defaults sensitivity reflects the combined impact of credit default and adverse credit rating migrations on assets held in the general account portfolio.
Longevity sensitivities
All main business units contribute to the company-wide risk that people will live longer than the expectations embedded in our provisions. The exposure has decreased since last year, driven by higher rates and reserves strengthening across different product lines, including further improved premium deficiency reserve sufficiency in the LTC business in the US.
Capital quality
Solvency II distinguishes between basic Own Funds and ancillary Own Funds. Aegon’s total Own Funds are comprised of Tier 1, Tier 2, and Tier 3 basic Own Funds. Aegon does not currently have ancillary Own Funds. Tier 1 basic Own Funds are divided into unrestricted Tier 1 capital and restricted Tier 1 capital. The latter category contains Own Funds instruments subject to the restrictions of the Solvency II Delegated Regulation, which includes grandfathered Tier 1 Own Funds instruments. Based on agreements with its supervisory authorities, Aegon applies a fungibility and transferability restriction with respect to charitable trusts within the Americas. These restrictions, applied to Aegon’s basic Own Funds, result in Aegon’s Available Own Funds.
Available Own Funds
Unrestricted Tier 1 capital consists of Aegon’s share capital, share premium, and the reconciliation reserve.
The reconciliation reserve includes deductions to account for foreseeable dividends that meet the IFRS definition of a liability or have been approved by the Board but that have yet to be distributed to Aegon’s shareholders, and restrictions related to Aegon’s with-profits fund in the UK for which the excess of Own Funds over its capital requirement is ring-fenced for policyholders and therefore unavailable to Aegon’s shareholders.
Restricted Tier 1 capital consists of Aegon’s junior perpetual capital securities, perpetual cumulative subordinated bonds, and perpetual contingent convertible securities. Aegon’s Tier 2 capital consists of subordinated notes, which include Solvency II compliant notes and grandfathered dated notes. Aegon’s Tier 3 capital under the Solvency II framework consists of Aegon’s deferred tax asset position under Solvency II. For more details reference is made to note 43 “Capital management and solvency.”
The grandfathered restricted Tier 1 and Tier 2 capital instruments are grandfathered to count as capital under Solvency II for up to 10 years from January 1, 2016. All call dates are listed in note 31 “Other equity instruments” and note 32 “Subordinated borrowings” to Aegon’s consolidated financial statements.
Eligible Own Funds
Under Solvency II regulation, restrictions apply to the eligibility of restricted Tier 1, Tier 2 and Tier 3 capital. As a result, it is possible that part of the Own Funds overflows to another tier or that it is not considered eligible in determining the company Solvency II ratio.
The table below shows the composition of Aegon’s Available and Eligible Own Funds, taking into consideration tiering restrictions.
For more details on tiering restrictions, reference is made to note 43 “Capital management and solvency” in Aegon’s consolidated financial statements.
As at December 31, 2022, the Eligible Own Funds of EUR 16,332 million are slightly below the Available Own Funds of EUR 16,525 million as deferred tax assets are partly ineligible due to the Tier 3 restriction of 15% of SCR. No overflow from restricted Tier 1 to Tier 2 Own Funds is applied from
year-end
2022 and 2021.
        December 31, 2022        December 31, 2021 
    Available Own Funds   Eligible Own Funds   Available Own Funds   Eligible Own Funds 
Unrestricted Tier 1   11,762    11,762    14,044    14,044 
Restricted Tier 1   1,822    1,822    2,364    2,364 
Tier 2   2,195    2,195    2,348    2,348 
Tier 3   746    552    675    675 
Total Tiers
  
 
16,525
 
  
 
16,332
 
  
 
19,431
 
  
 
19,431
 
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Regulation and supervision
Regulation and supervision
Individually regulated Aegon companies are each subject to prudential supervision in their respective home countries and therefore are required to maintain a minimum solvency margin based on local requirements. In addition, the company as a whole is subject to prudential requirements on a group basis, including capital, internal governance, risk management, reporting, and disclosure requirements, pursuant to Solvency II and the Financial Conglomerates Directive. The content of this section is based on the structure and composition of Aegon, prior to the closing of the transaction with a.s.r. Aegon is engaging with its college of supervisors on the implications for group supervision upon closing of the intended transaction.
Solvency II
Introduction
The Solvency II framework imposes prudential requirements at group level as well as on the individual EU insurance companies in Aegon. Insurance supervision is exercised by local supervisors on the individual insurance companies in Aegon and, in addition, by the group supervisor at group level. The Dutch Central Bank (DNB) is Aegon’s Solvency II group supervisor. Solvency II contains economic, riskbased capital requirements for insurance companies in all EU member states, as well as for groups with insurance and/ or reinsurance activities in the EU. The Solvency II framework is structured along three pillars. Pillar 1 comprises quantitative requirements (including technical provisions, valuation of assets and liabilities, solvency requirements, and own fund requirements). Pillar 2 includes governance and risk management requirements, and requirements for effective supervision. Pillar 3 consists of disclosure and supervisory reporting requirements.
Pillar 1
Solvency II requires EU insurance companies to determine technical provisions at a value that corresponds with the present exit value of their insurance obligations towards policyholders and other beneficiaries of insurance and reinsurance contracts. The calculation of the technical provisions should be based on market-consistent information where possible. The value of the technical provisions is equal to the sum of a best estimate and a risk margin. The discount rate at which technical provisions are calculated and other parameters to determine the technical provisions may have an important effect on the amount of own funds (the excess of assets over liabilities) that insurance undertakings are required to maintain as well as volatility thereof. Insurers and reinsurers are required to hold eligible own funds in order to ensure that they are able to meet their obligations over the next 12 months with a probability of at least 99.5% (that is, the ability to withstand a
1-in-200-year
event), which is called the Solvency Capital Requirement (SCR).
Insurance companies are allowed to use: (a) a standard formula to calculate their SCR; (b) a self-developed internal model; for which the approval of the supervisory authorities is required; or (c) a partial internal model (PIM); a combination of the standard formula and an internal model that also requires approval of the supervisory authorities. An internal model should better reflect the actual risk profile of the insurance company than the standard formula. Aegon, as a Group, uses a PIM. In addition to the SCR, insurance companies should also calculate a Minimum Capital Requirement (MCR). This represents a lower level of financial security than the SCR, below which the level of eligible own funds held by the insurance company is not allowed to drop. An irreparable breach of the MCR would lead to the withdrawal of an insurance company’s license. Insurance companies are required to hold eligible own funds against the SCR and MCR. Own funds are divided into three tiers based on their quality. More details can be found in the Capital and Liquidity Management section.
Pillar 2
Under Pillar 2, insurance companies are required to set up and maintain an adequate and effective system of governance, which includes an appropriate internal organization, a risk governance system and an effective assessment of the risk and solvency position of the company, including a prospective assessment of risks, through the Own Risk and Solvency Assessment (ORSA) process. In general, the system of governance should be proportionate to the nature, scale, and complexity of the insurance company. A number of risks that insurance companies face can only be addressed through proper governance structures, rather than quantitative requirements. Management is ultimately responsible for the maintenance of an effective governance system. An example of such a risk, is climate risk, which is addressed in the ORSA process. The Supervisory Review Process (SRP), which is part of Pillar 2, allows supervisory authorities to supervise the ongoing compliance of undertakings with Solvency II requirements. Possible enforcement measures include: the imposition of capital
add-ons;
the requirement to submit and execute a recovery plan; and ultimately, the revocation of an insurance license.
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Pillar 3
Solvency II includes detailed reporting and disclosure requirements. These requirements include
non-public
supervisory reporting on a regular basis through regular supervisory reports (RSR), complemented by detailed quantitative reporting templates (QRTs) reported on a quarterly basis, which contain detailed financial data and are partly public. In addition, it is a requirement to publish a Solvency and Financial Condition Report (SFCR) on an annual basis.
Group supervision
Many of the Solvency II requirements that apply to the individual insurance undertakings apply, with the necessary modifications, also at group level. These requirements include group solvency requirements, group reporting, and disclosure requirements, and requirements regarding the system of governance, risk management, and internal control framework at group level. Entities that are not subject to solo supervision under Solvency II (such as entities in other financial sectors,
non-financial
entities, and regulated and
non-regulated
entities in third countries) may be affected indirectly by the Solvency II group requirements. Entities in other financial sectors are, in most cases, taken into account in the group solvency calculation, applying the capital requirements of that specific financial sector and either by using the Accounting Consolidation method, which is the default method under Solvency II, or the Deduction and Aggregation method. The difference between these two methods primarily affects the extent to which diversification can be taken into account in the group capital requirements. Under the Accounting Consolidation method the group is essentially treated as one economic unit together with the Solvency II entities, whereas the Deduction and Aggregation method requires the group to aggregate entities, rather than to fully consolidate entities for the purpose of the group capital requirements. Subject to certain conditions, entities in other financial sectors may be included in accordance with the Accounting Consolidation method. In particular, this may be the case when the group supervisor is satisfied as to the level of integrated management and internal control regarding these entities. This applies to Aegon Bank in the Netherlands, for example. Furthermore, DNB may require groups to deduct any participation from the own funds eligible for the Group Solvency ratio. As explained in note 43 “Capital management and solvency” in Aegon’s consolidated financial statements, Aegon uses a combination of the two aggregation methods defined within the Solvency II framework to calculate the Group Solvency ratio. For insurance entities domiciled outside the EEA for which provisional or full equivalence applies, such as the United States, Aegon uses the Deduction and Aggregation method, based on local regulatory requirements to translate these into the Group Solvency position. US insurance entities are included in Aegon’s group solvency calculation in accordance with local US Risk-
Based Capital (RBC) requirements. Aegon’s current method is applied since July 1, 2017 and received approval from DNB. Details are included in note 43 “Capital management and solvency” in Aegon’s consolidated financial statements. Aegon’s UK insurance subsidiaries continue to be included in the Group Solvency II calculation in accordance with Solvency II standards, including Aegon’s approved Partial Internal Model. Solvency II group supervision is exercised by a combination of the supervisory authorities of the local insurance entities and the group supervisor. An important role in the cooperation between the supervisory authorities in the context of group supervision is played by the college of supervisors, in which the local and group supervisors are represented. This college is chaired by the group supervisor.
At international level, the International Association of Insurance Supervisors (IAIS) is developing a risk-based global Insurance Capital Standard (ICS). The IAIS’ ultimate goal, by a date yet to be determined, is a single ICS that includes a common methodology by which it achieves comparable outcomes across jurisdictions. Ongoing work is intended to lead to improved convergence over time on the key elements of the ICS towards this ultimate goal. According to the IAIS the key elements include valuation, capital resources, and capital requirements. In 2019, the IAIS adopted ICS Version 2.0, which is being used during a five-year monitoring period for confidential reporting to group-wide supervisors and discussion in supervisory colleges, not as a formal capital requirement. From 2025 onwards, it is currently envisaged that local jurisdictions will formally enact the ICS, which is described as a minimum standard. In Europe, and consequently for Aegon, this may entail that ICS standards will be incorporated in the Solvency II framework.
Solvency II review
On September 22, 2021, the European Commission published its legislative proposal for amendments to the Solvency II Directive, following extensive preparatory work in previous years by the European Commission and EIOPA. The Solvency II Directive proposal will be supplemented by a legislative proposal to amend the Solvency II Delegated Regulation, which will be published at a later stage. The
co-legislators
at European level are assessing the legislative proposals in order to arrive at a final text, resulting in amendments to the Solvency II Directive and the Solvency II Delegated Regulation.
Sustainability and Solvency II
In March 2018, the European Commission adopted its Action Plan on Sustainable Finance. This action plan is part of broader efforts to connect finance with the European and global economy for the benefit of the planet and wider society. Specifically, the Action Plan aims to: (1) reorient capital flows towards sustainable investment in order to achieve sustainable and inclusive growth, (2) manage financial risks stemming from climate change, resource
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Regulation and supervision
depletion, environmental degradation, and social issues; and (3) foster transparency and long-termism in financial and economic activity. On August 1, 2022, amendments to Solvency II entered into effect, integrating sustainability risks in the governance of insurance and reinsurance undertakings. The amendments relate to the inclusion of sustainability risk in the risk management areas to be covered in the risk management system, in particular in relation to underwriting and reserving and investment risk management, as well as in the corresponding risk management policies. In addition, the identification of emerging risks and sustainability risks is included as part of the tasks of the risk management function, and as risks that form part of the calculation of the overall solvency needs and consequently of the ORSA process. Furthermore, sustainability risk is made explicitly part of the opinion of the actuarial function on the underwriting policy, and it is also made explicitly part of the remuneration policy (that is, information how the remuneration policy takes into account the integration of sustainability risks in the risk management system). Lastly, the amendments relate to the integration of sustainability risk in the prudent person principle, as well as the integration of the potential long-term impact of investment strategy and decisions on sustainability factors (for example, climate change). In addition, the proposal to amend the Solvency II Directive, following the Solvency II 2020 review, includes an additional provision that will require insurers to identify and assess climate change risk as part of the assessment of their overall solvency needs, as well as a mandate to EIOPA to explore by 2023 a dedicated prudential treatment of exposures to assets and activities associated with environmental and social objectives and to regularly review the standard formula parameters pertaining to catastrophe risk. We refer to the
non-financial
information section of this Annual Report for a description of the changes to the disclosure requirements, applicable to Aegon N.V., relating to
non-financial
information, including sustainability-related disclosures.
Financial conglomerate supervision
Since 2009, Aegon has been subject to supplemental group supervision by DNB in accordance with the requirements of the EU’s Financial Conglomerate Directive. This includes supplementary capital adequacy requirements for financial conglomerates and supplementary supervision on risk concentrations and intra-group transactions in the financial conglomerate. Due to the introduction of the Solvency II group supervisory requirements – which include similar, and to a large extent overlapping – supplemental group supervision pursuant to the Financial Conglomerates Directive has become significantly less relevant.
Recovery and resolution and systemic risk
IAIS Holistic Framework for the assessment and mitigation of systemic risk in the insurance sector, and ComFrame
In November 2019, the IAIS adopted the Holistic Framework for the assessment and mitigation of systemic risk in the insurance sector and the Financial Stability Board (FSB) decided to suspend the identification of Global Systemically Important Insurers
(G-SIIs),
which included Aegon. Some of the provisions of the Holistic Framework are included in the IAIS Insurance Core Principles (that apply to all insurers), while others are included in ComFrame (the Common Framework for the Supervision of Internationally Active Insurance Groups, or IAIGs). Following a review after three years of implementation, the Financial Stability Board (FSB), in consultation with the IAIS, has decided in December 2022 that the Holistic Framework provides a more effective basis for assessing and mitigating systemic risk in the insurance sector than
G-SII
identification. The Holistic Framework consists of an enhanced set of supervisory policy measures and powers of intervention, an annual IAIS global monitoring exercise, and an assessment of consistent implementation of supervisory measures. ComFrame establishes supervisory standards and guidance focusing on the effective group-wide supervision of IAIGs. ComFrame is a comprehensive and outcome-focused framework that provides supervisory minimum requirements tailored to the international activities and sizes of IAIGs. ComFrame builds on the Insurance Core Principles that are applicable to the supervision of all insurers. The provisions of both ComFrame and the Insurance Core Principles must be implemented in local legislation in order to have a binding effect. The applicable requirements include the preparation and submission to DNB, Aegon’s group supervisory and resolution authority, of a liquidity risk management plan and an
ex-ante
recovery plan. Aegon continues to update these plans on an annual basis.
In addition, DNB is responsible for the development of Aegon’s resolution plan. The preparation of an
ex-ante
recovery plan and resolution is also required under the Dutch Act on Recovery & Resolution of Insurers and foreseen in the legislative proposal to introduce a European Insurance Recovery & Resolution Directive (IRRD), which is discussed briefly below. The scope of application of this directive is expected to include IAIGs based in the European Union. Lastly, other requirements included in the Holistic Framework may be implemented in Europe through the Solvency II Review. The European Commission’s proposal to amend the Solvency II Directive includes a number of macro-prudential tools.
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About Aegon
Governance and risk management
Financial information        Non-financial information
Recovery and resolution
Dutch Act on Recovery and Resolution for Insurers
On January 1, 2019, the Dutch Act on Recovery & Resolution for Insurers (R&R Act) came into force in the Netherlands, replacing the previously applicable intervention regime. The R&R Act has introduced a revised regulatory framework for recovery and resolution of Dutch insurance companies, and provides for a range of measures to be taken by these companies and the Dutch Central Bank, in order for these insurance companies to be prepared for recovery in circumstances where it no longer meets the required solvency requirements and for orderly resolution, in circumstances where it is failing or is likely to fail. The R&R Act allows DNB to require a Dutch insurance company or a group in certain circumstances, to remove,
ex-ante,
impediments to effective resolution of a Dutch insurance undertaking, such as the revision of financing arrangements, the reduction of exposures, the transfer of assets, the termination or limitation of business activities, the prohibition of starting certain new business activities, changes to the legal or operational structure of the group, or the securing certain critical business lines. The powers under the R&R Act may also extend to the level of the group and to entities, other than in insurance entities in the Netherlands, that are part of the group, such as Aegon N.V The powers include the transfer of the undertaking to a third party, the transfer to a bridge institution and the transfer of certain specific assets and/ or liabilities. In addition, a
bail-in
tool was introduced that allows for the
write-off
or conversion of rights of creditors, including policyholders and beneficiaries, while respecting the principle that they should not be worse off through resolution, including the application of the
bail-in
tool, than
they would be in ordinary insolvency proceedings. As part of the Solvency II review, the European Commission has proposed to introduce a recovery and resolution regime at European level, based on minimum harmonization, which means that local regimes should meet minimum standards, set at European level. It is expected that the R&R Act already meets these minimum standards to a significant extent.
Bank Recovery and Resolution Directive
Furthermore, to parts of Aegon, in particular Aegon Bank N.V., the framework of the EU Directive on the recovery and resolution of credit institutions and investment firms (the “Bank Recovery and Resolution Directive”) is applicable. The Bank Recovery and Resolution Directive also contains provisions that, in certain specific circumstances, where both Aegon Bank N.V. and Aegon N.V. fail or are likely to fail, could be applied to mixed financial holding companies such as Aegon N.V., including the right of
bail-in
of creditors.
Intervention by the Dutch Minister of Finance
Lastly, under Part 6 of the Dutch Financial Supervision Act, the Dutch Minister of Finance may intervene immediately, when the stability of the financial system is threatened by the situation of a financial institution, in which case legal or statutory provisions, applicable to the financial institution, might be superseded. The intervention measures available to the Minister of Finance, include in particular the right to expropriate assets of the financial institution, as well as securities and/or other financial instruments issued by or with the cooperation of the financial institution. The exercise of this power may significantly impact the rights of the owners or holders of these assets, securities and/ or financial instruments.
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Code of Conduct
Code of Conduct
Aegon’s Code of Conduct embodies the company’s values and helps ensure that all employees act ethically and responsibly and is available at aegon.com.
It prescribes a mandatory set of standards for how Aegon employees should conduct business, comply with all applicable laws and regulations, and exercise sound judgment in reaching ethical business decisions in the longterm interests of Aegon’s stakeholders.
Aegon’s Code of Conduct applies to all directors, officers, and employees of all Aegon companies around the world (regardless of the contractual basis of their employment), including associate companies and joint ventures that are majority owned and/or controlled by Aegon N.V. Companies in which Aegon does not hold a majority stake will be expected to either adopt the Aegon Code of Conduct or to implement an equivalent code.
All Aegon employees must certify that they have read and understood the Code of Conduct, and agree to abide by it. Employees are also required to follow mandatory training on a regular basis to help embed the principles of the Code in the way they work.
Any waivers to the Aegon Code made to directors or executive officers must be approved by the Aegon N.V. Supervisory Board or its Audit Committee. Waivers may only be granted in very exceptional circumstances and will be promptly disclosed to our shareholders in accordance with applicable laws and stock exchange requirements. No waivers were requested or given at the moment of publishing this Annual Report 2022.
Aegon Speak Up: Reporting misconduct
Breaching laws and regulations, the Code of Conduct, or internal policies and procedures may have serious consequences for the company and its staff, its customers, shareholders, and business partners, and may also have
a serious impact on the financial system or the public interest. Aegon’s ambition is to be a trusted long-term partner to all its stakeholders, and therefore, the company would like to be made aware of any suspected unlawful, unethical, or otherwise improper conduct that could be harmful to the company and its stakeholders. Effective detection and resolution of such conduct will help sustain its business and ensure long-term value creation for all stakeholders.
Aegon has introduced Aegon Speak Up to demonstrate its commitment to staff and other stakeholders that it encourages people to report any concerns regarding potential misconduct and will not tolerate reprisals for making a good faith report.
Aegon Speak Up provides a safe environment for anyone who wishes to raise a concern about suspected or observed misconduct that involves Aegon.
For this purpose, Aegon has contracted with an independent third party to host a secure reporting channel for employees and others to report potential misconduct. Reports can be submitted online or via toll-free telephone lines in all of the countries in which Aegon conducts business (24 hours a day, seven days a week). Reporters can choose to remain anonymous. If an issue is found upon investigation, appropriate management action is taken to resolve the issue and prevent it from happening again to the extent feasible.
It is important that people feel supported and protected by the company for bringing issues to the attention of management that may be harmful to the reputation and integrity of the company, its employees, or other stakeholders. Aegon has established specific measures to provide support, and to address situations that present a risk of reprisal. Reporters who believe they have experienced retaliation are encouraged to immediately bring the issue to the attention of the Group Compliance Officer.
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Table of Contents
About Aegon
Governance and risk management
Financial information        Non-financial information
Controls and procedures
Disclosure controls and procedures
At the end of the period covered by this Annual Report, Aegon’s management carried out an evaluation, under the supervision and with the participation of its Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of Aegon’s disclosure controls and procedures (as defined in Rules
13a-15(e)
and
15d-15(e)
under the Securities Exchange Act of 1934). Based on this evaluation, Aegon’s CEO and CFO concluded that, as of December 31, 2022, the disclosure controls and procedures were effective. There have been no material changes in the company’s internal controls, or in other factors, that could significantly affect internal controls over financial reporting subsequent to the end of the period covered by this Annual Report.
Due to the listing of Aegon shares on the New York Stock Exchange, Aegon is required to comply with the US Securities and Exchange Commission regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act, or SOX 404. These regulations require that Aegon’s CEO (the Chairman of the Executive Board) and CFO report on and certify the effectiveness of Aegon’s internal controls over financial reporting on an annual basis. Furthermore, external auditors are required to provide an opinion on the management assessment of Aegon’s internal controls over financial reporting. The SOX 404 statement by the Executive Board is stated below, followed by the report of the external auditor.
Management’s annual report on internal control over financial reporting
Aegon’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Aegon’s internal control over financial reporting is a process designed under the supervision of Aegon’s principal executive and financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of its published financial statements. Internal control over financial reporting includes policies and procedures that:
◆Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
◆Provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with generally accepted accounting principles;
◆Provide reasonable assurance that receipts and expenditures are made only in accordance with the authorizations of management and directors of the company; and
◆Provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on Aegon’s financial statements would be prevented or detected in a timely manner.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.
Management assessed the effectiveness of Aegon’s internal control over financial reporting as of December 31, 2022.
In making its assessment management used the criteria established in “Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission” (COSO, 2013 framework).
There were no changes to our internal control over financial reporting during the year ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Based on the assessment, management concluded that, in all material aspects, the internal control over financial reporting was effective as of December 31, 2022. They have reviewed the results of its work with the Audit Committee of the Supervisory Board.
Attestation report of the registered public accounting firm
Management assessment of the effectiveness of internal control over financial reporting as of December 31, 2022, was audited by PricewaterhouseCoopers Accountants N.V., an independent registered public accounting firm, as stated in their report included on page 330.
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Controls and procedures
Management’s assessment of going concern
Aegon’s management has adopted a going concern
basis, in preparing the consolidated financial statements,
on the reasonable assumption that the company is, and
will be, able to continue its normal course of business
in the foreseeable future.
Relevant facts and circumstances, relating
to the consolidated financial position on December 31,
2022, were assessed in order to reach the going concern
assumption. The main areas assessed are financial
performance, capital adequacy, financial flexibility, liquidity,
and access to capital markets, together with the factors
likely to affect Aegon’s future development, performance,
and financial position. Commentary on these is set out in the
“Capital and liquidity management”, “Risk management”,
“Results of operations” and “Business overview” sections
in this Annual Report. Aegon’s CEO and CFO concluded that
the going concern assumption is appropriate on the basis
of the financial performance of the company, its continued
ability to access capital markets, adequate solvency ratios,
and the level of leverage and Cash Capital at Holding.
The Hague, the Netherlands, March 22, 2023
The Executive Board of Aegon N.V.
Lard Friese, CEO
Matthew J. Rider, CFO
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Financial
information
2022
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About Aegon
Governance and risk management
Financial information
Non-financial information
Table of contents
Financial information
   
100
 
Selected financial data
 
102
 
Results of operations
 
103
 
◆
 Results 2022 worldwide
 
107
 
◆
 Results 2022 Americas
 
111
 
◆
 Results 2022 The Netherlands
 
115
 
◆
 Results 2022 United Kingdom
 
118
 
◆
 Results 2022 International
 
122
 
◆
 Results 2022 Asset Management
 
Consolidated financial statements
of Aegon N.V.
 
125
 
Exchange rates
 
126
 
Consolidated income statement of Aegon N.V.
 
127
 
Consolidated statement of comprehensive income of Aegon N.V.
 
128
 
Consolidated statement of financial position of Aegon N.V.
 
129
 
Consolidated statement of changes in equity of Aegon N.V.
 
132
 
Consolidated cash flow statement of Aegon N.V.
 
Notes to the consolidated financial
statements
 
133
 1 
General information
 
133
 2 
Significant accounting policies
 
164
 3 
Critical accounting estimates and judgment in applying accounting policies
 
169
 4 
Financial risks
 
190
 5 
Segment information
 
200
 6 
Premium income and premiums paid to reinsurers
 
201
 7 
Investment income
 
202
 8 
Fee and commission income
 
202
 9 
Income from reinsurance ceded
 
202
 10 
Results from financial transactions
 
204
 11 
Other income
 
204
 12 
Policyholder claims and benefits
 
204
 13 
Profit sharing and rebates
 
205
 14 
Commissions and expenses
 
207
 15 
Impairment charges / (reversals)
 
208
 16 
Interest charges and related fees
 
208
 17 
Other charges
 
209
 18 
Income tax
 
211
 19 
Earnings per share
 
212
 20 
Dividend per common share
 
213
 21 
Cash and cash equivalents
 
215
 22 
Investments
 
216
 23 
Investments for account of policyholders
 
218
 24 
Derivatives
 
221
 25 
Investments in joint ventures and associates
 
223
 26 
Reinsurance assets
 
225
 27 
Deferred expenses
 
225
 28 
Other assets and receivables
 
229
 29 
Intangible assets
 
230
 30 
Shareholders’ equity
 
237
 31 
Other equity instruments
 
238
 32 
Subordinated borrowings
 
238
 33 
Trust pass-through securities
 
239
 34 
Insurance contracts
 
242
 35 
Investment contracts
 
243
 36 
Guarantees in insurance contracts
 
246
 37 
Borrowings
 
248
 38 
Provisions
 
248
 39 
Defined benefit plans
 
253
 40 
Deferred tax
 
256
 41 
Other liabilities
 
256
 42 
Accruals
 
256
 43 
Capital management and solvency
 
262
 44 
Fair value
 
274
 45 
Commitments and contingencies
 
278
 46 
Transfers of financial assets
 
281
 47 
Offsetting, enforceable master netting arrangements and similar agreements
 
282
 48 
Companies and businesses acquired and divested
 
283
 49 
Group companies
 
285
 50 
Related party transactions
 
286
 51 
Discontinued operations
 
304
 52 
Events after the reporting period
 
98    
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Financial statements of Aegon N.V.
   
306
  
Income statement of Aegon N.V.
 
307
  
Statement of financial position of Aegon N.V.
 
Notes to the financial statements of Aegon N.V.
 
308
 1 
General information
 
308
 2 
Significant accounting policies
 
308
 3 
Investment income
 
308
 4 
Results from financial transactions
 
309
 5 
Commissions and expenses
 
309
 6 
Interest charges and related fees
 
309
 7 
Income tax
 
309
 8 
Shares in group companies
 
309
 9 
Loans to group companies
 
310
 10 
Non-current assets
 
310
 11 
Receivables
 
310
 12 
Other current assets
 
310
 13 
Share capital
 
312
 14 
Shareholders’ equity
 
315
 15 
Other equity instruments
 
316
 16 
Subordinated borrowings
 
316
 17 
Long-term borrowings
 
316
 18 
Current liabilities
 
317
 19 
Commitments and contingencies
 
317
 20 
Number of employees
 
317
 21 
Auditor’s remuneration
 
318
 22 
Events after the reporting period
 
318
 23 
Proposal for profit appropriation
 
Other information
319
Profit appropriation
320
Major shareholders
Other financial information
323
Schedule I
324
Schedule II
326
Schedule III
328
Schedule IV
329
Schedule V
330
Auditor’s report on the Annual Report on Form 20-F
Additional information
335
Overview of Americas
341
Overview of the Netherlands
347
Overview of United Kingdom
351
Overview of International
357
Overview of Asset Management
360
Risk factors Aegon N.V.
384
Compliance with regulations
385
Property, plant and equipment
386
Employees and labor relations
387
Dividend policy
388
The offer and listing
389
Memorandum and Articles of Association
391
Differences between Dutch and US company laws
392
Material contracts
393
Exchange controls
394
United States tax consequences to holders of shares
398
Principal accountant fees and services
399
Purchases of equity securities by the issuer and affiliated purchasers
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About Aegon
Governance and risk management
Financial information
Non-financial information
Selected financial data
The financial results in this Annual Report are based on Aegon’s consolidated financial statements, which have been prepared in accordance with International Financial Reporting Standards as issued by the IASB (IFRS).
Application of the accounting policies in the preparation of the financial statements requires management to apply judgment involving assumptions and estimates concerning future results or other developments, including the likelihood, timing or amount of future transactions or events. There can be no assurance that actual results will not differ materially from those estimates. Accounting policies that are critical to the presentation of the financial statements and that require complex estimates or significant judgment are described in the notes to the financial statements.
A summary of historical financial data is provided in the table below. It is important to read this summary in conjunction with the consolidated financial statements and related notes (see pages
126-304)
of this Annual Report.
Selected consolidated income statement information
In EUR millions (except per share amount)  
              2022
                 2021                 2020                2019                 2018 
Amounts based upon IFRS
         
Premium income
1)
   13,192    13,731    14,105   16,015    17,329 
Investment income
1)
   5,613    4,893    5,087   5,319    4,772 
Total revenues
1)
   21,331    21,091    21,318   23,597    24,439 
Result before tax from continuing operations
1)
   (1,543)    1,164    (958)   1,197    (154) 
Net result from continuing and discontinued operations
   (1,404)    2,029    (135)   1,236    707 
Earnings per common share
         
Basic
   (0.73)    0.94    (0.09)   0.56    0.29 
Diluted
   (0.73)    0.94    (0.09)   0.56    0.29 
Earnings per common share B
         
Basic
   (0.02)    0.02    -     0.01    0.01 
Diluted
   (0.02)    0.02    -     0.01    0.01 
Earnings per common share from continuing operations
         
Basic
   (0.54)    0.48    (0.33)   0.45    (0.08) 
Diluted
   (0.54)    0.48    (0.33)   0.45    (0.08) 
Earnings per common share B from continuing operations
         
Basic
   (0.01)    0.01    (0.01)   0.01    -   
Diluted
   (0.01)    0.01    (0.01)   0.01    -   
1 
Amounts for 2021-2018 have been
re-presented
to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Selected consolidated balance sheet information
In EUR millions  
              2022
                 2021                 2020                 2019                 2018 
Amounts based upon IFRS
          
Total assets
   401,786    468,252    443,814    439,769    392,008 
Insurance and investment contracts
1)
   278,932    400,104    370,286    371,014    329,974 
Borrowings including subordinated and trust pass-through securities
1)
   6,464    11,980    10,735    11,650    13,583 
Shareholders’ equity
   12,071    23,813    22,018    21,842    19,189 
1
 2022 excludes the liabilities of the disposal group, which are separately disclosed in note 51 Discontinued operations.
  
    
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Selected financial data
Number of common shares
In thousands  
              2022
                2021                2020                2019                 2018 
Balance at January 1
   2,106,313   2,098,114   2,105,139   2,095,648    2,095,648 
Share issuance
   -   -   -   -    - 
Stock dividends
   13,782   10,665   2,466   9,491    - 
Shares withdrawn
   (10,665)   (2,466)   (9,491)   -    - 
Balance at end of period
  
2,109,430
  
2,106,313
  
2,098,114
  
2,105,139
   
2,095,648
 
Number of common shares B
In thousands  
              2022
                2021                2020                2019                 2018 
Balance at January 1
   568,839   571,795   585,022   585,022    585,022 
Shares withdrawn
   (22,643)   (2,956)   (13,227)   -    - 
Balance at end of period
  
546,196
  
568,839
  
571,795
  
585,022
   
585,022
 
Dividends
Aegon declared interim and final dividends on common shares for the years 2018 through 2022, with the exception for the 2019 final dividend, in the amounts set forth in the following table. The 2022 interim dividend amounted to EUR 0.11 per common share and EUR 0.00275 per common share B. The interim dividend was paid in cash or stock at the election of the shareholder. The interim dividend was payable as of September 21, 2022. At the General Meeting of Shareholders currently scheduled for May 25, 2023, the Executive Board will, in line with its earlier announcement and barring unforeseen circumstances, propose a final dividend of EUR 0.12 per common share, and EUR 0.003 per common share B, which has financial rights attached to it of 1/40
th
of a common share. Aegon intends to move to a cash-only dividend as of the final dividend of 2022. To this end, Aegon will present an update to its dividend policy for discussion at the next Annual General Meeting of Shareholders. This final dividend of 2022 will bring the total dividend for 2022 to EUR 0.23 per common share and EUR 0.00575 per common share B. Dividends in US dollars are calculated based on the foreign exchange reference rate (WM/ Reuters closing spot exchange rate fixed at 5.00 pm Central European Summer Time ('CEST')) on the US-ex dividend day.
    EUR per common share   USD per common share 
Year
          Interim                     Final                 Total               Interim                 Final               Total    
2018
   0.14    0.15    0.29    0.16    0.17    0.33 
2019
   0.15    0.00
 1)
    0.15    0.17    -    0.17 
2020
   0.06    0.06    0.12    0.07    0.07    0.14 
2021
   0.08    0.09    0.17    0.09    0.10    0.19 
2022
   0.11    0.12
 2)
    0.23    0.11           
1 
Aegon forewent the 2019 final dividend of EUR 0.16 to strengthen its balance sheet and improve its risk profile.
2 
Proposed.
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About Aegon
Governance and risk management
Financial information
Non-financial information
Results of operations
This Annual Report on Form 20-F includes the following non-IFRS financial measure: operating result and addressable expenses.
The reconciliation of operating result to the most comparable IFRS measure is presented in note 5 'Segment information' of the consolidated financial statements. Operating result is calculated by consolidating on a proportionate basis the revenues and expenses of Aegon's joint ventures in Brazil, China, India, the Netherlands, Portugal and Spain and Aegon's associates in France, the Netherlands and United Kingdom. The information on the following tables also includes the non-IFRS financial measure operating result after tax. This is the after-tax equivalent of operating result.
The reconciliation of addressable expenses to operating expenses, the most comparable IFRS measure, is presented in this section. Operating expenses are all expenses associated with selling and administrative activities (excluding commissions). This includes certain expenses recorded in other charges for segment reporting, including restructuring charges. Addressable expenses are calculated by excluding the following items from operating expenses: direct variable acquisition expenses, restructuring expenses (including expenses related to the operational improvement plan), and expenses related to acquisitions and disposals. Addressable expenses are reported on a constant currency basis.
Aegon's senior management is compensated based in part on Aegon's results against targets using the non-IFRS measures presented in this report. While many other insurers in Aegon's peer group present substantially similar non-IFRS measures, the non-IFRS measures presented in this document may nevertheless differ from the non-IFRS measures presented by other insurers. There is no standardized meaning to these measures under IFRS or any other recognized set of accounting standards and readers are cautioned to consider carefully the different ways in which Aegon and its peers present similar information before making a comparison. Aegon believes the non-IFRS measures present within this report, when read together with Aegon's reported IFRS financial statements, provide meaningful supplemental information for the investing public. This enables them to evaluate Aegon's businesses after eliminating the impact of current IFRS accounting policies for financial instruments and insurance contracts, which embed a number of accounting policy alternatives that companies may select in presenting their results (as companies may use different local generally accepted accounting principles (GAAPs)), and this may make the comparability difficult between time periods.
For the discussion on our operating results and addressable expenses for the year ended December 31, 2021 compared to the year ended December 31, 2020, please refer to the section Results of operations on pages 96 to 117 in Aegon's Annual Report on Form 20-F 2021.
Aegon has changed the grouping of the operating segments included in the performance measure. As per January 1, 2022, Mongeral Aegon Group (MAG Seguros) is no longer reported within the Americas segment, but reported in the International segment. For the impact on comparative numbers please refer to note 5 Segment information. There is no impact on the consolidated numbers of Aegon.
102    
Aegon Annual Report on Form 20-F
2022
Table of Contents
Results of operations – Worldwide
Results 2022 worldwide
Operating result geographically
Amounts in EUR millions  
                  2022
                    2021  
                      %
 
Operating result after tax
  
 
1,525
 
 
 
1,582
 
 
 
(4)
 
Tax on operating result
   394   324  
 
22
 
Operating result
    
Americas
   790   790  
 
-
 
The Netherlands
   783   755  
 
4
 
United Kingdom
   206   184  
 
12
 
International
   167   143  
 
17
 
Asset Management
   193   253  
 
(24)
 
Holding and other activities
   (220)   (219)   
(1)
 
Operating result
  
1,918
  
1,906
  
1
 
Fair value items
   251   854   
(71
)
 
Realized gains / (losses) on investments
   (650)   446   
n.m.
 
Net impairments
   (36)   53   
n.m.
 
Non-operating items
  
 
(435
)
 
 
 
1,352
 
  
n.m.
 
Other income / (charges)
   (2,321)   (780)   
(198)
 
Result before tax (excluding income tax from certain proportionately
consolidated joint ventures and associates)
  
 
(837
)
 
 
 
2,478
 
  
n.m.
 
Income tax from certain proportionately consolidated joint ventures and
associates included in result before tax
   85   78   
10
 
Income tax
   (567)   (449)   
(26
)
 
Of which Income tax from certain proportionately consolidated joint ventures and
associates included in result before tax
   (85)   (78)   
(10)
 
Net result
  
(1,404)
  
2,029
  
n.m.
 
Operating expenses
   3,902   3,775   
3
 
Addressable expenses
1)
   3,028   3,094   
(2)
 
1 
Addressable expenses are reported at constant currency at the FY 2022 weighted average foreign exchange rate.
New life sales
Amounts in EUR millions  
                  2022
                     2021   
                      %
 
Americas
   473    352    
34
 
The Netherlands
   73    74    
(2
)
 
United Kingdom
   26    31    
(15
)
 
International
   253    228    
12
 
Total recurring plus 1/10 single
  
825
   
686
   
21
 
Amounts in EUR millions  
                  2022
                     2021   
                      %
 
New premium production accident & health insurance
   170    170    
(1
)
 
New premium production property & casualty insurance
   106    96   
 
9
 
Gross deposits (on and off balance)
Amounts in EUR millions  
                  2022
                     2021   
                      %
 
Americas
   34,229    32,500    
5
 
The Netherlands
   22,410    19,902    
13
 
United Kingdom
   9,949    24,764    
(60
)
 
International
   660    387    
71
 
Asset Management
1
)
   127,088    157,290    
(19)
 
Total gross deposits
  
194,336
   
234,843
   
(17)
 
1
Includes deposits from Third-Party and Strategic Partnerships only.
Aegon Annual Report on Form 20-F
2022
|  103
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
Net deposits (on and off balance)
Amounts in EUR millions  
                2022
                    2021  
                      %
 
Americas
   (16,083)   (17,656)  
 
9
 
The Netherlands
   1,201   (273)  
 
n.m.
 
United Kingdom
   (2,765)   10,228  
 
n.m.
 
International
   28   191  
 
(85)
 
Asset Management
1)
   (229)   12,885   
n.m.
 
Total net deposits / (outflows)
  
(17,848)
  
5,374
  
n.m.
 
1
Includes deposits from Third-Party and Strategic Partnerships only.
Worldwide revenues geographically 2022
Amounts in EUR millions  Americas   The
Nether-
lands		   United
Kingdom		   Interna-
tional		   Asset
Manage-
ment		   Holding
and other
activities		  Segment
total		   Associates
and Joint
Ventures
elimina-
tions		  Consoli-
dated		 
Total life insurance premiums
   7,329    1,168    4,081    1,280    -    6   13,864    (1,016)   12,848 
Accident & health insurance premiums
   1,407    257    -    184    -    -   1,848    (79)   1,769 
Property & casualty insurance premiums
   -    144    -    182    -    -   326    (182)   144 
Total gross premiums
  
 
8,735
 
  
 
1,569
 
  
 
4,081
 
  
 
1,646
 
  
 
-
 
  
 
6
 
 
 
16,037
 
  
 
(1,276
) 
 
 
14,761
 
Investment income
   3,467    1,728    1,951    297    12    (3)   7,453    (114)   7,338 
Fee and commission income
   2,021    325    217    42    693    (187)   3,111    (240)   2,871 
Other revenue
   -    -    -    26    5    -   31    (30)   1 
          
Total revenues
  
 
14,223
 
  
 
3,622
 
  
 
6,250
 
  
 
2,011
 
  
 
710
 
  
 
(184
) 
 
 
26,633
 
  
 
(1,661
) 
 
 
24,972
 
Number of employees, including agent employees
   6,153    3,609    2,621    4,281    1,464    958   19,087          
Worldwide revenues geographically 2021
Amounts in EUR millions  Americas   The
Nether-
lands		   United
Kingdom		   Interna-
tional		   Asset
Manage-
ment		   Holding
and other
activities		  Segment
total		   Associates
and Joint
Ventures
eliminations		  Consoli-
dated		 
Total life insurance premiums
   6,917    1,323    4,613    1,372    -    -   14,225    (825)   13,400 
Accident & health insurance premiums
   1,273    254    3    179    -    -   1,709    (67)   1,643 
General insurance premiums
   -    136    -    432    -    -   569    (168)   401 
Total gross premiums
  
 
8,190
 
  
 
1,713
 
  
 
4,616
 
  
 
1,984
 
  
 
-
 
  
 
-
 
 
 
16,504
 
  
 
(1,060
) 
 
 
15,444
 
Investment income
   2,909    2,088    1,691    361    12    (19)   7,042    (75)   6,967 
Fee and commission income
   1,920    300    223    59    800    (183)   3,120    (335)   2,785 
Other revenue
   -    -    -    14    2    12   27    (15)   13 
          
Total revenues
  
 
13,019
 
  
 
4,101
 
  
 
6,531
 
  
 
2,418
 
  
 
814
 
  
 
(190
) 
 
 
26,693
 
  
 
(1,484
) 
 
 
25,209
 
Number of employees, including agent employees
   6,942    3,534    2,476    7,323    1,675    321   22,271          
104    
Aegon Annual Report on Form 20-F
2022
Table of Contents
Results of operations
Results 2022 worldwide
Aegon’s net result amounted to a loss of EUR 1.4 billion in 2022, compared with a EUR 2 billion profit in 2021. This was mainly driven by losses on non-operating items in 2022 compared with gains in 2021. Furthermore, Other charges increased compared with 2021. Non-operating items in 2022 mainly reflected fair value losses from interest rate hedges in the United States and from realized losses on investments in the United States and in the Netherlands. Other charges were higher in 2022, mainly driven by an impairment loss related to the transaction with a.s.r. that was announced in 2022. The operating result for 2022 was stable compared with 2021 at EUR 1.9 billion. The result was supported by expense savings, benefits from growth initiatives, improved claims experience, and strengthening of the US dollar. This was offset by lower fees due to adverse market movements and outflows in US Variable Annuities and Asset Management.
Net result
The 2022 net result amounted to a loss of EUR 1.4 billion and was driven by non-operating items and Other charges, which more than offset the operating result of EUR 1.9 billion. Non-operating items amounted to a loss of EUR 435 million in 2022, whereas a gain of EUR 930 million was recorded in 2021. The reduced result from Non-operating items in 2022 resulted mostly from fair value items turning negative and realized losses on investments, while 2021 showed realized gains on investments. Fair value gains amounted to EUR 251 million in 2022 and were mainly from the Americas, largely due to the dynamic hedge program for US variable annuities with GMDB and GMIB riders. This program targets to hedge the economic liability. However, under IFRS reporting, discount rates for liabilities are locked-in, which led to an accounting mismatch and resulted in a fair value loss from the increase in interest rates during the year. Realized losses on investments were EUR 650 million in 2022 and were primarily from the sales of bonds in the Americas and the Netherlands to maintain a robust liquidity position, consistent with Aegon’s strict liquidity framework. Other charges in 2022 amounted to EUR 2.3 billion, compared with EUR 780 million in 2021. Other charges were mainly driven by an impairment loss triggered by classifying Aegon the Netherlands as held for sale, as a result of the announced transaction with a.s.r. This impairment was not tax deductible. Other charges furthermore included the impact from investments in the operational improvement plan across the businesses and various actuarial assumption updates and charges from reinsurance rate increases in the Americas. There was a partial offset from the net book gain from the divestment of Aegon’s businesses in Hungary and Turkey, and the sale of Aegon’s 50% stake in the joint venture with Liberbank. This led to a loss before tax of EUR 837 million in 2022. After the tax charge of EUR 567 million, the net result for 2022 amounted to EUR 1.4 billion.
Operating result
The operating result for 2022 was stable compared with 2021 at EUR 1.9 billion. The result was supported by expense savings, benefits from growth initiatives, improved claims experience, and strengthening of the US dollar. This was offset by lower fees due to adverse market movements and outflows in US Variable Annuities and Asset Management.
◆The Americas’ operating result in 2022 remained stable compared with 2021 at EUR 790 million. Strengthening of the US dollar, an improvement in the mortality claims experience in Life, and lower expenses as a result of the operational improvement plan benefited the result. This was offset by a lower result from Variable Annuities where fee income was negatively impacted by adverse markets and expected outflows. In addition, lower fee revenues in Mutual Funds and Retirement Plans and less favorable morbidity experience in Accident & Health contributed to the offset.
◆Operating result from the Netherlands increased by 4% compared with 2021 to EUR 783 million in 2022. The results of Bank and Workplace Solutions showed an increase, supported by higher interest rates, business growth, and non-life reserve releases, while the results of Life and Mortgages decreased, reflecting lower investment income from mortgages.
◆In the United Kingdom, the operating result rose by 12% compared with 2021 to EUR 206 million in 2022. The increase was mainly the result of lower operating expenses, driven by lower addressable expenses. Revenues increased compared with 2021 as higher net investment income on the general account more than offset the impacts from the loss of earnings due to the gradual run-off of the traditional product portfolio.
◆The operating result from International increased by 17% compared with 2021 to EUR 167 million in 2022. The increase reflects an improvement in claims experience, business growth, and an increase in Aegon’s economic ownership in its Brazilian business. These items more than offset a reduction in TLB’s operating result compared with 2021 as a result of a reinsurance treaty with Transamerica.
◆The operating result from Asset Management decreased by 24% compared with 2021 to EUR 193 million in 2022. This decrease was mainly driven by lower performance fees net of performance-based compensation in Strategic Partnerships. Management fees in Global Platforms were negatively impacted by a reduction in asset balances due to adverse market conditions and outflows, and were only partly offset by lower expenses.
◆The operating result for Holdings and other activities amounted to a loss of EUR 220 million in 2022 compared with a loss of EUR 219 million in 2021, and mainly reflects funding expenses.
Aegon Annual Report on Form 20-F
2022
|  105
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
Operating expenses
Operating expenses increased by 3% compared with 2021 to EUR 3.9 billion in 2022. This was driven by non-recurrence of a one-time benefit in 2021, increased project costs for IFRS 9 and 17 implementation and unfavorable currency movements. These more than offset the impact from lower addressable expenses and the impact of the completion of the sale of Aegon’s businesses in Hungary and Turkey.
Addressable expenses decreased by 2% compared with 2021 on a constant currency basis to EUR 3.0 billion in 2022. The benefit from expense savings initiatives and lower performance related compensation expenses was only partly offset by additional investments in growth initiatives across the group, and other elements including higher own employee pension costs in the Netherlands.
The reconciliation from operating expenses from continuing operations to addressable expenses is presented in the table below.
    
Note
   
 
2022
  
2021
 
Employee expenses from continuing operations
  
 
14
 
   1,707   1,511 
Administrative expenses from continuing operations
  
 
14
 
   1,218   1,294 
Operating expenses from continuing operations
                 2,926   
            2,803
 
Operating expenses from discontinued operations
     687   675 
Operating expenses from continuing operations and discontinued
operations
     3,613   
3,478
 
Operating expenses related to joint ventures and associates
     289   297 
Operating expenses in result of operations
     3,902   
3,775
 
Operating expenses related to joint ventures and associates
     (289)   (297) 
Deferred acquisition expenses
     (53)   (51) 
Restructuring expenses
     (98)   28 
Operational improvement plan expenses
     (401)   (389) 
Acquisition and disposals
     (33)   (163) 
FX effect constant currency and other
        -   190 
Addressable expenses
       
 
3,028
 
 
 
3,094
 
Capital management
During 2022, shareholders’ equity decreased by EUR 11.7 billion to EUR 12.1 billion, mostly due to higher interest rates, which had a negative impact on the revaluation reserve. The net loss of EUR 1.4 billion in 2022 also contributed unfavorably. Aegon’s shareholders’ equity, excluding revaluation reserves, non-controlling interests and share options not yet exercised decreased from EUR 17.4 billion at year-end 2021 to EUR 16.5 billion at year-end 2022, or EUR 8.38 per common share. This decrease is mainly driven by the net loss, which more than offset a strengthening of the US dollar against the euro.
Gross financial leverage based on IFRS as adopted by EU improved to EUR 5.6 billion on December 31, 2022, compared with EUR 5.9 billion on December 31, 2021. This reduction was driven by a debt tender offer, which reduced Aegon’s gross financial leverage by EUR 429 million. This decrease was partly offset by the strengthening of the US dollar against the euro.
Cash Capital at Holding increased from EUR 1.3 billion at the end of 2021 to EUR 1.6 billion at the end of 2022. Free cash flows amounted to EUR 780 million for 2022, while divestitures net of acquisitions amounted to EUR 798 million and were driven by the proceeds closing the sale of Aegon’s businesses in Hungary and Turkey as well as the sale of Aegon’s 50% stake in the joint venture with Liberbank. The proceeds from these divestitures provided Aegon with the financial flexibility to reduce its debt through a debt tender offer and to return surplus cash capital to its shareholders via a EUR 306 million share buyback. Furthermore, cash used for dividend payments totaled EUR 407 million in 2022. Cash used to reduce leverage amounted to EUR 417 million. Other cash outflows amounted to EUR 110 million and were driven by capital injections into smaller units and losses from rolling currency hedges related to Aegon's gross financial leverage.
As at December 31, 2022, Aegon's estimated Group Solvency II ratio amounted to 208%, a decrease of 3%-points since December 31, 2021. While operating capital generation more than offset dividends to shareholders, market movement had a negative impact, driven by lower equity markets in the US. Other elements reducing the ratio included a reduction of eligible own funds due to tiering restrictions and a reduction of group diversification benefits. For more details, please refer to note 43.
106    
Aegon Annual Report on Form 20-F
2022
Table of Contents
Results of operations – Americas
Results 2022 Americas
   Amounts in USD millions      Amounts in EUR millions     
    2022  2021  
%
  2022  2021  % 
Operating result after tax
  
 
703
 
 
 
847
 
 
 
(17
) 
 
 
668
 
 
 
716
 
 
 
(7
) 
Tax on operating result
   129   88  
 
48
 
  123   74   66 
Operating result
       
Individual Solutions
   549   668  
 
(18
) 
  521   565   (8) 
Workplace Solutions
   284   268  
 
6
 
  269   226   19 
Operating result
  
 
833
 
 
 
935
 
 
 
(12
) 
 
 
790
 
 
 
790
 
 
 
11
 
Fair value items
   (1,732)   826  
 
n.m.
 
  (1,644)   698   n.m. 
Realized gains / (losses) on investments
   (505)   370  
 
n.m.
 
  (479)   313   n.m. 
Net impairments
   (13)   17  
 
        n.m.
 
  (13)   15           n.m. 
Non-operating items
  
 
(2,250
) 
 
 
1,213
 
 
 
n.m.
 
 
 
(2,136
) 
 
 
1,025
 
 
 
n.m.
 
Other income / (charges)
   (555)   (789)  
 
30
 
  (526)   (667)   21 
Result before tax (excluding income tax from certain proportionately consolidated joint ventures and associates)
  
 
(1,972
) 
 
 
1,359
 
 
 
n.m.
 
 
 
(1,872
) 
 
 
1,149
 
 
 
n.m.
 
Income tax from certain proportionately consolidated joint ventures and associates included in result before tax
  
 
-
 
 
 
-
 
 
 
n.m.
 
 
 
-
 
 
 
-
 
 
 
n.m.
 
Income tax  
 
486
 
 
 
(162
) 
 
 
n.m.
 
 
 
462
 
 
 
(137
) 
 
 
n.m.
 
Of which Income tax from certain proportionately consolidated joint ventures and associates included in result before tax
  
 
-
 
 
 
-
 
 
 
n.m.
 
 
 
-
 
 
 
-
 
 
 
n.m.
 
Net result
  
 
(1,486
) 
 
 
1,197
 
 
 
n.m.
 
 
 
(1,411
) 
 
 
1,012
 
 
 
n.m.
 
Life insurance gross premiums
   7,720   8,184  
 
(6
) 
  7,329   6,917   6 
Accident and health insurance premiums
   1,482   1,506  
 
(2
) 
  1,407   1,273   11 
Total gross premiums
  
 
        9,202
 
 
 
9,689
 
 
 
(5
) 
 
 
        8,735
 
 
 
8,190
 
 
 
7
 
Investment income
   3,652           3,441  
 
6
 
  3,467           2,909   19 
Fee and commission income
   2,129   2,272  
 
(6
) 
  2,021   1,920   5 
Other revenues
   -   -  
 
n.m.
 
  -   -   n.m. 
Total revenues
  
 
14,983
 
 
 
15,403
 
 
 
(3
) 
 
 
14,223
 
 
 
13,019
 
 
 
9
 
Operating expenses
   1,757   1,705  
 
3
 
  1,668   1,441   16 
Addressable expenses
1)
   1,511   1,541  
 
(2
) 
  1,434   1,464   (2) 
1
   Addressable expenses are reported at constant currency at the FY 2022 weighted average foreign exchange rate.
    
New life sales
                   
   Amounts in USD millions      Amounts in EUR millions     
    
2022
  2021  
%
  
2022
  2021  
%
 
Individual Solutions
   431   360  
 
20
 
  409   304  
 
35
 
Workplace Solutions
   67   57  
 
17
 
  63   48  
 
31
 
Total recurring plus 1/10 single
  
 
498
 
 
 
417
 
 
 
19
 
 
 
473
 
 
 
352
 
 
 
34
 
   Amounts in USD millions      Amounts in EUR millions     
    
2022
  2021  
%
  
2022
  2021  
%
 
New premium production accident & health insurance
   133   152  
 
(12)
 
  126   129  
 
(2)
 
Aegon Annual Report on Form 20-F
2022
|  107
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
Gross deposits (on and off balance)
   Amounts in USD millions          Amounts in EUR millions     
    
2022
  2021  
%
  
2022
  2021  
%
 
Individual Solutions
   8,757   10,298  
 
(15
) 
  8,313           8,704  
 
(4
) 
Workplace Solutions
         27,300       28,154  
 
(3
) 
        25,916   23,797  
 
                9
 
Total gross deposits
  
 
36,057
 
 
 
38,451
 
 
 
(6
) 
 
 
34,229
 
 
 
32,500
 
 
 
5
 
Net deposits (on and off balance)
       
   Amounts in USD millions      Amounts in EUR millions     
    
2022
  2021  
%
  
2022
  2021  
%
 
Individual Solutions
   (9,040)   (7,709)  
 
(17
) 
  (8,582)   (6,516)  
 
(32
) 
Workplace Solutions
   (7,902)   (13,179)  
 
            40
 
  (7,502)   (11,140)  
 
33
 
Total net deposits / (outflows)
  
 
(16,942
) 
 
 
(20,889
) 
 
 
19
 
 
 
(16,083
) 
 
 
(17,656
) 
 
 
9
 
Exchange rates
    Weighted average rate        Closing rate as of 
Per 1 EUR  
2022
   2021   
December 31, 2022
   December 31, 2021 
USD
                               1.0534                                1.1831    1.0673         1.1372 
108    
Aegon Annual Report on Form 20-F
2022
Table of Contents
Results of operations – Americas
Results 2022 Americas
Aegon’s businesses in the Americas reported a net loss of USD 1,486 million in 2022 compared with a net profit of USD 1,197 million in 2021. The operating result decreased by 12% compared with 2021 to USD 833 million in 2022, as lower fees due to adverse market movements and outflows in Variable Annuities and less favorable morbidity experience more than offset lower expenses and an improvement in mortality experience. A loss of USD 2,250 million in non-operating items in 2022 was driven by fair value losses and realized losses on investments. Other charges amounted to USD 555 million and were mainly driven by reinsurance rate increases and actuarial assumption updates.
Net result
Aegon’s businesses in the Americas reported a net loss of USD 1,486 million in 2022 compared with a net profit of USD 1,197 million in 2021. The decrease in net result was driven by a lower operating result and a loss from non-operating items, this was partly offset by lower Other charges. The operating result decreased by 12% compared with 2021 to USD 833 million in 2022. Non-operating items resulted in a loss of USD 2,250 million and were driven by fair value losses and realized losses on investments. Other charges amounted to USD 555 million and were partly driven by reinsurance rate increases and actuarial assumption updates.
Results on fair value items amounted to a loss of USD 1,732 million in 2022, which was primarily related to the following items:
◆Fair value hedges without an accounting match under IFRS resulted in a loss of USD 1,824 million and are mainly related to the dynamic hedge program for GMDB and GMIB riders in the legacy Variable Annuities portfolio. This program targets to hedge the economic liability and showed 97% economic hedge effectiveness. However, under IFRS reporting, discount rates for liabilities are locked-in, which led to an accounting mismatch and resulted in a fair value loss from the increase in interest rates during the year.
◆The result on fair value hedges with an accounting match – which includes the hedges program for GMWB riders – amounted to a loss of USD 52 million caused by losses on unhedged basis and volatility risks.
◆Gains on fair value investments of USD 143 million, mainly driven by the outperformance of multi-family property investments and real estate with commodity exposure at the beginning of the year.
Realized losses on investments were USD 505 million and were driven by asset sales to protect the liquidity position in the context of rising interest rates and consistent with Aegon’s strict liquidity framework. In addition, losses resulted from adjustments to the Transamerica’s interest rate risk profile following the increase in interest rates. Net impairments of USD 13 million were driven by gross impairments of fixed income assets, which was partly offset by recoveries from residential mortgage-backed securities.
Other charges of USD 555 million in 2022 were mainly driven by USD 210 million charges from reinsurance rate increases, USD 170 million one-time investments related to the operational improvement plan, and the impact from various actuarial assumption updates.
Operating result
The operating result in 2022 decreased by 12% compared with 2021 to USD 833 million. This was primarily due to a lower result from Variable Annuities where fee income was negatively impacted by adverse markets and expected outflows. In addition, lower fee revenues in Mutual Funds and Retirement Plans and less favorable morbidity experience in Accident & Health contributed to the decrease. This was partly offset by an improvement in the mortality claims experience in Life and lower expenses as a result of the operational improvement plan.
The Individual Solutions operating result decreased by 18% compared with 2021 to USD 549 million.
◆
The Individual Life operating result of USD 161 million in 2022 compared with a loss of USD 111 million in 2021. The Individual Life operating result was impacted by adverse mortality experience of USD 148 million. USD 90 million of the adverse claims experience was directly attributable to COVID-19 as cause of death. The remaining mortality experience is mainly attributed to higher claims frequency in Universal Life and Traditional Life, which Aegon believes to be in part indirectly related to COVID-19. The Life operating result was also supported by lower operating expenses, and the one-time recognition of the TLB operating result from the third quarter of 2022 of USD 28 million, following the reinsurance treaty
Aegon Annual Report on Form 20-F
2022
|  109
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
between TLB and Transamerica that commenced retrospectively on July 1, 2022. This reinsurance treaty contributed additional USD 30 million to the operating result in the fourth quarter of 2022.
◆Individual Accident & Health operating result of USD 284 million in 2022 compared with USD 356 million in 2021, mainly due to less favorable morbidity experience of USD 118 million in 2022 compared with USD 211 million in 2021. Most of the favorable morbidity experience was related to the closed block of Long-Term Care insurance, where the actual to expected claim ratio amounted to 81% in 2022 compared to 64% in 2021. This was partly driven by the release of the incurred but not reported (IBNR) reserve in the first half of 2022 that had been set up in 2020, as new claims are now back at pre-pandemic levels.
◆The Mutual Funds operating result of USD 39 million in 2022 compared with USD 58 million in 2021 due to a decrease in fees from unfavorable market performance and net outflows.
◆The Variable Annuities operating result of USD 33 million in 2022 compared with USD 345 million in 2021, driven by higher benefit costs and lower fee revenues, a consequence of expected outflows and the impact of lower equity markets as well as higher interest rates on account balances.
◆The Fixed Annuities operating result of USD 32 million in 2022 compared with USD 20 million in 2021, mainly due to the impact of higher interest rates leading to benefits from new annuitizations.
Workplace Solutions operating result increased by 6% compared with 2021 to USD 284 million.
◆Life operating result of USD 35 million in 2022 compared with USD 13 million in 2021, reflecting better mortality experience and improved margins.
◆Accident & Health operating result of USD 11 million in 2022 compared with USD 21 million in 2021, reflecting higher expenses and worse than expected persistency.
◆Retirement Plans operating result of USD 162 million in 2022 compared with USD 156 million in 2021, as higher revenues from the Advice Center, participant fees, and transaction fees, as well as higher investment income more than offset a decrease in fee income from lower account values as a result of market movements.
◆Stable Value Solutions operating result of USD 76 million in 2022 compared with USD 77 million in 2021.
Operating expenses
Operating expenses increased by 3% compared with 2021 to USD 1.8 billion in 2022, mainly reflecting a favorable one-time benefit from changes to the employee pension plan in 2021, partly offset by lower addressable expenses.
Addressable expenses decreased by 2% compared with 2021 to USD 1.5 billion in 2022, driven by expense savings initiatives as part of the operational improvement plan to reduce employee, real estate, and third-party expenses.
Sales
Net outflows amounted to USD 16.9 billion in 2022 compared with net outflows of USD 20.9 billion in 2021. USD 5.2 billion of the USD 7.9 billion of net outflows in Retirement Plans were due to the discontinuance of one large Multiple-Employer-Plan in the Middle-Market segment of Retirement Plans. Net outflows in Variable Annuities amounted to USD 4.8 billion in 2022 and reflect the fact that Transamerica has discontinued the sale of variable annuities with significant interest rate sensitive riders. Mutual Funds saw outflows as the result of challenging market conditions. The run-off of the Fixed Annuities book contributed to the net outflows as well.
New life sales increased by 19% to USD 498 million in 2022 compared with USD 417 million in 2021. Individual Solutions new life sales grew by 20% compared with 2021 to USD 431 million. This was mainly driven by increased sales of indexed universal life across all distribution channels. The improved service experience and continued competitiveness of Transamerica’s products supported an increase in market share in the World Financial Group (WFG) distribution channel to 67% in the last quarter of 2022. WFG further expanded its distribution reach by growing its number of licensed life agents to a record level of more than 62,600 agents at year-end of 2022, a 20% increase compared with the year-end of 2021. Workplace Solutions new life sales increased by 17% compared with 2021 to USD 67 million, mainly driven by an increase in renewal rates for universal life products.
New Accident & Health premium production declined by 12% compared to 2021 to USD 133 million. In Workplace Solutions, new Accident & Health premium production increased to USD 129 million in 2022 from USD 116 million in 2021. New Individual Solutions Accident & Health premium production decreased to USD 4 million in 2022 from USD 36 million in 2021. Sales for this otherwise closed product where the result of a change in legislation in the state of Washington leading to one-time sales volumes in both years.
110    
Aegon Annual Report on Form 20-F
2022
Table of Contents
Results of operations – The Netherlands
Results 2022 The Netherlands
1
Amounts in EUR millions  
2022
  2021  % 
Operating result after tax
  
 
609
 
 
 
573
 
 
 
6
 
Tax on operating result
   173   181  
 
(4
) 
Operating result
    
Life
   463   519  
 
(11
) 
Mortgages
   68   71  
 
(4
) 
Bank
   128   115  
 
12
 
Workplace solutions
   123   50  
 
146
 
Operating result
  
 
783
 
 
 
755
 
 
 
4
 
Fair value items
   1,897   221  
 
n.m.
 
Realized gains / (losses) on investments
   (181)   118  
 
n.m.
 
Net impairments
   15   40  
 
(63
) 
Non-operating items
  
 
1,731
 
 
 
378
 
 
 
n.m.
 
Other income / (charges)
   (1,970)   (23)  
 
n.m.
 
Result before tax (excluding income tax from certain proportionately
consolidated joint ventures and associates)
  
 
543
 
 
 
1,110
 
 
 
(51
) 
Income tax from certain proportionately consolidated joint ventures and associates included in result before tax
   -   -  
 
n.m.
 
Income tax   (1,000)   (276)  
 
n.m.
 
Of which Income tax from certain proportionately consolidated joint ventures and associates included in result before tax
   -   -  
 
n.m.
 
Net result
  
 
(457
) 
 
 
833
 
 
 
n.m.
 
Life insurance gross premiums
   1,168   1,323  
 
(12
) 
Accident and health insurance premiums
   257   254  
 
1
 
Property & casualty insurance
   144   136  
 
5
 
Total gross premiums
  
 
1,569
 
 
 
1,713
 
 
 
(8
) 
Investment income
   1,728   2,088  
 
(17
) 
Fee and commission income
   325   300  
 
8
 
Other revenues
   -   -  
 
n.m.
 
Total revenues
  
 
                3,622
 
 
 
                4,101
 
 
 
(12
) 
Operating expenses
   738   729  
 
                    1
 
Addressable expenses
   610   607  
 
1
 
New Life Sales
    
    
Amounts in EUR millions
  
 
2022
 
  2021  
 
%
 
Life
   73   74  
 
(2
) 
Total recurring plus 1/10 single
  
 
73
 
 
 
74
 
 
 
(2
) 
    
Amounts in EUR millions
  
 
2022
 
  2021  
 
%
 
Mortgage origination
   8,743   10,856  
 
(19
) 
New premium production accident & health insurance
   8   10  
 
(23
) 
New premium production property & casualty insurance
   23   20  
 
15
 
1 
Following the announcement of the transaction with a.s.r. on October 27, 2022 the results for Aegon the Netherlands are reported as discontinued operations and classified as held for sale for IFRS reporting purposes.
Aegon Annual Report on Form 20-F
2022
|  111
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
Gross deposits (on and off balance)
Amounts in EUR millions
  
 
2022
 
   2021  
 
%
 
Bank
   21,376    19,006  
 
12
 
Workplace solutions
   1,034    896  
 
15
 
Total gross deposits
  
 
22,410
 
  
 
19,902
 
 
 
13
 
Net deposits (on and off balance)
     
Amounts in EUR millions
  
 
2022
 
                   2021  
 
%
 
Bank
   367    (1,012)  
 
                n.m.
 
Workplace solutions
   834    739  
 
13
 
Total net deposits / (outflows)
  
 
                1,201
 
  
 
(273
) 
 
 
n.m.
 
112    
Aegon Annual Report on Form 20-F
2022
Table of Contents
Results of operations – The Netherlands
Results 2022 The Netherlands
1
The net result for the Netherlands decreased by EUR 1.3 billion compared with 2021 to a loss of EUR 457 million in 2022. This was primarily driven by Other charges and a one-time tax charge, related to the transaction with a.s.r. that was announced in 2022. These more than offset an increase in the operating result, as the benefits from reserve releases and business growth, more than offset lower investment income.
Net result
The net result from the Netherlands amounted to a loss EUR 457 million in 2022, as improvements in the operating result and non-operating items were more than offset by Other charges and a one-time tax charge. The operating result amounted to EUR 783 million. Non-operating items amounted to a gain of EUR 1.7 billion in 2022, compared with a gain of EUR 378 million in 2021. In 2022, a EUR 1.9 billion gain from fair value items, and a gain of EUR 15 million from net recoveries were only partly offset by realized losses on investments of EUR 181 million. The fair value gain in 2022 was mostly driven by higher spreads, reducing the value of liabilities. Realized losses on investments resulted from sales of sovereign and corporate bonds to maintain a robust liquidity position, consistent with Aegon’s strict liquidity framework. Other charges in 2022 amounted to EUR 2.0 billion, and were driven by an impairment loss that was not tax deductible. This impairment was triggered by classifying Aegon the Netherlands as held for sale, as a result of the announced transaction with a.s.r. The tax charge for 2022 was EUR 1.0 billion, and reflected the anticipated settlement of a tax position in connection with the transaction with a.s.r.
Operating result
The operating result from Aegon’s operations in the Netherlands increased by 4% compared with 2021 to EUR 783 million in 2022.
◆The operating result from Life decreased by 11% compared with 2021 to EUR 463 million in 2022. The decrease was mainly driven by lower investment income, driven by the sale of corporate bonds due to the rising rate environment, and also by lower prepayment compensations and yields on mortgages.
◆The operating result from Mortgages decreased by 4% compared with 2021 to EUR 68 million in 2022. The impact of higher fees resulting from business growth was more than offset by the combination of lower revenues from lower customer prepayment compensations and lower yields on mortgages.
◆The operating result from Bank rose by 12% compared with 2021 to EUR 128 million in 2022. The main contributor was a higher interest margin due to higher interest rates. Furthermore, higher fee income from more fee-paying customers at Knab contributed favorably.
◆The operating result from Workplace Solutions increased by EUR 73 million to EUR 123 million in 2022. This primarily reflected increased earnings of the non-life disability business, mostly due reserve releases and elevated recoveries. Furthermore, business growth contributed favorably.
Operating expenses
Operating expenses increased by 1% compared with 2021 to EUR 738 million in 2022, reflecting higher addressable expenses and higher expenses related to customer due diligence.
Addressable expenses increased by EUR 3 million compared with 2021 to EUR 610 million in 2022. The benefit from expense savings initiatives was offset by higher expenses related to growth initiatives and other elements, mostly due to higher own employee pension costs as a consequence of higher interest rates.
1 
Following the announcement of the transaction with a.s.r. on October 27, 2022 the results for Aegon the Netherlands are reported as discontinued operations and classified as held for sale for IFRS reporting purposes.
Aegon Annual Report on Form 20-F
2022
  |  
113
Table of Contents

About AegonGovernance and risk management
Financial information
Non-financial information
Sales
Workplace Solutions net deposits increased by 13% compared with 2021 to EUR 834 million in 2022, supported by higher recurring gross deposits from continued strong demand for defined contribution pension products (PPIs).
Net deposits for the Bank amounted to EUR 367 billion in 2021, while 2021 had net outflows of EUR 1.0 billion. The increase was mainly due to the growth in the number of Knab customers this quarter, and the impact from of Aegon’s decision to stop offering savings products to non-fee-paying customers in 2021.
Mortgage origination volumes decreased by 19% compared with 2021 to EUR 8.7 billion in 2022, of which EUR 4.7 billion was for third-party investors. Third-party investors pay Aegon a fee for originating and servicing these mortgages. The decrease in 2022 when compared to 2021 is due to reduced refinancing activity as a result of increased mortgage rates and a decline in home sales.
New premium production for accident & health insurance amounted to EUR 8 million in 2022, a decrease of EUR 2 million compared with 2021, mostly due to disability insurance. New premium production for property & casualty insurance increased by 15% compared with 2021 to EUR 23 million in 2022, in part driven by pricing changes.
New life sales decreased by 2% in 2022 to EUR 73 million, as the impact from a lower production of immediate annuities was partly offset by higher additional yearly pension increases.
114    
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2022
Table of Contents
Results of operations – United Kingdom
Results 2022 United Kingdom
   Amounts in GBP millions     Amounts in EUR millions    
   
 
2022
 
  2021   %  
 
2022
 
  2021   % 
Operating result after tax
  
 
150
 
 
 
143
 
 
 
5
 
 
 
176
 
 
 
166
 
 
 
6
 
Tax on operating result
   25   15  
 
70
 
  29   17  
 
71
 
Operating result
  
 
175
 
 
 
158
 
 
 
11
 
 
 
206
 
 
 
184
 
 
 
12
 
Fair value items
   8   (53)  
 
n.m.
 
  10   (62)  
 
n.m.
 
Realized gains / (losses) on investments
   3   9  
 
(70
) 
  3   10  
 
(70)
 
Net impairments
   (10)   -  
 
n.m.
 
  (11)   -  
 
n.m.
 
Non-operating items
  
 
1
 
 
 
(44
) 
 
 
n.m.
 
 
 
1
 
 
 
(51
) 
 
 
n.m.
 
Other income / (charges)
   (32)   1  
 
n.m.
 
  (37)   1  
 
n.m.
 
Result before tax (excluding income tax from certain proportionately consolidated joint ventures and associates)
  
 
145
 
 
 
115
 
 
 
26
 
 
 
170
 
 
 
134
 
 
 
27
 
Income tax from certain proportionately consolidated joint ventures and associates included in result before tax
   -   -  
 
n.m.
 
  -   -  
 
n.m.
 
Income tax
   1   (10)  
 
n.m.
 
  1   (12)  
 
n.m.
 
Of which Income tax from certain proportionately consolidated joint ventures and associates included in result before tax
   -   -  
 
n.m.
 
  -   -  
 
n.m.
 
Net result
  
 
146
 
 
 
104
 
 
 
39
 
 
 
171
 
 
 
122
 
 
 
41
 
Life insurance gross premiums
   3,480   3,966  
 
(12
) 
  4,081   4,613  
 
(12)
 
Accident and health insurance premiums
   -   3  
 
n.m.
 
  -   3  
 
n.m.
 
Total gross premiums
  
 
3,480
 
 
 
3,969
 
 
 
(12
) 
 
 
4,081
 
 
 
4,616
 
 
 
(12
) 
Investment income
   1,664   1,454  
 
14
 
  1,951   1,691  
 
15
 
Fee and commission income
   185   192  
 
(3
) 
  217   223  
 
(2
) 
Total revenues
  
 
5,330
 
 
 
5,615
 
 
 
(5
) 
 
 
6,250
 
 
 
6,531
 
 
 
(4
) 
Operating expenses
   375   386  
 
(3
) 
  439   448  
 
(2
) 
Addressable expenses
1)
   319   335  
 
(5
) 
  374   393  
 
(5
) 
1 
Addressable expenses are reported at constant currency at the FY 2022 weighted average foreign exchange rate.
New life sales
   Amounts in GBP millions  Amounts in EUR millions 
   
 
2022
 
   2021    
%
  
 
2022
 
   2021    
%
 
Total recurring plus 1/10 single
  
 
22
 
  
 
27
 
  
 
(16
) 
 
 
26
 
  
 
31
 
  
 
(15
) 
Gross deposits (on and off balance)
   Amounts in GBP millions  Amounts in EUR millions 
   
 
2022
 
   2021    
%
  
 
2022
 
   2021    
%
 
Total gross deposits
  
 
8,485
 
  
 
21,292
 
  
 
(60
) 
 
 
9,949
 
  
 
24,764
 
  
 
(60
) 
Aegon Annual Report on Form 20-F
2022
|  115
Table of Contents

About AegonGovernance and risk management
Financial information
Non-financial information
Net deposits (on and off balance)
   Amounts in GBP millions      Amounts in EUR millions    
   
 
2022
 
  2021   %   
 
2022
 
  2021   
%
 
Retail
   (877)   (210)  
 
n.m.
 
   (1,028)   (244)  
 
n.m.
 
Workplace solutions
   2,223   1,493  
 
43
 
   2,607   1,736  
 
43
 
Institutional
   (2,743)   8,754  
 
n.m.
 
   (3,217)   10,181  
 
n.m.
 
Traditional products
   (961)   (1,246)  
 
23
 
   (1,127)   (1,449)  
 
22
 
Total net deposits / (outflows)
  
 
(2,358
) 
 
 
8,792
 
 
 
n.m.
 
  
 
(2,765
) 
 
 
10,225
 
 
 
n.m.
 
Exchange rates
    Weighted average rate        Closing rate as of 
Per 1 EUR
  
 
                            2022
 
                               2021   
 
December 31, 2022
 
   December 31, 2021   
Pound Sterling
   0.8528    0.8598    0.8872         0.8396   
116    
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2022
Table of Contents
Results of operations – United Kingdom
Results 2022 United Kingdom
The net result for the United Kingdom increased by 39% compared with 2021 to GBP 146 million in 2022. The improvement was driven by a higher operating result and higher non-operating items.
Net result
The net result for the United Kingdom increased by 39% compared with 2021 to GBP 146 million in 2022. The operating result increased by GBP 17 million compared with 2021 to GBP 175 million in 2022. Fair value items amounted to a gain of GBP 8 million and reflects the impact from hedges which protect the solvency position. Gains on investments amounted to GBP 3 million. Net impairments of GBP 10 million were recorded on an associate. Other charges amounted to GBP 32 million driven by investments related to the operational improvement plan and income related to policyholder taxes. Charges from policyholder taxes are fully offset in the income tax line. The result before tax in 2022 amounted to GBP 145 million and the income tax amounted to a benefit of GBP 1 million, impacted by the release of a tax provision.
Operating result
The operating result rose by 11% compared with 2021 to GBP 175 million in 2022. The increase in operating result was mainly the result of lower operating expenses, which decreased by GBP 11 million compared with 2021. Revenues increased compared with 2021 as higher net investment income on the general account more than offset the impacts from the loss of earnings due to the gradual run-off of the traditional product portfolio.
Operating expenses
Operating expenses amounted to GBP 375 million in 2022, which was a decrease of 3% compared with 2021. This decrease was driven by lower addressable expenses, partially offset by additions to a provision for operational incidents. Addressable expenses amounted to GBP 319 million in 2022, which was a decrease of GBP 17 million compared with 2021. This decrease was driven by the benefits of expense savings initiatives, which led to lower administration expenses, partially offset by higher employee expenses due to a higher headcount.
Sales
Gross deposits decreased from GBP 21.3 billion in 2021 to GBP 8.5 billion in 2022. Net outflows amounted to GBP 2.4 billion in 2022 compared with net deposits of GBP 8.8 billion in 2021. The main driver of net outflows in 2022 as well as net deposits in 2021 was the Institutional business, which is low-margin and for which net deposits can be lumpy. Net outflows on the Institutional business amounted to GBP 2.7 billion in 2022 compared with net inflows of GBP 8.8 billion in 2021. Net deposits on the Workplace channel amounted to GBP 2.2 billion in 2022 and were the highest level since 2018. For the Retail platform GBP 0.9 billion net outflows were recorded in 2022 compared with GBP 0.2 billion net outflows in 2021, reflecting weak investor sentiment. The traditional product portfolio continues to gradually run-off with net outflows of GBP 1.0 billion in 2022 compared with net outflows of GBP 1.2 billion in 2021. New life sales decreased by 16% compared with 2021 to GBP 22 million in 2022, reflecting lower market demand as a consequence of economic uncertainty.
Aegon Annual Report on Form 20-F
2022
|  117
Table of Contents

About AegonGovernance and risk management
Financial information
Non-financial information
Results 2022 International
Amounts in EUR millions  
 
                    2022
                   2021                      
%
 
Operating result after tax
  
 
120
 
  
 
110
 
 
 
9
 
Tax on operating result
   47    33  
 
43
 
Operating result
     
Spain & Portugal
   78    75  
 
4
 
China
   26    24  
 
8
 
Brazil
   27    (2)  
 
n.m.
 
TLB
   60    77  
 
(23
) 
Other
   (24)    (31)  
 
25
 
Operating result
  
 
167
 
  
 
143
 
 
 
17
 
Fair value items
   21    (18)  
 
n.m.
 
Realized gains / (losses) on investments
   -    2  
 
(81
) 
Net impairments
   (8)    1  
 
n.m.
 
Non-operating items
  
 
13
 
  
 
(15
) 
 
 
n.m.
 
Other income / (charges)
   373    65  
 
n.m.
 
Result before tax (excluding income tax from certain proportionately consolidated joint ventures and associates)
  
 
553
 
  
 
193
 
 
 
186
 
Income tax from certain proportionately consolidated joint ventures and associates included in result before tax
   37    20  
 
84
 
Income tax
   (36)    (36)  
 
-
 
Of which Income tax from certain proportionately consolidated joint ventures and associates included in result before tax
   (37)    (20)  
 
(84
) 
Net result
  
 
516
 
  
 
157
 
 
 
n.m.
 
Life insurance gross premiums
   1,280    1,372  
 
(7
) 
Accident and health insurance premiums
   184    179  
 
3
 
Property & casualty insurance premiums
   182    432  
 
(58
) 
Total gross premiums
  
 
1,646
 
  
 
1,984
 
 
 
(17
) 
Investment income
   297    361  
 
(18
) 
Fee and commission income
   42    59  
 
(29
) 
Other revenues
   26    14  
 
91
 
Total revenues
  
 
2,011
 
  
 
2,418
 
 
 
(17
)
 
Operating expenses
   334    424  
 
(21
) 
Addressable expenses
1)
   122    118  
 
4
 
1 
Addressable expenses are reported at constant currency at the FY 2022 weighted average foreign exchange rate.
New life sales
Amounts in EUR millions  
 
                    2022
                   2021                       % 
Spain & Portugal
   56    48   
 
17
 
China
   87    90   
 
(4)
 
Brazil
   105    77   
 
36
 
TLB
   5    11   
 
(52)
 
Other
   -    2   
 
(88)
 
Total recurring plus 1/10 single
  
 
253
 
  
 
228
 
  
 
11
 
      
Amounts in EUR millions  
2022
   2021   
%
 
New premium production accident & health insurance
   35    31   
 
15
 
New premium production property & casualty insurance
   82    76   
 
8
 
118    
Aegon Annual Report on Form 20-F
2022
Table of Contents
Results of operations – International
Gross deposits (on and off balance)
 
        
Amounts in EUR millions      
 
                    2022  
                       2021     
                    %
 
Spain & Portugal
     7      15     
 
(56
)   
China
     18      10     
 
77
 
Brazil
     635      361     
 
76
 
Other
     -      -     
 
n.m.
 
     
Total gross deposits
     
 
660  
 
  
 
387  
 
  
 
71
 
        
Net deposits (on and off balance)
 
        
Amounts in EUR millions     
 
                    2022
                      2021    
                    %  
 
Spain & Portugal
    (4)   -  
 
n.m.
 
China
    9   3  
 
n.m.
 
Brazil
    23   187  
 
(88
) 
Other
    -   -  
 
n.m.
 
     
Total net deposits / (outflows)
      
 
28
 
 
 
191
 
 
 
(85
) 
Exchange rates
 
     
               Weighted average rate Closing rate as of 
Per 1 EUR  
2022   
 2021  
 
December 31, 2022
  December 31, 2021 
USD
   1.0534     1.1831   1.0673     1.1372 
Chinese Yuan Renminbi
   7.0810   7.6313   7.4192   7.2478 
Hungarian Florint
       391.1604   358.4993   400.4500   368.5650 
Polish Zloty
   4.6845   4.5641   4.6812   4.5834 
Romanian Leu
   4.9305   4.9211   4.9478   4.9488 
Indian Rupee
   82.7290   87.4386   88.2936   84.5345 
Turkish Lira
   17.4047   10.4938   19.9784   15.1017 
Aegon Annual Report on Form 20-F
2022
|  119
Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
Results 2022 International
The net result from International increased by EUR 359 million compared with 2021 to EUR 516 million in 2022, mainly as a result of a net book gain from divestments. The operating result increased compared with 2021, as business growth and favorable claims experience more than offset the impact from a reinsurance transaction between Transamerica and TLB, Aegon’s high-net-worth business.
Net result
The net result from International increased by EUR 359 million compared with 2021 to EUR 516 million in 2022, mainly as a result of a net book gain from divestments. An improvement in the operating result and non-operating items also contributed positively. The operating result increased by EUR 24 million compared with 2021 to EUR 167 million in 2022. The increase in the operating result reflects an improvement in claims experience, business growth, and an increase in Aegon’s economic ownership in its Brazilian business. These items more than offset a reduction in TLB’s operating result compared with 2021 as a result of a reinsurance treaty with Transamerica. The gain from non-operating items of EUR 13 million in 2022 was driven by fair value gains as a result of the one-time impact from higher interest rates on intangibles. Other income amounted to EUR 373 million in 2022, and consisted of the result from the divestment of Aegon’s businesses in Hungary and Turkey, and the sale of Aegon’s 50% stake in the joint venture with Liberbank. The income tax charge in 2022 was EUR 36 million, and reflects the fact that the aforementioned result from divestments is tax-exempt.
Operating result
Operating result from International increased by 17% compared with 2021 to EUR 167 million in 2022. The increase reflects an improvement in claims experience, business growth, and an increase in Aegon’s economic ownership in its Brazilian business. These items more than offset a reduction in TLB’s operating result compared with 2021 as a result of a reinsurance treaty with Transamerica.
◆The operating result from Spain & Portugal was EUR 78 million in 2022, compared with EUR 75 million in 2021. This was mainly driven by business growth and favorable claims experience, which more than offset the impact from the sale of Aegon’s 50% stake in the joint venture with Liberbank.
◆The operating result from China increased by 8% compared with 2021 to EUR 26 million in 2022, reflecting a growing portfolio.
◆The operating result from Brazil improved by EUR 29 million to EUR 27 million, reflecting business growth, a normalization of COVID-19 mortality claims experience, and the benefit from an increase in Aegon’s economic ownership in the business.
◆TLB, Aegon’s high-net-worth business, recorded an operating result of EUR 60 million in 2022, a decrease of EUR 17 million compared with 2021. This was mostly the result of a reinsurance treaty with Transamerica that commenced retrospectively on July 1, 2022. Adjusting for this reinsurance treaty, the operating result from TLB increased supported by higher surrender gains and an improved investment margin.
◆For the Others segment, the result increased from a loss of EUR 31 million in 2021 to a loss of EUR 24 million in 2022. This was largely driven by an improvement in the operating result of India as a result of a normalization of COVID-19 mortality claims experience.
Operating expenses
Operating expenses decreased by EUR 90 million compared with 2021 to EUR 334 million in 2022. This largely reflects the sale of Aegon’s businesses in Hungary and Turkey and the benefit from expense savings initiatives across the businesses, which more than offset higher expenses in Brazil and Spain & Portugal due to business growth.
Addressable expenses increased by 4% compared with 2021 on a constant currency basis to EUR 122 million in 2022. This was driven by expenses related to business growth and inflation, partially offset by expense savings initiatives.
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2022
Table of Contents
Results of operations – International
Sales
Total new life sales increased by 11% compared with 2021 to EUR 253 million in 2022, mainly driven by Spain & Portugal and Brazil.
◆
New life sales from Spain & Portugal increased by EUR 8 million compared with 2021 to EUR 56 million in 2022, mainly due to sales growth in the bancassurance channel.
◆
New life sales from Aegon’s joint venture in China decreased by EUR 3 million compared with 2021 to EUR 87 million in 2022 reflecting COVID-19 related sales challenges.
◆
For TLB, new life sales decreased by EUR 6 million compared with 2021 to EUR 5 million in 2022 driven by COVID-19 related sales challenges.
◆
In Brazil, new life sales increased by EUR 28 million to EUR 105 million, driven by business growth and increased business ownership.
New premium production for accident and health insurance increased by 15% compared with 2021 to EUR 35 million in 2022, driven by growth in the bancassurance channel in Spain & Portugal. New premium production for property & casualty insurance increased by 8% compared with 2021 to EUR 82 million in 2022 as a result of increased demand for household insurance products in Spain.
Net deposits decreased from EUR 191 million in 2021 to EUR 28 million in 2022.
Aegon Annual Report on Form 20-F
2022
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Table of Contents

About Aegon
Governance and risk management
Financial information
Non-financial information
Results 2022 Asset Management
Amounts in EUR millions    
2022
            2021            %
Operating result after tax
    
 
130
 
        
 
181
 
        
(28)
Tax on operating result
     62          72         
(13)
Operating result
                    
Global Platforms
     51          54         
(6)
Strategic Partnerships
     142             199            
(29)
Operating result
    
 
193
 
        
 
253
 
        
(24)
Fair value items
     (3)          (1)         
n.m.
Realized gains / (losses) on investments
     -          2         
n.m.
Net impairments
     -             (1)            
n.m.
Non-operating items
    
 
(3
) 
        
 
-
 
        
n.m.
Other income / (charges)
     (19)             (18)            
(4)
Result before tax (excluding income tax from certain proportionately consolidated joint ventures and associates)
    
 
171
 
        
 
235
 
        
(27)
Income tax from certain proportionately consolidated joint ventures and associates included in result before tax
     48          57         
(16)
Income tax
     (67)          (65)         
(4)
Of which Income tax from certain proportionately consolidated joint ventures and associates included in result before tax
     (48)             (57)            
16
Net result
    
 
104
 
        
 
170
 
        
(39)
Management fees
     591          602         
(2)
Performance fees
     17          112         
(85)
Other
     89          75         
19
      
Total revenue
1)
    
 
697
 
        
 
788
 
        
(12)
Global Platforms
     429          430         
-
Strategic Partnerships
     268          359         
(25)
      
Total revenue
1)
    
 
697
 
        
 
788
 
        
(12)
Operating expenses
     547          552         
(1)
Addressable expenses
2)
     372          391         
(5)
Operating Margin - Global Platforms only
     11.9%             12.6%             
1 
Net fees and commissions
2 
Addressable expenses are reported at constant currency at the FY 2022 weighted average foreign exchange rate.
Gross deposits (on and off balance)
                             
Amounts in EUR millions    
2022
            2021            
%
General Account
     16,544          16,190         
2
Affiliate
     10,509          10,569         
(1)
Third Party
     12,708          26,086         
(51)
Global Platforms
     39,761          52,845         
(25)
Strategic Partnerships
     114,379             131,204            
(13)
Total gross deposits
    
154,141
            184,049            
(16)
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2022
Table of Contents
Results of operations – Aegon Asset Management
Net deposits
Amounts in EUR millions
     2022             2021            
%
General Account
     (9,742)          (5,489)         
(77)
Affiliate
     (2,061)          (2,431)         
15
Third Party
     (3,798)          5,049         
n.m.
Global Platforms
     (15,601)          (2,870)         
n.m.
Strategic Partnerships
     3,569             7,835            
(54)
Total net deposits / (outflows)
    
 
(12,032
) 
           
 
4,965
 
           
n.m.
Exchange rates
              Weighted average rate  
Closing rate as of
Per 1 EUR 
2022
  2021  
    December 31, 2022
      December 31, 2021 
USD
  1.0534    1.1831    1.0673    1.1372 
Pound Sterling
  0.8528    0.8598    0.8872    0.8396 
Hungarian Florint
                  391.1604            358.4993    400.4500    368.5650 
Chinese Yuan Renminbi
  7.0810    7.6313    7.4192    7.2478 
Aegon Annual Report on Form 20-F
2022
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Table of Contents

About Aegon
Governance and risk management
Financial information
Non-financial information
Results 2022 Asset Management
The net result from Asset Management decreased by 39% compared with 2021 to EUR 104 million in 2022. This was driven by a decrease of the operating result mainly as a result of lower performance fees net of performance-based compensation which more than offset lower addressable expenses. Third-party net deposits declined in 2022 compared with 2021 largely due to net outflows in Global Platforms as clients freed up liquidity in a rising interest rate environment.
Net result
The net result from Asset Management decreased by 39% compared with 2021 to EUR 104 million in 2022. This was driven by a lower operating result in 2022.
Operating result
The operating result from Asset Management decreased by 24% compared with 2021 to EUR 193 million in 2022. This decrease was mainly driven by lower performance fees net of performance-based compensation which decreased by 85% compared with 2021 to EUR 17 million in 2022.
◆The operating result from Strategic Partnerships decreased 29% compared with 2021 to EUR 142 million in 2022. This was mainly driven by lower performance fees net of performance-based compensation which decreased by EUR 95 million to EUR 11 million in 2022 compared to 2021
◆The operating result from Global Platforms decreased from EUR 54 million in 2021 to EUR 51 million in 2022. Management fees were negatively impacted by a reduction in asset balances due to adverse market conditions and outflows, and were only partly offset by lower expenses. Both revenues and expenses were impacted by the strengthening of the US dollar during 2022, with a limited positive net impact on the operating result.
Operating expenses
Operating expenses decreased by 1% compared with 2021 to EUR 547 million in 2022. The decrease is mainly caused by lower accruals for performance-based compensation in AIFMC. For Global Platforms, expenses increased driven by investments related to the operational improvement plan and a strengthening of the US dollar, which more than offset lower addressable expenses. The operating margin of Global Platforms amounted to 11.9% in 2022 compared with 12.6% in 2021, as management fees were negatively impacted by a reduction in asset balances due to adverse market conditions and outflows, and only partly offset by lower expenses
Addressable expenses in Global Platforms decreased by 5% at constant currencies compared with 2021 to EUR 372 million in 2022. This decrease was mainly driven by lower accruals of performance-based compensation and lower administration expenses as a result of expense savings initiatives, partly offset by inflationary pressure.
Sales
Third-party gross deposits decreased by EUR 30 billion or 19% compared with 2021 to EUR 127 billion in 2022. This decrease resulted from lower gross deposits in Strategic Partnerships, which decreased by EUR 17 billion compared with 2021 to EUR 114 billion in 2022. This was driven by adverse market and economic conditions in China impacting AIFMC. Gross deposits in Global Platforms decreased by EUR 13 billion compared with 2021, as clients freed up liquidity in a rising interest rate environment.
Full year third-party net outflows on the Global Platforms amounted to EUR 3.8 billion in 2022 compared with net deposits of EUR 5.0 billion in 2021. Third-party net deposits from Strategic Partnerships amounted to EUR 3.6 billion in 2022 compared to EUR 7.8 billion in 2021.
Assets under management
Assets under management decreased by EUR 117 billion compared to year-end 2021 to EUR 293 billion at year-end 2022. This was mainly driven by unfavorable market movements and a transfer of EUR 49 billion assets under management following the completion of the divestment of LBPAM’s 45% stake in Ostrum AM.
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Table of Contents
Exchange rates
Exchange rates
Exchange rates at December 31,
      
2022
   
2021
   
2020
 
                EUR           USD           GBP           EUR           USD               GBP           EUR           USD           GBP 
1                                        
  EUR               -    1.0673    0.8872    -    1.1372    0.8396    -    1.2236    0.8951 
1                                        
  USD               0.9369    -    0.8313    0.8794    -    0.7383    0.8173    -    0.7315 
1                                        
  GBP               1.1271    1.2030    -    1.1910    1.3545    -    1.1172    1.3670    - 
Weighted average exchange rates
      2022   2021   2020 
                    EUR           USD           GBP           EUR           USD           GBP           EUR           USD           GBP 
1                                        
  EUR               -    1.0534    0.8528    -    1.1831    0.8598    -    1.1416    0.8892 
1                                        
  USD               0.9493    -    0.8096    0.8452    -    0.7267    0.8760    -    0.7789 
1                                        
  GBP               1.1726    1.2352    -    1.1631    1.3760    -    1.1246    1.2839    - 
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Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
Consolidated income statement of Aegon N.V.
For the year ended December 31
Amounts in EUR millions (except per share data)  
            Note
   
            2022
                  2021
1)
                  2020
1)
 
     
Continuing operations
                  
     
Premium income
  
 
6
 
   13,192   13,731   14,105 
     
Investment income
  
 
7
 
   5,613   4,893   5,087 
     
Fee and commission income
  
 
8
 
   2,525   2,454   2,122 
     
Other revenues
        1   13   4 
     
Total revenues
        21,331   21,091   21,318 
     
Income from reinsurance ceded
  
 
9
 
   3,009   4,263   4,066 
     
Results from financial transactions
  
 
10
 
   (35,132)   24,715   17,961 
     
Other income
  
 
11
 
   378   49   62 
     
Total income
       
 
(10,415
) 
 
 
50,119
 
 
 
43,407
 
     
Premiums paid to reinsurers
  
 
6
 
   2,189   3,418   2,640 
     
Policyholder claims and benefits
  
 
12
 
   (16,680)   40,097   35,865 
     
Profit sharing and rebates
  
 
13
 
   7   8   8 
     
Commissions and expenses
  
 
14
 
   5,458   5,286   5,253 
     
Impairment charges / (reversals)
  
 
15
 
   68   16   284 
     
Interest charges and related fees
  
 
16
 
   329   246   405 
     
Other charges
  
 
17
 
   (5)   101   104 
     
Total charges
 
       
 
(8,634
) 
 
 
49,172
 
 
 
44,561
 
Result before share in profit / (loss) of joint ventures,associates and tax
        (1,781)   947   (1,154) 
     
Share in profit / (loss) of joint ventures
  
 
25
 
   249   232   166 
     
Share in profit / (loss) of associates
  
 
25
 
   (11)   (15)   31 
     
Result before tax from continuing operations
        (1,543)   1,164   (958) 
     
Income tax (expense) / benefit
  
 
18
 
   518   (95)   336 
     
Net result from continuing operations
       
 
(1,025
) 
 
 
1,069
 
 
 
(622
) 
     
Discontinued operations
                  
     
Net result from discontinued operations
  
 
51
 
  
 
(379
) 
 
 
960
 
 
 
487
 
     
Net result from continuing and discontinued operations
       
 
(1,404
) 
 
 
2,029
 
 
 
(135
) 
     
Net result attributable to:
                  
     
Owners of Aegon N.V.
        (1,433)   1,980   (146) 
     
Non-controlling interests
        29   50   11 
     
Earnings per share (EUR per share)
  
 
19
 
             
     
Basic earnings per common share
        (0.73)   0.94   (0.09) 
     
Basic earnings per common share B
        (0.02)   0.02   - 
     
Diluted earnings per common share
        (0.73)   0.94   (0.09) 
     
Diluted earnings per common share B
        (0.02)   0.02   - 
     
Basic earnings per common share from continuing operations
        (0.54)   0.48   (0.33) 
     
Basic earnings per common share B from continuing operations
        (0.01)   0.01   (0.01) 
     
Diluted earnings per common share from continuing operations
        (0.54)   0.48   (0.33) 
     
Diluted earnings per common share B from continuing operations
        (0.01)   0.01   (0.01) 
1 
Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
126    
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2022

Table of Contents
Consolidated financial statements of Aegon N.V.
Consolidated statement of comprehensive income of Aegon N.V.
For the year ended December 31
Amounts in EUR millions  
            2022
              2021 
1)
              2020 
1)
 
Net result from continuing and discontinued operations
  
 
(1,404
) 
 
 
2,029
 
 
 
(135
) 
    
Items that will not be reclassified to profit or loss:
             
Changes in revaluation reserve real estate held for own use
   (1)   (5)   20 
Remeasurements of defined benefit plans
   (43)   345   (75) 
Income tax relating to items that will not be reclassified
   (4)   (77)   12 
Discontinued operations that will not be reclassified
   703   133   (159) 
    
Items that may be reclassified subsequently to profit or loss:
             
Gains / (losses) on revaluation of available-for-sale investments
   (13,061)   (1,328)   2,969 
(Gains) / losses transferred to income statement on disposal and impairment of available-for-sale investments
   557   (336)   26 
Changes in cash flow hedging reserve
   (192)   (228)   (247) 
Movement in foreign currency translation and net foreign investment hedging reserves
   1,072   1,240   (1,493) 
Equity movements of joint ventures
   (63)   25   12 
Equity movements of associates
   1   (5)   5 
Disposal of group assets
   164   8   (8) 
Income tax relating to items that may be reclassified
   2,710   390   (589) 
Discontinued operations that may be reclassified
   (1,426)   23   (17) 
Other
   38   15   3 
Total other comprehensive income / (loss)
  
 
(9,545
) 
 
 
200
 
 
 
458
 
Total comprehensive income / (loss)
  
 
(10,950
) 
 
 
2,229
 
 
 
321
 
    
Total comprehensive income/ (loss) attributable to:
             
Owners of Aegon N.V.
   (10,991)   2,168   315 
Non-controlling interests
   41   61   6 
1
Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Aegon Annual Report on Form 20-F
2022
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Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
Consolidated statement of financial position of Aegon N.V.
As at December 31
Amounts in EUR millions  
Note
   
            2022  
               2021 
Assets
               
Cash and cash equivalents
  
 
21
 
   3,407    6,889 
Assets held for sale
  
 
51
 
   89,752    - 
Investments
  
 
22
 
   76,825    157,831 
Investments for account of policyholders
  
 
23
 
   180,006    250,953 
Derivatives
  
 
24
 
   2,760    8,827 
Investments in joint ventures
  
 
25
 
   1,443    1,743 
Investments in associates
  
 
25
 
   165    1,289 
Reinsurance assets
  
 
26
 
   21,184    20,992 
Defined benefit assets
  
 
39
 
   87    119 
Deferred tax assets
  
 
40
 
   1,827    131 
Deferred expenses
  
 
27
 
   12,886    10,503 
Other assets and receivables
  
 
28
 
   10,204    7,642 
Intangible assets
  
 
29
 
   1,240    1,333 
Total assets
       
 
401,786
 
  
 
468,252
 
    
Equity and liabilities
               
Shareholders’ equity
  
 
30
 
   12,071    23,813 
Other equity instruments
  
 
31
 
   1,943    2,363 
    
Issued capital and reserves attributable to owners of Aegon N.V.
       
 
14,014
 
  
 
26,176
 
Non-controlling interests
        176    196 
Group equity
       
 
14,190
 
  
 
26,372
 
    
Subordinated borrowings
  
 
32
 
   2,295    2,194 
Trust pass-through securities
  
 
33
 
   118    126 
Insurance contracts
  
 
34
 
   87,309    124,422 
Insurance contracts for account of policyholders
  
 
34
 
   100,409    149,323 
Investment contracts
  
 
35
 
   10,658    21,767 
Investment contracts for account of policyholders
  
 
35
 
   80,555    104,592 
Derivatives
  
 
24
 
   6,094    10,639 
Borrowings
  
 
37
 
   4,051    9,661 
Provisions
  
 
38
 
   99    193 
Defined benefit liabilities
  
 
39
 
   496    3,944 
Deferred gains
        9    9 
Deferred tax liabilities
  
 
40
 
   4    1,559 
Liabilities held for sale
  
 
51
 
   84,339    - 
Other liabilities
  
 
41
 
   10,785    12,916 
Accruals
  
 
42
 
   373    537 
Total liabilities
       
 
387,596
 
  
 
441,881
 
    
Total equity and liabilities
       
 
401,786
 
  
 
468,252
 
128    
7,172
   
Aegon Annual Report on Form 20-F
20227,103
Table of Contents
Consolidated financial statements of Aegon N.V.
   
(4,532
)
 
(890
)
653
   
1,943
(691
)
10,758
176
10,935
 
Consolidated statement of changes in equity of Aegon N.V.
For the year ended December 31, 2022
Amounts in EUR millions 
Note
  Share
capital		  Retained
earnings		  Revaluation
reserves		  Remeasurement
of defined
benefit
plans		  Other
reserves		  Other
equity
instruments		  Reserve of
discontinued
opera tions
held for
sale		  
Issued
capital
and
reserves 
1)
  Non-
control-
ling
inter-
ests		  Total 
At January 1, 2022
      7,354   11,892   6,442   (2,199)   325   2,363   -   26,176   196   26,372 
            
Net result recognized in the income statement
      -   (1,433)   -   -   -   -   -   (1,433)   29   (1,404) 
            
Other comprehensive income:
                                            
            
Items that will not be reclassified to profit or loss:
                                            
            
Changes in revaluation reserve real estate held for own use
      -   16   (17)   -   -   -   -   (1)   -   (1) 
            
Remeasurements of defined benefit plans
      -   -   -   (43)   -   -   -   (43)   -   (43) 
            
Income tax relating to items that will not be reclassified
      -   -   -   (4)   -   -   -   (4)   -   (4) 
            
Discontinued operations that will not be reclassified
 2)
      -   -   -   1,379   -   -   (676)   703   -   703 
            
Items that may be reclassified subsequently to profit or loss:
                                            
            
Gains / (losses) on revaluation of
available-for-sale
investments
      -   -   (13,061)   -   -   -   -   (13,061)   -   (13,061) 
            
(Gains) / losses transferred to income statement on disposal and impairment of
available-for-sale
investments
      -   -   557   -   -   -   -   557   -   557 
            
Changes in cash flow hedging reserve
      -   -   (192)   -   -   -   -   (192)   -   (192) 
            
Movements in foreign currency translation and net foreign investment hedging reserves
      -   -   487   (20)   594   -   -   1,061   12   1,073 
            
Equity movements of joint ventures
      -   -   -   -   (63)   -   -   (63)   -   (63) 
            
Equity movements of associates
      -   -   -   -   1   -   -   1   -   1 
            
Disposal of group assets
      -   -   14   -   150   -   -   164   -   164 
Income tax relating to items that may be reclassified
      -   -   2,722   -   (12)   -   -   2,710   -   2,710 
Discontinued operations that may be reclassified
 2)
      -   -   (802)   -   (14)   -   (610)   (1,426)   -   (1,426) 
            
Other
      -   38   -   -   -   -   -   38   -   38 
Total other comprehensive income / (loss)
     
 
-
 
 
 
54
 
 
 
(10,293
) 
 
 
1,312
 
 
 
656
 
 
 
-
 
 
 
(1,286
) 
 
 
(9,557
) 
 
 
12
 
 
 
(9,545
) 
                                             
Total comprehensive income / (loss) for 2022
     
 
-
 
 
 
(1,379
) 
 
 
(10,293
) 
 
 
1,312
 
 
 
656
 
     
 
(1,286
) 
 
 
(10,991
) 
 
 
41
 
 
 
(10,950
) 
            
Shares issued
      2   -   -   -   -   -   -   2   -   2 
            
Shares withdrawn
      (4)   -   -   -   -   -   -   (4)   -   (4) 
            
Issuance and purchase of treasury shares
      -   (393)   -   -   -   -   -   (393)   -   (393) 
            
Issuance and redemption of other equity instruments
      -   (1)   -   -   -   -   -   (1)   -   (1) 
            
Redemption other equity instruments
      -   32   -   -   -   (429)   -   (397)   -   (397) 
            
Dividends paid on common shares
      (180)   (167)   -   -   -   -   -   (347)   -   (347) 
            
Dividend withholding tax reduction
      -   -   -   -   -   -   -       -   - 
            
Coupons on perpetual securities
      -   (36)   -   -   -   -   -   (36)   -   (36) 
            
Incentive plans
      -   (5)   -   -   -   9   -   4   -   4 
            
Change in ownership
non-controlling
interest
      -   -   -   -   -   -   -   -   (61)   (61) 
            
At December 31, 2022
 
 
30, 31
 
 
 
7,172
 
 
 
9,944
 
 
 
(3,851
) 
 
 
(887
) 
 
 
981
 
 
 
1,943
 
 
 
(1,286
) 
 
 
14,014
 
 
 
176
 
 
 
14,190
 
1 
Issued capital and reserves attributable to owners of Aegon N.V.
Ltd.
2 
Opening balance as per January 1, 2022 has been restated due to the initial application of IFRS 9 and IFRS 17. Note 2 includes further details on the changes in accounting policies.
3 The lines “Discontinued operations that will not be reclassified” and “Discontinued operations that may be reclassified” include EUR 1,379 million and EUR (816)(329) million respectively of reclassifications from opening reserves to the column “Reserve of discontinued operations held for sale”.
 
Aegon Annual Report on Form 20-F
2022
 128  |  Annual Report on Form 20-F 2023
  |  
129
 
Table of Contents
 
About
Consolidated financial statements of Aegon
Governance and risk management
Financial information
Non-financial information Ltd.  
   
   
 
Consolidated statement of changes in equity of Aegon N.V.
Ltd.
For the year ended December 31, 2021
 
Amounts in EUR millions 
Note
 Share
capital		 Retained
earnings		 Revaluation
reserves		 Remeasurement
of defined
benefit
plans		 Other
reserves		 Other
equity
instruments		 Issued
capital
and
reserves 
1)
 
Non-controlling

interests 
2)
 Total  
Note
          
 
At January 1, 2021
   7,480  10,145  7,480  (2,534)  (553)  2,569  24,586  75  24,661    7,480  10,145  7,480  (2,534)  (553)  2,569  24,586  75  24,661 
 
Net result recognized in the income statement
    -  1,980   -   -   -   -  1,980  50  2,029 
Net result recognized in the income statement
Net result recognized in the income statement
Net result recognized in the income statement
   -  1,980   -   -   -   -  1,980  50  2,029 
 
Other comprehensive income:
Other comprehensive income:
Other comprehensive income:
Other comprehensive income:
                    
 
Items that will not be reclassified to profit or loss:
                    
Items that will not be reclassified to profit or loss:
Items that will not be reclassified to profit or loss:
Items that will not be reclassified to profit or loss:
 
Changes in revaluation reserve real estate held for own use
Changes in revaluation reserve real estate held for own use
Changes in revaluation reserve real estate held for own use
Changes in revaluation reserve real estate held for own use
    -   -  (4)   -   -   -  (4)   -  (4)    -   -  (4)   -   -   -  (4)   -  (4) 
 
Remeasurements of defined benefit plans
    -   -   -  501   -   -  501   -  501 
Remeasurements of defined benefit plans
Remeasurements of defined benefit plans
Remeasurements of defined benefit plans
   -   -   -  501   -   -  501   -  501 
 
Income tax relating to items that will not be reclassified
Income tax relating to items that will not be reclassified
Income tax relating to items that will not be reclassified
Income tax relating to items that will not be reclassified
    -   -  1  (102)   -   -  (101)   -  (101)    -   -  1  (102)   -   -  (101)   -  (101) 
 
Items that may be reclassified subsequently to profit or loss:
                    
Items that may be reclassified subsequently to profit or loss:
Items that may be reclassified subsequently to profit or loss:
Items that may be reclassified subsequently to profit or loss:
Gains / (losses) on revaluation of available-for-sale investments
Gains / (losses) on revaluation of available-for-sale investments
Gains / (losses) on revaluation of available-for-sale investments
Gains / (losses) on revaluation of
available-for-sale
investments
    -   -  (1,173)   -   -   -  (1,173)   -  (1,173)    -   -  (1,173)   -   -   -  (1,173)   -  (1,173) 
 
(Gains) / losses transferred to income statement on disposal and impairment of
available-for-sale
investments
    -   -  (450)   -   -   -  (450)   -  (450) 
(Gains) / losses transferred to income statement on disposal and impairment of available-for-sale investments
(Gains) / losses transferred to income statement on disposal and impairment of available-for-sale investments
(Gains) / losses transferred to income statement on disposal and impairment of available-for-sale investments
   -   -  (450)   -   -   -  (450)   -  (450) 
 
Changes in cash flow hedging reserve
Changes in cash flow hedging reserve
Changes in cash flow hedging reserve
Changes in cash flow hedging reserve
    -   -  (228)   -   -   -  (228)   -  (228)    -   -  (228)   -   -   -  (228)   -  (228) 
 
Movements in foreign currency translation and net foreign investment hedging reserves
    -   -  447  (65)  848   -  1,231  9  1,240 
Movements in foreign currency translation and net foreign investment hedging reserves
Movements in foreign currency translation and net foreign investment hedging reserves
Movements in foreign currency translation and net foreign investment hedging reserves
   -   -  447  (65)  848   -  1,231  9  1,240 
 
Equity movements of joint ventures
Equity movements of joint ventures
Equity movements of joint ventures
Equity movements of joint ventures
    -   -   -   -  25   -  25   -  25    -   -   -   -  25   -  25   -  25 
 
Equity movements of associates
    -   -   -   -  (6)   -  (6)   -  (6) 
Equity movements of associates
Equity movements of associates
Equity movements of associates
   -   -   -   -  (6)   -  (6)   -  (6) 
 
Disposal of group assets
Disposal of group assets
Disposal of group assets
Disposal of group assets
    -   -   -   -  8   -  8   -  8    -   -   -   -  8   -  8   -  8 
 
Income tax relating to items that may be reclassified
    -   -  369   -  3   -  372   -  372 
Income tax relating to items that may be reclassified
Income tax relating to items that may be reclassified
Income tax relating to items that may be reclassified
   -   -  369   -  3   -  372   -  372 
 
Other
    -  14   -   -   -   -  14  3  16 
Other
Other
Other
   -  14   -   -   -   -  14  3  16 
 
Total other comprehensive income / (loss)
   
 
 
-
 
 
 
 
 
 
14
 
 
 
 
 
 
(1,038
 
) 
 
 
 
 
335
 
 
 
 
 
 
878
 
 
 
 
 
 
-
 
 
 
 
 
 
188
 
 
 
 
 
 
11
 
 
 
 
 
 
200
 
 
 
   
 
-
 
 
 
14
 
 
 
(1,038
) 
 
 
335
 
 
 
878
 
 
 
-
 
 
 
188
 
 
 
11
 
 
 
200
 
 
Total comprehensive income / (loss) for 2021
   
 
-
 
 
 
1,993
 
 
 
(1,038
) 
 
 
335
 
 
 
878
 
 
 
-
 
 
 
2,168
 
 
 
61
 
 
 
2,229
 
Total comprehensive income / (loss) for 2021
Total comprehensive income / (loss) for 2021
Total comprehensive income / (loss) for 2021
  
 
-
 
 
 
1,993
 
 
 
(1,038
) 
 
 
335
 
 
 
878
 
 
 
-
 
 
 
2,168
 
 
 
61
 
 
 
2,229
 
 
Shares issued
Shares issued
Shares issued
Shares issued
   1   -   -   -   -   -  1   -  1    1   -   -   -   -   -  1   -  1 
 
Issuance and purchase of treasury shares
    -  (88)   -   -   -   -  (88)   -  (88) 
Issuance and purchase of treasury shares
Issuance and purchase of treasury shares
Issuance and purchase of treasury shares
   -  (88)   -   -   -   -  (88)   -  (88) 
 
Issuance and redemption of other equity instruments
Issuance and redemption of other equity instruments
Issuance and redemption of other equity instruments
Issuance and redemption of other equity instruments
    -   -   -   -   -  (212)  (212)   -  (212)    -   -   -   -   -  (212)  (212)   -  (212) 
 
Dividends paid on common shares
   (127)  (120)   -   -   -   -  (247)  (1)  (248) 
Dividends paid on common shares
Dividends paid on common shares
Dividends paid on common shares
  (127)  (120)   -   -   -   -  (247)  (1)  (248) 
 
Dividend withholding tax reduction
Dividend withholding tax reduction
Dividend withholding tax reduction
Dividend withholding tax reduction
    -   -   -   -   -   -   -   -   -    -   -   -   -   -   -   -   -   - 
 
Coupons on perpetual securities
    -  (39)   -   -   -   -  (39)   -  (39) 
Coupons on perpetual securities
Coupons on perpetual securities
Coupons on perpetual securities
   -  (39)   -   -   -   -  (39)   -  (39) 
 
Incentive plans
Incentive plans
Incentive plans
Incentive plans
    -   -   -   -   -  6  7   -  7    -   -   -   -   -  6  7   -  7 
 
Change in ownership
non-controlling
interest
    -   -   -   -   -   -   -  61  61 
Change in ownership non-controlling interest
Change in ownership non-controlling interest
Change in ownership non-controlling interest
   -   -   -   -   -   -   -  61  61 
  
At December 31, 2021
 
 
30,31
 
 
 
7,354
 
 
 
11,892
 
 
 
6,442
 
 
 
(2,199
) 
 
 
325
 
 
 
2,363
 
 
 
26,176
 
 
 
196
 
 
 
26,372
 
 
46.20
  
7,354
  
11,892
  
6,442
  
(2,199
)
 		 
325
  
2,363
  
26,176
  
196
  
26,372
 
 
1 
Issued capital and reserves attributable to owners of Aegon N.V.
2 
Comparative amounts have been updated to reflect revised disclosure on the change in ownership non-controlling interest.Ltd
 
130
   
Aegon Annual Report on Form 20-F
2022
2023  |  129 		 
 
Table of Contents
 
About Aegon  Governance and risk management  
Consolidated financial statements of Aegon N.V.Financial information
  Sustainability information
   
   
 
 
Consolidated statement of changes in equity of Aegon N.V.
For the year ended December 31, 2020
Amounts in EUR millions 
Note
  Share
capital		  Retained
earnings		  Revaluation
reserves		  Remea-
surement
of defined
benefit
plans		  Other
reserves		  Other
equity
instruments		  
Issued
capital
and
reserves 
1)
  
Non-controlling

interests		  Total 
At January 1, 2020
      7,536   10,374   5,873   (2,397)   456   2,571   24,413   20   24,433 
           
Net result recognized in the income statement
      -   (146)   -   -   -   -   (146)   11   (135) 
           
Other comprehensive income:
                                        
           
Items that will not be reclassified to profit or loss:
                                        
           
Changes in revaluation reserve real estate held for own use
      -   -   20   -   -   -   20   -   20 
           
Remeasurements of defined benefit plans
      -   -   -   (360)   -   -   (360)   -   (360) 
           
Income tax relating to items that will not be reclassified
      -   -   (2)   140   -   -   138   -   138 
           
Items that may be reclassified subsequently to profit or loss:
                                        
           
Gains / (losses) on revaluation of
available-for-sale
investments
      -   -   2,990   -   -   -   2,990   -   2,990 
           
(Gains) / losses transferred to income statement on disposal and impairment of
available-for-sale
investments
      -   -   13   -   -   -   13   -   13 
           
Changes in cash flow hedging reserve
      -   -   (247)   -   -   -   (247)   -   (247) 
           
Movements in foreign currency translation and net foreign investment hedging reserves
      -   -   (556)   83   (1,015)   -   (1,489)   (4)   (1,493) 
           
Equity movements of joint ventures
      -   -   -   -   12   -   12   -   12 
           
Equity movements of associates
      -   -   -   -   7   -   7   -   7 
           
Disposal of group assets
      -   -   (0)   -   (7)   -   (8)   -   (8) 
           
Income tax relating to items that may be reclassified
      -   -   (610)   -   (7)   -   (616)   -   (616) 
           
Other
      -   2   -   -   1   -   3   -   3 
           
Total other comprehensive income / (loss)
 
     
 
 
-
 
 
 
 
 
 
2
 
 
 
 
 
 
1,607
 
 
 
 
 
 
(137
 
) 
 
 
 
 
(1,009
 
) 
 
 
 
 
-
 
 
 
 
 
 
462
 
 
 
 
 
 
(4
 
) 
 
 
 
 
457
 
 
 
           
Total comprehensive income / (loss) for 2020
     
 
-
 
 
 
(144
) 
 
 
1,607
 
 
 
(137
) 
 
 
(1,009
) 
 
 
-
 
 
 
316
 
 
 
6
 
 
 
321
 
           
Shares issued
      (3)   3   -   -   -   -   -   -   - 
           
Issuance and purchase of treasury shares
      -   3   -   -   -   -   3   -   3 
           
Issuance and redemption of other equity instruments
      -   -   -   -   -   -   -   -   - 
           
Dividends paid on common shares
             (54)   (64)   -   -   -   -   (118)   -   (118) 
           
Dividend withholding tax reduction
      -   1   -   -   -   -   1   -   1 
           
Coupons on perpetual securities
      -   (38)   -   -   -   -   (38)   -   (38) 
           
Incentive plans
      -   10   -   -   -   (3)   8   -   8 
           
Change in ownership
non-controlling
interest
      -   -   -   -   -   -   -   49   49 
           
At December 31, 2020
 
 
30, 31
 
 
 
7,480
 
 
 
10,145
 
 
 
7,480
 
 
 
(2,534
) 
 
 
(553
) 
 
 
2,569
 
 
 
24,586
 
 
 
75
 
 
 
24,661
 
1 
Issued capital and reserves attributable to owners of Aegon N.V.
Aegon Annual Report on Form 20-F
2022
  |  
131
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
Consolidated cash flow statement of Aegon N.V.Ltd.
For the year ended December 31
 
Amounts in EUR millions
Amounts in EUR millions
Amounts in EUR millions
Amounts in EUR millions
  
 
Note
 
  
 
2022
 
 2021  2020   
  Note
       2023      2022 
1)
     2021 
1)
 
Result before tax from continuing operations
     
 
(1,543
) 
 
 
1,164
 
 
 
(958
) 
    
 
(391
) 
 
 
827
 
 
 
1,164
 
Result before tax from discontinued operations
  
 
51
 
   2,395  1,237  594   
 
45
 
   458  242  1,237 
Impairment loss on measurement of disposal group
  
 
51
 
   (1,775)   -   -   
 
45
 
   (413) (1,094)  - 
Result before tax from continuing operations and discontinued operations
     
 
(922
) 
 
 
2,400
 
 
 
(364
) 
    
 
(346
)
 
 
(25
) 
 
 
2,400
 
Results from financial transactions
      45,189  (25,716)  (22,092)      (20,540)  60,321  (25,716) 
Amortization and depreciation
      1,160  1,167  722      (163)  169  1,167 
Impairment losses
      49  5  382      116  115  5 
Results from (re)insurance contracts and investment contracts with discretionary participating features
     17,673  (43,253)  n.a. 
Income from joint ventures
      (286)  (265)  (184)      (200)  (289)  (265) 
Income from associates
      (4)  (112)  (111)      (118)  (4)  (112) 
Release of cash flow hedging reserve
      (126)  (106)  (109)      (130)  (126)  (106) 
Other
      796  248  9       892   479   248 
Adjustments of non-cash items
     
 
46,780
 
 
 
(24,778
) 
 
 
(21,383
) 
    
 
(2,469
)
 
 
17,412
 
 
 
(24,778
) 
Investment contracts without discretionary participating features
     9,742  (14,142)  n.a. 
Insurance and investment liabilities
      (4,742)  (1,885)  6,975      n.a.  n.a.  (1,885) 
Insurance and investment liabilities for account of policyholders
      (50,452)  13,605  11,005      n.a.  n.a.  13,605 
Accrued expenses and other liabilities
      (929)  (1,008)  655      (442)  (752)  (1,008) 
Accrued income and prepayments
      (1,505)  (543)  (1,315)       1,325  (997)  (543) 
Changes in accruals
     
 
        (57,627)
 
 
 
10,169
 
 
 
17,319
 
    
 
10,626
 
 
 
(15,891
) 
 
 
10,169
 
Insurance contracts
     (11,770)  (12,163)  n.a. 
Investment contracts with discretionary participating features
     (2,030)  (1,797)  n.a. 
Reinsurance contracts held
     923  1,491  n.a. 
Purchase of investments (other than money market investments)
      (22,635)          (35,520)          (44,637)      (43,445)  (64,243)  (35,520) 
Purchase of derivatives
      (4,140)  (1,611)  924      (1,011)  (4,140)  (1,611) 
Disposal of investments (other than money market investments)
      32,626  38,040  31,875      52,576  87,910  38,040 
Disposal of derivatives
      (2,502)  310  1,771      (1,612)  (2,306)  310 
Net purchase of investments for account of policyholders
      13,631  12,063  8,865      n.a.  n.a.  12,063 
Net change in cash collateral
      (3,207)  (2,805)  2,425      1,592  (3,207)  (2,805) 
Net purchase of money market investments
      (362)  (85)  363       (1,853)  (340)  (85) 
Cash flow movements on operating items not reflected in income
     
 
13,411
 
 
 
10,391
 
 
 
1,585
 
    
 
(6,631
) 
 
 
1,206
 
 
 
10,391
 
Tax (paid)/ received
      (37)  21  (7)      (321)  (38)  21 
Other
      1,248   -  (5)       4  6   - 
Net cash flows from operating activities
  
 
21
 
  
 
2,851
 
 
 
(1,796
) 
 
 
(2,854
) 
  
 
18
 
  
 
864
 
 
 
2,672
 
 
 
(1,796
) 
Purchase of individual intangible assets (other than VOBA and future servicing rights)
      (26)  (36)  (40) 
Purchase of individual intangible assets (other than future servicing rights)
     (51)  (26)  (36) 
Purchase of equipment and real estate for own use
      (72)  (76)  (80)      (65)  (72)  (76) 
Acquisition of subsidiaries, net of cash
      (146)   -  (15)      (34)  (29)   - 
Acquisition/capital contributions joint ventures and associates
      (73)  (97)  (305)      (253)  (73)  (97) 
Disposal of intangible asset
      -   -  3      3   -   - 
Disposal of equipment
      9  2  7      46  9  2 
Disposal of subsidiaries and businesses, net of cash
      604  59   -      (1,964)  604  59 
Disposal joint ventures and associates
      185   -  154      12  185   - 
Dividend received from joint ventures and associates
      137  95  138      310  137  95 
Other
      (1)   -       -  (1)   - 
Net cash flows from investing activities
  
 
 
21
 
 
 
  
 
 
616
 
 
 
 
 
 
(54
 
) 
 
 
 
 
(139
 
) 
 
  
 
18
 
  
 
(1,996
) 
 
 
733
 
 
 
(54
) 
Purchase of treasury shares
      (597)  (231)  (59) 
Proceeds from TRUPS
1)
, Subordinated borrowings and borrowings
      3,569  3,914  3,444 
Purchase of treasury shares
Purchase of treasury shares
Purchase of treasury shares
     (1,072)  (597)  (231) 
Proceeds from TRUPS
2)
, Subordinated borrowings and borrowings
     2,670  3,569  3,914 
Repayment of perpetuals
      (429)  (212)   -      -  (429)  (212) 
Repayment of share capital
      -   -   - 
Repayment of TRUPS
1)
, Subordinated borrowings and borrowings
      (4,086)  (3,000)  (3,985) 
Repayment of
non-cumulative
subordinated note
     (4,230)  (4,086)  (3,000) 
Dividends paid
      (167)  (121)  (63)      (494)  (167)  (121) 
Coupons on perpetual securities
      (48)  (52)  (55)      (65)  (48)  (52) 
Payment of Right-of-use Assets
      (49)  (59)  (60) 
Payment of lease liabilities
     (39)  (49)  (59) 
Change in ownership non-controlling interests
      (57)  61   -      (11)  (57)  61 
Other
      (55)   -   -       -  31   - 
Net cash flows from financing activities
  
 
18
 
  
 
(3,241
) 
 
 
(1,834
) 
 
 
300
 
Net increase / (decrease) in cash and cash equivalents
3)
    
 
(4,373
) 
 
 
1,570
 
 
 
(1,550
) 
   
Net cash flows from financing activities
  
 
21
 
  
 
(1,920
) 
 
 
300
 
 
 
(778
) 
   
Net increase / (decrease) in cash and cash equivalents
2)
     
 
 
1,548
 
 
 
 
 
 
(1,550
 
) 
 
 
 
 
(3,770
 
) 
 
Net cash and cash equivalents at the beginning of the year
Net cash and cash equivalents at the beginning of the year
Net cash and cash equivalents at the beginning of the year
Net cash and cash equivalents at the beginning of the year
      6,889  8,372  12,263      8,486  6,861  8,372 
Effects of changes in exchange rate
      55  67  (121)       (38)  55  67 
   
Net cash and cash equivalents at the end of the year
  
 
21
 
  
 
8,491
 
 
 
6,889
 
 
 
8,372
 
  
 
18
 
  
 
4,074
 
 
 
8,486
 
 
 
6,889
 
1
Comparatives for 2022 have been restated due to the initial application of IFRS 9 and IFRS 17. Comparatives for 2021 have not been restated due to the initial application of IFRS 9 and IFSR 17. Note 2 includes further details on the changes in accounting policies.
2 
Trust pass-through securities.
23 
Included in net increase / (decrease) in cash and cash equivalents are interest received EUR 5,4055,016 million (2021:(2022: EUR 5,271 million and 2020: EUR 5,1145,250 million), dividends received EUR 1,8402,254 million (2021:(2022: EUR 1,624 million and 2020: EUR 1,7511,856 million) and interest paid EUR 289516 million (2021:(2022: EUR 296 million and 2020: EUR 491247 million). All included in operating activities except for dividend received from joint ventures and associates EUR 310 million (2022: EUR 137 million (2021: EUR 95 million and 2020: EUR 138 million).
4 
n.a. in above table should be read as “not applicable”.
The cash flow statement is prepared according to the indirect method.
 
132
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Aegon Annual Report on Form 20-F
2022
 
Table of Contents
 
 
Notes to the consolidated financial statements
Note 1
   
   
 
Notes to the consolidated financial statements
1 General information
On September 29,2023 it was resolved to convert Aegon N.V. into Aegon S.A. via a cross border conversion. On September 30, 2023 the cross border conversion into Aegon S.A. was effectuated and subsequently Aegon S.A. was converted into Aegon Ltd, a Bermuda limited company, and effectuated the change of its legal seat to Bermuda. From October 1, 2023 the Bermuda Monetary Authority has been Aegon’s group supervisor.
Aegon N.V., incorporated and domiciled in the Netherlands,Ltd. is a publican exempted company with liability limited liability companyby shares organized under Dutch lawthe laws of Bermuda and registered with the Bermuda Registrar of Companies under number 202302830 and recorded in the Commercial Register of The Hague registered under number 27076669 and with its registered address at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.
Aegon Ltd. has its headquarters in the Netherlands at Aegonplein 50, 2591 TV, The Hague,Hague. As Aegon Ltd. currently qualifies as
Non-Resident
Company under Dutch law, certain Dutch law provisions remain applicable to it, including certain provisions of title 9 Book 2 of the Netherlands. Dutch Civil Code regarding the preparation and publication of its annual accounts.
Aegon N.V.Ltd. serves as the holding company for the Aegon Group and has listings of its common shares inon Euronext Amsterdam and New York.on NYSE.
Aegon N.V.Ltd. (or ‘the Company’“the Company”) and its subsidiaries (‘Aegon’(“Aegon” or ‘the Group’“the Group”) have life insurance and pensions operations and are also active in savings and asset management operations, accident and health insurance and general insurance and to a limited extent banking operations.insurance. Fully owned businesses by Aegon focuses on three core markets (theinclude the United States, the Netherlands,United Kingdom and the United Kingdom), three growth markets (Spainasset management, and Aegon also operates partnerships in Spain & Portugal, China, and Brazil)Brazil, and one global asset manager. Furthermore, Aegon has activitiesa strategic partnership in Asia and Southern and Eastern Europe. Headquarters are located in The Hague, the Netherlands. The Group employs around 19,00015,700 people worldwide (2021: over 22,000).
(2022: around 15,500)
Please note that the designation is uniformly Aegon Ltd. even if it was Aegon N.V. before October 1, 2023.
Aegon Funding Company LLC
Aegon Funding Company LLC (AFC) is an indirect wholly owned subsidiary of Aegon that was established as a financing vehicle to raise funds for the US subsidiaries of Aegon. AFC has been fully consolidated in the financial statements of Aegon under IFRS. If AFC issues debt securities, Aegon will fully and unconditionally guarantee the due and punctual payment of the principal, any premium and any interest on those debt securities when and as these payments become due and payable, whether at maturity, upon redemption or declaration of acceleration, or otherwise. The guarantees of senior debt securities will constitute an unsecured, unsubordinated obligation of Aegon and will rank equally with all other unsecured and unsubordinated obligations of Aegon. The guarantees of subordinated debt securities will constitute an unsecured obligation of Aegon and will be subordinated in right of payment to all senior indebtedness of Aegon.
2 SignificantMaterial accounting policiespolicy information
2.1 Basis of presentation
Aegon prepares its consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS) and with Part 9 of Book 2 of the Netherlands Civil Code for purposes of reporting with the U.S. Securities and Exchange Commission (‘SEC’), including financial information contained in this Annual Report on Form 20-F.
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the IASB and with Part 9 of Book 2 of the Dutch Civil Code.
Additional disclosures have been included in the consolidated financial statements in relation to the initial adoption of IFRS 9 and IFRS 17, that became effective on January 1, 2023.
The consolidated financial statements have been prepared in accordance with historical cost convention as modified by the revaluation of (investment)investment properties and those financial instruments (including derivatives) and financial liabilities that have been measured at fair value. Informationvalue, except for the following items, which are measured on the standards and interpretations that were adopted in 2022 is provided below in note 2.1.1. an alternative basis at each reporting date:
Item
Measurement basis
Insurance and reinsurance contractsFulfilment cash flows plus the CSM
Net defined benefit liability / (asset)Fair value of plan assets less the present value of the defined benefit obligations
Other impaired
non-financial
assets
Higher of fair value less costs of disposal and value in use
Financial instruments held to collect financial cash flowsAmortized cost
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About Aegon  Governance and risk management  
Financial information
  Sustainability information
The consolidated financial statements are presented in euros 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. All ratios and variances are calculated using the underlying amount rather than the rounded amount.
The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities as offrom the date of the financial statements and the reported amounts of revenues and expenses for the reporting period. Those estimates are inherently subject to change and actual results could differ from those estimates. Included among the material (or potentially material) reported amounts and disclosures that require extensive use of estimates are: insurance and reinsurance contracts as stated in the table above, fair value of certain invested assets and derivatives, deferred policy acquisition costs, value of business acquired and other purchased intangible assets, goodwill, policyholder claims and benefits, insurance guarantees, pension plans, income taxes and the potential effects of resolving litigation matters. Aegon does not use the optional exemption provided under IFRS to group together specific insurance contracts that were issued more than 12 months apart.
The consolidated financial statements of Aegon N.V.Ltd. were approved by the Executive Board and by the Supervisory Board on March 
22
, 2023.April 3, 2024. The financial statements will be put for adoptionpresented to the Annual General Meeting of Shareholders on May 2
2
, 2023. The shareholders’ meeting can decideApril 4, 2024. In accordance with Bermuda law, the annual accounts are not adopted by the General Meeting however pursuant to adoptour
Bye-Laws
are discussed with the financial statements but cannot amend them.General Meeting each Annual General Meeting.
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2022
  |  
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Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
A reconcilliation between IFRS and
EU-IFRS
is included in the table below.
 
        Shareholders’ equity          Net result 
    
      2022
        2021      2020  
      2022
        2021        2020 
In accordance with IFRS
  
 
12,071
 
 
 
23,813
 
 
 
22,018
 
 
 
(1,404
) 
 
 
2,029
 
 
 
(135
) 
Adjustment of EU ‘IAS 39’ carve-out
   (850)   632   1,054   (1,482)   (422)   280 
Tax effect of the adjustment
   219   (163)   (257)   382   93   (90) 
Effect of the adjustment after tax
  
 
(631
) 
 
 
469
 
 
 
798
 
 
 
(1,100
) 
 
 
(328
) 
 
 
190
 
In accordance with EU-IFRS
  
 
11,440
 
 
 
24,282
 
 
 
22,815
 
 
 
(2,504
) 
 
 
1,701
 
 
 
55
 
   Shareholders’ equity   Net result 
    
      2023
         2022         2023        2022 
In accordance with IFRS
  
 
7,475
 
  
 
8,815
 
  
 
(199
) 
 
 
(540
) 
Adjustment of EU ‘IAS 39’
carve-out
   -    -    -   (450) 
Tax effect of the adjustment   -    -    -   - 
Effect of the adjustment after tax
  
 
-
 
  
 
-
 
  
 
-
 
 
 
(450
) 
In accordance with
EU-IFRS
  
 
7,475
 
  
 
8,815
 
  
 
(199
) 
 
 
(990
) 
2.1.1 Adoption of new IFRS accounting standards and amendments effective in 20222023
NewThe accounting policies and methods of computation applied in the consolidated financial statements are the same as those applied in the 2022 consolidated financial statements, except for the following IFRS standards and amendments to standards becomethat became effective at the date specified by IFRS, but may allow companies to opt for an earlier adoption date. In 2022, the following amendments to existing standards issued by the IASB became mandatory:
Aegon from January 1, 2023:
Accounting standard/ amendment/ interpretation
∎
 IASB effective dateImpact for Aegon
Reference to the Conceptual Framework (Amendments to IFRS 3)
January 1, 2022Not material
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
January 1, 2022Not material
Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37)
January 1, 2022Not material
Annual Improvements to IFRS Standards 2018–2020
January 1, 2022Not material
COVID-19- Related Rent Concessions beyond 30 June 2021 (Amendments to IFRS 16)
April 1, 2021Not material
2.1.2 Future adoption of new IFRS accounting standards and amendments
The following standards and amendments to existing standards, published prior to January 1, 2023, were not early adopted by the Group, but will be applied in future years:
IASB effectiveEarly adopted byImpact for Aegon
Accounting standard/ amendment/ interpretation
dateAegon
See below for
IFRS 17 Insurance contracts
∎
 January 1, 2023Nocomments
Initial Application of IFRS 17 and IFRS 9 -– Comparative Informationinformation (Amendments to IFRS 17)
∎
 January 1, 2023NoSee below for
comments		 
 
See below for
IFRS 9 Financial instruments
∎
 January 1, 2018 
1)
Nocomments
See below for
Prepayment Features with Negative Compensation (Amendments to IFRS 9)
∎
 January 1, 2019 
1)
Nocomments
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
January 1, 2024NoNot material
Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
January 1, 2024NoNot material
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
∎
 January 1, 2023NoNot material
Definition of Accounting Estimates (Amendments to IAS 8)
∎
 January 1, 2023NoNot material
Deferred Taxtax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
The amendments to IAS 12 have been introduced in response to the OECD’s Base Erosion and Profit Shifting (BEPS) Pillar Two rules and include:
∎
 A mandatory temporary exception to the recognition and disclosure of deferred taxes arising from the jurisdictional implementation of the Pillar Two model rules; and
January 1, 2023
∎
 NoNot materialDisclosure requirements for affected entities to help users of the financial statements better understand an entity’s exposure to Pillar Two income taxes arising from that legislation, particularly before its effective date. The mandatory temporary exception – the use of which is required to be disclosed – applies immediately.
1 
The amendments to IFRS 4, Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts, issued in September 2016, allow entities that issue insurance contracts within the scope of IFRS 4 to defer the implementation of IFRS 9 (and linked amendments ‘Amendments to IFRS 9 Financial instruments on prepayment features with negative compensation’). The amendments to IFRS 4 are further explained below.
IFRS 17 Insurance Contracts
The IASB issued IFRS 17 Insurance Contracts in May 2017. The Standard will replace IFRS 4, which was intended as an interim solution and allowed insurers to continue to use accounting principles that they had applied prior to the initial adoption of IFRS. IFRS 17 establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts issued, reinsurance contracts held and investment contracts with discretionary participating features issued. The objective of the Standard is to ensure that entities provide relevant information in a way that faithfully represents those contracts. This information should provide users of financial statements with a basis to assess the effects that the contracts have on the financial position, financial performance and cash flows of the insurer. The Standard also specifies presentation andremaining disclosure requirements to enhance comparability between insurance companies.
On June 25, 2020, the IASB decided, next to a number of significant amendments to the Standard, to defer the effective date of IFRS 17 toapply for annual reporting periods beginning on or after 1 January 1,2023, but not for any interim periods ending on or before 31 December 2023. As a consequence
Aegon is within the scope of the IFRS 17 deferral,OECD Pillar Two model rules. Pillar Two legislation was enacted in the IASB also agreed to reviseNetherlands, the fixed expiry date of the temporary exemptionjurisdiction in which Aegon Ltd. as Ultimate Parent Entity is tax resident, and will come into effect from IFRS 9 in IFRS 4 to allow entities
31 December 2023.
 
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134
Notes to the consolidated financial statements
Note 2
 
   
Aegon has applied the mandatory exception to recognizing and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023. Based on performed analysis, applying both the temporary safe harbors and detailed calculations, Aegon has determined that the impact, if any, of Pillar Two is currently expected to be
non-material.
Therefore, the consolidated financial statements do not include information required by paragraphs
88A-88D
of IAS 12.
The adoption of IFRS 17 and IFRS 9, which replaced IFRS 4 and IAS 39 respectively, have had a significant impact on the financial position of Aegon and the consolidated financial statements. Based on the amendment to IFRS 17, Aegon has decided to apply the overlay approach upon initial application of IFRS 9 and IFRS 17. This has allowed it to restate the 2022 comparative period for both new standards.
IFRS 9 also significantly amended the credit risk disclosures required by IFRS 7 “Financial Instruments: Disclosures”. The consequential amendments to IFRS 7 disclosures have also been applied to the comparative period.
The impact of the adoption of the amendments to other standards, listed above, was immaterial.
2.1.2 Effects of initial adoption of IFRS 9 and IFRS 17
The effects of adopting IFRS 9 and IFRS 17 on the consolidated financial statements on January 1, 2022 are presented in the statement of changes in equity. The adjustments made to the statement of financial position on transition date of January 1, 2022, and on initial application date January 1, 2023 of IFRS 9 and IFRS 17 are presented below.
The transition to IFRS 9 and IFRS 17 changes Aegon’s balance sheet significantly. The main changes are:
∎
Deferred policy acquisition cost (DPAC) and Value of Business Acquired (VOBA) are no longer recognized as separate assets;
∎
Residential mortgages related to the insurance entities in the Netherlands are measured at fair value through P&L instead of at amortized cost;
∎
Insurance liabilities are measured at fulfillment value which represents the present value of future cashflow to fulfil insurance contracts, including a risk adjustment for
non-financial
risk. Interest rate movements impacting the fulfillment value flow through P&L or OCI, depending on the accounting policy choice. Aegon Americas applies the OCI option for certain groups of contracts, whereas Aegon UK applies the P&L option. These choices are aligned with the measurement of the related assets to ensure an accounting match for market movements on assets and liabilities; and
∎
On top of the fulfillment value, a contractual service margin (CSM), reflecting unearned profits, is added to the insurance liabilities.
Annual Report on Form 20-F
2022
2023  |  133 		 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Opening balance sheet reconciliation
  
  December 31,
2022
   
  Adoption of IFRS
9 and IFRS 17
    January 1, 2023 
Cash and cash equivalents   3,407    (5)   3,402 
Assets held for sale   89,752    (1,088)   88,664 
Investments   76,825    177,934   254,759 
Investments for account of policyholders   180,006    (180,006)   - 
Derivatives   2,760    11   2,771 
Investments in joint ventures   1,443    (13)   1,430 
Investments in associates   165    -   165 
Reinsurance contract assets   21,184    (4,245)   16,939 
Insurance contract assets   -    36   36 
Deferred tax assets   1,827    606   2,433 
Deferred expenses   12,886    (12,434)   452 
Other assets and receivables   10,291    (1,051)   9,240 
Intangible assets   1,240    (820)   420 
Total assets
  
 
401,786
 
  
 
(21,075
) 
 
 
380,711
 
Shareholders’ equity   12,071    (3,256)   8,815 
Other equity instruments   1,943    -   1,943 
Issued capital and reserves attributable to owners of Aegon Ltd.
  
 
14,014
 
  
 
(3,256
) 
 
 
10,758
 
Non-controlling
interests
   176    -   176 
Group equity
  
 
14,190
 
  
 
(3,255
) 
 
 
10,935
 
Subordinated borrowings   2,295    -   2,295 
Trust pass-through securities   118    -   118 
Reinsurance contract liabilities   -    270   270 
Insurance contracts for account of policyholders   100,409    (100,409)   - 
Insurance contract liabilities   87,309    88,811   176,120 
Investments contracts   10,658    (10,658)   - 
Investment contracts for account of policyholders   80,555    (80,555)   - 
Investment contract liabilities with discretionary participating features   -    21,055   21,055 
Investment contracts without discretionary participating features   -    65,227   65,227 
Derivatives   6,094    (919)   5,175 
Borrowings   4,051    -   4,051 
Liabilities held for sale / disposal groups   84,339    (156)   84,183 
Other liabilities   11,766    (483)   11,283 
Total liabilities
  
 
387,596
 
  
 
(17,819
) 
 
 
369,777
 
               
Total equity and liabilities
  
 
401,786
 
  
 
(21,076
) 
 
 
380,711
 
Due to these transition adjustments and the different measurement of insurance contracts and financial instruments during 2022, total assets from January 1, 2023, were lower by EUR 21,075 million, total liabilities were lower by 17,819 million and shareholders’ equity was lower by EUR 3,255 million than the amounts presented in the last annual financial statements for December 31, 2022.
On implementation of IFRS 9 and IFRS 17 the comparative balance of shareholders’ equity is restated due to the combination of opening balance sheet adjustments (decrease of EUR 12,795 million) of the transition date, and the cumulative differences in equity movements of 2022 arising from the application of IFRS 9 and 17 in the amount of EUR 9,540 million increase, of which 8,222 million is an adjustment to the change in the revaluation reserve. The remaining impact of EUR 1,318 million is largely attributable to the changes in CSM balance and different measurement of insurance liabilities.
The decrease of EUR 12,434 million on Deferred expenses from January 1, 2023 (2022: EUR 10,076 million decrease) attributable to the elimination of deferred acquisition costs, which are no longer recognized under IFRS 17 as separate assets, but form part of the fulfillment cash-flows used in the measurement of insurance contracts.
The change in the measurement basis of insurance contracts (as described under note 2.1.3) resulted in a decrease of EUR 11,598 million in the carrying amount of insurance liabilities (Insurance contract liabilities and Insurance contracts for account of policyholders combined) from January 1, 2023 (2022: EUR 16,321 million increase), and also impacted reinsurance
 134  |  Annual Report on Form 20-F 2023
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Notes to the consolidated financial statements
Note 12
  
  
assets resulting in a lower carrying amount by EUR 4,245 million (2022: EUR 330 million increase) and investment contracts, which decreased by EUR 4,931 (2022: EUR 6,602 million decrease).
The impacts of transition from IAS 39 to IFRS 9 on the carrying amounts of financial instruments including investments, derivative assets and liabilities, investment contracts without discretionary participating features, other financial assets and liabilities are detailed in note 2.1.4.
The carrying amount of assets held for sale on January 1, 2023 was lower by EUR 1,088 million compared to the balance presented in the latest annual financial statements of December 31, 2022. Regarding liabilities held for sale, the carrying amount on January 1, 2023 was lower by EUR 156 million compared to the figures previously reported. Note 45 includes details on the impacts of IFRS 9 and 17 on the measurement of the disposal group.
The book value of intangible assets decreased by EUR 820 million from January 1, 2023 (2022: EUR 748 million) due to the derecognition of value of business acquired on transition, as it will not be recognized as a separate asset under IFRS 17.
Opening balance sheet reconciliation
  
 December 31,
2021
   
 Adoption of IFRS
9 and IFRS 17
   January 1, 2022 
Cash and cash equivalents   6,889    (28)   6,861 
Investments   157,831    251,614   409,444 
Investments for account of policyholders   250,953    (250,953)   - 
Derivatives   8,827    16   8,843 
Investments in joint ventures   1,743    (28)   1,715 
Investments in associates   1,289    -   1,289 
Reinsurance contract assets   20,992    330   21,322 
Insurance contract assets   -    110   110 
Deferred tax assets   131    2,033   2,164 
Deferred expenses   10,503    (10,076)   428 
Other assets and receivables   7,761    (963)   6,798 
Intangible assets   1,333    (748)   585 
Total assets
  
 
468,252
 
  
 
(8,693
) 
 
 
459,560
 
Shareholders’ equity   23,813    (12,795)   11,018 
Other equity instruments   2,363    -   2,363 
Issued capital and reserves attributable to owners of Aegon Ltd.
  
 
26,176
 
  
 
(12,795
) 
 
 
13,381
 
Non-controlling
interests
   196    -   196 
Group equity
  
 
26,372
 
  
 
(12,795
) 
 
 
13,577
 
Subordinated borrowings   2,194    -   2,194 
Trust pass-through securities   126    -   126 
Reinsurance contract liabilities   -    471   471 
Insurance contracts for account of policyholders   149,323    (149,323)   - 
Insurance contract liabilities   124,422    165,644   290,066 
Investments contracts   21,767    (21,767)   - 
Investment contracts for account of policyholders   104,592    (104,592)   - 
Investment contract liabilities with discretionary participating features   -    27,392   27,392 
Investment contracts without discretionary participating features   -    92,364   92,364 
Derivatives   10,639    (3,501)   7,138 
Borrowings   9,661    -   9,661 
Other liabilities   19,158    (2,586)   16,572 
Total liabilities
  
 
441,881
 
  
 
4,102
 
 
 
445,983
 
               
Total equity and liabilities
  
 
468,252
 
  
 
(8,693
) 
 
 
459,560
 
As the result of restatement of the opening balance sheet on transition date January 1, 2022 the carrying amount of total assets decreased by EUR 8,693 million while total liabilities increased by EUR 4,102 million and as such shareholders’ equity decreased by EUR 12,795 million. The main component of this change was the net decrease of other comprehensive income by EUR 9,022 million due to the establishment of a revaluation reserve for interest rate movements on insurance liabilities
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Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
  
   
 
under IFRS 17, and the reclassification of revaluation reserves on financial assets from other comprehensive income to continue applyingretained earnings. The total decrease of retained earnings in amount of EUR 3,707 million also includes the temporary exemptionestablishment of CSM on insurance contracts, partly offset by other remeasurements arising from lower fulfillment cashflows under IFRS 17 compared to IFRS 4.
The impact of restated adjustments due to the adoption of IFRS 9 untiland IFRS 17 on earnings per share is reflected in the table below.
Impact of adoption of new accounting standards on the consolidated
income statement
  
YE 2022 (as
previously reported)
  
 Adoption of IFRS
9 and IFRS 17
   
YE 2022
  (restated)
 
Earnings per share (EUR per share)     
Basic earnings per common share   (0.73)   0.43    (0.30) 
Basic earnings per common share B   (0.02)   0.01    (0.01) 
Diluted earnings per common share   (0.73)   0.43    (0.30) 
Diluted earnings per common share B   (0.02)   0.01    (0.01) 
Earnings per common share calculation     
Net result / (loss) attributable to owners   (1,433)   864    (569) 
Coupons on perpetual securities   (36)   -    (36) 
Net result / (loss) attributable to owners for basic earnings per share calculation   (1,469)   864    (605) 
Weighted average number of common shares outstanding (in million)   2,010   -    2,010 
Weighted average number of common shares B outstanding (in million)   536   -    536 
2.1.3 IFRS 17 Insurance Contracts
Aegon has adopted IFRS 17 – Insurance Contracts, including any consequential amendments to other standards, with a date of initial application of January 1, 2023. The EU has endorsed IFRS 17 including the June 25, 2020 amendments as per November 2021.
The Standard represents2023 and a significant change to current financial reporting and the implementation effort is significant. An implementation project was started soon after the publicationtransition date of the new Standard. Based on the final amendments of June 2020 quantitative assessments are performed which continued during 2021. In 2022, methodology and policy choices were finalized which formed the basis of preparing the opening balance sheet per January 1, 2022 and2022.
Aegon does not use the 2022 quarterly results.
Whilst the preparation of the opening balance sheet has been completed, the preparation of the 2022 quarterly results are still ongoing and full year results are only expectedoptional exemption provided under IFRS to be completed in the first half-year of 2023. Aegon has an established governance framework to manage the implementation of IFRS 17, including the preparation of the 2022 quarterly results, which might impact significant accounting estimates and judgements. The impact on the 2022 opening balance sheet as presented in this note is therefore indicative.group together specific insurance contracts that were issued more than 12 months apart.
a) Changes compared to previous accounting policies
Under IFRS 4, Aegon largely continued to report under the accounting policies that were applied prior to the adoption of IFRS. This meant that, in general, the Group applied
non-uniform
accounting policies for insurance assets and liabilities as allowed under Dutch Accounting Policies for insurance contracts that were continued as measurement basis under IFRS 4.Policies. Specific measurement methodologies differdiffered between Aegon’s operations, reflecting local regulatory requirements and local practices for specific product features. Under IFRS 17, consistent accounting policies will beare applied to all insurance contracts and investment contracts with discretionary participation features, regardless of the jurisdiction in which the contracts have been issued.
Under Aegon’s currentprevious accounting policies, some minimum guarantees arewere separated from the host insurance contracts and classified as derivatives. The Group has also elected to apply the accounting option under IFRS 4 to measure certain closely related minimum guarantees at fair value. Under IFRS 17, Aegon has not identified any embedded derivatives that require separation. All minimum guarantees will beare measured together with the host contract, in accordance with the requirements of IFRS 17.
Policy loans, value of business acquired, and insurance payables and receivables, which are currentlywere previously accounted for as separate assets, will beare now included in the measurement of the insurance liabilities.
Measurement
IFRS 17 establishes principles for the accounting for insurance contracts, reinsurance contracts, and investment contracts with discretionary participation features. It will introduceintroduces a model that measures groups of contracts based on Aegon’s estimate of the present value of the future cash flows that will arise as these contracts are fulfilled, and which includes an explicit risk adjustment for
non-financial
risk and a contractual service margin (CSM) reflecting unearned profits. Contrary to currentprevious accounting, IFRS 17 will requirerequires estimates to be current, unbiased and probability-weighted, incorporating all available information in a way that is consistent with observable market data.
Insurance contracts are grouped together for measurement purposes. Aegon will not use the optional exemption provided under IFRS to group together specific insurance contracts that were issued more than 12 months apart, but instead, intends to apply the IFRS 17 cohort requirements to all groups of contracts that are in scope of the Standard.
IFRS 17 prescribes modifications to the general measurement model for contracts with direct participating features (the ‘variable“variable fee approach’approach”) and for reinsurance contracts held. The standard also provides an option to simplify the measurement of certain short-term contracts (the ‘premium“premium allocation approach’approach”), which willis primarily be applied by Aegon to
non-life
insurance
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Notes to the consolidated financial statements
Note 2
contracts and related reinsurance contracts held. The measurement of these contracts will beis similar to the currentprevious treatment under IFRS 4, treatment, albeit that when measuring liabilities for incurred claims, Aegon will discountnow discounts cash flows expected to occur more than one year after the claim’s date and will includeincludes an explicit risk adjustment for
non-financial
risk.
Acquisition costs
Currently,Previously, under IFRS 4, all acquisition costs arewere recognized and presented as separate assets (‘deferred policy acquisition costs(Deferred Policy Acquisition Costs or DPAC’“DPAC”) until these costs arewere included in profit or loss. Under IFRS 17, only insurance acquisition cash flows that arise before the recognition of the related insurance contracts will be presentedare included within the insurance liability as a separate assets.asset. These assets, which are subject to recoverability testing, are derecognized and included in the carrying amount of the related portfolio of contracts on initial recognition.
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Governance and risk management
Financial information
Non-financial information
For some (but not all) groups of contracts for which the premium allocation approach will beis applied, Aegon intendshas opted to expense acquisition costs when incurred.
Aegon allocates acquisition costs to either product or business lines (where applicable) based on a study, a series of studies or a thoroughly defined rational for their allocation methodologies.
Revenue and expenses
Under IFRS 4, the revenues reported in the income statement includeincluded gross insurance premiums when due, or for products where deposit accounting was required, surrender fees and other charges. Under IFRS 17, the insurance revenue in each reporting period will reflectreflects the consideration to which Aegon expects to be entitled in exchange for the services provided in that period.
The actual claims and expenses incurred in providing the service will beare presented in the income statement as insurance service expenses.
Insurance finance income and expenses, disaggregated between profit or loss and OCIother comprehensive income (OCI) for certain groups of contracts, will beare now presented separately from insurance revenue and insurance service expenses.
Income and expenses from reinsurance contracts, other than insurance finance expenses, will beare presented as a single net amount in the income statement. Currently,Previously, amounts recovered from reinsurers and reinsurance expenses were presented separately.
Other assets and liabilities
On transition to IFRS 9 and IFRS 17, some available-for-sale investments and loans will be designated as fair value through profit or loss to reduce the accounting mismatch between assets and liabilities. Aegon will also no longer apply shadow accounting which, ignoring the impact of any reclassifications of available-for-sale investments, will have a positive impact on the carrying amount of revaluation reserves presented in group equity.
Interests in insurance joint ventures and associates that are accounted for under the equity method, will be remeasured based on Aegon’s new accounting policies.
b) Transition
Changes in accounting policies resulting from the adoption of IFRS 17 will bewere applied retrospectively, to the extent practicable. Under a full retrospective approach, Aegon:
◆Identifies, recognizes and measures each group of contracts as if IFRS 17 had always been applied;
◆Derecognizes previously reported balances that would not have existed if IFRS 17 had always been applied; and
◆Recognizes any resulting net difference in equity.
Aegon considersconsidered the full retrospective approach to be impracticable ifwhen its application requiresrequired hindsight, for example in setting historical assumptions, or if the required historical input data cannotcould not be made available within reasonable efforts. The latter might bewas, for example, concluded ifwhen information is not, orwas no longer available electronically and incorporating it into the IFRS 17 reporting process would bewas expected to inducecause high costs and efforts.
If the retrospective application of IFRS 17 to a group of contracts iswas impracticable, either the modified retrospective approach or the fair value approach will bewas applied. The objectivemodified retrospective approach may only be applied if there is reasonable and supportable information available to do so. For groups of contracts that in principle were eligible for both the modified retrospective and the fair value approach, isthe most appropriate transition method was elected based on a mix of operational and financial considerations.
Notwithstanding the foregoing, Aegon applied the fair value approach to achievesome groups of contracts with direct participating features, to which it could have applied IFRS 17 fully retrospectively. These were groups of contracts for which Aegon had mitigated financial risk prior to transition using derivatives, other financial instruments classified as fair value through profit or loss, and reinsurance contracts, and to which risk mitigation has been applied prospectively from the closest outcome to retrospective application possible. transition date.
Fair Value Approach
Under the fair value approach, the carrying amount of a group of insurance contracts at transition is determined in accordance with IFRS 13 Fair Value Measurement but with the exclusion of the guidance on demand features. The modified retrospective approach may only be applied if there is sufficient reasonable and supportable information available to do so. For groups of contracts that are eligible for both the modified retrospective approach anddifference between the fair value approach,and the transition method will be elected based on a mix of operational and financial considerations.fulfillment cash flows at the transaction date is recognized as contractual service margin.
Notwithstanding the foregoing, Aegon will apply the fair value approach to groups of contracts with direct participation features to which it could have applied IFRS 17 fully retrospectively, where the following applies:
◆Aegon intends to apply risk mitigation to the group of contracts prospectively from the transition date, and
◆Prior to transition, Aegon used derivatives, other financial instruments classified as ‘fair value through profit or loss’ or reinsurance contracts to mitigate financial risk arising from that group of contracts.
IFRS 17 will be applied fully retrospectively to insurance contracts issued in 2021 and to a limited number of product groups issued in earlier years, except for life insurance contracts issued in the Netherlands which is transitioned using the fair value
 
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  Sustainability information
   
   
 
approach. The modified retrospective approach will be applied to Investment Only Variable Annuities written in the Americas from 2009 to 2020, Universal Life contracts issued in Asia in 2015 and in 2016, and certain products written by Aegon’s joint ventures in Spain and Portugal. The remainder of the in-force portfolio will transition to IFRS 17 using the fair value approach.
In estimating the fair value of insurance contracts for the transition to IFRS 17, Aegon applied a methodology whereby the estimated future cash flows were adjusted for known differences between the IFRS 17 and market valuation methodologies (such as the inclusion of investment expenses for all product types) and the risk adjustment was recalculated at a higher confidence level to reflect the additional compensation that a market participant would require for financial risk and the remaining contractual services that need to be provided. Where possible, the results were compared to market-observable transactions, such as recent reinsurance transactions entered into by Aegon and sales transactions of insurance portfolios and businessesbusinesses.
For contracts that transitioned to IFRS 17 under the fair value approach, the following assessments were generally performed at original contract inception date, with a limited number of products being assessed at the transition date:
∎
Assessment whether an insurance contract met the definition of an insurance contract with direct participating features;
∎
Assessment whether an investment contract met the definition of an investment contract with discretionary participating features; and
∎
Identification of discretionary cash flows for insurance contracts without direct participating features.
The grouping of contracts to which the fair value approach is applied has been performed at the transition date. The contracts were grouped together in portfolios in accordance with IFRS 9 and IFRS 17 (as per January 1, 2023). None of the contracts were identified as being onerous at transition. The identified groups of contracts were not further segmented into cohorts based on issue date.
The discount rates at which interest is accrued to the contractual service margin and at which changes in
non-financial
assumptions are recognized for groups of contracts without direct participating features have also been set at the transition date.
Modified Retrospective Approach
The objective of a modified retrospective approach is to reach the closest outcome to the full retrospective approach using reasonable and supportable information that can be obtained without undue cost or effort. Aegon applied the modified retrospective approach to groups of contracts for which the fair value approach was not the preferred transition approach, by working back from the transition date to the date on initial recognition to gather the necessary information. Only where the information could not be made available without undue effort were modifications applied as allowed under IFRS 17.
For all contracts that transitioned to IFRS 17 under the modified retrospective approach, sufficient information was available to perform the contract classifications at the original contract inception date.
The grouping of contracts was performed at the original contract inception date, or if there was a lack of reasonable and supportable information, at the transition date. Contracts were grouped into cohorts not exceeding 12 months.
None of the contracts to which the modified retrospective approach was applied were identified as being onerous at initial inception.
Modifications applied to contracts without direct participating features
To determine the contractual service margin at transition for groups of contracts without direct participating features, Aegon first estimated the contractual service margin at the original inception date. The contractual service margin at inception was then rolled forward to the transition date by deducting the estimated amount that would have been released for services provided prior to transition.
In order to attribute past calendar-year cash flows (including acquisition cash flows) to issue year cohorts, appropriate allocation keys were set by cash flow type based on the saleinformation available. Examples include accumulated premiums in force and (first year) account values.
The calculation of the fulfillment cash flows at inception and the subsequent accretion of interest to the contractual service margin of a group of contracts required the use of historical discount rates. In principle, Aegon determines IFRS 17 discount rates using a hybrid approach based on risk-free rates plus an illiquidity premium based on expected asset returns. Where the Netherlandsnecessary asset portfolio data was not or no longer available, an appropriate observable yield curve plus a spread adjustment was applied to a.s.r.).approximate historical discount rates. For cohorts that exceed 12 months, weighted-average historical discount rates were applied. The weighting was based on sales volumes, or where not available, on the expected coverage units at inception.
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Note 2
The modified retrospective calculations were based on the assumption that Aegon had not previously prepared interim financial statements, unless sufficient information existed to roll the contractual service margin forward with Aegon’s historical reporting frequency.
Modifications applied to contracts with direct participating features
To determine the contractual service margin at transition for a group of insurance contracts with direct participating features, Aegon first estimated the total contractual service margin for all services to be provided for that group of contracts. It then deducted the estimated amount that would have been released for services provided prior to the transition date.
The total contractual service margin for all services to be provided was estimated by taking the fair value of the underlying items at the transition date minus the fulfillment cash flows at that date and adjusting it for:
∎
Amounts charged to policyholders prior to the transition date;
∎
Excess claims and expenses paid in this period, including acquisition costs; and
∎
The estimated change in the risk adjustment for
non-financial
risk caused by the release of risk before the transition date.
Calendar year cash flows were attributed to issue years using allocation keys that were appropriate for the cash flow types, based on available information (for example, account value, and for excess claims paid, the net amount at risk). In estimating the change in the risk adjustment for
non-financial
risk prior to the transition date, the projected risk adjustment pattern for newly issued cohorts of similar products were deemed an appropriate proxy for previous years.
The amount released for services provided prior to transition was determined by multiplying the adjusted total contractual service margin by the ratio of the coverage units served prior to transition and the total coverage units expected to be provided over the lifetime of the group of contracts.
Other Comprehensive Income
Under IFRS 17, Aegon will electhas elected to disaggregate the insurance finance income andor expenses between profit or loss and OCI for certain groups of contracts without direct participating features that are issued in the Americas and Asia. The balance recognized in OCI will behas been determined retrospectively where possible, or alternatively, has been set to nil at the transition date. The latter applies, for example, to the fixed deferred annuities, indexed universal life and other life insurance products with indirect participating features issued in the Americas.
When applying IFRS 17 retrospectively,Aegon also no longer applies shadow accounting which, ignoring the impact of any reclassifications of investments discussed below, has had a positive impact on the carrying amount of goodwill from previous business combinations will not be adjusted.
revaluation reserves presented in OCI.
2.1.4 IFRS 9 Financial instruments
Aegon adoptshas adopted IFRS 9 as issued by the IASB in July 2014, with a date of initial application of January 1, 2023 and a transition date of January 1, 2022, which results in changes in accounting policies and adjustments to the amounts previously recognized in the financial statements.2022. Aegon did not early adopt IFRS 9 in previous periods.
For the transition to IFRS 9 and IFRS 17 in the financial statements of 2023, Aegon has decided, based on the amendment to IFRS 17, to apply the overlay approach for 2022 including impairment requirements. As the overlay approach can only be applied in periods where IFRS 17 comparatives are restated, 2021 as comparative period will not be restated for IFRS 9 (nor IFRS 17).
a) Changes compared to previous accounting policies
The adoption of IFRS 9 resultsresulted in changes in Aegon’s accounting policies for recognition, classification and measurement of financial assets and financial liabilities, impairment of financial assets and hedge accounting. IFRS 9 also significantly amends other Standards dealing with financial instruments such as IFRS 7 ‘Financial Instruments: Disclosures’.
Classification and measurement
Measurement
Under IAS 39, financial assets were classified as
“Available-For-Sale”
(AFS), “Loans and Receivables” (L&R) or as held at “Fair Value Through Profit or Loss” (FVPL). The following financial assets were measured at FVPL: financial assets held for trading, financial assets managed on a fair value basis and financial assets containing an embedded derivative that is not closely related and that cannot be reliably bifurcated. In addition, in certain instances Aegon designated financial assets to this category when by doing so a potential accounting mismatch in the financial statements is eliminated or significantly reduced.
Under IFRS 9, classification and measurement differ for debt instruments and equity instruments.
Debt instruments are those instruments that meet the definition of a financial liability from the issuer’s perspective, such as mortgage loans, private loans, and government and corporate bonds. Classification and subsequent measurement depend on:
◆Aegon’s business model for managing the asset;
◆The cash flow characteristics of the asset; and
◆The designation at FVPL to eliminate or significantly reduce an accounting mismatch or recognition inconsistency.
The Group determines its business model at the level that best reflects how it manages groups of financial assets to achieve its business objective. The Group’s business model is not assessed on an instrument-by-instrument basis, but at a higher level of aggregated portfolios and is based on observable factors, such as:
◆How the performance of the business model and the financial assets held within that business model are evaluated and reported to the Group’s senior management;
◆The risks that affect the performance of the business model and the financial assets held within it. In particular, the way those risks are managed;
◆How the Group management is compensated, i.e. whether the compensation is based on the fair value of the assets managed or on the contractual cash flows collected;
◆The expected frequency, value and timing of sales are also important aspects of the Group’s assessment.
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Non-financial information
Where the business model is to hold assets to collect contractual cash flows or to collect contractual cash flows and cash flows from the sale of the asset, Aegon assesses whether the financial instruments’ cash flows represent solely payments of principal and interest (the ‘SPPI test’). In making this assessment, Aegon considers whether the contractual cash flows are consistent with a basic lending arrangement i.e. interest includes only consideration for the time value of money, credit risk, other basic lending risks and a profit margin that is consistent with a basic lending arrangement. Where the contractual terms introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related financial asset is classified and measured at fair value through profit or loss.
Based on these factors, Aegon classifies its debt instruments into one of the following three IFRS 9 measurement categories:categories, based on its business model for managing the asset, the asset’s cash flow
 
◆
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characteristics, and Aegon’s intent to designate the asset at FVPL to eliminate or significantly reduce an accounting mismatch or recognition inconsistency:
∎
 Amortized cost (‘AC’(“AC”): Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest (‘SPPI’(“SPPI”), and that are not designated at FVPL, are measured at amortized cost. The carrying amount of these assets is adjusted by any expected credit lossExpected Credit Loss (“ECL”) allowance recognizedrecognized.
◆
∎
 Fair value through other comprehensive income (‘FVOCI’(“FVOCI”): Financial assets that are held for collection of contractual cash flows and for selling the assets, where the assets’ cash flows represent solely payments of principal and interest, and that are not designated at FVPL, are measured at FVOCI.
◆
∎
 Fair value through profit or loss (‘FVPL’(“FVPL”): Assets that do not meet the criteria for amortized cost or FVOCI are measured mandatorily at fair value through profit or loss.
Aegon performed a detailed analysis of its business models for managing financial assets and analysis of their cash flow characteristics. This leads to a classification of most of the mortgage, consumer, and private loan portfolios within Aegon’s non-insurance entities as measured at AC, given that the cash flows on these contracts represent solely payment of principal and interest, and they fit the business model hold-to-collect. For the most significant part of Aegon’s insurance entities, debt instruments will be classified as FVOCI because they fit the business model of hold-to-collect and sell, and their cash flows represent solely payment of principal and interest. However, financial assets within Aegon’s European insurance entities will be designated at FVPL to minimize accounting mismatches.
Equity instruments are instruments that meet the definition of equity from the issuer’s perspective; that is, instruments that do not contain a contractual obligation to pay and that evidence a residual interest in the issuer’s net assets. Examples of equity instruments includeperspective, such as basic ordinary shares. Under IFRS 9, equity investments do not qualify for amortized cost or FVOCI treatment because they would fail the contractual cash flow characteristics assessment (cash flows are typically declared dividends at the discretion of the issuer, instead of interest). Thus, equity investments would generally only qualify for FVTPL treatment and not subject to impairment under expected credit loss model.
However,On initial recognition, IFRS 9 allows the entityAegon to make an irrevocable election at initial recognition to present changes in the fair value of equity investment in OCI rather thanor profit or loss. TheIn both cases, the equity investments designated as FVOCIinstruments are not subject to impairment under expected credit lossExpected Credit Loss model. Aegon has not elected for this option for equity investments.
Financial liabilities are to be classified as subsequently measured at amortized cost, except financial liabilities measured at fair value through profit or loss, financial liabilities arising from the transfer of financial assets which did not qualify for derecognition, and financial guarantee contracts and loan commitments.
Impairment allowance
The IAS 39 impairment methodology was based on an ‘incurred loss’“incurred loss” model, which means that an allowance was determined when an instrument was deemed credit-impaired. Under IFRS 9, Aegon will assess on a forward-looking basis the expected credit losses (‘ECL’) associated with its debt instrument assets carried at amortized cost and FVOCI. Aegon recognizes a loss allowance for such losses at each reporting date. The measurement of ECL reflects:
◆An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
◆The time value of money; and
◆Reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.
When incorporating forward looking information, consideration should be given to the relevance of the information (and the availability of more relevant information) for each specific financial instrument or group of financial instruments. Forward looking information that is relevant for one financial instrument may not be relevant or as relevant for other financial instruments depending on the specific drivers of credit risk. To the extent relevant, forward-looking information used for the measurement of ECLs it needs to be consistent with that used for the assessment of a significant increase in credit risk.
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Note 2
The IFRS 9 ECL model of the Group will generally employ a Probability of Default (PD) / Loss Given Default (LGD) / Exposure at Default (EAD) methodology; each model consists of multiple sub-models that are used to generate the measurement of expected credit loss. The LGN (Loss Given No-cure) represents the expectation of the extent of the loss on an exposure that defaults without cure. The LGN varies by type and amount of exposure, and type and amount of collateral available, the presence of other credit support, the duration of default, and the macro-economic forecast. The LGN is expressed as a percentage loss per unit of exposure at the time of default. The LGN is calculated for each future quarter. Credit losses are calculated as the product of projected PD, LGD and EAD and are discounted using an appropriate discount rate. The ECL is determined as the probability weighted discounted credit losses that are determined for different scenarios (i.e., base, positive, adverse).
IFRS 9 outlines a ‘three-stage’ model for impairment based on relative changes in credit quality since initial recognition:
◆A financial instrument that is not credit-impaired on initial recognition is classified in ‘Stage 1’ and has its credit risk continuously monitored by the Group.
◆If a significant increase in credit risk (‘SICR’) since initial recognition is identified, the financial instrument is moved to ‘Stage 2’ but is not yet deemed to be credit-impaired.
◆If the financial instrument is credit-impaired, the financial instrument is then moved to ‘Stage 3’.
Financial instruments in Stage 1 have their Expected Credit Loss (ECL) measured at an amount equal to the portion of lifetime expected credit losses that result from default events possible within the next 12 months. Financial instruments in Stages 2 or 3 have their ECL measured based on expected credit losses on a lifetime basis. Purchased or originated credit-impaired financial assets are those financial assets that are credit-impaired on initial recognition. Their ECL is always measured on a lifetime basis.
Aegon considers a financial instrument to have experienced a significant increase in credit risk when specific criteria have been met which are determined for each class of financial instruments. These criteria involve quantitative, qualitative or backstop indicators. Examples of quantitative indicators include relative changes in forward-in-time probability of default, which represents a hybrid Point-in-Time (PiT) where the PD is appropriately adjusted for forward-looking information, or relative changes in rating. For specific assets Aegon uses qualitative indicators like a watchlist approach. Backstop indicators are also defined and are set specific per asset class. Aegon uses the low credit risk exemption for specific assets that are of low credit risk (i.e. investment grade or internal credit ratings that are consistent with the definition of low credit risk). Aegon’s definition of default involves qualitative and quantitative criteria defined at asset class level. Backstop criteria of 90 days past due is generally applied for all asset classes, except for private loans and debt securities and deposits with financial institutions, where 5 days past due is determined. Qualitative criteria include distressed restructuring, foreclosure, breach of significant covenants without reasonably supportable waiver obtained, bankruptcy or an equivalent of an injunction for the obligor, and an internal or external credit rating falling to D.
impaired. The allowance for instruments that are credit impaired under IAS 39 will generally align with the Stage 3 category of IFRS 9. However, within the expected loss framework of IFRS 9 the entire portfolio of financial instruments will be assigned an impairment allowance through the additions of the
12-month
ECL category (stage 1) and the Lifetime ECL
Non-credit-impaired (Stage
(Stage 2), generally leading to increases in the overall allowances.
Hedge accounting
The GroupAegon has elected to adopt the new hedge accounting model in IFRS 9. This requires the Group to ensure that hedging relationships are aligned with its risk management objectives and strategy and to apply a more qualitative and forward-looking approach to assessing hedge effectiveness.
Aegon has elected to continue to apply hedge accounting requirements for macro fair value hedges of IAS 39 on adoption of IFRS 9. As such, fair value hedge accounting for portfolio hedges of interest rate risk (macro hedging) under the EU “carve out” of IFRS is applied.
b) IFRS 9 Transition
Any adjustments to the carrying amounts of financial assets and liabilities will beat the date of transition were recognized in the opening retained earnings and other reserves atof the date of transition,initial recognition period, January 1, 2022.
 
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Classification and Measurement
On transition to IFRS 9, Aegon performed a detailed analysis of its business models for managing financial assets and analysis of their cash flow characteristics. Furthermore some AC and FVOCI financial assets have been designated as FVPL to reduce the accounting mismatch between assets and liabilities.
The transition to IFRS 9 impacted the classification and measurement of financial assets.
The measurement category and the carrying amount of financial assets and liabilities in accordance with IAS 39 and IFRS 9 at January 1, 2022 and January 1, 2023 are detailed in the table below by type of instrument, together with a reconciliation of the carrying amounts of financial instruments, from their previous measurement category in accordance with IAS 39 to their new measurement categories upon transition:
Reconciliation of financial instruments,
January 1, 2023
  
IAS 39
  
category
   
IAS 39
  amount
   
  Reclassifi-
cation
  
Remea-
  surement
- ECL
  
Remea-
  surement
- Other
   
IFRS 9
  category
3)
  
IFRS 9
  amount
 
Financial assets
            
Shares   FVPL    15,698    (193)   -   -   FVPL (d)   15,505 
Shares   AFS      348   -   -   FVPL (m)   348 
Shares     195    (186)   -   -   FVOCI (d)   10 
Debt securities   AFS    53,093    (1,486)   -   -   FVOCI   51,607 
Debt securities   FVPL    6,248    (5,449)   -   -   FVPL (m)   799 
Debt securities       6,935   -   -   FVPL (d)   6,935 
Money market and other short-term investments   AFS    5,514    (2,938)   -   -   FVOCI   2,576 
Money market and other short-term investments   FVPL    1,362    1,514   -   -   FVPL (m)   2,876 
Money market and other short-term investments       1,429   -   -   FVPL (d)   1,429 
Loans   L&R    12,511    (2,095)   (12)   4   AC   10,408 
Deposits with financial institutions   L&R    45    -   -   -   AC   45 
Deposits with financial institutions   FVPL    2,360    -   -   -   FVPL (d)   2,360 
Unconsolidated investment funds   FVPL    154,741    -   -   -   FVPL (d)   154,741 
Other investments   FVPL    3,722    (3,190)   -   -   FVPL (d)   532 
Other investments   AFS      4,056     FVPL (m)   4,056 
Other investments        840    (810)   -   -   FVOCI   31 
IAS 39 / IFRS 9 Investments
1)
    
 
256,328
 
  
 
(2,065
) 
 
 
(12
) 
 
 
4
 
    
 
254,257
 
Cash and cash equivalents   L&R    3,407    (4)   -   -   AC   3,402 
Other financial assets and receivables
2)
   L&R    9,722    (1,050)   -   -   AC   8,671 
Derivatives   FVPL    2,760    11   -   -   FVPL (m)   2,771 
Total financial assets
       
 
272,217
 
  
 
(3,108
) 
 
 
(12
) 
 
 
4
 
     
 
269,102
 
Financial liabilities:
            
Investment contracts   AC    10,485    (888)   -   -   AC   9,597 
Investment contracts   FVPL    55,254    376   -   -   FVPL (d)   55,631 
Investment contracts without discretionary participating features
    
 
65,739
 
  
 
(512
) 
      
 
65,227
 
Long-term borrowings and group loans   AC    4,051    -   -   -   AC   4,051 
Derivatives   FVPL    6,094    (919)   -   -   FVPL (m)   5,175 
Other liabilities   AC    10,785    (507)   -   -   AC   10,278 
Total financial liabilities
       
 
86,668
 
  
 
(1,938
) 
 
 
-
 
 
 
-
 
     
 
84,730
 
1 
Investments and other assets include financial assets and
non-financial
assets as well. Investments under IAS 39 comprises EUR 256,328 million financial assets as detailed in the table and EUR 502 million investments in real estates on December 31, 2023. Investments under IFRS 9 comprises EUR 254,257 million financial assets as detailed in the table and EUR 502 million investments in real estates on January 1, 2023.
2 Other assets and receivables under IAS 39 contains EUR 9,722 million other financial assets and receivables and EUR 482 million own used real estates and right of use assets on December 31, 2022. Other assets and receivables under IFRS 9 contains EUR 8,671 million other financial assets and receivables and EUR 482 million own used real estates and right of use assets on January 1, 2023
3 m: mandatorily; d: designated
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2023  |  
139
141 		 
 
Table of Contents
LOGO		 
About Aegon
Governance and risk management
Financial information
Non-financial  Sustainability information
Effects of initial adoption of IFRS 9 and IFRS 17
The transition to IFRS 9 and IFRS 17 changes Aegon’s balance sheet significantly. The main changes are:
◆DPAC and VOBA will no longer be recognized as separate assets;
◆Residential mortgages related to the insurance entities in the Netherlands will be measured at fair value through P&L instead of at amortized cost;
◆Insurance liabilities are measured at fulfillment value which represents the present value of future cashflow to fulfill insurance contracts, including a risk adjustment for non-financial risk. Interest rate movements impacting the fulfillment value flow through P&L or OCI, depending on the accounting policy choice. Aegon Americas applies the OCI option for certain groups of contracts, whereas Aegon the Netherlands and Aegon UK apply the P&L option. These choices are aligned with the measurement of the related assets to ensure an accounting match for market movements on assets and liabilities;
◆On top of the fulfillment value, a contractual service margin (CSM), reflecting unearned profits, is added to the insurance liabilities.
The effect of transition to IFRS 9 and IFRS 17 on the opening balance of shareholders’ equity in the comparative period in the consolidated financial statements on January 1, 2022 are presented in the table below. Please note that as stated earlier, the impacts on the opening balance are indicative and the numbers can therefore change.
The impact on shareholders’ equity of the implementation of IFRS 9 and IFRS 17 is estimated to be a decrease of approximately EUR 12.6 billion. This is mainly due to a release of the revaluation reserve of financial assets that are reclassified under IFRS 9 and the establishment of a revaluation reserve for interest rate movements on insurance liabilities under IFRS 17 where these are allocated to Other Comprehensive Income (net decrease of approximately EUR 9.0 billion). The remaining impact on shareholders’ equity (estimated net decrease of approximately EUR 3.6 billion) is largely attributable to the establishment of the CSM, partly offset by the net effect of remeasuring the insurance liabilities. The latter reflecting lower fulfillment cashflows under IFRS 17 compared to the IFRS 4 insurance liabilities net of DPAC / VOBA. The estimated CSM before tax, at January 1, 2022, amounts to approximately EUR 11.8 billion. After tax the CSM is estimated to amount to approximately EUR 9.2 billion.
In EUR billion
   Shareholders’ equity   Revaluation reserves 
Balances as at January 1, 2022, as previously reported
   23.8   6.4 
Impact of the change in accounting policies (IFRS 9 and 17)
   (12.6)   (9.0) 
Restated balances as at January 1, 2022
  
 
11.2
 
 
 
(2.6
) 
Temporary exemption from applying IFRS 9 Financial Instruments
Application of IFRS 9 is required for annual periods beginning on or after January 1, 2018. However, on May 18, 2017, the IASB published the final version of the IFRS 17 Insurance Contracts standard. Prior to its finalization, the IASB issued an amendment to IFRS 4 Insurance Contracts (the predecessor standard to IFRS 17) that provides for a qualifying insurer a temporary exemption that permits, but does not require, the insurer to apply IAS 39 rather than IFRS 9 for annual periods beginning before January 1, 2021 (i.e., a temporary exemption of IFRS 9). The objective of the amendment is to address the temporary accounting consequences of the different effective dates of IFRS 9 and IFRS 17. This amendment was endorsed by the European Union in November 2017.
On June 25, 2020, the IASB decided, next to a number of significant amendments to the Standard, to defer the effective date of IFRS 17 to annual reporting periods beginning on or after January 1, 2023. As a consequence of the IFRS 17 deferral, the IASB also agreed to revise the fixed expiry date of the temporary exemption from IFRS 9 in IFRS 4 to allow entities to continue applying the temporary exemption from IFRS 9 until January 1, 2023.
An entity is eligible to apply the temporary exemption if the carrying amount of its liabilities connected with insurance activities is
◆Greater than 90% of the total carrying value of all liabilities; or
◆Between 80% and 90% of the total carrying value of all its liabilities, and the insurer does not have significant activities unrelated to insurance.
Aegon performed this analysis at December 31, 2015, and concluded that it meets the requirements for the temporary exception as 94% of its liabilities are connected with insurance activities. As a result, Aegon elected to make use of the temporary exemption of IFRS 9 until January 1, 2023.
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2022
Table of Contents
Notes to the consolidated financial statements
Note 2
   
   
Reconciliation of financial instruments,
January 1, 2022
  
IAS 39
category
   
IAS 39
amount
   
 Reclassifi-
cation
   
 Remeasure-
ment- ECL
   Remeasure-
 ment - Other
   
IFRS 9
 category
3)
   
IFRS 9
amount
 
Financial assets:
              
Shares   FVPL    31,203    (1,660)    -    -    FVPL (d)    29,543 
Shares   AFS    -    1,912    -    -    FVPL (m)    1,912 
Shares     350    (279)    -    -    FVOCI (d)    72 
Debt securities   AFS    93,899    (22,925)    -    -    FVOCI    70,974 
Debt securities   FVPL    23,117    (22,387)    -    -    FVPL (m)    730 
Debt securities       45,312    -    -    FVPL (d)    45,312 
Money market and other short-term investments   AFS    4,790    (2,289)    -    -    FVOCI    2,501 
Money market and other short-term investments   FVPL    1,602    694    -    -    FVPL (m)    2,296 
Money market and other short-term investments       1,624    -    -    FVPL (d)    1,624 
Loans   L&R    46,770    (21,971)    (150)    110    AC    24,760 
Loans       20,106    -    2,594    FVPL (d)    22,700 
Deposits with financial institutions   L&R    52    -    -    -    AC    52 
Deposits with financial institutions   FVPL    4,105    -    -    -    FVPL (d)    4,105 
Unconsolidated investment funds   FVPL    191,950    -    -    -    FVPL (d)    191,950 
Other investments   FVPL    6,893    (2,800)    -    -    FVPL (d)    4,093 
Other investments       3,572    -    -    FVPL (m)    3,572 
Other investments   AFS    844    (800)    -    -    FVOCI    44 
IAS 39 / IFRS 9 Investments
1)
    
 
405,578
 
  
 
(1,891)
 
  
 
(150)
 
  
 
2,704
 
    
 
406,239
 
Cash and cash equivalents   L&R    6,889    (28)    -    -    AC    6,861 
Other financial assets and receivables
2)
   L&R    6,988    (963)    -    -    AC    6,025 
Derivatives    FVPL    8,827    16    -    -    FVPL (m)    8,843 
Total financial assets
       
 
 428,281
 
  
 
 (2,868)
 
  
 
(150)
 
  
 
2,704
 
       
 
 427,967
 
Financial liabilities:
              
Investment contracts   AC    21,573    (899)    -    -    AC    20,674 
Investment contracts   FVPL    71,242    448    -    -    FVPL (d)    71,690 
Investment contracts without discretionary participating features
    
 
92,815
 
  
 
(451)
 
  
 
-
 
  
 
-
 
    
 
92,364
 
Long-term borrowings and group loans   AC    9,661    -    -    -    AC    9,661 
Derivatives   FVPL    10,639    (3,501)    -    -    FVPL (m)    7,138 
Other liabilities   AC    12,916    (1,033)    -    -    AC    11,883 
Total financial liabilities
       
 
126,030
 
  
 
(4,985)
 
  
 
-
 
  
 
-
 
       
 
121,046
 
1 
Investments and other assets include financial assets and
non-financial
assets as well. Investments under IAS 39 comprises EUR 405,578 million financial assets as detailed in the table and EUR 3,206 million investments in real estates on December 31, 2023. Investments under IFRS 9 comprises EUR 406,871 million financial assets as detailed in the table and EUR 3,206 million investments in real estates on January 1, 2023.
2 Other assets and receivables under IAS 39 contains EUR 6,988 million other financial assets and receivables and EUR 654 million own used real estates and right of use assets on December 31, 2022. Other assets and receivables under IFRS 9 contains EUR 6,025 million other financial assets and receivables and EUR 654 million own used real estates and right of use assets on January 1, 2023.
3 m: mandatorily; d: designated
The reclassification and remeasurement impacts from January 1, 2023 do not include the Netherlands, which is separately disclosed in note 45. Discontinued operations.
From January 1, 2023, EUR 3,108 million (January 1, 2022: EUR 2,868 million) has been reclassified out of financial assets, and EUR 1,938 million (January 1, 2022: EUR 4,985 million) has been reclassified out of financial liabilities which moved in scope of IFRS 17 and classified and measured as (re)insurance contracts from January 1, 2022. These reclassifications are mainly related to policy loans and previously bifurcated embedded derivatives.
Remeasurement impacts included the reversal of impairments of financial assets recognized under IAS 39 in amount of EUR 4 million (January 1, 2022: EUR 110 million) and the recognition of expected credit losses of EUR 12 million (January 1, 2022: EUR 150 million) in line with the impairment requirements of IFRS 9.
On January 1, 2022, an additional remeasurement gain of EUR 2,594 was the result of the designation of loans and receivables in the Netherlands (previously measured at amortized cost) to measurement at fair value through profit or loss. The corresponding difference in measurement on January 1, 2023 is presented in note 45. Discontinued operations.
 
As Aegon defers the application of IFRS 9 (including linked amendments as included in above table), the full impact of the standard in combination with IFRS 17 is not yet clear, however an initial impact assessment resulted in the expectation that it will have a significant impact on shareholders’ equity, income and/or other comprehensive income and disclosures. An implementation project was started in 2017 and is combined with the implementation of IFRS 17 Insurance Contracts.
By qualifying for and electing the temporary exemption, the IFRS 4 amendment requires certain additional disclosures; specifically, Aegon is required to disclose information to enable users of financial statements to compare insurers applying the temporary exemption with entities applying IFRS 9. This information is presented below:
Fair value changes
The table below presents an overview of the fair value of the classes of financial assets as of December 31, 2022, as well as the change in fair value during the reporting period. The asset classes are divided into two categories:
 
◆SPPI: assets of which cash flows represent solely payments of principal and interest (SPPI) on an outstanding principal amount, excluding any financial assets that meet the definition of held for trading in IFRS 9, or that are managed and whose performance is evaluated on a fair value basis; and
◆Other: all financial assets other than those specified in SPPI:
◆with contractual terms that do not give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding;
◆that meet the definition of held for trading in IFRS 9; or
◆that are managed and whose performance are evaluated on a fair value basis.
              
2022
1)
  2021 
               
Change in
        
           Fair value at   
fair value
  Fair value at   Change in fair 
           the end of   during the  the end of   value during 
           the reporting   reporting  the reporting   the reporting 
Financial assets at fair value                      period   period  period   period 
Shares
2)
   SPPI         39    8   44    10 
    Other         345    (33)   618    36 
Debt securities
   SPPI         52,363    (14,000)   93,234    (3,132) 
    Other         1,284    (182)   3,961    (75) 
Money Markets and other short-term investments
   SPPI         2,631    10   2,324    (0) 
    Other         2,982    1   2,586    -   
Mortgage loans
   SPPI         9,245    (1,199)   44,366    (195) 
    Other         -      -     -      -   
Private loans
   SPPI         -      -     5,474    (267) 
    Other         15    (26)   36    (10) 
Deposits with financial institutions
   SPPI         45    -     52    -   
    Other         -      -     -      -   
Policy loans
   SPPI         1    -     1    -   
    Other         2,042    -     1,892    (0) 
Other financial assets
   SPPI         -      -     -      -   
    Other         4,566    179   5,598    724 
At December 31
            
 
75,557
 
  
 
(15,241
) 
 
 
160,187
 
  
 
(2,909
) 
1
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
2
The SPPI-compliant shares include preferred equity instruments.
Cash and cash equivalents, deposits with financial institutions, and receivables all pass the SPPI test and are held at amortized cost, whereby the amortized cost is assumed to approximate fair value due to the short-term nature of the assets. For movement schedules of these financial assets, refer to respective notes.142  |  Annual Report on Form 20-F 2023
The fair value at the end of the reporting period in the table reconciles back to the respective table in note 22.1 Financial assets, excluding derivatives.
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2022
  |  
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Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
Credit Risk
The table below details the credit risk rating grades, as of December 31, 2022, for financial assets with cash flows that are SPPI, excluding any financial assets that meet the definition of held for trading in IFRS 9, or that are managed and whose performance is evaluated on a fair value basis. The tables show the carrying value of those financial assets applying IAS 39 (in the case of financial assets measured at amortized cost, before adjusting for any impairment allowances).
SPPI compliant financial assets at carrying value
  AAA   AA   A   BBB   BB   B   CCC or
lower		   Not
Rated		   Total   
2022
1)
                                             
          
Shares – Carried at fair value
   -    -    -    22    8    -    9    -    39   
          
Debt securities – Carried at fair value
   9,251    4,270    16,398    19,779    1,424    594    647    -    52,363   
          
Money market and other short-term investments- carried at fair value
   313    221    2,080    1    -    -  �� 2    15    2,631   
          
Mortgage loans– Carried at amortized cost
   1,488    4,454    3,779    671    48    -    -    5    10,445   
          
Private loans – Carried at amortized cost
   -    -    -    -    -    -    -    -    -   
          
Other financial assets – Carried at fair value
   -    -    6    1    -    -    -    39    46   
          
At December 31
  
 
11,052
 
  
 
8,944
 
  
 
22,263
 
  
 
20,474
 
  
 
1,480
 
  
 
594
 
  
 
658
 
  
 
59
 
  
 
65,524  
 
2021
                                             
          
Shares – Carried at fair value
   -    -    -    23    13    -    8    -    44   
          
Debt securities – Carried at fair value
   26,076    10,195    24,916    28,524    1,828    918    754    24    93,234   
          
Money market and other short-term investments- carried at fair value
   25    120    1,986    193    -    -    -    -    2,324   
          
Mortgage loans– Carried at amortized cost
   1,383    4,221    3,301    519    59    -    -    31,141    40,624   
          
Private loans – Carried at amortized cost
   2,607    216    189    1,050    44    -    -    744    4,850   
          
Other financial assets – Carried at fair value
   -    -    13    1    -    18    -    21    53   
          
At December 31
  
 
30,090
 
  
 
14,752
 
  
 
30,405
 
  
 
30,310
 
  
 
1,944
 
  
 
936
 
  
 
762
 
  
 
31,930
 
  
 
141,128  
 
1 
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
For assets that do not qualify for the low credit risk exemption (assets rated below BBB or not rated) and of which cash flows represent SPPI, excluding any financial assets that meet the definition of held for trading in IFRS 9, or that are managed and whose performance is evaluated on a fair value basis, the table below provides the credit risk exposure from the financial assets held by Aegon
1
. The financial assets are categorized by asset class with a carrying amount and fair value measured in accordance with IAS 39 measurement requirements.
   
2022
1)
   2021 
SPPI compliant financial assets rated BB or below
  Carrying amount     Fair value     Carrying amount     Fair value   
     
Shares – Carried at fair value
   17      17      21      21   
     
Debt securities – Carried at fair value
   2,665      2,665      3,524      3,524   
     
Money market and other short-term investments – Carried at fair value
   17      17      -      -   
     
Mortgage loans – Carried at amortized cost
   53      40      31,200      34,254   
     
Private loans – Carried at amortized cost
   -      -      788      816   
     
Deposits with financial institutions – Carried at amortized cost
   38      38      38      38   
     
Other financial assets – Carried at fair value
   1      1      1      1   
     
At December 31
  
 
2,791  
 
  
 
2,777  
 
  
 
35,572  
 
  
 
38,654  
 
1 
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
1 
Mortgage loans with no low credit risk are defined as being more than 90 days past due, in line with regulatory guidelines.
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Table of Contents
Notes to the consolidated financial statements
Note 2
   
   
 
 
Impairment of financial assets
InvestmentsThe following table reconciles the prior period’s closing impairment allowance measured in joint venturesaccordance with the IAS 39 incurred loss model to the new impairment allowance measured in accordance with the IFRS 9 expected loss model on January 1, 2022, and associatesJanuary 1, 2023.
Impairment / ECL reconciliation
  Loss allowance under
IAS 39 / Provision
under IAS 37		  Reclassifications   Remeasurements  
 ECL under
IFRS 9
 
Measurement category      
Loans and receivables (IAS 39) to Financial assets at amortized cost (IFRS 9)   (9)   2    (4)   (12) 
Available for sale financial instruments (IAS 39) to Financial assets at FVOCI (IFRS 9)   (374)   187    (89)   (276) 
Total on January 1, 2023
  
 
(383
) 
 
 
189
 
  
 
(93
) 
 
 
(287
) 
Impairment / ECL reconciliation
  
Loss allowance under
IAS 39 / Provision
under IAS 37
  Reclassifications   Remeasurements  
 ECL under
IFRS 9
 
Measurement category      
Loans and receivables (IAS 39) to Financial assets at amortized cost (IFRS 9)   (125)   6    (31)   (150) 
Available for sale financial instruments (IAS 39) to Financial assets at FVOCI (IFRS 9)   (376)   190    (33)   (219) 
Total on January 1, 2022
  
 
(501
) 
 
 
196
 
  
 
(63
) 
 
 
(369
) 
2.1.5 Future adoption of new IFRS accounting standards and amendments
All Aegon’s equity accounted investments continueThe following standards and amendments to applyexisting standards, published prior to January 1, 2024, were not early adopted by the Group, but will be applied in future years:
∎
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (issued on 15 August 2023)
∎
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements (Issued on 25 May 2023)
∎
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or
Non-current
(Issued on 23 January 2020)
∎
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or
Non-current
- Deferral of effective date (Issued on 15 July 2020)
∎
Amendments to IAS 1 Presentation of Financial Statements:
Non-current
liabilities with covenants (Issued on 31 October 2022)
∎
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (issued on 22 September 2022)
Amendments to IAS 39. Except Santander Vida Seguros y Reaseguros S.A. (‘Santander Spain Life’) and Aegon Industrial Fund Management Co.Ltd. (‘AIFMC’), Aegon does21 have an effective date of January 1, 2025, the others became effective on January 1, 2024. These future amendments are not hold any other individuallyexpected to have a material joint-venture or associate. As most of AIFMC financial assets are measured at fair value through profit or loss, there is no material difference betweenimpact on the financial statements of AIFMC under IFRS 9 and IAS 39. Refer to note 25 Investments in joint ventures and associates for more detailed information on these joint ventures. As the remaining joint ventures and associates are not material on a consolidated level, the additional information required by IFRS 4 for electing the temporary exemption is not disclosed for these entities. The additional information for Santander Spain Life is presented below:Aegon.
       
2022
1)
  2021 
Financial assets at fair value
       Fair value at the
end of the
reporting period		   Change in fair
value during the
reporting period		  Fair value at the
end of the
reporting period		   Change in fair
value during the
reporting period		 
Debt securities
   SPPI            178    -   178    8 
      
    Other            -    -   -    - 
      
Money Markets and other short-term investments
   SPPI            -    -   -    - 
      
    Other    12    -   10    - 
      
Other financial assets
   SPPI            -    -   -    - 
      
    Other    836    (33)   -    - 
      
At December 31
       
 
1,026
 
  
 
(33
) 
 
 
188
 
  
 
8
 
1 
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
   
               
   
               
   
               
   
               
   
               
   
               
   
               
   
               
   
               
 
SPPI compliant financial assets at carrying value
  AAA   AA   A   BBB   BB   B   CCC or
lower		   Not
Rated		   Total 
2022
1)
                                             
Debt securities – Carried at fair value
   6    13    123    35    -    -    -    -    178 
          
At December 31
  
 
6
 
  
 
13
 
  
 
123
 
  
 
35
 
  
 
-
 
  
 
-
 
  
 
-
 
  
 
-
 
  
 
178
 
2021
                                             
Debt securities – Carried at fair value
   8    13    120    37    -    -    -    -    178 
          
At December 31
  
 
8
 
  
 
13
 
  
 
120
 
  
 
37
 
  
 
-
 
  
 
-
 
  
 
-
 
  
 
-
 
  
 
178
 
1 
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
Subsidiaries, joint ventures and associates applying IFRS 9 in their statutory accounts
Information on the application of IFRS 9 by principal subsidiaries and joint ventures that for statutory purposes cannot elect to defer the effective date of IFRS 9 can be found in the publicly available statutory annual reports on www.aegon.nl and/or the Chamber of Commerce. This information is not part of the audited consolidated financial statements of Aegon N.V. The related entities are:
◆Aegon Bank N.V.
◆Aegon Hypotheken B.V.
◆Aegon Asset Management Holding B.V.
◆Amvest Vastgoed B.V.
◆Amvest Development Fund B.V.
◆Amvest Living & Care Fund
◆Amvest Residential Core Fund
2.2 Basis of consolidation
Subsidiaries
The consolidated financial statements include the financial statementsinformation of Aegon N.V.Ltd. and its subsidiaries. Subsidiaries (including consolidated structured entities) are entities over which Aegon has control. Aegon controls an entity when Aegon is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The assessment of control is based on the substance of the relationship between the Group and the entity and, among other things, considers existing and potential voting rights that are substantive. For a right to be substantive, the holder must have the practical ability to exercise that right.
The subsidiary’s assets, liabilities and contingent liabilities are measured at fair value on the acquisition date and are subsequently accounted for in accordance with the Group’s accounting policies, which is consistent with IFRS. Intra-group
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Financial information
Non-financial information
transactions, including Aegon N.V.Ltd. shares held by subsidiaries, which are recognized as treasury shares in equity, are eliminated. Intra-group losses may indicate an impairment that requires recognition in the consolidated financial statements.
Non-controlling
interests are initially stated at their share in the fair value of the net assets on the acquisition date and subsequently adjusted for the
non-controlling
share in changes in the subsidiary’s equity.
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The excess of the consideration paid to acquire the interest and the fair value of any interest already owned over the Group’s share in the net fair value of assets, liabilities and contingent liabilities acquired is recognized as goodwill. Negative goodwill is recognized directly in the income statement. If the fair value of the assets, liabilities and contingent liabilities acquired in the business combination has been determined provisionally, adjustments to these values resulting from the emergence of new evidence within 12 months after the acquisition date are made against goodwill. Aegon recognized contingent considerations either as provision or as financial liability depending on the characteristics. Any contingent consideration payable is recognized at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognized in the income statement.
The identifiable assets, liabilities and contingent liabilities are stated at fair value when control is obtained.
Subsidiaries are deconsolidated when control ceases to exist. Any difference between the net proceeds plus the fair value of any retained interest and the carrying amount of the subsidiary including
non-controlling
interests is recognized in the income statement.
Transactions with
non-controlling
interests
Transactions with
non-controlling
interests are accounted for as transactions with owners. Therefore, disposals to
non-controlling
interests and acquisitions from
non-controlling
interests not resulting in losing or gaining control of the subsidiary are recorded in equity. Any difference between consideration paid or received and the proportionate share in net assets is accounted for in equity attributable to shareholders of Aegon N.V.
Ltd.
Investment funds
Investment funds managed by the Group in which the Group holds an interest are consolidated in the financial statements if the Group has power over that investment fund and it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. In assessing control, all interests held by the Group in the fund are considered, regardless of whether the financial risk related to the investment is borne by the Group or by the policyholders (unless a direct link between the policyholder and the fund can be assumed).
In determining whether Aegon has power over an investment fund all facts and circumstances are considered, including the following:
 
◆
∎
 Control structure of the asset manager (i.e. whether an Aegon subsidiary);
◆
∎
 The investment constraints posed by investment mandate;
◆
∎
 Legal rights held by the policyholder to the separate assets in the investment vehicle (e.g. policyholders could have the voting rights related to these investments);
◆
∎
 The governance structure, such as an independent boardBoard of directors,Directors, representing the policyholders, which has substantive rights (e.g. to elect or remove the asset manager); and
◆
∎
 Rights held by other parties (e.g. voting rights of policyholders that are substantive or not).
Exposure or rights to variability of returns can be the result of, for example:
◆
∎
 General account investment of Aegon;
◆
∎
 Aegon’s investments held for policyholder;
◆
∎
 Guarantees provided by Aegon on return of policyholders in specific investment vehicles;
◆
∎
 Fees dependent on fund value (including, but not limited to, asset management fees); and
◆
∎
 Fees dependent on performance of the fund (including, but not limited to, performance fees).
Investment funds where Aegon acts as an agent are not consolidated due to lack of control of the funds. In particular, for some separate accounts, the independent boardBoard of directorsDirectors has substantive rights and therefore Aegon does not have power over these separate accounts but acts as an agent.
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Notes to the consolidated financial statements
Note 2
For limited partnerships, the assessment takes into account Aegon’s legal position (i.e. limited partner or general partner) and any substantive removal rights held by other parties. Professional judgment is applied concerning the substantiveness of the removal rights and the magnitude of the exposure to variable returns, leading to the conclusion that Aegon controls some, but not all, of the limited partnerships in which it participates.
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Notes to the consolidated financial statements
Note 2
Upon consolidation of an investment fund, a liability is recognized to the extent that the Group is legally obliged to buy back participations held by third parties. The liability is presented in the consolidated financial statements as investment contracts for account of policyholders. Where no repurchase obligation exists, the participations held by third parties are presented as
non-controlling
interests in equity. The assets allocated to participations held by third parties or by the Group on behalf of policyholders are presented in the consolidated financial statements as investments for account of policyholders.
Equity instruments issued by the Group that are held by investment funds are eliminated on consolidation. However, the elimination is reflected in equity and not in the measurement of the related financial liabilities towardstoward policyholders or other third parties.
Structured entities
A structured entity is defined in IFRS 12 as “An entity that has been designed so that voting rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements.” In these instances the tests and indicators to assess control provided by IFRS 10 have more focus on the purpose and design of the investee (with relation to the relevant activities that most significantly affect the structured entity) and the exposure to variable returns, which for structured entities lies in interests through e.g.for example derivatives, and will not be focused on entities that are controlled by voting rights.
Structured entities that are consolidated include certain mortgage backed securitization deals, where Aegon was involved in the design of the structured entities and also has the ability to use its power to affect the amount of the investee’s returns. Other factors that contribute to the conclusion that consolidation of these entities is required includes consideration of whether Aegon fully services the investees and can therefore influence the defaults of the mortgage portfolios and the fact that in these cases the majority of risks are maintained by Aegon.
Structured entities that are not consolidated include general account investments in
non-affiliated
structured entities that are used for investment purposes.
Non-current
assets held for sale and disposal groups
Disposal groups are classified as held for sale if they are available for immediate sale in their present condition, subject only to the customary sales terms of such assets and disposal groups and their sale is considered highly probable. Management must be committed to the sale, which is expected to occur within one year from the date of classification as held for sale.
Upon classification as held for sale, the carrying amount of the disposal group (or group of assets) is compared to their fair value less cost to sell. If the fair value less cost to sell is lower than the carrying value, this expected loss is recognized through a reduction of the carrying value of any goodwill related to the disposal group or the carrying value of certain other
non-current,
non-financial
assets to the extent that the carrying value of those assets exceeds their fair value. Any excess of the expected loss over the reduction of the carrying amount of these relevant assets is not recognized upon classification as held for sale but is recognized as part of the result on disposal if and when a divestment transaction occurs.
Classification into or out of held for sale does not result in restating comparative amounts in the statement of financial position.
Discontinued operations
To qualify as a discontinued operation, Aegon requires a disposal group to be presented as a separate line of business or geographical segment. When Aegon classifies its component comprising of a cash generating unit or multiple cash generating units as a disposal group, it presents the performance of this component as discontinued operation in the statement of comprehensive income and makes separate disclosures with the analysis of the net result from discontinued operations, and cash-flow information. Aegon
re-presents
comparative information in the statement of comprehensive income and disclosures to reflect the prior years’ net result attributable to the operations discontinued until the end of the latest period.
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2.3 Foreign exchange translation
a. Translation of foreign currency transactions
The Group’s consolidated financial statements are presented in euros. Items included in the financial statements of individual group companies are recorded in their respective functional currency which is the currency of the primary economic environment in which each entity operates. Transactions in foreign currencies are initially recorded at the exchange rate prevailing at the date of the transaction.
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At the reporting date, monetary assets and monetary liabilities in foreign currencies are translated to the functional currency at the closing rate of exchange prevailing on that date, except for own equity instruments in foreign currencies which are translated using historical exchange rates.
Non-monetary
items carried at cost are translated using the exchange rate at the date of the transaction, while assets carried at fair value are translated at the exchange rate when the fair value was determined.
Exchange differences on monetary items are recognized in the income statement when they arise, except when they are deferred in other comprehensive income as a result of a qualifying cash flow or net investment hedge. Exchange differences on
non-monetary
items carried at fair value are recognized in other comprehensive income or the income statement, consistently with other gains and losses on these items.
Insurance contracts and investment contracts with discretionary participating features are monetary items. Exchange differences on changes in the carrying amount of groups of insurance contracts are recognized in the income statement, unless they relate to changes in the carrying amount of the groups of insurance contracts included in other comprehensive income, in which case that are included in other comprehensive income.
b. Translation of foreign currency operations
On consolidation, the financial statements of group entities with a foreign functional currency are translated to euro, the currency in which the consolidated financial statements are presented. Assets and liabilities are translated 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. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are translated at the closing rates on the reporting date.
The resulting exchange differences are recognized in the ‘foreign“foreign currency translation reserve’reserve”, which is part of shareholders’ equity. On disposal of a foreign entity the related cumulative exchange differences included in the reserve are recognized in the income statement.
2.4 Segment reporting
Reporting segments and segment measures are explained and disclosed in note 5 Segment information.
2.5 Offsetting of assets and liabilities
Financial assets and liabilities are offset in the statement of financial position when the Group has a legally enforceable right to offset and has the intention to settle the asset and liability on a net basis or simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency, or bankruptcy of the Company or the counterpart.
2.6 Intangible assets
Insurance contracts
a. Goodwilla) Scope
GoodwillInsurance contracts are contracts under which the Group accepts a significant risk – other than a financial risk – from a policyholder by agreeing to compensate the beneficiary on the occurrence of an uncertain future event by which he or she will be adversely affected. Significant insurance risk is recognized as an intangible asset for interestsdetermined on a present-value basis, where at least one scenario with commercial substance can be identified in subsidiaries and is measured aswhich the positive difference betweenGroup has to pay significant additional benefits to the acquisition cost andpolicyholder or his or her beneficiaries.
Contracts that do not meet the Group’s interest in the net fair value of the entity’s identifiable assets, liabilities and contingent liabilities. Subsequently, goodwill is carried at cost less accumulated impairment charges. It is derecognized when the interest in the subsidiary is disposed.
b. Value of business acquired
When a portfoliodefinition of insurance contracts is acquired, whether directly from another insurance companyare accounted for as financial instruments or as partservice contracts, depending on the nature of the agreement.
Insurance contracts include products that provide policyholders with the option to take out insurance coverage at predetermined prices, provided this option is shown to have commercial substance.
b) Combining a business combination,set or series of insurance contracts
Aegon accounts for a set or series of insurance contracts together as if they were issued as one contract, where this reflects the difference betweensubstance of the fair valuetransaction. This may, for example, be the case if the insurance contracts are negotiated as a package with a single commercial objective and the carrying amountmeasurement of the insurance liabilitiescontracts is recognized as value of business acquired (VOBA). The Group also recognizes VOBA when it acquires a portfolio of investment contracts with discretionary participation features.highly interrelated.
VOBA is amortized over the useful life of the acquired contracts, based on either the expected future premiums, revenues or the expected gross profit margins. The amortization period and pattern are reviewed at each reporting date; any change in estimates is recorded in the income statement. For all products, VOBA, in conjunction with deferred policy acquisition costs (DPAC) where appropriate, is assessed for recoverability using aggregation levels on a geographical jurisdiction basis or at the level of portfolio of contracts that are subject to broadly similar risks and managed together as a single portfolio.
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Notes to the consolidated financial statements
Note 2
   
  
c) Separating components from insurance contracts
At inception, the following components are separated from an insurance contract and accounted for as if they were standalone financial instruments:
∎
 Embedded derivatives whose economic characteristics and risks are not closely related to those of the host contract, and whose terms would not meet the definition of an insurance contract as a standalone instrument; and
∎
Investment components (i.e. amounts that an insurance contract requires Aegon to repay to a policyholder, even if the insured event does not occur) that are distinct. In other words, investment components that:
∎
Do not meet the definition of an investment contract with discretionary participation features;
∎
Are not highly interrelated with the insurance component; and
∎
For which contracts with equivalent terms are sold, or could be sold, separately in the same market or jurisdiction.
Promises to transfer to a policyholder distinct goods or services other than insurance contract services, are also separated from the host contract and accounted for as a service contract.
Aegon has not identified any components of the insurance contracts recognized at the balance sheet date that require separation when publishing these financial statements.
d) Level of aggregation
Insurance contracts are grouped together for measurement and income recognition purposes. The groups are established at initial recognition and are not reassessed subsequently.
Portfolios
Aegon classifies contracts as belonging to one portfolio, when they are subject to similar risks and are managed together.
When identifying similar risks, Aegon considers all insurance and financial risks that are transferred from the policyholder to the Group. This does not include lapse risk or expense risk, as these are not risks that a policyholder transfers to an insurer. Generally, contracts in the same product line are included within the same portfolio if they are managed together, and contracts in different product lines with dissimilar risks are included in different portfolios.
To be grouped together, contracts must be managed together from the perspective of either the management of Aegon Ltd. or the management of its operating segments. Information that is used to assess how risks are managed includes Aegon’s internal management reporting, as well as asset-liability management and asset allocation strategies.
Groups
Contracts within a portfolio are segregated into:
∎
Groups of insurance contracts that are onerous at initial recognition.
∎
Groups of insurance contracts that are not onerous at initial recognition, subdivided into:
∎
Groups of insurance contracts that have no significant possibility of becoming onerous subsequently; and
∎
A group of remaining contracts in the portfolio, if any.
Aegon uses two approaches to identify groups of contracts. The first approach consists of a
bottom-up
assessment, in which contracts are grouped together on a
contract-by-contract
basis by considering the expected profitability of each contract. Alternatively, the grouping assessment can be completed at a higher level of aggregation if, based on reasonable and supportable information, Aegon concludes that a set of contracts will, by definition, all be in the same group.
Both approaches involve qualitative factors, quantitative factors, or a combination of both, for example product pricing, assumption setting reviews, key performance indicators (such as market-consistent value of the new business and expected loss ratios) and asset liability management and hedging strategies.
In assessing whether a profitable group of contracts could subsequently become onerous, Aegon considers the size of the estimated profit at inception and its sensitivity to changes in the underlying assumptions. Typically, Aegon would expect that any insurance contract could become lossmaking if the insured event occurs. Nonetheless, there may be indicators based on which Aegon concludes that a group of contracts has no significant possibility of subsequently becoming onerous. For example, there may be pricing information demonstrating that products are sold at very favorable premiums due to specific market conditions (e.g. niche markets) or a product may contain embedded guarantees that are strongly out of the money.
 
 
The portion determined not to be recoverable is charged to the income statement. VOBA is considered in the liability adequacy test for each reporting period, for more details refer to 2.19.f Liability adequacy testing.
When unrealized gains or losses arise on available-for-sale assets backing the insurance liabilities, VOBA is adjusted to equal the effect that the realization of the gains or losses (through a sale or impairment) would have had on VOBA. The adjustment is recognized in other comprehensive income and accumulated in the related revaluation reserve in shareholders’ equity. VOBA is derecognized when the related contracts are settled or disposed.
c. Future servicing rights
On the acquisition of a portfolio of investment contracts without discretionary participation features under which Aegon will render investment management services, the present value of future servicing rights is recognized as an intangible asset. Future servicing rights can also be recognized on the sale of a loan portfolio or the acquisition of insurance agency activities.
The present value of the future servicing rights is amortized over the servicing period and is subject to impairment testing. It is derecognized when the related contracts are settled or disposed.
Where applicable, Aegon recognizes other intangibles on the acquisition of a business combination such as those related to customer relationships. This can include customer contracts, distribution agreements and client portfolios. For these intangibles the present value of future cash flows are recognized and amortized in the period when future economic benefits arise from these intangibles. These intangible assets are also presented under future servicing rights.
d. Software and other intangible assets
Software and other intangible assets are recognized to the extent that the assets can be identified, are controlled by the Group, are expected to provide future economic benefits and can be measured reliably. The Group does not recognize internally generated intangible assets arising from research or internally generated goodwill, brands, customer lists and similar items.
Software and other intangible assets are carried at cost less accumulated depreciation and impairment losses. Depreciation of the asset is over its useful life as the future economic benefits emerge and is recognized in the income statement as an expense. The depreciation period and pattern are reviewed at each reporting date, with any changes recognized in the income statement.
An intangible asset is derecognized when it is disposed of or when no future economic benefits are expected from its use or disposal.
2.7 Investments
General account investments comprise financial assets, excluding derivatives, as well as investments in real estate.
a. Financial assets, excluding derivatives
Financial assets are recognized at trade date (except for Private placements that are recognized at settlement date) when the Group becomes a party to the contractual provisions of the instruments. All financial assets are classified for accounting purposes depending on the characteristics of the instruments and the purpose for which they were purchased.
Classification
The following financial assets are measured at fair value through profit or loss: financial assets held for trading, financial assets managed on a fair value basis in accordance with the Group’s investment strategy and financial assets containing an embedded derivative that is not closely related and that cannot be reliably bifurcated. In addition, in certain instances the Group designates financial assets to this category when by doing so a potential accounting mismatch in the financial statements is eliminated or significantly reduced.
Financial assets with fixed or determinable payments, that are not quoted in an active market and that the Group does not intend to sell in the near future are classified as loans. Those for which the holder may not recover substantially all of its initial investment, other than because of credit deterioration, are accounted for as available-for-sale.
All remaining non-derivative financial assets are classified as available-for-sale.
   
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If contracts within a portfolio would fall into different groups only because law or regulation specifically constrains Aegon’s practical ability to set a different price or level of benefits for policyholders with different characteristics, the contracts are included in the same group.
Cohorts
Aegon follows a quarterly reporting frequency on a
locked-in
period-to-date
basis, as opposed to a
year-to-date
basis, and therefore groups contracts into quarterly cohorts. New contracts issued in the same quarter and belonging to the same group will be measured together. After the quarter end, the cohort is closed, and the cohort will be treated as “in force” in the subsequent quarterly reporting periods.
e) Recognition
A group of insurance contracts is recognized from the earliest of the following dates: the beginning of the coverage period, the date when the first payment from a policyholder in the group of insurance contracts becomes due, and the date when the group of insurance contracts becomes onerous.
f) Insurance acquisition cashflows
Insurance acquisition cash flows arise from selling, underwriting and starting a group of insurance contracts. They comprise not only the incremental costs of originating insurance contracts but also other (in)direct costs and include cash flows relating to both successful and unsuccessful acquisition efforts.
Insurance acquisition cash flows must be directly attributable to a portfolio of contracts. At initial recognition, Aegon allocates them to groups of contracts as follows:
∎
 Insurance acquisition cash flows that can be directly attributable to a specific group of insurance contracts (e.g. acquisition commissions) are allocated to that group, as well as to groups that are expected to include the renewals of those contracts.
∎
 Insurance acquisition cash flows that are directly attributable to a portfolio of insurance contracts, other than those in described in the above bullet, are allocated to the groups of contracts in the portfolio on a systematic and rational basis.
g) Insurance contract types
For presentation and analysis purposes, Aegon distinguishes between life and
non-life
insurance contracts. Life insurance contracts comprise insurance contracts for which the primary insured risk is life contingent, as well as long term care insurance products in the Americas.
Non-life
insurance contracts include fire insurance, motor insurance, general liability insurance, and disability and sickness insurance.
For measurement and income recognition purposes, Aegon distinguishes between insurance contracts with and without direct participating features. Contracts are classified at the initial recognition date and not subsequently reassessed. Aegon’s
non-life
business consists entirely of insurance contracts without direct participating features, while Aegon’s life insurance business includes both types of insurance contracts.
While the initial measurement of both types of insurance contracts is the same, the subsequent accounting differs. The Variable Fee Approach is applied to life insurance contracts with direct participating features. Other life and
non-life
insurance contracts are accounted for under the General Measurement Model, unless Aegon has elected to apply the Premium Allocation Approach to groups of these contracts.
Insurance contracts with direct participating features
Insurance contracts with direct participating features are defined as life insurance contracts for which, at inception:
∎
 The contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;
∎
Aegon expects to pay to the policyholder an amount equal to a substantial share of the fair value returns on the underlying items, and
∎
Aegon expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in fair value of the underlying items.
Insurance contracts with direct participating features provide both insurance services and investment-related services. They are viewed as creating an obligation to pay policyholders an amount that is equal to the fair value of the underlying items, less a variable fee for future services. The variable fee reflects the unrealized gain or loss that Aegon expects to make on the contract. It comprises Aegon’s share in the fair value of the underlying items less the fulfillment cash flows that do not vary based on the returns on underlying items, such as expense cash flows and the cost of financial guarantees.
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Note 2
   
  
A pool of underlying items can comprise any items, for example a reference portfolio of assets, a pool of funds, the net assets of an Aegon group company or a specified subset of the net assets of the entity. In determining whether the pool has been clearly identified to the policyholder, Aegon considers all contractual terms and conditions as well as other policyholder communications. Aegon does not need to hold the identified pool of underlying items for a product to qualify as an insurance contract with direct participating features, nor does the existence of Aegon’s discretion to vary the amounts paid to the policyholder preclude qualification. However, the link between policyholder benefits and underlying items must be enforceable and Aegon must not have the ability to change the underlying items with retrospective effect.
Once the presence of a clearly identified pool of underlying items has been established, Aegon uses a methodology for product classification that builds on a
two-step
approach with an initial assessment based on product characteristics, followed by a quantitative assessment where the former is not conclusive.
∎
 The initial assessment based on product characteristics is performed using multiple qualitative indicators. For example, Aegon considers whether a contract includes substantial contractual profit-sharing rates and the degree to which these can subsequently be reset. It also considers the extent to which asset management fees and other charges are commensurate with the services provided and in line with market terms, and whether a product guarantees a minimum return on investment.
∎
 If the qualitative step is not conclusive on its own, the product undergoes quantitative analysis. Different calculation methods are used, depending on the product characteristics and the market conditions at the inception of the contract.
∎
 The policyholder’s share in the fair value returns is assessed by comparing the expected total return on the underlying items, net of the asset management fees, with the expected payments to the policyholder that are based on those underlying items. Variable fees and charges that cover multiple services are split into an insurance component and investment management component, with only the latter being deducted from total returns. As a critical judgment, the threshold for a substantial share of the fair value returns is in the range of 50% (or higher).
∎
The assessment of the variability in policyholder benefits often requires the use of probability-weighted models, factoring all scenarios where returns are impacted by the allocation of clearly identifiable assets, variable fees and guarantees.
The determination of one scenario where there is no variability does not automatically disqualify a product for the variable fee approach but is assessed together with the scenarios in which the guarantee is not
in-the-money
at the expected termination date of the contract.
Examples of insurance contracts with direct participating features include unit-linked contracts issued by Aegon UK, and variable annuities issued in the Americas.
Insurance contracts without direct participating features
A product is considered to provide an investment-return service if, and only if, the following apply:
∎
The contract contains a
non-distinct
investment component or the policyholder has a right to withdraw an amount under the policy;
∎
Aegon expects that this amount will include an investment return; and
∎
Aegon expects to perform investment activity to generate that investment return.
Insurance contracts without direct participating features include all
non-life
insurance products issued by Aegon, as well as term insurance, fixed annuities, long term care insurance contracts, and
US-style
universal life products issued in the Americas and Asia.
h) Initial measurement
On initial recognition, Aegon measures a group of contracts at a risk-adjusted, current and probability-weighted estimate of the present value of the future cash flows (“fulfillment cash flows”) plus or minus the unearned profit on the group of contracts (“contractual service margin”).
Fulfilment cash flows
The fulfillment cash flows comprise:
∎
Estimates of future cash flows that are within the contract boundary;
∎
An adjustment to reflect time value of money and the financial risks related to future cash flows, to the extent that the financial risks are not included in the estimates of future cash flows and
∎
A risk adjustment for
non-financial
risk.
The fulfillment cash flows reflect Aegon’s view of the current condition at the reporting date, consistent with observable market prices and considering all contractual terms and conditions with commercial substance that are within the contract boundary.
 
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Future changes in legislation that would change or discharge a present obligation or create new obligations under existing contracts, are only considered when the legislation is substantively enacted.
The methods used to calculate the fulfillment cash flows and the process to estimate the inputs to those methods are discussed in note 29.3.
Contract boundary
Cash flows are within the boundary of an insurance contract if they arise from rights and obligations that exist during the period in which Aegon can either compel the policyholder to pay premiums or has a substantive obligation to provide insurance contract services to the policyholder.
A substantive obligation to provide insurance contract services ends when:
∎
Aegon has the practical ability to reassess the risks of a particular policyholder, and as a result, can set a price or level of benefits that fully reflects those risks; or
∎
Both of the following apply:
∎
Aegon has the practical ability to reassess the risks of the portfolio that contains the contract and can set a price or level of benefits that fully reflects the risks of that portfolio; and
∎
The pricing of the premiums up to the date when the risks are reassessed, does not take into account any risks that relate to periods after the reassessment date.
In determining whether a contract can be repriced, all insurance and financial risks that are transferred from the policyholder to Aegon are considered. Risks that result from the contract itself, such as expense risk or lapse risk, are ignored. If Aegon provides investment-related services to insurance policyholders, the ability to reprice the fees or charges for these services to prevailing rates is also considered in setting the contract boundary.
In some jurisdictions, regulatory requirements limit Aegon’s ability to fully reprice contracts on renewal and are therefore relevant when setting the contract boundary. Regulatory price caps that apply equally to existing and new policyholders do not extend the contract boundary, because they do not result in a valuable policyholder renewal option.
Some contracts that have a long contract boundary based on long-term guaranteed benefits, also include policyholder options that can be repriced. For example, the contract may allow the policyholder to take out additional insurance coverage at current market rates at the time of uptake. While the policyholder option can be repriced, Aegon cannot reprice or reassess the benefits of the entire policy. Therefore, the policyholder option is considered within the long contract boundary of the host contract, provided it can reasonably be expected to be utilized.
Contract boundaries are based on current facts and circumstances and may therefore change over time.
Contractual service margin
The contractual service margin represents the unearned profit Aegon will recognize as it provides insurance contract services in the future. On initial recognition of a group of
non-onerous
insurance contracts, it is measured at an amount that ensures that no income arises from:
∎
The initial recognition of the fulfillment cash flows;
∎
Any cash flows arising from the contracts in the group at that date; and
∎
The derecognition of any asset for insurance acquisition cash flows and any other asset or liability previously recognized for cash flows related to the group of contracts.
For onerous insurance contracts, the calculation above results in a loss that is recognized in the income statement immediately and for which a corresponding loss component is established as part of the insurance liabilities. More information on the loss component is provided in section j) of this note.
i) Subsequent measurement
The carrying amount of a group of insurance contracts at the end of each reporting period is the sum of the liability for remaining coverage and the liability for incurred claims. The liability for remaining coverage comprises the fulfillment cash flows related to future service allocated to that group and the contractual service margin of the group. The liability for incurred claims comprises the fulfillment cash flows related to past service allocated to the group. Cash flows that remain subject to insurance risk after the occurrence of the insured event are included in the liability for remaining coverage.
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Measurement
Notes to the consolidated financial statements
Note 2
The fulfillment cash flows are remeasured at each reporting date to reflect current estimates. The measurement of the contractual service margin differs for contracts with and without direct participating features and is described below.
Some changes in the contractual service margin are offset by changes in the fulfillment cash flows, resulting in no change in the total carrying amount of the liability for remaining coverage. To the extent that changes in the contractual service margin and changes in the fulfillment cash flows do not offset, income or expenses are recognized.
Insurance contracts without direct participating features (general measurement model)
For a group of insurance contracts without direct participating features, the carrying amount of the contractual service margin at the end of each reporting period is the carrying amount at the start of the period, adjusted for:
∎
The effect of any new contracts added to the group;
∎
Interest accreted on the carrying amount of the contractual service margin during the period;
∎
Changes in the fulfillment cash flows that relate to future services, except to the extent that:
∎
Such increases in the fulfillment cash flows exceed the carrying amount of the contractual service margin, giving rise to a loss, or
∎
Such decreases in the fulfillment cash flows are allocated to the loss component.
∎
The effect of any currency exchange differences on the contractual service margin; and
∎
The amount recognized as insurance revenue because of the insurance contract services provided in the period.
Interest accretion
Aegon accretes interest to the contractual service margin based on either the
one-year
forward rate or
one-year
spot-rate, derived from the discount rate curve used to estimate the present value of future cash flows that do not vary based on the returns on any underlying items on initial recognition of the group of contracts.
The amount of interest is calculated on a time-weighted basis, allowing for the timing of the movements in the contractual service margin over the reporting period.
Changes in fulfillment cash flows relating to future services
Changes in the fulfillment cash flows that relate to future services comprise:
∎
Experience adjustments arising from premiums received in the period that relate to future services and related cash flows, measured at the discount rates determined on initial recognition;
∎
Changes in estimates of the present value of future cash flows in the liability for remaining coverage (other than those that relate to the effects of the time value of the money and changes in financial risks), measured at the discount rates determined on initial recognition;
∎
Differences between any
non-distinct
investment component expected to become payable in the period and the actual
non-distinct
investment component that becomes payable in the period;
∎
Differences between any loan to a policyholder expected to become repayable in the period and the actual loan to a policyholder that becomes repayable in the period; and
∎
Changes in the risk adjustment for
non-financial
risk that relate to future services.
The change in fulfillment cash flows that relates to future service is calculated using discount rates derived from the discount rate curve used to determine the contractual service margin on initial recognition of the group of contracts.
Changes in discretionary cash flows are regarded as relating to future services, and accordingly, adjust the contractual service margin.
Changes in the contractual service margin recognized as insurance revenue
Part of the contractual service margin of a group of contracts is recognized as insurance revenue in each period to reflect the insurance contract services provided under the group of insurance contracts in that period. The amount of revenue is determined by allocating the contractual service margin remaining at the end of the reporting period equally to each coverage unit provided in the reporting period and expected to be provided in the future.
More information on the coverage units is provided in note 29.3.2.1.
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The numbers of coverage units in a group of contracts is determined by considering, for each contract, the quantity of the benefits provided and its expected coverage period. If a contract provides coverage for more than one insured event or if it provides additional investment-return services, the coverage unit reflects all material benefits.
The coverage period is defined as the period during which Aegon provides insurance coverage and/or investment services. The expected coverage period takes account of the expected survivorship of contracts and so considers expected lapses and deaths.
Aegon has defined coverage units that differ per product type to best reflect a product’s characteristics and the nature of the services provided to the policyholder. Insurance services are typically depicted by a metric that is based on the maximum amount that a policyholder would receive if the insured event were to occur, such as the total benefits amount or the death benefit amount. For investment-type services, coverage units are based on the total return that Aegon expects to provide the policyholder over the lifetime of the contract.
Aegon applies the following formula to determine the amount of contractual service margin to release in each reporting period:
Proportion of CSM released as insurance revenue =
 A 
[A + B]
Where:
A = coverage units provided in the period
B = present value of coverage units to be provided in the future
The coverage units provided in the period are determined as an average of the coverage units at the beginning and end of the quarterly reporting period. Future coverage units are discounted using rates
locked-in
at the initial recognition of the group of contracts.
Insurance contracts with direct participating features (variable fee approach)
For the measurement of direct participating contracts, Aegon adjusts the fulfillment cash flows for changes in the obligation to pay policyholders an amount equal to the fair value of the underlying items. These changes do not relate to future services and are recognized in the profit or loss.
Aegon adjusts the carrying amount of the contractual service margin for each group of contracts to equal the carrying amount at the start of the reporting period adjusted for:
∎
The effect of any new contracts added to the group of contracts;
∎
The change in the amount of Aegon’s share of the fair value of the underlying items and changes in fulfillment cash flows relating to future services, except to the extent that:
∎
For groups of contracts, there is a policy of excluding from the contractual service margin changes in the impact of financial risk on its share of the underlying items (“risk mitigation”);
∎
The decrease in the amount of the group of contracts share of the fair value of the underlying items, or an increase in the fulfillment cash flows relating to future services, exceeds the carrying amount of the contractual service margin, giving rise to a loss in the income statement; or
∎
The increase in the amount of the group of contracts share of the fair value of the underlying items, or a decrease in the fulfillment cash flows relating to future services, is allocated to a loss component, reversing losses previously recognized in the income statement;
∎
The effect of any currency exchange differences on the contractual service margin; and
∎
The amount recognized as insurance revenue because of the insurance contract services provided in the period.
Changes in fulfillment cash flows relating to future services
Changes in Aegon’s share in the fair value of the underlying items, by definition, relates to future service and therefore adjusted the contractual service margin.
In addition to the fulfillment cash flows movements that have been defined in the general measurement model as relating to future services, the variable fee approach requires changes in fulfillment cash flows to be booked to the contractual service margin if they are the result of a change in the effect of the time value of money or financial risks not arising from the underlying items. Examples include the interest accrued to projected fixed benefits and expense cash flows, and the change in the value of financial guarantees.
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Notes to the consolidated financial statements
Note 2
Changes in the contractual service margin recognized as insurance revenue
The policy on the recognition of revenue for insurance contracts with direct participating features is the same as under the general measurement model, except that references to “investment-return services” should be read as “investment-related services”.
Risk mitigation
For certain groups of contracts, Aegon has a documented risk management objective and strategy for mitigating financial risk arising from insurance contracts with participating features, using derivatives, reinsurance contracts held and other FVPL financial instruments. Risk mitigation involves the hedging of one or a combination of financial risks (e.g. interest rate, financial instrument price, currency exchange rate, index of prices or rates, inflation rate) and can cover multiple groups of contracts in different portfolios.
For these contracts, Aegon does not recognize the entire change in the amount of Aegon’s share of the fair value of the underlying items and changes in fulfillment cash flows relating to future services in the contractual service margin. Instead, the change in the hedged position is recognized as part of insurance finance expense in the income statement or in other comprehensive income.
Prior to the reporting period, Aegon demonstrates that an economic offset exists between the insurance contracts and the risk mitigating items (i.e. the values of both are generally expected to move in opposite directions because they respond in a similar way to the changes in the risk being mitigated), and demonstrates this is not dominated by credit risk. If these conditions cease to be met, risk mitigation accounting is discontinued. In this instance, any amounts previously recognized as insurance finance expense in the income statement or in other comprehensive income, are not adjusted.
j) Loss component
A group of insurance contracts can be onerous at inception, namely when the fulfillment cash flows allocated to the contract, any previously recognized insurance acquisition cash flows and any cash flows arising from the contract at the date of initial recognition in total are a net outflow. It can also become onerous at subsequent measurement due to unfavorable changes relating to future service in the fulfillment cash flows arising from changes in estimates of future cash flows and the risk adjustment for
non-financial
risk allocated to the contractual service margin, or for contracts with direct participating features, due to a decrease in the amount of Aegon’s share of fair value of the underlying items.
When a group of insurance contracts becomes onerous, a loss component of the liability for remaining coverage for that group is established. Except for changes in
non-financial
assumptions that are fully allocated to a loss component, all subsequent changes in the fulfillment cash flows of the liability for remaining coverage are allocated on a systematic basis between the loss component and the remaining liability for remaining coverage. No revenue is recognized for services allocated to the loss component, as Aegon has never received compensation from the policyholder for these.
Additional unfavorable changes in the fulfillment cash flows that exceed the contractual service margin are recognized in the income statement immediately. Favorable changes in the fulfillment cash flows are recognized in the income statement to the extent that they reverse the loss component, after which the contractual service margin is
re-established.
k) Premium allocation approach
Aegon applies the premium allocation approach to certain groups of predominantly
non-life
insurance contracts. These groups of contracts mostly include products with a coverage period of one year or less. The premium allocation approach is only applied to contracts with a longer coverage period if the Group expects that the resulting measurement would not differ materially from the result of applying the general measurement model.
Level of aggregation
Contracts to which the premium allocation approach is applied are grouped together using the same principles as described in paragraph (c) above, with the following modifications:
∎
Contracts to the premium allocation approach is applied, are assumed not to be onerous at inception, unless facts and circumstances indicate otherwise.
∎
Contracts to which the premium allocation approach are grouped together in annual cohorts, which is more aligned with the nature of the products.
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Acquisition costs
Insurance acquisition cashflows that relate to some (but not all) groups of contracts to which Aegon applies the premium allocation approach are expensed when incurred, provided the coverage period does not exceed 12 months.
Initial recognition and measurement
On initial recognition, Aegon measures the carrying amount of the liability for remaining coverage as premiums received at initial recognition, if any, plus or minus any amounts arising from the derecognition of other assets or liabilities previously recognized for cash flows related to the group of contracts.
Subsequent measurement, including loss component
The carrying amount of a group of insurance contracts at the end of each reporting period is the sum of the liability for remaining coverage and the liability for incurred claims.
The liability for remaining coverage is increased by any premiums received in the period and decreased by the amount recognized as insurance revenue for insurance contract service provided and any
non-distinct
investment component paid or transferred to the liability for incurred claims. Given the time between providing each part of the coverage and the related premium, Aegon has chosen not to adjust the liability for remaining coverage to reflect the time-value of money and the effect of financial risk.
If at any time during the coverage period facts and circumstances indicate that a group of insurance contracts is onerous, Aegon calculates the difference between the carrying amount of the liability for remaining coverage and the fulfillment cash flow that relate to the remaining coverage of the group. In case this difference is negative, Aegon recognizes a loss in the income statement and increases the liability for remaining coverage.
Aegon recognizes the liability for incurred claims of a group of insurance contracts at the amount of the fulfillment cash flows relating to incurred claims. The fulfillment cash flows are initiallydiscounted at current rates unless the cash flows are expected to be paid in one year or less from the date the claims are incurred.
l) Derecognition and contract modification
Aegon derecognizes a contract when it is extinguished (i.e. when the specified obligations in the contract expire or are discharged or cancelled).
On the derecognition of a contract from within a group of contracts:
∎
The fulfillment cash flows allocated to the group are adjusted to eliminate those that relate to the rights and obligations derecognized;
∎
The contractual service margin of the group is adjusted for the change in the fulfillment cash flows, except where such changes are allocated to a loss component; and
∎
The number of coverage units for the expected remaining insurance contract services is adjusted to reflect the coverage units derecognized from the group.
If a contract is derecognized because it is transferred to a third party, then the contractual service margin is also adjusted for the premium charged by the third party, unless the group is onerous.
A contract is also derecognized if its terms are modified in a such way that would have changed the accounting for the contract significantly had the new terms always existed, in which case a new contract based on the modified terms is recognized. In this instance, the contractual service margin of the group is adjusted for the premium that would have been charged had the Group entered into a contract with the new contract’s terms at the date of modification, less any additional premium charged for the modification. The new contract recognized is measured assuming that, at the end of modification, the issuer received the premium that it would have charged less any additional premium charged for the modification.
If a contract modification does not result in derecognition, Aegon treats the changes in cash flows caused by the modification as changes in estimates of fulfillment cash flows.
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Notes to the consolidated financial statements
Note 2
m) Insurance contracts acquired in a portfolio transfer or business combination
Insurance contracts acquired in a business combination or portfolio transfer after the transition to IFRS 17 (January 1, 2022) are accounted for in accordance with Aegon’s accounting policy on insurance contracts, with the exception that both the inception date and the initial recognition date should be taken to refer to the acquisition date of the contracts.
When determining the initial measurement of a transferred portfolio, the consideration paid or received for the insurance contracts is taken as a proxy for the premiums paid. For insurance contracts acquired in a business combination, the fair value of the contracts is used as a proxy instead.
If a group of contracts acquired in a portfolio transfer is onerous, the loss is recognized in profit or loss at the acquisition date. If an onerous group of contracts is acquired in a business combination, the loss first adjusts the amount of goodwill and is recognized in profit or loss to the extent that the loss exceeds the amount of goodwill.
At the acquisition date, Aegon recognizes a separate asset for insurance acquisition cash flows at fair value for the rights to obtain:
∎
future renewals of contracts recognized at the acquisition date; and
∎
other future insurance contracts without paying again insurance acquisition cash flows that the acquiree has already paid.
2.7 Reinsurance contracts
Reinsurance contracts held are contracts entered into by Aegon in order to receive compensation for claims arising from one or more insurance contracts issued by the Group. Reinsurance contracts that do not transfer insurance risk are accounted for as financial instruments or as service contracts, depending on the nature of the agreement.
Aegon is not relieved of its legal liabilities when entering into reinsurance transactions. Therefore, the liabilities relating to the underlying insurance contracts will continue to be reported on the consolidated statement of financial position during the contractual term of the underlying contracts.
To the extent possible, the accounting model applied to reinsurance contracts held is consistent with that of the underlying insurance contracts. Differences will arise when underlying contracts have direct participating features, as the variable fee approach cannot be applied to reinsurance contracts held. Furthermore, reinsurance contracts with a coverage period exceeding 12 months may not be eligible for the premium allocation approach.
a) Separating components from insurance contracts
Similarly to the analysis for insurance contracts (see note 2.6), Aegon has assessed that its reinsurance contracts held do not include components that need to be separated for accounting purposes.
b) Level of aggregation
Reinsurance contracts are grouped for measurement and income recognition purposes, based on the similarity of risk, the manner in which the contracts are managed, the expected profitability of the contracts at inception, and the period in which the contracts are issued.
The process for dividing reinsurance contracts into groups is similar to that used for insurance contracts (note 2.6), except that references to “onerous contracts” should be replaced with a reference to “contracts on which there is a net gain on initial recognition”.
When grouping reinsurance contracts, Aegon considers the type of reinsurance cover received (e.g. yearly renewable term, stop loss, or coinsurance).
A group of reinsurance contracts can comprise a single contract, for example when the contracts are managed on an individual treaty basis.
c) Reinsurance contracts measured under the general measurement model
The Group applies the accounting policies disclosed in note 2.6 for insurance contracts without direct participating features to measure a group of reinsurance contracts held, albeit with the following modifications:
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Recognition
Aegon recognizes reinsurance contracts held at the earlier of the following:
∎
The beginning of the coverage period; or
∎
The date that an onerous group of underlying insurance contracts is recognized, if Aegon entered into the related reinsurance contract held at or before that date.
Notwithstanding the foregoing, Aegon delays the recognition of a group of reinsurance contracts held that provide proportionate coverage (e.g. coinsurance, modified coinsurance and yearly renewable treaties) until the date that any underlying insurance contract is initially recognized, if that date is later than the beginning of the coverage period of the group of reinsurance contracts held.
Initial measurement
Aegon estimates the present value of the future cash flows of the group of reinsurance contracts held, using assumptions that are consistent with those used to measure the underlying insurance contracts. The estimate includes an adjustment for the risk of
non-performance
by the reinsurer, which is based on Aegon’s credit exposure, net of collateral, and the perceived counterparty default risk. More information on the methods used to calculate the fulfillment cash flows and the process to estimate the inputs to those methods is provided in notes 2.6 and 29.
The risk adjustment for
non-financial
risk is the amount of risk transferred by the Group to the reinsurer.
On initial recognition, the contractual service margin of a group of reinsurance contracts held represents a net cost or a net gain on purchasing reinsurance. It is measured as the equal and opposite amount of the total of the fulfillment cash flows, any derecognized assets for cash flows occurring before the recognition of the group, any cash flows arising from the contracts in the group at that date, and any income recognized in profit or loss for the recovery of losses recorded on initial recognition of onerous underlying contracts.
If the net cost on purchasing reinsurance coverage relates to insured events that occurred before the purchase of the group of reinsurance contracts, it is immediately expensed in the income statement.
Contract boundary
Cash flows are within the contract boundary of a reinsurance contract held if they arise from substantive rights and obligations that exist during the period in which Aegon is either compelled to pay amounts to the reinsurer or in which it has a substantive right to receive services from that reinsurer. A substantive right to receive services from a reinsurer ends when the reinsurer has the right to terminate coverage or when he has the practical ability to reassess the risks transferred by Aegon and can set a price or level of benefits that fully reflects those reassessed risks.
For treaties with open attaching periods, the cessions within the termination window (typically 90 days) are treated as a separate contract for accounting purposes. Cessions that take place after the termination window are treated as a new contract.
Contractual service margin
On initial recognition, the contractual service margin of a group of reinsurance contracts held represents a net cost or a net gain on purchasing reinsurance. It is measured as the equal and opposite amount of the total of the fulfillment cash flows, any derecognized assets for cash flows occurring before the recognition of the group, any cash flows arising from the contracts in the group at that date, and any income recognized in profit or loss for the recovery of losses recorded on initial recognition of onerous underlying contracts.
If the net cost on purchasing reinsurance coverage relates to insured events that occurred before the purchase of the group of reinsurance contracts, it is immediately expensed in the income statement.
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Notes to the consolidated financial statements
Note 2
Subsequent measurement
The carrying amount of a group of reinsurance contracts held at each reporting date is the sum of the asset for remaining coverage and the asset for incurred claims. The asset for remaining coverage comprises: (i) the fulfillment cash flows that relate to services that will be received under the contracts in future periods; plus (ii) any remaining contractual service margin at that date. The asset for incurred claims comprises the fulfillment cash flows that relate to services received in the current and past period.
The fulfillment cash flows are remeasured at each reporting date to reflect current estimates.
The carrying amount of the contractual service margin at the end of each period is the carrying amount at the start of the period, adjusted for:
∎
The contractual service margin of any new contracts that are added to the group in the period;
∎
Interest accreted on the carrying amount of the contractual service margin during the period;
∎
Income recognized in profit or loss in the reporting period to coincide with the initial recognition of an onerous group of underlying insurance contracts or on addition of onerous contracts to that group;
∎
Reversals of a loss-recovery component to the extent those reversals are not changes in the fulfillment cash flows of the group of reinsurance contracts held;
∎
Changes in fulfillment cash flows, measured at discount rates at initial recognition, to the extent that the change relates to future services, except for the extent that:
∎
The change results from a change in fulfillment cash flows allocated to a group of underlying insurance contracts that does not adjust the contractual service margin of the group of underlying contracts;
∎
The change results from the remeasurement of the liability for remaining coverage of an onerous group of underlying contracts to which the premium allocation approach is applied;
∎
The effect of any currency exchange differences on the contractual service margin; and
∎
The amount recognized in the profit or loss because of the services received in the period.
The rate at which interest in accreted to the contractual service margin is determined at the initial inception date of the group of reinsurance contracts, in the same way as the interest accretion rates for insurance contracts without direct participating features.
Some changes in the contractual service margin are offset by changes in the fulfillment cash flows, resulting in no change in the total carrying amount of the asset for remaining coverage. To the extent that changes in the contractual service margin and changes in the fulfillment cash flows do not offset, income and expenses are recognized.
Changes in the fulfillment cash flows that result from changes in the risk of
non-performance
by the issuer do not relate to future service and are recognized in the income statement immediately.
Loss recovery component
Aegon establishes a loss recovery component for a group of reinsurance contracts, when a change in the fulfillment cash flows that relates to future services does not adjust the contractual service margin. It reflects the income recognized in the income statement to offsets the reinsured loss reported on the underlying insurance contracts.
The adjusted amount, and resulting income, is determined by multiplying:
∎
The loss recognized on the group of underlying insurance contracts; and
∎
The recovery percentage, which is the percentage of claims on the group of underlying insurance contracts that Aegon expects to recover from the reinsurance contracts held.
The calculation of the recovery percentage is based on discounted claims and recovery amounts, using current discount rates. No allowance is made for reinsurance
non-performance
risk, and any risk adjustment for
non-financial
risks is excluded from the calculation.
If an onerous group of insurance contracts is only partially reinsured, systematic and rational allocation methods are used to determine the portion of subsequent movements in the loss component that relates to insurance contracts covered by the group of reinsurance contracts held.
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d) Reinsurance contracts held measured under the premium allocation approach
Aegon applies the premium allocation approach to a group of reinsurance contracts held, if the approach is also applied to the underlying insurance contracts and:
∎
The coverage period of each reinsurance contract in the group is one year or less; or
∎
Aegon reasonably expects the resulting measurement will not differ materially from the results when applying the general measurement model.
If a loss recovery component is created for a group of reinsurance contracts measured under the premium allocation approach, Aegon adjusts the carrying amount of the asset for remaining coverage instead of adjusting the contractual service margin.
Please see note 2.6(k) for a description of the accounting policies concerning the premium allocation approach.
e) Derecognition and contract modification
Aegon applies the same accounting policies for derecognition and contract modifications to reinsurance contract held as to insurance contracts. Please see note 2.6(l).
2.8 Insurance revenue
Aegon recognizes insurance revenue as it provides services under groups of insurance contracts and under groups of contracts with discretionary participating features.
The total insurance revenue recognized over the duration of a group of contracts is equal to the amount of premiums received, adjusted for a financing effect and excluding any
non-distinct
investment components. For contracts with direct participating features, it includes the variable fees that Aegon expects to receive. Reinstatement premiums are included in insurance revenue, when reinstatement is not mandatory under the terms of the contract but at the discretion of the policyholder. Ceding commissions paid by Aegon on inward reinsurance are deducted from insurance revenue, unless they are contingent on future claims.
The revenue recognized in the period represents the total of the changes in the liability for remaining coverage that relate to services for which the Group expects to receive compensation and includes:
∎
The release of contractual service margin for services provided in the period;
∎
Changes in the risk adjustments for
non-financial
risk that do not relate to future service, excluding amounts allocated to the loss component;
∎
The claims and other insurance service expenses expected to be incurred in the period, excluding amounts allocated to the loss component;
∎
Other amounts, such as experience adjustments for premium receipts that do not relate to future service and income tax that is specifically chargeable to the policyholder.
In addition, the insurance revenue recognized in the period includes an allocation of the portion of the premiums that are related to recovering insurance acquisition cash flows. The allocation is based on the passage of time, without interest accumulation. The same amount is also recognized as insurance service expenses (see note 2.9).
For insurance contracts to which the premium allocation approach is applied, insurance revenue is equal to the total premiums that are expected to be received for the services provided, excluding any
non-distinct
investment component and adjusted to reflect the time value of money and the effect of financial risk, where applicable. Revenues are allocated to the periods of insurance contract services based on the passage of time.
2.9 Insurance service expenses
Insurance service expenses arise as Aegon provides coverage and other services under issued insurance contracts and investment contracts with discretionary participating features. It comprises
∎
The incurred claims, excluding repayments of
non-distinct
investment components, and other incurred insurance service expenses;
∎
Adjustments to the liabilities for incurred claims that do not arise from the effects of the time value of money, financial risk and changes therein;
∎
Amortization of insurance acquisition cash flows;
∎
Losses on onerous contracts and the reversals of such losses; and
∎
Impairment losses on assets for insurance acquisition cash flows and reversals of such impairment losses.
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Notes to the consolidated financial statements
Note 2
2.10 Net income / (expenses) on reinsurance held
With the exception of reinsurance finance income, all other income and expenses from a group of reinsurance contracts are presented as a single amount.
Aegon recognizes an allocation of reinsurance premiums paid in profit or loss as it receives services under groups of reinsurance contracts. For contracts not measured under the premium allocation approach (PAA), the allocation of reinsurance premiums paid relating to services received for each period represents the total of the changes in the asset for remaining coverage that relate to services for which Aegon expects to pay consideration.
For contracts measured under the PAA, the allocation of reinsurance premiums paid for each period is the amount of expected premium payments for receiving services in that period.
2.11 Insurance finance expenses
Insurance finance expenses comprise the change in the carrying amount of the group of insurance contracts or reinsurance contracts arising from the effect of the time value of money and changes in the time value of money, as well as the effect of financial risk and changes in financial risk. It also includes the changes in the measurement of group of insurance contracts that are caused by changes in the value of underlying items (excluding additions and withdrawals).
For groups of contracts with direct participating features, insurance finance expenses exclude any changes that adjust the contractual service margin (See note 2.6). If a group of contracts with direct participating features becomes onerous due to changes in the time value of money or financial risk, the loss is recognized as insurance service expense rather than insurance finance expenses.
a) Defining financial risk
Financial risk can relate to one or more of a
∎
specified interest rate,
∎
financial instrument price,
∎
commodity price, currency exchange rate,
∎
index of prices or rates,
∎
credit rating or credit index, or
∎
other variable, provided in the case of a
non-financial
variable that the variable is not specific to a party to the contract.
As an example of variables not specific to a party to the contract, assumptions about inflation are considered to relate to financial risk, to the extent that they are based on an index of prices or on prices of assets with inflation-linked returns. Assumptions about inflation that are based on Aegon’s own expectations of specific price changes, do not relate to financial risk and are considered to be actuarial assumptions.
For contracts with discretionary participating features, Aegon uses the basis on which, at inception, it expected to determine its commitment under the contract to distinguish between the effect of changes in assumptions that relate to financial risk on that commitment and the effect of discretionary changes to that commitment (which adjust the contractual service margin).
Aegon considers, per portfolio, whether the risk adjustment for financial risks should be disaggregated in an insurance service component and an insurance finance component, taking into account the extent to which the carrying amount of the is affected by changes in interest rate and other financial risks. At the current reporting date, the changes in the risk adjustment for
non-financial
risk are fully attributed to insurance services.
b) Disaggregation of insurance finance expenses
Insurance finance expenses for the period are included in profit or loss, unless Aegon has chosen to apply the option to disaggregate these expenses between profit or loss and other comprehensive income. This option is set by insurance portfolio and applied consistently for all underlying groups of contracts. In assessing the appropriate accounting policy for a portfolio of insurance contracts, Aegon considers the investments and other assets that it holds for each portfolio and how it accounts for those assets.
Aegon disaggregates insurance finance expenses for insurance contracts without direct participating features issued in the United States, insurance contracts issued in Asia that are internally reinsured in the United States and certain life insurance products in Spain.
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The amount of insurance finance expenses included in profit or loss is determined by a systematic allocation of the expected total insurance finance income and expenses over the duration of the group of contracts, using the following rates:
∎
Discount rates determined at the date of initial recognition of the group of contracts;
∎
A rate that allocates the remaining revised expected finance income or expenses over the remaining duration of the group of contracts at a constant rate (expected yield approach); or
∎
For contracts that use a crediting rate to determine amounts due to the policyholders using an allocation that is based on the amounts credited in the period and expected to be credited in future periods (projected crediting rate approach).
The expected yield approach and projected crediting rate approach are applied to designated groups of contracts for which changes in financial assumptions have a substantial effect on the amounts paid by the policyholder (“indirect participating products”). Indirect participating products include variable annuity products that do not qualify for the variable fee approach due to minimum guarantees.
US-style
universal life contracts are not classified as indirect participating products because Aegon considers policyholder benefits to be insufficiently impacted by changes in financial assumptions.
In the United States, Aegon has elected to apply the projected crediting rate approach to indexed universal life and fixed indexed annuities. Other indirect participating contracts, such as variable universal life and fixed annuities, are accounted for under the expected yield approach.
2.12 Reinsurance finance income
Finance income related to reinsurance contracts held is presented separately in the income statement and OCI. They are not netted with the finance expenses related to insurance contracts issued.
2.13 Investment contracts
Contracts issued by the Group that do not transfer significant insurance risk but do transfer financial risk from the policyholder to the Group are accounted for as investment contracts. Investment contract liabilities are recognized when the contract is entered into and are derecognized when the contract expires, is discharged or is cancelled.
a. Investment contracts with discretionary participation features
Some investment contracts have participation features whereby the policyholder has the right to receive potentially significant additional benefits which are based on the performance of a specified pool of investment contracts, specific investments held by the Group or on the issuer’s net result. If the Group has discretion over the amount or timing of the distribution of the returns to policyholders, the investment contract liability is measured based on the accounting principles that apply to insurance contracts with similar features.
Some unitized investment contracts provide policyholders with the option to switch between funds with and without discretionary participation features. The entire contract is accounted for as an investment contract with discretionary participation features if there is evidence of actual switching resulting in discretionary participation benefits that are a significant part of the total contractual benefits.
Recognition and measurement
The accounting for investment contracts with discretionary participating features is the same as insurance contracts, with the following exceptions:
∎
The date of initial recognition is the date that Aegon becomes party to the contract;
∎
Cash flows are within the contract boundary if they result from a substantive obligation of the entity to deliver cash at a present or future date. Aegon has no substantive obligation to deliver cash if it has the practical ability to set a price for the promise to deliver the cash that fully reflects the amount of cash promised and related risks; and
∎
The contractual service margin is recognized over the duration of the group of contracts in a systematic way that reflects the transfer of investment services under the contract.
b. Investment contracts without discretionary participation features
At inception, investment contracts without discretionary participation features are carried at amortized cost.
Investment contracts without discretionary participation features are carried at amortized cost based on the expected cash flows and using the effective interest rate method. The expected future cash flows are
re-estimated
at each reporting date and the carrying amount of the financial liability is recalculated as the present value of estimated future cash flows using the financial liability’s original effective interest rate. Any adjustment is immediately recognized in the income statement. For
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Note 2
these investment contracts deposit accounting is applied, meaning that deposits are not reflected as premium income, but are recognized as part of the financial liability.
The consolidated financial statements provide information on the fair value of all financial liabilities, including those carried at amortized cost. As these contracts are not quoted in active markets, their value is determined by using valuation techniques, such as discounted cash flow methods and stochastic modeling. For investment contracts without discretionary participation features that can be cancelled by the policyholder, the fair value cannot be less than the surrender value.
2.14 Financial assets and liabilities
2.14.1 Initial recognition and measurement
Financial assets and financial liabilities are recognized when Aegon becomes a party to the contractual provisions of the instrument and are classified for accounting purposes depending on the characteristics and the business model under which they were purchased.
At initial recognition, Aegon measures a financial asset at its fair value plus or minus, in the case of a financial asset not at fair value through profit or loss any(FVPL), transaction costs that are incremental and directly attributable incremental transaction costs.
Loansto the acquisition or issue of the financial asset or financial liability, such as fees and commissions. Immediately after initial recognition, an expected credit loss allowance (ECL) is recognized for financial assets held-to-maturity are subsequently carriedmeasured at amortized cost usingand investments in debt instruments measured at fair value through other comprehensive income (FVOCI), as described in note 4.2.6 (Expected credit losses), which results in an accounting loss being recognized in profit or loss when an asset is newly originated.
When the effectivefair value of financial assets and liabilities differs from the transaction price on initial recognition, Aegon recognizes the difference as follows:
∎
When the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e. a Level 1 input) or based on a valuation technique that uses only data from observable markets, the difference is recognized as a gain or loss.
∎
In all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is determined individually. It is either amortized over the life of the instrument, deferred until the instrument’s fair value can be determined using market observable inputs, or realized through settlement.
2.14.2 Classification and subsequent measurement of financial assets
Under IFRS 9, Aegon classifies its financial assets in the following measurement categories:
∎
Fair value through profit or loss (“FVPL”);
∎
Fair value through other comprehensive income (“FVOCI”); or
∎
Amortized cost (“AC”).
Aegon has classified the majority of its mortgage, consumer and private loan portfolios as measured at amortized cost, given that the cash flows on these contracts represent solely payment of principal and interest, rate method.and they fit the business model
hold-to-collect.
Similarly, the majority of debt instruments held by most Aegon’s insurance entities are classified as FVOCI because they fit the business model of
hold-to-collect
and sell, and their cash flows represent solely payment of principal and interest. However, the majority of financial assets within Aegon’s European insurance entities are designated on FVPL to minimize accounting mismatches. For a detailed breakdown of asset classes in measurement categories see note 19.1 Financial assets, excluding derivatives.
(a) Equity instruments
Equity instruments are instruments that meet the definition of equity from the issuer’s perspective; that is, instruments that do not contain a contractual obligation to pay and that evidence a residual interest in the issuer’s net assets. Examples of equity instruments include basic ordinary shares.
Under IFRS 9, equity investments do not qualify for amortized cost or FVOCI treatment because they would fail the contractual cash flow characteristics assessment (cash flows are typically declared dividends at the discretion of the issuer, instead
of interest). Thus, equity investments would generally only qualify for FVPL treatment and not be subject to impairment under the Expected Credit Loss model.
However, IFRS 9 allows the entity to make an irrevocable election at initial recognition to present changes in the fair value of equity investment in OCI rather than profit or loss. The equity investments designated as FVOCI are not subject to impairment under the Expected Credit Loss model.
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When equity investments measured at FVOCI are disposed, the unrealized gains or losses, including the OCI resulting from foreign currency translation, will stay as a part of the equity and cannot be “recycled” into profit and loss. If applicable, dividends should be recognized in profit or loss with or without such election.
Gains and losses on equity investments at FVPL are included in the ‘Results from financial transactions’ line in the consolidated income statement.
(b) Debt instruments
Debt instruments are those instruments that meet the definition of a financial liability from the issuer’s perspective, such as mortgage loans, private loans, and government and corporate bonds.
Classification and subsequent measurement of debt instruments depend on:
∎
Aegon’s business model for managing the asset;
∎
The cash flow characteristics of the asset; and
∎
The designation at FVPL to eliminate or significantly reduce an accounting mismatch or recognition inconsistency.
Based on these factors, Aegon classifies its debt instruments into one of the following three measurement categories:
∎
Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest (“SPPI”), and that are not designated at FVPL, are measured at amortized cost. The carrying amount of these assets is adjusted by any expected credit loss allowance recognized (see note 4.2.6 Expected credit losses). Interest revenue from these financial assets is included in “Interest revenue on financial instruments calculated using the effective interest rate method”.
∎
Fair value through other comprehensive income (“FVOCI”): Financial assets that are held for collection of contractual cash flows and for selling the assets, where the assets’ cash flows represent solely payments of principal and interest, and that are not designated at FVPL, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses on the instrument’s amortized cost which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss and recognized in “Net Investment result”. Interest revenue from these financial assets is included in “Interest revenue on financial instruments calculated using the effective interest rate method”.
∎
Fair value through profit or loss (“FVPL”): Assets that do not meet the criteria for amortized cost or FVOCI are measured mandatorily at fair value through profit or loss.
The Group has designated certain debt instruments as measured at FVPL because they relate to insurance contracts that are measured in a way that incorporates current information and all related insurance finance income and expenses are recognized in profit or loss, by which designation the Group eliminates accounting mismatches.
A gain or loss on a debt investment that is subsequently measured at FVPL and is not part of a hedging relationship is recognized in profit or loss and presented in the profit or loss statement within “Net trading income” in the period in which it arises, unless it arises from debt instruments that were designated at fair value or which are not held for trading, in which case they are presented separately in “Net investment result”. Interest revenue from these financial assets is included in “Interest revenue from financial instruments measured at FV”.
Business model
The Group determines its business model at the level that best reflects how it manages groups of financial assets to achieve its business objective. The Group’s business model is not assessed on an
instrument-by-instrument
basis, but at a higher level of aggregated portfolios and is based on observable factors, such as:
∎
How the performance of the business model and the financial assets held within that business model are evaluated and reported to the Group’s senior management;
∎
The risks that affect the performance of the business model and the financial assets held within it. In particular, the way those risks are managed;
∎
How the Group management is compensated, i.e. whether the compensation is based on the fair value of the assets managed or on the contractual cash flows collected;
∎
The expected frequency, value and timing of sales are also important aspects of the Group’s assessment.
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Note 2
The business model assessment is based on reasonably expected scenarios without taking “worst case” or “stress case” scenarios into account. If cash flows after initial recognition are realized in a way that is different from the Group’s original expectations, the Group does not change the classification of the remaining financial assets held in that business model but incorporates such information when assessing newly originated or newly purchased financial assets going forward.
Sales in themselves do not determine the business model and therefore cannot be considered in isolation. An entity must consider information about sales within the context of the reasons for those sales and the conditions that existed at that time as compared to current conditions.
Solely payment of principal and interest (“SPPI”)
Where the business model is to hold assets to collect contractual cash flows or to collect contractual cash flows and cash flows from the sale of the asset, Aegon assesses whether the financial instruments’ cash flows represent solely payments of principal and interest (the “SPPI test”). In making this assessment, Aegon considers whether the contractual cash flows are consistent with a basic lending arrangement i.e. interest includes only consideration for the time value of money, credit risk, other basic lending risks and a profit margin that is consistent with a basic lending arrangement. Where the contractual terms introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related financial asset is classified and measured at fair value through profit or loss are measured at fair value with all changes in fair value recognized in the income statement as incurred. Available-for-sale assets are recorded at fair value with unrealized changes in fair value recognized in other comprehensive income. loss.
Financial assets thatwith embedded derivatives are designated as hedged itemsconsidered in their entirety when determining whether their cash flows are measured in accordance withsolely payment of principal and interest. Aegon reclassifies debt investments when and only when its business model for managing those assets changes. The reclassification takes place from the requirements for hedge accounting.
start of the first reporting period following the change. Such changes are expected to be very infrequent and none occurred during the period.
(c) Amortized cost and effective interest rate
The amortized cost of a debt instrument is the amount at which it is measured at initial recognition plus accrued interest minus principal repayments, plus or minus the cumulative amortization of any difference between the book value at initial amountrecognition and the maturitynominal amount and minus any reductionallowance for impairment. The effective interest rate method is a method of calculating the amortized cost and of allocating the interest incomerevenue or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the debt instrument, or when appropriate, a shorter period to the net carrying amount of the instrument. When calculating the effective interest rate, all contractual terms are considered. Possible future credit losses are not taken into account. Charges and interest paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts are included in the calculation.
Fair value
The consolidatedFor purchased or originated credit-impaired (“POCI”) financial statements provide informationassets – assets that are credit-impaired (see definition in note 4.2.6 Expected credit losses) at initial recognition – Aegon calculates the credit-adjusted effective interest rate, which is calculated based on the fair value of all financial assets, including those carried at amortized cost where the values are provided in the notes toof the financial statements.
asset instead of its gross carrying amount and incorporates the impact of expected credit losses in estimated future cash flows.
Fair valueFor assets determined to be POCI, the general impairment model would not apply. Instead, impairment is defined as the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions (i.e. an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability). For quoted financial assets for which there is an active market, the fair value is the bid price at the reporting date. In the absence of an active market, fair value is estimated by using present value based or other valuation techniques. Where discounting techniques are applied, the discount rate isdetermined based on current market rates applicable to financial instruments with similar characteristics. The valuation techniques that include unobservable inputs can result in a different outcome thanlifetime expected credit loss (ECL) since the actual transaction price at which the asset was acquired. Such differenceslosses are not recognized in the income statement immediately but are deferred. They are released over time to the income statement in line with the change in factors (including time) that market participants would consider in setting a price for the asset. Interest accrued to date is not includedreflected in the fair value at initial recognition. No separate loss allowance is recognized.
The effective interest rate for interest recognition throughout the life of the asset is a credit-adjusted effective interest rate (EIR) since lifetime ECL is already reflected in the estimated cash flows when calculating the effective interest rate on initial recognition.
On a regular basis, the Group assesses the estimate of cash flows made at acquisition of the POCI instrument. The assessment is performed by recalculating the gross carrying amount of the asset as the present value of the estimated future cash flows, discounted using the initial credit-adjusted effective interest rate. As a result of this assessment, in an instance where the payments received by the Group exceed or fall short of the initial cash flow estimate booked at acquisition, the gain is recorded directly in the P&L as impairment (losses) / reversals.
(d) Interest revenue
Interest revenue is calculated by applying the effective interest rate to the gross carrying amount of financial assets, except for:
∎
POCI financial assets, for which the original credit-adjusted effective interest rate is applied to the amortized cost of the financial asset.
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∎
Financial assets that are not POCI but have subsequently become credit-impaired (or “Stage 3”), for which interest revenue is calculated by applying the effective interest rate to their amortized cost (i.e. net of the expected credit loss provision). For the definition of “Stage 3”, see note 4.2.6 Expected credit losses.
IFRS 9 resulted in changes to IAS 1 for the presentation of Interest revenue for instruments calculated using the effective interest rate method. The revised presentation requires it be shown as a separate line item in the consolidated income statement. Interest revenue calculated using the effective interest rate relates to all financial assets, which are measured at amortized cost or FVOCI. Interest revenue on financial assets and financial liabilities that are measured at fair value through profit or loss are presented as “Interest revenue on financial instruments measured at FVPL”.
The new interest presentation was applied together with the other requirements of IFRS 9.
(e) Modification of financial assets
Aegon sometimes renegotiates or otherwise modifies the contractual cash flows of financial assets. When this happens, Aegon assesses whether or not the new terms are substantially different to the original terms. Aegon does this by considering, among other things, the following qualitative and quantitative factors:
∎
If the borrower is in financial difficulty, whether the modification merely reduces the contractual cash flows to amounts the borrower is expected to be able to pay.
∎
Whether any substantial new terms are introduced, such as a profit share/equity-based return that substantially affects the risk profile of the loan or equity conversion option.
∎
Significant extension of the loan term when the borrower is not in financial difficulty.
∎
Significant change in the interest rate.
∎
Change in the currency the loan is denominated in.
∎
Insertion of collateral, other security or credit enhancements that significantly affect the credit risk associated with the loan.
∎
Change in seniority or subordination.
∎
Any change in SPPI assessment of the asset.
∎
Significant change in the present value of the instrument.
If the terms are substantially different, Aegon derecognizes the original financial asset and recognizes a “new” asset at fair value and recalculates a new effective interest rate for the asset. The date of renegotiation is consequently considered to be the date of initial recognition for impairment calculation purposes, including for the purpose of determining whether a significant increase in credit risk has occurred. However, Aegon also assesses whether the new financial asset recognized is deemed to be credit-impaired at initial recognition, especially in circumstances where the renegotiation was driven by the debtor being unable to make the originally agreed payments. Differences in the carrying amount are also recognized in profit or loss as a gain or loss on derecognition (Results from financial transactions).
If the terms are not substantially different, the renegotiation or modification does not result in derecognition, and Aegon recalculates the gross carrying amount based on the revised cash flows of the financial asset.asset and recognizes a modification gain or loss in profit or loss as result from financial transactions. The new gross carrying amount is recalculated by discounting the modified cash flows at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets).
The impact of modifications of financial assets on the expected credit loss calculation is discussed in note 4.2.6 Expected credit losses.
(f) Derecognition other than a modification of financial assets
A financial asset is derecognized when the contractual rights to the asset’s cash flows expire or when the Group retains the right to receive cash flows from the asset but has an obligation to pay any received cash flows in full without delay to a third party and either: has transferred the asset and substantially all the risks and rewards of ownership, or has neither transferred nor retained all the risks and rewards but has transferred control of the asset.
∎
the contractual rights to the asset’s cash flows expire; and
∎
when Aegon retains the right to receive cash flows from the asset or has an obligation to pay received cash flows in full without delay to a third party; and
∎
either has transferred the asset and substantially all the risks and rewards of ownership, or has neither transferred nor retained all the risks and rewards but has transferred control of the asset.
Financial assets of which the GroupAegon has neither transferred nor retained significantly all the risk and rewards and retained control are recognized to the extent of the Group’sAegon’s continuing involvement. If significantly all risks are retained, the assets are not derecognized.
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Note 2
On derecognition, the difference between the disposal proceeds and the carrying amount is recognized in the income statement within results from financial transactions.
(g) Derivatives and hedge accounting
Definition of derivatives
Derivatives are financial instruments classified as held for trading assets of which the value changes in response to an underlying variable, which require little or no net initial investment and are settled at a realized gain or loss. Any cumulative unrealized gain or loss previouslyfuture date.
Measurement of derivatives
Derivatives are initially recognized inat fair value on the revaluation reserve in shareholders’ equitydate on which the derivative contract is alsoentered into and are subsequently remeasured at fair value. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative.
Net fair value changes of derivatives are recognized in the income statement.statement as result from financial transactions, unless the derivative has been designated as a hedging instrument in a cash flow hedge or a hedge of a net investment in a foreign operation. Fair value movements of fair value hedge instruments are offset by the fair value movements of the hedged item, and the resulting hedge ineffectiveness, if any, is included in result from financial transactions.
Embedded derivatives and hybrid contracts
Certain derivatives are embedded in hybrid contracts, such as the conversion option in a convertible bond. If the hybrid contract contains a host that is a financial asset, then the Group assesses the entire contract for classification and measurement purposes. Otherwise, the embedded derivatives are treated as separate derivatives when:
∎Their economic characteristics and risks are not closely related to those of the host contract;
∎A separate instrument with the same terms would meet the definition of a derivative; and
∎The hybrid contract is not measured at fair value through profit or loss.
These embedded derivatives are separately accounted for at fair value, with changes in fair value recognized in the income statement as result from financial transactions, unless the Group chooses to designate the hybrid contracts at fair value through profit or loss.
Hedge accounting
The method of recognizing the resulting fair value gain or loss depends on whether the derivative is designated and qualifies as a hedging instrument and if so, the nature of the item being hedged. Aegon designates certain derivatives as either:
∎Hedges of the fair value of recognized assets or liabilities or firm commitments (fair value hedges);
∎Hedges of highly probable future cash flows attributable to a recognized asset or liability (cash flow hedges); or
∎Hedges of a net investment in a foreign operation (net investment hedges).
Aegon documents, at the inception of the hedge, the relationship between hedged items and hedging instruments, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with changes in the fair value of the hedged assets or liabilities that are attributable to the hedged risk as result from financial transactions.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of hedged items for which the effective interest method is used is amortized to profit or loss over the period to maturity and recorded as “Interest revenue on financial instruments calculated using the effective interest method”.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in OCI. The gain or loss relating to the ineffective portion is recognized immediately in the P&L as result from financial transactions.
Amounts accumulated in equity are recycled to the P&L in the periods when the hedged item affects profit or loss. They are recorded in the income or expense lines in which the revenue or expense associated with the hedged item is reported.
Security lending and repurchase agreements
Financial assets that are lent to a third party or that are transferred subject to a repurchase agreement at a fixed price are not derecognized as the Group retains substantially all the risks and rewards of the asset. A liability is recognized for cash (collateral) received, on which interest is accrued.

A security that has been received under a borrowing or reverse repurchase agreement is not recognized as an asset. A receivable is recognized for any related cash (collateral) paid by Aegon. The difference between sale and repurchase price
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When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized in the periods when the hedged item effects profit or loss. When a forecast transaction is no longer expected to occur (e.g. the recognized hedged assets is disposed of), the cumulative gains or losses previously recognized in OCI is immediately reclassified to the P&L.
Aegon designates and accounts for cash flow hedges when effectiveness requirements are achieved. The following cash flow hedge type relationships are currently utilized by Aegon:
∎
An interest rate swap that converts a floating rate asset to a fixed rate asset (e.g. combining Treasury Inflation Protected Securities asset and inflation swap to synthetically create fixed rate treasury asset).
∎
A cross currency interest rate swap that converts a foreign denominated floating rate asset to a USD fixed rate asset.
∎
A cross currency interest rate swap that converts a foreign denominated fixed rate asset to a USD fixed rate asset.
∎
A forward starting interest rate swap to hedge the forecasted purchases of fixed rate assets.
Net investment hedge
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized directly in OCI; the gains or losses relating to the ineffective portion is recognized immediately in the P&L. Gains and losses accumulated in equity are included in the P&L when the foreign operation is disposed of as part of the gain or loss of the disposal.
Additional details on derivatives is disclosed in note 20 ‘Derivatives’.
2.14.3 Impairment of financial assets
Aegon assesses on a forward-looking basis the expected credit losses (“ECL”) associated with its debt instrument assets carried at amortized cost and FVOCI. Aegon recognizes a loss allowance for such losses at each reporting date. The measurement of ECL reflects:
∎
An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
∎
The time value of money; and
∎
Reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.
Note 4.2.6 Expected credit losses provides more detail of how the expected credit loss allowance is measured.
2.14.4 Financial liabilities
(a) Classification and subsequent measurement
In both the current and prior period, financial liabilities are classified as subsequently measured at amortized cost, except for:
∎
Financial liabilities measured at fair value through profit or loss: this classification is applied to derivatives, financial liabilities held for trading and other financial liabilities designated as such at initial recognition. This is because these liabilities, as well as the related assets, are managed and their performance evaluated on a fair value basis. Gains or losses on financial liabilities designated at FVPL are presented partially in other comprehensive income (the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability, which is determined as the amount that is not attributable to changes in market conditions that give rise to market risk) and partially in profit or loss (the remaining amount of change in the fair value of the liability). This is unless such a presentation would create, or enlarge an accounting mismatch, in which case the gains and losses attributable to changes in the credit risk of the liability are also presented in profit or loss;
∎
Financial liabilities arising from the transfer of financial assets which did not qualify for derecognition, whereby a financial liability is recognized for the consideration received for the transfer. In subsequent periods, Aegon recognizes any expense incurred on the financial liability; and
∎
Financial guarantee contracts and loan commitments.
The following sections provide more detail on the most significant classes of financial liabilities held by Aegon, their substance and their accounting treatment.
Trust pass-through securities and (subordinated) borrowings
A financial instrument issued by the Group is classified as a liability if the contractual obligation must be settled in cash or another financial asset or through the exchange of financial assets and liabilities at potentially unfavorable conditions for the Group. Trust pass-through securities and (subordinated) borrowings are initially recognized at their fair value including directly
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Note 2
  
  
attributable transaction costs and are subsequently carried at amortized cost using the effective interest rate method, with the exception of specific borrowings that are designated as fair value through profit or loss to eliminate, or significantly reduce, an accounting mismatch, or specific borrowings which are carried at fair value through profit or loss as they are managed and evaluated on a fair value basis.
Interest expense on trust pass-through securities and other borrowings carried at amortized cost is recognized in profit or loss as “interest charges” using the effective interest method.
The liability is derecognized when the Group’s obligation under the contract expires, is discharged or is cancelled. Subordinated borrowings include the liability component of
non-cumulative
subordinated notes. These notes are identified as a compound instrument due to the nature of this financial instrument. Compound instruments are separated into equity components and liability components. The liability component for the
non-cumulative
subordinated notes is related to the redemption amount.
Investment contracts without discretionary participation features
Investment contracts without discretionary participation features are financial liabilities carried at amortized cost or designated at fair value through profit or loss. For more information on the accounting treatment of these contracts, see note 2.13 Investment contracts.
Savings deposits
Savings deposits are stated at amortized cost (net of accrued interest). Accrued interest is recognized in the consolidated statement of financial position under “other liabilities and accruals”. Interest expenses of savings deposits are presented in the statement of comprehensive income as “interest expense” under other net investment result. The balances are largely repayable on demand. The initial valuation of this item reasonably approximates fair value.
Derivatives
To the extent that derivatives have a negative fair value at the end of the reporting period these are classified as financial liabilities at fair value through profit or loss. Interest incomes and expenses of derivatives are presented in the statement of comprehensive income as “interest expense” or “Interest revenue on financial instruments measured at FVPL”.
Financial guarantee contracts and loan commitments
Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument. Such financial guarantees are given to banks, financial institutions and others on behalf of customers to secure loans, overdrafts and other banking facilities.
Financial guarantee contracts are initially measured at fair value and subsequently measured at the higher of:
∎
The amount of the loss allowance (calculated as described in note 4.2.6); and
∎
The premium received on initial recognition less income recognized in accordance with the principles of IFRS 15.
Loan commitments provided by Aegon are measured as the amount of the loss allowance (calculated as described in note 4.2.6 Expected credit losses). Aegon has not provided any commitment to provide loans at a below-market interest rate, or that can be settled net in cash or by delivering or issuing another financial instrument.
For loan commitments and financial guarantee contracts, the loss allowance is recognized as a provision. However, for contracts that include both a loan and an undrawn commitment and Aegon cannot separately identify the expected credit losses on the undrawn commitment component from those on the loan component, the expected credit losses on the undrawn commitment are recognized together with the loss allowance for the loan. To the extent that the combined expected credit losses exceed the gross carrying amount of the loan, the expected credit losses are recognized as a provision.
(b) Derecognition
Financial liabilities are derecognized when they are extinguished (i.e. when the obligation specified in the contract is discharged, cancelled or expires).
The exchange between Aegon and its original lenders of debt instruments with substantially different terms, as well as substantial modifications of the terms of existing financial liabilities, are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present
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value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. In addition, other qualitative factors, such as the cu
rrency
that the instrument is denominated in, changes in the type of interest rate, new conversion features attached to the instrument and change in covenants are also taken into consideration. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognized as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortized over the remaining term of the modified liability.
2.15 Fee and commission income
Fees and commissions from investment management services and mutual funds are performed on an ongoing basis evenly throughout the year and are accounted for monthly (1/12 of the contractual agreement). Performance fees may be charged to policyholders in the event of outperformance in the investments compared to predefined benchmark levels. They are accounted for only when specified hurdles for generating performance fees are achieved i.e. when the full performance obligation is met.
Aegon acts also as an insurance broker selling insurance contracts of other insurance companies to policyholders and receiving direct sales commission as well as commissions over time when the same policyholders renew their contracts. These commissions are recognized only when received as policyholders’ renewals are not certain enough to be recorded upfront.
2.16 Intangible assets
The Group does not recognize as intangible assets those costs that are directly incurred in fulfilling the insurance contracts and they comprise (both direct costs and an allocation of fixed and variable overheads).
(a) Goodwill
Goodwill is recognized as an intangible asset for interests in subsidiaries and is measured as the positive difference between the acquisition cost and the Group’s interest in the net fair value of the entity’s identifiable assets, liabilities and contingent liabilities. Subsequently, goodwill is carried at cost less accumulated impairment charges. It is derecognized when the interest in the subsidiary is disposed.
(b) Future servicing rights
On the acquisition of a portfolio of investment contracts without discretionary participation features under which Aegon will render investment management services, the present value of future servicing rights is recognized as an intangible asset. Future servicing rights can also be recognized on the sale of a loan portfolio or the acquisition of insurance agency activities.
The present value of the future servicing rights is amortized over the servicing period and is subject to impairment testing. It is derecognized when the related contracts are settled or disposed.
Where applicable, Aegon recognizes other intangibles on the acquisition of a business combination such as those related to customer relationships. This can include customer contracts, distribution agreements and client portfolios. For these intangibles the present value of future cash flows are recognized and amortized in the period when future economic benefits arise from these intangibles. These intangible assets are also presented under future servicing rights.
(c) Software and other intangible assets
Software and other intangible assets are recognized to the extent that the assets can be identified, are controlled by the Group, are expected to provide future economic benefits and can be measured reliably. The Group does not recognize internally generated intangible assets arising from research or internally generated goodwill, brands, customer lists and similar items.
Software and other intangible assets are carried at cost less accumulated depreciation and impairment losses. Depreciation of the asset is over its useful life as the future economic benefits emerge and is recognized in the income statement as an expense. The depreciation period and pattern are reviewed at each reporting date, with any changes recognized in the income statement.
An intangible asset is derecognized when it is disposed of or when no future economic benefits are expected from its use or disposal.
 
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is treated as investment income. If the Group subsequently sells that security, a liability to repurchase the asset is recognized and initially measured at fair value.
Notes to the consolidated financial statements
Note 2
Collateral
2.17 Investment properties
With the exception of cash collateral, assets received as collateral are not separately recognized as an asset until the financial asset they secure defaults. When cash collateral is recognized, a liability is recorded for the same amount.
b. Real estate
Investments in real estate include property held to earn rentals or for capital appreciation, or both. Investments in real estate are presented as ‘Investments’“Investments”. Property that is occupied by the Group and that is not intended to be sold in the near future is classified as real estate held for own use and is presented in ‘Other“Other assets and receivables’receivables”.
All property is initially recognized at cost. Such cost includes the cost of replacing part of the real estate and borrowing cost for long-term construction projects if recognition criteria are met. Subsequently, investments in real estate are measured at fair value with the changes in fair value recognized in the income statement. Real estate held for own use is carried at its revalued amount, which is the fair value at the date of revaluation less subsequent accumulated depreciation and impairment losses. Depreciation is calculated on a straight line basis over the useful life of a building. Land is not depreciated. Revaluation of real estate for own use is recognized in other comprehensive income and accumulated in revaluation reserve in equity. On revaluation the accumulated depreciation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount.
On disposal of an asset, the difference between the net proceeds received and the carrying amount is recognized in the income statement. Any remaining surplus attributable to real estate in own use in the revaluation reserve is transferred to retained earnings.
Maintenance costs and other subsequent expenditure
Expenditure incurred after initial recognition of the asset is capitalized to the extent that the level of future economic benefits of the asset is increased. Costs that restore or maintain the level of future economic benefits are recognized in the income statement as incurred.
2.8 Investments for account of policyholders
Investments held for account of policyholders consist of investments in financial assets as well as investments in real estate. Investment return on these assets is passed on to the policyholder. Also included are the assets held by consolidated investment funds that are backing liabilities towards third parties. Investments for account of policyholders are valued at fair value through profit or loss.
2.9 Derivatives
a. Definition
Derivatives are financial instruments of which the value changes in response to an underlying variable, that often require little or no net initial investment and are settled at a future date.
Assets and liabilities may include derivative-like terms and conditions. With the exception of features embedded in contracts held at fair value through profit or loss, embedded derivatives that are not considered closely related to the host contract are bifurcated, carried at fair value and presented as derivatives. In assessing whether a derivative-like feature is closely related to the contract in which it is embedded, the Group considers the similarity of the characteristics of the embedded derivative and the host contract. Embedded derivatives that transfer significant insurance risk are accounted for as insurance contracts.
Derivatives with positive values are reported as assets and derivatives with negative values are reported as liabilities. Derivatives for which the contractual obligation can only be settled by exchanging a fixed amount of cash for a fixed amount of Aegon N.V. equity instruments are accounted for in shareholders’ equity.
b. Measurement
All derivatives recognized on the statement of financial position are carried at fair value.
The fair value is calculated net of the interest accrued to date and is based on market prices, when available. When market prices are not available, other valuation techniques, such as option pricing or stochastic modeling, are applied. The valuation
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techniques incorporate all factors that market participants would consider and are based on observable market data, to the extent possible.
c. Hedge accounting
As part of its asset liability management, the Group enters into economic hedges to limit its risk exposure. These transactions are assessed to determine whether hedge accounting can and should be applied.
To qualify for hedge accounting, the hedge relationship is designated and formally documented at inception, detailing the particular risk management objective and strategy for the hedge (which includes the item and risk that is being hedged), the derivative that is being used and how hedge effectiveness is being assessed. A derivative has to be highly effective in accomplishing the objective of offsetting either changes in fair value or cash flows for the risk being hedged. The effectiveness of the hedging relationship is evaluated on a prospective and retrospective basis using qualitative and quantitative measures of correlation. Qualitative methods may include comparison of critical terms of the derivative to the hedged item. Quantitative methods include a comparison of the changes in the fair value or discounted cash flow of the hedging instrument to the hedged item. A hedging relationship is considered highly effective if the results of the hedging instrument are within a ratio of 80% to 125% of the results of the hedged item.
Following the financial crisis, the reform and replacement of benchmark interest rates such as LIBOR and other interbank offered rates (‘IBORs’) has become a priority for global regulators. There is currently uncertainty around the timing and precise nature of these changes, in light of which the following assumptions have been made with respect to hedge accounting:
◆When considering the ‘highly probable’ requirement, it is assumed that the current benchmark interest rate on which the hedged positions is based will not change as a result of IBOR reform.
◆In assessing whether the hedge is expected to be ‘highly effective’ on a forward-looking basis, it is assumed that the current benchmark interest rate on which the cash flows of the hedged item and the derivative that hedges it are based is not altered as a result of the IBOR reform.
◆Hedge accounting is not discontinued during the period of IBOR-related uncertainty solely because the retrospective effectiveness falls outside the required 80-125% range.
◆The cash flows hedge reserve relating to the period after the IBOR reform is expected to take effect, is not recycled solely because cash flows are expected to change.
When the uncertainty arising from IBOR reform is no longer present with respect to the hedged risk or the timing and the amount of interest rate benchmark-based cash flows of the hedged item or of the hedging instrument, the hedge documentation is amended to reflect the changes required by IBOR reform (i.e. a change results directly from IBOR reform and occurs on an economically equivalent basis). For this purpose, the hedge designation is amended only to make one or more of the following changes:
◆designating an alternative benchmark rate as the hedged risk;
◆amending the description of the hedged item, including the description of the designated portion of the cash flows or fair value being hedged;
◆amending the description of the hedging instrument; or
◆amending the description of the method for assessing hedge effectiveness.
Amending the formal designation of a hedging relationship to reflect the changes required by IBOR reform constitutes neither the discontinuation of the hedging relationship nor the designation of a new hedging relationship.
For hedge accounting purposes, a distinction is made between fair value hedges, cash flow hedges and hedges of a net investment in a foreign operation.
Fair value hedges
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in the profit and loss account, together with fair value adjustments to the hedged item attributable to the hedged risk. If the hedge relationship no longer meets the criteria for hedge accounting, the cumulative adjustment of the hedged item is, in the case of interest bearing instruments, amortized through the profit and loss account over the remaining term of the original hedge or recognized directly when the hedged item is derecognized.
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Notes to the consolidated financial statements
Note 2
Cash flow hedges
Cash flow hedges are hedges of the exposure to variability in cash flows that is attributable to a particular risk of a forecasted transaction or a recognized asset or liability and could affect profit or loss. To the extent that the hedge is effective, the change in the fair value of the derivative is recognized in the related revaluation reserve in shareholders’ equity. Any ineffectiveness is recognized directly in the income statement. The amount recorded in shareholders’ equity is released to the income statement to coincide with the hedged transaction, except when the hedged transaction is an acquisition of a non-financial asset or liability. In this case, the amount in shareholders’ equity is included in the initial cost of the asset or liability.
Net investment hedges
Net investment hedges are hedges of currency exposures on a net investment in a foreign operation. To the extent that the hedge is effective, the change in the fair value of the hedging instrument is recognized in the net foreign investment hedging reserve in shareholders’ equity. Any ineffectiveness is recognized in the income statement. The amount in shareholders’ equity is released to the income statement when the foreign operation is disposed of.
Hedge accounting is discontinued prospectively for hedges that are no longer considered effective. When hedge accounting is discontinued for a fair value hedge, the derivative continues to be carried on the statement of financial position with changes in its fair value recognized in the income statement. When hedge accounting is discontinued for a cash flow hedge because the cash flow is no longer expected to occur, the accumulated gain or loss in shareholders’ equity is recognized immediately in the income statement. In other situations where hedge accounting is discontinued for a cash flow hedge, including those where the derivative is sold, terminated or exercised, accumulated gains or losses in shareholders’ equity are amortized into the income statement when the income statement is impacted by the variability of the cash flow from the hedged item.
2.102.18 Investments in joint arrangements
In general, joint arrangements are contractual agreements whereby the Group undertakes, with other parties, an economic activity that is subject to joint control. Joint control exists when it is contractually agreed to share control over an economic activity. Joint control exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations each investor has rather than the legal structure of the joint arrangement. Aegon has assessed the nature of its joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method.
Under the equity method of accounting, interests in joint ventures are initially recognized at cost, which includes positive goodwill arising on acquisition. Negative goodwill is recognized in the income statement on the acquisition date. If joint ventures are obtained in successive share purchases, each significant transaction is accounted for separately.
The carrying amount is subsequently adjusted to reflect the change in the Group’s share in the net assets of the joint venture and is subject to impairment testing. The net assets are determined based on the Group’s accounting policies. Any gains and losses recorded in other comprehensive income by the joint venture are recognized in other comprehensive income and reflected in other reserves in shareholders’ equity, while the share in the joint ventures net result is recognized as a separate line item in the consolidated income statement. The Group’s share in losses is recognized until the investment in the joint ventures’ equity and any other long-term interest that are part of the net investment are reduced to nil, unless guarantees exist.
Gains and losses on transactions between the Group and the joint ventures are eliminated to the extent of the Group’s interest in the entity, with the exception of losses that are evidence of impairment which are recognized immediately. Own equity instruments of Aegon N.V.Ltd. that are held by the joint venture are not eliminated.
On disposal of an interest in a joint venture, the difference between the net proceeds and the carrying amount is recognized in the income statement and gains and losses previously recorded directly in the revaluation reserve are reversed and recorded through the income statement.
The Group’s interests in some joint arrangements are underlying items of participating contracts. The Group has elected to measure these investments at FVPL because it manages them on a fair value basis.
2.112.19 Investments in associates
The Group’s interests in some associates are underlying items of participating contracts. The Group has elected to measure these investments at FVPL because it manages them on a fair value basis.
Entities over which the Group has significant influence through power to participate in financial and operating policy decisions, but which do not meet the definition of a subsidiary, are accounted for using the equity method. Interests held by venture
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Financial information
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capital entities, mutual funds and investment fundsinvestm
ent fun
ds that qualify as an associate are accounted for as an investment held at fair
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value through profit or loss. Interests held by the Group in venture capital entities, mutual funds and investment funds that are managed on a fair value basis, are also accounted for as investments held at fair value through profit or loss.
Interests in associates are initially recognized at cost, which includes positive goodwill arising on acquisition. Negative goodwill is recognized in the income statement on the acquisition date. If associates are obtained in successive share purchases, each significant transaction is accounted for separately.
The carrying amount is subsequently adjusted to reflect the change in the Group’s share in the net assets of the associate and is subject to impairment testing. The net assets are determined based on the Group’s accounting policies. Any gains and losses recorded in other comprehensive income by the associate are reflected in other reserves in shareholders’ equity, while the share in the associate’s net result is recognized as a separate line item in the consolidated income statement. The Group’s share in losses is recognized until the investment in the associate’s equity and any other long-term interest that are part of the net investment are reduced to nil, unless guarantees exist.
Gains and losses on transactions between the Group and the associate are eliminated to the extent of the Group’s interest in the entity, with the exception of losses that are evidence of impairment which are recognized immediately. Own equity instruments of Aegon N.V. that are held by the associate are not eliminated.
On disposal of an interest in an associate, the difference between the net proceeds and the carrying amount is recognized in the income statement and gains and losses previously recorded directly in the revaluation reserve are reversed and recorded through the income statement.
2.12 Reinsurance assets
Reinsurance contracts are contracts entered into by the Group in order to receive compensation for claims/benefits incurred on contracts written by the Group (outgoing reinsurance). Reinsurance assets are also held as part of exiting the business. For contracts transferring sufficient insurance risk, a reinsurance asset is recognized for the expected future benefits, less expected future reinsurance premiums. Reinsurance contracts with insufficient insurance risk transfer are accounted for as investment or service contracts, depending on the nature of the agreement.
Reinsurance assets are measured consistently with the assumptions associated with the underlying insurance contracts and in accordance with the terms of each reinsurance contract. They are subject to impairment testing and are derecognized when the contractual rights are extinguished or expire or when the contract is transferred to another party.
Aegon is not relieved of its legal liabilities when entering into reinsurance transactions, therefore the reserves relating to the underlying insurance contracts will continue to be reported on the consolidated statement of financial position during the contractual term of the underlying contracts.
Reinsurance premiums, commissions and claim settlements are accounted for in the same way as the original contracts for which the reinsurance was concluded. The insurance premiums for the original contracts are presented gross of reinsurance premiums paid.
2.132.20 Deferred expenses
a. Deferred policy acquisition costs (DPAC)
DPAC relates to all insurance contracts as well as investment contracts with discretionary participation features and represents directly attributable costs that are related to the selling, underwriting and initiating of these insurance contracts.
DPAC are deferred to the extent that they are recoverable and are subsequently amortized based on factors such as expected gross profit margins. For products sold in the United States and Asia with amortization based on expected gross profit margins or revenues, the amortization period and pattern are reviewed at each reporting date and any change in estimates is recognized in the income statement. Estimates include, but are not limited to: an economic perspective in terms of future returns on bond and equity instruments, mortality, morbidity and lapse assumptions, maintenance expenses and expected inflation rates.
For all products, DPAC, in conjunction with VOBA where appropriate, is assessed for recoverability at least annually as part of the liability adequacy test for each reporting period. If appropriate, the assumptions included in the determination of estimated gross profits or revenues are adjusted. The portion of DPAC that is determined not to be recoverable is charged to the income statement.
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Notes to the consolidated financial statements
Note 2
For products sold in the United States and Asia, when unrealized gains or losses arise on available-for-sale assets backing the insurance liabilities, DPAC is adjusted to equal the effect that the realization of the gains or losses (through sale or impairment) would have had on its measurement. This is recognized in other comprehensive income and accumulated in the related revaluation reserve in shareholders’ equity.
DPAC is derecognized when the related contracts are settled or disposed.
b. 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. When Aegon enters into a reinsurance contract as part of a plan to exit a business, an immediate loss is recognized in the income statement. Upon reinsurance, Aegon is not relieved of its legal liabilities, so the reserves relating to the underlying reinsured contracts will continue to be reported in the consolidated statement of financial position during the contractual term of the underlying contracts.
The difference, if any, between amounts paid in a reinsurance transaction and the amount of the liabilities relating to the underlying reinsured contracts is part of the deferred cost of reinsurance.
When losses on buying reinsurance are deferred, the amortization is based on the assumptions of the underlying insurance contracts. In the Netherlands, the amortization is based on the percentage of premium paid on the reinsurance contract. For products sold in the Americas and Asia where the amortization is based on expected gross profit margins (EGPs), these EGPs will be net of reinsurance (i.e., net of actual reinsurance cash flows that exceed expected reinsurance cash flows). The amortization is recognized in the income statement.
c. Deferred transaction costs
Deferred transaction costs relate to investment contracts without discretionary participation features under which Aegon will render investment management services. Incremental costs that are directly attributable to securing these investment management contracts are recognized as an asset if they can be identified separately and measured reliably and if it is probable that they will be recovered.
For contracts involving both the origination of a financial liability and the provision of investment management services, only the transaction costs allocated to the servicing component are deferred. The other transaction costs are included in the carrying amount of the financial liability.
The deferred transaction costs are amortized in line with fee income, unless there is evidence that another method better represents the provision of services under the contract. The amortization is recognized in the income statement. Deferred transaction costs are subject to impairment testing at least annually.
Deferred transaction costs are derecognized when the related contracts are settled or disposed.
2.142.21 Other assets and receivables
Other assets include trade and other receivables, prepaid expenses, equipment and real estate held for own use. Trade and other receivables are initially recognized at fair value and are subsequently measured at amortized cost. Equipment is initially carried at cost, depreciated on a straight line basis over its useful life to its residual value and is subject to impairment testing. The accounting for real estate held for own use is described in note 2.7 Investments.
2.152.22 Cash and cash equivalents
Cash comprises cash at banks and
in-hand.
Cash equivalents are short-term, highly liquid investments generally with original maturities of three months or less that are readily convertible to known cash amounts, are subject to insignificant risks of changes in value and are held for the purpose of meeting short-term cash requirements. Money market investments that are held for investment purposes (backing insurance liabilities, investment liabilities or equity based on asset liability management considerations) are not included in cash and cash equivalents but are presented as investments or investments for account of policyholders.
2.162.23 Impairment of assets
An asset is impaired if the carrying amount exceeds the amount that would be recovered through its use or sale. For tangible and intangible assets, financial assets and reinsurance assets, if not held at fair value through profit or loss, the recoverable
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amount of the asset is estimated when there are indications that the asset may be impaired. Irrespective of the indications, goodwill and other intangible assets with an indefinite useful life that are not amortized, are tested at least annually.
There are a number of significant risks and uncertainties inherent in the process of monitoring investments and determining if impairment exists. These risks and uncertainties include the risk that the Group’s assessment of an issuer’s ability to meet all of its contractual obligations will change based on changes in the credit characteristics of that issuer and the risk that the economic outlook will be worse than expected or have more of an impact on the issuer than anticipated. Any of these situations could result in a charge against the income statement to the extent of the impairment charge recorded.
a. Impairment of non-financial assets
Assets are tested individually for impairment when there are indications that the asset may be impaired. For goodwill and intangible assets with an undefined life, an impairment test is performed at least once a year or more frequently as a result of an event or change in circumstances that would indicate an impairment charge may be necessary. The impairment loss is calculated as the difference between the carrying and the recoverable amount of the asset, which is the higher of an asset’s value in use and its fair value less cost of disposal. The value in use represents the discounted future net cash flows from the continuing use and ultimate disposal of the asset and reflects its known inherent risks and uncertainties. The valuation utilizes the best available information, including assumptions and projections considered reasonable and supportable by management. The assumptions used in the valuation involve significant judgments and estimates. Refer toSee note 2924 Intangible assets for more details.
Impairment losses are charged to other comprehensive income to the extent that they offset a previously recorded revaluation reserve relating to the same item. Any further losses are recognized directly in the income statement. Impairment of deferred policy acquisition costs is included in note 15 Impairment charges/(reversals).
With the exception of goodwill, impairment losses are reversed when there is evidence that there has been a change in the estimates used to determine the asset’s recoverable amount since the recognition of the last impairment loss. The reversal is recognized in the income statement to the extent that it reverses impairment losses previously recognized in the income statement. The carrying amount after reversal cannot exceed the amount that would have been recognized had no impairment taken place.
Non-financial assets that only generate cash flows in combination with other assets and liabilities are tested for impairment at the level of the cash-generating unit. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination. The allocation is based on the level at which goodwill is monitored internally and cannot be larger than an operating segment. When impairing a cash-generating unit, any goodwill allocated to the unit is first written-off and recognized in the income statement. The remaining impairment loss is allocated on a pro rata basis among the other assets, on condition that the resulting carrying amounts do not fall below the individual assets’ recoverable amounts.
b. Impairment of debt instruments
Debt instruments are impaired if there is objective evidence that a credit event has occurred after the initial recognition of the asset that has a negative impact on the estimated future cash flows. Individually significant loans and other receivables are first assessed separately. All non-impaired assets measured at amortized cost are then grouped by credit risk characteristics and collectively tested for impairment.
For debt instruments carried at amortized cost, the carrying amount of impaired financial assets is reduced through an allowance account. The impairment loss is calculated as the difference between the carrying and recoverable amount of the investment. The recoverable amount is determined by discounting the estimated probable future cash flows at the original effective interest rate of the asset. For variable interest debt instruments, the current effective interest rate under the contract is applied.
For debt instruments classified as available-for-sale, the asset is impaired to its fair value. Any unrealized loss previously recognized in other comprehensive income is taken to the income statement in the impairment loss. After impairment the interest accretion on debt instruments is recognized using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
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Notes to the consolidated financial statements
Note 2
Impairment losses recognized for debt instruments can be reversed if in subsequent periods the amount of the impairment loss decreases and that decrease can be objectively related to a credit event occurring after the impairment was recognized. For debt instruments carried at amortized cost, the carrying amount after reversal cannot exceed what the amortized cost would have been at the reversal date, had the impairment not been recognized.
c. Impairment of equity instruments
For equity instruments, objective evidence of impairment of an investment in an equity instrument classified as available-for-sale includes information about significant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered. A significant or prolonged decline in fair value below initial cost is also considered objective evidence of impairment and always results in a loss being recognized in the income statement. Significant or prolonged decline is defined as an unrealized loss position for generally more than six months or a fair value of less than 80% of the cost price of the investment. Equity investments are impaired to the asset’s fair value and any unrealized gain or loss previously recognized in shareholders’ equity is taken to the income statement as an impairment loss. The amount exceeding the balance of previously recognized unrealized gains or losses is recognized in the income statement. If an available for sale equity security is impaired based upon Aegon’s qualitative or quantitative impairment criteria, any further declines in the fair value at subsequent reporting dates are recognized as impairments. Therefore, at each reporting period, for an equity security that is determined to be impaired based upon Aegon’s impairment criteria, an impairment is recognized for the difference between the fair value and the original cost basis, less any previously recognized impairments.
Impairment losses on equity instruments cannot be reversed.
d. Impairment of reinsurance assets
Reinsurance assets are impaired if there is objective evidence, as a result of an event that occurred after initial recognition of the reinsurance asset, that not all amounts due under the terms of the contract may be received. In such a case, the value of the reinsurance asset recoverable is determined based on the best estimate of future cash flows, taking into consideration the reinsurer’s current and expected future financial conditions plus any collateral held in trust for Aegon’s benefit. The carrying value is reduced to this calculated recoverable value, and the impairment loss recognized in the income statement.
2.172.24 Equity
Financial instruments that are issued by the Group are classified as equity if they represent a residual interest in the assets of the Group after deducting all of its liabilities and the Group has an unconditional right to avoid delivering cash or another financial asset to settle its contractual obligation. In addition to common shares, the Group has issued perpetual securities. Perpetual securities have no final maturity date, repayment is at the discretion of Aegon and for junior perpetual capital securities, Aegon has the option to defer coupon payments at its discretion. The perpetual capital securities are classified
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Notes to the consolidated financial statements
Note 2
as equity rather than debt, are measured at par and those that are denominated in US dollars are translated into euro using historical exchange rates.
Treasury shares are deducted from Group equity.
Non-cumulative
subordinated notes were identified as a compound instrument due to the nature of this financial instrument. For these
non-cumulative
subordinated notes, Aegon had an unconditional right to avoid delivering cash or another financial asset to settle the coupon payments. The redemption of the principal was however not at the discretion of Aegon and therefore Aegon had a contractual obligation to settle the redemption in cash or another financial asset or through the exchange of financial assets and liabilities at potentially unfavorable conditions for Aegon. Compound instruments were separated into liability components and equity components. The liability component for the
non-cumulative
subordinated notes was equal to the present value of the redemption amount and carried at amortized cost using the effective interest rate method. The unwinding of the discount of this component was recognized in the income statement. At initial recognition the equity component was assigned the residual amount after deducting the liability component from the fair value of the instrument as a whole. The equity component in US dollars was translated into euro using historical exchange rates.
Incremental external costs that are directly attributable to the issuing or buying back of own equity instruments are recognized in equity, net of tax. For compound instruments incremental external costs that were directly attributable to the issuing or buying back of the compound instruments were recognized proportionate to the equity component and liability component, net of tax.
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The Group recognizes the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where it originally recognized the past transactions or events that generated the distributable profits. A liability for
non-cumulative
dividends payable is not recognized until the dividends have been declared and approved.
When the Group reacquires its own equity instrument and includes the share as an underlying item of direct participating contracts, the Group may elect not to deduct the reacquired instrument from equity and instead account for the reacquired instrument as if it were a financial asset and measure it at FVPL. This election is irrevocable and is made on an
instrument-by-instrument
basis.
Treasury shares are shares issued by Aegon N.V. that are held by Aegon, one of its subsidiaries or by another entity controlled by Aegon. Treasury shares are deducted from Group equity, regardless of the objective of the transaction. No gain or loss is recognized in the income statement on the purchase, sale, issue or cancellation of the instruments. If sold, the difference between the carrying amount and the proceeds is reflected in retained earnings. The consideration paid or received is recognized directly in shareholders’ equity. All treasury shares are eliminated in the calculation of earnings per share and dividend per common share.
2.182.25 Trust pass-through securities and (subordinated) borrowings
A financial instrument issued by the Group is classified as a liability if the contractual obligation must be settled in cash or another financial asset or through the exchange of financial assets and liabilities at potentially unfavorable conditions for the Group.
Trust pass-through securities and (subordinated) borrowings are initially recognized at their fair value including directly attributable transaction costs and are subsequently carried at amortized cost using the effective interest rate method, with the exception of specific borrowings that are designated as at fair value through profit or loss to eliminate, or significantly reduce, an accounting mismatch, or specific borrowings which are carried as at fair value through profit or loss as they are managed and evaluated on a fair value basis. The liability is derecognized when the Group’s obligation under the contract expires, is discharged, or is cancelled.
Subordinated borrowings include the liability component of
non-cumulative
subordinated notes. These notes are identified as a compound instrument due to the nature of this financial instrument. Compound instruments are separated into equity components and liability components. The liability component for the
non-cumulative
subordinated notes is related to the redemption amount. For further information on the accounting policy of the
non-cumulative
subordinated notes, refer tosee note 2.172.24 Equity.
2.19 Insurance contracts
Insurance contracts are accounted for under IFRS 4 Insurance Contracts. In accordance with this standard, Aegon continues to apply the existing accounting policies that were applied prior to the adoption of IFRS with certain modifications allowed by IFRS 4 for standards effective subsequent to adoption. Aegon applies, in general, non-uniform accounting policies for insurance liabilities and insurance related intangible assets to the extent that it was allowed under Dutch Accounting Principles. As a result, specific methodologies applied may differ between Aegon’s operations as they may reflect local regulatory requirements and local practices for specific product features in these local markets. At the time of IFRS adoption, Aegon was applying US GAAP for its United States operations whereas in the Netherlands and the United Kingdom, Aegon was applying Dutch Accounting Principles. Since adoption of IFRS, Aegon has considered new and amended standards in those GAAPs which have become effective subsequent to the date of transition to IFRS. If any changes are made to current accounting policies for insurance contracts, these will be in accordance with IFRS 4.
Insurance contracts are contracts under which the Group accepts a significant risk – other than a financial risk – from a policyholder by agreeing to compensate the beneficiary on the occurrence of an uncertain future event by which he or she will be adversely affected. Contracts that do not meet this definition are accounted for as investment contracts. The Group reviews homogeneous books of contracts to assess whether the underlying contracts transfer significant insurance risk on an individual basis. This is considered the case when at least one scenario with commercial substance can be identified in which the Group has to pay significant additional benefits to the policyholder. Contracts that have been classified as insurance are not reclassified subsequently.
Insurance liabilities are recognized when the contract is entered into and the premiums are charged. The liability is derecognized when the contract expires, is discharged, disposed or cancelled. Within the United States, the Netherlands and the United Kingdom, substantially modified contracts are accounted for as an extinguishment of the original liability and the recognition of a new liability.
Insurance assets and liabilities are valued in accordance with the accounting principles that were applied by the Group prior to the transition to IFRS and with consideration of standards effective subsequent to the date of transition to IFRS, as further
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described in the following paragraphs. In order to reflect the specific nature of the products written, subsidiaries are allowed to apply local accounting principles to the measurement of insurance contracts. All valuation methods used by the subsidiaries are based on the general principle that the carrying amount of the net liability must be sufficient to meet any reasonably foreseeable obligation resulting from the insurance contracts.
a. Life insurance contracts
Life insurance contracts are insurance contracts with life-contingent benefits. The measurement of the liability for life insurance contracts varies depending on the nature of the product.
Liabilities arising from traditional life insurance products that are offered by Aegon, particularly those with fixed and guaranteed account terms, are typically measured using the net premium method. Under this method the liability is determined as the sum of the discounted value of the expected benefits and future administration expenses directly related to the contract, less the discounted value of the expected theoretical premiums that would be required to meet the future cash outflows based on the valuation assumptions used. The liability is either based on current assumptions or calculated using the assumptions established at the time the contract was issued, in which case a margin for risk and adverse deviation is generally included. Furthermore, the liability for life insurance comprises reserves for unearned premiums and accrued annuity benefits payable.
Depending on local accounting principles, the liability may include amounts for future services on contracts where the policy administration charges are higher in the initial years than in subsequent years.
Terms and conditions, including participation features, are considered when establishing the insurance liabilities. Where the Group has discretion over the amount or timing of the bonuses distributed resulting from participation features, a liability is recognized equal to the amount that is available at the reporting date for future distribution to policyholders.
In establishing the liability, guaranteed minimum benefits issued to the policyholder are measured as described in note 2.19.c Embedded derivatives or, if bifurcated from the host contract, as described in note 2.9 Derivatives.
b. Life insurance contracts for account of policyholders
Life insurance contracts under which the policyholder bears the risks associated with the underlying investments are classified as insurance contracts for account of policyholders.
The liability for the insurance contracts for account of policyholders is measured at the policyholder account balance. Contracts with unit-denominated payments are measured at current unit values, which reflect the fair values of the assets of the fund. If applicable, the liability representing the nominal value of the policyholder unit account is amortized over the term of the contract so that interest on actuarial funding is at an expected rate of return.
c. Embedded derivatives
Life insurance contracts may include derivative-like terms and conditions. With the exception of policyholder options to surrender the contract at a fixed amount, contractual features that are not closely related to the insurance contract and that do not themselves meet the definition of insurance contracts are accounted for as derivatives.
Guaranteed minimum benefits
Certain life insurance contracts, issued by the Group, contain guaranteed minimum benefits. Bifurcated guaranteed minimum benefits are classified as derivatives.
In the United States, the additional liability for guaranteed minimum benefits that are not bifurcated is determined each period by estimating the expected value of benefits in excess of the projected account balance and recognizing the excess over the accumulation period based on total expected assessments. The estimates are reviewed regularly and any resulting adjustment to the additional liability is recognized in the income statement. The benefits used in calculating the liabilities are commonly based on the average benefits payable over a range of stochastic scenarios. Where applicable, the calculation of the liability incorporates a percentage of the potential annuitizations that may be elected by the contract holder.
In the Netherlands, an additional liability is established for guaranteed minimum investment returns on group pension plans with profit sharing and on traditional insurance contracts, with profit sharing based on an external interest index, that are not bifurcated. These guarantees are measured at fair value.
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d. Shadow accounting
Shadow accounting allows that all gains and losses on investments affect the measurement of the insurance assets and liabilities in the same way, regardless of whether they are realized or unrealized and regardless of whether the unrealized gains and losses are recognized in the income statement or through other comprehensive income in the revaluation reserve. In some instances, realized gains or losses on investments have a direct effect on the measurement of the insurance assets and liabilities. For example, some insurance contracts include benefits that are contractually based on the investment returns realized by the insurer. In addition, realization of gains or losses on available-for-sale investments can lead to unlocking of VOBA or DPAC and can also affect the outcome of the liability adequacy test to the extent that it considers actual future investment returns. For similar changes in unrealized gains and losses, shadow accounting is applied. If an unrealized gain or loss triggers a shadow accounting adjustment to VOBA, DPAC or the insurance liabilities, the corresponding adjustment is recognized through other comprehensive income in the revaluation reserve, together with the unrealized gain or loss.
Some profit sharing schemes issued by the Group entitle the policyholder to a bonus which is based on the actual total return on specific assets held. To the extent that the bonus relates to gains or losses on available-for-sale investments for which the unrealized gains or losses are recognized through other comprehensive income in the revaluation reserve in shareholders’ equity, shadow accounting is applied. This means that the increase in the liability is also charged through other comprehensive income to shareholders’ equity to offset the unrealized gains rather than to the income statement.
e. Non-life insurance contracts
Non-life insurance contracts are insurance contracts where the insured event is not life-contingent. For non-life products the insurance liability generally includes reserves for unearned premiums, unexpired risk, inadequate premium levels and outstanding claims and benefits. No catastrophe or equalization reserves are included in the measurement of the liability.
The reserve for unearned premiums includes premiums received for risks that have not yet expired. Generally, the reserve is released over the coverage period of the premium and is recognized as premium income.
The liability for outstanding claims and benefits is established for claims that have not been settled and any related cash flows, such as claims handling costs. It includes claims that have been incurred but have not been reported to the Group. The liability is calculated at the reporting date using statistical methods based on empirical data and current assumptions that may include a margin for adverse deviation. Liabilities for claims subject to periodic payment are calculated using actuarial methods consistent with those applied to life insurance contracts. Discounting is applied if allowed by the local accounting principles used to measure the insurance liabilities. Discounting of liabilities is generally applied when there is a high level of certainty concerning the amount and settlement term of the cash outflows.
f. Liability adequacy testing
At each reporting date, the adequacy of the life insurance liabilities (including life insurance contracts for account of policyholders), net of VOBA and DPAC, is assessed using a liability adequacy test.
All tests performed within the Group are based on current estimates of all contractual future cash flows, including related cash flows from policyholder options and guarantees. A number of valuation methods are applied, including discounted cash flow methods, option pricing models and stochastic modeling. Aggregation levels are set either on geographical jurisdiction or at the level of portfolio of contracts that are subject to broadly similar risks and managed together as a single portfolio. Specifically, in the Netherlands the liability adequacy test is performed on a consolidated basis for all life and non-life business, whereas in the Americas and the UK it is performed at the level of the portfolio of contracts. To the extent that the tests involve discounting of future cash flows, the interest rate applied is based on market rates or is based on management’s expectation of the future return on investments. These future returns on investments take into account management’s best estimate related to the actual investments and, where applicable, reinvestments of these investments at maturity. Aegon the Netherlands, as required locally, adjusts the outcome of the liability adequacy test for the difference between the fair value and the book value of the assets that are measured at amortized cost in the statement of financial position. For details on the fair value (measurement) of Aegon’s assets and liabilities, please refer to note 44 Fair value. Only differences between the fair value and the book value build up during the period when the assets were allocated to the insurance portfolio are included in the LAT.
To the extent that the account balances are insufficient to meet future benefits and expenses, any resulting deficiency is recognized in the income statement, initially by impairing the DPAC and VOBA and subsequently by establishing an insurance liability for the remaining loss, unless shadow loss recognition has taken place. In the Netherlands, in situations where market
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interest rates for the valuation of debt securities lead to a change in the revaluation reserve, and where the result of using the same assumptions for the liabilities could lead to a deficiency in the liability adequacy test that should be recognized in the income statement, shadow loss recognition is applied. Shadow loss recognition is applied to the extent that the deficiency of the insurance liabilities relates to the revaluation of debt securities as a result of movements in interest rates, the addition to the insurance liabilities is then offset against the revaluation reserve. If in subsequent periods such a deficiency of the insurance liability is no longer applicable, shadow loss recognition is reversed via the revaluation reserve.
The adequacy of the non-life insurance liability is tested at each reporting date. Changes in expected claims that have occurred, but that have not been settled, are reflected by adjusting the liability for claims and future benefits. The reserve for unexpired risk is increased to the extent that the future claims and expenses in respect of current insurance contracts exceed the future premiums plus the current unearned premium reserve.
2.20 Investment contracts
Aegon conducts its operations through the following type of investment contracts:
Contracts issued by the Group that do not transfer significant insurance risk, but do transfer financial risk from the policyholder to the Group are accounted for as investment contracts. Depending on whether the Group or the policyholder runs the risks associated with the investments allocated to the contract, the liabilities are classified as investment contracts or as investment contracts for account of policyholders. Investment contract liabilities are recognized when the contract is entered into and are derecognized when the contract expires, is discharged, cancelled or substantially modified.
a. Investment contracts with discretionary participation features
Some investment contracts have participation features whereby the policyholder has the right to receive potentially significant additional benefits which are based on the performance of a specified pool of investment contracts, specific investments held by the Group or on the issuer’s net result. If the Group has discretion over the amount or timing of the distribution of the returns to policyholders, the investment contract liability is measured based on the accounting principles that apply to insurance contracts with similar features.
Some unitized investment contracts provide policyholders with the option to switch between funds with and without discretionary participation features. The entire contract is accounted for as an investment contract with discretionary participation features if there is evidence of actual switching resulting in discretionary participation benefits that are a significant part of the total contractual benefits.
b. Investment contracts without discretionary participation features
At inception, investment contracts without discretionary participation features are carried at amortized cost.
Investment contracts without discretionary participation features are carried at amortized cost based on the expected cash flows and using the effective interest rate method. The expected future cash flows are re-estimated at each reporting date and the carrying amount of the financial liability is recalculated as the present value of estimated future cash flows using the financial liability’s original effective interest rate. Any adjustment is immediately recognized in the income statement. For these investment contracts deposit accounting is applied, meaning that deposits are not reflected as premium income, but are recognized as part of the financial liability.
The consolidated financial statements provide information on the fair value of all financial liabilities, including those carried at amortized cost. As these contracts are not quoted in active markets, their value is determined by using valuation techniques, such as discounted cash flow methods and stochastic modeling. For investment contracts without discretionary participation features that can be cancelled by the policyholder, the fair value cannot be less than the surrender value.
c. Investment contracts for account of policyholders
Investment contracts for account of policyholders are investment contracts for which the actual return on investments allocated to the contract is passed on to the policyholder. Also included are participations held by third parties in consolidated investment funds that meet the definition of a financial liability.
Investment contracts for account of policyholders are designated at fair value through profit or loss. Contracts with unit-denominated payments are measured at current unit values, which reflect the fair values of the assets of the fund.
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For unit-linked contracts without discretionary participation features and subject to actuarial funding, the Group recognizes a liability at the funded amount of the units. The difference between the gross value of the units and the funded value is treated as an initial fee paid by the policyholder for future asset management services and recognized as a deferred revenue liability, refer to note 2.23 Deferred gains.
2.212.26 Provisions
A provision is recognized for present legal or constructive obligations arising from past events, when it is probable that it will result in an outflow of economic benefits and the amount can be reliably estimated. Management exercises judgment in evaluating the probability that a loss will be incurred.
The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the reporting date, considering all its inherent risks and uncertainties, as well as the time value of money. The estimate of the amount of a loss requires management judgment in the selection of a proper calculation model and the specific assumptions related to the particular exposure. The unwinding of the effect of discounting is recorded in the income statement as an interest expense.
Onerous contracts
With the exception
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Table of insurance contracts and investment contracts with discretionary participation features for which potential future losses are already considered in establishing the liability, a provision is recognized for onerous contracts in which the unavoidable costs of meeting the resulting obligations exceed the expected future economic benefits. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfill it.Contents
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2.222.27 Assets and liabilities relating to employee benefits
a.(a) Short-term employee benefits
A liability is recognized for the undiscounted amount of short-term employee benefits expected to be settled within one year after the end of the period in which the service was rendered. Accumulating short-term absences are recognized over the period in which the service is provided. Benefits that are not service-related are recognized when the event that gives rise to the obligation occurs.
b.(b) Post-employment benefits
The Group has issued defined contribution plans and defined benefit plans. A plan is classified as a defined contribution plan when the Group has no further obligation than the payment of a fixed contribution. All other plans are classified as defined benefit plans.
Defined contribution plans
The contribution payable to a defined contribution plan for services provided is recognized as an expense in the income statement. An asset is recognized to the extent that the contribution paid exceeds the amount due for services provided.
Defined benefit plans
Measurement
The defined benefit obligation is based on the terms and conditions of the plan applicable on the reporting date. In measuring the defined benefit obligation the Group uses the projected unit credit method and actuarial assumptions that represent the management’s best estimates. The benefits are discounted using an interest rate based on the market yield for high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity that approximate the terms of the related pension liability. Actuarial assumptions used in the measurement of the liability include the discount rate, estimated future salary increases, mortality rates and price inflation. To the extent that actual experience deviates from these assumptions, the valuation of defined benefit plans and the level of pension expenses recognized in the future may be affected. Plan improvements (either vested or unvested) are recognized in the income statement at the date when the plan improvement occurs.
Plan assets are qualifying insurance policies and assets held by long-term employee benefit funds that can only be used to pay the employee benefits under the plan and are not available to the Group’s creditors. They are measured at fair value and are deducted from the defined benefit obligation in determining the amount recognized on the statement of financial position.
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Table For reimbursements by associated third parties of Contentssome or all of the expenditure required to settle a defined benefit obligation, a reimbursement asset is recognized on the basis of the present value of the related obligation, subject to any reduction required if the reimbursement is not recoverable in full.
Notes to the consolidated financial statements
Note 2
Profit or loss recognition
The cost of the defined benefit plans are determined at the beginning of the year and comprise the following components:
 
◆
∎
 Current year service cost which is recognized in profit or loss; and
◆
∎
 Net interest on the net defined benefit liability (asset) which is recognized in profit or loss.
Remeasurements of the net defined benefit liability (asset) which is recognized in other comprehensive income are revisited quarterly and are not allowed to be reclassified to profit or loss in a subsequent period.
Deducted from current year service cost are discretionary employee contributions and employee contributions that are linked to service (those which are independent of the number of years of service). Net interest on the net defined benefit liability (asset) is determined by multiplying the net defined benefit liability (asset) by the applicable discount rate. Net interest on the net defined benefit liability (asset) comprises interest income on plan assets and interest cost on the defined benefit obligation. Whereby interest income on plan assets is a component of the return on plan assets and is determined by multiplying the fair value of the plan assets by the applicable discount rate. The difference between the interest income on plan assets and the actual return on plan assets is included in the remeasurement of the net defined benefit liability (asset). Any movements during the period related to reimbursement assets, will be partly recognized in the income statement (interest cost on the reimbursement right) and partly through other comprehensive income for the difference between the actual return and the interest cost.
Remeasurements of the net defined benefit liability (asset) comprise of:
 
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◆
 Actuarial gains and losses;
Notes to the consolidated financial statements
Note 2
◆ The return on plan assets, excluding amounts included in net interest on the net defined benefit liability (asset); and
◆ Any change in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability (asset).
Past service cost and gains or losses on settlements
Past service cost is the change in the present value of the defined benefit obligation for employee service, resulting from a plan amendment or curtailment.
Gains or losses on curtailments or settlements of a defined benefit plan comprise of the difference between:
 
◆The present value of the defined benefit obligation being settled, as determined on the date of settlement; and
◆The settlement price, including any plan assets transferred and any payments made directly by Aegon in connection with the settlement.
Aegon recognizes (in the income statement) gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs.
c.(c) Share-based payments
The Group has issued share-based plans that entitle selected employees to receive Aegon N.V.Ltd. common shares, subject to
pre-defined
conditions such as the grant price of the shares and (business and personal) performance criteria. The number of shares that will vest may partly depend on Aegon’s relative total shareholder return in comparison with a peer group.
The expenses recognized for these plans are based on the fair value on the grant date of the shares. The fair value is measured at the market price of Aegon N.V.Ltd. common shares, adjusted to take into account the
non-vesting
and market conditions upon which the shares were granted. For example, where the employee is not entitled to receive dividends during the vesting period, this factor is taken into account when estimating the fair value of the shares granted. For the determination of factors such as expected dividends, market observable data has been considered. In addition, where the relative total shareholder return is included in the performance criteria, this factor represents a market condition and hence is taken into account when estimating the fair value of the shares granted.
The cost for long termlong-term incentive plans are recognized in the income statement, together with a corresponding increase in shareholders’ equity, as the services are rendered. During this period the cumulative expense recognized at the reporting date reflects management’s best estimate of the number of shares expected to vest ultimately.
The withholding of shares to fund the payment to the tax authorities in respect of the employee’s withholding tax obligation associated with the share-based payment is accounted for as a deduction from equity for the shares withheld, except to the extent that the payment exceeds the fair value at the net settlement date of the equity instruments withheld.
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2.232.28 Deferred gains
Initial fees and
front-end
loadings paid by policyholders and other clients for future investment management services related to investment contracts without discretionary participation features are deferred and recognized as revenue when the related services are rendered.
2.242.29 Taxation
The income tax charge on the result for the year comprises current and deferred tax. Current tax is calculated taking into account items that are
non-taxable
or disallowed, using rates that have been enacted or substantively enacted by the reporting date and any adjustments to tax payable relating to previous years.
Current tax receivables and payables for current and prior periods reflect the best estimate of the tax amount expected to be paid or received and includes provisions for uncertain income tax positions, if any.
Deferred tax assets and liabilities are recognized, using the liability method, for temporary differences arising between the carrying value and tax value of an item on the balance sheet and for unused tax losses and credits carried forward. Deferred tax assets and liabilities are measured using tax rates applicable that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the deferred tax asset is realized, or the deferred tax liability is settled.
Deferred tax assets are recognized for deductible temporary differences and unused tax losses and credits carried forward to the extent that the realization of the related tax benefit through future taxable profits is probable. The recognition of the deferred tax assets is based on Aegon’s
mid-term
projections including sensitivities and tax planning and is reassessed periodically. Deferred tax liabilities relating to investments in subsidiaries, associates and joint ventures are not recognized if the Group is able to control the timing of the reversal of the temporary difference and it is probable that the difference will not be reversed in the foreseeable future.
Tax assets and liabilities are presented separately in the consolidated balance sheet except where there is a legally enforceable right to offset the tax assets against tax liabilities within the same tax jurisdiction and the intention to settle such balances on a net basis.
Tax assets and liabilities are recognized in relation to the underlying transaction either in profit and loss, other comprehensive income or directly in equity.
2.252.30 Contingent assets and liabilities
Contingent assets are disclosed in the notes if the inflow of economic benefits is probable, but not virtually certain. When the inflow of economic benefits becomes virtually certain, the asset is no longer contingent and its recognition is appropriate.
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A provision is recognized for present legal or constructive obligations arising from past events, when it is probable that it will result in an outflow of economic benefits and the amount can be reliably estimated.
reliab
ly e
stim
ated. If the outflow of economic benefits is not probable, a contingent liability is disclosed, unless the possibility of an outflow of economic benefits is remote.
2.26 Premium income
Gross premiums, including recurring and single premiums, from life and non-life insurance and investment contracts with discretionary participation features are recognized as revenue when they become receivable. A portion of the single premiums are deferred over the benefit period of the contract as unearned premium reserve. For products where deposit accounting is required, the deposits are not reflected as premium income, but are recognized as part of the financial liability. For these products the surrender charges and charges assessed have been included in gross premiums.
Premium loadings for installment payments and additional payments by the policyholder towards costs borne by the insurer are included in the gross premiums. Rebates that form part of the premium rate, such as no-claim rebates, are deducted from the gross premium, others are recognized as an expense. Depending on the applicable local accounting principles, bonuses that are used to increase the insured benefits may be recognized as gross premiums. The insurance premiums for the original contracts are presented gross of reinsurance premiums paid.
2.27 Investment income
For interest-bearing assets, interest is recognized as it accrues and is calculated using the effective interest rate method. Fees and commissions that are an integral part of the effective yield of the financial assets or liabilities are recognized as an
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adjustment to the effective interest rate of the instrument. Investment income includes the interest income and dividend income on financial assets carried at fair value through profit or loss.
Investment income also includes rental income due.
2.28 Fee and commission income
Fees and commissions from investment management services and mutual funds are performed on an ongoing basis evenly throughout the year and are accounted for monthly (1/12 of the contractual agreement). Performance fees may be charged to policyholders in the event of outperformance in the investments compared to predefined benchmark levels. They are accounted for only when specified hurdles for generating performance fees are achieved i.e. when the full performance obligation is met.
Aegon acts also as an insurance broker selling insurance contracts of other insurance companies to policyholders and receiving direct sales commission as well as commissions over time when the same policyholders renew their contracts. These commissions are recognized only when received as policyholders’ renewals are not certain enough to be recorded upfront.
2.29 Policyholder claims and benefits
Policyholder claims and benefits consist of claims and benefits paid to policyholders, including benefits in excess of account value for products for which deposit accounting is applied and the change in the valuation of liabilities for insurance and investment contracts. It includes internal and external claims handling costs that are directly related to the processing and settlement of claims. Amounts receivable in respect of salvage and subrogation are also considered.
2.30 Results from financial transactions
Results from financial transactions include:
Net fair value change of general account financial investments at fair value through profit or loss, other than derivatives
Net fair value change of general account financial investments at fair value through profit or loss, other than derivatives include fair value changes of financial assets carried at fair value through profit or loss. The net gains and losses do not include interest or dividend income.
Realized gains and losses on financial investments
Gains and losses on financial investments include realized gains and losses on general account financial assets, other than those classified as at fair value through profit or loss.
Net fair value change of derivatives
All changes in fair value are recognized in the income statement, unless the derivative has been designated as a hedging instrument in a cash flow hedge or a hedge of a net investment in a foreign operation. Fair value movements of fair value hedge instruments are offset by the fair value movements of the hedged item, and the resulting hedge ineffectiveness, if any, is included in this line. In addition, the fair value movements of bifurcated embedded derivatives are included in this line.
Net fair value change on for account of policyholder financial assets at fair value through profit or loss
Net fair value change on for account of policyholder financial assets at fair value through profit or loss includes fair value movements of investments held for account of policyholders (refer to note 2.8 Investments for account of policyholders). The net fair value change does not include interest or dividend income.
Other
In addition, results from financial transactions include gains/losses on real estate (general account and account of policyholders), net foreign currency gains/(losses) and net fair value change on borrowings and other financial liabilities and realized gains on repurchased debt.
2.31 Impairment charges/(reversals)
Impairment charges and reversals include impairments and reversals on investments in financial assets, impairments and reversals on the valuation of insurance assets and other non-financial assets and receivables. Impairment of deferred policy acquisition costs is included in note 15 Impairment charges/ (reversals).
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2.32 Interest charges and related fees
Interest charges and related fees includes interest expense on trust pass-through securities and other borrowings. Interest expense on trust pass-through securities and other borrowings carried at amortized cost is recognized in profit or loss using the effective interest method.
2.33 Leases
As a lessee
The Group recognizes a
right-of-use
asset and a lease liability at the lease commencement date. The
right-of-use
asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The
right-of-use
asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the
right-of-use
asset or the end of the lease term. The estimated useful lives of
right-of-use
assets are determined on the same basis as those of real estate and equipment. In addition, the
right-of-use
asset is periodically reduced by impairment losses (using the same rate to measure the lease liability), if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option. The Group presents
right-of-use
assets that do not meet the definition of investment property in ‘Other“Other assets and receivables’receivables” and lease liabilities in ‘Other liabilities’“Other liabilities” in the statement of financial position.
Short-term leases and leases of
low-value
assets The Group has elected not to recognize
right-of-use
assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of
low-value
assets, including small office equipment. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
As a lessor
Where the Group is the lessor under an operating lease, the assets subject to the operating lease arrangement are presented in the statement of financial position according to the nature of the asset. Income from these leases is recognized in the income statement on a straight line basis over the lease term, unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished.
2.32 Other operating expenses
With the exception of expenses made to acquire insurance contracts and investment contracts with discretionary participating features, all expenses are incurred as the related activities are performed.
2.342.33 Events after the reporting period
The financial statements are adjusted to reflect events that occurred between the reporting date and the date when the financial statements are authorized for issue, provided they give evidence of conditions that existed at the reporting date.
Events that are indicative of conditions that arose after the reporting date are disclosed, but do not result in an adjustment of the financial statements themselves.
3 Critical accounting estimates and judgment in applying accounting policies
ApplicationIn preparing these consolidated financial statements, Aegon has made judgments, estimates and assumptions that affect the application of the Group’s accounting policies inand the preparation of the financial statements requires management to apply judgment involving assumptions and estimates concerning future results or other developments, including the likelihood, timing orreported amount of future transactions or events. Those estimates are inherently subject to changeassets, liabilities, income and actualexpenses. Actual results couldmay differ from thosethese estimates.
Included among the material (or potentially material) reported amounts and disclosures that require extensive use of estimates are:are the fair value of certain invested assets and derivatives deferred policy acquisition costs (please refer to paragraph 2.13)see note 38), valuethe measurement of business acquired(re)insurance contracts and other purchased intangible assetsinvestment contracts with discretionary participating features (please refer to paragraph 2.6)see note 29), goodwill (please refer to paragraph 2.6), policyholder claims and benefits (please refer to paragraph 2.29), insurance guarantees (please refer to paragraph 2.19), pension plans (please refer to paragraph 2.22), income taxes (please refer to paragraph 2.24) and the potential effectsmeasurement of resolving litigation mattersthe expected credit loss allowance (please refer to paragraph 2.25)see note 4). Accounting policies that are critical to the financial statement presentation and that require complex estimates or significant judgment are described in the following sections.
 
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Note 3
   
   
 
 
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized prospectively.
Macro-economic context
When making judgments, estimates and assumptions, Aegon has taken into consideration the current macro-economic context.
In 2022,2023, the Russian invasion ofwar in the Ukraine continued and another conflict between Israel and Hamas began. These events caused a humanitarian crisis and also impacted global financial markets and caused significant economic turbulence. Aegon closely monitors financial and wider economic developments to understand our exposure to potential shocks in the markets where we invest, and Aegon works proactively to mitigate related risks. The inflation rates for the main economies that Aegon is exposed to increased significantly. Aegon has implemented an inflation hedge covering liabilities with conditional indexation rightspeaked in 2022 and first half of 2023, then it started decreasing during the Netherlands to address the uncertainty around the rise in inflation.second half of 2023. In the United States, the inflation risk within long-term care claims derives primarily from wage inflation, which Aegon mitigatemitigates by offering customers downgrades of the maximum daily benefit as an alternative to premium rate increases. In addition, Aegon’s expense savings program helpshelped to mitigate the impact of rising inflation.
inflation in the beginning of 2023. High inflation has prompted central banks to start raising interest rates significantly. As a consequence, interest rates have increased significantly in Aegon’s main markets during 2022, however in 2023 interest rates have started to stabilize. Equity markets for Aegon have shown recovery in 2023 compared to December 31, 2021. Equity markets in Aegon’s three main markets decreased in 2022 compared to an increasea decline of equity markets in 2021. Additionally, credit2022. Credit spreads have widened in 2022 and affected Aegon’s results negatively.
Uncertainty resulting from COVID-19
In 2022 the COVID-19 pandemic continued to cause disruption to business, markets, and the industry. Progress on vaccinations has reduced the spread of COVID-19 and will likely continue to reduce the effects of the public health crisis on the economy. However, the pace of vaccinations has slowed down, and new strains of the virus and reduced availability of healthcare remain risks.
In 2022, Aegon’s operating result in the Americas was impacted by EUR 147 million of adverse mortality in Life (2021: EUR 345 million). Claims directly attributable to COVID-19 as the cause of death are the main driver for the adverse mortality. Compared to 2021, US COVID-19 related claims have declinednot changed significantly in 2022. Favorable morbidity experience in Accident & Health and is mostly related to Long-Term Care insurance with higher claims terminations due to higher mortality and discharges from care facilities. In 2022, Aegon continued to observe positive morbidity in Long-Term Care, but less favorable when compared to prior year. By the end of 2022, LTC morbidity was close to expectations. During 2022, Aegon released the remaining Long-Term Care incurred but not reported (IBNR) reserve established during the peak of the pandemic.over 2023.
As part of its normal process, Aegon has updated its sensitivity analysis for the impact of changes in financial assumptions on its IFRS equity and net result included in note 4 Financial risks.
Aegon continues to monitor the relevant market and the economic factors to proactively manage the associated risks. Management believes that the most significant risks are related to financial markets (particularly credit, equity, and interest rates risks) and underwriting risks (particularly related to mortality, morbidity, and policyholder behavior).
Management’s assessment of going concern
The consolidated financial statements of Aegon have been prepared assuming a going concern basis of accounting based on the reasonable assumption that the Company is, and will be, able to continue its normal course of business in the foreseeable future. Relevant facts and circumstances relating to the consolidated financial position on December 31, 2022,2023, were assessed in order to reach the going concern assumption. The main areas assessed are the financial performance, capital adequacy, financial position and flexibility, liquidity, ability to access capital markets, leverage ratios and the level of Cash Capital at Holding. For further details, refer tosee note 4337 Capital management and solvency. Considering all these areas management concluded that the going concern assumption for Aegon is appropriate in preparing the consolidated financial statements.
Valuation of assetsstatements and liabilities arising from life insurance contracts
The valuation of certain assets and liabilities arising from insurance contractsthere is developed using complex valuation models. The liability for life insurance contracts with guaranteed or fixed account terms is either based on current assumptions, on the assumptions established at inception of the contract, reflecting the best estimates at the time increased with a margin for adverse deviation, or on the valuation assumptions (historical cost), without risk margin. All contracts are subject to liability adequacy testing which reflects management’s current estimates of future cash flows (including investment returns). To the extent that the liability is based on current assumptions, a change in assumptions will have an immediate impact on the income statement. Also, if a change in assumption results in not passing the liability adequacy test, the entire deficiency is recognized in the income statement. To the extent that the deficiency relates to unrealized gains and losses on available-for-
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sale investments, the additional liability is recognized through other comprehensive income in the related revaluation reserve in shareholders’ equity.
Aegon the Netherlands, as required locally, adjusts the outcome of the liability adequacy test for the difference between the fair value and the book value of the assets that are measured at amortized cost in the statement of financial position. Mortgage loans and private loans are the primary asset classes for which the difference between the fair value and the book value of assets impacts the LAT. For details on the fair value (measurement) of Aegon’s assets and liabilities, please refer to note 44 Fair value and to note 51 Discontinued operations.
Some insurance contracts without a guaranteed or fixed contractual term contain guaranteed minimum benefits. Depending on the nature of the guarantee, it may either be bifurcated and presented as a derivative, or be reflected in the value of the insurance liability in accordance with local accounting principles. Given the dynamic and complex nature of these guarantees, stochastic techniques under a variety of market return scenarios are often used for measurement purposes. Such models require management to make numerous estimates based on historical experience and market expectations. Changes in these estimates will immediately affect the income statement. Refer to note 36 “Guarantees in insurance contracts” for more information.
In addition, certain acquisition costs related to the sale of new policies and the purchase of policies already in force are recorded as DPAC and VOBA assets respectively, and are amortized to the income statement over time. If the assumptions relating to the future profitability of these policies are not realized, the amortization of these costs could be accelerated and may require write-offs due to unrecoverability.
no significant doubt about going concern.
Actuarial and economic assumptions
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amount of insurance related assets and liabilities within the year ending December 31, 2023, is included in note 29 on Insurance contracts, reinsurance contracts held and investment contracts with discretionary participation features.
Measurement of the expected credit loss allowance (“ECL”)
The mainmeasurement of the expected credit loss allowance for financial assets measured at amortized cost and FVOCI is an area that requires the use of complex models and significant assumptions about future economic conditions and credit behavior (e.g. the likelihood of customers defaulting and the resulting losses). Explanation of the inputs, assumptions and estimation techniques used in measuring DPAC, VOBAECL is further detailed in note 4.2 – Credit risk, which also sets out key sensitivities of the ECL to changes in these elements.
A number of significant judgments are also required in applying the accounting requirements for measuring ECL, such as:
∎
Determining criteria for significant increase in credit risk;
∎
Choosing appropriate models and assumptions for the measurement of ECL;
∎
Establishing the number and relative weightings of forward-looking scenarios for each type of product/market and the associated ECL; and
∎
Establishing groups of similar financial assets for the purposes of measuring ECL.
Detailed information about the judgments and estimates made by the liabilities for life insurance contracts with fixed or guaranteed terms relate to mortality, morbidity, investment returnGroup in the above areas and future expenses. Depending on local accounting principles, surrender, lapse, and utilization rates may be considered.
Mortality tables applied are generally developed based on a blend of company experience and industry wide studies, taking into consideration product characteristics, own risk selection criteria, target market and past experience. Mortality experience is monitored through regular studies,information incorporating the results of which are fedforward-looking information into the pricing cycle for new products and reflected in the liability calculation when appropriate. For contracts insuring survivorship or mortality, allowance may be made for further longevity or mortality improvements. Morbidity assumptions are based on own claims severity and frequency experience, adjusted where appropriate for industry information.
Investment assumptions are prescribed by the local regulator, market observable or based on management’s future expectations. In the latter case, the anticipated future investment returns are set by management on a countrywide basis, considering available market information and economic indicators. A significant assumption related to estimated gross profits on variable annuities and variable life insurance products in the United States and somemeasurement of the smaller countries,ECL is the annual long-term growth rateset out in note 4.2 – Credit risk.
Classification of financial assets
The assessment of the underlying assets. The reconsideration of this assumption may affectbusiness model to determine within which classification the original DPAC or VOBA amortization schedule, referred to as DPAC or VOBA unlocking. The difference between the original DPAC or VOBA amortization schedule and the revised schedule, which is based on actual and estimates of future gross profits, is recognized in the income statement as an expense or a benefit in the period of determination.
Assumptions on future expensesfinancial assets are based on the current level of expenses, adjusted for expected expense inflation if appropriate. In Aegon the Netherlands, the expense basis makes an allowance for planned future cost savings, which are included in the liability adequacy test.
Surrender and lapse rates depend on product features, policy duration and external circumstances such as the interest rate environment and competitor behavior. For policies with account value guarantees based on equity market movements, a dynamic lapse assumption is utilized to reflect policyholder behavior basedheld, depends on whether the guarantee iscontractual terms of the assets are solely payments of principal and interest (“SPPI”) on the principal amount outstanding.
Detailed information about the judgments and estimates made by the Group in the money. Own experience, as well as industry published data,SPPI and business model review are usedset out in establishing assumptions. Lapse experience is correlated to mortality and morbidity levels, as higher or lower levels of surrenders may indicate future claims will be higher or lower than anticipated. Such correlations are accounted for in the mortality and morbidity assumptions based on the emerging analysis of experience.
note 19 – Investments.
 
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Note 3Financial information
  Sustainability information
   
   
 
 
Actuarial assumption and model updates
Assumptions are reviewed periodically in the second quarter for the Americas and in the fourth quarter for Europe and Asia,The classification of financial assets is based on historical experience, observable market data, including market transactions such as acquisitions and reinsurance transactions, anticipated trends and legislative changes. Similarly,Aegon’s business model for managing the models and systems used for determining our liabilities are reviewed periodically and, if deemed necessary, updated based on emerging best practices and available technology.
During 2022, Aegon implemented actuarial assumption and model updates resulting in a net EUR 480 million charge to result before tax (2021: EUR 298 million charge). This is mainly related to Aegon’s businesses in the Americasfinancial assets and the Netherlands.
Assumption changes and model updates in the Americas led to a net adverse impact of EUR 354 million and is mainly driven by charges from reinsurance rate increases and various actuarial assumption updates. The latter mainly related to updated policyholder behaviour and mortality assumption in Individual Life.
Assumption changes and model updates in the Netherlands led to an unfavorable impact of EUR 118 million and is mainly related to adverse impactscontractual cash flow characteristics of the annual updatefinancial assets. The classification of financial assets determines how they are accounted for and how they are measured on an ongoing basis. Based on business model and cash flow characteristics, instruments are accounted for in one of the mortgage conditional prepayment rate and expense methodology.
For the years 2020 through 2022, Aegon kept its long-term equity market return assumptionfollowing measurement categories for the estimated gross profits on variable life and variable annuity products in the Americas at 8%. The long term credit spread assumption, net of assumed defaults and expenses, on our most common corporate bonds is 120bps. The 90-day Treasury yield was 4.70%, 0.14% and 0.15% at December 31, 2022, 2021 and 2020 respectively. During 2022, the 90-day Treasury yield was assumed to have a uniform grading over 10 years to 2.25%, which was a change from the assumption during 2021 and 2020 of grading over 10 years to 2.0% and 1.5%, respectively. On a quarterly basis, the estimated gross profits are updated for the difference between the estimated market return and the actual market return.financial assets:
Sensitivities
Please note that the sensitivities listed in the disclosures below represent sensitivities to Aegon’s position at the balance sheet date for the respective years, and are measured in accordance with IFRS 4 and IAS 39. 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
Sensitivity analysis of DPAC and VOBA balances to changes in in expected long-term equity growth rate
 
   
        2022        
          2021         
   
Estimated approximate effect
   DPAC /VOBA   DPAC /VOBA 
   
1% decrease in the expected long-term equity growth rate
   (113)   (95) 
The DPAC and VOBA balances for these products in the United States amounted to EUR 2.1 billion at December 31, 2022 (2021: EUR 2.1 billion).
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∎
 Debt instruments at amortized cost (e.g. loans, debt securities, cash equivalents);
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∎
 Debt instruments at fair value through other comprehensive income (FVOCI) with cumulative gains and losses reclassified to profit or loss upon
About Aegonde-recognition
(e.g. debt securities, security lending, repo);
 
Governance∎
Debt instruments, derivatives, and risk management
Financial information
equity instruments at fair value through profit or loss (FVPL);
 
Non-financial information
∎		Equity instruments designated as measured at FVOCI with gains and losses remaining in other comprehensive income (OCI), i.e. without recycling
∎
A financial asset will be measured at amortized cost if both of the following conditions are met:
 a.
the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows
(held-to-collect);
and
 b.the contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.
Sensitivity analysis of net result to changes in various underwriting risks
   
        2022        
          2021         
   
Estimated approximate effect
   Net Result   Net Result 
   
10% increase to mortality assumption
   (222)   (128) 
   
20% increase in the lapse rate assumption
   15   71 
Any reasonably possible changes in the other assumptions Aegon uses to determine EGP margins (i.e. maintenance expenses) would reduce net result by less than EUR 14 million (2021: EUR 8 million).
Sensitivity on long term care (LTC) products in the United States
After tax sensitivities of significant product liability assumptions on the LTC IFRS after-tax Gross Present Value Reserve (GPV) are indicated below. The GPV is the liability as determined on a best estimate assumption basis.
Sensitivity analysis of GPV to changes in various underwriting risks
   
        2022        
          2021         
Estimated approximate effect
   GPV   GPV 
5% increase in the utilization rates
   208   195 
   
5% decrease in the utilization rates
   (222)   (201) 
   
10% decrease expected mortality
   129   122 
   
10% increase expected mortality
   (123)   (114) 
Removing the morbidity improvement assumption, which is a component of the utilization assumption, would result in a GPV increase of approximately EUR 349 million (2021: EUR 309 million), of which EUR 233 million (2021: EUR 194 million) relates to the loss recognition block.
Removing future mortality improvement would result in a GPV decrease of approximately EUR 100 million (2021: EUR 112 million).
Determination of fair value and fair value hierarchy
Note 38 Fair value determines the fair value of financial instruments with significant unobservable inputs (i.e. level 3 financial assets).
The following is a description of Aegon’s methods of determining fair value, and a quantification of its exposure to assets and liabilities measured at fair value.
Fair value is defined as the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions (i.e. an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability). A fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either:
◆
∎
 In the principal market for the asset or liability; or
◆
∎
 In the absence of a principal market, in the most advantageous market for the asset or liability.
Aegon uses the following hierarchy for measuring and disclosing of the fair value of assets and liabilities:
 
◆
∎
 Level I: quoted prices (unadjusted) in active markets for identical assets or liabilities that Aegon can access at the measurement date;
◆
∎
 Level II: inputs other than quoted prices included within Level I that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices of identical or similar assets and liabilities) using valuation techniques for which all significant inputs are based on observable market data; and
◆
∎
 Level III: inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) using valuation techniques for which any significant input is not based on observable market data.
The best evidence of fair value is a quoted price in an actively traded market. In the event that the market for a financial instrument is not active or quoted market prices are not available, a valuation technique is used.
The degree of judgment used in measuring the fair value of assets and liabilities generally inversely correlates with the level of observable valuation inputs. Aegon maximizes the use of observable inputs and minimizes the use of unobservable valuation inputs when measuring fair value. Financial instruments, for example, with quoted prices in active markets generally have more
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pricing observability and therefore less judgment is used in measuring fair value. Conversely, financial instruments for which no quoted prices are available have less observability and are measured at fair value using valuation models or other pricing techniques that require more judgment.
The assets and liabilities categorization within the fair value hierarchy is based on the lowest input that is significant to the fair value measurement.
An active market is one in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The judgment as to whether a market is active may include, although not necessarily determinative, lower transaction volumes, reduced transaction sizes and, in some cases, no observable trading activity
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for short periods. In inactive markets, assurance is obtained that the transaction price provides evidence of fair value or it is determined that adjustments to transaction prices are necessary to measure the fair value of the instrument.
The majority of valuation techniques employ only observable market data, and so the reliability of the fair value measurement is high. However, certain assets and liabilities are valued on the basis of valuation techniques that feature one or more significant market inputs that are unobservable and, for such assets and liabilities, the derivation of fair value is more judgmental. An instrument is classified in its entirety as valued using significant unobservable inputs (Level III) if, in the opinion of management, a significant proportion of the instrument’s carrying amount is driven by unobservable inputs. ‘Unobservable’“Unobservable” in this context means that there is little or no current market data available from which to determine the price at which an at arm’s length transaction would be likely to occur. It generally does not mean that there is no market data available at all upon which to base a determination of fair value. Additional information is provided in the table headed ‘Effect“Effect of changes in significant unobservable assumptions to reasonably possible alternatives’alternatives” in note 4438 Fair Value. While Aegon believes its valuation techniques are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain instruments (both financial and
non-financial)
could result in a different estimate of fair value at the reporting date.
The valuation techniques applied to financial instrument affected by IBOR reforms remain consistent with those of other market participants, and the uncertainty on the outcome of the reforms has not affected the classification of the instruments.
To operationalize Aegon’s fair value hierarchy, individual instruments (both financial and
non-financial)
are assigned a fair value level based primarily on the type of instrument and the source of the prices (e.g., index, third-party pricing service, broker, internally modeled). Periodically, this logic for assigning fair value levels is reviewed to determine if any modifications are necessary in the context of the current market environment.
4 Financial risks
4.1 General
GeneralInsurance risks are described in note 29.4 for risk exposures arising from contracts within the scope of IFRS 17. Financial risks typically include, but are not limited to, credit risk, liquidity risk and market risk.
As an insurance group, Aegon is exposed to a variety of risks. Aegon’s largest exposures are to changes in financial markets (e.g. foreign currency, interest rate, credit and equity market risks) that affect the value of the investments, liabilities from products that Aegon sells and deferred expenses and value of business acquired.expenses. Other risks include insurance related risks, such as changes in mortality, morbidity, bond credit spread and liquidity premium, which are discussed in note 3429 Insurance contracts. Aegon manages risk at local level where business is transacted, based on principles and policies established at the Group level. Aegon’s integrated approach to risk management involves similar measurement of risk and scope of risk coverage to allow for aggregation of the Group’s risk position.
To manage the risk from changes in financial markets, Aegon’s products are priced using a market-consistent framework and comprehensive asset liability management (ALM) programs are implemented to ensure that the assets backing policyholder benefits are invested prudently over the long term. A range of ALM techniques are used across the Group. These range in terms of sophistication and complexity from cash-flow matching (for traditional fixed annuities) to duration matching (for the Universal Life range of products) to derivative-based semi-static and dynamic hedges (to match variable annuities)annuities and indexed universal life.).
To manage its risk exposure, Aegon has risk policies in place. Many of these policies are group-wide while others are specific to the unique situation of local businesses. For ALM specifically, the Enterprise Risk Management (ERM) framework includes several risk policies that govern ALM strategies, such as the Investment and Counterparty Risk Policy (ICRP). The ICRP governs the management of investment risks associated with credit, equity, property, alternative asset classes, interest rate and currency risk in addition to option markets, implied volatility risk, interest rate options and swaptions. As well as product-level ALM programs, subsidiary businesses are required by the ICRP to maintain overarching entity-level ALM strategies that set
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the direction and limits for the aggregated product-level programs. Significant or complex ALM strategies are approved at group level, and all programs are subject to Group Risk oversight.
Together with the ICRP, which guides ALM strategy, several other ERM policies govern concentration risk, liquidity risk, use of derivatives and securities lending and repos. As Aegon uses derivatives extensively, collateral calls can be significant
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depending on market circumstances. Liquidity is managed at legal entity level in the first instance with central coordination by Aegon N.V. The largeLtd. Aegon US and Dutch units may use external market solutions to match projected liquidity requirements with funding.
Next to guidance, the Group level policies also provide limits to the Group’sAegon’s exposure to major risks such as equity, interest rates, credit, and currency. The limits in these policies in aggregate remain within the Group’sAegon’s overall tolerance for risk and the Group’s financial resources. Operating within this policy framework, Aegon employs risk management programs including ALM processes and models and hedging programs (which are largely conducted via the use of financial derivative instruments). These risk management programs are in place in each country unit and are not only used to manage risk in each unit but are also part of the Group’sAegon’s overall risk strategy.
Aegon operates a Derivative Use Policy to govern its usageuse of derivatives. This policy establishes the control, authorization, execution and monitoring requirements of the usage of such instruments. In addition, the policy stipulates necessary mitigation of credit risk created through derivatives management tools. For derivatives, counterparty credit risk is normally mitigated by requirements to post collateral via credit support annex agreements or through a central clearing house.
As part of its risk management programs, Aegon takes inventory of its current risk position across risk categories. Aegon also measures the sensitivity of net result and shareholders’ equity under both deterministic and stochastic scenarios. Management uses the insight gained through these ‘what“what if?’” scenarios to manage the Group’s risk exposure and capital position. The models, scenarios and assumptions used are reviewed regularly and updated as necessary.
Results of Aegon’s sensitivity analyses are presented throughout this section to show the estimated sensitivity of CSM, net result and shareholders’ equity to various scenarios. For each type of market risk, the analysis shows how net result and shareholders’ equity would have been affected by changes in the relevant risk variable that were reasonably possible atvariable. In case of insurance contracts, changes in assumptions could have immediate impact on net result, OCI and on CSM, depending on the reporting date.measurement model. For each sensitivity test the impact of a reasonably possible change in a single factor is shown. Management action is taken into account to the extent that it is part of Aegon’s regular policies and procedures, such as established hedging programs. However, incidental management actions that would require a change in policies and procedures are not considered.
Each sensitivity analysis reflects the extent to which the shock tested would affect management’s critical accounting estimates and judgment in applying Aegon’s accounting policies. Market-consistent assumptions underlying the measurement of
non-listed
assets and liabilities are adjusted to reflect the shock tested. The shock may also affect the measurement of assets and liabilities based on assumptions that are not observable in the market. For example, a shock in interest rates may lead to changes in the amortization schedule of DPAC or to increased impairmentexpected credit losses on equitydebt investments. Although management’s short-term assumptions may change if there is a reasonably possible change in a risk factor, long-term assumptions will generally not be revised unless there is evidence that the movement is permanent. This fact is reflected in the sensitivity analyses.
The accounting mismatch inherent in IFRS is also apparent in the reported sensitivities. A change in interest rates has an immediate impact on the carrying amount of assets measured at fair value. However, the shock will not have a similar effect on the carrying amount of the related insurance liabilities that are measured based on locked-in assumptions or on management’s long-term expectations. Consequently, the different measurement bases for assets and liabilities lead to increased volatility in IFRS net result and shareholders’ equity. Aegon has classified a significant part of its investment portfolio as ‘available-for-sale’, which is one of the main reasons why the economic shocks tested have a different impact on net result than on shareholders’ equity. Unrealized gains and losses on these assets are not recognized in the income statement but are booked through other comprehensive income to the revaluation reserves in shareholders’ equity, unless impaired. As a result, economic sensitivities predominantly impact shareholders’ equity but leave net result unaffected. The effect of movements of the revaluation reserve on capitalization ratios and capital adequacy are minimal. Aegon’s target ratio for the composition of its capital base is based on shareholders’ equity excluding the revaluation reserve.
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The sensitivities do not reflect what the net result for the period would have been if risk variables had been different because the analysis is based on the exposures in existence at the reporting date rather than on those that actually occurred during the year. Nor are the results of the sensitivities intended to be an accurate prediction of Aegon’s future shareholders’ equity or earnings. The analysis does not take into account the impact of future new business, which is an important component of Aegon’s future earnings. It also does not consider all methods available to management to respond to changes in the financial environment, such as changing investment portfolio allocations or adjusting premiums and crediting rates. Furthermore, the results of the analyses cannot be extrapolated nor can be interpolated for wider variations since effects do not tend to be linear.
Concentration risk for financial risks are measured and managed at the following levels:
 
◆
∎
 Concentration per risk type: Risk exposures are measured per risk type as part of Aegon’s internal economic framework. A risk tolerance framework is in place which sets risk limits per risk type to target desired risk balance and promote diversification across risk types;
◆
∎
 Concentration per counterparty: Risk exposure is measured and risk limits are in place per counterparty as part of the Counterparty Name Limit Policy; and
◆
∎
 Concentration per sector, geography and asset class: Aegon’s investment strategy is translated in investment mandates for its internal and external asset managers. Through these investment mandates limits on sector, geography and asset class are set. Compliance monitoring of the investment mandates is done by the insurance operating companies.
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Moreover, concentration of financial risks are measured in Aegon business planning cycle. As part of business planning, the resilience of Aegon’s business strategy is tested in several extreme event scenarios. In the Adverse Financial scenario, financial markets are stressed without assuming diversification across different market factors. Within the projection certain management actions may be implemented when management deems this necessary.
Aegon’s significant financial risks and related financial information are explained in the order as follows:
 
◆
∎
 Credit risk (note 4.2)
◆
∎
Market risk (note 4.3)
∎
 Equity market risk and other investment risks
◆
∎
 Interest rate risk
◆
∎
 Currency exchange risk
◆
∎
 Liquidity risk (note 4.4)
Certain information in this note is presented per segment, please refer tosee note 5 Segment information for the definition of Aegon’s segments.
4.2 Credit risk
Credit risk is the risk of financial loss to Aegon if a counterparty to a reinsurance contract or financial instrument fails to meet its contractual obligations; the risk of economic loss due to the deterioration in the financial condition of counterparties, either through fair value losses on traded securities or through defaults on traded securities, loans and mortgages.
Aegon implemented policies and procedures to govern credit limits and processes to manage credit risk, concentration risk and counterparty risk with regards to all the Group’s material businesses with credit exposures in scope, including bonds, loans, cash and equivalents, collateralized assets, reinsurance assets, and assets measured at fair value. The Group uses risk gradings aligned with the major credit rating agencies, and in case of specific asset portfolios like residential mortgage loans implements internal risk gradings that reflect its assessment of the probability of default of individual counterparties.
The credit grades are calibrated such that the risk of default increases exponentially at each higher risk grade. For example, this means that the difference in the Probability of Default (PD) between AAA and A grade is lower than the difference in the PD between BBB and B rating grade.
4.2.1 Aegon’s maximum exposure to credit risk
As premiums and deposits are received, these funds are invested to pay for future policyholder obligations. For assets backing insurance liabilities measured under the general account products,model and the premium allocated approach, as well as other “free” assets, Aegon typically bears the risk for investment performance which is equal to the return of principal and interest. Aegon is exposed to credit risk on its general account fixed-income portfolio (debt securities, mortgages and private placements),
over-the-counter
derivatives and reinsurance contracts. Some issuers have defaulted on their financial obligations for various reasons, including bankruptcy, lack of liquidity, downturns in the economy, downturns in real estate values, operational failure and fraud. During financial downturns, Aegon can incur defaults or other reductions in the value of these securities and loans, which could have a materially adverse effect on Aegon’s business, results of operations and financial condition. Investments
The estimates of best estimate liability for account of policyholders are excluded as the policyholder bears the credit risk associated with the investments.
The table that follows shows the Group’s(re)insurance contracts assets represent Aegon’s maximum exposure to credit risk from investmentsthese assets. Please see the cash flow information in general account financial assets, as well as general account derivativesnote 29 (Insurance contracts and reinsurance assets, collateral heldcontracts held).
Annual Report on Form 20-F 2023  |  179 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
The following table contains an analysis of Aegon’s maximum credit risk exposure from financial assets. Please see note 39 and net exposure. Please refer to note 45 and 4640 for further information on capital commitments and contingencies and on collateral given, which may expose the Group to credit risk.
 
Aegon Annual Report on Form 20-F
2022
  |  
171
2023
 
Maximum
exposure
to credit
risk
   Cash   Securities  
 Letters of
credit /
guaran-
tees
  
Real
estate
 property
  
 Master
netting
agree-
ments
   Other  
Total
 collateral
  
Surplus
collateral
(or
overcol-
 lateraliza-
tion)
  
Net 
 exposure 
Debt securities  55,811   -   -   93   -   -   -   93   -   55,718 
Money market and other short-term investments  8,695   -   442   -   -   -   -   442   24   8,277 
Loans  10,183   31   -   20   23,711   -   -   23,762   13,579   - 
Unconsolidated investment funds  167,411   -   -   -   -   -   -   -   -   167,411 
Deposits with financial institutes  2,289   -   -   -   -   -   -   -   -   2,289 
Other investments  5,040   -   -   -   -   -   -   -   -   5,040 
Derivative assets  1,429   832   669   -   -   373   -   1,875   550   104 
Reinsurance assets  16,608   -   13,416   82   -   -   -   13,498   -   3,110 
           
On December 31
 
 
267,465
 
 
 
864
 
 
 
14,528
 
 
 
194
 
 
 
23,711
 
 
 
373
 
 
 
-
 
 
 
39,669
 
 
 
14,153
 
 
 
241,949
 
 
Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
2022
1)
  Maximum
exposure
to credit
risk		       Cash   Securities   Letters of credit
/ guaran- tees		   Real
estate
property		   Master
netting
agree-
ments		   Other   Total
collateral		   Surplus
collateral
(or
overcol-
lateraliza-
tion)		   Net
exposure		 
Debt securities - carried at fair value
   53,647    -    -    96    -    -    -    96    -    53,551 
           
Money market and other short-term investments - carried at fair value
   5,613    -    312    -    -    -    -    312    23    5,324 
           
Mortgage loans - carried at amortized cost
   10,441    40    -    22    24,822    -    -    24,883    14,442    1 
           
Private loans - carried at amortized cost
   27    11    -    -    -    -    -    11    -    15 
           
Other loans - carried at amortized cost
   2,088    -    -    -    -    -    3,510    3,510    1,470    47 
           
Other financial assets - carried at fair value
   4,562    -    -    -    -    -    -    -    -    4,562 
           
Derivatives
   2,707    246    426    -    -    2,174    -    2,846    173    33 
           
Reinsurance assets
   21,184    -    14,162    103    -    -    -    14,265    -    6,919 
At December 31
  
 
100,269
 
  
 
297
 
  
 
14,900
 
  
 
221
 
  
 
24,822
 
  
 
2,174
 
  
 
3,510
 
  
 
45,923
 
  
 
16,108
 
  
 
70,453
 
1
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
2021
  Maximum
exposure
to credit
risk		       Cash   Securities   Letters of
credit /
guaran-
tees		   Real
estate
property		   Master
netting
agree-
ments		   Other   Total
collateral		   Surplus
collateral
(or
overcol-
lateraliza-
tion)		   Net
exposure		 
Debt securities - carried at fair value
   97,195    -    -    221    -    -    -    221    -    96,974 
           
Money market and other short-term investments - carried at fair value
   4,910    -    330    -    -    -    -    330    21    4,601 
           
Mortgage loans - carried at amortized cost
   39,991    2,684    -    32    75,412    -    -    78,128    38,197    60 
           
Private loans - carried at amortized cost
   4,883    33    -    -    -    -    -    33    -    4,850 
           
Other loans - carried at amortized cost
   1,949    -    -    -    -    -    1,872    1,872    1,346    1,423 
           
Other financial assets - carried at fair value
   4,245    -    -    -    -    -    -    -    -    4,245 
           
Derivatives
   8,780    2,555    107    -    -    5,921    -    8,583    66    263 
           
Reinsurance assets
   20,992    -    3,784    77    -    -    -    3,861    -    17,131 
At December 31
  
 
182,945
 
  
 
5,272
 
  
 
4,221
 
  
 
330
 
  
 
75,412
 
  
 
5,921
 
  
 
1,872
 
  
 
93,028
 
  
 
39,630
 
  
 
129,547
 
Investment exposure to Russia
In 2022, following the Russian invasion of Ukraine, Aegon has reduced its general account investment exposure to Russia from EUR 27 million to almost nil per December 31, 2022. The remaining investment positions currently cannot be sold as these investments are in companies which are in scope of international sanctions imposed on Russia following the invasion of Ukraine. Aegon has no operations in Russia.
2022
 
Maximum
exposure
to credit
risk
   Cash   Securities  
 Letters of
credit /
guaran-
tees
  
Real
estate
 property
  
 Master
netting
agree-
ments
   Other  
Total
 collateral
  
Surplus
collateral
(or
overcol-
 lateraliza-
tion)
  
Net 
 exposure 
Debt securities  59,341   -   -   96   -   -   -   96   -   59,245 
Money market and other short-term investments  6,881   -   312   -   -   -   -   312   23   6,592 
Loans  10,419   40   -   22   24,763   -   -   24,825   14,407   1 
Unconsolidated investment funds  154,741   -   -   -   -   -   -   -   -   154,741 
Deposits with financial institutes  2,405   -   -   -   -   -   -   -   -   2,405 
Other investments  4,618   -   -   -   58   -   -   58   35   4,595 
Derivative assets  2,771   257   426   -   -   2,174   -   2,858   173   86 
Reinsurance assets  16,939   -   14,162   103   -   -   -   14,265   -   2,675 
           
On December 31
 
 
258,116
 
 
 
297
 
 
 
14,900
 
 
 
221
 
 
 
24,822
 
 
 
2,174
 
 
 
-
 
 
 
42,414
 
 
 
14,638
 
 
 
230,341
 
Debt securities
Several bonds in Aegon’s Americas’ portfolio are guaranteed by Monoline insurers. This is shown in the table above in the column ‘Letters“Letters of credit / guarantees’guarantees”.
172
Aegon Annual Report on Form 20-F
2022
Table of Contents
Notes to the consolidated financial statements
Note 4
Money market and short-term investments
The collateral reported for the money market and short-term investments are related to
tri-party
repurchase agreements (repos). Within
tri-party
repos Aegon invests under short-term reverse repurchase agreements and the counterparty posts collateral to a third party custodian. The collateral posted is typically high-quality, short-term securities and is only accessible for or available to Aegon in the event the counterparty defaults.
Mortgage loans
 180  |  Annual Report on Form 20-F 2023
Notes to the consolidated financial statements
Note 4
The following table contains an analysis of Aegon’s credit risk exposure for debt instruments for which an ECL allowance is recognized. See note 4.2.6 for a more detailed description of ECL measurement. All asset categories not presented here are determined to have
non-material
credit risk or to be of short-term nature (cash and cash equivalents, other receivables). The gross carrying amount of financial assets below also represents Aegon’s maximum exposure to credit risk on these assets.
   2023  2022 
   ECL staging              ECL staging              
   Stage 1  Stage 2  Stage 3           Stage 1  Stage 2  Stage 3         
Financial assets
measured at
FVOCI - with
recycling
  
12-month
ECL
  
Lifetime
ECL not
credit-
 impaired
  
Lifetime
ECL
credit-
 impaired
  
 Purchased
credit
impaired
  Total  
12-month
ECL
  
Lifetime
ECL not
credit-
 impaired
  
Lifetime
ECL
credit-
 impaired
  
 Purchased
credit
impaired
  Total 
AAA   2,961   -   -   -   2,961   9,562   -   -   -   9,562 
AA   9,217   -   2   -   9,219   4,034   -   -   -   4,034 
A   18,410   -   -   -   18,411   18,224   10   2   -   18,235 
BBB   17,534   11   -   1   17,547   19,696   6   -   -   19,702 
BB   899   136   -   -   1,035   1,250   172   3   2   1,427 
B   431   120   3   -   554   432   153   5   -   590 
CCC and lower   120   91   319   99   629   76   72   394   123   664 
           
Gross carrying amount
  
 
49,571
 
 
 
358
 
 
 
325
 
 
 
100
 
 
 
50,354
 
 
 
53,273
 
 
 
413
 
 
 
403
 
 
 
125
 
 
 
54,214
 
Expected credit loss   (147)   (25)   (64)   (2)   (238)   (157)   (32)   (86)   (1)   (276) 
           
Total
  
 
49,571
 
 
 
358
 
 
 
325
 
 
 
100
 
 
 
50,354
 
 
 
53,273
 
 
 
413
 
 
 
403
 
 
 
125
 
 
 
54,214
 
Loans
The real estate collateral for mortgages includes both residential and commercial properties. The collateral for commercial mortgage
loans
in Aegon Americas is measured at fair value. At a minimum on an annual basis, a fair value is estimated for each individual real estate property that has been pledged as collateral. When a loan is originally provided, an external appraisal is obtained to estimate the value of the property. In subsequent years, the value is typically estimated internally using various professionally accepted valuation methodologies. Internal appraisals are performed by qualified, professionally accredited personnel. International valuation standards are used and the most significant assumptions made during the valuation of real estate are the current cost of reproducing or replacing the property, the value that the property’s net earning power will support, and the value indicated by recent sales of comparable properties. Valuations are primarily supported by market evidence. For Aegon the Netherlands, collateral for the residential mortgages is measured as the foreclosure value which is indexed periodically.
Cash collateral for mortgage loans includes the savings that have been received to redeem the underlying mortgage loans at redemption date. These savings are part of the credit side of the statement of financial position but reduce the credit risk for the mortgage loan as a whole.
   2023  2022 
   ECL staging             ECL staging            
   Stage 1  Stage 2   Stage 3             Stage 1  Stage 2   Stage 3           
Loans at
amortized cost
  
12-month

ECL		  Lifetime
ECL not
credit-
 impaired		  Lifetime
ECL
credit-
 impaired		    Purchased
credit
impaired		   Total  
12-month

ECL		  Lifetime
ECL not
credit-
 impaired		   Lifetime
ECL
credit-
 impaired		    Purchased
credit
impaired		   Total 
Internal grade 1   947   -   -    -    947   1,484   -    -    -    1,484 
Internal grade 2   3,929   2   -    -    3,930   4,438   2    -    -    4,440 
Internal grade 3   4,460   24   -    -    4,485   3,775   -    -    -    3,775 
Internal grade 4   778   7   -    -    785   671   -    -    -    671 
Internal grade 5   33   2   -    -    35   48   -    -    -    48 
Internal grade 6   -   -   -    -    -   -   -    -    -    - 
Internal grade 7 or lower   -   -   -    -    -   -   -    -    -    - 
           
Gross carrying amount
  
 
10,147
 
 
 
35
 
 
 
-
 
  
 
-
 
  
 
10,183
 
 
 
10,416
 
 
 
2
 
  
 
-
 
  
 
-
 
  
 
10,419
 
Expected credit loss   (24)   (1)   -    -    (26)   (12)   -    -    -    (12) 
           
Total
  
 
10,123
 
 
 
33
 
 
 
-
 
  
 
-
 
  
 
10,156
 
 
 
10,404
 
 
 
2
 
  
 
-
 
  
 
-
 
  
 
10,407
 
A substantial part
Annual Report on Form 20-F 2023  |  181 
Table of Aegon’s Dutch residential mortgage loan portfolio benefits from guaranteesContents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Financial assets designated at fair value through profit or loss
Significant portion of instruments have been designated as FVPL. On December 31 2023, the maximum exposure to credit risk of these financial assets was their carrying amount of EUR 1,736 million (December 2022: EUR 1,376 million). The credit risk of these financial assets has not been hedged by a Dutch government-backed trust (Stichting Waarborgfonds Eigen Woning) through the Dutch Mortgage loan Guarantee program (NHG). With exceptionuse of NHG-backed mortgage loans originated after January 1, 2014,derivatives. The following changes in fair value have been recognized for which a 10% lender-incurred haircut applies on realized losses on each defaulted loan, these guarantees cover all principal losses, missed interest payments and foreclosure costs incurred upon termination and settlement of defaulted mortgage loans when lender-specific terms and conditionsinvestments:
Financial assets designated at FVPL
   Debt securities   
 Money market and
other short-term
investments
            Total 
Change in fair value attributable to changes in credit risk during the year   46    (1)          45 
Cumulative change in fair value attributable to changes in credit risk held on December 31   20    -             20 
Financial assets designated at FVPL
  Debt securities  
 Money market and
other short-term
investments
        Total 
Change in fair value attributable to changes in credit risk during the year   (24)   -      (24) 
Cumulative change in fair value attributable to changes in credit risk held on December 31   (22)   -      (22) 
The change in fair value attributable to changes in credit risk is determined as the total amount of the guarantee are met. Whenchange in fair value that is not fully met,attributable to changes in the trust may pay claims in partobservable benchmark interest rate or in full, depending onother market rates. This approach provides a reasonable approximation of changes attributable to credit risk because fixed income securities valuation is mainly driven by two factors – interest rates and credit spreads, and the severity of the breach of terms and conditions. For each specific loan, the guarantee amortizes in line with an equivalent annuity mortgage loan. When the remaining loan balance at default does not exceed the amortized guarantee, it covers the full loss under its terms and conditions. Any loan balance in excess of this decreasing guarantee profile serves as a first loss position for the lender.fair value change due to credit risk can therefore be estimated by removing impacts from
non-credit
related factors.
Derivatives
The master netting agreements column in the table relates to derivative liability positions which are used in Aegon’s credit risk management. The offset in the master netting agreements column includes balances where there is a legally enforceable right of offset, but no intention to settle these balances on a net basis under normal circumstances. As a result, there is a net exposure for credit risk management purposes. However, as there is no intention to settle these balances on a net basis, they do not qualify for net presentation for accounting purposes.
Reinsurance assets
The collateral related to the reinsurance assets include assets in trust that are held by the reinsurer for the benefit of Aegon. The assets in trust can be accessed to pay policyholder benefits in the event the reinsurers fail to perform under the terms of their contract. Further information on the related reinsurance transactions is included in note 26 Reinsurance assets.29.
Collateral and other credit enhancements
Aegon employs a range of policies and practices to mitigate credit risk and the most common of these is accepting collateral for funds advanced. The Group has internal policies on the acceptability of specific classes of collateral or credit risk mitigation.
Other loans
Collateral and other credit enhancements obtained
On December 31, 2023, the Group held no collateral that were obtained during the year (EUR 0 in 2022) by taking possession of collateral held as security against receivables. The collateral included in the other column represents the policyholders account value forGroup’s policy loans. The excessis to pursue timely realization of the account value overcollateral in an orderly manner. Aegon does not generally use the loan value is included in the surplus
non-cash
collateral column. For further information on the policy loans refer to note 22.1 Financial assets, excluding derivatives.
for its own operations.
The total collateral includes both under- and over-collateralized positions. To present a net exposure of credit4.2.2 Credit risk the over-collateralization, which is shown in the surplus collateral column, is extracted from the total collateral.
Aegon Annual Report on Form 20-F
2022
  |  
173
Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
Credit
risk
management
Aegon manages credit risk exposure by individual counterparty, sector and asset class, including cash positions. Normally, Aegon mitigates credit risk in derivative contracts by entering into credit support agreement, where practical, and in ISDA master netting agreements for most of Aegon’s legal entities to facilitate Aegon’s right to offset credit risk exposure. Main counterparties to these transactions are investment banks which are typically rated ‘A’“A” or higher. The credit support agreement will normally dictate the threshold over which collateral needs to be pledged by Aegon or its counterparty. Transactions requiring Aegon or its counterparty to post collateral are typically the result of derivative trades, comprised mostly of interest rate swaps, equity swaps, currency swaps and credit swaps. Collateral received is mainly cash (USD and EUR). The credit support agreements that outline the acceptable collateral require high-quality instruments to be posted. Over the last three years, there was no default with any derivatives counterparty. The credit risk associated with financial assets subject
 182  |  Annual Report on Form 20-F 2023
Table of Contents
Notes to the consolidated financial statements
Note 4
to a master netting agreement is eliminated only to the extent that financial liabilities due to the same counterparty will be settled after the assets are realized. Eligible derivative transactions are traded via Central Clearing Houses as required by EMIR and the Dodd-Frank act. Credit risk in these transactions is mitigated through posting of initial and variation margins.
Aegon may also mitigate credit risk in reinsurance contracts by including downgrade clauses that allow the recapture of business, retaining ownership of assets required to support liabilities ceded or by requiring the reinsurer to hold assets in trust. For the resulting net credit risk exposure, Aegon employs deterministic and stochastic credit risk modeling in order to assess the Group’s credit risk profile, associated earnings and capital implications due to various credit loss scenarios.
Aegon operates a Credit Name Limit Policy (CNLP) under which limits are placed on the aggregate exposure that it has to any one counterparty. Limits are placed on the exposure at both group level and individual country units. The limits also vary
by a rating system, which is a composite of the main rating agencies (S&P, Moody’s and Fitch) and Aegon’s internal rating of the counterparty. If an exposure exceeds the stated limit, then the exposure must be reduced to the limit for the country unit and rating category as soon as possible. Exceptions to these limits can only be made after explicit approval from Aegon’s Group Risk and Capital Committee (GRCC). The policy is reviewed regularly.
The Group offers products that cover inflation risk for policyholders. To hedge the inflation risk, the Group invests in financial instruments of which the value depends on the rate of inflation. This significantly reduces the net exposure to inflation risk.
At December 31, 2022, there was no violation of the Credit Name Limit Policy at Group level (2021: one).
At December 31, 2022, Aegon’s largest corporate credit exposures are to American United Mutual Insurance, Reinsurance Group of America, Bank of America and Berkshire Hathaway. Aegon had
large
government exposures, the largest being to the United States, the Netherlands and Germany. Highly rated government bonds and government exposure domestically issued and owned in local currency are excluded from the Credit Name Limit Policy.

Aegon group level long-term counterparty exposure limits are as follows:
Group limits per credit rating
        
Amounts in EUR million    
 
2022
 
     2021   
AAA                            900                             900   
AA     900      900   
A     675      675   
BBB     450      450   
BB     250      250   
B     125      125   
CCC or lower        50         50   
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Aegon Annual Report on Form 20-F
2022
Table of Contents
Notes to the consolidated financial statements
Note 4
4.2.3 Credit rating
Aegon group level long-term counterparty exposure limits are as follows:
Group limits per credit rating
Amounts in EUR million  
   2023
       2022  
AAA   900    900 
AA   900    900 
A   675    675 
BBB   450    450 
BB   250    250 
B   125    125 
CCC or lower   50    50 
The ratings distribution of general account portfolios of Aegon’s
major
reporting units,
excluding
reinsurance assets, are presented in the table that follows, organized by rating category and split by assets that are valued at fair value and assets that are valued at amortized cost. Aegon uses a composite rating based on a combination of the external ratings of S&P, Moody’s, Fitch and National Association of Insurance Commissioners (NAIC which is for US only) and internal ratings. The rating used is the lower of the external rating and the internal rating.
 
    Americas   United Kingdom   International 
Credit rating general account investments,excluding reinsurance
assets 2022
  Amortized cost   Fair value   Amortized cost   Fair value   Amortized cost  Fair value   
       
AAA
   1,488    12,124    -    55    -   91   
       
AA
   4,454    3,659    -    461    -   157   
       
A
   3,779    19,374    -    262    39   891   
       
BBB
   671    18,785    -    123    (5)   745   
       
BB
   48    1,434    -    1    -   71   
       
B
   -    592    -    -    -   13   
       
CCC or lower
   -    445    -    -    -   4   
       
Assets not rated
   2,035    4,525    -    582    9   9   
       
Total
  
 
12,475
 
  
 
60,938
 
  
 
-
 
  
 
1,483
 
  
 
43
 
 
 
1,980  
 
       
Past due and / or impaired assets
   -    2,239    -    -    -   22   
       
At December 31
  
 
12,475
 
  
 
      63,178
 
  
 
-
 
  
 
      1,483
 
  
 
      43
 
 
 
      2,001  
 
   Americas  United Kingdom   International  Asset Management   Total 2023
1)
 
Financial assets
  Amortized
cost		  Fair value  Amortized
cost		   Fair value   Amortized
cost		   Fair value  Amortized
cost		   Fair
value		   Amortized
cost		  Fair
value		  Total
carrying
value		 
AAA   947   6,836   -    38   -    35   52    123    998   7,033   8,031 
AA   3,930   9,191   -    514    -    161   -    -    3,930   9,866   13,796 
A   4,485   19,474   -    220    1    791   -    -    4,486   20,486   24,972 
BBB   785   17,679   -    124    -    466   -    -    803   18,269   19,072 
BB   33   1,084   -    1    -    41   -    -    33   1,126   1,160 
B   2   570   -    -    -    9   -    -    2   579   581 
CCC or lower   -   986   -    -    -    6   -    -    -   992   992 
Assets not rated   -   4,444   -    797    -    4   -    1    -   5,286   5,286 
            
Total
  
 
10,182
 
 
 
60,264
 
 
 
-
 
  
 
1,695
 
  
 
1
 
  
 
1,514
 
 
 
52
 
  
 
124
 
  
 
10,253
 
 
 
63,638
 
 
 
73,891
 
ECL on financial assets   (26)   (228)   -    -    -    (10)   -    -    (26)   (238)   (263) 
            
On December 31, 2023
  
 
10,156
 
 
 
60,264
 
 
 
-
 
  
 
1,695
 
  
 
1
 
  
 
1,514
 
 
 
52
 
  
 
124
 
  
 
10,227
 
 
 
63,638
 
 
 
73,865
 
 
    Asset Management   
Total 2022
1)
2)
 
Credit rating general account investments, excluding
reinsurance assets 2022
  Amortized cost               Fair value   
      Amortized cost
   
          Fair value
   
      Total carrying  
value  
 
      
AAA
   -    135    1,488    12,404    13,892   
      
AA
   -    -    4,454    4,277    8,731   
      
A
   -    -    3,818    20,527    24,345   
      
BBB
   -    -    666    19,653    20,319   
      
BB
   -    -    48    1,505    1,553   
      
B
   -    -    -    605    605   
      
CCC or lower
   -    -    -    449    449   
      
Assets not rated
   -    1    2,081    5,235    8,167   
      
Total
  
 
-
 
  
 
136
 
  
 
12,556
 
  
 
64,656
 
  
 
78,061  
 
      
Past due and / or impaired assets
   -    -    -    2,261    2,262   
      
At December 31
  
 
-
 
  
 
136
 
  
 
12,556
 
  
 
66,917
 
  
 
80,323  
 
1 
Includes investments of Holding and other activities.
2 
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
    Americas   The Netherlands   United Kingdom   International 
Credit rating general account investments,
excluding reinsurance assets 2021
  Amortized cost   Fair value   Amortized cost   Fair value   Amortized cost   Fair value   Amortized cost  Fair value   
         
AAA
   1,383    15,537    2,607    11,832    -    74    -   738   
         
AA
   4,219    4,438    216    6,474    -    586    -   699   
         
A
   3,301    20,888    128    10,636    -    384    52   2,610   
         
BBB
   519    21,894    1,050    4,458    -    202    (4)   3,311   
         
BB
   59    1,614    44    127    -    1    -   272   
         
B
   -    549    -    19    -    -    18   370   
         
CCC or lower
   -    441    -    19    -    -    -   13   
         
Assets not rated
   1,868    4,257    31,137    1,418    -    644    27   79   
         
Total
  
 
11,349
 
  
 
69,618
 
  
 
35,182
 
  
 
34,983
 
  
 
-
 
  
 
1,893
 
  
 
93
 
 
 
8,093  
 
         
Past due and / or impaired assets
   2    2,044    176    17    -    -    -   116   
         
At December 31
  
 
11,352
 
  
 
71,662
 
  
 
35,358
 
  
 
35,000
 
  
 
-
 
  
 
1,893
 
  
 
93
 
 
 
8,208  
 
 
   
Aegon Annual Report on Form 20-F
2022
2023  |  
175
183 		 
Table of Contents
LOGO		 
About Aegon
Governance and risk management
Financial information
Non-financial  Sustainability information
   
   
    Asset Management   
Total 2021
1)
 
Credit rating general account investments, excluding reinsurance
assets 2021
  Amortized cost               Fair value         Amortized cost             Fair value         Total carrying  
value  		 
      
AAA
   -    295    3,989    28,476    32,465 
      
AA
   -    -    4,436    12,197    16,633 
      
A
   -    -    3,481    34,530    38,011 
      
BBB
   -    -    1,564    29,866    31,431 
      
BB
   -    -    103    2,015    2,118 
      
B
   -    -    18    938    956 
      
CCC or lower
   -    -    -    473    473 
      
Assets not rated
   -    2    33,053    6,474    39,527 
      
Total
  
 
-
 
  
 
296
 
  
 
46,644
 
  
 
114,968
 
  
 
161,613
 
      
Past due and / or impaired assets
   -    -    178    2,176    2,355 
      
At December 31
  
 
-
 
  
 
296
 
  
 
46,823
 
  
 
117,145
 
  
 
163,967
 
 
   Americas  United Kingdom   International  Asset Management   Total 2022
1)
 
Financial assets
  Amortized
cost		  Fair value  Amortized
cost		   Fair value   Amortized
cost		   Fair value  Amortized
cost		   Fair
value		   Amortized
cost		  Fair
value		  Total
carrying
value		 
AAA   1,484   12,243   -    55    -    91   -    135    1,522   12,523   14,046 
AA   4,440   3,996   -    461    -    158   -    -    4,440   4,615   9,055 
A   3,775   20,233   -    262    7    921   -    -    3,782   21,416   25,198 
BBB   671   19,313   -    123    1    763   -    -    672   20,198   20,870 
BB   48   1,439   -    1    -    71   -    -    48   1,512   1,560 
B   -   594   -    -    -    13   -    -    -   607   607 
CCC or lower   -   900   -    -    -    5   -    -    -   905   905 
Assets not rated   -   4,480   -    582    -    -   -    1    -   5,182   5,182 
            
Total
  
 
10,417
 
 
 
63,200
 
 
 
-
 
  
 
1,483
 
  
 
9
 
  
 
2,021
 
 
 
-
 
  
 
136
 
  
 
10,464
 
 
 
66,959
 
 
 
77,423
 
ECL on financial assets   (12)   (264)   -    -    -    (12)   -    -    (12)   (277)   (289) 
            
On December 31, 2022
  
 
10,406
 
 
 
63,200
 
 
 
-
 
  
 
1,483
 
  
 
9
 
  
 
2,021
 
 
 
-
 
  
 
136
 
  
 
10,453
 
 
 
66,959
 
 
 
77,412
 
1
Includes investments of Holding and other activities.
The following table shows the credit quality of the gross positionsreinsurance contracts included in the statement of financial position for general account reinsurance assets specifically:position:
 
   
Carrying value  
2022
1)
  
  Carrying value  
2021  		 
   
AAA
 -   - 
   
AA
 2,156   9,084 
   
A
 18,105   11,087 
   
Below A
 6   7 
   
Not rated
 917   813 
   
At December 31
 
21,184
  
 
20,992
 
Carrying value
  
   2023
      2022 
AAA   -    - 
AA   1,245    1,609 
A   14,089    14,322 
Below A   4    5 
Not rated   662    733 
   
On December 31
  
 
   16,000
 
  
 
16,669
 
1 
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
4.2.4 Credit risk concentration
The tables that follow present specific credit risk concentration information for general account financial assets.
Credit risk concentrations – debt securities and
money market investments
 Americas  United
 Kingdom		   International  Asset
 Management		   Total 2023 
1)
  
 Of which past
due and / or
impaired
assets
 
Residential mortgage-backed securities (RMBSs)  933   -   -   -   933   (13) 
Commercial mortgage-backed securities (CMBSs)  2,216   73   34   -   2,323   (17) 
Asset-backed securities (ABSs) - CDOs backed by ABS, Corp. bonds, Bank loans  557   -   3   -   560   - 
ABSs – Other  2,905   53   28   52   3,037   (9) 
Financial - Banking  3,412   173   201   -   3,786   (14) 
Financial - Other  11,909   38   289   97   12,332   (33) 
Capital goods and other industry  3,443   24   143   -   3,609   (23) 
Communications & Technology  4,242   2   140   -   4,384   (30) 
Consumer cyclical  3,197   29   85   -   3,311   (20) 
Consumer
non-cyclical
  5,661   74   111   -   5,846   (24) 
Energy  2,821   20   55   -   2,896   (19) 
Transportation  1,633   -   30   -   1,663   (6) 
Utility  4,190   73   75   -   4,338   (10) 
Government bonds  7,349   338   265   17   7,969   (20) 
       
On December 31, 2023
 
 
  54,467
 
 
 
898
 
 
 
1,458
 
 
 
166
 
 
 
56,988
 
 
 
(237
) 
 
Credit risk concentrations – debt securities and
money market investments 2022
        Americas           United Kingdom           International   Asset
      Management		   
      Total 2022 
1)
   
Of which past  
due and / or  
      impaired assets  
 
       
Residential mortgage-backed securities (RMBSs)
   1,136    -    -    5    1,141    479 
       
Commercial mortgage-backed securities (CMBSs)
   2,707    94    37    -    2,838    42 
       
Asset-backed securities (ABSs) - CDOs backed by ABS, Corp. bonds, Bank loans
   438    -    3    -    440    2 
       
ABSs - Other
   2,400    53    15    9    2,478    26 
       
Financial - Banking
   3,957    168    318    -    4,443    39 
       
Financial - Other
   10,778    36    352    96    11,263    191 
       
Capital goods and other industry
   3,769    22    132    -    3,923    268 
       
Communications & Technology
   4,658    2    167    -    4,828    417 
       
Consumer cyclical
   3,742    28    106    -    3,877    223 
       
Consumer non-cyclical
   5,445    85    144    -    5,674    350 
       
Energy
   3,205    19    102    -    3,326    41 
       
Transportation
   1,728    -    43    -    1,771    19 
       
Utility
   4,319    69    80    -    4,469    110 
       
Government bonds
   7,962    323    488    17    8,790    43 
       
At December 31
  
 
56,243
 
  
 
901
 
  
 
1,989
 
  
 
128
 
  
 
59,260
 
  
 
2,251
 
1 Includes investments of Holding and other activities.
2
2022 excludes the assets of the disposal group,
which
are separately
disclosed
in note 51 Discontinued
operations
.
 
176
 184  |  Annual Report on Form 20-F 2023
Aegon Annual Report on Form 20-F
2022
 
 
 
Notes to the consolidated financial statements
Note 4
   
   
 
 
Credit risk concentrations – debt securities and
money market investments
 Americas  United
 Kingdom		   International  Asset
 Management		   Total 2022 
1)
  
 Of which past
due and / or
impaired
assets
 
Residential mortgage-backed securities (RMBSs)  1,136   -   -   5   1,141   (9) 
Commercial mortgage-backed securities (CMBSs)  2,707   94   37   -   2,838   - 
Asset-backed securities (ABSs) - CDOs backed by ABS, Corp. bonds, Bank loans  438   -   3   -   440   - 
ABSs – Other  2,400   53   15   9   2,478   (6) 
Financial - Banking  3,957   168   319   -   4,444   (14) 
Financial - Other  10,778   36   353   96   11,264   (31) 
Capital goods and other industry  3,769   22   132   -   3,923   (25) 
Communications & Technology  4,658   2   171   -   4,831   (51) 
Consumer cyclical  3,742   28   106   -   3,877   (25) 
Consumer
non-cyclical
  5,445   85   144   -   5,674   (47) 
Energy  3,205   19   102   -   3,326   (23) 
Transportation  1,728   -   43   -   1,771   (6) 
Utility  4,319   69   80   -   4,469   (11) 
Government bonds  7,962   323   488   17   8,790   (26) 
       
On December 31, 2022
 
 
56,243
 
 
 
901
 
 
 
1,994
 
 
 
128
 
 
 
59,265
 
 
 
(276
) 
 
Credit risk concentrations – Government bonds per country of risk
2022
  Americas   United Kingdom   International   Asset
Management		   
Total 2022 
1) 
2)
 
      
United States
   7,209    -    80    -    7,290 
      
Netherlands
   -    -    -    -    - 
      
United Kingdom
   -    275    -    17    292 
      
Austria
   -    -    3    -    3 
      
Belgium
   -    -    3    -    3 
      
Finland
   -    -    -    -    - 
      
France
   -    27    2    -    29 
      
Germany
   -    -    -    -    - 
      
Hungary
   18    -    4    -    22 
      
Indonesia
   82    -    -    -    82 
      
Luxembourg
   -    -    1    -    1 
      
Spain
   -    -    152    -    152 
      
Rest of Europe
   48    -    229    -    277 
      
Rest of world
   604    21    13    -    638 
      
Supranational
 
   -    -    -    -    - 
      
At December 31
  
 
7,962
 
  
 
323
 
  
 
488
 
  
 
17
 
  
 
8,790
 
1 
Includes investments of Holding and other activities.
2 
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
Credit risk concentrations – Government bonds per
country of risk
  Americas   United
  Kingdom		     International   Asset
  Management		     Total 2023
1)
 
United States   6,632    -    62    -    6,694 
Netherlands   -    -    2    -    2 
United Kingdom   -    289    -    17    307 
Austria   -    -    10    -    10 
Belgium   -    -    4    -    4 
France   -    28    8    -    36 
Hungary   20    -    4    -    24 
Indonesia   71    -    -    -    71 
Luxembourg   -    -    1    -    1 
Spain   -    -    153    -    153 
Rest of Europe   46    -    13    -    58 
Rest of world   581    21    8    -    610 
      
On December 31, 2023
  
 
  7,349
 
  
 
338
 
  
 
265
 
  
 
17
 
  
 
7,969
 
 
Credit risk concentrations – Credit rating 2022
3)
  Government
bonds		   Corporate bonds   RMBSs CMBSs
ABSs		   Other   
Total 2022 
1) 
2)
 
      
AAA
   5,980    724    2,997    2,780    12,482 
      
AA
   1,243    2,484    815    -    4,541 
      
A
   753    16,180    1,960    -    18,894 
      
BBB
   538    19,307    306    -    20,151 
      
BB
   206    1,204    102    -    1,513 
      
B
   65    519    23    -    607 
      
CCC or lower
   4    207    694    -    905 
      
Assets not rated
 
   -    15    -    152    167 
      
At December 31
  
 
8,790
 
  
 
40,640
 
  
 
6,897
 
  
 
2,933
 
  
 
59,260
 
1 
Includes investments of Holding and other activities.
Credit risk concentrations – Government bonds per
country of risk
  Americas   United
  Kingdom		     International   Asset
  Management		     Total 2022
1)
 
United States   7,209    -    80    -    7,290 
Netherlands   -    -    -    -    - 
United Kingdom   -    275    -    17    292 
Austria   -    -    3    -    3 
Belgium   -    -    3    -    3 
France   -    27    2    -    29 
Hungary   18    -    4    -    22 
Indonesia   82    -    -    -    82 
Luxembourg   -    -    1    -    1 
Spain   -    -    152    -    152 
Rest of Europe   48    -    229    -    277 
Rest of world   604    21    13    -    638 
      
On December 31, 2022
  
 
7,962
 
  
 
323
 
  
 
488
 
  
 
17
 
  
 
8,790
 
1 Includes investments of Holding and other activities.
Annual Report on Form 20-F 2023  |  185 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
     Government Bonds       Corporate bonds    RMBSs CMBSs ABSs      Other    Total 2023 
1)
 
AAA   166    503    2,462    3,915    7,046 
AA   6,444    2,262    1,160    -    9,866 
A   723    16,352    2,101    -    19,176 
BBB   354    17,408    404    -    18,165 
BB   205    838    78    -    1,121 
B   69    496    30    -    596 
CCC or lower   9    245    618    -    872 
Assets not rated   -    2    -    144    147 
      
On December 31, 2023
  
 
7,969
 
  
 
38,106
 
  
 
6,853
 
  
 
4,059
 
  
 
56,988
 
1 Includes investments of Holding and other activities.
2 
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
3 
CNLP Ratings are used and are the lower of the Barclay’s Rating and the Internal Rating with the Barclay’s rating being a blended rating of S&P, Fitch, and Moody’s.
There are no individual issuers rated below investment grade in the RMBS sector, CMBS sector and ABS sector which have unrealized loss position greater than EUR 25 million.
     Government Bonds       Corporate bonds    RMBSs CMBSs ABSs      Other    Total 2022 
1)
 
AAA   5,980    724    2,997    2,780    12,482 
AA   1,243    2,484    815    -    4,541 
A   753    16,180    1,960    -    18,894 
BBB   538    19,312    306    -    20,156 
BB   206    1,204    102    -    1,513 
B   65    519    23    -    607 
CCC or lower   4    207    694    -    905 
Assets not rated   -    15    -    152    167 
      
On December 31, 2022
2)
  
 
8,790
 
  
 
40,645
 
  
 
6,897
 
  
 
2,933
 
  
 
59,265
 
 
Aegon Annual Report on Form 20-F
2022
  |  
177
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
Credit risk concentrations – debt securities and money market investments 2021
 Americas  The
Netherlands		  United
Kingdom		  International  Asset
Management		  Total 2021 
1)
  Of which past
due and / or
impaired assets		 
Residential mortgage-backed securities (RMBSs)
  1,854   106   -   20   4   1,984   611 
Commercial mortgage-backed securities (CMBSs)
  3,005   3   122   517   -   3,647   13 
Asset-backed securities (ABSs) - CDOs backed by ABS, Corp. bonds, Bank loans
  265   1,576   -   37   -   1,878   2 
ABSs – Other
  1,972   1   74   267   8   2,321   27 
Financial - Banking
  5,597   3,146   177   1,035   -   9,956   9 
Financial - Other
  9,916   854   68   783   257   11,877   175 
Capital goods and other industry
  4,048   1,078   33   501   -   5,661   144 
Communications & Technology
  6,190   1,561   3   732   -   8,485   411 
Consumer cyclical
  3,159   741   43   342   -   4,286   152 
Consumer non-cyclical
  6,138   1,900   121   825   -   8,984   177 
Energy
  4,177   143   26   635   -   4,980   91 
Transportation
  2,151   815   -   197   -   3,163   130 
Utility
  5,356   707   105   590   -   6,757   153 
Government bonds
  11,663   14,321   477   1,649   18   28,127   4 
        
At December 31
 
 
65,490
 
 
 
26,951
 
 
 
1,248
 
 
 
8,130
 
 
 
286
 
 
 
102,105
 
 
 
2,101
 
1 
Includes investments of Holding and other activities.
Credit risk concentrations – Government bonds
per country of risk 2021
  Americas   The Netherlands   United Kingdom   International   Asset
Management		   
Total 2021 
1)
 
United States
   10,897    -    -    463    -    11,360 
Netherlands
   -    4,691    -    -    -    4,691 
United Kingdom
   -    3    413    -    18    433 
Austria
   -    1,175    -    6    -    1,181 
Belgium
   -    1,132    -    5    -    1,137 
Finland
   -    41    -    -    -    41 
France
   -    1,618    34    2    -    1,654 
Germany
   -    4,309    -    -    -    4,309 
Hungary
   -    -    -    302    -    302 
Indonesia
   75    39    -    28    -    141 
Luxembourg
   -    873    -    1    -    875 
Spain
   -    144    -    197    -    341 
Rest of Europe
   85    65    -    503    -    654 
Rest of world
   587    230    31    131    -    979 
Supranational
   19    -    -    11    -    29 
       
At December 31
  
 
11,663
 
  
 
14,321
 
  
 
477
 
  
 
1,649
 
  
 
18
 
  
 
28,127
 
1 
Includes investments of Holding and other activities.
Credit risk concentrations – Credit rating 2021 
2)
  Government
bonds		   Corporate bonds   RMBSs CMBSs
ABSs		   Other   
Total 2021 
1)
 
AAA
   19,740    754    5,779    1,882    28,155 
AA
   5,476    4,099    1,125    -    10,700 
A
   1,228    25,470    1,648    -    28,345 
BBB
   1,094    28,855    338    -    30,286 
BB
   238    1,700    63    -    2,001 
B
   348    553    26    -    927 
CCC or lower
   5    183    826    -    1,014 
Assets not rated
   -    3    24    649    676 
      
At December 31
  
 
28,127
 
  
 
61,617
 
  
 
9,830
 
  
 
2,531
 
  
 
102,105
 
1 
Includes investments of Holding and other activities.
2
CNLP Ratings are used and are the lower of the Barclay’s Rating and the Internal Rating with the Barclay’s rating being a blended rating of S&P, Fitch, and Moody’s.
Credit risk concentrations –
mortgage loans
    Americas   United Kingdom      International    Asset
  Management		      Total 2023   
Of which past
due and / or
impaired assets
 
Agricultural   46    -    -    -    46    - 
Apartment   5,365    -    -    -    5,365    (10) 
Industrial   410    -    -    -    410    - 
Office   1,300    -    -    -    1,300    (14) 
Retail   1,372    -    -    -    1,372    (1) 
Other commercial   1,663    -    1    -    1,664    - 
       
On December 31, 2023
  
 
10,156
 
  
 
-
 
  
 
1
 
  
 
-
 
  
 
10,156
 
  
 
(26
) 
Credit risk concentrations –
mortgage loans
    Americas   United Kingdom      International   Asset
  Management		      Total 2022   
Of which past
due and / or
impaired assets
 
Agricultural   49    -    -    -    49    - 
Apartment   5,517    -    -    -    5,517    (4) 
Industrial   402    -    -    -    402    - 
Office   1,515    -    -    -    1,515    (7) 
Retail   1,465    -    -    -    1,465    (1) 
Other commercial   1,456    -    1    -    1,457    - 
       
On December 31, 2022
  
 
10,406
 
  
 
-
 
  
 
1
 
  
 
-
 
  
 
10,406
 
  
 
(12
) 
 
178    
 186  |  Annual Report on Form 20-F 2023
Aegon Annual Report on Form 20-F
2022
 
 
 
Notes to the consolidated financial statements
Note 4
   
   
 
 
There are no individual issuers rated below investment grade in the RMBS sector, CMBS sector and ABS sector which have unrealized loss position greater than EUR 25 million.
Credit risk concentrations – mortgage loans 2022
    Americas     United Kingdom     International     Asset
Management		     
Total 2022 
1)
     Of which past
due and / or
impaired assets		 
Agricultural
     49      -      -      -      49      - 
Apartment
     5,519      -      -      -      5,519      - 
Industrial
     402      -      -      -      402      - 
Office
     1,521      -      -      -      1,521      - 
Retail
     1,475      -      -      -      1,475      - 
Other commercial
     1,469      -      -      -      1,469      - 
Residential
     5      -      1      -      5      - 
       
At December 31
    
 
10,441
 
    
 
-
 
    
 
1
 
    
 
-
 
    
 
10,441
 
    
 
-
 
1 
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
Credit risk concentrations – mortgage loans
2021
  Americas   The
Netherlands		   United
Kingdom		   International   Asset
Management		   Total 2021   Of which past
due and / or
impaired assets		 
Agricultural
   59    -    -    -    -    59    - 
Apartment
   5,085    -    -    -    -    5,085    2 
Industrial
   1,349    -    -    -    -    1,349    - 
Office
   1,560    -    -    -    -    1,560    - 
Retail
   1,425    6    -    -    -    1,432    - 
Other commercial
   -    23    -    -    -    23    1 
Residential
   6    30,476    -    1    -    30,483    139 
        
At December 31
  
 
9,485
 
  
 
30,505
 
  
 
-
 
  
 
1
 
  
 
-
 
  
 
39,991
 
  
 
142
 
The fair value of Aegon Americas commercial and agricultural mortgage loan portfolio as per December 31, 2022, amounted to EUR 9,224 million (2021: EUR 10,161 million). The loan to value (LTV) amounted to approximately 50.4% (2021: 53%). Of the portfolio 0% (2021: 0%) is in delinquency (defined as 60 days in arrears). In 2022, Aegon Americas recognized EUR 0 million of net impairments (2021: EUR 1 million net impairments) on this portfolio. In 2022, there were no foreclosures (2021: EUR 0 million) and no impairments or recoveries associated with foreclosed loans (2021: EUR 0 million).
4.2.5 Unconsolidated structured entities
Aegon’s investments in unconsolidated structured entities such as RMBSs, CMBSs and ABSs and investment funds are presented in the line item ‘Investments’“Investments” of the statement of financial position. Aegon’s interests in these unconsolidated structured entities can be characterized as basic interests, Aegon does not have loans, derivatives, guarantees or other interests related to these investments. Any existing commitments such as future purchases of interests in investment funds are disclosed in note 4539 Commitments and contingencies.
For debt instruments, specifically for RMBSs, CMBSs and ABSs, the maximum exposure to loss is equal to the carrying amount which is reflected in the credit risk concentration table regarding debt securities and money market investments. To manage credit risk Aegon invests primarily in senior notes of RMBSs, CMBSs and ABSs. The composition of the RMBSs, CMBSs and ABSs portfolios of Aegon are widely dispersed looking at the individual amount per entity, therefore Aegon only has
non-controlling
interests in individual unconsolidated structured entities. Furthermore these investments are not originated by Aegon.
Except for commitments as noted in note 4539 Commitments and contingencies, Aegon did not provide, nor is required to provide financial or other support to unconsolidated structured entities. Nor does Aegon have intentions to provide financial or other support to unconsolidated structured entities in which Aegon has an interest or previously had an interest.
For RMBSs, CMBSs and ABSs in which Aegon has an interest at reporting date, the following table presents total income received from those interests. The Investments column reflects the carrying values recognized in the statement of financial position of Aegon’s interests in RMBSs, CMBSs and ABSs.
  Total income for the year ended December 31, 2023  December 31, 2023 
2023
 Interest income   
Total gains and
losses on sale
of assets
  Total  Investments 
Residential mortgage-backed securities  67    (15)   52   933 
Commercial mortgage-backed securities  92    12        105   2,323 
Asset-backed securities  40     14   54    560 
ABSs - Other  134    57   191   3,037 
     
Total
 
 
334
 
  
 
68
 
 
 
402
 
 
 
6,853
 
  Total income for the year ended December 31, 2022  December 31, 2022 
2022
 Interest income   
Total gains and
losses on sale
of assets
  Total  Investments 
Residential mortgage-backed securities  104    26   130   1,141 
Commercial mortgage-backed securities  120    (723)   (603)   2,838 
Asset-backed securities  25    (34)   (9)   440 
ABSs - Other  92    (416)       (324)   2,478 
     
Total
 
 
341
 
  
 
(1,148
) 
 
 
(807
) 
 
 
6,897
 
4.2.6 Expected credit losses
Measurement
The estimation of credit exposure for risk management purposes is complex and requires the use of models, as the exposure varies with changes in market conditions, expected cash flows and the passage of time. The assessment of credit risk of a portfolio of assets entails further estimations as to the likelihood of defaults occurring, of the associated loss ratios and of default correlations between counterparties. Aegon measures credit risk using Probability of Default (PD), Exposure at Default (EAD) and Loss Given Default (LGD). This is similar to the approach used for the purposes of measuring the Expected Credit Loss (ECL) under IFRS 9. See section on ECL developments in the reporting period later in this note for more details.
Losses as a result of credit risk are a natural part of investing in fixed-income securities. The amount of and compensation for this risk are related. A significant management measure to avoid excessive credit risk is to diversify and limit exposure to individual issuers.
 
   
Aegon Annual Report on Form 20-F
2022
2023  |  
179
187 		 
Table of Contents
LOGO 
About Aegon
Governance and risk management
  
Financial information
Non-financial  Sustainability information
   
   
a) Recognition of expected credit losses
IFRS 9 outlines a “three-stage” model for impairment based on relative changes in credit quality since initial recognition:
∎
a financial instrument that is not credit-impaired on initial recognition is classified in “Stage 1”;
∎
if a significant increase in credit risk (“SICR”) since initial recognition is identified, the financial instrument is moved to “Stage 2” but is not yet deemed to be credit-impaired (see “Significant increase in credit risk” for further details);
∎
if the financial instrument is credit-impaired, the financial instrument is then moved to “Stage 3”.
Credit risk is continuously monitored by the Group in all the above stages.
Financial instruments in Stage 1 have their Expected Credit Loss (ECL) measured at an amount equal to the portion of lifetime expected credit losses that result from default events possible within the next 12 months. Financial instruments in Stages 2 or 3 have their ECL measured based on expected credit losses on a lifetime basis. Purchased or originated credit-impaired financial assets are those financial assets that are credit-impaired on initial recognition. Their ECL is always measured on a lifetime basis.
   Stage 1 Impaired
Stage 2
Under-performing
Stage 3
Non-performing
Purchased or Originated
Credit Impared (POCI)
ECL12 month ECLLifetime ECLLifetime ECLLifetime ECL
Provision Trigger
n.a.
Quantitative and Qualitative Triggers
Qualitative Triggers
Qualitative Triggers
Days Past Due (“DPD”) BackstopUp to date and early arrears (< 30 DPD)> 30 DPD (rebuttable presumption)> 90 DPD (rebuttable presumption)n.a.
Interest Income
Interest calculated on gross carrying amount
Interest calculated on gross carrying amount
Interest calculated on net carrying amount
Interest calculated on net carrying amount using a credit-adjusted effective interest rate
1n.a. in above table should be read as “not applicable”.
Following this assessment, IFRS 9 requires the incorporation of multiple, forward looking macro- scenarios to drive the ECL provision.
IFRS 9 requires that the measurement of ECL represent an unbiased probability-weighted amount that is to be determined by:
∎
evaluating a range of possible outcomes;
∎
use reasonable and supportable information available without undue cost and effort about past events;
∎
current conditions; and
∎
forecasts of future economic conditions.
When incorporating forward looking information, consideration should be given to the relevance of the information (and the availability of more relevant information) for each specific financial instrument or group of financial instruments. Forward looking information that is relevant for one financial instrument may not be relevant or as relevant for other financial instruments depending on the specific drivers of credit risk. To the extent relevant, forward-looking information used for the measurement of ECLs it needs to be consistent with that used for the assessment of a significant increase in credit risk.
The models used by the Group generally employ a Probability of Default / Loss Given Default / Exposure at Default methodology; each model consists of multiple
sub-models
that are used to generate the measurement of expected credit loss.
Credit losses are calculated as the product of projected PD, LGD and EAD and are discounted using an appropriate discount rate. The ECL is determined as the probability weighted discounted credit losses that are determined for different scenarios (i.e. base, positive, adverse).
Given the need to adapt the models to the different portfolio characteristics, all ECL models have different key judgments and assumptions. As such, the below paragraphs outline the key judgements and assumptions made by the Group in addressing the key requirements on a
model-by-model
basis.
The Group employs separate models to calculate ECL on each category of financial assets.
 
 
   Total result 2022              December 31, 2022 
2022
1)
  Interest income   Total gains and
losses on sale
of assets		             Total  Investments 
Residential mortgage-backed securities
   92    (84)      9   1,141 
Commercial mortgage-backed securities
   120    (715)      (595)   2,838 
Asset-backed securities
   24    (34)      (10)   440 
ABSs - Other
   92    (416)      (324)   2,478 
     
Total
  
 
328
 
  
 
(1,249
) 
    
 
(921
) 
 
 
6,897
 
 
1
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
   Total result 2021               December 31, 2021 
2021  Interest income   Total gains and
losses on sale
of assets		             Total   Investments 
Residential mortgage-backed securities
   83    (28)      55    1,980 
Commercial mortgage-backed securities
   113    (31)      82    3,647 
Asset-backed securities
   29    -      29    1,878 
ABSs - Other
   70    (11)      59    2,323 
     
Total
  
 
295
 
  
 
(69
) 
    
 
226
 
  
 
9,829
 
Additional information188  |  Annual Report on credit risk, unrealized losses and impairments
Form 20-F 2023
Debt instruments
The amortized cost and fair value of debt securities, money market investments and other, included in Aegon’s available-for-sale (AFS) portfolios, are as follows as of December 31, 2022, and December 31, 2021.
2022
1)
  Amortized
cost		   Unrealized
gains		   Unrealized
losses		  Total fair
value		   Fair value of
instruments
with unrealized
gains		   Fair value of
instruments
with unrealized
losses		 
       
Debt securities, money market instruments and other
                             
United States government
   8,386    135    (1,294)   7,226    1,435    5,791 
Dutch government
   -    -    -   -    -    - 
Other government
   1,700    23    (239)   1,484    266    1,218 
Mortgage-backed securities
   4,218    160    (439)   3,939    578    3,362 
Asset-backed securities
   3,269    12    (376)   2,905    183    2,722 
Corporate
   42,507    449    (5,419)   37,538    7,428    30,110 
Money market investments
   5,511    4    (1)   5,514    3,815    1,699 
Other
   863    105    (128)   840    600    241 
       
Total
  
 
66,455
 
  
 
888
 
  
 
(7,896
) 
 
 
59,447
 
  
 
14,305
 
  
 
45,143
 
       
Of which held by Aegon Americas
   63,213    837    (7,672)   56,379    13,073    43,306 
1 
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
180
Aegon Annual Report
on
Form 20-F
2022
Table of Contents
 
 
Notes to the consolidated financial statements
Note 4
  
For bonds and private placements, the Group applies a global correlation model. It provides correlations of credit quality movements across different asset classes, linked with movements in the macro economy. Global correlation model is therefore used for determining the conditional PD and LGD, given a macroeconomic scenario. Unconditional PD and LGD curves are modelled with use of different methods for sovereign debt, corporate bonds and private placements.
For commercial mortgage loans and mortgage-backed securities the parameters are estimated with commercial mortgage metrics which uses corporate bond PD and LGD estimates further adjusted with other assumptions based on debt service coverage and
loan-to-value
ratios.
The Group applies a separate model for asset-backed securities, which pools the instruments based on the underlying collateral and estimates credit loss parameters collectively. Collateralized debt (loan) obligations (CDOs and CLOs) are special types of asset-backed securities to which a different set of models are applied depending on region of the exposure.
b) Significant increase in credit risk
Aegon considers a financial instrument to have experienced a significant increase in credit risk when one or more of the following quantitative, qualitative or backstop criteria have been met:
Asset class
Quantitative criteria   Qualitative criteriaBackstop criteria
Commercial mortgagesRelative change in Forward-in-Time Probability of DefaultNone60 days past due backstop
Private loansRelative changes in ratingWatchlist approachNo other backstop applied
Debt securitiesRelative changes in ratingWatchlist approachNo other backstop applied
Structured financeRelative changes in ratingWatchlist approach30 days past due backstop
Deposits with financial institutionsRelative changes in ratingWatchlist approachNo other backstop applied
Loan commitmentsDefined as for the respective loans to which the commitment relates
Financial guaranteesDefined as for the respective loans to which the commitment relates       
The quantitative factor(s) should indicate whether the credit risk of an instrument has increased significantly since initial recognition. When making this assessment, Aegon shall use the change in the risk of a default occurring over the expected life of the financial instrument. Aegon uses a mix of relative and absolute thresholds:
∎
The relative threshold measures the relative increase in credit risk since origination.
∎
The absolute threshold defines a stage for each rating and is mainly used when the rating at origination is not available or when an instrument is already in default.
The relative thresholds are defined in two steps:
∎
A
PD-based
statistical analysis is performed to determine an optimal PD threshold that provides the best predictor for default;
∎
The
PD-based
thresholds are translated in rating-based rules, which are more intuitive and practically applicable.
 
Annual Report on Form 20-F 2023  |  189 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
2021
  Amortized
cost		   Unrealized
gains		   Unrealized
losses		  Total fair
value		   Fair value of
instruments with
unrealized gains		   Fair value of
instruments with
unrealized losses		 
       
Debt securities, money market instruments and other
                             
United States government
   8,942    2,386    (11)   11,317    10,938    379 
Dutch government
   3,456    1,238    (0)   4,694    4,688    6 
Other government
   9,060    2,794    (84)   11,769    10,414    1,356 
Mortgage-backed securities
   5,265    372    (56)   5,581    3,832    1,749 
Asset-backed securities
   4,088    118    (16)   4,189    2,334    1,855 
Corporate
   50,953    5,738    (343)   56,348    45,363    10,985 
Money market investments
   4,790    -    (0)   4,790    4,547    243 
Other
   876    34    (66)   844    519    325 
       
Total
  
 
87,431
 
  
 
12,679
 
  
 
(576
) 
 
 
99,533
 
  
 
82,635
 
  
 
16,898
 
       
Of which held by Aegon Americas and NL
   78,468    11,865    (475)   89,859    74,954    14,905 
These PD thresholds can be translated into rating-based thresholds using standard Moody’s rating to PD mappings.
The difference between the PD at origination and the PD corresponding to the threshold determines the number of notches that the rating must drop by. E.g. for a one year old instrument with a one year remaining maturity this gives the following result:
Unrealized bond losses
LOGO
PD amounts used by sectorAegon are bunched into ranges in below table. Each range contains the minimum and maximum of PDs on both financial and corporate assets of a
1-10
year term. As Aegon US represents the Group the best, PD amounts of Americas is presented below.
PD range 2023
  
   Minimum
      Maximum 
AAA   0.0002    0.0024 
AA   0.0003    0.0037 
A   0.0007    0.0057 
BBB   0.0020    0.0085 
BB   0.0055    0.0085 
B   0.0138    0.0308 
CCC or lower   0.0205    1.0000 
PD range 2022
  
   Minimum
           Maximum 
AAA   0.0003      0.0016 
AA   0.0004      0.0029 
A   0.0011          0.0051 
BBB   0.0030      0.0088 
BB   0.0081      0.0172 
B   0.0160      0.0436 
CCC or lower   0.0279         1.0000 
Quantitative criteria
The composition by industry category of Aegon’s available-for-sale (AFS)For debt securities, money market investmentsprivate loans, structured finance securities and otherdeposits with financial institutions the relative change of the credit rating is used as primary indicator to assess significant increase in credit risk, for this purpose external credit ratings are used.
Qualitative criteria
For debt securities, private loans, structured finance securities and deposits with financial institutions the watchlist approach is applied as an unrealized loss position at December 31, 2022, and December 31, 2021, is presentedadditional qualitative criterion.
The watchlist approach means exposure of instruments on the watchlist are intensively monitored. Financial assets are added to the watchlist based on if their relative change in the following table:fair value has surpassed a predetermined threshold:
∎
The fair value either drops to 80% and below the (amortized) cost price and stays there for six months; or
∎
The fair value falls by 20% over 3 months; or
∎
The fair value falls to 60% and below the (amortized) cost price.
 
   
December 31, 2022
1)
  December 31, 2021 
Unrealized losses - debt securities, money market
investments and other		  Carrying value of
instruments with
unrealized losses		   Unrealized losses  Carrying value of
instruments with
unrealized losses		   Unrealized losses 
Residential mortgage-backed securities (RMBSs)
   633    (70)   810    (21) 
Commercial mortgage-backed securities (CMBSs)
   2,690    (360)   803    (27) 
Asset-backed securities (ABSs) - CDOs backed by ABS, Corp. bonds, Bank loans
   434    (39)   1,244    (9) 
ABSs - Other
   2,253    (334)   558    (7) 
Financial Industry - Banking
   2,906    (412)   1,669    (32) 
Financial Industry - Insurance
   1,146    (199)   368    (11) 
Financial Industry - Other
   5,821    (878)   1,092    (29) 
Industrial
   17,249    (3,068)   5,630    (179) 
Utility
   3,564    (765)   1,564    (68) 
Government
   6,368    (1,418)   842    (28) 
Other
   240    (128)   325    (66) 
     
Total held by Aegon Americas and NL
1)
  
 
43,306
 
  
 
(7,672
) 
 
 
14,905
 
  
 
(475
) 
Held by other segments
   1,837    (224)   1,994    (102) 
     
Total
  
 
45,143
 
  
 
(7,896
) 
 
 
16,898
 
  
 
(576
) 
 190  |  Annual Report on Form 20-F 2023
Table of Contents
Notes to the consolidated financial statements
Note 4
In relation to debt securities and private loans, where a watchlist is used to monitor credit risk, this assessment is performed at the counterparty level and on a periodic basis. The criteria used to identify SICR are monitored and reviewed periodically for appropriateness by the Group.
Backstop
A backstop is applied to exposures considered to have experienced a significant increase in credit risk if the borrower is more than 30 days past due on its contractual payments in case of structured finance and 60 days in case commercial mortgage loans. No backstop is applied to the other asset classes.
Aegon has used the low credit risk exemption for debt instruments. Debt instruments that have a credit rating which responds with “investment grade” (rating “BBB” or higher) are considered as having low credit risk. As such, external and internal credit ratings are used respectively for these assets to assess whether a significant increase in credit risk has occurred.
Low credit risk exemption is applied for staging purposes on instruments rated BBB and higher. (IFRS 9 provides an exception for financial instruments that have low credit risk at the reporting date, commonly referred to as the “low credit risk exemption” or LCRE, it is an exception to the general model where entities have an option not to assess whether credit risk has increased significantly since initial recognition if the credit risk is considered low.)
Loan commitments and financial guarantees
For loan commitments and financial guarantees, Aegon defines default in the same way as for the respective loan or financial instrument to which a commitment relates or a guarantee is issued for (considering the factors described above).
c) Definition of default and credit-impaired assets
Aegon assesses a financial instrument to be in default or credit-impaired using the following criteria:
Asset class
Quantitative criteriaQualitative criteria
Commercial mortgages90 days past due backstop
Foreclosure
Sale at material credit-related economic loss
Debt securities and private loans5 days past due backstop
Rating falling to “D” (external or internal)
Breach of significant covenants without reasonably supportable waiver obtained
Distressed restructuring taking place
Bankruptcy or an equivalent of an injunction for the obligor was filed
Obligor was classified as default internally
Deposits with financial institution5 days past due backstop
Rating falling to “D” (external or internal)
Breach of significant covenants without reasonably supportable waiver obtained
Distressed restructuring taking place
Bankruptcy or an equivalent of an injunction for the obligor was filed
Obligor was classified as default internally
Structured securities90 days past due backstop
Rating falling to “D” (external or internal)
Loss coverage ratio (Ratio of credit-related losses to the par value of a debt security) is below 1
Receivables90 days past due backstop
Loan commitmentsDefined as for the respective loans to which the commitment relatesDefined as for the respective loans to which the commitment relates
Financial guarantee contractsDefined as for the respective exposures to which the financial guarantee relatesDefined as for the respective exposures to which the financial guarantee relates
Distressed restructuring means material forgiveness, or postponements of principal, interest, or where relevant, fees which is likely to result in a diminished financial obligation.
 
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Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
In addition to the criteria included in the table above, Aegon identifies other indicators of unlikeliness to pay, which include but are not limited to the following:
∎
a borrower’s sources of recurring income are no longer available to meet the payments of instalments;
∎
there are justified concerns about a borrower’s future ability to generate stable and sufficient cash flows;
∎
the borrower’s overall leverage level has significantly increased beyond applicable limits or there are justified expectations of such changes to leverage;
∎
for the exposures to an individual: default of a company fully owned by a single individual where this individual provided the institution with a personal guarantee for all obligations of a company;
∎
material fraud; or
∎
death of a client.
All the criteria above have been applied to the financial instruments held by Aegon and are consistent with the definition of default used for internal credit risk management purposes. The definition of default has been applied consistently to model the Probability of Default, Exposure at Default throughout the Aegon’s expected loss calculations.
An instrument is considered to no longer be in default (i.e. to have “cured”) when it no longer meets any of the default criteria for a consecutive period of six months and an assessment has shown the obligor is no longer unlikely to pay. This period of six months considers the likelihood of a financial instrument returning to default status after cure using different possible cure definitions.
d) Measuring ECL – inputs, assumptions and estimation techniques
The ECL is measured on either a
“12-month
basis” (Stage 1) or “lifetime basis” (Stages 2 and 3), depending on whether a significant increase in credit risk has occurred since initial recognition or whether an asset is considered to be credit-impaired.
The expected credit losses are the discounted product of the Probability of Default, Exposure at Default, and Loss Given Default, defined as follows:
∎
The PD represents the likelihood of a borrower defaulting on its financial obligation (as per “Definition of default and credit-impaired” above), either over the next 12 months (12M PD), or over the remaining lifetime (Lifetime PD) of the obligation.
∎
EAD is based on the amounts the Group expects to be owed at the time of default.
∎
Loss Given Default represents Aegon’s expectation of the extent of loss on a defaulted exposure. LGD varies by type of counterparty, type and seniority of claim and availability of collateral or other credit support. LGD is expressed as a percentage loss per unit of exposure at the time of default.
The discount rate used in the ECL calculation is the original effective interest rate or an approximation thereof.
The lifetime PD is calculated for a financial instrument that results in default by summing the probabilities of all future developments which
end-up
in the ECL. All possible future developments are enumerated and for each future development a probability is calculated. The possibility of full prepayment is included among all possible future developments. For each possible future development the probability is estimated using statistical modeling techniques.
Forward-looking economic information is included in determining the
12-month
and lifetime ECL, and lifetime PD by using a set of variables describing the state of the macro economy as input in the calculation of the probability of default and prepayment.
As described above, and subject to using a maximum of a
12-month
PD for financial assets for which credit risk has not significantly increased, the Group measures ECL considering the risk of default over the maximum contractual period (including any borrower’s extension options) over which Aegon is exposed to credit risk, even if the Group considers a longer period.
There have been no significant changes in estimation techniques or significant assumptions made during the reporting period.
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Table of Contents
Notes to the consolidated financial statements
Note 4
e) Forward-looking information incorporated in the ECL models
The assessment of significant increase in credit risk (SICR) and the calculation of ECL both incorporate forward-looking information. Aegon has performed historical analysis and identified the key economic variables impacting credit risk and expected credit losses for each portfolio.
These economic variables and their associated impact on the ECL and Lifetime PD vary by financial instrument. Expert judgment has also been applied in this process. Forecasts of these economic variables (the “base economic scenario”) give the best estimate view of the economy over the next five years. After five years, to project the economic variables out for the full remaining lifetime of each instrument, a mean reversion approach has been used, which means that economic variables tend to either a long run average rate (e.g. for unemployment) or a long run average growth rate (e.g. GDP) over a period of three years. Statistical regression analysis has been performed to understand the impact changes in these macro-economic variables have had historically on default and prepayment rates.
Using the base scenario as a starting point, three macro-economic scenarios are generated by applying shocks to the macro-economic variables in a positive and negative direction, taking into account their correlation as historically observed, resulting in a positive, neutral and negative scenario. The shocks applied correspond to the historical average deviance from the long term mean observed in the best/worst 10% of the historically observed quarters. The ECL is calculated for each of the three scenarios, multiplied by the scenario weighting, and summed. The use of multiple economic scenarios ensures that the ECL represents the best estimate of expected credit loss and is not merely the credit loss in the most likely scenario.
As with any economic forecasts, the projections and likelihoods of occurrence are subject to a high degree of inherent uncertainty, and therefore, the actual outcomes may be significantly different to those projected. The Group considers these forecasts to represent its best estimate of the possible outcomes.
Economic variable assumptions
The most significant
period-end
assumptions used for the ECL estimate are set out below. The scenarios “base”, “upside”, and “downside” were used for all portfolios.
Economic variable
assumptions,
December 31,
2023
      2024   2025   2026   2027   Units
Interest rates  Base   4.11    4.04    4.02    4.03   Interest Rates:
10-Year
Treasury Constant Maturities, (% p.a., NSA
1)
)
Interest rates  Upside   4.21    4.13    4.02    4.03   Interest Rates:
10-Year
Treasury Constant Maturities, (% p.a., NSA
1)
)
Interest rates  Downside   2.31    3.24    3.71    3.89   Interest Rates:
10-Year
Treasury Constant Maturities, (% p.a., NSA
1)
)
Unemployment rate  Base   4.03    4.06    3.97    3.94   (%, SA)
Unemployment rate  Upside   3.08    3.41    3.34    3.35   (%, SA)
Unemployment rate    Downside   7.56    6.90    5.70    4.88   (%, SA)
House Price Index  Base   400.12    393.70    394.21    403.50   Existing Single-Family Home Price: Median, (Ths. USD, SA)
House Price Index  Upside   419.87    423.62    428.16    439.72   Existing Single-Family Home Price: Median, (Ths. USD, SA)
House Price Index  Downside   339.91    347.29    352.66    363.59   Existing Single-Family Home Price: Median, (Ths. USD, SA)
Domestic GDP  Base   22,900.95    23,303.78    23,825.37    24,397.71   Bil. Ch. 2012 USD, SAAR
2)
Domestic GDP  Upside   23,354.42    23,883.09    24,451.63    25,020.82   Bil. Ch. 2012 USD, SAAR
2)
Domestic GDP  Downside    22,039.64     22,368.94     23,099.22     23,768.80    Bil. Ch. 2012 USD, SAAR
2)
Equity  Base   4,672.66    4,796.24    5,043.19    5,368.63   Standard & Poor’s (S&P); Moody’s Analytics Forecasted
Equity  Upside   4,950.59    5,058.20    5,256.09    5,490.26   Standard & Poor’s (S&P); Moody’s Analytics Forecasted
Equity  Downside   2,904.90    3,226.25    3,942.26    4,603.90   Standard & Poor’s (S&P); Moody’s Analytics Forecasted
1 
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
NSA: National Security Agency
2 SAAR: Seasonally adjusted annual rate
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Table of Contents
Impairment
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Economic variable assump-
tions, December 31, 2022
  2023   2024   2025   2026   Units
Interest rates  Base   3.94    3.86    3.86    3.99   Interest Rates:
10-Year
Treasury Constant Maturities, (% p.a., NSA
1)
)
Interest rates  Upside   4.04    3.96    3.86    3.98   Interest Rates:
10-Year
Treasury Constant Maturities, (% p.a., NSA
1)
)
Interest rates  Downside   2.13    2.59    3.34    3.78   Interest Rates:
10-Year
Treasury Constant Maturities, (% p.a., NSA
1)
)
Unemployment rate  Base   3.82    4.22    4.19    4.15   (%, SA)
Unemployment rate  Upside   3.04    3.33    3.59    3.53   (%, SA)
Unemployment rate  Downside   6.52    7.64    6.34    5.48   (%, SA)
House Price Index  Base   385.74    372.68    371.61    379.79   Existing Single-Family Home Price: Median, (Ths. USD, SA)
House Price Index  Upside   396.53    400.29    399.99    413.28   Existing Single-Family Home Price: Median, (Ths. USD, SA)
House Price Index  Downside   341.01    331.35    339.24    347.82   Existing Single-Family Home Price: Median, (Ths. USD, SA)
Domestic GDP  Base   20,410.05    20,741.30    21,301.03    21,891.77   Bil. Ch. 2012 USD, SAAR
2)
Domestic GDP  Upside   20,705.70    21,265.32    21,796.25    22,379.68   Bil. Ch. 2012 USD, SAAR
2)
Domestic GDP  Downside   20,009.19    19,956.30    20,566.77    21,238.89   Bil. Ch. 2012 USD, SAAR
2)
Equity  Base   4,343.49    4,498.93    4,655.70    4,905.28   Standard & Poor’s (S&P); Moody’s Analytics Forecasted
Equity  Upside   4,690.53    4,727.85    4,923.08    5,047.37   Standard & Poor’s (S&P); Moody’s Analytics Forecasted
Equity  Downside   3,062.99    2,836.89    3,326.54    4,000.34   Standard & Poor’s (S&P); Moody’s Analytics Forecasted
1 NSA: National Security Agency
2 SAAR: Seasonally adjusted annual rate
The weightings assigned to each economic scenario were as follows:
Weightings
     Base     Upside     Downside   
On December 31, 2023   40    30    30   
On December 31, 2022   40    30    30   
Other forward-looking considerations not otherwise incorporated within the above scenarios, such as the impact of any regulatory, legislative or political changes, have also been considered, but are not deemed to have a material impact, and therefore, no adjustment has been made to the ECL for such factors. This process is reviewed and monitored for appropriateness on a quarterly basis.
f)
Write-off
policy
The Group
writes-off
financial assets, in whole or in part, when it has exhausted all practical recovery efforts and has concluded there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include (i) ceasing enforcement activity; and (ii) where Aegon’s recovery method is foreclosing on collateral and the value of the collateral is such that there is no reasonable expectation of recovering in full.
The Group may
write-off
financial assets that are still subject to enforcement activity. The outstanding contractual amounts of such assets
written-off
during 2023 is not material. The Group still seeks to recover amounts it is legally owed in full, but which have been partially written off due to no reasonable expectation of full recovery.
g) Modification of financial assets
The Group has the option to modify the terms of loans provided to customers due to commercial renegotiations, or for distressed loans, with a view to maximizing recovery. Such restructuring activities include extended payment term and penalty interest arrangements. Restructuring policies and practices are based on indicators or criteria which, in the judgment of management, indicate that payment will most likely continue. These policies are kept under continuous review.
The risk of default of such assets after modification is assessed at the reporting date and compared with the risk under the original terms at initial recognition, when the modification is not substantial and so does not result in derecognition of the original asset. The Group monitors the subsequent performance of modified assets. Aegon may determine that the credit risk has significantly improved after restructuring, so that the assets are moved from Stage 3 or Stage 2 (Lifetime ECL) to Stage 1
(12-month
ECL) (see note 4.2.6(a) for details of the Group ECL staging classification). This is only the case for assets which have performed in accordance with the new terms for three consecutive months or more. The gross carrying amount of such assets held on December 31 2023 was EUR 0 million (2022: EUR 0 million).
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Notes to the consolidated financial statements
Note 4
ECL developments in the reporting period
Aegon regularly monitors industry sectors and individual debt securities for indicatorssources of impairment. changes in the ECL allowance.
These indicatorssources may include one or more of the following: 1) deteriorating market to book ratio, 2) increasing industry risk factors, 3) deteriorating financial condition of the issuer, 4) covenant violations by the issuer, 5) high probability of bankruptcy of the issuer, or 6) downgrades by internationally recognized credit rating agency. Additionally,
∎
Transfers between Stages 1, 2 and 3 due to financial instruments experiencing significant increases (or decreases) of credit risk or becoming credit-impaired in the period, and the consequent “step up” (or “step down”) between
12-month
and lifetime ECL;
∎
Additional allowances for new financial instruments recognized during the period, as well as releases for financial instruments
de-recognized
in the period;
∎
Impact on the measurement of ECL due to changes in PDs, EADs and LGDs in the period, arising from regular refreshing of inputs to models;
∎
Impacts on the measurement of ECL due to changes made to models and assumptions;
∎
Discount unwind within ECL due to the passage of time, as ECL is measured on a present value basis;
∎
Foreign exchange retranslations for assets denominated in foreign currencies and other movements; and,
∎
Financial assets derecognized during the period and write-offs of allowances related to assets that were written off during the period.
In addition, for asset-backed securities, cash flow trends and underlying levels of collateral are monitored. A security is impaired if there is objective evidence thatFurthermore, quality ratings of investment portfolios are based on a loss event has occurred after the initial recognitioncomposite of the asset that has a negative impact onmain rating agencies (S&P, Moody’s and Fitch) and Aegon’s internal rating of the estimated future cash flows.
counterparty. The following tables explain the changes in the loss allowance changes between the beginning and the end of the annual period due to these factors:
For details on impairments on financial assets, including receivables, refer to note 15 Impairment charges / (reversals).
   2023 
   ECL staging              
   Stage 1  Stage 2  Stage 3         
Debt securities
   
12-month

ECL		 
 		  Lifetime ECL not
credit-impaired		 
 		  Lifetime ECL
 credit-impaired
 
 		  Purchased credit
impaired		 
 		      Total 
Loss allowance on January 1   (156)   (32)   (86)   (1)   (276) 
Transfers:
      
- Transfer from Stage 1 to Stage 2   2   (2)   -   -   - 
- Transfer from Stage 1 to Stage 3   2   -   (2)   -   - 
- Transfer from Stage 2 to Stage 1   (3)   3   -   -   - 
- Transfer from Stage 2 to Stage 3   -   3   (3)   -   - 
- Transfer from Stage 3 to Stage 2   -   (4)   4   -   - 
- Transfer from Stage 3 to Stage 1   (39)   -   39   -   - 
Impact on
year-end
ECL of exposures transferred between stages during the year
   36   (2)   (39)   -   (5) 
Financial assets derecognized during the period   26   3   44   -   73 
New financial assets originated or purchased   (16)   (1)   (9)   -   (26) 
Change in models   (5)   6   (14)   (1)   (13) 
Net exchange differences   5   1   2   -   9 
      
Loss allowance on December 31
  
 
(147
) 
 
 
(25
) 
 
 
(64
) 
 
 
(2
) 
 
 
(238
) 
Past due and impaired assets
The tables that follow provide information on past due and individually impaired financial assets for the whole Aegon Group. An asset is past due when a counterparty has failed to make a payment when contractually due. Assets are impaired when an impairment loss has been charged to the income statement relating to this asset. After the impairment loss is reversed in subsequent periods, the asset is no longer considered to be impaired. When the terms and conditions of financial assets
 
   
Aegon Annual Report on Form 20-F
2022
2023 | 
181
195  		 
 
Table of Contents
LOGO 
About Aegon
Governance and risk management
  
Financial information
Non-financial  Sustainability information
  
  
   2022 
   ECL staging              
   Stage 1  Stage 2  Stage 3         
Debt securities
   
12-month

ECL		 
 		  Lifetime ECL not
credit-impaired		 
 		   Lifetime ECL credit-
impaired		 
 		  Purchased credit
impaired		 
 		      Total 
Loss allowance on January 1   (161)   (13)   (38)   (2)   (214) 
Transfers:
      
- Transfer from Stage 1 to Stage 2   7   (7)   -   -   - 
- Transfer from Stage 1 to Stage 3   3   -   (3)   -   - 
- Transfer from Stage 2 to Stage 1   (10)   10   -   -   - 
- Transfer from Stage 2 to Stage 3   -   1   (1)   -   - 
- Transfer from Stage 3 to Stage 2   -   (8)   8   -   - 
- Transfer from Stage 3 to Stage 1   (21)   -   21   -   - 
Impact on
year-end
ECL of exposures transferred between stages during the year
   26   (16)   (82)   -   (72) 
Financial assets derecognized during the period   33   6   20   -   58 
New financial assets originated or purchased   (29)   (2)   (24)   -   (56) 
Change in models   5   (2)   16   1   20 
Net exchange differences   (11)   (1)   (2)   -   (13) 
Transfers to disposal groups   1   -   -   -   1 
      
Loss allowance on December 31
  
 
(156
) 
 
 
(32
) 
 
 
(86
) 
 
 
(1
) 
 
 
(276
) 
The ECL allowance for debt securities measured at FVOCI of EUR 237 million (December 2022: EUR 276 million) does not reduce the carrying amount of these investments (which are measured at fair value) but gives rise to an equal and opposite gain in OCI.
Expected credit losses on mortgage loans increased by EUR (14) million to EUR (26) million as per December 2023 (2022: (12) million). The increase in expected credit losses was mainly due to Change in models (14) million (2022: EUR 10 million). The majority of the expected credit losses recognized are in Stage 1 EUR (24) million (2022: EUR (12) million).
In 2022 all Private loans and Other loans and relared expected credit losses were transferred to disposal groups. Upon completion of the a.s.r. transaction all Private loans and Other loans and related expected credit losses were derecognized.
Based on the tables above, the following is a reconciliation of the loss allowance movements with an impact on the income statement with the net impairment charge presented in the income statement. Other represents impairment charges on asset types which are not individually material.
         
2023
         2022 
Mortgage loans measured at amortized cost  (15)   10 
Debt securities measured at FVOCI  (44)   (108) 
Other  (60)   (41) 
   
Net impairment charge in P&L
 
 
(119
) 
 
 
(138
) 
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Table of Contents
Notes to the consolidated financial statements
Note 4
  
   
The following table further explains changes in the gross carrying amount / market value of the financial assets and their significance to the changes in the loss allowance for the same portfolio as discussed above:
   2023 
   ECL staging                
   Stage 1  Stage 2  Stage 3           
Mortgage loans
   
12-month

ECL		 
 		  Lifetime ECL not
credit-impaired		 
 		  Lifetime ECL
 credit-impaired
     Purchased credit
impaired		 
 		       Total 
Gross carrying amount on January 1   10,416   2   -    -    10,418 
Transfers:
        
- Transfer from Stage 1 to Stage 2   (39)   39   -    -    - 
Financial assets derecognized during the period other than write-offs   (566)   (5)   -    -    (571) 
New financial assets originated or purchased   691   -   -    -    691 
Net exchange differences   (354)   (1)   -    -    (355) 
Gross carrying amount on December 31
  
 
10,147
 
 
 
35
 
 
 
-
 
  
 
-
 
  
 
10,182
 
(-) Expected credit losses on December 31   (24)   (1)   -    -    (26) 
      
Net carrying amount on December 31
  
 
10,123
 
 
 
33
 
 
 
-
 
  
 
-
 
  
 
10,156
 
   2022 
   ECL staging               
   Stage 1  Stage 2  Stage 3          
Mortgage loans
   
12-month

ECL		 
 		  Lifetime ECL not
credit-impaired		 
 		  Lifetime ECL
 credit-impaired
 
 		  Purchased credit
impaired		 
 		       Total 
Gross carrying amount on January 1   24,032   391   14   -    24,437 
Transfers:
       
- Transfer from Stage 1 to Stage 2   (508)   508   -   -    - 
- Transfer from Stage 1 to Stage 3   (1)   -   1   -    - 
- Transfer from Stage 2 to Stage 1   29   (29)   -   -    - 
Financial assets derecognized during the period other than write-offs   (2,456)   (62)   (3)   -    (2,521) 
New financial assets originated or purchased   3,738   109   -   -    3,848 
Amortizations through income statement   (2)   -   -   -    (2) 
Realized gains and losses through income statement   36   -   -   -    36 
Net exchange differences   615   2   -   -    617 
Other movements   (1,474)   -   -   -    (1,474) 
Transfer to/from other headings   (2)   -   -   -    (2) 
Transfers to disposal groups   (13,590)   (918)   (13)   -    (14,521) 
Gross carrying amount on December 31
  
 
10,416
 
 
 
2
 
 
 
-
 
 
 
-
 
  
 
10,418
 
(-) Expected credit losses on December 31   (12)   -   -   -    (12) 
      
Net carrying amount on December 31
  
 
10,405
 
 
 
2
 
 
 
-
 
 
 
-
 
  
 
10,407
 
Other movements includes the elimination of movements connected to Aegon the Netherlands after the completion of the sale.
 
Annual Report on Form 20-F 2023 | 197  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
 
   2023 
   ECL staging             
   Stage 1  Stage 2  Stage 3         
Debt securities
   
12-month

ECL		 
 		  Lifetime ECL not
credit-impaired		 
 		  Lifetime ECL
 credit-impaired
 
 		  Purchased credit
impaired		 
 		      Total 
Gross carrying amount on January 1   50,666   413   403   125   51,607 
Transfers:
      
- Transfer from Stage 1 to Stage 2   (80)   80   -   -   - 
- Transfer from Stage 1 to Stage 3   (45)   -   45   -   - 
- Transfer from Stage 2 to Stage 3   -   (23)   23   -   - 
- Transfer from Stage 3 to Stage 2   -   6   (6)   -   - 
- Transfer from Stage 2 to Stage 1   76   (76)   -   -   - 
- Transfer from Stage 3 to Stage 1   59   -   (59)   -   - 
Financial assets derecognized during the period other than write-offs   (7,836)   (83)   (111)   (27)   (8,057) 
New financial assets originated or purchased   3,672   37   22   -   3,731 
Unrealized gains/losses through equity   1,488   16   1   (10)   1,495 
Amortizations through income statement   113   -   19   17   148 
Net exchange differences   (1,637)   (13)   (12)   (4)   (1,666) 
Other movements   (9)   -   -   -   (9) 
Transfer to/from other headings   (6)   -   -   -   (6) 
Gross carrying amount on December 31
  
 
46,461
 
 
 
357
 
 
 
325
 
 
 
100
 
 
 
47,242
 
Expected credit losses on December 31   (147)   (25)   (64)   (2)   (237) 
   2022 
   ECL staging              
   Stage 1  Stage 2  Stage 3         
Debt securities
   
12-month

ECL		 
 		  Lifetime ECL not
credit-impaired		 
 		  Lifetime ECL
 credit-impaired
 
 		  Purchased credit
impaired		 
 		      Total 
Gross carrying amount on January 1   70,132   259   433   150   70,974 
Transfers:
      
- Transfer from Stage 1 to Stage 2   (228)   228   -   -   - 
- Transfer from Stage 1 to Stage 3   (77)   -   77   -   - 
- Transfer from Stage 2 to Stage 3   -   (15)   15   -   - 
- Transfer from Stage 3 to Stage 2   -   2   (2)   -   - 
- Transfer from Stage 2 to Stage 1   33   (33)   -   -   - 
- Transfer from Stage 3 to Stage 1   6   -   (6)   -   - 
Financial assets derecognized during the period other than write-offs   (11,855)   (47)   (112)   (30)   (12,043) 
New financial assets originated or purchased   6,411   45   45   -   6,501 
Unrealized gains/losses through equity   (16,599)   (94)   (123)   (26)   (16,842) 
Amortizations through income statement   267   2   38   20   327 
Movements related to fair value hedges   (12)   -   -   -   (12) 
Net exchange differences   4,525   15   29   10   4,580 
Other movements   (52)   50   10   -   7 
Transfers to disposal groups   (1,884)   -   -   -   (1,884) 
Gross carrying amount on December 31
  
 
50,666
 
 
 
413
 
 
 
403
 
 
 
125
 
 
 
51,607
 
Expected credit losses on December 31   (156)   (32)   (86)   (1)   (276) 
The total amount of undiscounted ECL at initial recognition for purchased or originated credit-impaired financial assets recognized during the period was EUR EUR 2 million (2022: EUR 1 million).
  198 | Annual Report on Form 20-F 2023
Table of Contents
have been renegotiated, the terms and conditions of the new agreement apply in determining whether the financial assets are past due.
Notes to the consolidated financial statements
Note 4
Aegon’s policy is to pursue realization of the collateral in an orderly manner as and when liquidity permits. Aegon generally does not use the non-cash collateral for its own operations.
 
     
2022
1)
     
2021
 
Past due but not impaired assets     
0-6 months
      6-12
months		 
 		     > 1 year      
Total
      0-6
months		 
 		     6-12
months		 
 		     > 1 year      Total 
Debt securities - carried at fair value
     1,155      572      25      1,751      1,171      255      40      1,466 
Mortgage loans
     -      -      -      -      129      1      1      131 
Other loans
     -      -      -      -      19      5      10      35 
Accrued interest
     28      22      -      50      30      10      3      42 
Other financial assets - carried at fair value
     -      -      -      -      -      -      -      - 
         
At December 31
    
 
1,183
 
    
 
593
 
    
 
25
 
    
 
1,802
 
    
 
1,350
 
    
 
271
 
    
 
54
 
    
 
1,675
 
1 
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
Impaired financial assets                       Carrying
amount 2022 
 
1)
 
  Carrying
amount 2021
 
 
Shares
                       10   62 
Debt securities - carried at fair value
                       500   635 
Mortgage loans
                       -   10 
Other loans
                       -   2 
Other financial assets - carried at fair value
                       1   14 
       
At December 31
                      
 
510
 
 
 
723
 
1 
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
Sensitivity on ECL to future-economic conditions
ECL are sensitive to judgments and assumptions made regarding the formulation of forward looking scenarios and how such scenarios are incorporated into the calculations. Management performs a sensitivity analysis on the ECL recognized on material classes of its assets. As ECL is not material at the end of 2023 and 2022, sensitivity on ECL is being assessed to be not material for 2023 and 2022 either.
4.3 Market risk
Market risk is the risk that changes in market prices (e.g. foreign exchange rates, interest rates) will affect the fulfillment cash flows of insurance and reinsurance contracts as well as the fair value or future cash flows of financial instruments. The objective of market risk management is to control exposures within acceptable parameters while optimizing the return on risk.
Aegon’s management of market risk comprises equity price risk, interest rate risk and currency risk.
4.3.1 Equity market risk and other investments risk
Fluctuations in the equity, real estate and capital markets have affected Aegon’s profitability, capital position and sales of equity related products in the past and may continue to do so. Exposure to equity, real estate and capital markets exists in both assets and liabilities. Asset exposure exists through direct equity investment, where Aegon bears all or most of the volatility in returns and investment performance risk. Equity market exposure is also present in insurance and investment contracts for policyholders where funds are invested in equities, backing variable annuities, unit-linked products and mutual funds. Although most of the risk remains with the policyholder, lower investment returns can reduce the asset management fee earned by Aegon on the asset balance in these products. In addition, some of this business has minimum return or accumulation guarantees.


In 2021, Transamerica expanded its dynamic hedge program to variable annuities with guaranteed minimum death benefit riders (GMDB) and remaining policies with guaranteed minimum income (GMIB) riders. This builds on the effective dynamic hedge program of policies with guaranteed minimum withdrawal benefits (GMWB). The dynamic hedge program covers the equity risks (and interest rate risk) embedded in the guarantees of its entire variable annuity portfolio. Dynamic hedging stabilizes cash flows and reduces sensitivities to changes in equity markets (and interest rates) on an economic basis.

The general account equity, real estate and other
non-fixed-income
portfolio of Aegon is as follows:

 
Equity, real estate and non-fixed income
exposure		   Americas    United Kingdom    International    Asset
Management		 
 		   Holding and
other activities		 
 		   
Total 2022 
1)
 
Equity funds
   141    -    3    7    -    151 
Common shares
2)
   148    25    5    -    1    179 
Preferred shares
   56    -    -    -    -    56 
Investments in real estate
   42    -    17    -    -    59 
Hedge funds
   10    -    -    -    -    10 
Other alternative investments
   2,168    -    -    -    -    2,168 
Other financial assets
   1,848    531    5    1    -    2,385 
       
At December 31
  
 
4,414
 
  
 
556
 
  
 
30
 
  
 
9
 
  
 
1
 
  
 
5,009
 
Equity, real estate and
non-fixed
income
exposure
   Americas    United
  Kingdom
     International    Asset
Management		 
 		   
 		Holding and
other
activities		 
 
 		   Total 20231) 
Equity funds   133    -    -    9    -    141 
Common shares
1)
   106    14    5    -    -    126 
Preferred shares   29    -    -    -    -    29 
Investments in real estate   38    -    17    -    -    55 
Hedge funds   6    -    -    -    -    6 
Other alternative investments   2,404    -    -    -    -    2,404 
Other financial assets   1,856    772    4    1    -    2,633 
       
On December 31
  
 
4,573
 
  
 
786
 
  
 
27
 
  
 
10
 
  
 
-
 
  
 
5,395
 
 
1 
2022 excludes the exposures of the disposal group, which are separately disclosed in note 51 Discontinued operations.
2 
Common shares in Holding and other activities includes t
he
elimination of treasury shares in the general account for an amount of EUR nil million.
182
Aegon Annual Report on Form 20-F
2022
Table of Contents
Notes to the consolidated financial statements
Note 4
Equity, real estate and
non-fixed
income exposure
          Americas   The
        Netherlands		   United
              Kingdom		             International   Asset
            Management		   
        Holding and
other activities
               Total 2021 
        
Equity funds
   175    34    -    63    9    -    280 
        
Common shares
1)
   190    -    29    5    -    1    226 
        
Preferred shares
   128    -    -    -    -    -    128 
        
Investments in real estate
   39    2,588    -    16    -    -    2,643 
        
Hedge funds
   35    -    -    -    -    -    35 
        
Other alternative investments
   1,934    432    -    -    -    -    2,366 
        
Other financial assets
   1,595    1,023    598    7    2    -    3,225 
        
At December 31
  
 
4,097
 
  
 
4,076
 
  
 
628
 
  
 
91
 
  
 
10
 
  
 
1
 
  
 
8,903
 
1 
Common shares in Holding and other activities includes the elimination of treasury shares in the general account for an amount of EUR nil million.
Equity, real estate and
non-fixed
income
exposure
   Americas    United
  Kingdom
     International    Asset
Management		 
 		   
 		Holding and
other
activities		 
 
 		   Total 20221) 
Equity funds   141    -    3    7    -    151 
Common shares
1)
   148    25    5    -    1    179 
Preferred shares   26    -    -    -    -    26 
Investments in real estate   42    -    17    -    -    59 
Hedge funds   10    -    -    -    -    10 
Other alternative investments   2,169    -    -    -    -    2,169 
Other financial assets   1,904    531    5    1    -    2,441 
       
On December 31
  
 
4,440
 
  
 
556
 
  
 
30
 
  
 
9
 
  
 
1
 
  
 
5,035
 
 
Market risk concentrations – shares
                Americas           United Kingdom               International   Asset
            Management		   
        Total 2022 
1) 2)
   
Of which
        impaired assets
 
       
Communication
   2    -    -    -    2    - 
       
Consumer
   13    -    -    -    13    - 
       
Financials
   184    -    5    -    189    7 
       
Funds
   19    25    -    -    45    1 
       
Industries
   4    -    -    -    4    - 
       
Other
   123    -    4    7    135    - 
       
At December 31
  
 
345
 
  
 
25
 
  
 
10
 
  
 
7
 
  
 
388
 
  
 
10
 
1 
Includes investments ofCommon shares in Holding and other activities.
activities includes the elimination of treasury shares in the general account for an amount of EUR nil million.
2 
2022 excludes the market risk concentrations of the disposal group, which are separately disclosed in note 51 Discontinued operations.
 
Market risk concentrations –
shares
              Americas   The
        Netherlands		   United
              Kingdom		           International   Asset
        Management		   
            Total 2021 
1)
   
          Of which
impaired
assets
 
        
Communication
   1    -    -    -    -    1    - 
        
Consumer
   5    -    -    -    -    5    1 
        
Financials
   411    4    -    5    -    420    39 
        
Funds
   -    1,406    29    62    -    1,498    17 
        
Industries
   42    -    -    -    -    42    5 
        
Other
   35    -    -    5    9    49    - 
        
At December 31
  
 
493
 
  
 
1,410
 
  
 
29
 
  
 
72
 
  
 
9
 
  
 
2,015
 
  
 
62
 
Annual Report on Form 20-F 2023 | 199  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
 
1 
Includes investments of Holding and other activities.
Market risk concentrations – shares
     Americas    United
  Kingdom
       International     Asset
  Management
       Total 2023 
Communication   2    -    -    -    2  
Consumer   4    -    -    -    4 
Financials   136    -    5    -    142 
Funds   30    14    -    -    45 
Industries   11    -    -    -    11 
Other   84    -    4    9    97 
On December 31
  
 
267
 
  
 
14
 
  
 
10
 
  
 
9
 
  
 
300
 
Market risk concentrations – shares
     Americas    United
  Kingdom
       International     Asset
  Management
       Total 2022 
Communication   2    -    -    -    2  
Consumer   13    -    -    -    13 
Financials   154    -    5    -    159 
Funds   19    25    -    -    45 
Industries   4    -    -    -    4 
Other   123    -    4    7    135 
On December 31
  
 
315
 
  
 
25
 
  
 
10
 
  
 
7
 
  
 
358
 
The table that follows sets forth the closing levels of certain major indices at the end of the last five years.
       
 2023
         2022          2021          2020         2019 
S&P 500   4,770    3,840    4,766    3,756    3,231  
Nasdaq   15,011    10,466    15,645    12,888    8,973 
FTSE 100   7,733    7,452    7,385    6,461    7,542 
AEX   787    689    798    625    605 
An analysis of Aegon’s sensitivity to a 10% and 25% increase or decrease in equity prices at the reporting date, assuming that all other variables remain constant, is presented below.
   
2023
  2022 
Estimated approximate effects on:
     CSM      Net result   Shareholders’
equity
        CSM      Net result   Shareholders’
equity
  
Equity 10% increase
       
Financial instruments    (5)   (13)    (10)   29  
Insurance and reinsurance assets   -   (271)   (265)   -   (325)   (320) 
Insurance and reinsurance liabilities   310   422   397   291   415   397 
Equity 10% decrease
       
Financial instruments    4   11    16   (28) 
Insurance and reinsurance assets   -   229   225   -   344   340 
Insurance and reinsurance liabilities   (316)   (465)   (431)   (274)   (522)   (509) 
Equity 25% increase
       
Financial instruments    (31)   (50)    (43)   59 
Insurance and reinsurance assets   -   (737)   (721)   -   (699)   (690) 
Insurance and reinsurance liabilities   775   1,035   989   723   917   872 
Equity 25% decrease
       
Financial instruments    35   53    55   (53) 
Insurance and reinsurance assets   -   965   945   -   1,010   997 
Insurance and reinsurance liabilities   (804)   (1,499)   (1,434)   (618)   (1,539)   (1,505) 
Equity sensitivities on CSM mainly relate to VFA products in US and UK and reflect the impact on the present value of future fee income triggered by changes in underlying asset values due to market changes.
 
    
                  2022
                     2021                     2020                     2019                     2018 
      
S&P 500
   3,840    4,766    3,756    3,231    2,507 
      
Nasdaq
   10,466    15,645    12,888    8,973    6,635 
      
FTSE 100
   7,452    7,385    6,461    7,542    6,728 
      
AEX
   689    798    625    605    488 
The sensitivity analysis of net result and shareholders’ equity to changes in equity prices is presented in the table below. The sensitivity of shareholders’ equity and net result to changes in equity markets reflects changes in the market value of Aegon’s portfolio, changes in DPAC amortization, contributions to pension plans for Aegon’s employees and the strengthening of the guaranteed minimum benefits, when applicable. Aegon generally has positive income benefits from equity market increases and negative impacts from equity market declines as it earns fees
  200 | Annual Report on policyholder account balances and provides minimum guarantees for account values. Aegon uses options and other equity derivatives to provide protection against the negative impact of equity market declines.Form 20-F 2023
Aegon Annual Report on Form 20-F
2022
  |  
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Table of Contents
 
About Aegon
Governance and risk management
Notes to the consolidated financial statements
Financial informationNote 4
Non-financial information
   
   
 
Sensitivity analysis of netEquity sensitivities on Net result and shareholders’Shareholders’ equity toare not symmetric for increases and decreases of equity markets
markets. This is mainly driven by the hedged VFA products within Variable Annuities in the US. In our sensitivity modelling we assume a level of hedge ineffectiveness thus generating a negative net impact here for both increased and decreased equity markets.
Immediate change of  
    Estimated approximate effects
on net result
      Estimated approximate effects
on shareholders’ equity		 
   
2022
1)
         
   
Equity increase 10%
   168   202 
   
Equity decrease 10%
   (237)   (288) 
   
Equity increase 25%
   358   456 
   
Equity decrease 25%
   (551)   (666) 
   
2021
1)
         
   
Equity increase 10%
   151   341 
   
Equity decrease 10%
   (212)   (221) 
   
Equity increase 25%
   322   660 
   
Equity decrease 25%
   (529)   (685) 
1 
Includes the approximate effects of the disposal group
4.3.2 Interest rate risk
Aegon bears interest rate risk with many of its products. In cases where cash flows are highly predictable, investing in assets that closely match the cash flow profile of the liabilities can offset this risk. For some Aegon country units, local capital markets are not well developed, which prevents the complete matching of assets and liabilities for those businesses. For some products, cash flows are less predictable as a result of policyholder actions that can be affected by the level of interest rates.
In periods of rapidly increasing interest rates, policy loans, surrenders and withdrawals may increase. Premiums in flexible premium policies may decrease as policyholders seek investments with higher perceived returns. This activity may result in cash payments by Aegon requiring the sale of invested assets at a time when the prices of those assets are adversely affected by the increase in market interest rates; this may result in realized investment losses. These cash payments to policyholders result in a decrease in total invested assets and a decrease in net result. Among other things, early withdrawals may also require accelerated amortization of DPAC, which in turn reduces net result.
During periods of sustained low interest rates, Aegon may not be able to preserve margins as a result of minimum interest rate guarantees and minimum guaranteed crediting rates provided on policies. Also, investment earnings may be lower because the interest earnings on new fixed-income investments are likely to have declined with the market interest rates. Mortgage loans and redeemable bonds in the investment portfolio are more likely to be repaid as borrowers seek to borrow at lower interest rates and Aegon may be required to reinvest the proceeds in securities bearing lower interest rates. Accordingly, net result declines as a result of a decrease in the spread between returns on the investment portfolio and the interest rates either credited to policyholders or assumed in reserves.
Aegon manages interest rate risk closely, taking into account all of the complexity regarding policyholder behavior and management action. Aegon employs sophisticated interest rate measurement techniques and actively uses derivatives and other risk mitigation tools to closely manage its interest rate risk exposure. Aegon operates an Investment & Counterparty Risk policy that limits the amount of interest rate risk to which the Group is exposed. All derivative use is governed by Aegon’s Derivative Use Policy. A detailed description on the use of derivatives within Aegon is included in note 2420 Derivatives.
In 2020 Transamerica commenced a multi-year plan to gradually reduce its economic interest rate risk, primarily by lengthening the duration of the assets to provide a closer match to the liability duration and extending the existing forward starting swap program. The program has been completed in 2022.
Furthermore, in 2021, Transamerica expanded its dynamic hedge program to variable annuities with guaranteed minimum death benefit riders (GMDB) and remaining policies with guaranteed minimum income (GMIB) riders. This builds on the effective dynamic hedge program of policies with guaranteed minimum withdrawal benefits (GMWB). The dynamic hedge program covers the interest rate (and equity risks) embedded in the guarantees of its entire variable annuity portfolio. Dynamic hedging stabilizes cash flows and reduces sensitivities to changes in interest rates (and equity markets) on an economic basis.
The following table shows interest rates at the end of each of the last five years.
   
2023
 		  2022  2021   2020   2019   
3-month
US LIBOR
    5.59%     4.77%    0.21%     0.24%     1.91%   
3-month
EURIBOR
  3.91%   2.13%  (0.57%)  (0.55%)  (0.38%) 
10-year
US Treasury
  3.86%   3.83%  1.78%   0.91%   1.91%  
10-year
Dutch government
  2.32%   2.91%  (0.03%)  (0.48%)  (0.06%) 
 
184
   
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2022
2023 | 201  		 
Table of Contents
LOGO		 
Notes to the consolidated financial statementsAbout Aegon  Governance and risk management  
Note 4Financial information
  Sustainability information
   
   
 
    
            2022
               2021              2020              2019              2018 
      
3-month US LIBOR
   4.77%    0.21%   0.24%   1.91%   2.81% 
      
3-month EURIBOR
   2.13%    (0.57%)   (0.55%)   (0.38%)   (0.31%) 
      
10-year US Treasury
   3.83%    1.78%   0.91%   1.91%   2.69% 
      
10-year Dutch government
   2.91%    (0.03%)   (0.48%)   (0.06%)   0.39% 
The sensitivityAn analysis in the table below shows an estimate of the effect of a parallel shift in the yield curves on net result and shareholders’ equity arising from the impact on general account investments and offset due to liabilities from insurance and investment contracts. Timing and valuation differences between assets and liabilities may cause short-term reductions in net result as rates rise. Rising interest rates would also cause the fair value of the available-for-sale bond portfolio to decline and the level of unrealized gains could become too low to support recoverability of the full deferred tax asset triggering an allowance charge to income. The offsetting economic gain on the insurance and investment contracts is however not fully reflected in the sensitivities because many of these liabilities are not measured at fair value. The short to medium term reduction in net result due to rising interest rates would be offset by higher net result in later years, all else being equal. Therefore, higher interest rates are not considered a long-term risk to the Group. However, a long sustained period of low interest rates will erode net result due to lower returns earned on reinvestments and due to lower long term returns from decreased overall portfolio yields.
Parallel movement of yield curve
            Estimated approximate effects
on net result		            Estimated approximate effects
on shareholders’ equity		 
   
2022
1)
         
   
Shift up 100 basis points
   (257)   (3,966) 
   
Shift down 100 basis points
   (1,166)   1,993 
   
2021
1)
         
   
Shift up 100 basis points
   296   (3,591) 
   
Shift down 100 basis points
   (594)   2,906 
1 
Includes the approximate effects of the disposal group
Aegon’s sensitivity to a 100 basis points parallel increase or decrease in market interest rate risk has changed per December 31, 2022 compared to December 31, 2021rates at the reporting date, assuming that all other variables remain constant, is presented below:
   
2023
  2022 
Estimated approximate effects on:
     CSM    Net result    Shareholders’
equity
      CSM    Net result    Shareholders’
equity
  
100 bps increase - Yield curve
       
Financial instruments    (114)   (652)    (153)   (605)  
Insurance and reinsurance assets   (4)   (1,029)   (3,876)   (2)   (1,217)   (4,190) 
Insurance and reinsurance liabilities   126   1,008   4,158   185   1,149   4,123 
100 bps decrease - Yield curve
       
Financial instruments    35   655    55   570 
Insurance and reinsurance assets   6   1,258   4,625   4   1,482   5,149 
Insurance and reinsurance liabilities   (133)   (1,306)   (5,303)    (208)   (1,480)   (5,527) 
The exposures of our different products vary and in particular we have a number of asymmetric exposures. This is mainly the resultexplained by some of the improvementsUS products:
∎
For a number of products (e.g. our Stable Value Solutions and parts of the Universal Life products) we have stable surrender values alongside stable crediting rates which mean that as interest rates rises it becomes more attractive in the short term for customers to lapse their policies and due to the market movements this leads to increased losses. There are also asymmetries from accounting rules of IFRS, where decreases in interest rates which turn SVS liabilities negative will be floored at zero based on IFRS 9 rules applied to these contracts.
∎
For other longer duration products such as Long Term Care and Unit Linked products with Non Lapse or secondary guarantees, we have a natural convexity, meaning we are more exposed to interest rates falling, which results in adverse sensitivities on these products than to interest rates rising which are positive. This is because we still expect to receive premiums over the next 10 to 20 years but will continue to pay claims for many years thereafter.
The interaction of these two factors with the more symmetrical exposures on other products results in the LAT deficit in the Netherlands, referour overall sensitivities showing an adverse impact to note 51 Discontinued operations. The impact from increasingboth rising and falling interest rates on the result before tax is capped to the net LAT deficit position in the Netherlands. The impact from decreasing interest rates on result before tax is changed as there is no revaluation reserve available for shadow loss recognition in the net LAT deficit.rates.
The hedge strategy targets minimal mismatch according to the Aegon economic framework (which broadly aligns with Solvency II Own Funds) and stabilizes Solvency II ratio volatility to a large extent.
Risks and risks management arising from financial instruments subject to interest rate benchmark reform
The future of IBORs (Interbank Offered Rates) such as EURIBOR, EONIA and LIBOR has been a major topic on the global agenda since the G20 asked the Financial Stability Board (FSB) to undertake a fundamental review of leading interest rate benchmarks in 2013. The FSB proposed new standards to reform interest rate benchmarks and the use of transaction-based input data instead of
non-transactional/panel
input data.
In the EU this is adopted in the new Benchmark Regulation (BMR) which stipulates that from January 2020 only BMR compliant benchmarks may be used within the EU.
ToIn order to prepare for the IBOR transition all Aegon units have written transition planplans containing among others project solutions and actions, timelines and ownership to ensure timely preparation and implementation. We are currently implementing the actions as describedActions have been completed in theaccordance with these transition plans.
There are no plans for the discontinuation for EURIBOR and appropriate fallback language has been
implemented
for derivatives via the International Swaps and Derivatives Association (‘ISDA’(“ISDA”) fallback protocol and rulebook changes by the clearing houses.
In the US the relevant USD LIBOR benchmark rates are expected to remain available for existing contracts until mid 2023 and these instruments are expected to either be transitioned actively to Secured Overnight Funding Rate (‘SOFR’) before the 2023 deadline, via the ISDA fallback protocol or via a legislative solution.
Aegon Annual Report on Form 20-F
2022
  |  
185
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
In July 2020 the discount rates of EUR cleared derivatives switched from EONIA to
€
STR which impacted the valuation of derivatives for which compensation was exchanged. All EUR Credit Support Annex (‘CSA’(“CSA”) which have positions outstanding have been amended from EONIA to
€
STR discounting. In the US,United States, the cleared market has switched discount rates from Fed Funds to SOFR in October 2020. The switch in discount rates is expected to lead to increased liquidity in the new risk free rates.
  202 | Annual Report on Form 20-F 2023
Table of Contents
Notes to the consolidated financial statements
Note 4
Aegon recognizes that the reform of IBORs and any transition to replacement rates entail risks for all our businesses across our assets and liabilities. These risks include, but are not limited to:
◆
∎
 Legal risks, as Aegon is required to make changes to documentation for new and existing transactions, such as funding instruments issued with an IBOR reference and derivatives held with an IBOR reference;
◆
∎
 Financial risks, arising from any changes in the valuation of financial instruments linked to benchmark rates, such as derivatives and floating rate notes, issued by, or invested in by Aegon;
◆
∎
 Pricing risks, as changes to benchmark indices could impact pricing mechanisms on some funding instruments or investments;
◆
∎
 Operational risks, due to the potential requirement to adapt informational technology systems, trade reporting infrastructure and operational processes; and
◆
∎
 Conduct risks, relating to communication with potential impact on Aegon’s customers, and engagement during the transition period.
Various supranational institutions, central banks, regulators, benchmark administrators and industry working groups play a role in the benchmark reform and the preparation for the replacement of IBORs. Although a lot of work has been done, there is still significant uncertainty around liquidity development, and the timetable and mechanisms for implementation, including application of spread adjustments to the alternative reference rates. Accordingly, it is not currently possible to determine whether, or to what extent, any such changes would affect Aegon. However, the implementation of alternative reference rates may have a material adverse effect on Aegon’s business, financial condition, customers, and operations.
The table below summarize the exposures of
non-derivative
financial assets and
non-derivative
liabilities that yet have to transition to alternative benchmark rates.
 
  
2022
1)
   2021   
2023
   2022 
  
Non derivative financial instruments to transition to
alternative benchmark
  
    Financial assets
non-derivatives
   
                Financial
liabilities
non-derivatives
       Financial assets
non-derivatives
                   Financial
liabilities
non-derivatives
 
Non derivative financial instruments to
transition to alternative benchmark
Non derivative financial instruments to
transition to alternative benchmark
Non derivative financial instruments to
transition to alternative benchmark
    Financial assets
non-derivatives
      Financial liabilities 
non-derivatives 
      Financial assets
non-derivatives
      Financial liabilities
non-derivatives
  
  
By benchmark rate
By benchmark rate
By benchmark rate
By benchmark rate
            
  
GBP LIBOR
   27    -    19    - 
GBP LIBOR
GBP LIBOR
GBP LIBOR   27    -     27    -  
  
USD LIBOR
   814    1,218    822    1,143 
  
Euribor
   34    1,200    3,095    1,200 
  
Fed Funds
   -    -    102    - 
USD LIBOR
USD LIBOR
USD LIBOR   66    -     814    1,218 
  
Total
  
 
875
 
  
 
2,418
 
  
 
4,038
 
  
 
2,343
 
Total
Total
Total
  
 
93
 
  
 
- 
 
  
 
841
 
  
 
1,218
 
1 
2022 excludes the non derivative financial instruments of the disposal group, which are separately disclosed in note 51 Discontinued operations.
The table below summarize the exposuresDuring 2023 all derivative financial instruments with USD Libor as a benchmark rate, with a total nominal value of derivatives that yet haveEUR 39,752, transitioned to transition toan alternative benchmark rates.
rate. There are no remaining derivative financial instruments to be transitioned to an alternative benchmark rate.
    
2022
1)
   2021 
   
Derivative financial instruments to transition to alternative benchmark
    Nominal Value     Nominal Value 
   
By benchmark rate
          
   
GBP LIBOR
   -    - 
   
USD LIBOR
   39,752    54,232 
   
Euribor
   563    113,593 
   
Fed Funds
   -    3,574 
   
Total
  
 
40,315
 
  
 
171,399
 
1 
2022 excludes the derivative financial instruments of the disposal group, which are separately disclosed in note 51 Discontinued operations.
4.3.3 Currency exchange rate risk
As an international group, Aegon is subject to foreign currency translation risk. Foreign currency exposure exists mainly when policies are denominated in currencies other than the issuer’s functional currency. Currency risk in the investment portfolios backing insurance and investment liabilities is managed using asset liability matching principles. Assets allocated to equity are kept in local currencies to the extent shareholders’ equity is required to satisfy regulatory and self-imposed
186
Aegon Annual Report on Form 20-F
2022
Table of Contents
Notes to the consolidated financial statements
Note 4
capital requirements. Therefore, currency exchange rate fluctuations will affect the level of shareholders’ equity as a result of translation of subsidiaries into euro, the Group’s presentation currency. Aegon holds the remainder of its capital base (perpetual capital securities, subordinated and senior debt) in various currencies in amounts that are targeted to correspond to the book value of the country units. This balancing mitigates currency translation impacts on shareholders’ equity and leverage ratios. Aegon does not hedge the income streams from the main
non-euro
units and, as a result, earnings may fluctuate due to currency translation. As Aegon has significant business segments in the Americas and in the United Kingdom, the principal sources of exposure from currency fluctuations are from the differences between the US dollar and the euro and between the UK pound and the euro. Aegon may experience significant changes in net result and shareholders’ equity because of these fluctuations.
Aegon operates an Investment & Counterparty Risk Policy which applies currency risk exposure limits both at Group and regional levels, and under which direct currency speculation or program trading by country units is not allowed unless explicit approval has been granted by the Group Risk and Capital Committee and the Management Board.CEO. Assets should be held in the functional currency of the business written or hedged back to that currency. Where this is not possible or practical, remaining currency exposure should be sufficiently documented and limits are placed on the total exposure at both group level and for individual country units.
Annual Report on Form 20-F 2023 | 203  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Information on Aegon’s three year historical net result and shareholders’ equity in functional currency are shown in the table below:
 
  
                    2022
                      2021                       2020      
 2023
      2022 
  
Net result
        
Net result
Net result
Net result
  
Americas (in USD)
Americas (in USD)
Americas (in USD)
Americas (in USD)
   (1,486)  1,195    (611)    (266)    562  
  
United Kingdom (in GBP)
   146  104    60 
United Kingdom (in GBP)
United Kingdom (in GBP)
United Kingdom (in GBP)   26    57 
  
Equity in functional currency
Equity in functional currency
Equity in functional currency
Equity in functional currency
        
  
Americas (in USD)
   6,228  18,324    19,127 
Americas (in USD)
Americas (in USD)
Americas (in USD)   3,690    3,456 
  
United Kingdom (in GBP)
   1,108  1,260    1,391 
United Kingdom (in GBP)
United Kingdom (in GBP)
United Kingdom (in GBP)   1,256    1,373 
The summary quantitative information about Aegon’s exposure to currency risk arising from insurance and reinsurance contracts and financial instruments was as follows:
   2023   2022 
      EUR      GBP      USD      Other      Total       EUR      GBP      USD      Other      Total 
Financial instruments - assets   722    1,713    70,557    928    73,921     733    1,501    73,745    1,493    77,471  
Financial instruments - liabilities   2,823    40,242    38,387    -    81,452     3,304    32,595    39,781    -    75,681 
Insurance and reinsurance contract - assets   7    2    16,744    39    16,793     5    369    16,557    45    16,976 
Insurance and reinsurance contract - liabilities   715    61,922    130,886    6,124    199,648     690    58,676    130,991    7,088    197,445 
The exchange rates for US dollar and UK pound per euro for each of the last five year ends are set forth in the table below:
 
Closing rates
  
            2022
               2021               2020               2019               2018 
      
USD
   1.07    1.14    1.22    1.12    1.14 
      
GBP
   0.89    0.84    0.90    0.85    0.90 
Closing rates
     
 2023
 		       2022       2021       2020       2019 
USD   1.10     1.07    1.14    1.22    1.12  
GBP   0.87     0.89    0.84    0.90    0.85 
Aegon Group companies’ foreign currency exposure from monetary assets and liabilities denominated in foreign currencies (that is, other than the entity’s functional currency), is not material.
Sensitivity analysis of net result and shareholders’ equity to translation risk
The sensitivity analysis in the following table shows an estimate of the translation effect of movements in the exchange rates of functional currencies of foreign subsidiaries against the euro presentation currency of the Group’s financial statements, on net income and shareholders’ equity.
 
Aegon Annual Report on Form 20-F
2022
  |  
187
Movement of markets
1)
   Estimated approximate effects
on net income
    Estimated approximate effects
on shareholders’ equity
  
   
2023
   
Increase by 15% of USD currencies relative to the euro   (27)   769  
Increase by 15% of GBP currencies relative to the euro   (2)   264 
Increase by 15% of
non-euro
currencies relative to the euro
   (49)   1,145 
Decrease by 15% of USD currencies relative to the euro   20   (569) 
Decrease by 15% of GBP currencies relative to the euro   2   (195) 
Decrease by 15% of
non-euro
currencies relative to the euro
   36   (847) 
   
2022
   
Increase by 15% of USD currencies relative to the euro   116   761 
Increase by 15% of GBP currencies relative to the euro   4   281 
Increase by 15% of
non-euro
currencies relative to the euro
   108   1,190 
Decrease by 15% of USD currencies relative to the euro   (86)   (562) 
Decrease by 15% of GBP currencies relative to the euro   (3)   (208) 
Decrease by 15% of
non-euro
currencies relative to the euro
   (80)   (880) 
 
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
Sensitivity analysis of net result and shareholders’ equity to translation risk
Movement of currency exchange rates
1)
  
Estimated approximate effects
on net result
  Estimated approximate effects
on shareholders’ equity		 
   
2022
2)
         
   
Increase by 15% of USD currencies relative to the euro
   (230)   1,342 
   
Increase by 15% of GBP currencies relative to the euro
   188   2,125 
   
Increase by 15% of
non-euro
currencies relative to the euro
   (220)   1,590 
   
Decrease by 15% of USD currencies relative to the euro
   169   (1,024) 
   
Decrease by 15% of GBP currencies relative to the euro
   141   1,497 
   
Decrease by 15% of
non-euro
currencies relative to the euro
   163   (1,175) 
   
2021
2)
         
   
Increase by 15% of USD currencies relative to the euro
   205   3,249 
   
Increase by 15% of GBP currencies relative to the euro
   152   1,900 
   
Increase by 15% of
non-euro
currencies relative to the euro
   244   3,541 
   
Decrease by 15% of USD currencies relative to the euro
   (153)   (2,441) 
   
Decrease by 15% of GBP currencies relative to the euro
   107   1,315 
   
Decrease by 15% of
non-euro
currencies relative to the euro
   (179)   (2,616) 
1 
The effect of currency exchange movements is reflected as a
one-time
shift up or down in the value of the
non-euro
currencies relative to the euro on December 31.
2 
Includes the approximate effects of the disposal group
  204 | Annual Report on Form 20-F 2023
Notes to the consolidated financial statements
Note 4
4.4 Liquidity risk
Liquidity risk is inherent in much of Aegon’s business. Each asset purchased and liability incurred has its own liquidity characteristics. Some liabilities are surrenderable while some assets, such as privately placed loans, mortgage loans, real estate and limited partnership interests, have low liquidity. If Aegon requires significant amounts of cash on short notice in excess of normal cash requirements and existing credit facilities, it may have difficulty selling these investments at attractive prices or in a timely manner. Liquidity risk is also affected by the use of collateralized financial derivatives to mitigate other risks.
Aegon operates a Liquidity Risk Policy under which country units are obliged to maintain sufficient levels of highly liquid assets to meet cash demands by policyholders and account holders over the next two years. Potential cash demands are assessed under a stress scenario including spikes in disintermediation risk due to rising interest rates and concerns over Aegon’s financial strength due to multiple downgrades of the Group’s credit rating. At the same time, the liquidity of assets other than cash and government issues is assumed to be severely impaired for an extended period of time. All legal entities and Aegon Group must maintain enough liquidity in order to meet all cash needs under this extreme scenario.
Aegon held EUR 13,39219,399 million of general account investments in cash, money market products and government bonds that are readily saleable or redeemable on demand, which excludes the investment of the disposal group (2021:(2022: EUR 31,101 million and includes the disposal group)17,166 million). The Group expects to meet its obligations, even in a stressed liquidity event, from operating cash flows and the proceeds of maturing assets as well as these highly liquid assets. Further, the Group has access to
back-up
credit facilities, as disclosed in note 3731 Borrowings, amounting to EUR 3,4352,623 million which were unused at the end of the reporting period (2021:(2022: EUR 3,3993,435 million).
The maturity analysis below shows the remaining contractual maturities of each category of financial liabilities (including coupon interest). When the counterparty has a choice of when an amount is paid, the liability is included on the basis of the earliest date on which it can be required to be paid. Financial liabilities that can be required to be paid on demand without any delay are reported in the category ‘On“On demand.’” If there is a notice period, it has been assumed that notice is given immediately and the repayment has been presented at the earliest date after the end of the notice period. When the amount payable is not fixed, the amount reported is determined by reference to the conditions existing at the reporting date. For example, when the amount payable varies with changes in an index, the amount disclosed may be based on the level of the index at the reporting date.
To manage the liquidity risk arising from financial liabilities, Aegon holds liquid assets comprising cash and cash equivalents and investment grade investment securities for which there is an active and liquid market. These assets can be readily sold to meet liquidity requirements. For this reason, Aegon believes that it is not necessary to disclose a maturity analysis in respect of these assets to enable users to evaluate the nature and extent of liquidity risk.
188
Aegon Annual Report on Form 20-F
2022
Table of Contents
Notes to the consolidated financial statements
Note 4
Maturity analysis – gross
undiscounted contractual cash flows
(for non-derivatives)
        On demand         < 1 yr amount   1 < 5 yrs
      amount		   5 < 10 yrs
      amount		   > 10 yrs
      amount		         Total amount   
2022
2)
                              
Trust pass-through securities
   -    10    114    17    60    200   
Subordinated loans
   -    113    370    242    3,068    3,792   
Borrowings
   -    1,312    3,130    94    500    5,036   
Lease liabilities
   -    35    99    63    55    251   
Other financial liabilities
   4,263    795    355    34    47    5,495   
Total financial liabilities (excluding investment/insurance contracts)
  
 
4,263
 
  
 
2,265
 
  
 
4,067
 
  
 
450
 
  
 
3,729
 
  
 
14,775  
 
Investment contracts
1)
   9,642    1,445    385    186    141    11,798   
Investment contracts for account of policyholders
1)
   22,748    31,186    7    4    2    53,948   
Total investment contracts
  
 
32,389
 
  
 
32,631
 
  
 
392
 
  
 
190
 
  
 
143
 
  
 
65,746  
 
       
2021
                              
       
Trust pass-through securities
   -    9    113    16    60    197   
Subordinated loans
   -    108    377    246    2,964    3,695   
Borrowings
   -    901    7,651    956    1,052    10,559   
Lease liabilities
   -    37    86    67    70    259   
Other financial liabilities
   4,993    1,749    325    154    224    7,444   
Total financial liabilities (excluding investment/insurance contracts)
  
 
4,993
 
  
 
2,803
 
  
 
8,551
 
  
 
1,439
 
  
 
4,368
 
  
 
22,154  
 
Investment contracts
1)
   17,254    2,681    2,114    1,101    655    23,804   
Investment contracts for account of policyholders
1)
   34,756    34,571    10    6    4    69,347   
Total investment contracts
  
 
52,009
 
  
 
37,252
 
  
 
2,124
 
  
 
1,107
 
  
 
659
 
  
 
93,151  
 
1 
Excluding investment contracts with discretionary participating features.
2 
2022 excludes the liabilities of the disposal group, which are separately disclosed in note 51 Discontinued operations.
Aegon’s liquidity management is based on expected claims and benefit payments rather than on the contractual maturities. The projected cash benefit payments in the table below (maturity analysis - insurance and reinsurance contracts) are based on management’s best estimates of the expected gross benefits and expenses, partially offset by the expected gross premiums, fees and charges relating to the existing business in force. Estimated cash benefit payments are based on mortality, morbidity and lapse assumptions based on Aegon’s historical experience, modified for recently observed trends. Actual payment obligations may differ if experience varies from these assumptions. The cash benefit payments are presented on an undiscounted basis and are before deduction of tax and before reinsurance.
Financial liabilities relating to insurance and
investment contracts
1)
   On demand    < 1 yr amount        1 < 5 yrs
amount		            5 < 10 yrs
amount		            > 10 yrs
amount		    Total amount  
2022
2)
                        
Insurance contracts
  -   3,432   11,364   11,946   116,169   142,911 
Insurance contracts for account of policyholders
  -   7,456   30,877   29,565   113,346   181,245 
Investment contracts
  -   1,737   4,814   2,581   4,379   13,511 
Investment contracts for account of policyholders
  -   6,107   23,626   26,970   89,126   145,829 
  
 
-
 
 
 
18,732
 
 
 
70,681
 
 
 
71,062
 
 
 
323,021
 
 
 
483,496
 
       
2021
                        
       
Insurance contracts
  -   4,260   16,215   18,438   127,344   166,257 
Insurance contracts for account of policyholders
  -   11,494   41,638   39,941   131,667   224,740 
Investment contracts
  -   8,324   7,975   3,847   4,438   24,584 
Investment contracts for account of policyholders
  193   14,011   27,637   31,715   84,825   158,381 
  
 
193
 
 
 
38,089
 
 
 
93,465
 
 
 
93,941
 
 
 
348,274
 
 
 
573,962
 
1 
The liability amount in the consolidated financial statements reflects the discounting for interest as well as adjustments for the timing of other factors as described above. As a result, the sum of the cash benefit payments shown for all years in the table exceeds the corresponding liability amounts included in notes 34 Insurance contracts and 35 Investments contracts.
2 
2022 excludes the liabilities of the disposal group, which are separately disclosed in note 51 Discontinued operations.
Aegon Annual Report on Form 20-F
2022
  |  
189
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
The following table (maturity analysis - financial instruments) details the Group’s liquidity analysis for its derivative financial instruments, based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a net basis, and the undiscounted gross inflows and outflows on those derivatives that require gross settlement.
Maturity analysis relating to derivatives
1)
(Contractual cash flows)
   On demand    < 1 yr amount        1 < 5 yrs
amount		 
 		           5 < 10 yrs
amount		 
 		           > 10 yrs
amount		 
 		   Total amount  
2022
2)
                              
       
Gross settled
                              
Cash inflows
   -    15,301    575    675    1,741    18,293 
Cash outflows
   -    (15,242)    (443)    (633)    (1,600)    (17,919) 
       
Net settled
                              
Cash inflows
   -    1,552    4,255    3,812    6,227    15,846 
Cash outflows
   -    (1,937)    (4,222)    (3,700)    (14,214)    (24,072) 
2021
                              
       
Gross settled
                              
Cash inflows
   -    4,300    3,728    5,034    104,335    117,396 
Cash outflows
   -    (4,895)    (7,080)    (9,499)    (105,376)    (126,850) 
       
Net settled
                              
Cash inflows
   -    683    3,442    3,640    5,375    13,140 
Cash outflows
   -    (780)    (3,032)    (3,102)    (12,591)    (19,505) 
1
Derivatives includes all financial derivatives regardless whether they have a positive or a negative value. It does not include bifurcated embedded derivatives. These are presented together with the host contract. For interest rate derivatives only, cash flows related to the pay leg are taken into account for determining the gross undiscounted cash flows.
2
2022 excludes the derivatives of the disposal group, which are separately disclosed in note 51 Discontinued operations.
For maturity information on other obligations, please refer tosee note 4539 Commitments and contingencies.
Annual Report on Form 20-F 2023 | 205  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Maturity analysis - insurance and reinsurance contracts
The following tables provides a maturity analysis of Aegon’s insurance and reinsurance contracts, which reflects the dates on which the cash flows are expected to occur. The cash flows presented below represent the undiscounted best estimate liability for the relevant periods.
Undiscounted best estimate liability
(i.e. Remaining contractual undiscounted
net cash flows)
   < 1 yr
 amount
     1 < 2 yrs
amount
     2 < 3 yrs
amount		 
 		   3 < 4 yrs
amount
     4 < 5 yrs
amount		 
 		  > 5 yrs
 amount
    Total 
 amount 
  
2023
        
Insurance contracts:
        
- Direct participating contracts   8,737   8,287   8,186   7,823   7,187   127,351   167,571   
- Without direct participation contracts   9,105   8,651   8,041   7,541   6,960   103,939   144,237 
Investment contracts with DPF:
        
- Direct participating contracts   1,717   1,637   1,788   1,732   1,511   21,407   29,793 
Reinsurance contracts held, in a liability position   46   43   41   39   39   1,370   1,578 
        
Total
  
 
19,605
 
 
 
18,618
 
 
 
18,056
 
 
 
17,136
 
 
 
15,698
 
 
 
254,067
 
 
 
343,179
 
2022
        
Insurance contracts:
        
- Direct participating contracts   7,900   8,062   7,876   7,475   7,319   136,457   175,089 
- Without direct participation contracts   4,313   3,619   3,350   3,217   3,201   141,794   159,494 
Investment contracts with DPF:
        
- Direct participating contracts   1,764   1,894   1,835   1,615   1,590   20,934   29,632 
Reinsurance contracts held, in a liability position   18    18    18    18    19    782    874  
        
Total
  
 
13,996
 
 
 
13,594
 
 
 
13,079
 
 
 
12,325
 
 
 
12,129
 
 
 
299,967
 
 
 
365,089
 
Expected release of risk adjustment
   < 1 yr
 amount
     1 < 2 yrs
amount
     2 < 3 yrs
amount		 
 		   3 < 4 yrs
amount		 
 		   4 < 5 yrs
amount		 
 		  > 5 yrs
 amount		 
 		  Total 
 amount 		 
 
2023
        
Insurance contracts:
        
- Direct participating contracts   30   35   32   29   29   413   568 
- Without direct participation contracts   72   63   60   57   58   2,373   2,683   
Investment contracts with DPF:
        
- Direct participating contracts   9   12   10   8   9   81   128 
- Without direct participation contracts   -   -   -   -   -   -   - 
Reinsurance contracts held, in a liability position   (12)   (11)   (11)   (10)   (10)   (278)   (332) 
        
Total
  
 
98
 
 
 
99
 
 
 
92
 
 
 
85
 
 
 
85
 
 
 
2,589
 
 
 
3,047
 
2022
        
Insurance contracts:
        
- Direct participating contracts   28   28   25   25   25   383   514 
- Without direct participation contracts   91   80   74   70   69   2,539   2,922 
Investment contracts with DPF:
        
- Direct participating contracts   9   9   7   8   7   69   109 
- Without direct participation contracts   -   -   -   -   -   -   - 
Reinsurance contracts held, in a liability position   5   4   3   3   3   83   101 
        
Total
  
 
133
 
 
 
120
 
 
 
110
 
 
 
106
 
 
 
104
 
 
 
3,073
 
 
 
3,646
 
No amount of the insurance contract liabilities are payable on demand (2022: 0).
  206 | Annual Report on Form 20-F 2023
Notes to the consolidated financial statements
Note 5
Maturity analysis – financial instruments
Maturity analysis – gross
undiscounted contractual cash flows
(for
non-derivatives)
    On demand    < 1 yr
 amount
     1 < 2 yrs
amount
     2 < 3 yrs
amount
     3 < 4 yrs
amount
     4 < 5 yrs
amount
    < 5 yrs
 amount
    Total 
 amount 
  
2023
          
Trust pass-through securities   -    9   9   88   3   3   71   184 
Subordinated loans   -    111   83   83   83   63   3,158   3,579 
Borrowings   -    123   1,057   726   48   48   1,140   3,143 
Investment contracts   34,464    40,059   11   8   110   23   74   74,749 
Lease liabilities   -    34   29   24   21   18   114   240 
Other financial liabilities   4,582    930   52   7   -   4   -   5,575 
2022
          
Trust pass-through securities   -    10   10   10   92   3   77   200 
Subordinated loans   -    113   113   85   85   85   3,309   3,792 
Borrowings   -    1,312   155   2,867   61   47   594   5,036 
Investment contracts   32,104    32,452   9   16   13   117   113   64,824 
Lease liabilities   -    35   32   26   21   19   117   251 
Other financial liabilities   4,259    623    284    54    17    -    81    5,318  
                                
2023 
 
Maturity analysis relating to derivatives
1)
(Contractual cash flows),
    On demand    < 1 yr
 amount
     1 < 2 yrs
amount
     2 < 3 yrs
amount
     3 < 4 yrs
amount
     4 < 5 yrs
amount
    > 5 yr
 amount
    Total 
 amount 
  
Gross settled
          
Cash inflows   -    9,757   170   171   202   145   2,560   13,004 
Cash outflows   -    (9,710)   (121)   (134)   (191)   (134)   (2,458)   (12,748) 
Net settled
          
Cash inflows   -    282   253   260   286   341   7,509   8,930 
Cash outflows   -    (560)   (224)   (244)   (266)   (271)   (12,248)   (13,813) 
                                2022  
Maturity analysis relating to derivatives
1)
(Contractual cash flows),
    On demand    < 1 yr
 amount
     1 < 2 yrs
amount
     2 < 3 yrs
amount
     3 < 4 yrs
amount
     4 < 5 yrs
amount
    > 5 yr
 amount
    Total 
 amount 		 
 
Gross settled
          
Cash inflows   -    15,315   156   146   155   188   2,570   18,530 
Cash outflows   -    (15,250)   (104)   (103)   (123)   (180)   (2,385)   (18,146) 
Net settled
          
Cash inflows   -    1,552   1,295   1,060   964   933   10,039   15,843 
Cash outflows   -    (1,937)   (1,285)   (1,037)   (962)   (934)   (17,914)   (24,068) 
5 Segment information
Aegon’s operating segments are based on the businesses as presented in internal reports that are regularly reviewed by the
Executive Board Director
which is regarded as the chief operating decision maker. All reportable segments are involved in insurance or reinsurance business, asset management or services related to these activities. The reportable segments are:
 
◆
∎
 Americas: one operating segment
Americas
: which covers business units in the United States, including any of the units’ activities located outside of the United States;
◆
∎
 The Netherlands:
Netherlands
: which coverscovered businesses activities from Aegon the Netherlands;Netherlands (no longer a reporting segment following the completion of the transaction with a.s.r.);
◆
∎
 
United Kingdom:Kingdom
: which covers businesses activities from platform business and traditional insurance in the United Kingdom;
◆
∎
 International: one operating segment
International
: which covers businesses operatingoperations in Spain & Portugal, China, Brazil, Bermuda, Hong Kong, Singapore, China, India, Indonesia, Brazil, Hungary (sold in 2022), Poland, Turkey (sold in 2022), Romania, Spain and PortugalSingapore including any of the units’ activities located outside these countries;
◆
∎
 
Asset Management: one operating segmentManagement
: which covers business activities from AAM Global Platforms and Strategic Partnerships;
◆
∎
 
Holding and other activities: one operating segmentactivities
: which includes financing, employee and other administrative expenses of holding companies.
Annual Report on Form 20-F 2023 | 207  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Aegon’s segment information is prepared by consolidating on a proportionate basis Aegon’s joint ventures and associated companies.companies except for its
29.99
Aegon has changed the grouping% stake in a.s.r.. The result of the operating segmentsassociate a.s.r. is included in the performance measure. As per January 1, 2022, Mongeral Aegon Group (MAG Seguros) is no longer reported within the Americas segment, but reported in the International segment. The 2021 comparative figures presented in this note have been adjusted to reflect this change, enabling a like for like comparison, which includes reclassifications between Americas and International for an operating result of EUR 2 million, life insurance gross premiums of EUR 191 million and Other revenues of EUR 11 million (2020 comparative figures amount to EUR 11 million, EUR 159 million and EUR 7 million, respectively)income / (charges). There is no impact on the consolidated numbers of Aegon.
Performance Measure
Aegon uses the
non-IFRS
performance measure operating result. OperatingSimilar as under the previous accounting policies, operating result reflects Aegon’s profit before tax from underlying business operations and mainly excludes components that relate to accounting mismatches that are dependent on market volatility, updates to best estimate actuarial and economic assumptions and model updates or events that are
190
Aegon Annual Report on Form 20-F
2022
Table of Contents
Notes to the consolidated financial statements
Note 5
considered outside the normal course of business. There is no standardized meaning to these measures under IFRS or any other recognized set of accounting standards.
Aegon believes that its performance measure operating result provides meaningful information about the operating results of Aegon’s business, including insight into the financial measures that Aegon’s senior management uses in managing the business. Among other things, Aegon’s senior management is compensated based in part on Aegon’s results against targets using operating result. While many other insurers in Aegon’s peer group present substantially similar performance measures, the performance measures presented in this document may nevertheless differ from the performance measures presented by other insurers.
The reconciliation from result before tax from continuing operations, being the most comparable IFRS measure, to operating result is presented in the tables in this note.
TheThere have been changes in the calculation of the items that are excluded from operating result as described further below are: fair(fair value items, realized gains or losses on investments, impairment charges/reversals, other income or charges and share in earnings of joint ventures and associates.associates - these items are further discussed below) due to the adoption of IFRS 9 and IFRS 17. For example:
∎
Fair value items have reduced significantly, reflecting fewer accounting mismatches under the new accounting policies.
∎
Realized gains/(losses) on investments now includes realized gains and losses on financial assets measured at amortized cost and financial assets classified at FVOCI.
∎
Impairment losses and reversals of impairment losses reflect the change in ECL for financial assets.
∎
Other
non-operating
results continue to include items that cannot be directly allocated to a specific line of business and items that are outside the normal course of business. It no longer includes all impacts of actuarial and economic assumption and model updates as most of these are recorded in CSM, but only:
∎
the impact of changes in actuarial assumptions and model updates on onerous contracts, and
∎
the impact of changes in financial assumptions and the passage of time on onerous groups of VFA contracts to which no risk mitigation is applied.
Fair value items
Fair value items include the over- or underperformance of investments and guarantees held at fair value for which management’s best estimate investment return is included in operating result.following:
∎
Over- or underperformance of investments and guarantees held at fair value for which management’s best estimate investment return is included in operating result;
∎
Hedge ineffectiveness on hedge transactions, fair value changes on economic hedges without natural offset in earnings and for which no hedge accounting is applied and fair value movements on real estate are included under fair value items;
∎
Certain assets held by Aegon are carried at fair value and managed on a total return basis, with no offsetting changes in the valuation of related liabilities. These include assets such as investments in hedge funds, private equities, real estate (limited partnerships), convertible bonds and structured products;
∎
Certain products offered by Aegon Americas contain guarantees and are reported on a fair value basis and include the total return annuities and variable annuities. The earnings on these products are impacted by movements in equity markets and risk-free interest rates. Short-term developments in the financial markets may therefore cause volatility in earnings;
∎
Changes in value of VFA products that result in (a reversal of) onerous contracts;
∎
Changes in discount rates for General model insurance contracts, including the revaluation of changes in
non-financial
assumptions and experience adjustments that adjust CSM to current interest rates.
In addition, hedge ineffectiveness on hedge transactions, fair value changes on economic hedges without natural offset in earnings and for which no hedge accounting is applied and fair value movements on real estate are included under fair value items.
Certain assets held by Aegon are carried at fair value and managed on a total return basis, with no offsetting changes in the valuation of related liabilities. These include assets such as investments in hedge funds, private equities, real estate (limited partnerships), convertible bonds and structured products. Operating result exclude any over- or underperformance compared to management’s best estimate investment return on assets. Based on current holdings and asset returns, the long-term expected return on an annual basis is 3-10%, depending on asset class, including cash income and market value changes. The expected earnings from these asset classes are net of deferred policy acquisition costs (DPAC) where applicable.
In addition, certain products offered by Aegon Americas contain guarantees and are reported on a fair value basis and include the total return annuities and guarantees on variable annuities. The earnings on these products are impacted by movements in equity markets and risk-free interest rates. Short-term developments in the financial markets may therefore cause volatility in earnings.
The fair value movements of certain guarantees and the fair value change of derivatives that hedge certain risks on these guarantees of Aegon’s businesses in the Netherlands and Japan are excluded from operating result, because management’s best estimate expected return for these guarantees is set at zero. In addition, fair value items include market related results on the loyalty bonus reserves in the United Kingdom. The value of these reserves are directly related to policyholder investments which value is directly impacted by movements in equity and bond markets.
Holding and other activities include certain issued bonds that are held at fair value through profit or loss (FVTPL). The interest rate risk on these bonds is hedged using swaps. The fair value movement resulting from changes in Aegon’s credit spread used in the valuation of these bonds are excluded from operating result and reported under fair value items.
The periodic intangibles unlocking in the US Life and TLB business is recorded in fair value items instead of operating result.
Realized gains or losses on investments
Realized gains or losses on investments includes realized gains and losses on available-for-sale investments, mortgage loans and other loan portfolios.
Impairment charges/(reversals)
Impairment charges/(reversals) include impairments on available-for-sale debt securities, shares including the effect of deferred policyholder acquisition costs, mortgage loans and other loan portfolios at amortized cost, joint ventures and associates. Impairment reversals include reversals on available-for-sale debt securities. For Aegon the Netherlands,
 
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2022
  |  
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Table of Contents
 
About AegonNotes to the consolidated financial statements
Note 5
Governance and risk management
Financial information
Non-financial information
   
   
 
the expected impairments on alternative assets classes (e.g. illiquid investments – including consumer loans and catastrophe bonds – and residential real estate) are allocated to operating result in order to present management’s best estimate investment return in operating result. Deviations from the expected impairments are presented as part of impairment charges / (reversals) in non-operating result.
Other income or charges/ (charges)
Other income or charges includes/ (charges) include the following:
 
◆
∎
 Items which cannot be directly allocated to a specific line of business;
◆
∎
 The impact of changes in actuarial and economic assumptionassumptions and model updates used to support calculations of our liabilities for insurance and investment contracts sold to policyholders and related assets (refer to note 3 Critical accounting estimates and judgement in applying accounting policies); andon onerous contracts;
◆
∎
The impact of changes in financial assumptions and the passage of time on onerous groups of VFA contracts to which no risk mitigation is applied, and;
∎
 Items that are outside the normal course of business, including restructuring charges.
In the Consolidated income statement, the restructuring charges are included in operating expenses. Actuarialfor onerous contracts, actuarial assumption and model updates are recordedincluded in ‘Policyholder claims and benefits’“Insurance service result”. Restructuring charges are included in the Consolidated income statement.“Other operating expenses”.
Share in earnings of joint ventures and associates
Earnings from Aegon’s joint ventures in China, India, the Netherlands, Spain and& Portugal, and Aegon’s associates in France the Netherlands and United Kingdom are reported as part of operating result.
Segment results
The following table presents Aegon’s segment results.
 
Income statement - Operating
result
  Americas   
The
Nether-
lands
 
 
1)
 
  United
Kingdom
    International   
Asset
Manage-
ment
 
 
 
  
Holding and
other
activities
 
 
 
  Eliminations  
 
Segment
total
 
 
  
Joint
ventures and
associates
eliminations
 
 
 
 
 
 
Consoli-
dated
 
 
           
Year ended December 31, 2023
                                        
Operating result
 
 
1,107
 
 
 
-
 
 
 
214
 
 
 
196
 
 
 
145
 
 
 
(173
) 
 
 
10
 
 
 
1,498
 
 
 
19
 
 
 
1,517
 
Fair value items  138   -   (76)   (1)   (8)   24   (1)   76   9   85 
Realized gains / (losses) on investments  (683)   -   -   24   -   -   -   (659)   (30)   (689) 
Impairment losses / (reversals)  (62)   -   -   (23)   -   (7)   -   (92)   2   (90) 
Non-operating
items
 
 
(607
) 
 
 
-
 
 
 
(76
) 
 
 
(1
) 
 
 
(8
) 
 
 
17
 
 
 
(1
) 
 
 
(675
) 
 
 
(19
) 
 
 
(695
) 
Other income / (charges)  (961)   (65)   (85)   (110)   (31)   110   2   (1,140)   (90)   (1,230) 
Result before tax
 
 
(460
) 
 
 
(65
) 
 
 
52
 
 
 
85
 
 
 
106
 
 
 
(46
) 
 
 
11
 
 
 
(317
) 
 
 
(91
) 
 
 
(408
) 
Income tax (expense) / benefit  214   -   (23)   (69)   (36)   31   -   118   91   209 
Net result
 
 
(246
) 
 
 
(65
) 
 
 
29
 
 
 
16
 
 
 
70
 
 
 
(14
) 
 
 
11
 
 
 
(199
) 
 
 
-
 
 
 
(199
) 
Inter-segment operating result
  (569)   (48)   (75)   256   150   286     
Revenues
          
Insurance contracts revenue
          
- Insurance contracts: direct part.  9,468   -   600   1,095   -   -   (51)   11,112   (1,490)   9,622 
- Insurance contracts: without direct part.  -   -   -   700   -   -   -   700   -   700 
Investment contracts with discretionary participation features revenue
          
- Insurance contracts: direct part.  -   -   64   -   -   -   -   64   -   64 
- Insurance contracts: without direct part.  -   -   -   -   -   -   -   -   -   - 
Insurance revenue
 
 
9,468
 
 
 
-
 
 
 
663
 
 
 
1,795
 
 
 
-
 
 
 
-
 
 
 
(51
) 
 
 
11,876
 
 
 
(1,490
) 
 
 
10,386
 
Interest revenue on financial instruments calculated using the effective interest method  3,108   -   58   87   2   90   (6)   3,339   (3)   3,336 
Interest revenue on financial instruments measured at FVPL  339   -   486   1   -   -   -   826   -   826 
Other investment income  14   -   1,818   104   14   498   (498)   1,950   (116)   1,833 
Fee and commission income  1,653   -   214   34   632   -   (158)   2,376   (215)   2,160 
Other revenues  -   -   -   37   1   -   -   38   (38)   - 
Total revenues
 
 
14,582
 
 
 
-
 
 
 
3,239
 
 
 
2,058
 
 
 
649
 
 
 
589
 
 
 
(713
) 
 
 
20,404
 
 
 
(1,862
) 
 
 
18,541
 
Inter-segment revenues
  49   -   -   1   172   500                 
Income statement - Operating

result
 Americas  The
Netherlands		  United
Kingdom		  International  Asset
Management		  Holding and
other
activities		  Eliminations  
Segment
total
  Joint ventures
and associates
eliminations		  
Consolidated
 
2022
                                        
Operating result
  790   783   206   167   193   (220)   (0)   1,918   (40)   1,878 
Fair value items
  (1,644)   1,897   10   21   (3)   (21)   (8)   251   (9)   242 
Realized gains / (losses) on investments
  (479)   (181)   3   -   -   7   (0)   (650)   (16)   (666) 
Impairment charges
  (32)   15   (11)   (8)   -   (18)   -   (55)   (2)   (57) 
Impairment reversals
  19   -   -   -   -   -   -   19   -   19 
Non-operating items
 
 
(2,136
) 
 
 
1,731
 
 
 
1
 
 
 
13
 
 
 
(3
) 
 
 
(32
) 
 
 
(6
) 
 
 
(435
) 
 
 
(27
) 
 
 
(462
) 
Other income / (charges)
  (526)   (1,970)   (37)   373   (19)   (141)   (0)   (2,321)   (18)   (2,339) 
Result before tax
 
 
(1,872
) 
 
 
543
 
 
 
170
 
 
 
553
 
 
 
171
 
 
 
(393
) 
 
 
(8
) 
 
 
(837
) 
 
 
(85
) 
 
 
(922
) 
Income tax (expense) / benefit
  462   (1,000)   1   (36)   (67)   74   (0)   (567)   85   (482) 
Net result
 
 
(1,411
) 
 
 
(457
) 
 
 
171
 
 
 
516
 
 
 
104
 
 
 
(319
) 
 
 
(8
) 
 
 
(1,404
) 
 
 
-
 
 
 
(1,404
) 
Inter-segment operating result
  (362)   (94)   (75)   55   188   288                 
Revenues
                                        
2022
                                        
Life insurance gross premiums
  7,329   1,168   4,081   1,280   -   -   6   13,864   (1,016)   12,848 
Accident and health insurance
  1,407   257   -   184   -   -   -   1,848   (79)   1,769 
General insurance
  -   144   -   182   -   -   -   326   (182)   144 
Total gross premiums
 
 
8,735
 
 
 
1,569
 
 
 
4,081
 
 
 
1,646
 
 
 
-
 
 
 
-
 
 
 
6
 
 
 
16,037
 
 
 
(1,276
) 
 
 
14,761
 
Investment income
  3,467   1,728   1,951   297   12   474   (477)   7,453   (114)   7,338 
Fee and commission income
  2,021   325   217   42   693   -   (187)   3,111   (240)   2,871 
Other revenues
  -   -   -   26   5   -   -   31   (30)   1 
Total revenues
 
 
14,223
 
 
 
3,622
 
 
 
6,250
 
 
 
2,011
 
 
 
710
 
 
 
474
 
 
 
(658
) 
 
 
26,633
 
 
 
(1,661
) 
 
 
24,972
 
           
Inter-segment revenues
  (5)   3   -   -   187   473                 
1 The net result represents the standalone result of ‘The Netherlands’. After elimination, the remaining result is EUR (17). See note 45 Held for sale and discontinued operations for more details.
The other charges of the Americas in 2022 are mainly due to unfavorable impacts from model and assumption updates and restructuring charges.
The other charges of The Netherlands in 2022 mainly reflects an impairment loss triggered by classifying Aegon the Netherlands as held for sale, refer for more information to note 51 Discontinued operations.
 
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2022
209  
 
 
Table of Contents
LOGO		 
About Aegon  Governance and risk management  
Notes to the consolidated financial statementsFinancial information
Note 5  Sustainability information
   
   
 
The income tax of The Netherlands includes a one-time tax charge of EUR 454 million related to the settlement of a tax position in connection with the transaction with a.s.r., refer to note 51 Discontinued operations.
Income statement - Operating

result
  Americas  The
Netherlands		  United
Kingdom		  International  Asset
Management		  Holding and
other
activities		  Eliminations  
Segment
total
  Joint ventures
and associates
eliminations		  
Consolidated
 
2021
                                         
Operating result
   790   755   184   143   253   (218)   (1)   1,906   42   1,948 
Fair value items
   698   221   (62)   (18)   (1)   12   3   854   (123)   730 
Realized gains / (losses) on investments
   313   118   10   2   2   1   -   446   (9)   437 
Impairment charges
   (19)   (19)   -   -   (1)   (11)   -   (49)   (0)   (49) 
Impairment reversals
   33   59   -   1   -   8   -   101   -   101 
Non-operating items
  
 
1,025
 
 
 
378
 
 
 
(51
) 
 
 
(15
) 
 
 
-
 
 
 
11
 
 
 
3
 
 
 
1,352
 
 
 
(132
) 
 
 
1,220
 
Other income / (charges)
   (667)   (23)   1   65   (18)   (138)   -   (780)   12   (768) 
Result before tax
  
 
1,149
 
 
 
1,110
 
 
 
134
 
 
 
193
 
 
 
235
 
 
 
(344
) 
 
 
2
 
 
 
2,478
 
 
 
(78
) 
 
 
2,400
 
Income tax (expense) / benefit
   (137)   (276)   (12)   (36)   (65)   77   -   (449)   78   (371) 
Net result
  
 
1,012
 
 
 
833
 
 
 
122
 
 
 
157
 
 
 
170
 
 
 
(267
) 
 
 
2
 
 
 
2,029
 
 
 
-
 
 
 
2,029
 
Inter-segment operating result
   (20)   (95)   (96)   (31)   191   51                 
Revenues
                                         
2021
                                         
Life insurance gross premiums
   6,917   1,323   4,613   1,372   -   -   -   14,225   (825)   13,400 
Accident and health insurance
   1,273   254   3   179   -   -   -   1,709   (67)   1,643 
General insurance
   -   136   -   432   -   -   -   569   (168)   401 
Total gross premiums
  
 
8,190
 
 
 
1,713
 
 
 
4,616
 
 
 
1,984
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
16,504
 
 
 
(1,060
) 
 
 
15,444
 
Investment income
   2,909   2,088   1,691   361   12   242   (261)   7,042   (75)   6,967 
Fee and commission income
   1,920   300   223   59   800   -   (183)   3,120   (335)   2,785 
Other revenues
   -   -   -   14   2   12   -   27   (15)   13 
Total revenues
  
 
13,019
 
 
 
4,101
 
 
 
6,531
 
 
 
2,418
 
 
 
814
 
 
 
254
 
 
 
(444
) 
 
 
26,693
 
 
 
(1,484
) 
 
 
25,209
 
           
Inter-segment revenues
   1   14   -   -   182   247                 
Aegon Annual Report on Form 20-F
2022
  |  
193
 
Table of Contents
On July 4, 2023, Aegon announced the completion of the combination of its Dutch pension, life and
non-life
insurance, banking, and mortgage origination activities with a.s.r., and the beginning of its asset management partnership with a.s.r. As part of the transaction, Aegon received EUR 2.2 billion in cash proceeds and almost a 30% stake in a.s.r. In light of the transaction, Aegon the Netherlands is no longer reported as a separate segment, and its first half 2023 result is included in Other charges in the income statement.
The other charges of the Americas in 2023 are mainly due to unfavorable assumption updates and restructuring charges.
Income statement - Operating
result
    Americas   
The
 Nether-
lands
 
 
1)
 
  United
 Kingdom
     International   
Asset
 Manage-
ment
 
 
 
  
 Holding and
other
activities
 
 
 
   Eliminations    Segment
total
    
Joint
 ventures and
associates
eliminations
 
 
 
 
   Consoli-
dated
  
Year ended December 31,
2022
                                        
Operating result
 
 
1,433
 
 
 
-
 
 
 
211
 
 
 
202
 
 
 
193
 
 
 
(220
) 
 
 
(17
) 
 
 
1,802
 
 
 
(59
) 
 
 
1,743
 
Fair value items  (85)   -   (71)   38   (3)   (21)   (76)   (218)   8   (209) 
Realized gains / (losses) on investments  (518)   -   -   30   -   7   -   (481)   (16)   (497) 
Impairment losses / (reversals)  (78)   -   (11)   (14)   -   (18)   -   (122)   1   (121) 
Non-operating
items
 
 
(681
) 
 
 
-
 
 
 
(83
) 
 
 
54
 
 
 
(3
) 
 
 
(32
) 
 
 
(76
) 
 
 
(820
) 
 
 
(7
) 
 
 
(827
) 
Other income / (charges)  (117)   (1,373)   (64)   326   (19)   (118)   -   (1,365)   (19)   (1,384) 
Result before tax
 
 
636
 
 
 
(1,373
) 
 
 
64
 
 
 
582
 
 
 
171
 
 
 
(371
) 
 
 
(93
) 
 
 
(384
) 
 
 
(85
) 
 
 
(469
) 
Income tax (expense) / benefit  (102)   -   2   (57)   (67)   68   -   (156)   85   (71) 
Net result
 
 
533
 
 
 
(1,373
) 
 
 
67
 
 
 
526
 
 
 
104
 
 
 
(303
) 
 
 
(93
) 
 
 
(540
) 
 
 
-
 
 
 
(540
) 
Inter-segment operating result
  (458)   (94)   (75)   236   188   203     
Revenues
          
Insurance contracts revenue
          
- Insurance contracts: direct part.  10,174   -   628   967   -   -   (32)   11,736   (1,210)   10,526 
- Insurance contracts: without direct part.  -   -   -   651   -   -   -   651   -   651 
Investment contracts with discretionary participation features revenue
          
- Insurance contracts: direct part.  -   -   74   -   -   -   -   74   -   74 
- Insurance contracts: without direct part.  -   -   -   -   -   -   -   -   -   - 
Insurance revenue
 
 
10,174
 
 
 
-
 
 
 
701
 
 
 
1,618
 
 
 
-
 
 
 
-
 
 
 
(32
) 
 
 
12,461
 
 
 
(1,210
) 
 
 
11,251
 
Interest revenue on financial instruments calculated using the effective interest method  3,105   -   12   191   -   2   (5)   3,306   (3)   3,303 
Interest revenue on financial instruments measured at FVPL  228   -   399   (3)   -   -   -   624   -   624 
Other investment income  32   -   1,530   100   12   425   (425)   1,673   (110)   1,564 
Fee and commission income  1,756   -   223   62   693   -   (187)   2,548   (254)   2,294 
Other revenues  -   -   -   25   5   -   -   30   (30)   - 
Total revenues
 
 
15,295
 
 
 
-
 
 
 
2,865
 
 
 
1,993
 
 
 
710
 
 
 
427
 
 
 
(648
) 
 
 
20,642
 
 
 
(1,607
) 
 
 
19,035
 
Inter-segment revenues
  33   -   -   -   208   426                 
1 
About Aegon
GovernanceThe net result represents the standalone result of ‘The Netherlands’. After elimination and risk management
Financial information
Non-financial information
considering the result included in the Holdings and other activities, the remaining result is EUR (1,746). See note 45 Held for sale and discontinued operations for more details
The Americas recorded other charges of EUR 667117 million in 20212022 mainly due to a one-time charge as a result of management actions to release capitalunfavorable assumption updates and increase the predictability of capital generation from the US variable annuity business and unfavorable impacts from model and assumption updates.restructuring charges.
Income statement -Operating

result
  Americas  
The
Netherlands
  United
Kingdom		  International  
Asset
Management
  Holding and
other
activities		  Eliminations  
Segment
total
  Joint ventures
and associates
eliminations		  
Consolidated
 
2020
                                         
Operating result
   781   665   144   175   182   (237)   1  
 
1,710
 
  31  
 
1,741
 
Fair value items
   (448)   (230)   (2)   (7)   22   (36)   -   (701)   (87)   (788) 
Realized gains / (losses) on investments
   93   14   -   46   1   (3)   -   150   (8)   142 
Impairment charges
   (173)   (50)   -   (16)   (1)   (25)   -   (265)   1   (264) 
Impairment reversals
   27   1   -   -   -   -   -   28   -   28 
Non-operating items
  
 
(501
) 
 
 
(265
) 
 
 
(1
) 
 
 
22
 
 
 
22
 
 
 
(65
) 
 
 
-
 
 
 
(788
) 
 
 
(94
) 
 
 
(881
) 
Other income / (charges)
   (1,110)   78   (68)   (1)   (8)   (130)   -   (1,239)   15   (1,224) 
Result before tax
  
 
(829
) 
 
 
478
 
 
 
74
 
 
 
197
 
 
 
195
 
 
 
(433
) 
 
 
1
 
 
 
(317
) 
 
 
(47
) 
 
 
(364
) 
Income tax (expense) / benefit
   288   (107)   (7)   (26)   (44)   78   -   181   47   229 
Net result
  
 
(541
) 
 
 
371
 
 
 
67
 
 
 
170
 
 
 
151
 
 
 
(355
) 
 
 
1
 
 
 
(135
) 
 
 
-
 
 
 
(135
) 
Inter-segment operating result
   (40)   (87)   (86)   (35)   193   62                 
Revenues
                                         
2020
                                         
Life insurance gross premiums
   6,946   1,619   4,833   1,255   -   4   (3)   14,654   (726)   13,929 
Accident and health insurance
   1,380   245   25   193   -   -   -   1,844   (59)   1,784 
General insurance
   -   130   -   388   -   -   -   519   (132)   386 
Total gross premiums
  
 
8,326
 
 
 
1,994
 
 
 
4,858
 
 
 
1,836
 
 
 
-
 
 
 
5
 
 
 
(3
) 
 
 
17,016
 
 
 
(917
) 
 
 
16,099
 
Investment income
   2,986   2,083   1,795   362   7   261   (281)   7,212   (63)   7,149 
Fee and commission income
   1,653   255   194   50   750   (9)   (180)   2,713   (308)   2,405 
Other revenues
   -   -   -   9   2   3   -   14   (10)   4 
Total revenues
  
 
12,964
 
 
 
4,332
 
 
 
6,847
 
 
 
2,257
 
 
 
759
 
 
 
260
 
 
 
(465
) 
 
 
26,955
 
 
 
(1,298
) 
 
 
25,657
 
           
Inter-segment revenues
   1   21   -   -   188   264                 
 
194
  210 | Annual Report on Form 20-F 2023
Aegon Annual Report on Form 20-F
2022
 
 
 
Notes to the consolidated financial statements
Note 5
   
   
 
The Group uses operatingOperating result in its segment reporting as an important indicator of its financial performance. reconciliation
The reconciliation from operating result to result before tax, from continuing operations, being the most comparable IFRS measure, is presented in the table below. For those items that cannot be directly reconciled to the respective notes, the explanation is provided below the table. Aegon believes that operating result, together with the other information included in this report, provides a meaningful measure for the investing public to evaluate Aegon’s business relative to the businesses of its peers.
 
Presentation Non-Operating result
  
Note
   
            2022
              2021              2020 
Result before tax from continuing operations
       
 
(1,543)
 
 
 
1,164
 
 
 
(958
) 
     
Result before tax from discontinued operations
  
 
51
 
   2,396   1,237   594 
Impairment loss on remeasurement of disposal group
  
 
51
 
   (1,775)   -   - 
Result before tax from continuing operations and discontinued operations
       
 
(922
) 
 
 
2,400
 
 
 
(364
) 
Elimination of share in earnings of joint ventures and associates
        40   (42)   (31) 
Premium income
  
 
6
 
   (1)   5   (4) 
Rental income
  
 
7
 
   76   71   68 
Dividend income
  
 
7
 
   (2)   (76)   40 
Fee and commission income
  
 
8
 
   (41)   (30)   5 
Recovered claims and benefits
  
 
9
 
   -   31   143 
Change in valuation of reinsurance ceded
  
 
9
 
   208   43   (86) 
Net fair value change of general account financial investments at
fair value through profit or loss, other than derivatives
  
 
10
 
   1,234   4   421 
Net fair value change on borrowings and other financial liabilities
  
 
10
 
   (5)   13   (2) 
Realized gains and losses on financial investments
  
 
10
 
   718   (463)   (132) 
Gains and (losses) on investments in real estate
  
 
10
 
   51   (253)   (74) 
Net fair value change of derivatives
  
 
10
 
   465   471   (613) 
Other income
  
 
11
 
   (401)   (77)   (68) 
Benefits and claims paid life
  
 
12
 
   14   217   - 
Change in valuation of liabilities for insurance contracts
  
 
12
 
   (1,937)   (994)   1,422 
Change in valuation of liabilities for investment contracts
  
 
12
 
   (9)   8   7 
Policyholder claims and benefits - Other
  
 
12
 
   (20)   (38)   (19) 
Commissions and expenses
  
 
14
 
   651   715   450 
Impairment (charges) reversals
  
 
15
 
   34   (53)   318 
Interest charges and related fees
  
 
16
 
   -   -   82 
Other charges
  
 
17
 
   1,764   37   150 
Results of CEE businesses which were previously reported in operating results
        -   (85)   - 
Operating result
       
 
1,918
 
 
 
1,906
 
 
 
1,710
 
Presentation
Non-operating
items and other income/ (charges)
  
 
     Note
 
 
 
     2023
 
       2022 
Result before tax from continuing operations    (391)    827 
Elimination of share in earnings of joint ventures and associates    (19)   59 
Insurance revenue  
 
6
 
  (15)   1 
Insurance service expenses  
 
7
  
  427   442 
Net income / (expenses) on reinsurance held  
 
8
 
  (23)   (40) 
Net fair value change of financial investments at fair value through profit or loss, other than derivatives  
 
9.4 / 10.4
 
  (224)   183 
Net fair value change of derivatives    (7)   - 
Realized gains and losses on financial investments  
 
9.4 / 10.4
 
  683   670 
Net fair value change on investments in real estate  
 
9.4 / 10.4
 
  (2)   (1) 
Impairment (losses) reversals  
 
9.5 / 10.5
 
  90   121 
Insurance finance income / (expenses)  
 
9
 
  375   (614) 
Net reinsurance finance income / (expenses) on reinsurance held  
 
9
 
  (85)   68 
Investment contract income / (expenses)  
 
10
 
  (5)   (2) 
Net fair value change on borrowings and other financial liabilities    -   (5) 
Fee and commission income  
 
12
 
  (11)   (14) 
Commissions and expenses  
 
13
 
  596   378 
Other income  
 
14
 
  (18)   (341) 
Other charges  
 
14
 
  79   - 
Results of businesses disposed during reporting periods       48   70 
Operating result
      
 
1,498
 
 
 
1,802
 
 
◆
∎
Insurance service expenses are mainly driven by two items:
∎
Assumption changes on onerous contracts amounting to a loss of EUR 497 million (2022: loss of EUR
93
million), which is included in Other income / (charges).
∎
Change in value of VFA products that result in (a reversal of) onerous contracts, amounting to a gain of EUR 129 million (2022: loss of 273 million), which is included in Fair value items.
∎
Net income / (expenses) on reinsurance held mainly consist of assumption changes that relate to (a reversal of) underlying onerous contracts, amounting to a gain of EUR 31 million (2022: gain of EUR 38 million), which is included in Other income / (charges).
∎
 Net fair value change of general account financial investments at fair value through profit or loss, other than derivatives is reported as part of the respective line in note 10 and reflects the over- or underperformance of investments and guarantees held at fair value for which the expectedexpecting long-term return is included in operating result.
◆
∎
Insurance finance income / (expenses) mainly relate to changes in discount rates, amounting to a loss of EUR 354 million (2022: a gain of EUR 614 million), which is included in Fair value items.
∎
 Net fair value change of derivatives is reported as part of the respective linereinsurance finance income / (expenses) on reinsurance held relate to changes in note 10 and includes: 1) the over- or underperformance of derivativesdiscount rates, amounting to a gain of EUR 2,08984 million gain (2021:(2022: loss of EUR 8 million loss, 2020: EUR 38 million gain) for70 million), which the expected long-term return is included in operating result; 2) Net fairFair value change on economic hedges where no hedge accounting is applied of EUR 1,303 million loss (2021: EUR 466 million loss, 2020: EUR 652 million gain); 3) Ineffective portion of hedge transactions to which hedge accounting is applied of EUR 4 million gain (2021: EUR 2 million gain, 2020: EUR nil million).items.
◆Net foreign currency gains and (losses) are reported as part of the respective line in note 10.
∎
◆Benefits and claims paid life relate to the lump-sum buy-out program for certain variable annuities in the Americas and is reported as part of the respective line in note 12.
◆Change in valuation of liabilities for insurance contracts is reported as part of the respective line in note 12.
◆Change in valuation of liabilities for investment contracts is reported as part of the respective line in note 12.
◆Policyholder claims and benefits - Other are reported as part of the ‘Other’ line in note 12 and is related to policyholder tax.
Aegon Annual Report on Form 20-F
2022
  |  
195
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
◆ Commissions and expenses, include: 1) Restructuring charges of EUR 273 million (2021: EUR 240 million charge, 2020: EUR 266 million charge) which are reported as partincluded in Other income / (charges), relate to items which can cannot be directly allocated to a specific line of Employeebusiness and Administration expenses lines in note 14; 2) Amortization of deferred expenses of EUR 136 million income (2021: income of EUR 260 million, 2020: income of EUR 35 million) which is reported as part of the respective line in note 14. This is offset against realized gains and losses and impairments on financial investments; 3) Amortization of VOBA and future servicing rights of EUR 11 million charge (2021: charge of EUR 87 million; 2020: income of EUR 20 million) which is reported as part of the respective line in note 14. Commissions and expenses include a DPAC/VOBA fair value adjustment of EUR 151 million loss (2021: gain of EUR 51 million; 2020: gain of EUR 159 million).restructuring charges.
◆Impairment (charges) reversals include: 1) Impairment charges and reversals on financial assets, excluding receivables of EUR 20 million charge (2021: reversal of EUR 45 million, 2020: charge of EUR 266 million) as shown in note 15; 2) Impairment charges and reversals on non-financial assets and receivables of EUR 48 million charge (2021: EUR 60 million charge; 2020: EUR 128 million charge) reported as part of the respective line in note 15.
◆There are no interest charges and related fees that are classified for segment reporting purposes as non-operating results.
Impact from assumption and model updates
During 2022, Aegon implemented actuarial assumption and model updates resulting in a net EUR 480 million charge to result before tax (2021: EUR 298 million charge). This is mainly related to Aegon’s businesses in the Americas and the Netherlands. Assumption changes and model updates in the Americas led to a net adverse impact of EUR 354 million and is mainly driven by charges from reinsurance rate increases and various actuarial assumption updates. The latter mainly related to updated policyholder behaviour and mortality assumption in Individual Life. Assumption changes and model updates in the Netherlands led to an unfavorable impact of EUR 118 million and is mainly related to adverse impacts of the annual update of the mortgage conditional prepayment rate and expense methodology.
The 2021 assumption changes and model updates resulted in a negative impact of EUR 298 million and mainly relates to Aegon’s businesses in the Americas and the Netherlands. Assumption changes and model updates in the Americas led to a net negative impact of EUR 250 million. This mainly reflects a charge of EUR 123 million related to an update of the minimum surrender rate assumption for variable annuities with guaranteed lifetime withdrawal benefits from 2% to 1.5% to reflect latest portfolio and industry experience. Assumption changes and model updates in the Netherlands led to a negative impact of EUR 52 million, mainly related to adverse impacts from a more granular modeling driven by the conversion of the administration of defined benefit pensions to TKP. This was partly offset by the favorable impact of model updates relating to interest guarantees and indexation assumptions for certain pension products.
The 2020 assumption changes and model updates amounted to a negative impact of EUR 580 million and mainly relates to Aegon’s businesses in the Americas and the Netherlands. Assumption changes and model updates in the Americas led to a net negative impact of EUR 805 million. This reflects a charge of EUR 460 million related to the lowering the long-term interest rate assumption from 4.25% to 2.75% and the corresponding adjustment of the separate account bond return assumptions. Non-economic assumption changes resulted in a charge of EUR 345 million, mainly related to Universal Life premium persistency and an increase in mortality rate assumptions, as well as lowering the morbidity improvement assumption for Long-Term Care from 1.5% to 0.75% per year for the next 15 years. Assumption changes and model updates in the Netherlands led to a favorable impact of EUR 225 million mainly related to favorable longevity assumption changes, partially offset by adverse impacts from mortgage prepayment model and expense assumption updates
.
 
196
   
Aegon Annual Report on Form 20-F 2023 | 
2022
211  
 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Other selected income statement items
      Americas    United
  Kingdom
      International    Asset
 Management
     
 Holding and
other
activities
 
 
 
      Total 
2023
            
Amortization of deferred expenses and future servicing rights   24    2    1    6    -    33 
Depreciation   64    12    5    2    14    97  
Impairment losses / (reversals) on financial assets, excluding receivables   59    -    -    -    -    59 
Impairment losses / (reversals) on
non-
financial assets and receivables
   32    -    21    -    7    60 
2022
            
Amortization of deferred expenses and future servicing rights   34    2    3    -    -    38 
Depreciation   67    11    6    2    17    103 
Impairment losses / (reversals) on financial assets, excluding receivables   78    -    13    -    -    92 
Impairment losses / (reversals) on
non-
financial assets and receivables
   17    11    -    -    18    46 
Number of employees
Number of employees
     Americas    United
  Kingdom
      International    Asset
 Management
     
 Holding and
other
activities
 
 
 
      Total 
2023
            
Number of employees - headcount   6,967    2,591    3,654    1,409    1,037    15,658  
Of which Aegon’s share of employees in joint ventures and associates
1)
   -    49    2,936    219    -    3,204 
2022
            
Number of employees - headcount   6,153    2,621    4,281    1,464    958    15,478 
Of which Aegon’s share of employees in joint ventures and associates   -    62    3,239    206    -    3,507 
1 Excludes a.s.r. as the results of this associate is not included in Operating result
  212 | Annual Report on Form 20-F 2023
Table of Contents
 
 
Notes to the consolidated financial statements
Note 5
   
   
 
 
Other selected income statement items
 Americas  The
Netherlands		  United Kingdom  International  Asset
Management		  Holding
 
and
other
activities		          Total 
2022
                            
Amortization of deferred expenses, VOBA and
future servicing rights
  850   -   107   36   -   -   993 
Depreciation
  53   -   4   6   2   7   73 
Impairment charges / (reversals) on financial
assets, excluding receivables
  12   -   -   7   -   -   20 
Impairment charges / (reversals) on non-
financial assets and receivables
  17   -   11   1   -   18   48 
        
2021
                            
Amortization of deferred expenses, VOBA and
future servicing rights
  929   -   113   61   -   -   1,103 
Depreciation
  56   20   6   15   2   1   99 
Impairment charges / (reversals) on financial
assets, excluding receivables
  (23)   (14)   -   -   -   (8)   (45) 
Impairment charges / (reversals) on non-
financial assets and receivables
  37   12   -   -   1   11   60 
        
2020
                            
Amortization of deferred expenses, VOBA and
future servicing rights
  637   -   119   97   -   -   854 
Depreciation
  56   20   9   12   2   1   101 
Impairment charges / (reversals) on financial
assets, excluding receivables
  151   86   -   15   -   11   262 
Impairment charges / (reversals) on non-
financial assets and receivables
  72   21   17   -   4   14   128 
        
Number of employees
 Americas  The
Netherlands		  United Kingdom  International  Asset
Management		  Holding and
other
activities		          Total 
2022
                            
Number of employees - headcount
  6,153   3,609   2,621   4,281   1,464   958   19,087 
Of which Aegon’s share of employees in joint
ventures and associates
  -   -   62   3,239   206   -   3,507 
        
2021
                            
Number of employees - headcount
  7,675   3,534   2,476   6,590   1,675   321   22,271 
Of which Aegon’s share of employees in joint
ventures and associates
  733   -   59   3,245   191   -   4,228 
        
2020
                            
Number of employees - headcount
  7,960   3,521   2,307   6,598   1,527   409   22,322 
Of which Aegon’s share of employees in joint
ventures and associates
  669   -   47   3,294   183   -   4,193 
Aegon Annual Report on Form 20-F
2022
  |  197
Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
Summarized assets and liabilities per segment
  Americas   
The
Netherlands
1)
   United
Kingdom		   Interna-
tional		   Asset
Manage-
ment		   Holding and
other
activities		  Eliminations  
Total
 
2022
                                      
         
Assets
                                      
         
Cash and Cash equivalents
   1,097    -    182    122    367    1,639   -   3,407 
         
Assets held for sale
   -    89,752    -    -    -    -   -   89,752 
         
Investments
   73,132    -    1,457    2,061    136    39   -   76,825 
         
Investments for account of policyholders
   89,535    -    90,007    464    -    -   -   180,006 
         
Investments in joint ventures
   -    -    -    972    471    (0)   -   1,443 
         
Investments in associates
   -    -    -    20    129    16   -   165 
         
Deferred expenses
   12,657    -    736    57    -    -   (564)   12,886 
         
Other assets
   30,796    -    2,883    7,648    136    19,722   (23,882)   37,302 
         
Total assets
   207,217    89,752    95,264    11,344    1,239    21,415   (24,446)   401,786 
         
Liabilities
                                      
         
Insurance contracts
   84,905    -    1,373    8,255    -    -   (7,223)   87,309 
         
Insurance contracts for account of policyholders
   66,842    -    33,122    446    -    -   -   100,409 
         
Investment contracts
   10,483    -    174    2    -    -   -   10,658 
         
Investment contracts for account of policyholders
   22,693    -    57,836    26    -    -   -   80,555 
         
Liabilities held for sale
   -    84,339    -    -    -    -   -   84,339 
         
Other liabilities
   16,194    -    1,511    851    414    7,225   (1,870)   24,325 
         
Total liabilities
  
 
201,117
 
  
 
84,339
 
  
 
94,015
 
  
 
9,580
 
  
 
414
 
  
 
7,225
 
 
 
(9,093
) 
 
 
387,596
 
1
Please refer to note 51 Discontinued operations for the summarized assets and liabilities of Aegon the Netherlands
In 2022, an intragroup reinsurance agreement was concluded between Americas (Transamerica Life Insurance Company - TLIC) and International (Transamerica Life (Bermuda) - TLB) to reinsure a substantial portion of the life business from TLB to TLIC, predominantly existing of UL policies with secondary guarantees. UnderlyingSummarized assets and liabilities have been transferred from TLB to TLIC at book value without an impact on the consolidated statement of financial position of Aegon. The consideration received by TLIC was less than the reserves assumed from TLB, resulting in a day-one loss on the transaction for TLIC and a day-one gain for TLB, which are, in line with Aegon’s accounting policies, recorded as a deferred cost of reinsurance. The Americasper segment in the table above includes an EUR 0.6 billion deferred cost of reinsurance asset reported as part of deferred expenses. The International segment includes an equal but offsetting deferred cost of reinsurance liability as part of other liabilities. Both the deferred cost of reinsurance asset and liability are eliminated in the Elimination column.
      Americas    United
 Kingdom
      International    Asset
 manage-
ment
 
 		   
 Holding and
other
activities
 
 
 
    Eliminations    Total 
2023
             
Assets
             
Cash and Cash equivalents   1,042    200    106    246    2,479    -   4,074 
Assets held for sale   -    432    -    -    -    -   432 
Investments   161,715    102,795    1,678    176    18    -   266,382  
Investments in joint ventures   -    -    1,034    397    -    -   1,430 
Investments in associates   -    -    5    279    2,622    -   2,906 
Reinsurance contract assets   16,563    2    5,656    -    -    (5,613)   16,608 
Insurance contract assets   181    -    3    -    -    -   185 
Deferred expenses   428    19    -    -    -    -   447 
Other assets   6,486    1,818    183    359    8,095    (7,823)   9,118 
Total assets
  
 
186,415
 
  
 
105,265
 
  
 
8,664
 
  
 
1,457
 
  
 
13,215
 
  
 
(13,436
) 
 
 
301,581
 
Liabilities
             
Reinsurance contract liabilities   396    -    211    -    -    -   608 
Insurance contract liabilities   136,116    40,329    6,628    -    -    (5,626)   177,446 
Investment contracts with discretionary participating features   -    21,594    -    -    -    -   21,594 
Investment contracts without discretionary participating features   35,181    40,085    -    -    -    -   75,266 
Liabilities held for sale / disposal groups   -    389    -    -    -    -   389 
Other liabilities   11,257    1,418    219    397    3,660    (228)   16,723 
Total liabilities
  
 
182,950
 
  
 
103,815
 
  
 
7,058
 
  
 
397
 
  
 
3,660
 
  
 
(5,854
) 
 
 
292,026
 
 
Summarized assets and liabilities per segment
  Americas   The
Netherlands		   United
Kingdom		   Interna-
tional		   Asset
Manage-
ment		   Holding and
other
activities		   Eliminations  Total 
2021
                                       
         
Assets
                                       
         
Cash and Cash equivalents
   1,127    3,718    210    282    311    1,242    -   6,889 
         
Investments
   80,938    66,384    1,876    8,315    296    21    -   157,831 
         
Investments for account of policyholders
   115,596    25,673    108,713    974    -    -    (4)   250,953 
         
Investments in joint ventures
   56    343    -    936    368    39    -   1,743 
         
Investments in associates
   -    1,103    9    18    151    20    (12)   1,289 
         
Deferred expenses
   9,052    235    825    391    -    -    -   10,503 
         
Other assets
   27,268    9,318    2,125    2,064    199    31,733    (33,663)   39,044 
         
Total assets
  
 
234,037
 
  
 
106,775
 
  
 
113,758
 
  
 
12,979
 
  
 
1,326
 
  
 
33,056
 
  
 
(33,679
) 
 
 
468,252
 
         
Liabilities
                                       
         
Insurance contracts
   74,967    40,547    1,490    9,028    -    -    (1,611)   124,422 
         
Insurance contracts for account of policyholders
   83,316    25,294    39,955    758    -    -    -   149,323 
         
Investment contracts
   9,804    11,767    194    2    -    -    -   21,767 
         
Investment contracts for account of policyholders
   32,280    2,273    69,819    220    -    -    -   104,592 
         
Other liabilities
   17,382    19,875    799    518    540    6,685    (4,022)   41,776 
         
Total liabilities
  
 
217,750
 
  
 
99,757
 
  
 
112,257
 
  
 
10,526
 
  
 
540
 
  
 
6,685
 
  
 
(5,633
) 
 
 
441,881
 
198
Aegon Annual Report on Form 20-F
2022
Table of Contents
Notes to the consolidated financial statements
Note 5
As per January 1, 2022, MAG Seguros is no longer reported within the Americas segment, but is reported in the International segment. This change is applied prospectively in the investments overview
      Americas    
The
 Nether-
lands
 
 
 
  United
 Kingdom
      Interna-
tional
     
Asset
 manage-
ment
 
 
 
   
Holding
 and other
activities
 
 
 
    Elimina-
tions
     Total 
2022
              
Assets
              
Cash and Cash equivalents   1,097    -   182    116    367    1,639    -   3,402 
Assets held for sale   -    88,664   -    -    -    -    -   88,664 
Investments   160,624    -   91,463    2,497    136    39    -   254,759 
Investments in joint ventures   -    -   -    959    471    -    -   1,430  
Investments in associates   -    11   -    20    129    16    (11)   165 
Reinsurance contract assets   16,520    -   369    6,273    -    -    (6,223)   16,939 
Insurance contract assets   36    -   -    -    -    -    -   36 
Deferred expenses   432    -   20    -    -    -    -   452 
Other assets   9,652    1,076   1,973    336    146    16,455    (14,774)   14,864 
Total assets
  
 
188,362
 
  
 
89,751
 
 
 
94,007
 
  
 
10,201
 
  
 
1,249
 
  
 
18,148
 
  
 
(21,008
) 
 
 
380,711
 
Liabilities
              
Reinsurance contract liabilities   62    -   -    208    -    -    -   270 
Insurance contract liabilities   137,195    (0)   37,621    7,570    -    -    (6,266)   176,120 
Investment contracts with discretionary participating features   -    -   21,055    -    -    -    -   21,055 
Investment contracts without discretionary participating features   32,788    -   32,440    -    -    -    -   65,227 
Liabilities held for sale / disposal groups   -    84,183   -    -    -    -    -   84,183 
Other liabilities   14,920    934   1,344    281    424    7,213    (2,196)   22,922 
Total liabilities
  
 
184,965
 
  
 
85,117
 
 
 
92,460
 
  
 
8,059
 
  
 
424
 
  
 
7,213
 
  
 
(8,462
) 
 
 
369,777
 
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.
 
Investments
  Americas   
The
Netherlands
1)
   United
Kingdom		   Interna-
tional		   Asset
Manage-
ment		   Holding and
other
activities		  Eliminations  
Total
 
         
2022
                                      
         
Shares
   345    -    25    10    7    1   -   388 
         
Debt securities
   51,008    -    777    1,847    15    -   -   53,647 
         
Loans
   12,475    -    -    43    -    38   -   12,556 
         
Other financial assets
   9,262    -    654    145    114    -   -   10,175 
         
Investments in real estate
   42    -    -    17    -    -   -   59 
         
Investments general account
  
 
73,132
 
  
 
-
 
  
 
1,457
 
  
 
2,061
 
  
 
136
 
  
 
39
 
 
 
-
 
 
 
76,825
 
         
Shares
   -    -    15,493    12    -    -   -   15,505 
         
Debt securities
   -    -    5,677    17    -    -   -   5,694 
         
Unconsolidated investment funds
   89,535    -    64,776    431    -    -   -   154,741 
         
Other financial assets
   -    -    3,617    5    -    -   -   3,622 
         
Investments in real estate
   -    -    443    -    -    -   -   443 
         
Investments for account of policyholders
  
 
89,535
 
  
 
-
 
  
 
90,007
 
  
 
464
 
  
 
-
 
  
 
-
 
 
 
-
 
 
 
180,006
 
         
Investments on balance sheet
   162,667    -    91,463    2,526    136    39   -   256,831 
         
Off-balance sheet investments third parties
   216,060    7,325    122,742    3,384    141,067    -   -   490,578 
         
Total revenue-generating investments
  
 
378,727
 
  
 
7,325
 
  
 
214,205
 
  
 
5,910
 
  
 
141,203
 
  
 
39
 
 
 
-
 
 
 
747,409
 
         
Investments
                                      
Available-for-sale
   56,564    -    991    1,991    96    -   -   59,643 
         
Loans
   12,475    -    -    43    -    38   -   12,556 
         
Financial assets at fair value through profit or loss
   93,585    -    90,029    475    40    1   -   184,130 
         
Investments in real estate
   42    -    443    17    -    -   -   502 
Total investments on balance sheet
  
 
162,667
 
  
 
-
 
  
 
91,463
 
  
 
2,526
 
  
 
136
 
  
 
39
 
 
 
-
 
 
 
256,831
 
         
Investments in joint ventures
   -    -    -    972    471    (0)   -   1,443 
         
Investments in associates
   -    -    -    20    129    16   -   165 
         
Assets held for sale
   -    89,752    -    -    -    -   -   89,752 
         
Other assets
   44,551    -    3,800    7,827    503    21,361   (24,446)   53,595 
         
Consolidated total assets
  
 
207,217
 
  
 
89,752
 
  
 
95,264
 
  
 
11,344
 
  
 
1,239
 
  
 
21,415
 
 
 
(24,446
) 
 
 
401,786
 
1
Please refer to note 51 Discontinued operations for the assets of Aegon the Netherlands
 
   
Aegon Annual Report on Form 20-F
2022
2023 | 199
213  		 
 
Table of Contents
About AegonLOGO 
About Aegon  Governance and risk
manage
ment
management  
Financial information
Non-financial  Sustainability information
   
   
Investments
      Americas    United
 Kingdom
      International    Asset
 Management
     
 Holding and
other
activities
 
 
 
    Eliminations    Total 
2023
             
Shares   267    16,192    23    9    -    -   16,491 
Debt securities   47,547    6,916    1,295    52    -    -   55,811  
Unconsolidated investment funds   92,520    74,719    173    -    -    -   167,411 
Loans   10,156    2,269    3    -    18    -   12,446 
Other financial assets   11,187    2,266    166    115    -    -   13,735 
Investments in real estate   38    433    17    -    -    -   488 
Total investments on balance sheet
  
 
161,715
 
  
 
102,795
 
  
 
1,678
 
  
 
176
 
  
 
18
 
  
 
-
 
 
 
266,382
 
Off-balance
sheet investments third parties
   225,090    135,270    3,711    195,304    -    -   559,375 
Total revenue-generating investments
  
 
386,806
 
  
 
238,064
 
  
 
5,389
 
  
 
195,480
 
  
 
18
 
  
 
-
 
 
 
825,757
 
Investments
             
Financial assets measured at FVOCI
             
Backing insurance contracts without direct participation   42,973    -    1,439    -    -    -   44,412 
Backing investment contracts without direct participation   5,854    -    -    -    -    -   5,854 
Non-insurance
related assets
   -    -    1    97    -    -   98 
Financial assets measured at FVPL             
Backing direct participation insurance contracts   67,532    40,008    173    -    -    -   107,714 
Backing insurance contracts without direct participation   9,696    1,243    27    -    -    -   10,967 
Backing direct participation investment contracts   24,988    22,771    -    -    -    -   47,759 
Backing investment contracts without direct participation   386    -    19    -    -    -   405 
Non-insurance
related assets
   92    38,339    -    27    -    -   38,458 
Financial assets measured at amortized cost
   10,156    -    1    52    18    -   10,227 
Investments in real estate   38    433    17    -    -    -   488 
Total investments on balance sheet
  
 
161,715
 
  
 
102,795
 
  
 
1,678
 
  
 
176
 
  
 
18
 
  
 
-
 
 
 
266,382
 
Investments in joint ventures   -    -    1,034    397    -    -   1,430 
Investments in associates   -    -    5    279    2,622    -   2,906 
Other assets   24,700    2,470    5,948    606    10,575    (13,436)   30,863 
Consolidated total assets
  
 
186,415
 
  
 
105,265
 
  
 
8,664
 
  
 
1,457
 
  
 
13,215
 
  
 
(13,436
) 
 
 
301,581
 
 
  214 | Annual Report on Form 20-F 2023
 
Investments
  Americas   The
Netherlands		   United
Kingdom		   International
1)
   Asset
Management		   Holding and
other activities		   Eliminations  Total 
2021
                                       
Shares
   493    1,410    29    72    9    1    -   2,015 
Debt securities
   61,014    26,951    1,159    8,060    11    -    -   97,195 
Loans
   11,352    35,358    -    93    -    20    -   46,823 
Other financial assets
   8,040    79    687    73    276    -    -   9,155 
Investments in real estate
   39    2,588    -    16    -    -    -   2,643 
         
Investments general account
  
 
80,938
 
  
 
66,384
 
  
 
1,876
 
  
 
8,315
 
  
 
296
 
  
 
21
 
  
 
-
 
 
 
157,831
 
         
Shares
   -    9,078    20,221    243    -    -    (4)   29,539 
Debt securities
   -    12,044    7,649    128    -    -    -   19,821 
Unconsolidated investment funds
   115,596    1,059    74,698    597    -    -    -   191,950 
Other financial assets
   -    3,493    5,581    6    -    -    -   9,080 
Investments in real estate
   -    -    563    -    -    -    -   563 
         
Investments for account of policyholders
  
 
115,596
 
  
 
25,673
 
  
 
108,713
 
  
 
974
 
  
 
-
 
  
 
-
 
  
 
(4
) 
 
 
250,953
 
         
Investments on balance sheet
   196,534    92,058    110,589    9,288    296    21    (4)   408,784 
Off-balance sheet investments third parties
   240,248    7,711    151,097    2,300    212,779    -    -   614,136 
Total revenue-generating investments
  
 
436,782
 
  
 
99,769
 
  
 
261,687
 
  
 
11,589
 
  
 
213,076
 
  
 
21
 
  
 
(4
) 
 
 
1,022,920
 
         
Investments
                                       
Available-for-sale
   65,694    24,443    1,299    8,191    257    -    -   99,884 
Loans
   11,352    35,358    -    93    -    20    -   46,823 
Financial assets at fair value through profit or loss
   119,450    29,669    108,727    987    40    1    (4)   258,871 
Investments in real estate
   39    2,588    563    16    -    -    -   3,206 
Total investments on balance sheet
  
 
196,534
 
  
 
92,058
 
  
 
110,589
 
  
 
9,288
 
  
 
296
 
  
 
21
 
  
 
(4
) 
 
 
408,784
 
         
Investments in joint ventures
   56    343    -    936    368    39    -   1,743 
Investments in associates
   -    1,103    9    18    151    20    (12)   1,289 
Other assets
   37,447    13,271    3,160    2,736    510    32,975    (33,663)   56,436 
Consolidated total assets
  
 
234,037
 
  
 
106,775
 
  
 
113,758
 
  
 
12,979
 
  
 
1,326
 
  
 
33,056
 
  
 
(33,679
) 
 
 
468,252
 
6 Premium income and premiums paid to reinsurers
    
                2022
                   2021
 1)
                   2020
 1)
 
Life insurance
   11,680    12,077    12,310 
Non-life insurance
   1,512    1,654    1,795 
Total premium income
  
 
13,192
 
  
 
13,731
 
  
 
14,105
 
    
Accident and health insurance
   1,512    1,389    1,539 
General insurance
   -    265    256 
Non-life insurance premium income
  
 
1,512
 
  
 
1,654
 
  
 
1,795
 
1
Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Premium income decreased by EUR 539 million in 2022 (2021: EUR 374 million decrease) mainly driven by the divestments of Aegon Hungary and Aegon Turkey to Vienna Insurance Group AG Wiener Versicherung Gruppe (VIG). For more information about these divestments refer to note 48 Companies and businesses acquired and divested.
200
Aegon Annual Report on Form 20-F
2022
Table of Contents
 
 
Notes to the consolidated financial statements
Note 75
   
   
    Americas   The
Netherlands		   United
Kingdom		   International   Asset
Manage-
ment		   Holding and
other
activities		   Eliminations  Total 
2022
               
Shares   315    -    15,518    21    7    1    -   15,863 
Debt securities   51,008    -    6,455    1,864    15    -    -   59,341 
Unconsolidated investment funds   89,535    -    64,776    431    -    -    -   154,741 
Loans   10,406    -    2,354    14    -    38    -   12,812 
Other financial assets   9,318    -    1,917    150    114    -    -   11,500 
Investments in real estate   42    -    443    17    -    -    -   502 
Total investments on balance sheet
  
 
160,624
 
  
 
-
 
  
 
91,463
 
  
 
2,497
 
  
 
136
 
  
 
39
 
  
 
-
 
 
 
254,759
 
Off-balance
sheet investments third parties
   216,060    -    122,742    3,384    141,067    -    -   483,253 
Total revenue-generating investments
  
 
376,684
 
  
 
-
 
  
 
214,205
 
  
 
5,881
 
  
 
141,203
 
  
 
39
 
  
 
-
 
 
 
738,013
 
Investments
               
Financial assets measured at FVOCI
               
Backing insurance contracts without direct participation   46,665    -    -    1,900    -    -    -   48,565 
Backing investment contracts without direct participation   5,482    -    -    -    -    -    -   5,482 
Non-insurance
related assets
   -    -    -    81    96    -    -   177 
Financial assets measured at FVPL
               
Backing direct participation insurance contracts   66,344    -    36,843    140    -    -    -   103,327 
Backing insurance contracts without direct participation   8,164    -    1,083    305    -    -    -   9,552 
Backing direct participation investment contracts   23,191    -    22,262    -    -    -    -   45,453 
Backing investment contracts without direct participation   285    -    -    47    -    -    -   331 
Non-insurance
related assets
   46    -    30,832    -    40    1    -   30,918 
Financial assets measured at amortized cost
   10,406    -    -    9    -    38    -   10,453 
Investments in real estate   42    -    443    17    -    -    -   502 
Total investments on balance sheet
  
 
160,624
 
  
 
-
 
  
 
91,463
 
  
 
2,497
 
  
 
136
 
  
 
39
 
  
 
-
 
 
 
254,759
 
Investments in joint ventures   -    -    -    959    471    -    -   1,430 
Investments in associates   -    11    -    20    129    16    (11)   165 
Other assets   27,399    89,740    2,544    6,726    513    18,094    (20,658)   124,357 
Consolidated total assets
  
 
188,023
 
  
 
89,751
 
  
 
94,007
 
  
 
10,201
 
  
 
1,249
 
  
 
18,148
 
  
 
(20,669
) 
 
 
380,711
  
Insurance, reinsurance and investment contracts with discretionary participation feature
Summarized assets and liabilities per segment
   Americas    United
 Kingdom		 
 		   International    Eliminations   Total 
2023
         
Insurance contracts
         
Direct participating contracts   70,436    39,687    193    -   110,315 
Without direct participation contracts   65,499    642    6,393    (5,626)   66,907 
Contracts measured under the PAA   -    -    39    -   39 
Investment contracts with DPF
         
Direct participating contracts   -    21,594    -    -   21,594 
Insurance contracts and investment contracts without participation features
  
 
   135,934
 
  
 
61,922
 
  
 
6,625
 
  
 
(5,626
) 
 
 
198,855
 
Reinsurance contracts held   16,166    2    5,445    (5,613)   16,000  
 
 
    
            2022
               2021
1)
               2020
1)
 
Life insurance
   2,057    3,292    2,506 
Non-life insurance
   132    126    134 
Total premiums paid to reinsurers
  
 
2,189
 
  
 
3,418
 
  
 
2,640
 
    
Accident and health insurance
   132    118    127 
General insurance
   -    8    7 
Non-life insurance premiums paid to reinsurers
  
 
132
 
  
 
126
 
  
 
134
 
1
Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Premium paid to reinsurers decreased by EUR 1,229 million in 2022 (2021: EUR 778 million increase), mainly explained by the increased premiums paid to reinsurers in 2021 which includes a reinsurance transaction covering universal life policies with secondary guarantees in Americas.
7 Investment income
    
            2022
               2021
1)
               2020
1)
 
    
Interest income
   4,071    3,536    3,652 
    
Dividend income
   1,504    1,327    1,397 
    
Rental income
   39    29    39 
    
Total investment income
  
 
5,613
 
  
 
4,893
 
  
 
5,087
 
    
Interest income accrued on impaired financial assets
   1    53    (70) 
    
Interest income on financial assets that are not carried at Fair value through profit or loss
   3,413    3,047    3,156 
1
Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Lease income is included within rental income. Please refer to note 45 Commitments and Contingencies for future lease payments (lease rights).
Total investment income from:  
            2022
               2021
1)
               2020
1)
 
    
Shares
   1,504    1,327    1,397 
    
Debt securities and money market instruments
   3,374    2,970    3,105 
    
Loans
   538    499    497 
    
Real estate
   39    29    39 
    
Other
   159    68    49 
    
Total
  
 
5,613
 
  
 
4,893
 
  
 
5,087
 
1
Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Investment income is split into:
  
            2022
               2021
1)
              2020
1)
 
    
Investment income related to general account
   3,724    3,249   3,329 
    
Investment income for account of policyholders
   1,889    1,644   1,758 
    
Total
  
 
5,613
 
  
 
4,893
 
 
 
5,087
 
    
Investment income from financial assets held for general account:
              
    
Available-for-sale
   3,017    2,674   2,757 
    
Loans
   538    499   497 
    
Financial assets designated at fair value through profit or loss
   142    97   65 
    
Real estate
   4    (1)   12 
    
Derivatives
   8    (4)   (11) 
    
Other
   14    (15)   9 
    
Total
  
 
3,724
 
  
 
3,249
 
 
 
3,329
 
1
Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and
discontinued
operations, refer to note 51 Discontinued operations.
   
Aegon Annual Report on Form 20-F
2022
2023 | 201
215  		 
 
Table of Contents
LOGO 
About Aegon
Governance and risk management
  
Financial information
Non-financial  Sustainability information
   
   
Summarized assets and liabilities per segment
   Americas    United
  Kingdom		 
 		   International    Eliminations   Total 
2022
         
Insurance contracts
         
Direct participating contracts   69,163    36,694    187    -   106,044 
Without direct participation contracts   67,996    927    6,944    (6,266)   69,600 
Contracts measured under the PAA   -    -    439    -   439 
Investment contracts with DPF
         
Direct participating contracts   -    21,055    -    -   21,055 
      
Insurance contracts and investment contracts without participation features
  
 
137,159
 
  
 
58,676
 
  
 
7,570
 
  
 
(6,266
) 
 
 
197,139
 
Reinsurance contracts held   16,458    369    6,065    (6,223)   16,669  
6 Insurance revenue
    
2023
  2022 
Amounts related to changes in liability for remaining coverage
   Insurance
  contracts		 
 		  
 		Investment
contracts with
DPF		 
 
 		  Insurance
  contracts		 
 		  
 		Investment
contracts with
DPF		 
 
 
Expected insurance claims and expenses   8,383   32   9,092   49 
Earnings released from contractual service margin   952   17   1,029   11 
Release of risk adjustment for
non-financial
risk
   340   15    320   14 
Allocated portion of consideration that relates to recovery acquisition costs   558   -   545   - 
Other   (39)   -   (42)   - 
Contracts not measured under the PAA
  
 
10,195
 
 
 
64
 
 
 
10,944
 
 
 
74
 
Contracts measured under the PAA   127   -   233   - 
Total Insurance revenue
  
 
10,322
 
 
 
64
 
 
 
11,178
 
 
 
74
  
The following table shows the revenue recognized on insurance and investments contracts with discretionary participating features by transition method. Other contracts comprise contracts transitioned under the full retrospective approach and contracts issued after the transition to IFRS 17.
Revenue recognized on contracts
in-force
on the transition date to IFRS 17
  
 
2023
 
  2022 
Insurance contracts
   
Related to contracts transitioned under the modified retrospective method   514   559 
Related to contracts transitioned under the fair value approach   8,707   9,513 
Other contracts   1,101   1,105 
   
Total revenue reported in the period
  
 
   10,322
 
 
 
   11,178
 
Investment contracts with discretionary participating features
   
Related to contracts transitioned under the fair value approach   64   74 
Total revenue reported in the period
  
 
64
  
 
 
74
  
7 Insurance service expenses
   
2023
  2022 
    Insurance
  contracts		 
 		  
 		Investment
contracts with
DPF		 
 
 		  Insurance
  contracts		 
 		  
 		Investment
contracts with
DPF		 
 
 
Incurred claims and other incurred insurance service expenses   (8,404)   (36)   (9,030)   (54) 
Changes in fulfilment cash flows relating to incurred claims   (17)   -   8   - 
Onerous contract losses (and reversals)   (1,079)   -   (1,247)   - 
Amortization of insurance acquisition costs   (558)   -   (545)   - 
Contracts not measured under the PAA
  
 
(10,058
) 
 
 
(36
) 
 
 
(10,815
) 
 
 
(54
) 
Contracts measured under the PAA   (132)   -   (228)   - 
Total insurance service expenses
  
 
(10,190
) 
 
 
(36
) 
 
 
(11,043
) 
 
 
(54
) 
 
8 Fee and commission income
  
    
            2022
               2021
1)
               2020
 1)
 
Fee income from asset management
   1,574    1,647    1,512 
Commission income
   787    640    510 
Other
   164    168    99 
Total fee and commission income
  
 
2,525
 
  
 
2,454
 
  
 
2,122
 
    
Included in fee and commission income:
               
Fees on trust and fiduciary activities
   242    259    221 
1 
Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
9 Income from reinsurance ceded
216 | Annual Report on Form 20-F 2023
    
            2022
              2021
1)
               2020
 1)
 
Recovered claims and benefits
   3,480   3,377    3,362 
    
Change in technical provisions
   (612)   738    309 
    
Commissions
   148   147    396 
    
Amortization charges
   (9)   2    - 
Total
  
 
3,009
 
 
 
4,263
 
  
 
4,066
 
1 
Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
10 Results from financial transactions
Results from financial transactions comprise:
  
            2022
              2021
1)
              2020
 1)
 
Net fair value change of general account financial investments at fair value through profit or loss, other than derivatives
   227   807   223 
Realized gains and (losses) on financial investments
   (537)   392   119 
Gains and (losses) on investments in real estate
   1   -   (60) 
Net fair value change of derivatives
   1,148   761   (2,270) 
Net fair value change on account of policyholder financial assets at fair value through profit or loss
   (35,951)   22,539   19,935 
Net fair value change on investments in real estate for account of policyholders
   (61)   46   (36) 
Net foreign currency gains and (losses)
   36   182   34 
    
Net fair value change on borrowings and other financial liabilities
   5   (13)   18 
Total
  
 
(35,132
) 
 
 
24,715
 
 
 
17,961
 
1 
Amounts for 2021 and 2020 have been re-presented to reflect the
classification
of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Net fair value change of general account financial investments at fair value
through profit or loss, other than derivatives comprise:
  
            2022
              2021
1)
              2020
 1)
 
Shares
   (48)   27   (4) 
    
Debt securities and money market investments
   (91)   (26)   22 
    
Other
   366   807   205 
Total
  
 
227
 
 
 
807
 
 
 
223
 
1
Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Other mainly includes net fair value changes of limited partnerships such as hedge and private equity funds.
202
Aegon Annual Report on Form 20-F
2022
Table of Contents
 
 
Notes to the consolidated financial statements
Note 108
   
   
8 Net income / (expenses) on reinsurance held
        2023        2022 
Assumption changes that relate to (a reversal of) underlying onerous contracts   31   38 
Experience adjustments that relate to (a reversal of) underlying onerous contracts   516   562 
Release of the contractual service margin for services received   (26)   63 
Release of risk adjustment for
non-financial
risk
   (118)   (134) 
Experience adjustments on current service   (217)   (280) 
Changes in fulfilment cash flows relating to incurred claims   (2)   (12) 
Loss on retrospective reinsurance (reinsurance purchased relating to incurred claims)   (17)   - 
New contracts issued/acquired: loss on initial recognition of underlying contracts   12   31 
Establishing of loss recovery component from onerous underlying contracts   7   8 
Reversals of a loss-recovery component other than changes in the FCF of reinsurance contracts held   (3)   (2) 
Contracts not measured under the PAA
  
 
181
 
 
 
274
 
Contracts measured under the PAA   1   1 
Net income / (expenses) on reinsurance held
  
 
182
   
 
 
275
   
 
Realized gains and losses on financial investments comprise:
  
            2022
              2021
1)
              2020
 1)
 
Shares
   67   16   (2) 
    
Debt securities and money market investments
   (632)   281   144 
    
Loans
   36   125   20 
    
Other
   (8)   (30)   (43) 
Total
  
 
(537
) 
 
 
392
 
 
 
119
 
1 
Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Realized gains and losses on financial investments comprise:
  
            2022
              2021
1)
               2020
 1)
 
Available-for-sale investments
   (573)   268    99 
    
Loans
   36   125    20 
Total
  
 
(537
) 
 
 
392
 
  
 
119
 
1
Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Net fair value change of derivatives comprise:
  
            2022
              2021
1)
              2020
 1)
 
Net fair value change on economic hedges where no hedge accounting is applied
   (143)   (265)   (533) 
Net fair value change on bifurcated embedded derivatives
   1,290   1,023   (1,739) 
Ineffective portion of hedge transactions to which hedge accounting is applied
   1   4   2 
Total
  
 
1,148
 
 
 
761
 
 
 
(2,270
) 
1
Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
The ineffective portion of hedge transactions to which hedge accounting is
applied comprises:
  
            2022
              2021
1)
              2020
 1)
 
Fair value change on hedging instruments in a fair value hedge
   (4)   (3)   11 
    
Fair value change on hedged items in a fair value hedge
   7   6   (9) 
    
Ineffectiveness fair value hedge
   4   3   2 
    
Ineffectiveness cash flow hedges
   (3)   1   - 
Total
  
 
1
 
 
 
4
 
 
 
2
 
1Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Net fair value change on for account of policyholder financial assets at fair value
through profit or loss comprise:
  
            2022
              2021
1)
              2020
 1)
 
Shares
   (2,799)  2,661   1,290 
    
Debt securities and money market investments
   (2,114)  (557)   485 
    
Unconsolidated investment funds
   (30,326)  20,833   17,670 
    
Derivatives
   (712)  (398)   489 
Total
  
 
(35,951
) 
 
22,539
  
 
19,935
 
1Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Net fair value change on account of policyholder financial assets at fair value through profit or loss are a charge in 2022, mainly due to declining equity markets, rising interest rates and credit spread widening compared to December 31, 2021. Net fair value changes on account of policyholder financial assets at fair value through profit or loss are offset by changes in technical provisions reported as part of the lines Change in valuation of liabilities for insurance contracts and Change in valuation of liabilities for investment contracts in note 12 Policyholder claims and benefits.
Net fair value change on borrowings and other financial
liabilities
  
            2022
               2021
1)
              2020
1)
 
Borrowings
   -    -   16 
    
Other financial liabilities
   5    (13)   2 
Total
  
 
5
 
  
 
(13
) 
 
 
18
 
1
Amounts for 2021 and 2020 have been re-presented to reflect the
classification
of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
   
Aegon Annual Report on Form 20-F
2022
2023 | 
203
217  		 
Table of Contents
LOGO 
About Aegon
Governance and risk management
  
Financial information
Non-financial  Sustainability information
   
   
9 Insurance net investment result
       
Insurance contracts
  
Investment
contracts with DPF
  
2023
 
    
Note
      Direct Part   Without
  direct part.		 
 		    Direct Part      Total 
Insurance investment return
       
Interest revenue on financial instruments calculated using the effective interest method  
 
9.1
 
   -   2,738   -   2,738 
Interest revenue on financial instruments measured at FVPL  
 
9.2
 
   231   369   137   737 
Other investment income  
 
9.3
 
   845   11   427   1,283 
Results from financial transactions  
 
9.4
 
   11,446   (467)   1,322   12,302 
Impairment (losses) / reversals  
 
9.5
 
   -   (86)   -   (86) 
Interest expenses       -  (218)  -  (218) 
P&L impacts
    
 
12,523
 
  
2,347
   
1,886
   
16,756
 
Gains / (losses) on financial assets measured at FVOCI     -   1,311   -   1,311 
Gains / (losses) transferred to income statement on disposal of financial assets measured at FVOCI        -   577   -   577 
OCI impacts
       
 
-
 
 
 
1,888
 
 
 
-
 
 
 
1,888
 
Total insurance investment return
       
 
12,523
 
 
 
4,235
 
 
 
1,886
 
 
 
18,644
 
Insurance finance income / (expenses) – General model
       
Interest accreted to insurance contracts     -   (3,098)   -   (3,098) 
Changes in interest rates and other financial assumptions     -   (1,587)   -   (1,587) 
Revaluation of changes in
non-financial
assumptions and experience adjustments to current interest rates ,
     -   (421)   -   (421) 
Insurance finance income / (expenses) – Variable fee approach
       
Change in fair value of underlying assets of products with direct participating features     (13,730)   -   (1,921)   (15,651) 
Change in fulfilment value not recognized in CSM due to risk mitigation option     1,493   -   -   1,493 
Insurance finance income / (expenses) – Premium allocation approach
       
Insurance finance expenses from PAA contracts        -   (12)   -   (12) 
Total insurance finance income / (expenses)
       
 
(12,237
) 
 
 
(5,118
) 
 
 
(1,921
) 
 
 
(19,276
) 
Represented by:
       
Amounts recognized in profit or loss     (12,244)   (3,485)   (1,921)   (17,650) 
Amounts recognized in OCI     7   (1,633)   -   (1,626) 
Reinsurance finance income / (expenses) on reinsurance held
       
Interest accreted to reinsurance contracts     -   630   -   630 
Changes in interest rates and other financial assumptions     -   283   -   283 
Revaluation of changes in
non-financial
assumptions and experience adjustments to current interest rates
     -   148   -   148 
Changes in risk of
non-performance
of reinsurers
        -   (12)   -   (12) 
Reinsurance finance income / (expenses) on reinsurance held
       
 
-
 
 
 
1,048
 
 
 
-
 
 
 
1,048
 
Represented by:
       
Amounts recognized in profit or loss     -   699   -   699 
Amounts recognized in OCI        -   349   -   349 
Insurance net investment result
       
 
285
 
 
 
165
 
 
 
(34
) 
 
 
415
 
Represented by:
       
Amounts recognized in profit or loss     278   (440)   (34)   (196) 
Amounts recognized in OCI        7   604   -   611 
 
11 Other income
  218 | Annual Report on Form 20-F 2023
  ��   
            2022
                 2021
 1)
                 2020
 1)
 
Other income
     378      49      62 
1 
Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Other income in 2022 includes the book gain on the divestment of Aegon Hungary and Aegon Turkey to Vienna Insurance Group AG Wiener Versicherung Gruppe (VIG) amounting to EUR 288 million, and the book gain on the divestment of Aegon’s 50% stake in the Spanish insurance joint venture with Liberbank to Unicaja Banco amounting to EUR 87 million.
Other income in 2021 includes a gain of EUR 38 million related to the sale of a small-sized Individual Retirement Account (IRA) portfolio to a third party.
Othe
r income in 2020 includes a book gain of EUR 53 million on the divestment of the joint ventures in Japan.
Refer to note 48 Companies and businesses acquired and divested for more details on these divestments.
12 Policyholder claims and benefits
    
            2022
                 2021
 1)
                 2020
 1)
 
Benefits and claims paid life
   17,313      16,971      12,973 
Benefits and claims paid non-life
   1,305      1,240      1,290 
Change in valuation of liabilities for insurance contracts
   (24,879)      19,504      19,723 
Change in valuation of liabilities for investment contracts
   (10,398)      2,420      1,898 
    
Other
   (20)      (38)      (19) 
Total
  
 
(16,680
) 
    
 
40,097
 
    
 
35,865
 
1 
Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Policyholder claims and benefits includes claims and benefits in excess of account value for products for which deposit accounting is applied and the change in valuation of liabilities for insurance and investment contracts. The lines ‘‘Change in valuation of liabilities for insurance contracts’’ and ‘‘Change in valuation of liabilities for investment contracts’’ reflect movements in technical provisions resulting from “Net fair value change on for account of policyholder financial assets at fair value through profit or loss” included in note 10 Results from financial transactions of EUR 35,951 million negative (2021: EUR 22,539 million positive, 2020: EUR 19,935 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 1,345 million (2021: increase of EUR 863 million, 2020: increase of EUR 1,707 million).
13 Profit sharing and rebates
    
            2022
                 2021
 1)
                 2020
 1)
 
Surplus interest bonuses
   -      1      1 
    
Profit appropriated to policyholders
   7      7      7 
Total
  
 
7
 
    
 
8
 
    
 
8
 
1 Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
204
Aegon Annual Report on Form 20-F
2022
 
 
 
Notes to the consolidated financial statements
Note 149
  
  
       Insurance contracts  Investment
contracts with DPF		  2022 
   
 
Note
 
   Direct Part   Without
direct part.		 
 		  Direct Part   Total 
Insurance investment return
       
Interest revenue on financial instruments calculated using the effective interest method  
 
9.1
 
   -   2,898   -   2,898 
Interest revenue on financial instruments measured at FVPL  
 
9.2
 
   182   265   128   575 
Other investment income  
 
9.3
 
   701   31   421   1,153 
Results from financial transactions  
 
9.4
 
   (24,716)   (909)   (3,880)   (29,505) 
Impairment (losses) / reversals  
 
9.5
 
   -   (95)   -   (95) 
Interest expenses        -   (97)   -   (97) 
P&L impacts
    
 
(23,833
) 
 
 
2,092
 
 
 
(3,331
) 
 
 
(25,072
) 
Gains / (losses) on investments in equity instruments designated at FVOCI     -   2   -   2 
Gains / (losses) on financial assets measured at FVOCI     -   (14,571)   -   (14,571) 
Gains / (losses) transferred to income statement on disposal of financial assets measured at FVOCI        -   488   -   488 
      
OCI impacts
       
 
-
 
 
 
(14,081
) 
 
 
-
 
 
 
(14,081
) 
Total insurance investment return
    
 
(23,833
) 
 
 
(11,989
) 
 
 
(3,331
) 
 
 
(39,153
) 
Insurance finance income / (expenses) – General model
       
Interest accreted to insurance contracts     -   (3,045)   -   (3,045) 
Changes in interest rates and other financial assumptions     -   18,495   -   18,495 
Revaluation of changes in
non-financial
assumptions and experience adjustments to current interest rates ,
     -   786   -   786 
Insurance finance income / (expenses) – Variable fee approach
       
Change in fair value of underlying assets of products with direct participating features     20,886   -   3,247   24,133 
Change in fulfilment value not recognized in CSM due to risk mitigation option     3,323   -   -   3,323 
Insurance finance income / (expenses) – Premium allocation approach
       
Insurance finance expenses from PAA contracts        -   (7)   -   (7) 
Total insurance finance income / (expenses)
    
 
24,208
 
 
 
16,230
 
 
 
3,247
 
 
 
43,685
 
Represented by:
       
Amounts recognized in profit or loss     24,233   (2,475)   3,247   25,005 
Amounts recognized in OCI     (25)   18,705   -   18,680 
Reinsurance finance income / (expenses) on reinsurance held
       
Interest accreted to reinsurance contracts     -   660   -   660 
Changes in interest rates and other financial assumptions     -   (4,469)   -   (4,469) 
Revaluation of changes in
non-financial
assumptions and experience adjustments to current interest rates
     -   (267)   -   (267) 
Changes in risk of
non-performance
of reinsurers
        -   3   -   3 
Reinsurance finance income / (expenses) on reinsurance held
    
 
-
 
 
 
(4,073
) 
 
 
-
 
 
 
(4,073
) 
Represented by:
       
Amounts recognized in profit or loss     -   599   -   599 
Amounts recognized in OCI        -   (4,672)   -   (4,672) 
Insurance net investment result
    
 
375
 
 
 
168
 
 
 
(84
) 
 
 
458
 
Represented by:
       
Amounts recognized in profit or loss     400   217   (84)   532 
Amounts recognized in OCI        (25)   (49)   -   (74) 
During the reporting period, Aegon did not change the basis of disaggregation of insurance finance income / (expenses) between the Income statement and OCI.
Annual Report on Form 20-F 2023 | 219  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
  
   
 
14 Commissions and expenses
9.1 Interest revenue on financial instruments calculated using the effective interest method
   
2023
 
       Without direct
part.		 
 		         Total 
Debt securities and money market instruments   2,166   2,166 
Loans   433   433 
Other   139   139 
   
At December 31
  
 
 2,738
  
 
 
 2,738
  
 
   2022 
       Without direct
part.		 
 		         Total 
Debt securities and money market instruments   2,479   2,479 
Loans   425   425 
Other   (6)   (6) 
   
At December 31
  
 
2,898
 
 
 
2,898
 
9.2 Interest revenue on financial instruments measured at FVPL
    
            2022
              2021
 1)
              2020
 1)
 
Commissions
   2,311   2,539   2,264 
Employee expenses
   1,707   1,511   1,579 
Administration expenses
   1,218   1,294   1,298 
Deferred expenses
   (770)   (1,160)   (741) 
Amortization of deferred expenses
   885   933   767 
Amortization of VOBA and future servicing rights
   108   171   87 
Total
  
 
5,458
 
 
 
5,286
 
 
 
5,253
 
    
Included in administration expenses:
             
Depreciation of equipment, software and real estate held for own use
   73   80   81 
 
1 
Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
   
Insurance contracts
  
Investment
contracts with DPF
   
2023
 
      Direct Part   Without direct part.   Direct Part         Total 
Non-derivative
assets applying the fair value option
   231   54   137    422 
Non-derivative
assets failing the SPPI criteria
   -   315   -    315 
     
On December 31
  
 
 231
  
 
 
 369
  
 
 
137
 
  
 
   737
  
 
   Insurance contracts  Investment
 contracts with DPF		   2022 
      Direct Part   Without direct part.   Direct Part         Total 
Non-derivative
assets applying the fair value option
   188   48   128    364 
Non-derivative
assets failing the SPPI criteria
   -   217   -    217 
Non-derivative
assets – PH designated
   (5)   -   -    (5) 
     
On December 31
  
 
 182
 
 
 
 265
  
 
 
128
 
  
 
   575
 
9.3 Other investment income
Employee expenses
  
            2022
               2021
 1)
               2020
 1)
 
Salaries
   1,160    1,092    1,105 
Post-employment benefit costs
   116    126    137 
Social security charges
   99    100    97 
Other personnel costs
   284    150    203 
Shares
   48    43    37 
Total
  
 
1,707
 
  
 
1,511
 
  
 
1,579
 
    
Included in employee expenses:
               
Defined contribution expenses
   49    35    36 
 
1 Amounts for 2021 and 2020 have been re-presented to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
   
Insurance contracts
  
Investment
contracts with DPF
   
2023
 
      Direct Part   Without direct part.   Direct Part         Total 
Dividend income   828   12   417    1,257 
Rental income   17   (2)   11    26 
     
On December 31
  
 
 845
  
 
 
 11
 
 
 
427
 
  
 
1,283
  
   Insurance contracts  Investment
 contracts with DPF		   2022 
      Direct Part   Without direct part.   Direct Part         Total 
Dividend income   680   28   407    1,115 
Rental income   20   4   14    38 
     
On December 31
  
 
 701
  
 
 
 31
  
 
 
421
 
  
 
1,153
  
 
In 2021, Aegon expanded the dynamic hedge covering the equity and interest rate risks
  220 | Annual Report on Form 20-F 2023
Long Term Incentive Plans
Notes to the consolidated financial statements
Note 9
9.4 Results from financial transactions
   
Insurance contracts
  
Investment
contracts with DPF
  
2023
 
       Direct Part   Without direct
part.		 
 		  Direct Part       Total 
     
Net fair value change of financial investments at fair
value through profit or loss, other than derivatives
     
Shares   800   13   413   1,225 
Debt securities and money market investments   55   1,366   36   1,457 
Unconsolidated investment funds   11,800   11   939   12,750 
Other   -   15   -   15 
  
 
12,655
 
 
 
1,404
 
 
 
1,388
 
 
 
15,447
 
Net fair value change of derivatives
     
Economic hedges where no hedge accounting is applied   (95)   29   (48)   (114) 
Bifurcated embedded derivatives   -   (1)   -   (1) 
Change in fair value of hedges on guarantees in products with direct participating features   (1,085)   -   -   (1,085) 
Ineffective portion of hedge transactions to which hedge accounting is applied   -   3   -   3 
  
 
(1,181
) 
 
 
31
 
 
 
(48
) 
 
 
(1,197
) 
Realized gains and (losses) on financial investments
     
Debt securities and money market investments   -   (15)   -   (15) 
  
 
-
 
 
 
(16
) 
 
 
-
 
 
 
(16
) 
Realized gains and (losses) on financial investments comprised of:
     
Investments measured at fair value through other comprehensive income (“FVOCI”)   -   (15)   -   (15) 
Other
     
Gains and (losses) on investments in real estate   (28)   -   (18)   (46) 
Net fair value change on investments in real estate   -   2   -   2 
     
   
 
(28
) 
 
 
2
 
 
 
(18
) 
 
 
(44
) 
On December 31
  
 
11,446
 
 
 
 1,421
 
 
 
1,322
 
 
 
14,190
 
Represented by:
     
Assets designated at FVPL   12,627   (562)   1,370   13,435 
Assets mandatorily measured at FVPL   (1,181)   95   (48)   (1,134) 
Other (i.e. FVOCI)   -   1,888   -   1,888 
Annual Report on Form 20-F 2023 | 221  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
   Insurance contracts  Investment
 contracts with DPF		  2022 
      Direct Part   Without direct
part.		 
 		  Direct Part        Total 
     
Net fair value change of financial investments at fair value
through profit or loss, other than derivatives
     
Shares   (1,566)   (33)   (950)   (2,548) 
Debt securities and money market investments   (1,153)   (14,958)   (737)   (16,847) 
Unconsolidated investment funds   (18,538)   (38)   (1,785)   (20,360) 
Other   -   329   -   329 
  
 
(21,256
) 
 
 
(14,699
) 
 
 
(3,471
) 
 
 
(39,427
) 
Net fair value change of derivatives
     
Economic hedges where no hedge accounting is applied   (333)   (361)   (385)   (1,080) 
Bifurcated embedded derivatives   -   (1)   -   (1) 
Change in fair value of hedges on guarantees in products with direct participating features   (3,093)   -   -   (3,093) 
Ineffective portion of hedge transactions to which hedge accounting is applied   -   (3)   -   (3) 
  
 
(3,427
) 
 
 
(364
) 
 
 
(385
) 
 
 
(4,176
) 
Realized gains and (losses) on financial investments
     
Loans   -   36   -   36 
  
 
-
 
 
 
35
 
 
 
-
 
 
 
35
 
Realized gains and (losses) on financial investments comprised of:
     
Investments measured at amortized cost   -   36   -   36 
Other
     
Gains and (losses) on investments in real estate   (33)   -   (23)   (56) 
Net fair value change on investments in real estate   -   1   -   1 
Net foreign currency gains and (losses)   -   37   -   37 
     
   
 
(33
) 
 
 
38
 
 
 
(23
) 
 
 
(18
) 
On December 31
  
 
(24,716
) 
 
 
(14,990
) 
 
 
(3,880
) 
 
 
(43,586
) 
Represented by:
     
Assets designated at FVPL   (21,289)   (714)   (3,495)   (25,498) 
Assets mandatorily measured at FVPL   (3,427)   (194)   (385)   (4,006) 
Other (i.e. FVOCI)   -   (14,081)   -   (14,081) 
9.5 Impairment (losses) / reversals
         
2023
        2022 
Impairment losses on financial assets, excluding receivables
   
Debt securities and money market investments   (77)   (121) 
Loans   (15)       10 
Other   -   6 
Impairment reversals on financial assets, excluding receivables
   
Debt securities and money market investments      37   26 
Impairment losses and reversals on
non-financial
assets and receivables
  
 
(31
) 
 
 
(17
) 
   
On December 31
  
 
(86
) 
 
 
(95
) 
  222 | Annual Report on Form 20-F 2023
Notes to the consolidated financial statements
Note 10
10 Other net investment result
   
  Note 
  
 
     2023
 
       2022 
Interest revenue on financial instruments calculated using the effective interest method  
10.1 
   599   409 
Interest revenue on financial instruments measured at FVPL  
10.2 
   89   49 
Other investment income  
10.3 
   550   411 
Results from financial transactions  
10.4 
   6,929   (10,656) 
Impairment (losses) / reversals  
10.5 
   (33)   (43) 
Investment contract income / (expenses)     (7,851)   9,808 
Interest expenses      (45)   (3) 
On December 31
     
 
238
 
 
 
(26
) 
10.1 Interest revenue on financial instruments calculated using the effective interest method
        
 
     2023
 
        2022 
Debt securities and money market instruments     457      405 
Other        142    3 
    
On December 31
     
 
599
 
 
 
409
 
10.2 Interest revenue on financial instruments measured at FVPL
        
 
     2023
 
        2022 
Non-derivative
assets applying the fair value option
         89        49 
    
On December 31
     
 
89
 
 
 
49
 
10.3 Other investment income
        
 
     2023
 
        2022 
Dividend income        547       410 
Rental income     3   1 
    
On December 31
     
 
550
 
 
 
411
 
Annual Report on Form 20-F 2023 | 223  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
10.4 Results from financial transactions
Net fair value change of financial investments at fair value through profit or loss,
other than derivatives
        
2023
        2022 
Shares   195   (281) 
Debt securities and money market investments   46   (222) 
Unconsolidated investment funds   6,805   (9,961) 
  
 
7,047
 
 
 
(10,463
) 
Net fair value change of derivatives
   
Economic hedges where no hedge accounting is applied   (8)   (162) 
Bifurcated embedded derivatives   5   29 
Ineffective portion of hedge transactions to which hedge accounting is applied   3   4 
  
 
-
 
 
 
(129
) 
Realized gains and (losses) on financial investments
   
Debt securities and money market investments   (113)   (58) 
  
 
(113
) 
 
 
(58
) 
Comprised of:
   
Investments measured at fair value through other comprehensive income (“FVOCI”)   (113)   (58) 
Other
   
Net fair value change on investments in real estate   (6)   (5) 
Net foreign currency gains and (losses)   2   (1) 
   
   
 
(4
) 
 
 
(6
) 
On December 31
  
 
6,929
 
 
 
(10,656
) 
Represented by:
   
Assets designated at FVPL   7,043   (10,466) 
Assets mandatorily measured at FVPL   3   3 
Other (i.e. FVOCI)   (117)   (192) 
10.5 Impairment (losses) / reversals
    
     2023
        2022 
Impairment losses on financial assets, excluding receivables
   
Debt securities and money market investments   (4)   (13) 
Impairment losses and reversals on
non-financial
assets and receivables
   (29)  
 
(30
) 
   
On December 31
  
 
   (33
) 
 
 
    (43
) 
11 Financing net investment result
   
Note 
   
     2023
        2022 
Interest charges  
11.1 
     (182)     (182) 
Other financing income     -   5 
    
On December 31
     
 
(182
) 
 
 
(178
) 
11.1 Interest charges
    
     2023
        2022 
Subordinated loans     (115)     (119) 
Trust pass-through securities   (9)   (9) 
Borrowings   (58)   (54) 
   
On December 31
  
 
(182
) 
 
 
(182
) 
  224 | Annual Report on Form 20-F 2023
Table of Contents
Notes to the consolidated financial statements
Note 12
12 Fees and commission income
                  
 
    2023
 
        2022 
Fee income from asset management      1,967   2,079 
Commission income      21   23 
Other fee and commission income            174   171 
On December 31
           
 
 2,163
  
 
 
2,272
  
Included in fees and commission income:
      
Fees on trust and fiduciary activities            220   248 
13 Other operating expenses
   
2023
 2022
      Insurance
related
    
Non-Insurance
related
      Insurance
related
    
Non-Insurance
related
  
Policyholder claims and benefits   6,965   -   7,736   - 
Onerous contract losses (and reversals)   1,081   -   1,250   - 
Commissions   1,403   1,069   1,214   1,011 
Handling and clearing fees   -   32   1   31 
Right of use assets - interest expense   -   7   -   7 
Employee expenses   604   1,107   637   1,059 
Administration expenses   551   780   594    669 
Deferred transaction expenses   -   (29)    -   (28) 
Amortization of deferred expenses   -   21   -   28  
Amortization of other intangibles   -   13   -   9 
Total
  
 
10,604
 
 
 
3,000
 
 
 
11,433
 
 
 
2,786
 
Amounts attributed to insurance acquisition cash flows (see cash flow in note 29)   (956)    -   (903)   - 
Amortization of insurance acquisition cash flows (see note 6/7)   558   -   545   - 
Amortization of insurance acquisition cash flows PAA   19   -   22   - 
Total other operating expenses
  
 
10,226
 
 
 
3,000
 
 
 
11,097
 
 
 
2,786
 
Employee expenses
                 
 
      2023
 
       2022 
Salaries      1,131   1,138 
Post-employment benefit costs      125   117 
Social security charges      107   101 
Other personnel costs      294   292 
Shares            54    48  
Total
           
 
 1,711
 
 
 
1,696
 
Included in employee expenses:
      
Defined contribution expenses                57   48 
Other operating expenses that arise directly from or can be allocated to the fulfillment of insurance contracts or investment contracts with discretionary participating features, are considered insurance service expenses and recognized in the income statement as the services under the contract are provided (see Notes 6 and 7). Other operating expenses that do not meet the definition of fulfillment cash flows, including unexpected amounts of waste labor and other resources (e.g.
start-up
costs of new businesses) are expensed when incurred.
Long term incentive plans
Selected senior employees within Aegon, who have not been classified as Material Risk Takers, can be made eligible for variable compensation, which is partially paid in cash and partially in Aegon shares. The grant price of these shares is equal to the volume weighted average price (VWAP) on the Euronext stock exchange in Amsterdam during the period between December 15 preceding the plan year and January 15 of the plan year. The actual allocation of variable compensation in cash and shares depends on Aegon’s performance, the employee’s unit performance and individual performance against predefined
Annual Report on Form 20-F 2023 | 225  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
financial and
non-financial
performance indicators and targets, as well as the continued employment of the employee. Once variable compensation is allocated, the cash part is paid directly and the payment of the shares is deferred for two years. These shares are paid out as soon asshall vest and be released following the Integratedadoption of the Company’s Annual Report has been adoptedAccounts by the shareholders at the Annual General Meeting inBoard of Directors following the last deferral year. Employees are not eligible to receive dividend during the deferral period. In exceptional circumstances Aegon’s Supervisory Boardvariable compensation can adjust variable compensationbe adjusted downwards before allocation or
pay-out
(malus) or after
pay-out (claw
(claw back), after considering the outcomes of an
ex-ante
or
ex-post
risk assessment.
Variable Compensation Material Risk Takers
MembersThe Executive Director, members of the Executive BoardCommittee and the Management Board as well ascertain other senior employees are classified as Material Risk Takers in accordance with BMA Insurance Code of Conduct, and through 2023 the Solvency II Legal Framework. In line with these rules, variable compensation for Material Risk Takers is partially paid in cash and partly in Aegon shares. The grant price of these shares is equal to the volume weighted average price (VWAP) on the Euronext stock exchange in Amsterdam during the period between December 15 preceding the plan year and January 15 of the plan year. The actual allocation of variable compensation in cash and shares depends on Aegon’s performance, the employee’s unit performance and individual performance against predefined financial and
non-financial
performance indicators and targets, as well as the continued employment of the employee. Once variable
Aegon Annual Report on Form 20-F
2022
  |  
205
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
compensation is allocated, the cash part is paid directly and the payment of the shares is deferred for three years. These shares are paid out as soon asshall vest and be released following the Integratedadoption of the Company’s Annual Report has been adoptedAccounts by the shareholders at the Annual General Meeting inBoard of Directors following the last deferral year. Employees are not eligible to receive dividend during the deferral period. For the Members ofExecutive Director, the Executive Board, the
paid-out
shares are subject to an additional holding period of two years. During this holding period, the Executive Board memberDirector is not allowed to sell these shares. In exceptional circumstances Aegon’s Supervisory Boardvariable compensation can adjust variable compensationbe adjusted downwards before allocation or
pay-out
(malus) or after
pay-out (claw
(claw back), after considering the outcomes of an
ex-ante
or
ex-post
risk assessment.
Shares as Fixed Compensation
Selected members of the Management BoardExecutive Committee as well as other senior employees receive part of their fixed compensation in Aegon shares each pay round, next to receiving fixed compensation in cash. The grant price of these shares is equal to the volume weighted average price (VWAP) on the Euronext stock exchange in Amsterdam during the period between December 15 preceding the plan year and January 15 of the plan year. Once allocated these shares are unconditional and do not depend on the continued employment of the employee. These shares are either paid as soon asvest following approval of the IntegratedCompany’s Annual Report has been adoptedAccounts by the shareholders at the next Annual General MeetingBoard of Directors, or the pay-outpayout is deferred until the IntegratedCompany’s Annual Report hasAccounts have been adoptedapproved by the shareholders at the Annual General MeetingBoard three years after the plan year.
In the former case, these
paid-out
shares are subject to an additional holding period of three years, while in the latter case there is no holding period after
pay-out.
During the holding period (if applicable), the employee is not allowed to sell these shares. During the deferral period (if applicable), the employee is not eligible to receive dividend.
Shares as part of a
Sign-on
Arrangement
Employees may be offered a
sign-on
arrangement when joining Aegon, with payments in cash and Aegon shares, within the applicable rules and regulations. Once allocated, the
sign-on
shares depend on the continued employment of the employee. These shares are deferred and typically cliff-vest after one, two and three years after allocation as soon asallocation. These shares are only paid out after approval of the IntegratedCompany’s Annual Report has been adopted byAccounts following the shareholders at the Annual General Meeting of thatlast deferral year. Employees are not eligible to receive dividend during the deferral period.
The following overview contains the cumulative number of shares and their status in relation to active Long Term Incentive Plans,long term incentive plans, variable compensation allocated to Material Risk Takers, shares allocated as fixed compensation and shares allocated as part of a
sign-on
arrangement.
Number of shares per plan year
 
    2018   2019   2020   2021   
2022
   Total 
Conditionally granted
1)
       6,513,984    7,378,113    8,381,086    9,449,451        7,495,307        39,217,941 
Allocated
2)
   6,123,546        6,761,360    6,522,324    13,297,242    -    32,704,472 
Number of shares per plan year
   2019    2020    2021    2022   
 
2023
  
  Total  
Conditionally granted
1)
    7,378,113    8,381,086   9,449,451   7,495,307     7,932,942    40,636,899 
Allocated
2)
   6,761,360   6,522,324    13,297,242    10,953,082   1,511,212   39,045,220 
 
1 
The at target number of shares which were conditionally granted for the plan year.
2 
The allocated number of shares based on the actual performance during the plan year.
 
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2022
  226 | Annual Report on Form 20-F 2023
Table of Contents
 
 
Notes to the consolidated financial statements
Note 1514
   
   
 
Number of shares per plan year
 
    2018    2019    2020    2021    2022    Total 
Unvested at January 1, 2021
  
 
5,251,551
 
  
 
7,340,768
 
  
 
9,251,766
 
  
 
-
 
  
 
-
 
  
 
21,844,085
 
Conditionally granted as variable compensation
1)
   -    -    -    9,449,451    -    9,449,451 
Allocated
2)
   4,010    (29,388)    (1,858,762)    2,450,661    -    566,521 
Forfeited
   (205,734)    (254,543)    (174,128)    (4,729)    -    (639,134) 
Vested
   (2,037,774)    (259,858)    (221,441)    (69,851)    -    (2,588,924) 
Unvested at December 31, 2021
  
 
3,012,053
 
  
 
6,796,979
 
  
 
6,997,435
 
  
 
11,825,532
 
  
 
-
 
  
 
28,631,999
 
Conditionally granted as variable compensation
1)
   -    -    -    -    7,495,307    7,495,307 
Allocated
2)
   65,410    3,445    1,832    3,847,791    2,136,074    6,054,552 
Forfeited
   (119,833)    (103,121)    (262,567)    (1,050,197)    -    (1,535,718) 
Vested
   (2,957,630)    (2,899,400)    (327,134)    (835,534)    (183,739)    (7,203,437) 
Unvested at December 31, 2022
  
 
-
 
  
 
3,797,903
 
  
 
6,409,566
 
  
 
13,787,592
 
  
 
9,447,642
 
  
 
33,442,703
 
       
Grant price (in EUR)
3)
   5.405    4.162    4.083    3.293    4.491      
       
    4.143 to    2.741 to    1.794 to    1.625 to    3.341 to      
Fair value of shares at grant date (in EUR)
4)
   5.054    3.737    3.796    3.978    5.061      
   2019  2020  2021  2022  2023  Total 
Unvested on January 1, 2022
  
 
6,796,979
 
 
 
6,997,435
 
 
 
11,825,532
 
 
 
-
 
 
 
-
 
 
 
25,619,946
 
Conditionally granted as variable compensation
1)
   -   -   -   7,495,307   -   7,495,307  
Allocated
2)
   3,445   1,832   3,847,791   2,136,074   -   5,989,142 
Forfeited   (103,121)   (262,567)   (1,050,197)   -   -   (1,415,885) 
Vested   (2,899,400)   (327,134)   (835,534)   (183,739)   -   (4,245,807) 
Unvested on December 31, 2022
  
 
3,797,903
 
 
 
6,409,566
 
 
 
13,787,592
 
 
 
9,447,642
 
 
 
-
 
 
 
33,442,703
 
Conditionally granted as variable compensation
1)
   -   -   -   -   7,932,942   7,932,942 
Allocated
2)
   95,653   130,020   (16,864)   1,321,701   1,511,212   3,041,722 
Forfeited   (142,634)   (232,905)   (437,677)   (182,796)   (49,968)   (1,045,980) 
Vested   (3,750,922)   (2,645,290)   (747,687)   (663,161)   (31,033)   (7,838,093) 
Unvested on December 31, 2023
  
 
-
 
 
 
3,661,391
 
 
 
12,585,364
 
 
 
9,923,386
 
 
 
9,363,153
 
 
 
35,533,294
 
Grant price (in EUR)
3)
   4.162   4.083   3.293   4.491   4.833  
Fair value of shares at grant date (in EUR)
4)
   2.741 to
3.737		 
 		  1.794 to
3.737		 
 		  1.625 to
3.978		 
 		  3.341 to
5.061		 
 		  3.555 to
4.524		 
 		    
 
1 
The at target number of shares which were conditionally granted as variable compensation for the plan year.
2 
Shares that are already allocated during a plan year, are a combination of shares as part of fixed compensation or a
sign-on
arrangement (e.g. the 2,450,6612,136,074 shares allocated during the calendar year 20212022 in relation to the 20212022 plan year). Shares that are allocated in the calendar year after a plan year, concerns the difference between the conditionally granted shares for that plan year and the actual number of shares which have been allocated as variable compensation (e.g. the 1,858,7623,847,791 share correction during 20212022 for the 20202021 plan year). This number can therefore be positive or negative. Shares allocated during a calendar year in relation to earlier plan years are backdated corrections to the administration (e.g. during 20212022 a correction of 4,0103,455 shares was made in relation to the 20182019 plan year).
3 
This is the volume weighted average price (VWAP) of Aegon on the Euronext Amsterdam stock exchange for the period December 15 to January 15. For instance for the 20222023 plan year, this is the VWAP for the period December 15, 20212022 to January 15, 2022.
2023.
4 
These fair values are adjusted for expected dividend (for which the participants are not eligible during the deferral period) and for the impact of relative total shareholder return as performance indicator for variable compensation (where applicable).
Aegon applies a net settlement option for participants in order to meet their income tax obligations when their shares are paid out. This means that Aegon will not sell shares on the market but hold these shares within Aegon and settle directly with the tax authorities in cash.
Refer toSee the Remuneration Report for detailed information on conditional shares granted to the Executive Board.Director.
14 Other income / (charges)
   
 
   2023 
 
     2022  
Other income   35    341 
Other charges   (92)   - 
On December 31
  
 
(57)
  
 
 
341
 
15 ImpairmentThe other charges / (reversals)in 2023 mainly relate to the book loss of the divestment of Aegon’s businesses in Poland and Romania to Vienna Insurance Group AG Wiener Versicherung Gruppe (VIG), amounting to EUR 78 million.
Other income in 2022 includes the book gain on the divestment of Aegon Hungary and Aegon Turkey to Vienna Insurance Group AG Wiener Versicherung Gruppe (VIG) amounting to EUR 237 million, and the book gain on the divestment
of Aegon’s 50% stake in the Spanish insurance joint venture with LIberbank to Unicaja Banco amounting to EUR 91 million.
 
Impairment charges / (reversals) comprise:  
            2022
              2021 
1)
              2020 
1)
 
Impairment charges on financial assets, excluding receivables
   39   11   204 
Impairment reversals on financial assets, excluding receivables
   (19)   (42)   (28) 
Impairment charges and reversals on
non-financial
assets and receivables
   48   48   107 
Total
  
 
68
 
 
 
16
 
 
 
284
 
1 
Amounts for 2021 and 2020 have been
re-presented
to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Impairment charges on financial assets, excluding receivables, from:  
            2022
               2021 
1)
               2020 
1)
 
Shares
   3    1    42 
Debt securities and money market instruments
   36    9    161 
Loans
   -    -    2 
Total
  
 
39
 
  
 
11
 
  
 
204
 
1 
Amounts for 2021 and 2020 have been
re-presented
to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
 
 
   
Aegon Annual Report on Form 20-F
2022
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227  		 
Table of Contents
LOGO 
About Aegon
Governance and risk management
  
Financial information
Non-financial  Sustainability information
   
   
 
15 Income tax
Impairment reversals on financial assets, excluding receivables, from:  
            2022
              2021 
1)
              2020 
1)
 
Shares
   -   (8)   - 
Debt securities and money market instruments
   (18)   (30)   (26) 
Loans
   (1)   (0)   (0) 
Other
   -   (4)   (1) 
Total
  
 
(19
) 
 
 
(42
) 
 
 
(28
) 
 
   
 
   2023
  
     2022  
Current tax
   
Current year   4   (6) 
Adjustments to prior years   (9)   (3) 
Total current tax
  
 
(5
) 
 
 
(9
) 
Deferred tax
   
Origination / (reversal) of temporary differences   (247)   43 
Changes in tax rates / bases   1   5 
Changes in deferred tax assets as a result of recognition / write off of previously not recognized / recognized tax losses, tax credits and deductible temporary differences   9   8 
Non-recognition
of deferred tax assets
   61   9 
Adjustments to prior years   (27)   16 
Total deferred tax
  
 
(204
) 
 
 
80
 
Income tax for the period (income) / charge
  
 
(209
) 
 
 
71
 
1 
Amounts for 2021 and 2020 have been
re-presented
to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Reconciliation between standard and effective income tax:
  
 
   2023
 
      2022 
Result before tax   (391)   827 
Income tax calculated using weighted average applicable statutory tax rates   (94)   188 
Difference due to the effects of:
   
Non-taxable
income
   (39)   (103) 
Non-tax
deductible expenses
   12   15 
Changes in tax rate/base   1   24 
Different tax rates on overseas earnings   3   3 
Tax credits   (34)   (43) 
Other taxes   -   (17) 
Adjustments to prior years   (36)   12 
Changes in deferred tax assets as a result of recognition / write off of previously not recognized / recognized tax losses, tax credits and deductible temporary differences   9   8 
Non-recognition
of deferred tax assets
   20   9 
Tax effect of (profit) / losses from joint ventures and associates   (47)   (19) 
Other   (3)   (7) 
  
 
(115
) 
 
 
(118
) 
   
Income tax for the period (income) / charge
  
 
(209
) 
 
 
71
 
Impairment charges on financial assets in 2020 were mainly driven by Americas impairments on public fixed income holdings, primarilyIn September 2023, the legal seat of Aegon N.V. was redomiciled to Bermuda. Headquarters remained in the energy sector, asNetherlands and the company remained a consequence of the weakening demand related to the nationwide lockdown due to
COVID-19.Dutch tax resident.
Impairment charges on
non-financial
assets and receivables in 2020 are mainly related to a valuation allowance due to the ongoing rehabilitation process of a reinsurer of Aegon Americas for EUR 68 million.
For more details on impairments on financial assets, excluding receivables, refer to note 4 Financial risks.
16 Interest charges and related fees
    
            2022
               2021 
1)
               2020 
1)
 
Subordinated loans
   119    110    110 
Trust pass-through securities
   9    8    9 
Borrowings
   115    65    96 
Other
   85    64    190 
Total
  
 
329
 
  
 
246
 
  
 
405
 
    
Included in interest charges and related fees:
               
Interest charges accrued on financial liabilities not carried at fair value through profit or loss
   221    121    132 
1 
Amounts for 2021 and 2020 have been
re-presented
to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Other includes interest charges on short term borrowings and bank fees.
17 Other charges
      
            2022
                 2021 
1)
                 2020 
1)
 
Other charges
    
 
(5
) 
    
 
101
 
    
 
104
 
1 
Amounts for 2021 and 2020 have been
re-presented
to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Other charges in 2022 are mainly related to the result of a release of an accrual.
Other charges in 2021 are mainly related to settlements of certain universal life policies in the US. For more details refer to note 45 commitments and contingencies.
Other charges in 2020 are mainly driven by charges of EUR 91 million (USD 104 million) related to settlements of certain universal life policies in the US.
208
Aegon Annual Report on Form 20-F
2022
Table of Contents
Notes to the consolidated financial statements
Note 18
18 Income tax
    
Note
     
            2022
                 2021 
1)
                 2020 
1)
 
     
Current tax
                          
Current year
          (6)      (18)      (23) 
     
Adjustments to prior years
          (3)      (6)      (24) 
          
 
(9
) 
    
 
(24
) 
    
 
(47
) 
Deferred tax
  
 
40
 
                     
     
Origination / (reversal) of temporary differences
          (540)      163      (309) 
     
Changes in tax rates / bases
          (2)      (39)      (11) 
     
Changes in deferred tax assets as a result of recognition / write off of previously not recognized / recognized tax losses, tax credits and deductible temporary differences
          8      (5)      12 
     
Non-recognition
of deferred tax assets
          9      9      7 
     
Adjustments to prior years
          16      (9)      11 
          
 
(509
) 
    
 
119
 
    
 
(289
) 
Income tax for the period (income) / charge
         
 
(518
) 
    
 
95
 
    
 
(336
) 
1 
Amounts for 2021 and 2020 have been
re-presented
to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Reconciliation between standard and effective income tax:
  
            2022
                 2021 
1)
                 2020 
1)
 
Result before tax from continuing operations
   (1,543)      1,164      (958) 
    
Income tax calculated using weighted average applicable statutory tax rates
   (329)      231      (218) 
    
Difference due to the effects of:
                   
    
Non-taxable
income
   (116)      (57)      (54) 
    
Non-tax
deductible expenses
   12      21      21 
    
Changes in tax rate/base
   (2)      (39)      (11) 
    
Different tax rates on overseas earnings
   3      -      - 
    
Tax credits
   (43)      (48)      (57) 
    
Other taxes
   (46)      38      (2) 
    
Adjustments to prior years
   12      (15)      (12) 
    
Change in uncertain tax positions
   (0)      (16)      - 
    
Changes in deferred tax assets as a result of recognition / write off of previously not recognized / recognized tax losses, tax credits and deductible temporary differences
   8      (5)      12 
    
Non-recognition
of deferred tax assets
   9      9      7 
    
Tax effect of (profit) / losses from joint ventures and associates
   (19)      (18)      (17) 
    
Other
   (8)      (5)      (4) 
   
 
(189
) 
    
 
(136
) 
    
 
(118
) 
Income tax for the period (result) / charge
  
 
(518
) 
    
 
95
 
    
 
(336
) 
1 
Amounts for 2021 and 2020 have been
re-presented
to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
The weighted average applicable statutory tax rate for 20222023 is 21.3% (2021: 19.9%, 2020:24.1% (2022: 22.8%). The weighted average applicable statutory tax rate increased compared to 20212022 due to the relatively high contribution of negative income before tax in the Netherlands versus high negative income in the United States andversus positive income from equity accounted joint ventures and associates which is presented net of tax in the consolidated income statement. Furthermore, the weighted average applicable statutory tax rate is impacted by the accounting for discontinued operations including intercompany transactions, refer to note
51 Discontinued operations.
Non-taxable
income in 20222023 is comprised of the regular
non-taxable
items such as the dividend received deduction in the United States and the participation exemption in the Netherlands. Compared to 20212022 the
non-taxable
income increased due to moreincludes the tax exempt income insale proceeds of the Netherlands.Hungarian and Turkish business.
Aegon Annual Report on Form 20-F
2022
  |  
209
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
In the Netherlands,United Kingdom, the enacted corporate income tax rate increased from 25% to 25.8% as from January 1, 2022 which resulted in a favorable tax rate impact in 2021. In the United Kingdom, the enacted future corporate income tax rate will increase from 19% to 25% as of April 1, 2023 which resulted in a2023. The beneficial impact of this tax rate impactchange was included in 2021 and 2022.the 2022 change in tax rate/base.
Tax credits mainly include tax benefits from United States investments that provide affordable housing to individuals and families that meet median household income requirements.
Other taxes are lowerhigher compared to 20212022 due to unfavorable equity and bondfavorable investment markets which yielded lowerhigher policyholder taxes in the United Kingdom, andoffset against state tax benefits in the United States due to negative income.pretax losses.
  228 | Annual Report on Form 20-F 2023
Notes to the consolidated financial statements
Note 16
In 2021, changes in uncertain tax positions relate2023, adjustments to a partial releaseprior years mainly consist of certain reassessed tax provisionsadjustments to the 2022 dividend received deduction in the United States.
Non-recognition
of deferred tax assets in 2023 includes the processing of the tax impact related to the new introduced corporate income tax regime in Bermuda that is effective in 2024 .
The following tables present income tax related to components of other comprehensive income and retained earnings.
 
           
            2022
               2021 
1)
               2020 
1)
 
Items that will not be reclassified to profit and loss:
                      
Changes in revaluation reserve real estate held for own use
          -    1    (2) 
     
Remeasurements of defined benefit plans
          (5)    (78)    14 
          
 
(5
) 
  
 
(77
) 
  
 
12
 
     
Items that may be reclassified subsequently to profit and loss:
                      
     
(Gains) / losses on revaluation of
available-for-sale
investments
          2,802    269    (635) 
     
(Gains) / losses transferred to the income statement on disposal and impairment of
available-for-sale
investments
          (121)    71    (1) 
     
Changes in cash flow hedging reserve
          42    47    54 
     
Movement in foreign currency translation and net foreign investment hedging reserve
          (12)    3    (7) 
          
 
2,710
 
  
 
390
 
  
 
(589
) 
Total income tax related to components of other comprehensive income
         
 
2,706
 
  
 
313
 
  
 
(577
) 
1
Amounts for 2021 and 2020 have been
re-presented
to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
 
 
           
2022
   2021   2020 
Income tax related to equity instruments and other
                  
     
Income tax related to equity instruments
  
 
31
 
     2    13    18 
     
Other
          1    3    1 
Total income tax recognized directly in retained earnings
         
 
3
 
  
 
16
 
  
 
19
 
   
 
    2023
 
      2022 
Items that will not be reclassified to profit and loss:
   
Remeasurements of defined benefit plans   17   (249) 
Total items that will not be reclassified to profit and loss
  
 
17
 
 
 
(249
) 
Items that may be reclassified subsequently to profit and loss:
   
(Gains) / losses on revaluation of FVOCI investments   (487)   3,499 
Revaluation reserve - Insurance contracts   397   (4,211) 
Revaluation reserve - Reinsurance contracts   (126)   1,243 
Changes in cash flow hedging reserve   42   42 
Movement in foreign currency translation and net foreign investment hedging reserve   3   (12) 
Total items that may be reclassified subsequently to profit and loss
  
 
(171
) 
 
 
561
 
Total income tax related to components of other comprehensive income
  
 
(154
) 
 
 
312
 
 
210
Aegon Annual Report on Form 20-F
2022
   
 
Note
 
  
 
    2023
 
      2022 
Income tax related to equity instruments and other
     
Income tax related to equity instruments  
 
26 
 
     17        2  
Other        1   1 
Total income tax recognized directly in retained earnings
       
 
18
 
 
 
3
 
Table of Contents
Notes to the consolidated financial statements
Note 19
1916 Earnings per share
The Group has applied the option from IAS 32 to recognize some of the Group’s ordinary shares held as underlying items of direct participating contracts as if they were financial assets. These shares are treated as outstanding shares (i.e. not treasury shares) and therefore not deducted from the number of shares outstanding.
Basic earnings per share
Basic earnings per share is calculated by dividing the net result attributable to owners, after deduction of coupons on perpetual securities and
non-cumulative
subordinated notes by the weighted average number of common shares, excluding common shares purchased by the Company and held as treasury shares (refer to(see note 30.125.1 Share capital – par value and 30.325.3 Treasury shares respectively).
Continuing and discontinued operations
  
 
   2023
 
     2022 
Net result attributable to owners of Aegon Ltd. from continuing and discontinued operations   (179)   (570) 
Coupons on perpetual securities   (48)   (36) 
Net result attributable to owners for basic earnings per share calculation from continuing and discontinued operations
  
 
(227
) 
 
 
(606
) 
Net result attributable to common shareholders from continuing and discontinued operations   (225)   (602) 
Net result attributable to common shareholders B from continuing and discontinued operations   (1)   (4) 
Weighted average number of common shares outstanding (in million)   1,879   2,010 
Weighted average number of common shares B outstanding (in million)   490   536 
Basic earnings per common share (EUR per share) from continuing and discontinued operations   (0.12)   (0.30) 
Basic earnings per common share B (EUR per share) from continuing and discontinued operations   -   (0.01) 
 
    
        2022
          2021          2020 
Continuing and discontinued operations
             
    
Net result attributable to owners of Aegon N.V. from continuing and discontinued operations
   (1,433)   1,980   (146) 
    
Coupons on perpetual securities
   (36)   (39)   (38) 
Net result attributable to owners for basic earnings per share calculation from continuing and discontinued operations
  
 
(1,469
) 
 
 
1,941
 
 
 
(184
) 
    
Net result attributable to common shareholders from continuing and discontinued operations
   (1,460)   1,928   (182) 
    
Net result attributable to common shareholders B from continuing and discontinued operations
   (10)   13   (1) 
    
Weighted average number of common shares outstanding (in million)
   2,010   2,043   2,044 
Weighted average number of common shares B outstanding (in million)
   536   559   561 
    
Basic earnings per common share (EUR per share) from continuing and discontinued operations
   (0.73)   0.94   (0.09) 
Basic earnings per common share B (EUR per share) from continuing and discontinued operations
   (0.02)   0.02   - 
    
Continuing operations
             
    
Net result attributable to owners of Aegon N.V. from continuing operations
   (1,054)   1,019   (633) 
    
Coupons on perpetual securities
   (36)   (39)   (38) 
Net result attributable to owners for basic earnings per share calculation from continuing operations
  
 
(1,090
) 
 
 
981
 
 
 
(670
) 
    
Net result attributable to common shareholders from continuing operations
   (1,083)   974   (666) 
    
Net result attributable to common shareholders B from continuing operations
   (7)   7   (5) 
    
Weighted average number of common shares outstanding (in million)
   2,010   2,043   2,044 
Weighted average number of common shares B outstanding (in million)
   536   559   561 
    
Basic earnings per common share (EUR per share) from continuing operations
   (0.54)   0.48   (0.33) 
Basic earnings per common share B (EUR per share) from continuing operations
   (0.01)   0.01   (0.01) 
    
Discontinued operations
             
    
Net result attributable to owners of Aegon N.V. from discontinued operations
   (379)   960   487 
    
Coupons on perpetual securities
   -   -   - 
Net result attributable to owners for basic earnings per share calculation from discontinued operations
  
 
(379
) 
 
 
960
 
 
 
487
 
    
Net result attributable to common shareholders from discontinued operations
   (377)   954   484 
    
Net result attributable to common shareholders B from discontinued operations
   (3)   7   3 
    
Weighted average number of common shares outstanding (in million)
   2,010   2,043   2,044 
Weighted average number of common shares B outstanding (in million)
   536   559   561 
    
Basic earnings per common share (EUR per share) from discontinued operations
   (0.19)   0.47   0.24 
    
Basic earnings per common share B (EUR per share) from discontinued operations
   (0.00)   0.01   0.01 
 
   
Aegon Annual Report on Form 20-F
2022
2023 | 
211
229  		 
Table of Contents
LOGO 
About Aegon
Governance and risk management
  
Financial information
Non-financial  Sustainability information
   
   
 
Continuing operations
   
2023
   2022 
Net result attributable to owners of Aegon Ltd. from continuing operations   (162)   727  
Coupons on perpetual securities   (48)   (36) 
Net result attributable to owners for basic earnings per share calculation from continuing operations
  
 
(210
) 
 
 
691
 
Net result attributable to common shareholders from continuing operations   (209)   686 
Net result attributable to common shareholders B from continuing operations   (1)   5 
Weighted average number of common shares outstanding (in million)       1,879        2,010 
Weighted average number of common shares B outstanding (in million)   490   536 
Basic earnings per common share (EUR per share) from continuing operations   (0.11)   0.34 
Basic earnings per common share B (EUR per share) from continuing operations   -   0.01 
Discontinued operations
   
2023
   2022 
Net result attributable to owners of Aegon Ltd. from discontinued operations   (17)   (1,296)  
Net result attributable to owners for basic earnings per share calculation from discontinued operations
  
 
(17
) 
 
 
(1,296
) 
Net result attributable to common shareholders from discontinued operations   (16)   (1,288) 
Net result attributable to common shareholders B from discontinued operations   -   (9) 
Weighted average number of common shares outstanding (in million)       1,879        2,010 
Weighted average number of common shares B outstanding (in million)   490   536 
Basic earnings per common share (EUR per share) from discontinued operations   (0.01)   (0.64) 
Basic earnings per common share B (EUR per share) from discontinued operations   -   (0.02) 
Diluted earnings per share
The diluted earnings per share equaled the basic earnings per share for all years disclosed since there were no Long Term Incentive Planslong-term incentive plans which were considered dilutive.
2017 Dividend per common share
Final dividend 2023
Aegon aims to pay a sustainable dividend to allow equity investors to participate in the company’s performance. The Board of Directors will, in the absence of unforeseen circumstances, propose a final dividend for 2023 of EUR 0.16 per common share at the Annual General Meeting of Shareholders to be held on June 12, 2024. Although not formally required under Aegon’s current
bye-laws,
Aegon has decided to make the approval of the 2023 final dividend subject to a binding vote at the June 12, 2024 general meeting. This is because Aegon will be proposing to amend its
bye-laws
at that same general meeting to include, amongst other things, a binding vote on the approval of final dividends, as previously announced. If approved, and in combination with the interim dividend of EUR 0.14 per share paid over the first half of 2023, Aegon’s total dividend over 2023 will amount to EUR 0.30 per common share. This represents an increase of EUR 0.07 or 30% compared with the total dividend per common share over 2022.
If the proposed dividend is approved by shareholders, Aegon’s shares will be quoted
ex-dividend
on June 14, 2024. The record date for the dividend will be June 17, 2024, and the dividend will be payable as of July 8, 2024.
In addition to the 2023 final dividend, it is proposed to execute a EUR 35 million share buyback to avoid diluting the stock related to long-term incentive compensation (LTIC) share rewards. This share buyback will be added to the final tranche of the running EUR 1.5 billion share buyback program, bringing the total size of the program to EUR 1.535 billion. The execution of the final tranche is aimed to start on April 8, 2024 and to be completed on or before June 30, 2024. The Board of Directors is authorized to execute this share buyback, based on the authorization granted to it during the 2023 AGM.
Interim dividend 2023
Aegon paid a 2023 interim dividend of EUR 0.14 per common share and EUR 0.0035 per common share B. The dividend was paid on September 27, 2023.
  230 | Annual Report on Form 20-F 2023
Table of Contents
Notes to the consolidated financial statements
Note 18
Final dividend 2022
At the Annual General Meeting of Shareholders currently scheduled forheld on May 25 2023, the Executive Board will, in line with its earlier announcement and barring unforseen circumstances, proposeof Aegon N.V. proposed a final dividend for the year 2022 of EUR 0.12 per common share and EUR 0.003 per common share B. If approved and inIn combination with the interim dividend 2022 of EUR 0.11 per common share, Aegon’s total dividend over 2022 will amountamounted to EUR 0.23 per common share and EUR 0.00575 per common share B. Following the transaction with a.s.r., Aegon increased its dividend per common share target from around EUR 0.25has moved to around EUR 0.30 over 2023.a cash-only dividend.
Interim dividend 2022
The interim dividend 2022 was paid in cash or stock at the election of the shareholder. Approximately 60% of shareholders elected to receive the final dividend in shares. Those who elected stock dividend received one Aegon common share for every 42 common shares held. The stock fraction is based on Aegon’s average share price as quoted on Euronext Amsterdam, using the high and low of each of the five trading days from September 8 up to and including September 14, 2022. The average share price calculated on this basis amounted to EUR 4.61. The dividend was paid on September 21, 2022.
The shares repurchased as part of the buyback program to neutralize the dilutive effect of the 2022 interim dividend, as announced on September 27, 2022, will be held as treasury shares and will be used to pay future dividends in shares. Between October 3, 2022 and December 15, 2022, common shares for an amount of EUR 134 million were repurchased. A total of 29,833,390 common shares were repurchased at an average price of EUR 4.4897 per share.
Final dividend 2021
It was decided at the Annual General Meeting of Shareholders on May 31, 2022 to pay a final dividend for 2021 of EUR 0.09 per common share and EUR 0.00225 per common share B. After taking into account the interim dividend of EUR 0.08 per common share and EUR 0.002 per common share B, Aegon’s total dividend over 2021 amounted to EUR 0.17 per common share and EUR 0.00425 per common share B.
Interim dividend 2021
The interim dividend 2021 was paid in cash or stock at the election of the shareholder. Approximately 42% of holders of common shares elected to receive the cash dividend. The remaining 58% of shareholders elected to receive the interim dividend in stock. The cash dividend amounted to EUR 0.08 per common share, the stock dividend amounted to one new Aegon common share for every 52 common shares held. The stock dividend and cash dividend are approximately equal in value. The dividend was payable as of September 17, 2021. The interim dividend 2021 for common shares B amounted to 1/40th of the dividend paid on common shares.
To neutralize the dilutive effect of the 2021 interim dividend paid in shares, Aegon executed a program to repurchase 21,531,927 common shares. The repurchase of shares commenced on October 1, 2021 and was completed on October 27, 2021. Aegon engaged a third party to execute the transactions on its behalf. The common shares were repurchased at a maximum of the average of the daily volume-weighted average prices during the repurchase period.
212
Aegon Annual Report on Form 20-F
2022
Table of Contents
Notes to the consolidated financial statements
Note 21
2118 Cash and cash equivalents
 
    
            2022
               2021               2020 
Cash at bank and in hand
   1,827    3,638    4,907 
    
Short-term deposits
   345    1,576    2,214 
    
Money market investments
   1,235    1,675    1,247 
    
Short-term collateral
   -    -    4 
At December 31
  
 
3,407
 
  
 
6,889
 
  
 
8,372
 
    
Cash collateral received related to securities lending, repurchase agreements and margins on derivatives transactions
   5,072    5,776    9,208 
    
Income from security lending programs
   7    3    9 
    
Weighted effective interest rate on short-term deposits
   15.01%    (0.72%)    (0.64%) 
    
Average maturity days on short-term deposits
   44    16    10 
The decrease in Cash and cash equivalents in 2022 is mainly the result of the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
    
2023
   2022    2021 
Cash at bank and in hand   1,614    1,827    3,638  
Short-term deposits   340   345    1,576 
Money market investments   2,120   1,230    1,675 
On December 31
  
 
    4,074
 
 
 
    3,402
 
  
 
    6,889
 
Cash collateral related to securities lending, repurchase agreements and margins on derivatives transactions   3,416   5,072    5,776 
Income from security lending programs   7   7    3 
Weighted effective interest rate on short-term deposits   3.90%   1.70%    (0.72%) 
Average maturity on short-term deposits (in days)   11   17    16 
The carrying amounts disclosed reasonably approximate the fair values as at the
year-end.
For cash collateral received related to securities lending, repurchase agreements and margins on derivatives transactions, a corresponding liability to repay the cash is recognized in other liabilities (refer to(see note 4135 Other liabilities). Also, refer tosee note 4640 Transfer of financial assets for details on collateral received and paid. Investment of cash collateral received is restricted through limitations on credit worthiness, duration, approved investment categories and borrower limits. Short-term collateral relates to cash collateral received included in cash and cash equivalents and the remainder is included in other asset classes as that collateral is typically reinvested. Aegon earns a share of the spread between the collateral earnings and the rebate paid to the borrower of the securities which is reflected in Income from securities lending programs.
Cash and cash equivalent balances that are not available for use by the group is EUR 98 million (2022: EUR 93 million).
    
Note
 		    
2023
   2022    2021 
Cash and cash equivalents          4,074        3,402          6,889  
Cash classified as Assets held for sale        -   5,085    - 
Net cash and cash equivalents
       
 
4,074
 
 
 
8,486
 
  
 
6,889
  
 
Note
  
            2022
               2021              2020 
    
Cash and cash equivalents
   3,407    6,889   8,372 
    
Cash classified as Assets held for sale
   5,085    -   - 
Net cash and cash equivalents
  
 
8,491
 
  
 
6,889
 
 
 
8,372
 
 
Annual Report on Form 20-F 2023 | 231  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Cash and cash equivalents attributable to Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
 
Summary cash flow statement
  
            2022
               2021 
1)
              2020 
1)
 
Net cash flows from operating activities
   2,851    (1,796)   (2,854) 
    
Net cash flows from investing activities
   616    (54)   (139) 
    
Net cash flows from financing activities
   (1,920)    300   (778) 
Net increase / (decrease) in cash and cash equivalents
  
 
1,548
 
  
 
(1,550
) 
 
 
(3,770
) 
    
Net cash and cash equivalents are impacted by:
              
Positive (negative) effects of changes in exchange rates
   55    67   (121) 
1
Amounts for 2021 and 2020 includes the disposal group.
Summary cash flow statement
       
 2023
        2022        2021 
Net cash flows from operating activities   864    2,672   (1,796)  
Net cash flows from investing activities   (1,996)   733   (54) 
Net cash flows from financing activities   (3,241)   (1,834)   300 
Net increase / (decrease) in cash and cash equivalents
  
 
(4,373
) 
 
 
1,570
 
 
 
(1,550
) 
Net cash and cash equivalents on December 31, are impacted by:
    
Positive (negative) effects of changes in exchange rates   (38)   55   67 
Analysis of cash flows
20222023 compared to 20212022
Net cash flows from operating activities
Total net cash flow from operating activities decreased by EUR 1,808 million to a EUR 864 million inflow (2022: EUR 2,672 million inflow). Mainly due to:
∎
Changes in results from financial transactions (see note 9 Insurance net investment result and note 10 Other net investment result), partly offset by changes in financial results from insurance and investment contracts (see note 29 on
(re-)
insurance contracts and investment contracts with DPF and note 30 Investment contracts without DPF), and
∎
The net disposal of investments (see note 19 Investments).
Net cash flows from investing activities
Net cash flows from investing activities decreased by EUR 2,729 million to a EUR 1,996 million outflow (2022: EUR 733 million inflow). This is mainly driven by net cash outflows related to the disposal of Aegon the Netherlands (see note 42 Companies and businesses acquired and divested and note 45 Held for sale and discontinued operations).
Net cash flows from financing activities
Net cash flow from financing activities decreased by EUR 1,407 million to a EUR 3,241 million outflow (2022: EUR 1,834 million outflow). The decrease is mainly driven by proceeds of borrowings (see note 31 Borrowings).
2022 compared to 2021
Based on IFRS the 2022 comparative information is restated for IFRS 9 and IFRS 17. In line with IFRS, the 2021 comparative information is not restated for IFRS 9 and IFRS 17 and therefore the analysis presented below is based on IFRS 4 and IAS 39 classifications.
Net cash flows from operating activities
Total net cash flow from operating activities increased by EUR 4,6474,918 million to a EUR 2,8512,672 million inflow (2021:
EUR 1,796 million outflow). The main movements are the decreased cash outflows regarding purchase of investments and the increased cash inflows from disposal of investments, (refer to note 22 Investment), partially offset by outflow from insurance and investment liabilities (refer to note 34 Insurance contracts) and by the increased outflow from results
from
financial transactions (refer to note 10 Results from financial transactions).transactions.
Aegon Annual Report on Form 20-F
2022
  |  
213
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
Net cash flows from investing activities
Net cash flows from investing activities increased by EUR 670787 million to a EUR 616733 million inflow (2021: EUR 54 million outflow). The main movements are the decreased cash outflows regarding acquisition/capital contribution joint ventures and associates, partially offset by decreased inflow from disposal joint ventures and associates (refer to note 48 Business combinations and note 49 Group companies.
associates.
Net cash flows from financing activities
Net cash flow from financing activities decreased by EUR 2,2202,134 million to a EUR 1,9201,834 million outflow (2021: EUR 300 million inflow). The increase is a result of lower repayments of borrowings and higher proceeds, (refer to note 37 Borrowings), partially offset by higher purchases of treasury shares (refer to the table below and note 31 Other equity instruments).shares.
2021 compared to 2020
  232 | Annual Report on Form 20-F 2023
Table of Contents
Net cash flows from operating activities
Notes to the consolidated financial statements
Note 19
Total net cash flow from operating activities increased by EUR 1,058 million to a EUR 1,796 million outflow (2020:
EUR 2,854 million outflow). The main movements are the decreased cash outflows regarding purchase of investments and the increased cash inflows from disposal of investments (refer to note 22 Investment), partially offset by outflow from insurance and investment liabilities (refer to note 34 Insurance contracts) and by the increased outflow from results from financial transactions (refer to note 10 Results from financial transactions).
Net cash flows from investing activities
Net cash flows from investing activities increased by EUR 85 million to a EUR 54 million outflow (2020: EUR 139 million outflow). The main movements are the decreased cash outflows regarding acquisition/capital contribution joint ventures and associates, partially offset by decreased inflow from disposal joint ventures and associates (refer to note 48 Business combinations and note 49 Group companies.
Net cash flows from financing activities
Net cash flow from financing activities increased by EUR 1,078 million to a EUR 300 million inflow (2020: EUR 778 million outflow). The increase is a result of lower repayments of borrowings and higher proceeds (refer to note 37 Borrowings), partially offset by higher purchases of treasury shares (refer to the table below and note 31 Other equity instruments).
Reconciliation of liabilities arising from financing activities
The table below shows the reconciliation between the net cash flows from financing activities and the liabilities as included in the consolidated statement of financial position.
 
   
Cash flows
      
Non-cash changes
 
Reconciliation of debt from
financing activities
   January 1,
2023
    Addition    Repayment      Disposal of
a business
    
Realized
gains /
losses in
income
statement
 
 
 
 
 
  
Move-
ments
related to
fair value
hedges
 
 
 
 
 
  Amortiza-
tion
    
Transfers
to disposal
groups
 
 
 
   
Net
exchange
difference
 
 
 
  December
31, 2023
  
Subordinated borrowings   2,295   -    -       -   -   -   3   -    (54)   2,244  
Trust pass-through securities   118   -    -     -   -   (3)   (1)   -    (4)   111 
Borrowings   4,051   1,604    (3,239)     (8)   -   -   2   -    (54)   2,356 
Assets held to hedge Trust pass-through securities   (11)   -    -      -   (3)   -   -   -    -   (14) 
 
Cash flows
     
Non-cash changes
 
       Cash flows    
Non-cash
changes
         
Reconciliation of debt from
financing activities
  At
January
1, 2022		   Addition   Repayment Realized
gains /
losses in
income
statement		 Movements
related to
fair value
hedges		 Amortization Transfers
to
disposal
groups		 
Net
exchange
difference
   At
December
31, 2022		 
Reconciliation of debt from
financing activities
Reconciliation of debt from
financing activities
Reconciliation of debt from
financing activities
   January 1,
2022
     Addition    Repayment      Disposal of
a business
     
Realized
gains /
losses in
income
statement
 
 
 
 
 
  
Move-
ments
related to
fair value
hedges
 
 
 
 
 
  Amortiza-
tion
    
Transfers
to disposal
groups
 
 
 
  
Net
exchange
difference
 
 
 
   December
31, 2022
  
Subordinated borrowings
   2,194    -    -   -   -  3   -  98    2,295 
Subordinated borrowings
Subordinated borrowings
Subordinated borrowings   2,194    -    -      -    -   -   3   -   98    2,295  
Trust pass-through securities
   126    -    -   -  (15)  (1)   -  8    118 
Trust pass-through securities
Trust pass-through securities
Trust pass-through securities   126    -    -     -    -   (15)   (1)   -   8    118 
Borrowings
   9,661    3,569    (4,086)   -  (0)  1  (5,227)  133    4,051 
Borrowings
Borrowings
Borrowings   9,661    3,569    (4,086)     -    -   -   1   (5,227)   133    4,051 
Assets held to hedge Trust pass-through securities
   3    -    -  (15)   -   -   -   -    (11) 
Assets held to hedge Borrowings
   -    -    -   -   -   -   -   -    - 
Assets held to hedge Trust pass-through securities
Assets held to hedge Trust pass-through securities
Assets held to hedge Trust pass-through securities   3    -    -      -    (15)   -   -   -   -    (11) 
19 Investments
   
Insurance related
   
2023
 		 
   Insurance contracts    Investment contracts with
DPF
            
Investments
   Direct Part.    Without
direct part.
     Direct Part.    Without
direct part.
     
Non-Insur-
ance related
     Total 
Financial assets measured at FVOCI – with recycling   -    44,404    -    5,854    97    50,354  
Financial assets measured at FVOCI – no recycling   -    9    -    -    1    10 
Financial assets measured at amortized cost   -    7,941    -    2,216    70    10,227 
Financial assets measured at FVPL – designated   107,714    2,078    47,759    19    38,347    195,916 
Financial assets measured at FVPL – mandatory   -    8,889    -    386    111    9,386 
Total financial assets, excluding derivatives
  
 
107,714
 
  
 
63,321
 
  
 
47,759
 
  
 
8,474
 
  
 
38,626
 
  
 
265,894
 
Investments in real estate   227    55    152    -    54    488 
Total investments
  
 
107,941
 
  
 
63,376
 
  
 
47,911
 
  
 
8,474
 
  
 
38,680
 
  
 
266,382
 
   Insurance related   2022  
   Insurance contracts    Investment contracts with
DPF
            
Investments
   Direct Part.    Without
direct part.
     Direct Part.    Without
direct part.
     
Non-Insur-
ance related
     Total 
Financial assets measured at FVOCI – with recycling   -    48,556    -    5,482    176    54,214  
Financial assets measured at FVOCI – no recycling   -    9    -    -    1    10 
Financial assets measured at amortized cost   -    8,254    -    2,159    39    10,453 
Financial assets measured at FVPL – designated   103,327    1,833    45,453    47    30,843    181,503 
Financial assets measured at FVPL – mandatory   -    7,719    -    285    75    8,079 
Total financial assets, excluding derivatives
  
 
103,327
 
  
 
66,371
 
  
 
45,453
 
  
 
7,972
 
  
 
31,134
 
  
 
254,257
 
Investments in real estate   236    59    168    -    40    502 
Total investments
  
 
103,562
 
  
 
66,430
 
  
 
45,620
 
  
 
7,972
 
  
 
31,174
 
  
 
254,759
 
Of the debt securities, money market and other short-term investments, mortgage loans and private loans EUR 8,727 million is current (December 2022: EUR 7,305 million).
 
214
   
Aegon Annual Report on Form 20-F
2022
2023 | 233  		 
 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
See note 38 “Fair Value” for information on fair value measurement, including loans that are held at amortized cost.
19.1 Financial assets, excluding derivatives, by measurement category
   
2023
 		 
Financial assets, excluding derivatives, by
measurement category
   
FVOCI
(With
recycling)
 
 
 
   FVOCI (no
recycling)
     Amortized
cost
     FVPL
(designated)
     FVPL
(mandatory)
     Total    Fair value 
Investments where Aegon bears the risk for investment performance              
Shares   -    10    -    -    291    300    300  
Debt securities   47,191    -    52    1,538    858    49,639    49,639 
Money market and other short-term investments   3,135    -    -    215    3,999    7,349    7,349 
Deposits with financial institutions   -    -    18    -    -    18    18 
Mortgage loans   -    -    10,157    -    -    10,157    9,025 
Other   29    -    1    773    4,239    5,040    5,040 
Total
  
 
50,354
 
  
 
10
 
  
 
10,227
 
  
 
2,526
 
  
 
9,386
 
  
 
72,504
 
  
 
71,371
 
   2022  
Financial assets, excluding derivatives, by
measurement category
   
FVOCI
(With
recycling)
 
 
 
   FVOCI (no
recycling)
     Amortized
cost
     FVPL
(designated)
     FVPL
(mandatory)
     Total    Fair value 
Investments where Aegon bears the risk for investment performance              
Shares   -    10    -    -    348    358    358  
Debt securities   51,607    -    -    1,241    799    53,647    53,647 
Money market and other short-term investments   2,576    -    -    167    2,876    5,618    5,618 
Deposits with financial institutions   -    -    45    -    -    45    45 
Mortgage loans   -    -    10,406    -    -    10,406    9,218 
Other   31    -    1    532    4,056    4,619    4,619 
Total
  
 
54,214
 
  
 
10
 
  
 
10,453
 
  
 
1,940
 
  
 
8,079
 
  
 
74,694
 
  
 
73,505
 
In both 2022 and 2023 no significant transactions took place with respect to Shares recognized at FVOCI.
No
dividends were received during 2023 (2022:
0
).
   2023 2022
Financial assets, excluding derivatives, by measurement category
   FVPL (designated)   FVPL (designated) 
Investments where policyholders bear the risk for investment performance   
Shares   16,191    15,505  
Debt securities   6,172   5,694 
Money market and other short-term investments   1,346   1,263 
Unconsolidated investment funds   167,411   154,741 
Deposits with financial institutions   2,271   2,360 
Total
  
 
193,390
 
 
 
179,563
 
During the period ended December 31, 2023 the Group has not made changes to its business model or reclassified financial assets.
See note 38 “Fair Value” for a summary of all financial assets and financial liabilities measured at fair value through profit or loss. See note 40 Transfers of financial assets for a discussion of collateral received and paid.
  234 | Annual Report on Form 20-F 2023
Table of Contents
 
 
Notes to the consolidated financial statements
Note 2220
   
   
19.2 Investment properties
   
 
     2023
 
       2022 
On January 1   502   3,206 
Additions   42   41 
Subsequent expenditure capitalized   2   12 
Disposals   (18)    (83) 
Fair value gains / (losses)   (50)   (112)  
Transfers to disposal groups   -   (2,545) 
Transfers to other headings   -   7 
Net exchange differences   9   (24) 
On December 31
  
 
488
 
 
 
502
 
Value of Aegon’s properties, which were appraised in the current year   99%   99% 
Appraisals performed by independent external appraisers   95%   95% 
20 Derivatives
                  Derivative assets                   Derivative liabilities 
        Insurance related                   Insurance related         2023 
   Insurance contracts    
Invest-
ment
contracts
with DPF
 
 
 
 
             Insurance contracts    
Invest-
ment
contracts
with DPF
 
 
 
 
          
Derivatives    Direct
Part.
     
 Without
direct
part.
 
 
 
    Direct
Part.
     
Non-
 Insurance
related
 
 
 
    Total     Direct
Part.
     
 Without
direct
part.
 
 
 
    Direct
Part.
     
 Non-Insur-
ance
related
 
 
 
    Total 
FVPL - mandatorily
                    
Derivatives not designated in a hedge   35    1,171    25    7    1,238    296    823    300    47    1,466  
Derivatives designated as fair value hedges   -    4    -    1    4    -    4    -    -    4 
Derivatives designated as cash flow hedges   -    147    -    -    147    -    961    -    -    961 
Derivatives designated as net foreign investment hedges   -    -    -    39    39    -    -    -    48    48 
Total
  
 
35
 
  
 
1,322
 
  
 
25
 
  
 
46
 
  
 
1,429
 
  
 
296
 
  
 
1,788
 
  
 
300
 
  
 
96
 
  
 
2,479
 
Segregated by:
                    
Derivatives where Aegon bears the risk for financial performance   -    1,322    -    40    1,361    -    1,788    -    90    1,878 
Derivatives where the policyholder bears the risk for financial performance   35    -    25    7    67    296    -    300    5    601 
 
   
Cash flows
  
Non-cash
changes		      
Reconciliation of debt from
financing activities		  At
January
1, 2021		   Addition   Repayment  Realized
gains /
losses in
income
statement		  Movements
related to
fair value
hedges		  Amortization   Transfer
to/from
other
headings		   Net
exchange
difference		   At
December
31, 2021		 
Subordinated borrowings
   2,085    -    -   -       3    -    105    2,194 
Trust pass-through securities
   126    -    -   -   (9)   -    -    9    126 
Borrowings
   8,524    3,914    (3,000)   -   (1)   1    -    222    9,661 
Assets held to hedge Trust pass-through securities
   12    -    -   (9)   -   -    -    1    3 
Assets held to hedge Borrowings
   62    -    (61)   (1)   -   -    -    -    - 
22 Investments
Investments for general account comprise financial assets, excluding derivatives, as well as investments in real estate.
    
Note
 
                2022    
         2021 
Available-for-sale
(AFS)
       59,643    99,884 
Loans
       12,556   46,823 
Financial assets at fair value through profit or loss (FVTPL)
       4,567   8,481 
Total financial assets, excluding derivatives
  
 
22.1
 
 
 
76,766
 
 
 
155,188
 
Investments in real estate
  
 
    22.2
  
  59   2,643 
Total investments for general account
      
 
76,825
 
 
 
157,831
 
The decrease in Investments in 2022 is mainly the result of the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
22.1 Financial assets, excluding derivatives
            AFS           FVTPL           Loans           Total       Fair value 
2022
                         
      
Shares
   195    193    -    388    388 
      
Debt securities
   53,093    554    -    53,647    53,647 
      
Money market and other short-term investments
   5,514    99    -    5,613    5,613 
      
Mortgage loans
   -    -    10,441    10,441    9,245 
      
Private loans
   -    -    27    27    27 
      
Deposits with financial institutions
   -    -    45    45    45 
      
Policy loans
   -    -    2,042    2,042    2,042 
      
Other
   840    3,722    -    4,562    4,562 
At December 31, 2022
  
 
59,643
 
  
 
4,567
 
  
 
12,556
 
  
 
76,766
 
  
 
75,569
 
      
2021
                         
      
Shares
   350    1,665    -    2,015    2,015 
      
Debt securities
   93,899    3,296    -    97,195    97,195 
      
Money market and other short-term investments
   4,790    120    -    4,910    4,910 
      
Mortgage loans
   -    -    39,991    39,991    44,366 
      
Private loans
   -    -    4,883    4,883    5,491 
      
Deposits with financial institutions
   -    -    52    52    52 
      
Policy loans
   -    -    1,893    1,893    1,893 
      
Other
   844    3,401    3    4,248    4,248 
At December 31, 2021
  
 
99,884
 
  
 
8,481
 
  
 
46,823
 
  
 
155,188
 
  
 
160,171
 
    
                 2022
                   2021 
Current portion:
          
   
Debt securities, money market and other short-term investments, mortgage and private loans
   7,294    12,924 
Refer to note 44 Fair value for further details on fair value measurement.
   
Aegon Annual Report on Form 20-F
2022
2023 | 
215
235  		 
 
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
Loan allowance
Movement on the loan allowance account during the year were as follows:
    
            2022
                  2021 
At January 1
   (118)   (188) 
Addition charged to income statement
   (16)   (40) 
Reversal to income statement
   15   55 
Amounts written off
   40   55 
Transfers to disposal groups
   76   - 
At December 31
  
 
(4
) 
 
 
(118
) 
22.2 Investments in real estate
    
            2022
                  2021 
At January 1
   2,643   2,385 
Additions
   41   47 
   
Subsequent expenditure capitalized
   1   1 
   
Disposals
   (40)   (60) 
   
Transfer from real estate for own use and equipment
   -   14 
   
Fair value gains / (losses)
   (51)   253 
   
Net exchange differences
   3   3 
   
Transfers to disposal groups
   (2,545)   - 
   
Other
   7   - 
   
At December 31
  
 
59
 
 
 
2,643
 
Investments in real estate held by:
         
Americas
   42   39 
The Netherlands
   -   2,588 
   
Value of Aegon’s properties which were appraised in the current year
   99%   98% 
Appraisals performed by independent external appraisers
   95%   98% 
Refer to note 45 Commitments and contingencies for a description of
non-cancellable
lease rights.
    
            2022
               2021 
1)
               2020 
1)
 
Rental income reported as part of investment income
   4    (1)    12 
Direct operating expenses (Including repairs and maintenance expenses):
               
- From investment property that generated rental income
   5    5    23 
- From investment property that did not generate rental income
   -    1    1 
1 
Amounts for 2021 and 2020 have been
re-presented
to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
There are no restrictions on the realizability of investment property or the remittance of income and proceeds of disposal.
Refer to note 45 Commitments and contingencies for a summary of contractual obligations to purchase investment property.
23 Investments for account of policyholders
Investments for account of policyholders comprise financial assets at fair value through profit or loss, excluding derivatives, and investments in real estate.
216
Aegon Annual Report on Form 20-F
2022
Table of Contents
LOGO		 
Notes to the consolidated financial statementsAbout Aegon  Governance and risk management  
Note 23Financial information
  Sustainability information
   
   
 
    
Note
  
                    2022
                      2021 
Shares
       15,505   29,539 
Debt securities
       5,694   19,821 
Money market and other short-term investments
       1,263   1,482 
Deposits with financial institutions
       2,360   4,105 
Unconsolidated investment funds
       154,741   191,950 
Other
       -   3,493 
Total investments for account of policyholders at fair value through profit or loss, excluding derivatives
      
 
179,563
 
 
 
250,390
 
    
Investments in real estate
  
 
23.1
 
  443   563 
Total investments for account of policyholders
      
 
180,006
 
 
 
250,953
 
                  Derivative assets                   Derivative liabilities 
        Insurance related                   Insurance related         2022 
   Insurance contracts    
Invest-
ment
contracts
with DPF
 
 
 
 
             Insurance contracts    
Invest-
ment
contracts
with DPF
 
 
 
 
          
Derivatives
    Direct
Part.
     
 Without
direct
part.
 
 
 
    Direct
Part.
     
Non-
 Insurance
related
 
 
 
    Total     Direct
Part.
     
 Without
direct
part.
 
 
 
    Direct
Part.
     
 Non-Insur-
ance
related
 
 
 
    Total 
FVPL - mandatorily
                    
Derivatives not designated in a hedge   29    2,392    20    5    2,445    344    3,182    366    65    3,958 
Derivatives designated as fair value hedges   -    3    -    -    4    -    4    -    -    4 
Derivatives designated as cash flow hedges   -    204    -    -    204    -    1,108    -    -    1,108  
Derivatives designated as net foreign investment hedges   -    -    -    118    118    -    -    -    104    104 
Total
  
 
29
 
  
 
2,599
 
  
 
20
 
  
 
123
 
  
 
2,771
 
  
 
344
 
  
 
4,295
 
  
 
366
 
  
 
170
 
  
 
5,175
 
Segregated by:
                    
Derivatives where Aegon bears the risk for financial performance   -    2,599    -    119    2,718    -    4,295    -    165    4,459 
Derivatives where the policyholder bears the risk for financial performance   29    -    20    5    53    344    -    366    5    715 
Where Aegon hedges minimum guarantees embedded in VFA products, the change in the fulfillment cash flows relating to the hedged position is recognized in income rather than being booked to the Contractual Service Margin. In 2023, the amount booked to income was EUR 1,481 million (2022: EUR 3,341 million).
The decrease in Investments for account of policyholder in 2022derivatives assets and derivative liabilities is mainly the result of the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Refer to note 44 Fair value for a summary of all financial assets and financial liabilities at fair value through profit or loss.
23.1 Investmentsincreasing interest rates in real estate for account of policyholders2023.
   
                    2022
                      2021 
At January 1
  563   467 
   
Additions
  -   54 
   
Subsequent expenditure capitalized
  10   6 
   
Disposals
  (42)   (43) 
   
Fair value gains / (losses)
  (61)   46 
   
Net exchange differences
  (27)   32 
At December 31
 
 
443
 
 
 
563
 
The investment properties are leased out under operating leases.
   
                    2022
                      2021                      2020 
Rental income reported as part of investment income
  34   30   27 
    
Direct operating expenses from investment in real estate for account of policyholders
  5   4   8 
There are no restrictions on the realizability of investment property or the remittance of income and proceeds of disposal.
Refer to note 45 Commitments and contingencies for a summary of contractual obligations to purchase investment property.
Aegon Annual Report on Form 20-F
2022
  |  
217
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
24 Derivatives
   Derivative asset   Derivative liability 
   
                    2022
                      2021  
                    2022
                      2021 
Derivatives for general account
                
     
Derivatives not designated in a hedge
  2,381   8,344   4,162   9,578 
     
Derivatives designated as fair value hedges
  4   18   4   15 
     
Derivatives designated as cash flow hedges
  204   346   1,108   948 
     
Derivatives desginated as Net foreign investment hedges
  118   73   104   59 
  
 
2,707
 
 
 
8,780
 
 
 
5,379
 
 
 
10,600
 
Derivatives for account of policyholders
                
     
Derivatives not designated in a hedge
  53   46   715   39 
     
                 
Total derivatives
1)
 
 
2,760
 
 
 
8,827
 
 
 
6,094
 
 
 
10,639
 
Of which:
                
     
Current
  352   723   1,607   2,803 
1
Refer to note 44 Fair value for a summary of all financial assets and financial liabilities at fair value through profit or loss.
The decrease in Derivatives in 2022 is mainly the result of the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
The derivatives are measured at fair value through profit or loss in accordance with IAS 39.IFRS 9. For more details on fair value measurement of derivatives refer tosee note 4438 Fair value.
Use of derivatives
Derivatives not designated in a hedge - general account
 
    Derivative asset   Derivative liability 
Derivatives not designated in a hedge – general account  
                2022
                   2021   
            2022
               2021 
     
Derivatives held as an economic hedge
   2,378    8,327    3,198    5,992 
     
Bifurcated embedded derivatives
   3    17    964    3,586 
Total
  
 
2,381
 
  
 
8,344
 
  
 
4,162
 
  
 
9,578
 
     Derivative asset       Derivative liability   
Derivatives not designated in a hedge – where Aegon bears the risk
  
 
    2023
 
      2022  
 
    2023
 
      2022 
Derivatives held as an economic hedge   1,171    2,392    812    3,197  
Bifurcated embedded derivatives   -   -   53   46 
Total
  
 
1,171
 
 
 
2,392
 
 
 
865
 
 
 
3,242
 
Aegon utilizes derivative instruments as a part of its asset liability risk management practices. The derivatives held for risk management purposes are classified as economic hedges to the extent that they do not qualify for hedge accounting, or that Aegon has elected not to apply hedge accounting. The economic hedges of certain exposures relate to an existing asset, liability or future reinvestment risk. In all cases, these are in accordance with internal risk guidelines and are closely monitored for continuing compliance.
Bifurcated embedded derivatives that are not closely related to the host contracts have been bifurcated and recorded at fair value in the consolidated statement of financial position. These bifurcated embedded derivatives are embedded in various institutional products, modified coinsurance and unit-linked insurance contracts in the formproducts.
  236 | Annual Report on Form 20-F 2023
Table of guarantees for minimum benefits. Please refer to note 36 Guarantees in insurance contracts for more disclosures about these guarantees.Contents
Notes to the consolidated financial statements
Note 20
Credit Default Swaps
Aegon has entered into free-standing credit derivative transactions. The positions outstanding at the end of the year were:
 
 2023   2022 
  2022   2021 
Credit derivative disclosure by quality
               Notional                Fair value                Notional                Fair value 
Credit derivative disclosure by quality
Credit derivative disclosure by quality
Credit derivative disclosure by quality
       Notional        Fair value       Notional        Fair value 
  
AAA
AAA
AAA
AAA
   5    -    14    -    3    -   5    - 
  
AA
   177    2    173    3 
AA
AA
AA   97    1   177    2 
  
A
A
A
A
   964    9    926    14    1,021    16   964    9 
  
BBB
   3,446    18    2,925    50 
BBB
BBB
BBB   2,746    52    3,446    18 
  
BB
BB
BB
BB
   144    (1)    263    1    119    1   144    (1)  
  
B or lower
   86    (0)    148    2 
B or lower
B or lower
B or lower   57    -   86    - 
Total
  
 
4,820
 
  
 
28
 
  
 
4,449
 
  
 
70
 
Total
Total
Total
  
 
4,043
 
  
 
71
 
 
 
4,820
 
  
 
28
 
The use of credit default swaps (CDS) is to create synthetic bonds. Aegon US uses credit default swaps to replicate or synthesize bonds, this is done via Replication (Synthetic Asset) Transactions (RSAT).
This is an insurance industry concept which allows insurance companies to use a derivative in conjunction with a cash investment to reproduce the investment characteristics of an otherwise permissible investment. There are three main types of RSAT transactions:
 
218
∎
 single asset replications
Aegon Annual Report on Form 20-F
2022
∎
 RSATs involving indices
Table of Contents
∎
 
Notes to the consolidated financial statements
Note 24
RSATs involving baskets of assets
Certain derivatives are usedIn each case the approach allows Aegon US to addaccess credit risk in derivative form by selling protection in the form of single name and index basedusing credit default swaps. This involves the purchase of high quality, low risk assets and the sale of credit derivatives. swaps in conjunction with cash or sovereign bonds to replicate (synthetically create) corporate bonds.
The table above provides a breakdown in credit quality of these credit derivatives. The credit ratings relate to the underlying exposures of these credit derivatives.
Derivatives designated as fair value hedges
Aegon’s fair value hedges includesinclude interest rate swaps, swaptions, equity and fixed income total return swaps, equity options, equity futures, bond futures and variance swaps that are used to protect against changes in the fair value of interest rate and equity sensitive instruments or liabilities. Gains and losses on derivatives designated under fair value hedge accounting are recognized in the income statement. The effective portion of the fair value change on the hedged item is also recognized in the income statement. As a result, only the net accounting ineffectiveness has an impact on the net result.
Aegon has entered into interest rate swap agreements that effectively convert certain fixed-rate assets and liabilities to a floating-rate basis (generally to six months or less LIBOR).basis. These hedges are used for portfolio management to better match assets to liabilities or to protect the value of the hedged item from interest rate movements. These agreements involve the payment or receipt of fixed-rate interest amounts in exchange for floating-rate interest amounts over the life of the agreement without the exchange of the underlying principal amounts. Some of the arrangements use forward starting swaps to better match the duration of assets and liabilities.
Aegon has entered into cross-currency interest rate swap agreements that effectively convert certain foreign currency fixed-rate and floating-rate assets and liabilities to US dollar floating-rate assets and liabilities. These agreements involve the exchange of the underlying principal amounts.
For the years ended December 31, 2022, 2021 and 2020, the gains and (losses) related to the ineffectiveness portion of designated fair value hedges Aegon recognized are as follows:
    
            2022
   
            2021 
1)
   
            2020 
1)
 
Gains (losses) related to the ineffectiveness portion of designated fair value hedges
   4    3    2 
1
Amounts for 2021 and 2020 have been
re-presented
to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Derivatives designated as cash flow hedges
Aegon has entered primarily into interest rate swap agreements that effectively convert certain variable-rate assets and liabilities to a fixed-rate basis in order to match the cash flows of the assets and liabilities within Aegon’s portfolio more closely. These agreements involve the payment or receipt of variable-rate interest amounts in exchange for fixed-rate interest amounts over the life of the agreement without the exchange of the underlying principal amounts. Aegon hedges its exposure to the variability of future cash flows from the interest rate movements for terms up to 2221 years for hedges converting existing floating-rate assets and liabilities to fixed-rate assets.
Aegon uses forward starting interest rate swap agreements to hedge the variability in future cash flows associated with the forecasted purchase of fixed-income assets. These agreements reduce the impact of future interest rate changes on the forecasted transaction. Fair value adjustments for these interest rate swaps are deferred and recorded in equity until the occurrence of the forecasted transaction at which time the interest rate swaps will be terminated. The accumulated gain or loss
Annual Report on Form 20-F 2023 | 237  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
in equity will be amortized into investment income as the acquired asset affects income. Aegon hedges its exposure to the variability of future cash flows from interest rate movements for terms up to 2120 years. The cash flows from these hedging instruments are expected to affect the profit and loss for approximately the next 4039 years. For the year ended December 31, 2022,2023, the contracts for which cash flow hedge accounting was terminated resulted in deferred gains of EUR 1275 million (2021:(2022: EUR 6012 million) that are recognized directly in equity to be reclassified into net result during the period when the cash flows occur of the underlying hedged items. During the year ended December 31, 2022,2023, none of Aegon’s active cash flow hedges were discontinued as it was highly probable that the original forecasted transactions would occur by the end of the originally specified time period documented at the inception of the hedging relationship. All reported discontinued cash flow hedges are a product of completed forecasted transactions at which point the hedges were unwound.
Aegon projects investment needs many years into the future in order to support the insurance liabilities and pay all contractual obligations arising from the policies in force today.
Aegon Annual Report on Form 20-F
2022
  |  
219
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
In addition, Aegon also makes use of cross currency swaps to convert variable or fixed foreign currency cash flows into fixed cash flows in local currencies. The cash flows from these hedging instruments are expected to occur over the next 3433 years. These agreements involve the exchange of the underlying principal amounts.
 
Hedge ineffectiveness and reclassification of gains (losses)
  
            2022
               2021               2020 
    
Hedge ineffectiveness on cash flow hedges
   (3)    1    - 
    
Gains (losses) reclassified from equity into the income statement
   (102)    (38)    74 
    
Expected deferred gain (loss) to be reclassified from equity into net result during the next 12 months
   116    113    92 
Hedge ineffectiveness and reclassification of gains (losses)
  
 
     2023
 
       2022 
Hedge ineffectiveness on cash flow hedges   3   (3) 
Gains (losses) reclassified from equity into the income statement   20    (102)  
Expected deferred gain (loss) to be reclassified from equity into net result during the next 12 months   114   116 
The periods when the cash flows are expected to occur are as follows:
 
      < 1yr    1 < 2 yrs     2 < 3 yrs     3 < 4 yrs     4 < 5 yrs    > 5 yrs    Total 2023 
Cash inflows   282   253    260    286    341   7,509   8,930 
Cash outflows   560     224      244    266    271   12,248   13,813 
Net cash flows
  
 
(277
) 
 
 
28
 
  
 
16
 
  
 
19
 
  
 
 70
  
 
 
(4,740
) 
 
 
(4,883
)  
    < 1 year   1 -5 years   5 - 10 years   > 10 years   2022 Total 
      
Cash inflows
   598    2,572    1,887    6,331    11,388 
      
Cash outflows
   -    4    -    -    4 
Net cash flows
  
 
598
 
  
 
2,569
 
  
 
1,887
 
  
 
6,331
 
  
 
11,384
 
      
    < 1 year   
1 - 5 years
   5 – 10 years   > 10 years   2021 Total 
      
Cash inflows
   535    2,158    1,640    5,868    10,201 
      
Cash outflows
   -    4    -    -    4 
Net cash flows
  
 
535
 
  
 
2,154
 
  
 
1,640
 
  
 
5,868
 
  
 
10,197
 
      < 1yr    1 < 2 yrs     2 < 3 yrs     3 < 4 yrs     4 < 5 yrs    > 5 yrs    Total 2022 
Cash inflows   1,552   1,295    1,060    964    933   10,039   15,843 
Cash outflows   1,937   1,285    1,037    962    934   17,914   24,068 
Net cash flows
  
 
(385
) 
 
 
10
 
  
 
23
 
  
 
3
 
  
 
 (2
) 
 
 
(7,875
) 
 
 
(8,225
)  
Effect of uncertainty of IBOR reform on derivatives designated as fair value and cash flows hedges
The future of IBORs (Interbank Offered Rates) such as EURIBOR, EONIA and LIBOR has been a major topic on the global agenda since the G20 asked the Financial Stability Board (FSB) to undertake a fundamental review of leading interest rate benchmarks in 2013. The FSB proposed new standards to reform interest rate benchmarks and the use of transaction-based input data instead of
non-transactional/panel
input data. In the EU this is adopted in the new Benchmark Regulation (BMR) which stipulates that from January 2020 only BMR compliant benchmarks may be used within the EU.
In order to prepare for the IBOR transition all Aegon units have written transition plans containing among others project solutions and actions, timelines and ownership to ensure timely preparation and implementation. We are currently implementing the actionsActions as described in the transition plans.
plan have been implemented.
In July 2020, the discount rates of EUR cleared derivatives switched from EONIA to
€
STR which impacted the valuation of derivatives for which compensation was exchanged. All EUR Credit Support Annex (‘CSA’(“CSA”) which have positions outstanding have been amended from EONIA to
€
STR discounting. In the US,United States, the cleared market has switched discount rates from Fed Funds to Secured Overnight Funding Rate (‘SOFR’(“SOFR”) in October 2020. The switch in discount rates is expected to lead to increased liquidity in the new risk free rates.
The majority of the fair value and cash flow hedges arewere directly exposed to changes in benchmark rates (predominantly EURIBOR and USD LIBOR). There are no plans for the discontinuation of EURIBOR and appropriate fallback language has beenwas implemented via the International Swaps and Derivatives (‘ISDA’(“ISDA”) fallback protocol and rulebook changes by the clearing houses. The relevant USD LIBOR benchmark rates are expected to remainwere available for existing contracts until mid 2023
mid-2023
and these derivatives will either bewere actively transitioned to SOFR before the 2023 deadline or via the ISDA fallback protocol. The total notional of financial instruments designated as fair value or cash flow hedges with a USD LIBOR reference that have a maturity date beyond June 30, 2023 amount to EUR 3,121 million (2021: EUR 3,439 million).
Aegon applies the reliefs offered in IAS 39 to ensure that this uncertainty does not result in the early termination
  238 | Annual Report on Form 20-F 2023
Notes to the consolidated financial statements
Note 20
Net foreign investment hedges
Aegon funds its investments in insurance subsidiaries with a mixture of debt and equity. Aegon aims to denominate debt funding in the same currency as the functional currency of the investment. Investments outside the Eurozone, the United States and the United Kingdom are funded in euros. When the debt funding of investments is not in the functional currency of the investment, Aegon uses derivatives to swap the currency exposure of the debt instrument to the appropriate functional
220
Aegon Annual Report on Form 20-F
2022
Table of Contents
Notes to the consolidated financial statements
Note 25
currency. This policy will ensure that total capital will reflect currency movements without distorting debt to shareholders’ equity ratios. Aegon utilizes various financial instruments as designated hedging instruments of its foreign investments. These instruments include long-term and short-term borrowings, short-term debts to credit institutions, cross currency swap contracts and forward foreign exchange contracts.
Terms and conditions of hedging instruments
The following table sets out the maturity profile and average price/rate of the hedging instruments used in Aegon’s hedging strategies:
                    
 
2023
 
                     Maturity 
     Up to 1 month    1-3 months    3-12 months     1-5 years     > 5 years 
Fair value hedges
        
Interest rate contracts
        
Notional   -   -   -    88    21 
Foreign exchange contracts
        
Notional   -   -   -    -    8 
Cash flow hedges
        
Interest rate contracts
        
Notional   -   -   -    -    5,540 
Average fixed interest rate   -   -   -    -    2.83%  
Foreign exchange contracts
        
Notional   -   -   -    121    835 
Average exchange rate EUR/USD   -   -   -    1.16    1.13 
Average exchange rate EUR/GBP   -   -   -    -    - 
Average exchange rate USD/EUR   -   -   -    0.87    0.88 
Average exchange rate USD/GBP   -   -   -    0.74    0.76 
Average exchange rate GBP/EUR   -   -   -    1.35    1.32 
Average exchange rate GBP/USD   -   -   -    -    - 
Net investment hedges
        
Foreign exchange - FX forward
        
Notional   (8)   (1)   -    -    - 
Average exchange rate EUR/USD   0.91   0.91   -    -    - 
Average exchange rate EUR/GBP   1.15   -   -    -    - 
Annual Report on Form 20-F 2023 | 239  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
                     2022 
                     Maturity 
    Up to 1 month    1-3 months    3-12 months    1-5 years      > 5 years 
Fair value hedges
        
Interest rate contracts
        
Notional   -   -    -   87    26   
Foreign exchange contracts
        
Notional   -   -    -   -    8 
Cash flow hedges
        
Interest rate contracts
        
Notional   -   -    -   -    6,738 
Average fixed interest rate   -   -    -   -    2.90% 
Foreign exchange contracts
        
Notional   -   -    -   88    788 
Average exchange rate EUR/USD   -   -    -   1.18    1.14 
Average exchange rate EUR/GBP   -   -    -   -    - 
Average exchange rate USD/EUR   -   -    -   0.85    0.88 
Average exchange rate USD/GBP   -   -    -   0.75    0.75 
Average exchange rate GBP/EUR   -   -    -   -    - 
Average exchange rate GBP/USD   -   -    -   1.34    1.34 
Net investment hedges
        
Foreign exchange - FX forward
        
Notional   (4)   23    (5)   -    - 
Average exchange rate EUR/USD   0.94   0.94    0.94   -    - 
Average exchange rate EUR/GBP   1.13   1.13    1.13   -    - 
Impacts of hedge accounting in the statement of financial position, statement of comprehensive income and statement of changes in equity
The following table contains details of the hedging instruments used in Aegon’s hedging strategies that are booked under line item “Derivatives” in the consolidated statement of financial position:
                 2023 
   Carrying amounts 
       Notional     Assets      Liabilities    
Changes in fair value used
for calculating hedge
ineffectiveness
 
 
 
Fair value hedges
       
Interest rate contracts   109   1    4    - 
Foreign exchange contracts   8   4    -    1  
Cash flow hedges
       
Interest rate contracts   5,540   42    950    106 
Foreign exchange contracts   956   105    11    (44) 
Net investment hedges
       
Foreign exchange - FX forward   (9)   39    48    - 
  240 | Annual Report on Form 20-F 2023
Notes to the consolidated financial statements
Note 20
                  2022 
   Carrying amounts 
       Notional      Assets      Liabilities    
Changes in fair value used
for calculating hedge
ineffectiveness
 
 
 
Fair value hedges
        
Interest rate contracts   113    -    4    (3) 
Foreign exchange contracts   8    3    -    - 
Cash flow hedges
        
Interest rate contracts   6,738    55    1,102    (383) 
Foreign exchange contracts   876    149    6    116  
Net investment hedges
        
Foreign exchange - FX forward   14    118    104    - 
The following table contains details of the hedged exposures covered by Aegon’s hedging strategies that are booked under line item “Derivatives” in the consolidated statement of financial position:
                                  2023  
   Carrying amounts    
Accumulated
amount of fair value
adjustments on the
hedged item
 
 
 
 
          
Cash flow hedge /
currency translation
reserve
 
 
 
    Assets    Liabilities    Assets    Liabilities  
Balance sheet line
item
   
Change in fair
value of
hedged item
for ineffec-
tiveness
assessment
 
 
 
 
 
 
   Continuing
hedges
    Discontinued
hedges
  
Fair value hedges
              
Corporate Debt Hedge Program   -    67    -    (13)  
Trust pass-through
securities
   3    n.a.   n.a. 
Offshore Liability Hedge Program   -    12    -    2  Investment contracts without discretionary participating features   -    n.a.   n.a. 
Synthetic Asset Fair value hedges   34    -    4    -  Investments   1    n.a.   n.a. 
Cash flow hedges
              
Synethetic Asset Cash flow hedges   2,672    -    -    -  Investments   11    87   - 
Life & Health Liability Investment Risk Hedge Program   n.a.    n.a.    n.a.    n.a.  n.a.   5    (348)   232 
Long Term Care (LTC) Liability Hedge Program   n.a.    n.a.    n.a.    n.a.  n.a.   1    (15)   1,085 
IMD Payout Hedge   n.a.    n.a.    n.a.    n.a.  n.a.   -    -   29 
TRS (Vivendi) Hedge   n.a.    n.a.    n.a.    n.a.  n.a.   -    -   3 
Net investment hedges
              
Investments in foreign operations   n.a.    n.a.    n.a.    n.a.  n.a.   -    (324)   - 
1 n.a. in above table should be read as “not applicable”.
Annual Report on Form 20-F 2023 | 241  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
                                 2022  
   Carrying amounts    
Accumulated
amount of fair value
adjustments on the
hedged item
 
 
 
 
         
Cash flow hedge /
currency translation
reserve
 
 
 
    Assets    Liabilities    Assets    Liabilities  Balance sheet line item   
Change in fair
value of
hedged item
for ineffec-
tiveness
assessment
 
 
 
 
 
 
  Continuing
hedges		 
 		  Discontinued
hedges		 
 
Fair value hedges
             
Corporate Debt Hedge Program   -    72    -    (10)  
Trust pass-through
securities		   15   n.a.   n.a. 
Offshore Liability Hedge Program   -    12    -    2  Investment contracts without discretionary participating features   (3)   n.a.   n.a. 
Synthetic Asset Fair value hedges   34    -    3    -  Investments   (8)   n.a.   n.a. 
Cash flow hedges
             
Synethetic Asset Cash flow hedges   3,127    n.a.    n.a.    n.a.  Investments   (1,667)   82  
Life & Health Liability Investment             
Risk Hedge Program   n.a.    n.a.    n.a.    n.a.  n.a.   (586)   (365)   393 
Long Term Care (LTC) Liability             
Hedge Program   n.a.    n.a.    n.a.    n.a.  n.a.   (129)   (17)   1,177 
IMD Payout Hedge   n.a.    n.a.    n.a.    n.a.  n.a.   -   -   31 
TRS (Vivendi) Hedge              4 
Net investment hedges
             
Investments in foreign operations   n.a.    n.a.    n.a.    n.a.  n.a.   -   (371)   - 
1 n.a. in above table should be read as “not applicable”.
Potential sources of hedge ineffectiveness
Macro hedge on mortgage portfolio in the Netherlands
Aegon held a portfolio of long-term fixed rate mortgages and therefore was exposed to changes in fair value due to movements in market interest rates. Aegon managed this risk exposure by entering into interest rate swaps.
Only the interest rate risk element was hedged and therefore other risks, such as credit risk, were managed but not hedged by Aegon. The interest risk component was determined as the change in fair value of the long-term fixed rate mortgages arising solely from changes in
3-month
LIBOR. Such changes were usually the largest component of the overall change in fair value. This strategy was designated as a fair value hedge and its effectiveness was assessed by comparing changes in the fair value of the loans attributable to changes in the benchmark rate of interest with changes in the fair value of the interest rate swaps.
∎
Differences between the expected and actual volume of prepayments, as Aegon hedged to the expected repayment date taking into account expected prepayments based on past experience;
∎
Difference in the discounting between the hedged item and the hedging instrument, as cash collateralized interest rate swaps were discounted using Overnight Indexed Swaps (OIS) discount curves, which were not applied to the fixed rate mortgages;
∎
Hedging derivatives with a
non-zero
fair value at the date of initial designation as a hedging instrument; and
∎
Counterparty credit risk which impacted the fair value of uncollateralized interest rate swaps but not the hedged items.
Aegon had not identified any other sources of hedge ineffectiveness in the period.
Aegon the Netherlands managed the interest rate risk arising from fixed rate mortgages by entering into interest rate swaps on a monthly basis. The exposure from this portfolio frequently changed due to new loans originated, contractual repayments and early prepayments made by customers in each period. As a result, Aegon the Netherlands adopted a dynamic hedging strategy to hedge the exposure profile by closing and entering into new swap arrangements at each
month-end.
Aegon the Netherlands used the portfolio fair value hedge of interest rate risk to recognize fair value changes related to changes in interest rate risk in the mortgage portfolio, and therefore reduced the profit or loss volatility that would have otherwise arisen from changes in fair value of the interest rate swaps alone. This approach was applicable until the completion of the transaction with a.s.r. on July 4, 2023.
  242 | Annual Report on Form 20-F 2023
Notes to the consolidated financial statements
Note 20
Corporate debt hedge
∎
If there is a mismatch between critical terms of hedging instruments and hedged items, changes in fair value may not be offset. The qualitative hedge effectiveness test assures all critical terms align.
∎
Counterparty default: If the counterparty fails to fulfill the contract, the hedge would not be highly effective. All derivatives in this program are collateralized or cleared, so impact from this credit risk will not dominate the hedge relationship.
Life & Health liability investment risk hedge
∎
Counterparty default: If the counterparty fails to fulfill the contract, the hedge would not be highly effective. All derivatives in this program are collateralized or cleared, so impact from this credit risk will not dominate the hedge relationship.
∎
Expected future transactions fail to occur as projected: the hedging instrument (i.e. FSS) terms are already known and easily valued. However, the hedged item consists of one or more forecasted asset purchases for which we are unable to project exactly the dates, coupon rates, and other underlying terms. Given these unknown variables in the hedged item, for the period in which the FSS remains in inventory and the forecasted transactions have not been completed, the hedged item portion of this relationship will be setup assuming identical dates and rates as outlined in the hedging instrument.
∎
When the forecasted transaction (i.e. bond purchase) is completed and the terms of the underlying hedged item are known, hedge ineffectiveness would possibly arise if the timing of the asset being purchased differs from the unwind date of the swaps designated as the hedging instrument, or the coupon rate of the asset being purchased differs from the coupon rate on the receive leg of the swap, or a combination of both.
Long Term Care (LTC) liability hedge
∎
The hedge ineffectiveness would possibly arise if the timing of the asset being purchased differs from the unwind date of the swaps designated as the hedging instrument, or the coupon rate of the asset being purchased differs from the coupon rate on the receive leg of the swap, or a combination of both.
Synthetic asset cash flow hedge
∎
Mismatch of critical terms: If critical terms do not match between the hedged item and the hedged instrument, hedge ineffectiveness can arise.
∎
Counterparty default: If the counterparty fails to fulfill the contract, the hedge would not be highly effective. All derivatives in this program are collateralized or cleared, so impact from this credit risk will not dominate the hedge relationship.
The following table contains information regarding the effectiveness of the hedging relationships designated by Aegon, as well as the impacts on profit or loss and other comprehensive income that are booked under line item “Results from financial transactions” (including the reclassified amount where applicable):
2023
Amounts reclassified from
reserves to P&L as
Gains / (loss)
recognized in
OCI
Hedge ineffective-
 ness recognized in
P&L
 P&L line item that includes
hedge ineffectiveness
hedged cash
flows will no
longer occur
hedged item
affected P&L
Fair value hedges
Interest rate contractsn.a.(3) 
Results from financial
transactions
n.a.n.a.
Foreign exchange contractsn.a.-Results from financial transactionsn.a.n.a.
Cash flow hedges
Interest rate contracts--
Results from financial
transactions
--
Foreign exchange contracts-(2) Results from financial transactions--
Net investment hedges
Foreign exchange - FX forward--
Results from financial
transactions
--
1 n.a. in above table should be read as “not applicable”.
Annual Report on Form 20-F 2023 | 243  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
2022
Amounts reclassified from
reserves to P&L as
Gains / (loss)
recognized in
OCI
Hedge
 ineffectiveness
recognized in
P&L
 P&L line item that includes hedge
ineffectiveness
hedged cash
flows will no
longer occur
hedged item
affected P&L
Fair value hedges
Interest rate contractsn.a.1Results from financial transactionsn.a.n.a.
Foreign exchange contractsn.a.(4) Results from financial transactionsn.a.n.a.
Cash flow hedges
Interest rate contracts-1Results from financial transactions--
Foreign exchange contracts-2Results from financial transactions--
Net investment hedges
Foreign exchange - FX forward--Results from financial transactions--
1 n.a. in above table should be read as “not applicable”.
Aegon recognizes the separate line items: “Changes in cash flow hedging reserve” and “Movement in foreign currency translation and net foreign investment hedging reserves” in the statement of comprehensive income related to hedges of net positions gains and losses. Refer to note 25 Shareholders’ equity for more details on these items.
Financial instruments designated and measured at FVPL
The following table shows reconciliation of nominal amount and fair value of credit derivatives that have been used to manage the credit risk of financial instruments designated as FVPL:
       CDSs  
Credit derivative disclosure by quality
    Nominal amount     Fair value 
On January 1, 2023   4,820   28 
Increase/(Decrease) during the year   (778)   43  
   
On December 31, 2023
  
 
4,043
 
 
 
71
 
       CDSs  
Credit derivative disclosure by quality
    Nominal amount     Fair value 
On January 1, 2022   4,449   70 
Increase/(Decrease) during the year   371    (42) 
   
On December 31, 2022
  
 
4,820
 
 
 
28
 
21 Investments in joint ventures and associates
 
    Joint ventures   Associates 
    
2022
   2021   
2022
   2021 
     
At January 1
   1,743    1,376    1,289    1,264 
     
Additions
   30    61    40    12 
     
Disposals
   (67)    -    (8)    - 
     
Share in net result
   286    265    4    112 
     
Share in changes in equity (note 30.6)
   (63)    25    3    (6) 
     
Impairment reversals / (charges)
   -    -    (9)    3 
     
Dividends
   (79)    (88)    (58)    (39) 
     
Net exchange difference
   (25)    45    (1)    2 
     
Transfer to / (from) other headings
   -    58    -    (58) 
     
Transfer to disposal groups
   (382)    -    (1,096)    - 
At December 31
  
 
            1,443
 
  
 
            1,743
 
  
 
            165
 
  
 
            1,289
 
The decrease in Investments in joint ventures and associates in 2022 is mainly the result of the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
       Joint ventures        Associates  
   
 
    2023
 
  2022  
 
    2023
 
  2022 
On January 1   1,430   1,715   165   1,289 
Additions   49   30   2,765   40 
Disposals   -   (81)   (12)   (8) 
Share in net income   196   289   103   4 
Share in changes in equity (note 25.6)   (2)   (33)   (9)   3 
Impairment losses   -   -   (25)   (9) 
Dividend   (211)   (79)   (81)   (58) 
Net exchange difference   (32)   (28)   -   (1) 
Transfers to disposal groups   -   (382)   -   (1,096) 
     
On December 31
  
 
1,430
 
 
 
1,430
 
 
 
2,906
 
 
 
165
 
The disposal of joint ventures in 2022 relates to the divestment of Aegon’s 50% stake in the Spanish insurance joint venture with Liberbank to Unicaja Banco, refer tosee note 4842 Companies and businesses acquired and divested.
In 2021, Aegon amended its agreement related to the investment in MAG Seguros and injected EUR 40 million in the undertaking. Following the amendment the investment required reclassification from Investments in associates to Investments in joint ventures as the level
  244 | Annual Report on Form 20-F 2023
With the exception of a limited number of immaterial venture capital entities, all
Notes to the consolidated financial statements
Note 21
The joint ventures and associates are unlisted and are accounted for using the equity method and are considered to be
non-current.
The investments in joint ventures and associates include interest in insurance companies that are required to maintain a minimum solvency margin based on local directives. Such restrictions can affect the ability of these joint ventures and associates to transfer funds in the form of cash dividends, or repayment of loans or advances, and therefore, there can be no assurance that these restrictions will not become a limitation in the future. Refer toSee note 4539 Commitments and contingencies for any commitments and contingencies related to investments in joint ventures. There are no unrecognized shares of losses in joint ventures and associates. The financial statements of the principal joint ventures and associates have the same reporting date as the Group. Refer toSee note 4943 Group companies for a listing of the investments in joint ventures and associates and the Group’s percentage holding.
Aegon Annual Report on Form 20-F
2022
  |  
221
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
Summarized financial information of joint ventures
The summarized financial information presented in the following table presents the joint ventures on a 100% basis. Aegon considers its investments in Santander Vida Seguros y Reaseguros S.A. (‘(“Santander Spain Life’Life”) and Aegon Industrial Fund Management Co.Ltd. (‘AIFMC’(“AIFMC”) as material joint ventures and are therefore presented separately.
   Santander Spain Life      AIFMC  Other Joint ventures 
    
  2023
     2022   
  2023
     2022     
2023
     2022 
Summarized statement of financial position
       
Cash and cash equivalents   18   23   421   392   47   99 
Other current assets   76   73   654   836   840   561 
Total current assets
  
 
94
 
 
 
96
 
 
 
1,075
 
 
 
1,229
 
 
 
887
 
 
 
660
 
Non-current
assets
   1,056   1,068   -   200   6,234   5,325 
Total assets
  
 
1,150
 
 
 
1,164
 
 
 
1,075
 
 
 
1,429
 
 
 
7,121
 
 
 
5,985
 
Other current liabilities   64   95   (149)   526   643   499 
Total current liabilities
  
 
64
 
 
 
95
 
 
 
(149
) 
 
 
526
 
 
 
643
 
 
 
500
 
Non-current
financial liabilities excluding trade payables and other provisions
   -   -   -   -   64   67 
Other
non-current
liabilities
   403   410   414   -   5,257   4,351 
       
Total
non-current
financial liabilities
  
 
403
 
 
 
410
 
 
 
414
 
 
 
-
 
 
 
5,321
 
 
 
4,418
 
       
Total liabilities
  
 
467
 
 
 
506
 
 
 
265
 
 
 
526
 
 
 
5,964
 
 
 
4,918
 
Net assets
  
 
683
 
 
 
658
 
 
 
810
 
 
 
903
 
 
 
1,157
 
 
 
1,067
 
Summarized statement of comprehensive income
       
Revenue   482   265   478   644   2,586   2,267 
Results from financial transactions   -   -   -   -   -   (2) 
Depreciation and amortization   (32)   (30)   (5)   (4)   (27)   (28) 
Interest income   4   1   10   9   117   103 
Interest expense   -   -   -   -   (10)   (7) 
Profit or loss   97   79   193   330   259   258 
Income tax (expense) or income   (24)   (18)   (53)   (92)   (88)   (53) 
Post-tax
profit or (loss)
  
 
73
 
 
 
61
 
 
 
140
 
 
 
238
 
 
 
170
 
 
 
205
 
Other comprehensive income   9   (24)   -   -   32   (41) 
Total comprehensive income
  
 
82
 
 
 
37
 
 
 
140
 
 
 
238
 
 
 
203
 
 
 
164
 
Dividends received   58   30   122   -   211   54 
 
    Santander Spain Life          AIFMC              Other Joint ventures 
    
          2022
            2021  
          2022
            2021  
          2022
            2021 
Summarized statement of financial position
                         
Cash and cash equivalents
   23   20   392   351   99   157 
Other current assets
   155   130   836   810   725   697 
Total current assets
  
 
178
 
 
 
150
 
 
 
1,229
 
 
 
1,161
 
 
 
824
 
 
 
854
 
       
Non-current
assets
   1,109   1,134   200   204   5,349   5,574 
Total assets
  
 
1,287
 
 
 
1,284
 
 
 
1,429
 
 
 
1,364
 
 
 
6,173
 
 
 
6,428
 
       
Current financial liabilities excluding trade payables and other provisions
   -   -   -   -   -   7 
Other current liabilities
   148   126   526   613   543   501 
Total current liabilities
  
 
148
 
 
 
126
 
 
 
526
 
 
 
613
 
 
 
544
 
 
 
509
 
       
Non-current
financial liabilities excluding trade payables and other provisions
   -   -   -   -   67   183 
Other
non-current
liabilities
   504   510   -   -   4,447   3,921 
Total
non-current
financial liabilities
  
 
504
 
 
 
510
 
 
 
-
 
 
 
-
 
 
 
4,515
 
 
 
4,104
 
Total liabilities
  
 
652
 
 
 
636
 
 
 
526
 
 
 
613
 
 
 
5,059
 
 
 
4,613
 
Net assets
  
 
635
 
 
 
648
 
 
 
903
 
 
 
752
 
 
 
1,114
 
 
 
1,816
 
       
Summarized statement of comprehensive income
                         
Revenue
   288   247   644   858   2,374   1,866 
Results from financial transactions
   -   -   -   -   (2)   51 
Depreciation and amortization
   (30)   (25)   (4)   (3)   (27)   (21) 
Interest income
   2   2   9   8   104   25 
Interest expense
   -   -   (0)   -   (7)   (13) 
       
Profit or loss
   71   61   330   386   260   247 
Income tax (expense) or result
   (16)   (12)   (92)   (109)   (56)   (40) 
Post-tax
profit or (loss)
  
 
55
 
 
 
48
 
 
 
238
 
 
 
277
 
 
 
205
 
 
 
208
 
Other comprehensive income
   (37)   (2)   -   -   (86)   53 
Total comprehensive income
  
 
18
 
 
 
47
 
 
 
238
 
 
 
277
 
 
 
118
 
 
 
260
 
       
Dividends received
   30   -   -   -   54   18 
 
An overview of the summarized financial information of the carrying amount of the joint ventures is as follows:

 
 
    Santander Spain Life  AIFMC  Other Joint ventures 
    
2022
  2021  
2022
  2021  
2022
  2021 
Net assets of joint venture as presented above
   635   648   903   752   1,114   1,816 
Net assets of joint venture excluding goodwill
   556   568   960   751   1,019   1,681 
Group share of net assets of joint venture, excluding goodwill
   283   290   471   368   513   857 
Goodwill on acquisition
   80   80   1   1   95   148 
Carrying amount
  
 
363
 
 
 
369
 
 
 
471
 
 
 
369
 
 
 
608
 
 
 
1,005
 
Annual Report on Form 20-F 2023 | 245  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
An overview of the summarized financial information of the carrying amount of the joint ventures is as follows:
   Santander Spain Life        AIFMC    Other Joint ventures 
    
2023
    2022      
2023
      2022      
2023
      2022 
Net assets of joint venture as presented above   683    658   810    903    1,157    1,067 
Net assets of joint venture excluding goodwill   603    578   809    902    1,030    972 
Group share of net assets of joint venture, excluding goodwill   308    295    397    471    518    488 
Goodwill on acquisition   80    80   1    1    128    95  
Carrying amount
  
 
387
 
  
 
375
 
 
 
397
 
  
 
471
 
  
 
646
 
  
 
584
 
Aegon’s group share of net assets of joint ventures, as presented in the table above, is less than Aegon’s share of the net assets as presented in the summarized financial information on a 100% basis, due to the inclusion of third parties in the joint ventures
.ventures.
222
Aegon Annual Report on Form 20-F
2022
Table of Contents
Notes to the consolidated financial statements
Note 26
The following table includes the summarized financial information of the joint ventures based on the Group’s relative holding.
 
    Santander Spain Life  AIFMC   Other Joint ventures 
    
2022
  2021  
        2022
           2021   
2022
  2021 
Post-tax
profit or loss
   28   25   116    136    104   104 
Other comprehensive income
   (19)   (1)   -    -    (44)   26 
Total comprehensive income
  
 
9
 
 
 
24
 
 
 
116
 
  
 
136
 
  
 
61
 
 
 
131
 
   Santander Spain Life        AIFMC    Other Joint ventures 
    
2023
    2022      
2023
      2022    
  2023
      2022 
Post-tax
profit or loss
   37    31   69    116    90      105 
Other comprehensive income   4    (12)   -    -    17    (21) 
Total comprehensive income
  
 
42
 
  
 
19
 
 
 
69
 
  
 
116
 
  
 
107
 
  
 
84
 
Summarized financial information of associates
The summarized financial information of associates presented below is based on the Group’s relative holding.
The following tables reflect the condensed statement of financial position and income statement of Aegon’s material associate a.s.r. at 100%. a.s.r. is a listed company in the Netherlands in which Aegon holds a stake of
29,98
% as per December 31, 2023.
The income statement includes the a.s.r. results for the period July 4, 2023 to December 31, 2023.
 
          Associates 
    
          2022
  2021
1)
 
Post-tax
profit or loss
   (11)   (15) 
Other comprehensive income
   1   (5) 
Total comprehensive income
  
 
(10
) 
 
 
(20
) 
   
Carrying amount
   165   1,289 
1
  
Amounts for 2021 related to
post-tax
profit or loss, other comprehensive income and total comprehensive income have been
re-presented
to reflect the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
a.s.r.
26 Reinsurance assets
Assets arising from reinsurance contracts related to:
  
2022
   2021 
Life insurance general account
       19,595        19,409 
Non-life
insurance
   1,255    1,245 
Investment contracts
   334    338 
At December 31
  
 
21,184
 
  
 
20,992
 
   
Current
   8    16 
Non-current
   21,176    20,976 
Amounts due from reinsurers in respect of claims already paid by the Group are included in note 28 Other assets and receivables.
       
2023
Summarized statement of financial position
Investments92,177
Derivatives12,907
Other assets45,673
Total assets
Aegon Annual Report on Form 20-F
2022150,758
  |  
223
Insurance liabilities99,475
Borrowings and subordinated liabilities8,386
Derivatives10,132
Other liabilities23,467
Total liabilities
141,460
Non-controlling
interest
   35
Other equity instruments974
Total other equity components
1,008
Net assets
8,289
  246 | Annual Report on Form 20-F 2023
 
About Aegon
Governance and risk management
Financial information
Non-financial information
Movements during the year in reinsurance assets relating to life insurance:
                                           Life insurance general account
At January 1, 2022
19,409
Gross premium and deposits – existing and new business
1,635
Unwind of discount / interest credited
1,115
Insurance liabilities released
(3,562) 
Fund charges released
(252) 
Changes to valuation of expected future benefits
(138) 
Net exchange differences
1,201
Transfer to/from insurance contracts
(2) 
Transfers to disposal groups
(0) 
Other movements
190
At December 31, 2022
19,595
At January 1, 2021
17,421
Gross premium and deposits – existing and new business
1,825
Unwind of discount / interest credited
828
Insurance liabilities released
(1,890) 
Fund charges released
(83) 
Changes to valuation of expected future benefits
(38) 
Net exchange differences
1,342
Transfer to/from insurance contracts
2
Other movements
1
At December 31, 2021
19,409
Movements during the year in reinsurance assets relating to
non-life
insurance:
  
 
            2022
 
              2021 
At January 1
   1,245   1,144 
Gross premium and deposits – existing and new business
   125   129 
Unwind of discount / interest credited
   91   83 
Insurance liabilities released
   (130)   (113) 
Changes in unearned premiums
   (68)   (75) 
Incurred related to current year
   124   91 
Incurred related to prior years
   43   49 
Release for claims settled current year
   (35)   (29) 
Release for claims settled prior years
   (118)   (108) 
Change in IBNR
   (9)   1 
Net exchange differences
   78   84 
Disposal of a business
   (4)   - 
Transfers to disposal groups
   (78)   - 
Other movements
   (9)   (11) 
At December 31
  
 
1,255
 
 
 
1,245
 
Assets arising from reinsurance contracts related to:
  
 
            2022
 
               2021 
Normal course of business
   7,582    7,809 
Exit of a business
   13,602    13,183 
At December 31
  
 
21,184
 
  
 
20,992
 
224
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2022
Table of Contents
 
 
Notes to the consolidated financial statements
Note 2721
a.s.r.
2023
Summarized statement of comprehensive income
Insurance revenues4,944
Insurance service result274
Profit or loss from continuing operations450
Income tax expense or income(103) 
Post-tax
profit or loss from continuing operations
347
Post-tax
profit or loss from discontinued operations
-
Other comprehensive income - that may be recycled to profit or loss17
Other comprehensive income - that will not be recycled to profit or loss(58) 
Total comprehensive income
306
Dividends received68
Group share
29,98
%
Group share of
post-tax
profit or loss
110
Group share of other comprehensive income
(12
) 
a.s.r.
2023
Net assets of a.s.r. as presented above8,289
Net assets of a.s.r., excluding goodwill, fair value adjustments and other equity transactions8,180
Group share of net assets of a.s.r., excluding goodwill, fair value adjustments and other equity transactions2,453
Fair value adjustments47
Goodwill on acquisition117
Carrying amount of investment in a.s.r.
2,618
The following tables includes associates that Aegon considered immaterial.
   Other Associates 
        
2023
       2022 
Summarized statement of financial position
   
Current assets   309   105 
Non-current
assets
   725   139 
Total assets
  
 
1,034
 
 
 
244
 
Current liabilities   217   37 
Non-current
liabilities
   17   45 
Total current liabilities
  
 
235
 
 
 
82
 
          
Net assets
  
 
799
 
 
 
162
 
Summarized statement of comprehensive income
   
Post-tax
profit or (loss)
   (7)   (11) 
Other comprehensive income   6   2 
Total comprehensive income
  
 
(1
) 
 
 
(9
) 
Dividends received   11   28 
Carrying amount   288   165 

Annual Report on Form 20-F 2023 | 247  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
22 Deferred expenses
         
2023
         2022 
Deferred transaction costs for investment management services   447    452 
Current   20    29 
Non-current
   427    424 
Deferred transaction costs
On January 1, 2023452
Costs deferred during the year29
Amortization through income statement(21) 
Net exchange differences       (14) 
On December 31, 2023
       
447
On January 1, 2022428
Costs deferred during the year28
Amortization through income statement(28) 
Net exchange differences25
On December 31, 2022
452
27 Deferred expenses
    
2022
   2021 
DPAC for insurance contracts and investment contracts with discretionary participation features
           11,777              9,303 
Deferred cost of reinsurance
   651    766 
Deferred transaction costs for investment management services
   458    434 
At December 31
  
 
12,886
 
  
 
10,503
 
   
Current
   719    683 
Non-current
   12,167    9,820 
    
2022
  
2021
 
      Deferred  Deferred     Deferred  Deferred 
      costs of  transaction     costs of  transaction 
          DPAC  reinsurance  costs        DPAC  reinsurance  costs 
At January 1
   9,303   766   434   8,253   141   404 
Costs deferred during the year
   683   59   28   636   619   25 
Amortization through income statement
   (793)   (93)   (29)   (899)   (32)   (26) 
Shadow accounting adjustments
   2,136   85   -   699   17   - 
Net exchange differences
   483   34   25   621   21   30 
Transfers to disposal groups
   (29)   (212)   -   -   -   - 
Other
   (7)   12   -   (7)   -   - 
At December 31
  
 
11,777
 
 
 
651
 
 
 
458
 
 
 
9,303
 
 
 
766
 
 
 
434
 
The decrease in deferred cost on reinsurance in 2022 is mainly the result of the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
The increase in deferred cost on reinsurance in 2021 is mainly the result of an EUR 480 million reinsurance agreement between Transamerica and a third party to reinsure a portfolio of universal life secondary guarantee policies. Furthermore, in the Netherlands a reinsurance agreement protecting against longevity risk was closed with Reinsurance Group of America (RGA) leading to a deferred cost of reinsurance of EUR 115 million.
2823 Other assets and receivables
 
    
            Note
   
              2022
                 2021 
Real estate held for own use and equipment
  
 
28.1
 
   324    455 
Receivables
  
 
28.2
 
   8,880    5,622 
Accrued income
  
 
28.3
 
   843    1,366 
Right-of-use
assets
  
 
28.4
 
   158    199 
At December 31
       
 
10,204
 
  
 
7,642
 
   
 
Note 
 
  
 
   2023
 
      2022 
Real estate held for own use and equipment  
 
23.1 
 
   258    324 
Receivables  
 
23.2 
 
   3,567    7,857 
Accrued income  
 
23.3 
 
   736    814 
Right-of-use
assets
  
 
23.4 
 
   150    158 
On December 31
       
 
4,712
 
  
 
9,153
 
28.123.1 Real estate held for own use and equipment
 
Total real estate held for own use and equipment
  
            2022
               2021 
General account real estate held for own use
   73    185 
Equipment
   251    270 
At December 31
  
 
324
 
  
 
455
 
Total real estate held for own use and equipment
           
2023
       2022 
Real estate held for own use     64    73 
Equipment        194    251 
On December 31
       
 
258
 
  
 
324
 
 
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2022
  |  
225
  248 | Annual Report on Form 20-F 2023
Table of Contents
 
About Aegon
Governance and risk management
Notes to the consolidated financial statements
Financial informationNote 23
Non-financial information
   
   
 
General account real estate held for own use
  
 
          2022
 
            2021 
Net book value
         
At January 1
   185   209 
Additions
   -   - 
Capitalized subsequent expenditure
   1   7 
Disposals
   (32)   - 
Transfer to investments in real estate
   (5)   (14) 
Unrealized gains/(losses) through equity
   (1)   (4) 
Realized gains/(losses) through income statement
   (0)   - 
Depreciation through income statement
   (4)   (5) 
Impairment losses
   (0)   (13) 
Net exchange differences
   4   5 
Transfers from disposal groups
   (76)   - 
Other
   1   - 
At December 31
  
 
73
 
 
 
185
 
   
Gross carrying value
   95   218 
Accumulated depreciation and impairment losses
   (23)   (33) 
Net book value
  
 
73
 
 
 
185
 
   
General account real estate held for own use:
         
Carrying amount under a historical cost model
   72   165 
% of real estate appraised in the current year
   7%   50% 
% of appraisals performed by independent external appraisers
   100%   100% 
The decrease in Real estate held for own use and equipment in 2022 is mainly the result of the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Real estate held for own use
  
 
    2023
 
      2022 
Cost
   
On January 1   73   185 
Capitalized subsequent expenditure   1   1 
Disposals   -   (32) 
Unrealized gains/(losses) through equity   (2)   (1) 
Depreciation through income statement   (2)   (4) 
Impairment losses   (3)   - 
Transfers to disposal groups   -   (76) 
Net exchange differences   (2)   4 
Other   -   (4) 
On December 31
  
 
64
 
 
 
73
 
Gross carrying value   87   96 
Accumulated depreciation and impairments   (23)   (23) 
Net book value on December 31
  
 
64
 
 
 
73
 
Real estate held for own use:   
Carrying amount under a historical cost model   70   72 
% of real estate appraised in the current year   76%   7% 
% of appraisals performed by independent external appraisers   100%   100% 
General account real estate held for own use has not been pledged as security for liabilities, nor are there any restrictions on title. Depreciation expenses are recorded in Commissions and expensesnote 13 “Other operating expenses” in the income statement. The useful lives of buildings range between 40 and 50 years.
 
Equipment
  
 
          2022
 
            2021 
Net book value
         
At January 1
   270   263 
Additions
   72   69 
Disposals
   (5)   (2) 
Depreciation through income statement
   (71)   (71) 
Impairment losses
   (2)   (4) 
Net exchange differences
   13   16 
Transfers to disposal groups
   (27)   - 
Other
   2   (1) 
At December 31
  
 
251
 
 
 
270
 
   
Gross carrying value
   636   679 
Accumulated depreciation and impairment losses
   (386)   (409) 
Net book value
  
 
251
 
 
 
270
 
Equipment
  
 
    2023
 
      2022 
Cost
   
On January 1   251   270 
Additions   62   72 
Acquisitions through business combinations   -   2 
Disposals   (47)   (6) 
Depreciation through income statement   (66)   (71) 
Transfers to disposal groups   -   (27) 
Net exchange differences   (6)   13 
Other   -   (1) 
On December 31
  
 
194
 
 
 
251
 
Gross carrying value   602   636 
Accumulated depreciation and impairments   (408)   (386) 
Net book value on December 31
  
 
194
 
 
 
251
 
None of the equipment is held for lease (2021:(2022: none). Equipment has not been pledged as security for liabilities, nor are there any restrictions on title. Depreciation expenses have been recorded in Commissions and expensesnote 13 “Other operating expenses” in the income statement. Equipment is generally depreciated over a period of
three
to five years.
 
226
   
Aegon Annual Report on Form 20-F
2022
2023 | 249  		 
 
LOGO		 
Notes to the consolidated financial statements
About Aegon  Governance and risk management  
  Note 28Financial information
  Sustainability information
   
   
 
28.223.2 Receivables
 
   
 
          2022
 
            2021 
Loans to associates
   8   8 
Receivables from policyholders
   647   691 
Receivables from brokers and agents
   376   310 
Receivables from reinsurers
   723   750 
Cash outstanding from assets sold
   134   160 
Trade receivables
   881   1,393 
Cash collateral
   3,372   314 
Income tax receivable
   277   229 
Other
   2,597   1,885 
Provision for doubtful debts
   (134)   (120) 
At December 31
  
 
8,880
 
 
 
5,622
 
   
Current
   8,866   5,600 
Non-current
   13   21 
   
 
    2023
 
      2022  
Loans to associates   8   8 
Receivables from policyholders   137   142 
Receivables from brokers and agents   239   256 
Cash outstanding from assets sold   133   134 
Trade receivables   178   881 
Cash collateral   516   3,372 
Income tax receivable   172   294 
Other   2,194   2,899 
Expected credit losses   (10)   (129) 
On December 31
  
 
3,567
 
 
 
7,857
 
Current   3,564   7,843 
Non-current
   2   13 
With the exception of receivables from reinsurers, the receivables balances presented above are mostly not externally rated.
The increasedecrease in cash collateral at December 31, 20222023 compared to December 31, 20212022 is mainly due to the decrease in the volume of derivative transactions as a result of increased interest rates in 2022.the transaction with a.s.r.
The movements in the provisionexpected credit losses for doubtful debtsreceivables during the year were as follows:
   
 
    2023
 
      2022  
On January 1   (129)   (113) 
Expected credit losses   (29)   (18) 
Reversal of expected credit losses   -   2 
Transfers to disposal groups   -   4 
Other movements     148   (5) 
On December 31
  
 
(10
) 
 
 
(129
) 
Other movements in 2023 reflect that ECL balances related to insurance and reinsurance
receivables
are presented as part of insurance and reinsurance contracts.

   
 
          2022
 
            2021 
At January 1
   (120)   (88) 
Additions charged to earnings
   (19)   (33) 
Unused amounts reversed through the income statement
   3   5 
Disposal of business
   3   - 
Used during the year
   2   3 
Transfers to disposal groups
   4   - 
Net exchange differences
   (6)   (6) 
At December 31
  
 
(134
) 
 
 
(120
) 
28.323.3 Accrued income
 
   
 
          2022
 
             2021 
Accrued interest
   842    1,363 
Other
   1    3 
At December 31
  
 
843
 
  
 
1,366
 
   
Current
   842    1,366 
Non-current
   -    - 
   
 
    2023
 
       2022  
Accrued interest   736    813 
Other   -    1 
On December 31
  
 
736
 
  
 
814
 
Current   736    814 
 
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2022
  |  
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  250 | Annual Report on Form 20-F 2023
Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
28.4
Right-of-use
assets
         Real estate for          
    own use            Equipment                    Other                    Total 
Net book value
                 
At January 1, 2022
   182   14   3   199 
Additions
   24   10   1   34 
Disposals
   (8)   -   -   (8) 
Modification of lease contracts
   3   -   -   3 
Depreciation through income statement
   (29)   (10)   (1)   (41) 
Transfers from disposal groups
   (28)   -   -   (28) 
Net exchange differences
   (2)   1   (0)   (2) 
Other
   2   (0)   (1)   1 
At December 31, 2022
  
 
143
 
 
 
14
 
 
 
1
 
 
 
158
 
Gross carrying value
   256   35   4   295 
Accumulated depreciation and impairment losses
   (113)   (21)   (3)   (138) 
Net book value 2022
  
 
143
 
 
 
14
 
 
 
1
 
 
 
158
 
  ��  
Net book value
                 
At January 1, 2021
   193   15   3   211 
Additions
   12   9   2   23 
Disposals
   (14)   (0)   -   (14) 
Modification of lease contracts
   17   -   -   17 
Depreciation through income statement
   (36)   (11)   (2)   (49) 
Net exchange differences
   10   1   (1)   10 
At December 31, 2021
  
 
182
 
 
 
14
 
 
 
3
 
 
 
199
 
     
Gross carrying value
   287   43   8   339 
Accumulated depreciation and impairment losses
   (105)   (29)   (6)   (140) 
Net book value 2021
  
 
182
 
 
 
14
 
 
 
3
 
 
 
199
 
Right-of-use
assets are mainly held by Aegon UK and Aegon Americas and they are mainly office buildings held for own use.
For information on the Lease liabilities and respective maturity analysis, please refer to note 41 Other liabilities and note 4 Financial risks, respectively.
228
Aegon Annual Report on Form 20-F
2022
Table of Contents
 
 
Notes to the consolidated financial statements
Note 2923
  
  
23.4
Right-of-use
assets
     Real estate for own use     Equipment        Other        Total 
Net Book Value
     
On January 1, 2023   143   14   1   158 
Additions   19   4   3   26 
Disposals   (1)   -   -   (1) 
Modification of lease contracts   2   -   -   2 
Depreciation through income statement   (24)   (8)   (1)   (32) 
On December 31, 2023
  
 
138
 
 
 
10
 
 
 
3
 
 
 
150
 
Gross carrying value   247   37   7   290 
Accumulated depreciation   (109)   (27)   (3)   (140) 
Net book value 2023
  
 
138
 
 
 
10
 
 
 
3
 
 
 
150
 
Net Book Value
     
On January 1, 2022   182   14   3   199 
Additions   24   10   1   34 
Disposals   (8)   -   -   (8) 
Modification of lease contracts   3   -   -   3 
Depreciation through income statement   (29)   (10)   (1)   (41) 
Transfers to disposal groups   (28)   -   -   (28) 
Net exchange differences   (2)   1   -   (2) 
Other   2   -   -   2 
On December 31, 2022
  
 
143
 
 
 
14
 
 
 
1
 
 
 
158
 
Gross carrying value   256   35   4   295 
Accumulated depreciation   (113)   (21)   (3)   (138) 
Net book value 2022
  
 
143
 
 
 
14
 
 
 
1
 
 
 
158
 
Right-of-use
assets are mainly held by Aegon UK and Aegon Americas.
For information on the Lease liabilities and respective maturity analysis, please see note 35 Other liabilities and note 4 Financial risks, respectively.
Annual Report on Form 20-F 2023 | 251  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
  
   
 
2924 Intangible assets
 
         Future          
             servicing          
            Goodwill  VOBA          rights      Software            Other          Total 
Net book value
                         
At January 1, 2022
   391   750   65   83   44   1,333 
Additions
   -   -   -   20   6   26 
Amortization through income statement
   -   (97)   (9)   (16)   (5)   (127) 
Impairment losses
   -   -   -   -   -   - 
Shadow accounting adjustments
   -   126   -   -   -   126 
Business combinations, disposals and other changes
   11   -   (1)   (26)   16   (0) 
Net exchange differences
   10   44   -   (3)   (4)   47 
Transfers to disposal groups
   (97)   -   -   (37)   (32)   (165) 
At December 31, 2022
  
 
316
 
 
 
821
 
 
 
56
 
 
 
21
 
 
 
25
 
 
 
1,240
 
       
Gross carrying value
   487   7,231   347   85   128   8,278 
Accumulated amortization, depreciation and impairment losses
   (171)   (6,409)   (291)   (64)   (102)   (7,038) 
Net book value 2022
  
 
316
 
 
 
821
 
 
 
56
 
 
 
21
 
 
 
25
 
 
 
1,240
 
       
Net book value
                         
At January 1, 2021
   375   815   71   79   45   1,386 
Additions
   -   -   -   25   3   29 
Amortization through income statement
   -   (163)   (8)   (20)   (4)   (194) 
Impairment losses
   -   -   -   (7)   (1)   (8) 
Shadow accounting adjustments
   -   41   -   -   -   41 
Capital expenditure
   -   -   -   14   -   14 
Business combinations, disposals and other changes
   -   -   -   (7)   1   (6) 
Net exchange differences
   16   57   1   (1)   (1)   72 
At December 31, 2021
  
 
391
 
 
 
750
 
 
 
65
 
 
 
83
 
 
 
44
 
 
 
1,333
 
Gross carrying value
   561   6,923   350   408   185   8,427 
Accumulated amortization, depreciation and impairment losses
   (169)   (6,174)   (285)   (325)   (141)   (7,094) 
Net book value 2021
  
 
391
 
 
 
750
 
 
 
65
 
 
 
83
 
 
 
44
 
 
 
1,333
 
The decrease in Intangible assets in 2022 is mainly the result of the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
     Goodwill   Future servicing
rights
     Software      Other      Total  
Net book value
      
On January 1, 2023   316   59   21   25   420 
Additions   -   122   41   3   166 
Amortization through income statement   -   (11)   (8)   (2)   (21) 
Business combinations, disposals and other changes   (18)   (38)   (5)   8   (54) 
Net exchange differences   (6)   -   -   -   (7) 
On December 31, 2023
  
 
291
 
 
 
131
 
 
 
48
 
 
 
33
 
 
 
504
 
Gross carrying value   411   298   71   56   835 
Accumulated amortization, depreciation and impairment losses   (120)   (166)   (23)   (23)   (331) 
Net book value 2023
  
 
291
 
 
 
131
 
 
 
48
 
 
 
33
 
 
 
504
 
Net book value
      
On January 1, 2022   391   68   83   43   585 
Additions   -   -   20   6   26 
Amortization through income statement   -   (9)   (16)   (5)   (30) 
Business combinations, disposals and other changes   11   (1)   (27)   12   (5) 
Net exchange differences   10   1   (2)   -   9 
Transfers to disposal groups   (97)   -   (37)   (32)   (165) 
On December 31, 2022
  
 
316
 
 
 
59
 
 
 
21
 
 
 
25
 
 
 
420
 
Gross carrying value   487   344   85   46   963 
Accumulated amortization, depreciation and impairment losses   (171)   (286)   (64)   (21)   (543) 
Net book value 2022
  
 
316
 
 
 
59
 
 
 
21
 
 
 
25
 
 
 
420
 
Amortization and depreciation through income statement is included in Commissions and expenses.Note 13 “Other operating expenses”. None of the intangible assets have titles that are restricted or have been pledged as security for liabilities.
With the exception of goodwill, all intangible assets within the Americas have a finite useful life and are amortized accordingly. VOBA and futureFuture servicing rights are amortized over the term of the related insurance contracts, which can vary significantly depending on the maturity of the acquired portfolio. The amortization is based on either the expected future premiums, revenues or the expected gross profit margins, which for the most significant blocks of business ranges between 50 and 80 years. Future servicing rights are amortized over a period of 10 to 30 years of which 12 years remain at December 31, 2022 (2021: 132023 (2022: 12 years). Software is generally depreciated over an average period of 3 to 5 years (no changes compared to 2021)2022).
Goodwill
The goodwill balance has been allocated across the cash-generating units which are expected to benefit from the synergies inherent in the goodwill. Goodwill is tested for impairment both annually and when there are specific indicators of a potential impairment. The recoverable amount is the higher of the value in use and fair value less costs of disposal for a cash-generating unit. The operating assumptions used in all the calculations are best estimate assumptions and based on historical data where available.
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2022
  |  
229
Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
The economic assumptions used in all the calculations are based on observable market data and projections of future trends. All the cash-generating units tested showed that the recoverable amount was higher than their carrying values, including goodwill. A reasonably possible change in any key assumption is not expected to cause the carrying value of the cash-generating units to exceed its recoverable amount.
A geographical summary of the cash-generating units to which the goodwill is allocated is as follows:
   
 
    2023
  
      2022  
Americas   201   208 
United Kingdom   56   54 
International   -   18 
Asset Management   34   35 
On December 31
  
 
291
 
 
 
316
 
 
Goodwill
  
            2022
               2021 
Americas
   208    181 
The Netherlands
   -    97 
United Kingdom
   54    57 
International
   18    23 
Asset Management
   35    33 
At December 31
  
 
316
 
  
 
391
 
  252 | Annual Report on Form 20-F 2023
Notes to the consolidated financial statements
Note 25
Within the Americas, Transamerica’s goodwill is allocated to groups of cash-generating units including variable annuities, fixed annuities and the retirement plans cash-generating unit. Transamerica uses the value in use concept to determine the recoverable amount and it is calculated annually in the fourth quarter. Transamerica reviewed the recoverable amount of the annuities and retirement plan cash-generating units under the Economic Available Capital (EAC) approach. This approach measures the difference between the market value of assets assigned to a block of business and the market value of liabilities. The EAC is reflective of market conditions where a
pre-tax
benchmark discount rate ranged from approximately 3.13%5.53% to 3.65%4.63% from the one month to
30-year
tenors. Transamerica reviewed the recoverable amount of the annuities cash-generating units under the Contractual Service Margin (CSM) approach. The CSM is a component of the asset or liability for the group of insurance contracts that represents the unearned profit the entity will recognize as it provides services in the future. Based on the value in use tests, Transamerica’s goodwill for the group of annuities cash-generating units (2022:(2023: EUR 133 million: 2021:129 million; 2022: EUR 125133 million) remains unchanged from prior yearperiod except for the impact of currency translation adjustments. Transmerica’sTransamerica’s goodwill for the retirement plans cash generatingcash-generating unit increased in 2022 due to the TAG Resources, LLC (TAG) acquisition bringing the total goodwill allocated to the retirement plans cash generating unit to(2023: EUR 72 million; 2022: EUR 75 million) remains unchanged from prior period except for the impact of currency translation adjustments.
In the UK, the cash-generating unit for the goodwill impairment assessment is Aegon UK. The value in use of Scottish Equitable plc is the most material part of the Aegon UK value in use calculation The value in use of SE plc was determined using SE plc’s Solvency II own funds value with adjustments for contract boundaries, and risk margin. An allowance has also been made for the present value of profits from expected new business in the next 3 years. A key variable is the present value of profits from expected new business in the next 3 years, which if this does not arise would reduce the value in use by EUR 79 million, (2021:however there would still be over EUR 56 million).1,385 million headroom.
Future servicing rights
The additions in Future servicing rights reflect the investment mandates received by Aegon Asset Management following the closure of the transaction with a.s.r..
3025 Shareholders’ equity
Issued share capital and reserves attributable to shareholders of Aegon N.V.Ltd.
 
  
 
Note
 
  
 
    2023
 
      2022 
  
            Note
   
            2022
              2021             2020 
Share capital – par value
  
 
30.1
 
   319  321  320 
Share capital – par value
Share capital – par value
Share capital – par value  
 
25.1
 
   265   319 
Share premium
  
 
30.2
 
   6,853  7,033  7,160 
Share premium
Share premium
Share premium  
 
25.2
 
   6,853  6,853 
Total share capital
     
 
7,172
 
 
 
7,354
 
 
 
7,480
 
Total share capital
Total share capital
Total share capital
    
 
7,118
 
 
 
7,172
 
Retained earnings
      10,619  12,166  10,327 
Retained earnings
Retained earnings
Retained earnings     5,099   7,770 
Treasury shares
  
 
30.3
 
   (676)  (273)  (181) 
Treasury shares
Treasury shares
Treasury shares  
 
25.3
 
   (346)  (668) 
Total retained earnings
     
 
9,944
 
 
 
11,892
 
 
 
10,145
 
Total retained earnings
Total retained earnings
Total retained earnings
    
 
4,753
 
 
 
7,103
 
Revaluation reserves
1)
  
 
30.4
 
   (4,477)  6,442  7,480 
Revaluation reserves
1)
Revaluation reserves
1)
Revaluation reserves
1)
  
 
25.4
 
   (3,770)   (4,563) 
Remeasurement of defined benefit plans
2)
  
 
30.5
 
   (1,565)  (2,199)  (2,534) 
Remeasurement of defined benefit plans
2)
Remeasurement of defined benefit plans
2)
Remeasurement of defined benefit plans
2)
  
 
25.5
 
   (1,006)   (1,565) 
Other reserves
3)
  
 
30.6
 
   997  325  (553) 
Other reserves
3)
Other reserves
3)
Other reserves
3)
  
 
25.6
 
   379  669 
Total shareholders’ equity
     
 
12,071
 
 
 
23,813
 
 
 
22,018
 
Total shareholders’ equity
Total shareholders’ equity
Total shareholders’ equity
     
 
7,475
 
 
 
8,815
 
1 
Included in the 2022 Revaluation reserves is an amount of EUR (676)(31) million relating to Aegon the Netherlands classification as discontinued operations, refer to note 51 Discontinued45 Held for sale and discontinued operations
2 
Included in the 2022 Remeasurement of defined benefit plans is an amount of EUR (624)(675) million relating to Aegon the Netherlands classification as discontinued operations, refer to note 51 Discontinued45 Held for sale and discontinued operations
3 
Included in the 2022 Other reserves is an amount of EUR 1415 million relating to Aegon the Netherlands classification as discontinued operations, refer to note 51 Discontinued45 Held for sale and discontinued operations
 
230
   
Aegon Annual Report on Form 20-F
2022
2023 | 253  		 
Table of Contents
Notes to the consolidated financial statements
Note 30
  
 
 
2022
 
 
 
  
 
2021
 
 
 
   
 
2020
 
 
 
    
Share capital transactions relating to common shares
 
 
Number of shares
(thousands)
 
 
  Number of shares
(thousands)		 
 		   Number of shares
(thousands)		 
 
Transactions in 2022:
 
             
    
Final dividend 2021
1)
  (18,676)          
    
Share buyback program (final dividend 2021)
  24,364          
    
Interim dividend 2022
1)
  (21,365)          
    
Share buyback program (interim dividend 2022)
  29,833          
    
Transactions in 2021:
 
             
    
Final dividend 2020
1)
      (15,274)      
    
Share buyback program (final dividend 2020)
      19,452      
    
Interim dividend 2021
1)
      (17,314)      
    
Share buyback program (interim dividend 2021)
      21,532      
    
Transactions in 2020:
 
             
    
Interim dividend 2020
1)
           (22,947) 
    
Share buyback program (interim dividend 2020)
 
           
 
24,029
 
 
 
1
Dividend distribution paid from treasury shares (note 30.3)
In 2023, Aegon executed a program to repurchase 8,516,263 common shares for an amount of EUR 42.5 million to meet its obligations resulting from the share-based compensation plans for senior management. Between January 6, 2023 and January 30, 2023, these common shares were repurchased at an average price of EUR 5.00 per share.
30.1 Share capital – par value
  
 
 
                    2022
 
 
 
  
 
                     2021
 
 
 
   
 
                      2020
 
 
 
    
Common shares
  253   253    252 
    
Common shares B
 
  
 
66
 
 
 
  68    69 
    
At December 31
 
 
 
 
319
 
 
 
 
 
321
 
  
 
320
 
Common shares
 
 
 
 
                    2022
 
 
 
                       2021                          2020 
    
Authorized share capital
  720   720    720 
    
Number of authorized shares (in million)
  6,000   6,000    6,000 
    
Par value in cents per share
 
  
 
12
 
 
 
  12    12 
Common shares B
 
 
 
 
                    2022
 
 
 
                       2021                          2020 
    
Authorized share capital
  360   360    360 
    
Number of authorized shares (in million)
  3,000   3,000    3,000 
    
Par value in cents per share
 
  
 
12
 
 
 
  12    12 
    
 
Common shares
 
 
 
  
 
Common shares B
 
 
 
     
    
 
Number of shares
(thousands)
 
 
 
 
  
 
        Total amount
 
 
 
  
 
Number of shares
(thousands)
 
 
 
 
  
 
Total amount
 
 
 
     
At January 1, 2020
  
 
2,105,139
 
 
 
253
 
 
 
585,022
 
 
 
70
 
     
Shares withdrawn
   (9,491)   (1)   (13,227)   (2) 
     
Dividend
 
   
 
2,466
 
 
 
  
 
-
 
 
 
  
 
-
 
 
 
  
 
-
 
 
 
     
At December 31, 2020
  
 
2,098,114
 
 
 
252
 
 
 
571,795
 
 
 
69
 
     
Shares withdrawn
   (2,466)   (0)   (2,956)   (0) 
     
Dividend
 
   10,665   1   -   - 
     
At December 31, 2021
  
 
2,106,313
 
 
 
253
 
 
 
568,839
 
 
 
68
 
     
Shares withdrawn
   (10,665)   (1)   (22,643)   (3) 
     
Dividend
   
 
13,782
 
 
 
  2   -   - 
     
At December 31, 2022
  
 
 
2,109,430
 
 
 
 
 
253
 
 
 
546,196
 
 
 
66
 
Aegon Annual Report on Form 20-F
2022
  |  
231
Table of Contents
LOGO 
About Aegon
Governance and risk management
  
Financial information
Non-financial  Sustainability information
   
   
 
  
 
2023
 
  2022  
Share capital transactions relating to common shares
      Number of shares
(thousands)
       Number of shares
(thousands)
  
   
Transactions in 2023:
         
Cancellation of shares   (451,140)  
Transactions in 2022:
         
Final dividend 2021
1)
    (18,676) 
Share buyback program (final dividend 2021)    24,364 
Interim dividend 2022
1)
    (21,365) 
Share buyback program (interim dividend 2022)       29,833 
1 Dividend distribution paid from treasury shares (note 25.3)
In 2023, Aegon cancelled a total of 294,703,317 common shares and 156,436,840 common shares B. The purpose of the share cancellation is to reduce the number of threasury shares that are not used to cover obligations arising from share-based incentive plans or other obligations.
25.1 Share capital – par value
   
 
    2023
 
       2022  
Common shares   218    253 
Common shares B   47    66 
   
On December 31
  
 
265
 
  
 
319
 
Common shares
  
 
    2023
 
       2022  
Authorized share capital   480    720 
Number of authorized shares (in million)   4,000    6,000 
Par value in cents per share   12    12 
Common shares B
  
 
    2023
 
       2022  
Authorized share capital   240    360 
Number of authorized shares (in million)   2,000    3,000 
Par value in cents per share   12    12 
   Common shares   Common shares B 
     Number of shares
(thousands)
     Total amount    Number of shares
(thousands)
     Total amount  
On December 31, 2021
  
 
2,106,313
 
 
 
253
 
 
 
568,839
 
 
 
68
 
Shares withdrawn   (10,665)   (1)   (22,643)   (3) 
Dividend   13,782   2   -   - 
On December 31, 2022
  
 
2,109,430
 
 
 
253
 
 
 
546,196
 
 
 
66
 
Shares withdrawn   (294,703)   (35)   (156,437)   (19) 
Dividend   -   -   -   - 
On December 31, 2023
  
 
1,814,727
 
 
 
218
 
 
 
389,759
 
 
 
47
 
The withdrawal of common shares was executed in two transactions during 2023. In July 2023, 79,703,317 common shares and 43,817,400 common shares B; while in December 2023, 215,000,000 common shares and 112,619,440 common shares B were cancelled.
The common shares and common shares B withdrawn in 2022 are the result of the cancellation of 10,664,951 and 22,643,360 shares, respectively, following the repurchase by the Company in connection with the share buyback program. This share buy back program was executed following the 2021 interim dividend distribution in order to reduce the number
  254 | Annual Report on Form 20-F 2023
Table of own shares, which are not used to cover obligations arising from share-based incentive plans or other obligations.Contents
Notes to the consolidated financial statements
Note 25
The table below represents weighted average number of common shares including treasury shares attributable to Aegon N.V.Ltd.:
 
    
 
Weighted average number of
common shares (thousands)
 
 
 
 
   
 
Weighted average number of
common shares B (thousands)
 
 
 
 
2020
 
  
 
 
2,101,749
 
 
 
  
 
 
579,312
 
 
 
   
2021
 
  
 
 
2,101,231
 
 
 
  
 
 
570,629
 
 
 
   
2022
 
  
 
 
2,107,315
 
 
 
  
 
 
559,906
 
 
 
    Weighted average number of common
shares (thousands)
     Weighted average number of common
shares B (thousands)
  
2022
  
 
2,107,315
 
  
 
559,906
 
2023
  
 
2,067,119
 
  
 
523,149
 
All issued common shares and common shares B each have a nominal value of EUR 0.12 and are fully paid up. Repayment of capital can only be initiated by the ExecutiveThe Board is authorized, subject to approvalcertain restrictions of the Supervisory BoardBermuda law and must be resolved by the General Meeting of Shareholders. Moreover, repayment on common shares B needs approval of the related shareholders. Refer
Bye-Laws,
to ‘Other information’ for further information on dividend rights.repurchase Aegon Ltd. shares.
Vereniging Aegon, based in The Hague, the Netherlands, holds all of the issued and outstanding common shares B.
UnderFor detailed information on the terms of the 1983 Amended Merger Agreement, dated May 2013,transaction between Aegon Ltd. and Vereniging Aegon, has a call option relating to common shares B. Vereniging Aegon may exercise its call option at fair value of a common share B (being 1/40th of the market value of a common share in the capital of the Company at the time of issuance) to keep or restore its total stake at 32.6%, irrespective of the circumstances which cause the total shareholding to be or become lower than 32.6%. Refer tosee note 5044 Related party transactions for transactions between Aegon N.V. and Vereniging Aegon.
in the consolidated financial statements.
30.225.2 Share premium
 
   
 
 
                2022
 
 
 
   
 
                2021
 
 
 
   
 
                2020
 
 
 
At January 1
   7,033    7,160    7,213 
    
Share dividend
 
   
 
(180)
 
 
 
   
 
(127)
 
 
 
   
 
(54)
 
 
 
At December 31
  
 
6,853
 
  
 
7,033
 
  
 
7,160
 
    
Share premium relating to:
               
    
- Common shares
   5,200    5,380    5,507 
    
- Common shares B
 
   
 
1,653
 
 
 
   
 
1,653
 
 
 
   
 
1,653
 
 
 
Total share premium
 
  
 
 
6,853
 
 
 
  
 
 
7,033
 
 
 
  
 
 
7,160
 
 
 
   
 
    2023
 
       2022 
On January 1   6,853    7,033 
Share dividend   -   (180)  
On December 31
  
 
6,853
 
 
 
6,853
 
Share premium relating to:   
- Common shares   5,200   5,200 
- Common shares B   1,653   1,653 
Total share premium
  
 
6,853
 
 
 
6,853
 
The share premium account reflects the balance of
paid-in
amounts above par value at issuance of new shares less the amounts charged for share dividends.
25.3 Treasury shares
On the reporting date, Aegon Ltd. held 72,319,889 (2022: 145,821,347) of its own common shares and 7,945,440 (2022: 51,762,840) own common shares B with a par value of EUR 0.12 each.
In 2023, on July 6, Aegon announced the beginning of a EUR 1.5 billion share buyback program. This follows the completion of the combination of its Dutch pension, life and
non-life
insurance, banking, and mortgage origination activities with a.s.r. on July 4, 2023. The share buyback program is aimed to be completed on or before June 30, 2024, barring unforeseen circumstances. Aegon has engaged third parties to execute the buyback transactions on its behalf. The common shares will be repurchased at a maximum of the average of the daily volume-weighted average prices during the repurchase period.
On June 2, 2023, Aegon completed its share buyback program, as announced on February 9, 2023, aimed at returning EUR 200 million of surplus cash capital to shareholders. Between February 10, 2023 and June 2, 2023, a total of 46,797,567 common shares were repurchased at an average price of EUR 4.2737 per share.
 
232
   
Aegon Annual Report on Form 20-F
2022
2023 | 255  		 
 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Movements in the number of treasury common shares held by Aegon Ltd. were as follows:
  
 
2023
 
  2022 
      Number of shares
(thousands)
      Amount     Number of shares
(thousands)
      Amount 
On January 1   145,821   662   70,958   262 
Transactions in 2023:
     
Purchase: 1 transaction, average price EUR 5.00   8,516   43   
Sale: 2 transactions, average price EUR 4.46   (4,924)   (22)   
Purchase: 1 transaction, average price EUR 4.27   46,798   200   
Sale: 1 transaction, average price EUR 4.46   (69)   -   
Share withdrawn: 1 transaction, average price EUR 4.59   (79,703)   (366)    
Purchase: 2 transactions, average price EUR 4.77   170,881   815   
Share Withdrawn: 1 transaction, average price EUR 4.59   (215,000)   (986)   
Transactions in 2022:
     
Purchase: 1 transaction, average price EUR 4.92     10,158   50 
Sale: 3 transactions, average price EUR 2.46     (4,708)   (12)  
Sale: 1 transaction, average price EUR 3.12     (18,676)   (58) 
Purchase: 1 transaction, average price EUR 4.38     24,364   107 
Share withdrawn: 1 transaction, average price EUR 3.70     (10,665)   (39) 
Sale: 1 transaction, average price EUR 3.91     (21,365)   (84) 
Purchase: 1 transaction, average price EUR 4.49     29,833   134 
Purchase: 3 transactions, average price EUR 4.58           65,921   302 
On December 31
  
 
72,320
 
 
 
346
 
 
 
145,821
 
 
 
662
 
Movements in the number of treasury common shares B held by Aegon Ltd. were as follows:
  
 
2023
 
  2022 
      Number of shares
(thousands)
      Amount     Number of shares
(thousands)
      Amount 
On January 1   51,763   6   30,589   3 
Transactions in 2023:
     
Share withdrawn: 1 transaction, average price EUR 0.11   (43,817)   (5)    
Purchase: 1 transaction, average price EUR 0.13   112,619   15   
Share withdrawn: 1 transaction, average price EUR 0.13   (112,619)   (15)   
Transactions in 2022:
     
Share withdrawn: 1 transaction, average price EUR 0.10     (22,643)   (2)  
Purchase: 1 transaction, average price EUR 0.12           43,817   5 
On December 31
  
 
7,945
 
 
 
1
 
 
 
51,763
 
 
 
6
 
    
Weighted average number of treasury
shares, including treasury shares held by
subsidiaries (thousands)
 
 
 
   Weighted average number of
    treasury shares B (thousands)
  
2022
  
 
97,807
 
  
 
23,696
 
2023
  
 
188,403
 
  
 
33,035
 
  256 | Annual Report on Form 20-F 2023
Table of Contents
 
 
Notes to the consolidated financial statements
Note 3025
   
   
 
30.3 Treasury shares
On the reporting date, Aegon N.V. and its subsidiaries held 146,606,837 (2021: 71,780,196) of its own common shares and 51,762,840 (2021: 30,588,800) own common shares B with a par value of EUR 0.12 each.
Movements in the number of treasury common shares held by Aegon N.V. were as follows:
   
 
 
2022
 
 
 
   
 
2021
 
 
 
   
 
2020
 
 
 
   
 

 
 
Number of
shares
(thousands)
 
 
 
 
 
  
 
 
        Amount
 
 
 
   
 
 
Number of
shares
(thousands)
 
 
 
 
 
   
 
        Amount
 
 
 
   
 
 
Number of
shares
(thousands)
 
 
 
 
 
   
 
        Amount
 
 
 
       
At January 1
   70,958    262    52,686    171    65,540    269 
       
Transactions in 2022:
                              
       
Purchase: 1 transaction, average price EUR 4.92
   10,158    50                     
       
Sale: 3 transactions, average price EUR 2.46
   (4,708)    (12)                     
       
Sale: 1 transaction, average price EUR 3.12
   (18,676)    (58)                     
       
Purchase: 1 transaction, average price EUR 4.38
   24,364    107                     
       
Share withdrawn: 1 transaction, average price EUR 3.70
   (10,665)    (39)                     
       
Sale: 1 transaction, average price EUR 3.91
   (21,365)    (84)                     
       
Purchase: 1 transaction, average price EUR 4.49
   29,833    134                     
       
Purchase: 3 transactions, average price EUR 4.58
   65,921    302                     
       
Transactions in 2021:
                              
       
Sale: transactions, average price 3.90
             (4,139)    (16)           
       
Shares withdrawn: 1 transaction average price 3.89
             (2,466)    (10)           
       
Sale: 1 transaction, average price 3.89
             (15,274)    (59)           
       
Purchase: 1 transaction average price 3.70
             35,933    133           
       
Sale: 1 transaction, average price 3.02
             (17,314)    (52)           
       
Purchase: 1 transaction average price 4.46
             21,532    96           
       
Transactions in 2020:
                              
       
Sale: transactions, average price 4.52
                       (4,445)    (20) 
       
Shares withdrawn: 1 transaction average price 4.52
                       (9,491)    (43) 
       
Sale: 1 transaction, average price 4.13
                       (22,947)    (95) 
       
Purchase: 1 transaction average price 2.46
 
                       
 
24,029
 
 
 
   
 
59
 
 
 
       
At December 31
 
  
 
 
145,821
 
 
 
  
 
 
662
 
 
 
  
 
 
70,958
 
 
 
  
 
 
262
 
 
 
  
 
 
52,686
 
 
 
  
 
 
171
 
 
 
Aegon Annual Report on Form 20-F
2022
  |  
233
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
Movements in the number of treasury common
shares
B held by Aegon N.V. were as follows:
   
 
 
2022
 
 
 
   
 
2021
 
 
 
   
 
2020
 
 
 
   
 

 
 
Number of
shares
(thousands)
 
 
 
 
 
  
 
 
        Amount
 
 
 
   
 
 
Number of
shares
(thousands)
 
 
 
 
 
   
 
        Amount
 
 
 
   
 
 
Number of
shares
(thousands)
 
 
 
 
 
   
 
        Amount
 
 
 
       
At January 1
   30,589    3    12,884    1    25,310    3 
       
Transactions in 2022:
                              
       
Share withdrawn: 1 transaction, average price EUR 0.10
   (22,643)    (2)                     
       
Purchase: 1 transaction, average price EUR 0.12
   43,817    5                     
       
Transactions in 2021:
                              
       
Sale: 1 transaction, average price 0.10
             (1,983)    -           
       
Shares withdrawn: 1 transaction average price 0.10
             (2,956)    -           
       
Purchase: 1 transaction average price 0.10
             22,643    2           
       
Transactions in 2020:
                              
       
Sale: 1 transaction, average price 0.13
                       (2,154)    - 
       
Shares withdrawn: 1 transaction average price 0.13
                       (13,227)    (2) 
       
Purchase: 1 transaction average price 0.08
 
                       
 
2,956
 
 
 
   
 
-
 
 
 
       
At December 31
 
  
 
 
51,763
 
 
 
  
 
 
6
 
 
 
  
 
 
30,589
 
 
 
  
 
 
3
 
 
 
  
 
 
12,884
 
 
 
  
 
 
1
 
 
 
As part of their insurance and investment operations, subsidiaries within the Group also hold Aegon N.V. common shares, both for their
own account and for account of policyholders. These shares have been treated as treasury shares and are (de) recognized at the
consideration paid or received.
   
 
 
2022
 
 
 
   
 
2021
 
 
 
   
 
2020
 
 
 
   
 

 
 
Number of
shares
(thousands)
 
 
 
 
 
  
 
 
Total
amount
 
 
 
 
   
 
 
Number of
shares
(thousands)
 
 
 
 
 
   
 
Total
amount
 
 
 
 
   
 
 
Number of
shares
(thousands)
 
 
 
 
 
   
 
Total
amount
 
 
 
 
       
Common shares
                              
       
Held by Aegon N.V.
   145,821       662   70,958     262    52,686       171 
       
Held by subsidiaries
   785    8    822    8    1,062    9 
       
Common shares B
                              
       
Held by Aegon N.V.
 
   
 
51,763
 
 
 
   
 
6
 
 
 
   
 
30,589
 
 
 
   
 
3
 
 
 
   
 
12,884
 
 
 
   
 
1
 
 
 
       
At December 31
 
  
 
 
198,369
 
 
 
  
 
 
676
 
 
 
  
 
 
102,369
 
 
 
  
 
 
273
 
 
 
  
 
 
66,632
 
 
 
  
 
 
181
 
 
 
   
    
 
 
Weighted average number of treasury shares,
including treasury shares held by subsidiaries
(thousands)
 
 
 
 
 
   
 
Weighted average number of treasury shares B
(thousands)
 
 
 
 
   
2020
 
  
 
 
58,224
 
 
 
  
 
 
18,386
 
 
 
   
2021
 
  
 
 
57,989
 
 
 
  
 
 
11,621
 
 
 
   
2022
 
  
 
 
97,807
 
 
 
  
 
 
23,696
 
 
 
234
Aegon Annual Report on Form 20-F
2022
Table of Contents
Notes to the consolidated financial statements
Note 30
30.425.4 Revaluation reserves
 
    
 
Available-for-sale

investments
 
 
 
 
   
 
Real estate held
for own use
 
 
 
 
   
 
Cash flow
hedging reserve
 
 
 
 
   
 
Total
 
 
 
     
At January 1, 2022
   5,309    32    1,100    6,442 
     
Gross revaluation
   (21,586)    (1)    (66)                (21,653) 
     
Shadow accounting adjustment
   6,407    -    -    6,407 
     
Net (gains) / losses transferred to income statement
   742    (16)    (126)    600 
     
Disposal of a business
   14    -    -    14 
     
Foreign currency translation differences
   413    (0)    74    487 
     
Tax effect
   3,178    -    42    3,219 
     
Transfers to disposal groups
   -    -    -    - 
     
Other
 
   
 
7
 
 
 
   
 
-
 
 
 
   
 
-
 
 
 
   
 
7
 
 
 
     
At December 31, 2022
 
  
 
 
(5,516)
 
 
 
  
 
 
15
 
 
 
  
 
 
1,024
 
 
 
  
 
 
(4,477)
 
 
 
     
At January 1, 2021
   6,248    35    1,197    7,480 
     
Gross revaluation
   (3,930)    (4)    (122)    (4,057) 
     
Shadow accounting adjustment
   2,759    -    -    2,759 
     
Net (gains) / losses transferred to income statement
   (450)    -    (106)    (556) 
     
Foreign currency translation differences
   362    1    84    447 
     
Tax effect
   322    1    47    370 
     
Other
 
   
 
(1)
 
 
 
   
 
-
 
 
 
   
 
-
 
 
 
   
 
(1)
 
 
 
     
At December 31, 2021
 
  
 
 
5,309
 
 
 
  
 
 
32
 
 
 
  
 
 
1,100
 
 
 
  
 
 
6,442
 
 
 
     
At January 1, 2020
   4,352    19    1,502    5,873 
     
Gross revaluation
   5,728    20    (141)    5,607 
     
Shadow accounting adjustment
   (2,738)    -    -    (2,738) 
     
Net (gains) / losses transferred to income statement
   13    -    (106)    (94) 
     
Net (gains) / losses transferred to retained earnings
   -    -    -    - 
     
Foreign currency translation differences
   (443)    (2)    (111)    (556) 
     
Tax effect
 
   
 
(664)
 
 
 
   
 
(2)
 
 
 
   
 
54
 
 
 
   
 
(612)
 
 
 
     
At December 31, 2020
 
  
 
 
6,248
 
 
 
  
 
 
35
 
 
 
  
 
 
1,197
 
 
 
  
 
 
7,480
 
 
 
    
Investments
measured at
fair value
through OCI
 
 
 
 
  
Real estate
 held for own
use
 
 
 
  
 Cash flow
hedging
reserve
 
 
 
   Insurance
contracts
    
 Reinsurance
contracts
held
 
 
 
    Total 
On January 1, 2023   (5,251)   15   1,024   2,215   (2,566)   (4,563) 
Gross revaluation   1,552   (2)   (62)   (1,626)   349   211 
Net (gains) / losses transferred to income statement   706   -   (130)   -   -   577 
Foreign currency translation differences   138   -   (31)   (47)   82   142 
Tax effect   (487)   -   42   397   (126)   (174) 
Disposal of group assets   42   (3)   -   -   -   38 
On December 31, 2023
  
 
(3,300
) 
 
 
9
 
 
 
842
 
 
 
939
 
 
 
(2,261
) 
 
 
(3,770
) 
On January 1, 2022   6,810   32   1,100   (11,291)   768   (2,580) 
Gross revaluation   (16,743)   (1)   (66)   18,680   (4,672)   (2,803) 
Net (gains) / losses transferred to income statement   541   -   (126)   -   -   415 
Foreign currency translation differences   588   -   74   (931)   95   (174) 
Tax effect   3,499   -   42   (4,211)   1,243   574 
Disposal of group assets   46   (16)   -   (31)   -   (2) 
Other   7   -   -   -   -   7 
On December 31, 2022
  
 
(5,251
) 
 
 
15
 
 
 
1,024
 
 
 
2,215
 
 
 
(2,566
) 
 
 
(4,563
) 
The revaluation accounts for both
available-for-sale
investments measured at FVOCI and for real estate held for own use include unrealized gains and losses on these investments, net of tax. Upon sale, the amounts realized are recognized in the income statement (for
available-for-sale
investments) FVOCI investments with recycling) or transferred to retained earnings (for real estate held for own use). Upon impairment, unrealized losses areThe revaluation reserve also includes the loss allowance recognized in the income statement.for financial assets measured at FVOCI.
The closing balances of the revaluation reserve for
available-for-sale
investments measured at FVOCI relate to the following instruments:
 
    
            2022
              2021              2020 
Shares
   18   49   46 
    
Debt securities
   (5,511)   5,276   6,218 
    
Other
   (22)   (15)   (17) 
Revaluation reserve for
available-for-sale
investments
  
 
(5,516
) 
 
 
5,309
 
 
 
6,248
 
   
 
     2023
 
       2022 
Shares   2   2 
Debt securities   (3,297)    (5,249)  
Money market and other short-term investments   (5)   (5) 
Revaluation reserve for investments measured at FVOCI
  
 
(3,300
) 
 
 
(5,251
) 
The cash flow hedging reserve includes (un)realized gains and losses on the effective portions of hedging instruments, net of tax. The amounts are recognized in the income statement at the moment of realization of the hedged position to offset the gain or loss from the hedged cash flow. No amounts have been released from equity to be included in the initial measurement of
non-financial
assets or liabilities.
25.5 Remeasurement of defined benefit plans
   
 
     2023
 
       2022 
On January 1   (1,565)   (2,199) 
Remeasurements of defined benefit plans   (110)    904 
Tax effect   17   (250)  
Net exchange differences   14   (20) 
Disposal of a business   638   - 
Total remeasurement of defined benefit plans
  
 
(1,006
) 
 
 
(1,565
) 
 
   
Aegon Annual Report on Form 20-F
2022
2023 | 
235
257  		 
 
Table of Contents
LOGO 
About Aegon
Governance and risk management
  
Financial information
Non-financial  Sustainability information
   
   
 
30.5 Remeasurement of defined benefit plans
    
            2022
              2021              2020 
At January 1
   (2,199)   (2,534)   (2,397) 
    
Remeasurements of defined benefit plans
   904   501   (360) 
    
Tax effect
   (250)   (102)   140 
    
Net exchange differences
   (20)   (65)   83 
Total remeasurement of defined benefit plans
  
 
(1,565
) 
 
 
(2,199
) 
 
 
(2,534
) 
30.625.6 Other reserves
 
    Foreign currency
translation reserve		  Net foreign
investment hedging
reserve		  Equity movements
of joint ventures and
associates		              Total 
At January 1, 2022
   596   (338)   67   325 
     
Movement in foreign currency translation and net foreign investment hedging reserves
   710   (116)   -   594 
     
Disposal of a business
   102   67   (18)   150 
     
Tax effect
   (28)   16   -   (12) 
     
Equity movements of joint ventures
   -   -   (63)   (63) 
     
Equity movements of associates
   -   -   3   3 
     
Transfers to disposal groups
   -   -   -   - 
At December 31, 2022
  
 
1,379
 
 
 
(371
) 
 
 
(11
) 
 
 
997
 
     
At January 1, 2021
   (403)   (199)   48   (554) 
     
Movement in foreign currency translation and net foreign investment hedging reserves
   1,013   (165)   -   848 
     
Disposal of a business
   10   (2)   -   8 
     
Tax effect
   (24)   27   -   3 
     
Equity movements of joint ventures
   -   -   25   25 
     
Equity movements of associates
   -   -   (6)   (6) 
At December 31, 2021
  
 
596
 
 
 
(338
) 
 
 
67
 
 
 
325
 
     
At January 1, 2020
   799   (374)   31   456 
     
Movement in foreign currency translation and net foreign investment hedging reserves
   (1,209)   195   -   (1,015) 
     
Disposal of a business
   (5)   -   (2)   (7) 
     
Tax effect
   12   (19)   -   (7) 
     
Equity movements of joint ventures
   -   -   12   12 
     
Equity movements of associates
   -   -   7   7 
At December 31, 2020
  
 
(402
) 
 
 
(199
) 
 
 
48
 
 
 
(553
) 
    Foreign currency
 translation reserve
    
Net foreign
investment
 hedging reserve
 
 
 
  
Equity
movements of
joint ventures
 and associates
 
 
 
 
     Total 
On January 1, 2023   1,108   (371)   (68)   669 
Movement in foreign currency translation and net foreign investment hedging reserves   (290)   54   -   (236) 
Disposal of a business   (29)   -   (15)   (45) 
Tax effect   10   (6)   -   3 
Equity movements of joint ventures   -   -   (2)   (2)  
Equity movements of associates   -   -   (9)   (9) 
On December 31, 2023
  
 
798
 
 
 
(324
) 
 
 
(95
) 
 
 
379
 
On January 1, 2022   596   (338)   -   258 
Movement in foreign currency translation and net foreign investment hedging reserves   436   (116)   (2)   318 
Disposal of a business   104   67   (36)   135 
Tax effect   (28)   16   -   (12) 
Equity movements of joint ventures   -   -   (33)   (33) 
Equity movements of associates   -   -   3   3 
On December 31, 2022
  
 
1,108
 
 
 
(371
) 
 
 
(68
) 
 
 
669
 
The foreign currency translation reserve includes the currency results from investments in
non-euro
denominated subsidiaries. The amounts are released to the income statement upon the sale of the subsidiary.
The net foreign investment hedging reserve is made up of gains and losses on the effective portions of hedging instruments, net of tax. The amounts are recognized in the income statement at the moment of realization of the hedged position to offset the gain or loss from the net foreign investment.
The equity movements of joint ventures and associates reflect Aegon’s share of changes recognized directly in the joint venture’s and associate’s equity.
236
Aegon Annual Report on Form 20-F
2022
Table of Contents
Notes to the consolidated financial statements
Note 31
3126 Other equity instruments
 
    Perpetual
contingent
convertible
securities		           Junior
perpetual
capital
securities		          Perpetual
cumulative
subordinated
bonds		   
        Long Term
Incentive
Plans
1)
                  Total 
At January 1, 2022
   500    1,352   454    57   2,363 
Shares granted
   -    -   -    32   32 
Shares vested
   -    -   -    (23)   (23) 
Securities redeemed
   -    (429)   -    -   (429) 
At December 31, 2022
  
 
500
 
  
 
923
 
 
 
454
 
  
 
66
 
 
 
1,943
 
      
At January 1, 2021
   500    1,564   454    50   2,569 
Shares granted
   -    -   -    27   27 
Shares vested
   -    -   -    (21)   (21) 
Securities redeemed
   -    (212)   -    -   (212) 
At December 31, 2021
  
 
500
 
  
 
1,352
 
 
 
454
 
  
 
57
 
 
 
2,363
 
      
At January 1, 2020
   500    1,564   454    53   2,571 
Shares granted
   -    -   -    22   22 
Shares vested
   -    -   -    (25)   (25) 
At December 31, 2020
  
 
500
 
  
 
1,564
 
 
 
454
 
  
 
50
 
 
 
2,569
 
    
Perpetual
contingent
 convertible
securities
 
 
 
 
   
Junior
 perpetual
capital
securities
 
 
 
 
  
Perpetual
cumulative
 subordinated
bonds
 
 
 
 
   
 Share options
and incentive
plans
1)
 
 
 
      Total 
On January 1, 2023   500    923   454    66   1,943 
Shares granted / Share options cost incurred   -    -   -    33   33 
Shares vested / Share options forfeited   -    -   -    (25)   (25)  
On December 31, 2023
  
 
500
 
  
 
923
 
 
 
454
 
  
 
74
 
 
 
1,951
 
On January 1, 2022   500    1,352   454    57   2,363 
Shares granted / Share options cost incurred   -    -   -    32   32 
Shares vested / Share options forfeited   -    -   -    (23)   (23) 
Securities redeemed   -    (429)   -    -   (429) 
On December 31, 2022
  
 
500
 
  
 
923
 
 
 
454
 
  
 
66
 
 
 
1,943
 
 
1 
Long Term Incentive Plansplans include the shares granted to personnel which are not yet vested.
Perpetual contingent convertible securities  Coupon rate   Coupon date   Year of next call        2023       2022
EUR 500 million  5.625%
1)
 		  Semi-annually, April 15   2029   500  500
On December 31           500  500
 
Perpetual contingent convertible securities
  Coupon rate               Coupon date                   Year of next call   
2022
   2021   2020 
EUR 500 million
   
5.625
%
1)
    Semi-annually, April 15    2029    500    500    500 
At December 31
                 
 
500
 
  
 
500
 
  
 
500
 
1 
The coupon is fixed at 5.625% until the first call date and reset thereafter to a 5 year mid swap plus a margin of 5.207%.
  258 | Annual Report on Form 20-F 2023
Table of Contents
Notes to the consolidated financial statements
Note 27
The securities have been issued at par and have subordination provisions, rank junior to all other liabilities and senior to shareholders’ equity only. The conditions of the securities contain certain provisions for optional and required coupon payment cancelation.deferral. Although the securities have no stated maturity, Aegon has the right to call the securities for redemption at par for the first time between April 15, 2029 and October 15, 2029 and every reset date (October 15, with five year intervals) thereafter. Upon breach of certain regulatory capital requirement levels, the securities convert into common shares.
 
Junior perpetual capital securities
  Coupon rate                   Coupon date               Year of next call   
2022
   2021   2020 
USD
250 
million
   floating LIBOR rate 
1)
    Quarterly, December 15    Called in 2021    -    -    212 
USD
500 
million
   floating CMS rate
2)
    Quarterly, July 15    2023    402    402    402 
EUR
950 
million
   floating DSL rate
3)
    Quarterly, July 15    2023    521    950    950 
At December 31
                 
 
923
 
  
 
1,352
 
  
 
1,564
 
Junior perpetual capital securities
     Coupon rate       Coupon date    Year of next call   
     2023 
       2022 
USD 500 million  
floating CMS
 rate 
1)
 		   Quarterly, July 15    2024   402   402 
EUR 950 million
3)
  floating DSL rate 
2)
 		   Quarterly, July 15    2024   521   521 
On December 31
             
923 
  
923 
 
1
The coupon of the USD 250 million junior perpetual capital securities was reset each quarter based on the then prevailing three-month LIBOR yield plus a spread of 87.5 basis points, with a minimum of 4%.
2
The coupon of the USD 500 million junior perpetual capital securities is reset each quarter based on the then prevailingaggregate of (i) the
ten-year10-year
US dollar interestUSD SOFR ICE swap rate, swap yield plus(ii) a spread adjustment of ten
29
basis points and (iii) a credit spread of
ten
basis, with a maximum of 8.5%.
32 
The coupon of the EUR 950 million junior perpetual capital securities is reset each quarter based on the then prevailing
ten-year
Dutch government bond yield plus a spread of
ten
basis points, with a maximum of 8%.
3 On April 5, 2022 Aegon completed a tender offer buying back EUR 429 million of perpetual capital securities, part of the EUR 950 million notes issued in 2004.
The interest rate exposure on some of these securities has been swapped to a three-month LIBOR and/SOFR or EURIBOR based yield.
On April 5, 2022 Aegon completed a tender offer buying back EUR 429 million of perpetual capital securities, part of the EUR 950 million notes issued in 2004. Aegon bought back the securities at a purchase price of 90%. The gain realized on this tender offer amounts to EUR 43 million before tax and is recognized in retained earnings in 2022.
With effect on September 15, 2021, Aegon has exercised its right to redeem USD 250 million floating rate perpetual capital securities with a minimum coupon of 4% issued in 2005. The securities had no stated maturity, however Aegon had the right to call the securities for redemption and exercised this right with effect on September 15, 2021.
The securities have been issued at par. The securities have subordination provisions, rank junior to all other liabilities and senior to shareholders’ equity only. The conditions of the securities contain certain provisions for optional and required
Aegon Annual Report on Form 20-F
2022
  |  
237
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
coupon payment deferral and,
in situations under Aegon’s control, mandatory coupon payment events. Although the securities have no stated maturity, Aegon has the right to call the securities for redemption at par for the first time on the coupon date in the years as specified, or on any coupon payment date thereafter.
 
Perpetual cumulative subordinated bonds
  Coupon rate  Coupon date   Year of next call   
2022
   2021   2020 
Perpetual cumulative subordinated bonds
     Coupon rate       Coupon date    Year of next call   
     2023 
        2022 
EUR 114 million
  1.506%
1),
4)
   Annually, June 8    2025    114    114    114 
EUR 114 million  1.506% 
1), 4)
  		  Annually, June 8    2025   114    114 
EUR 136 million
  1.425%
2),
4)
   Annually, October 14    2028    136    136    136 
EUR 136 million  1.425%
2), 4)
  		  
Annually, October  
14  
  2028   136    136 
EUR 203 million
  0.496%
3),
4)
   Annually, March 4    2031    203    203    203 
At December 31
           
 
454
 
  
 
454
 
  
 
454
 
EUR 203 million  0.496%
3), 4)
  		  Annually, March 4    2031   203    203 
On December 31
On December 31
           
454 
  
 
454
 
1
The coupon of the EUR 114 million bonds was originally set at 8% until June 8, 2005. Subsequently, the coupon has been reset at 4.156% until June 8, 2015 and 1.506% until June 8, 2025.
2
The coupon of the EUR 136 million bonds was originally set at 7.25% until October 14, 2008. Subsequently, the coupon has been reset at 5.185% until October 14, 2018 and 1.425% until October 14, 2028.
3
The coupon of the EUR 203 million bonds was originally set at 7.125% until March 4, 2011. Subsequently, the coupon has been reset at 4.26% until March 4, 2021 and 0.496% until March 4, 2031.
4
If the bonds are not called on the respective call dates and after consecutive period of ten years, the coupons will be reset at the then prevailing effective yield of
ten-year
Dutch government securities plus a spread of
85
basis points.
These bonds have the same subordination provisions as dated subordinated debt. In addition, the conditions of the bonds contain provisions for interestcoupon payment deferral.
Although the bonds have no stated maturity, Aegon has the right to call the bonds for redemption at par for the first time on the coupon date in the year of next call.
3227 Subordinated borrowings
 
    Coupon rate  Coupon date   Issue /Maturity   Year of next call   
2022
   2021 
Fixed to floating subordinated
notes
                             
EUR 700 million
  4%
2)
   Annually, April 25    2014/44    2024    699    698 
USD 800 million
  5.5%
3)
   
Semi-annually, April 11
    2018/48    2028    743    697 
Fixed subordinated notes
                            
USD 925 million
1)
  5.1%   Quarterly, March 15    2019/49    2024    852    798 
At December 31
                    
 
2,295
 
  
 
2,194
 
       
Fair value of subordinated borrowings
                     2,035    2,438 
Fixed to floating subordinated
notes
  Coupon rate   Coupon date    Issue / Maturity    Year of next call   
 
   2023
 
      2022 
                            
EUR 700 million  4%
2)
   Annually, April 25    2014/
44
    2024    700    699 
USD 800 million  5.5%
3)
   Semi-annually, April 11    2018/
48
    2028    718    743 
Fixed subordinated notes
                            
USD 925 million
1)
  5.1%    Quarterly, March 15    2019/
49
    2024    826    852 
On December 31
                    
 
2,244
 
  
 
2,295
 
Fair value of subordinated borrowings                     2,122    2,035 
 
1 
Issued by a subsidiary of, and guaranteed by Aegon N.V.
Ltd.
2 
The coupon is fixed at 4% until the first call date and floating thereafter with a 3 months Euribor plus a margin of 335bps.
335
bps.
3 
The coupon is fixed at 5.5% until the first call date in 2028 and floating thereafter with a 6 month USD LIBOR (subject to US LIBOR Act) plus a margin of 3.539%.
These securities are subordinated and rank senior to the junior perpetual capital securities and the perpetual contingent convertible securities, equally with the perpetual cumulative subordinated bonds and junior to all other liabilities. The conditions of the securities contain certain provisions for optional and required deferral of interest payments.coupon payment deferral. There have been no defaults or breaches of conditions during the period.
Annual Report on Form 20-F 2023 | 259  
33
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
28 Trust pass-through securities
 
    Coupon rate    Coupon date   
 
Issue /
Maturity
 
 
   Year of
  next call		 
 		      
 
   2023
 
      2022 
USD 225 million
1)
   7.65%    Semi-annually, December 1    1996/2026    n.a.     67    72 
USD 190 million
1)
   7.625%     Semi-annually, November 15    1997/2037    n.a.        44    46 
On December 31
                          
 
111
 
  
 
118
 
Fair value of trust pass-through securities                           125    133 
    Coupon rate  Coupon date   Issue /Maturity   Year of next call   
2022
   2021 
USD 225 million
1)
  7.65%   
Semi-annually, December 1
    1996/2026    n.a.    72    82 
USD 190 million
1)
  7.625%   
Semi-annually, November 15
    1997/2037    n.a.    46    43 
At December 31
                    
 
118
 
  
 
126
 
       
Fair value of trust pass-through securities
                     133    139 
1 Issued by a subsidiary of, and guaranteed by Aegon N.V.Ltd.
2 n.a. in above table should be read as “not applicable”.
Trust pass-through securities are securities through which the holder participates in a trust. The assets of these trusts consist of junior subordinated deferrable interest debentures issued by Transamerica Corporation. The trust pass-through securities carry provisions with regard to deferral of distributions for extension periods up to a maximum of 10 consecutive semi-annual periods. The trust pass-through securities are subordinated to all other unsubordinated borrowings and liabilities of Transamerica Corporation.
There were no defaults or breaches of conditions during the period.
29 Insurance contracts, reinsurance contracts held and investment contracts with discretionary participating features
29.1 Contracts by measurement model
The following tables show the assets and liabilities for groups of insurance contracts issued and reinsurance contracts held by measurement model.
Insurance contracts
    Contracts not measured
under the PAA
        Contracts measured
under the PAA
          Total 
Portfolios in an asset position   185    -    185 
Portfolios in a liability position   177,407    39    177,446 
Net balance, on December 31, 2023
  
 
177,222
 
  
 
39
 
  
 
177,262
 
Portfolios in an asset position   36    -    36 
Portfolios in a liability position   175,681    439    176,120 
Net balance, on December 31, 2022
  
 
175,645
 
  
 
439
 
  
 
176,083
 
Reinsurance contracts held
    Contracts not measured
under the PAA
        Contracts measured
under the PAA		 
 		        Total 
Portfolios in an asset position   16,601    7    16,608 
Portfolios in a liability position   608    -    608 
On December 31, 2023
  
 
15,993
 
  
 
7
 
  
 
16,000
 
Portfolios in an asset position   16,934    6    16,939 
Portfolios in a liability position   270    -    270 
On December 31, 2022
  
 
16,664
 
  
 
6
 
  
 
16,669
 
All groups of investment contracts with discretionary participating features were not measured under the PAA and were in a liability position at the reporting and comparative dates.
  260 | Annual Report on Form 20-F 2023
Table of Contents
Notes to the consolidated financial statements
Note 29
29.2 Movements in carrying amounts on insurance contracts, investment contracts with discretionary participation features and reinsurance contracts held
The following tables show the movement in the net carrying amounts of insurance contracts issued, investment contracts with discretionary participating features issued and reinsurance contracts held. Two types of tables are presented:
∎
Tables that analyze movements by type of liabilities and reconciles them to the condensed income statement and the condensed statement of comprehensive income
∎
Tables that analyze movements by measurement component
29.2.1 Movement schedules by type of liability
  
 
Remaining coverage
 
        
Insurance contracts not measured under PAA - by type
     Excluding loss
component
     Loss component    Incurred claims        Total 
Opening assets   40   (1)   (2)   36 
Opening liabilities   163,758   1,455   10,468   175,681 
Net opening balance, on January 1, 2023
  
 
163,719
 
 
 
1,456
 
 
 
10,470
 
 
 
175,645
 
Insurance revenue   (10,195)   -   -   (10,195) 
Incurred claims and other insurance service expenses   -   (186)   8,593   8,407 
Amortization of insurance acquisition cash flows   558   -   -   558 
Losses (and reversal of losses) on onerous contracts   -   1,084   -   1,084 
Adjustments to liabilities for incurred claims   -   -   9   9 
Insurance service expenses
  
 
558
 
 
 
899
 
 
 
8,601
 
 
 
10,058
 
Investment components   (4,834)   -   4,834   - 
Insurance service result
  
 
(14,471
) 
 
 
898
 
 
 
13,436
 
 
 
(137
) 
Insurance finance (income) / expenses (P&L and OCI)   17,262   81   -   17,343 
Cash flows   (4,892)   (150)   (5,582)   (10,624) 
Contracts disposed during the period   (347)   -   -   (347) 
Transfers to disposal groups   (1)   (211)   (133)   (345) 
Other movements   20   -   -   20 
Transfer (to)/from other headings   (514)   (33)   36   (512) 
Net exchange differences   (3,252)   (54)   (515)   (3,821) 
Net closing balance, on December 31, 2023
  
 
157,524
 
 
 
1,987
 
 
 
17,711
 
 
 
177,222
 
Closing assets   1,589   (1,042)   (362)   185 
Closing liabilities   159,113   945   17,349   177,407 
Annual Report on Form 20-F 2023 | 261  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
   Remaining coverage         
Insurance contracts not measured under PAA - by type
   Excluding loss
component		 
 		  Loss component   Incurred claims        Total 
Opening assets   780   -   (669)   110 
Opening liabilities   286,352   343   1,407   288,102 
Net opening balance, on January 1, 2022
  
 
285,572
 
 
 
343
 
 
 
2,076
 
 
 
287,991
 
Insurance revenue   (13,522)   -   -   (13,522) 
Incurred claims and other insurance service expenses   -   (51)   11,372   11,321 
Amortization of insurance acquisition cash flows   547   -   -   547 
Losses (and reversal of losses) on onerous contracts   -   1,335   -   1,335 
Adjustments to liabilities for incurred claims   -   -   8   8 
Insurance service expenses
  
 
547
 
 
 
1,284
 
 
 
11,381
 
 
 
13,212
 
Investment components   (4,820)   (50)   4,870   - 
Insurance service result
  
 
(17,795
) 
 
 
1,234
 
 
 
16,251
 
 
 
(309
) 
Insurance finance (income) / expenses (P&L and OCI)   (57,191)   (49)   -   (57,240) 
Cash flows   (4,031)   (33)   (7,866)   (11,930) 
Contracts disposed during the period   (278)   -   -   (278) 
Transfers to disposal groups   (51,983)   (54)   -   (52,037) 
Other movements   (28)   33   -   5 
Net exchange differences   9,453   (19)   9   9,442 
     
Net closing balance, on December 31, 2022
  
 
163,719
 
 
 
1,456
 
 
 
10,470
 
 
 
175,645
 
Closing assets   40   (1)   (2)   36 
Closing liabilities   163,758   1,455   10,468   175,681 
  
 
Remaining coverage
 
  
 
Liability for incurred claims
 
Insurance contracts PAA - by type
   Excluding loss
component		 
 		  Loss
component
     Best estimate
liability		 
 		  Risk
adjustment		 
 		        Total 
Opening assets   -   -    -   -    - 
Opening liabilities   404   2    33   -    439 
Net opening balance, on January 1, 2023
  
 
404
 
 
 
2
 
  
 
33
 
 
 
-
 
  
 
439
 
Insurance revenue   (127)   -    -   -    (127) 
Incurred claims and other insurance service expenses   -   -    96   -    96 
Amortization of insurance acquisition cash flows   19   -    -   -    19 
Losses (and reversals of losses) on onerous contracts   -   2    -   -    2 
Adjustments to liabilities for incurred claims   -   -    14   -    14 
Insurance service expenses
  
 
19
 
 
 
2
 
  
 
110
 
 
 
-
 
  
 
132
 
Investment components   -   -    -   -    - 
Insurance service result
  
 
(108
) 
 
 
2
 
  
 
110
 
 
 
-
 
  
 
5
 
Insurance finance (income) / expenses (P&L and OCI)   12   -    -   -    12 
Cash flows   95   -    (114)   -    (19) 
Disposal of a business   (407)   -    -   -    (407) 
Net exchange differences   9   -    -   -    9 
      
Net closing balance, on December 31, 2023
  
 
6
 
 
 
4
 
  
 
29
 
 
 
-
 
  
 
39
 
Closing assets   -   -    -   -    - 
Closing liabilities   6   4    29   -    39 
  262 | Annual Report on Form 20-F 2023
Table of Contents
Notes to the consolidated financial statements
Note 29
  Remaining coverage    Liability for incurred claims 
Insurance contracts PAA - by type
  Excluding loss
component		 
 		  Loss
component		 
 		   Best estimate
liability		 
 		  Risk
adjustment		 
 		       Total 
Opening assets  -   -    -   -   - 
Opening liabilities  1,242   -    712   10   1,964 
Net opening balance, on January 1, 2022
 
 
1,242
 
 
 
-
 
  
 
712
 
 
 
10
 
 
 
1,964
 
Insurance revenue  (563)   -    -   -   (563) 
Incurred claims and other insurance service expenses  -   -    254   -   253 
Amortization of insurance acquisition cash flows  22   -    -   -   22 
Losses (and reversals of losses) on onerous contracts  -   2    -   -   2 
Adjustments to liabilities for incurred claims  -   -    259   (3)   257 
Insurance service expenses
 
 
22
 
 
 
2
 
  
 
513
 
 
 
(3
) 
 
 
534
 
Investment components  -   -    -   -   - 
Insurance service result
 
 
(542
) 
 
 
2
 
  
 
513
 
 
 
(3
) 
 
 
(29
) 
Insurance finance (income) / expenses (P&L and OCI)  7   -    (110)   -   (103) 
Cash flows  515   -    (470)   -   45 
Disposal of a business  (729)   -    (75)   -   (804) 
Transfers to disposal groups  (15)   -    (532)   (7)   (554) 
Net exchange differences  (75)   -    (5)   -   (80) 
      
Net closing balance, on December 31, 2022
 
 
404
 
 
 
2
 
  
 
33
 
 
 
-
 
 
 
439
 
Closing assets  -   -    -   -   - 
Closing liabilities  404   2    33   -   439 
   Asset for remaining coverage     
Reinsurance contracts held - Analysis by type, no PAA
   Excluding loss
recovery component		 
 		  Loss recovery
component		 
 		  Asset for
incurred claims		 
 		       Total 
Opening assets   14,801   1,607   526   16,934 
Opening liabilities   (217)   (57)   5   (270) 
Net opening balance, on January 1, 2023
  
 
14,584
 
 
 
1,549
 
 
 
530
 
 
 
16,664
 
Changes in the statements of P&L and OCI
     
Net expenses from reinsurance contracts   453   (235)   (38)   181 
Other reinsurance finance income / (expenses)   1,026   34   -   1,060 
Effect of changes in risk of
non-performance
of reinsurers
   (12)   -   -   (12) 
Total changes in the statements of P&L and OCI
  
 
1,467
 
 
 
(200
) 
 
 
(37
) 
 
 
1,229
 
Cash flows   (397)   (158)   (425)   (979) 
Other movements   (424)   139   (86)   (371) 
Net exchange differences   (511)   (34)   (4)   (550) 
     
Net closing balance, on 31 December 31, 2023
  
 
14,719
 
 
 
1,296
 
 
 
(22
) 
 
 
15,993
 
Closing assets   16,457   349   (205)   16,601 
Closing liabilities   1,738   (947)   (183)   608 
Annual Report on Form 20-F 2023 | 263  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
   Asset for remaining coverage     
Reinsurance contracts held - Analysis by type, no PAA
   Excluding loss
recovery component		 
 		  Loss recovery
component		 
 		  Asset for
incurred claims		 
 		      Total 
Opening assets   20,704   202   383   21,288 
Opening liabilities   (1,116)   -   645   (471) 
Net opening balance, on January 1, 2022
  
 
19,588
 
 
 
202
 
 
 
1,028
 
 
 
20,818
 
Changes in the statements of P&L and OCI
     
Net expenses from reinsurance contracts   (1,028)   1,380   (103)   248 
Other reinsurance finance income / (expenses)   (3,956)   10   -   (3,945) 
Investment components   (6)   (2)   8   - 
Effect of changes in risk of
non-performance
of reinsurers
   1   -   -   1 
Total changes in the statements of P&L and OCI
  
 
(4,988
) 
 
 
1,388
 
 
 
(96
) 
 
 
(3,696
) 
Cash flows   (1,021)   (12)   (466)   (1,498) 
Other movements   (322)   (1)   -   (323) 
Net exchange differences   1,327   (28)   64   1,363 
     
Net closing balance, on 31 December 31, 2022
  
 
14,584
 
 
 
1,549
 
 
 
530
 
 
 
16,664
 
Closing assets   14,801   1,607   526   16,934 
Closing liabilities   217   57   5   270 
   Remaining coverage          
Investment contracts with DPF - by type
   Excluding loss
component
    Loss component    Incurred claims       Total 
Opening assets   -   -    -   - 
Opening liabilities   21,055   -    -   21,055 
Net balance, on January 1, 2023
  
 
21,055
 
 
 
-
 
  
 
-
 
 
 
21,055
 
Insurance revenue   (64)   -    -   (64) 
Incurred claims and other insurance service expenses   -   -    36   36 
Insurance service expenses
   -   -    36   36 
Investment components   (2,417)   -    2,418   - 
Insurance service result
  
 
(2,481
) 
 
 
-
 
  
 
2,453
 
 
 
(28
) 
Insurance finance (income) / expenses (P&L and OCI)   1,921   -    -   1,921 
Cash flows   423   -    (2,453)   (2,030) 
Other movements   172   -    -   172 
Net exchange differences   503   -    -   503 
     
Net closing balance, on December 31, 2023
  
 
21,594
 
 
 
-
 
  
 
-
 
 
 
21,594
 
Closing assets   -   -    -   - 
Closing liabilities   21,594   -    -   21,594 
  264 | Annual Report on Form 20-F 2023
Table of Contents
Notes to the consolidated financial statements
Note 29
   Remaining coverage     
Investment contracts with DPF - by type
   Excluding loss
component		 
 		  Loss component   Incurred claims       Total 
Opening assets   -   -   -   - 
Opening liabilities   27,392   -   -   27,392 
Net balance, on January 1, 2023
  
 
27,392
 
 
 
-
 
 
 
-
 
 
 
27,392
 
Insurance revenue   (74)   -   -   (74) 
Incurred claims and other insurance service expenses   -   -   58   58 
Losses (and reversal of losses) on onerous contracts
   -   (5)   -   (5) 
Insurance service expenses
  
 
-
 
 
 
(5
) 
 
 
58
 
 
 
54
 
Investment components   (2,254)   5   2,250   - 
     
Insurance service result
  
 
(2,328
) 
 
 
-
 
 
 
2,308
 
 
 
(20
) 
Insurance finance (income) / expenses (P&L and OCI)   (3,247)   -   -   (3,247) 
Cash flows   511   -   (2,308)   (1,797) 
Net exchange differences   (1,273)   -   -   (1,273) 
     
Net closing balance, on December 31, 2023
  
 
21,055
 
 
 
-
 
 
 
-
 
 
 
21,055
 
Closing assets   -   -   -   - 
Closing liabilities   21,055   -   -   21,055 
Annual Report on Form 20-F 2023 | 265  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
29.2.2 Movement schedules by measurement component
Insurance contracts not measured under PAA - by component
   Best estimate
liability		 
 		  Risk adjustment   Contractual
service margin		 
 		      Total 
Opening assets   100   -   (64)   36 
Opening liabilities   163,381   3,436   8,865   175,681 
Net opening balance, on January 1, 2023
  
 
163,280
 
 
 
3,435
 
 
 
8,929
 
 
 
175,645
 
Changes in estimates that adjust contractual service margin   (204)   380   (176)   - 
Changes in estimates that result in (a reversal of) onerous contracts   974   51   -   1,025 
New contracts issued –
non-onerous
   (563)   90   473   - 
New contracts issued – onerous   38   22   -   60 
Changes that relate to future service
  
 
245
 
 
 
542
 
 
 
297
 
 
 
1,084
 
Earnings released from contractual service margin   -   -   (952)   (952) 
Release of risk adjustment   -   (345)   -   (345) 
Experience adjustments on current service   75   -   -   75 
Revenue recognized for incurred policyholder tax expenses   (15)   -   -   (15) 
Changes that relate to current service
  
 
60
 
 
 
(345
) 
 
 
(952
) 
 
 
(1,238
) 
Experience adjustments on claims incurred   17   -   -   17 
Changes that relate to past service
  
 
17
 
 
 
-
 
 
 
-
 
 
 
17
 
Insurance service result
  
 
322
 
 
 
197
 
 
 
(656
) 
 
 
(137
) 
General model
     
Interest accreted to insurance contracts   2,680   195   223   3,098 
Changes in interest rates and other financial assumptions   1,573   14   -   1,587 
Revaluation of changes in
non-financial
assumptions and experience adjustments to current interest rates
   425   (4)   -   421 
Variable fee approach
     
Change in fair value of the underlying assets of products with direct participating features   13,730   -   -   13,730 
Change in fulfilment value of products with direct participating features not recognized in CSM due to risk mitigation option   (1,493)   -   -   (1,493) 
Insurance finance (income) / expenses
  
 
16,915
 
 
 
205
 
 
 
223
 
 
 
17,343
 
Premiums received   14,203   -   -   14,203 
Claims, benefits and expenses paid   (23,862)   -   -   (23,862) 
Acquisition costs paid   (936)   -   -   (936) 
Other   (30)   -   -   (30) 
Cash flows
  
 
(10,624
) 
 
 
-
 
 
 
-
 
 
 
(10,624
) 
Contracts disposed during the period   (283)   (5)   (59)   (347) 
Transfers to disposal groups   (59)   (197)   (89)   (345) 
Other   41   -   (21)   20 
Transfer (to)/from other headings   (511)   (1)   (1)   (512) 
Other movements
  
 
(811
) 
 
 
(203
) 
 
 
(169
) 
 
 
(1,184
) 
Net exchange differences   (3,520)   (98)   (203)   (3,821) 
Net closing balance, on December 31, 2023
  
 
165,562
 
 
 
3,537
 
 
 
8,124
 
 
 
177,222
 
Closing assets   475   (286)   (4)   185 
Closing liabilities   166,036   3,251   8,120   177,407 
  266 | Annual Report on Form 20-F 2023
Table of Contents
Notes to the consolidated financial statements
Note 29
Insurance contracts not measured under PAA - by component
   Best estimate
liability		 
 		  Risk adjustment   Contractual
service margin		 
 		      Total 
Opening assets   1,086   (510)   (465)   110 
Opening liabilities   271,870   4,831   11,401   288,102 
Net opening balance, on January 1, 2022
  
 
270,784
 
 
 
5,341
 
 
 
11,866
 
 
 
287,991
 
Changes in estimates that adjust contractual service margin   909   (1,232)   323   - 
Changes in estimates that result in (a reversal of) onerous contracts   1,408   (131)   -   1,277 
New contracts issued –
non-onerous
   (595)   103   493   - 
New contracts issued – onerous   27   29   -   56 
Changes that relate to future service
  
 
1,749
 
 
 
(1,231
) 
 
 
816
 
 
 
1,333
 
Earnings released from contractual service margin   -   -   (1,229)   (1,229) 
Release of risk adjustment   -   (359)   -   (359) 
Experience adjustments on current service   (47)   1   -   (46) 
Revenue recognized for incurred policyholder tax expenses   1   -   -   1 
Changes that relate to current service
  
 
(46
) 
 
 
(359
) 
 
 
(1,229
) 
 
 
(1,634
) 
Experience adjustments on claims incurred   (7)   -   -   (8) 
Changes that relate to past service
  
 
(7
) 
 
 
-
 
 
 
-
 
 
 
(8
) 
Insurance service result
  
 
1,695
 
 
 
(1,591
) 
 
 
(414
) 
 
 
(309
) 
General model
     
Interest accreted to insurance contracts   2,548   156   221   2,925 
Changes in interest rates and other financial assumptions   (28,114)   (58)   -   (28,172) 
Revaluation of changes in
non-financial
assumptions and experience adjustments to current interest rates
   (862)   19   -   (843) 
Variable fee approach
     
Change in fair value of the underlying assets of products with direct participating features   (25,351)   -   -   (25,351) 
Change in fulfilment value of products with direct participating features not recognized in CSM due to risk mitigation option   (5,799)   -   -   (5,799) 
Insurance finance (income) / expenses
  
 
(57,578
) 
 
 
117
 
 
 
221
 
 
 
(57,240
) 
Premiums received   15,444   -   -   15,444 
Claims, benefits and expenses paid   (26,454)   -   -   (26,454) 
Acquisition costs paid   (892)   -   -   (892) 
Other   (28)   -   -   (28) 
Cash flows
  
 
(11,930
) 
 
 
-
 
 
 
-
 
 
 
(11,930
) 
Contracts disposed during the period   (177)   (5)   (96)   (278) 
Transfers to disposal groups   (48,338)   (659)   (3,040)   (52,037) 
Other   -   -   5   5 
Other movements
  
 
(48,515
) 
 
 
(663
) 
 
 
(3,131
) 
 
 
(52,310
) 
Net exchange differences   8,825   231   387   9,442 
Net closing balance, on December 31, 2022
  
 
163,280
 
 
 
3,435
 
 
 
8,929
 
 
 
175,645
 
Closing assets   100   -   (64)   36 
Closing liabilities   163,381   3,436   8,865   175,681 
Annual Report on Form 20-F 2023 | 267  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Reinsurance contracts held - Movement schedule by
component, no PAA
   Best estimate
liability		 
 		  Risk adjustment   Contractual
service margin		 
 		      Total 
Opening assets   16,233   1,010   (309)   16,934 
Opening liabilities   (371)   (101)   202   (270) 
Net opening balance, on January 1, 2023
  
 
15,862
 
 
 
909
 
 
 
(107
) 
 
 
16,664
 
Changes in estimates that adjust the contractual service margin   (3)   6   (4)   - 
Changes in estimates that relate to losses and reversals of losses on underlying onerous contracts   477   67   6   550 
New reinsurance contracts issued / acquired recognized in the year   (330)   42   271   (17) 
Initial recognition of onerous underlying contracts   -   -   12   12 
Changes that relate to future service
  
 
144
 
 
 
114
 
 
 
286
 
 
 
544
 
CSM recognized for service received   -   -   (26)   (26) 
Release of risk adjustment   -   (118)   -   (118) 
Experience adjustment on current service   (217)   -   -   (217) 
Changes that relate to current service
  
 
(217
) 
 
 
(118
) 
 
 
(26
) 
 
 
(361
) 
Experience adjustment on claims component   (2)   -   -   (2) 
Changes that relate to past service
  
 
(2
) 
 
 
-
 
 
 
-
 
 
 
(2
) 
                  
Net income/expenses of reinsurance held
  
 
(76
) 
 
 
(3
) 
 
 
260
 
 
 
181
 
                  
Reinsurance finance income / (expenses)
  
 
1,013
 
 
 
48
 
 
 
(13
) 
 
 
1,048
 
Premiums paid, net of received fixed commission   2,642   -   -   2,642 
Amounts received   (3,622)   -   -   (3,622) 
Cash flows
  
 
(979
) 
 
 
-
 
 
 
-
 
 
 
(979
) 
Other movements   (132)   (176)   (63)   (371) 
Other movements
  
 
(132
) 
 
 
(176
) 
 
 
(63
) 
 
 
(371
) 
Net exchange difference   (528)   (23)   2   (550) 
Net closing balance, on December 31, 2023
  
 
15,160
 
 
 
755
 
 
 
78
 
 
 
15,993
 
Closing assets   16,184   423   (7)   16,601 
Closing liabilities   (1,024)   332   85   (608) 
  268 | Annual Report on Form 20-F 2023
Table of Contents
Notes to the consolidated financial statements
Note 29
Reinsurance contracts held - Movement schedule by
component, no PAA
   Best estimate
liability		 
 		  Risk adjustment   Contractual
service margin		 
 		      Total 
Opening assets   20,608   1,009   (328)   21,288 
Opening liabilities   (1,617)   585   561   (471) 
Net opening balance, on January 1, 2022
  
 
18,991
 
 
 
1,594
 
 
 
233
 
 
 
20,818
 
Changes in estimates that adjust the contractual service margin   244   (408)   164   - 
Changes in estimates that relate to losses and reversals of losses on underlying onerous contracts   655   (58)   10   607 
New reinsurance contracts issued / acquired recognized in the year   (8)   21   (13)   - 
Initial recognition of onerous underlying contracts   -   -   31   31 
Changes that relate to future service
  
 
891
 
 
 
(444
) 
 
 
192
 
 
 
638
 
CSM recognized for service received   -   -   42   42 
Release of risk adjustment   -   (147)   -   (147) 
Experience adjustment on current service   (274)   -   -   (274) 
Changes that relate to current service
  
 
(274
) 
 
 
(147
) 
 
 
42
 
 
 
(379
) 
Experience adjustment on claims component   (12)   -   -   (12) 
Changes that relate to past service
  
 
(12
) 
 
 
-
 
 
 
-
 
 
 
(12
) 
                  
Net income/expenses of reinsurance held
  
 
605
 
 
 
(591
) 
 
 
234
 
 
 
248
 
                  
Reinsurance finance income / (expenses)
  
 
(3,954
) 
 
 
47
 
 
 
(37
) 
 
 
(3,944
) 
Premiums paid, net of received fixed commission   3,005   -   -   3,005 
Amounts received   (4,503)   -   -   (4,503) 
Cash flows
  
 
(1,498
) 
 
 
-
 
 
 
-
 
 
 
(1,498
) 
Other movements   403   (206)   (520)   (323) 
Other movements
  
 
403
 
 
 
(206
) 
 
 
(520
) 
 
 
(323
) 
Net exchange difference   1,316   65   (17)   1,363 
Net closing balance, on December 31, 2022
  
 
15,862
 
 
 
909
 
 
 
(107
) 
 
 
16,664
 
Closing assets   16,233   1,010   (309)   16,934 
Closing liabilities   (371)   (101)   202   (270) 
Annual Report on Form 20-F 2023 | 269  
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Investment contracts with DPF - by component
   Best estimate
liability		 
 		  Risk adjustment   Contractual
service margin		 
 		      Total 
Opening assets   -   -   -   - 
Opening liabilities   20,874   109   72   21,055 
Net balance, on January 1, 2023
  
 
20,874
 
 
 
109
 
 
 
72
 
 
 
21,055
 
Changes in estimates that adjust contractual service margin   (152)   31   121   - 
Changes that relate to future service
  
 
(152
) 
 
 
31
 
 
 
121
 
 
 
-
 
Earnings released from contractual service margin   -   -   (17)   (17) 
Release of risk adjustment   -   (15)   -   (15) 
Experience adjustments on current service   4   -   -   4 
Changes that relate to current service
  
 
4
 
 
 
(15
) 
 
 
(17
) 
 
 
(28
) 
Changes that relate to past service
  
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
Insurance service result
  
 
(148
) 
 
 
16
 
 
 
104
 
 
 
(28
) 
Variable fee approach
     
Change in fair value of the underlying assets of products with direct participating features   1,921   -   -   1,921 
Insurance finance (income) / expenses
  
 
1,921
 
 
 
-
 
 
 
-
 
 
 
1,921
 
Premiums received   475   -   -   475 
Claims, benefits and expenses paid   (2,506)   -   -   (2,506) 
Cash flows
  
 
(2,030
) 
 
 
-
 
 
 
-
 
 
 
(2,030
) 
Other   170   -   1   172 
Other movements
  
 
170
 
 
 
-
 
 
 
1
 
 
 
172
 
Net exchange differences   498   3   2   503 
Net closing balance, on December 31, 2023
  
 
21,285
 
 
 
128
 
 
 
180
 
 
 
21,594
 
Closing assets   -   -   -   - 
Closing liabilities   21,285   128   180   21,594 
  270 | Annual Report on Form 20-F 2023
Table of Contents
Notes to the consolidated financial statements
Note 29
Investment contracts with DPF - by component
   Best estimate
liability		 
 		  Risk adjustment   Contractual
service margin		 
 		      Total 
Opening assets   -   -   -   - 
Opening liabilities   27,064   133   195   27,392 
Net balance, on January 1, 2022
  
 
27,064
 
 
 
133
 
 
 
195
 
 
 
27,392
 
Changes in estimates that adjust contractual service margin   110   (3)   (106)   - 
Changes that relate to future service
  
 
110
 
 
 
(3
) 
 
 
(106
) 
 
 
-
 
Earnings released from contractual service margin   -   -   (11)   (11) 
Release of risk adjustment   -   (14)   -   (14) 
Experience adjustments on current service   5   -   -   5 
Changes that relate to current service
  
 
5
 
 
 
(14
) 
 
 
(11
) 
 
 
(20
) 
Changes that relate to past service
  
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
Insurance service result
  
 
114
 
 
 
(17
) 
 
 
(117
) 
 
 
(20
) 
Variable fee approach
     
Change in fair value of the underlying assets of products with direct participating features   (3,247)   -   -   (3,247) 
Insurance finance (income) / expenses
  
 
(3,247
) 
 
 
-
 
 
 
-
 
 
 
(3,247
) 
Premiums received   511   -   -   511 
Claims, benefits and expenses paid   (2,308)   -   -   (2,308) 
Cash flows
  
 
(1,797
) 
 
 
-
 
 
 
-
 
 
 
(1,797
) 
Net exchange differences   (1,261)   (6)   (6)   (1,273) 
Net closing balance, on December 31, 2022
  
 
20,874
 
 
 
109
 
 
 
72
 
 
 
21,055
 
Closing assets   -   -   -   - 
Closing liabilities   20,874   109   72   21,055 
29.2.3 New contracts recognized
New insurance contracts recognized, no PAA
  
 
2023  
 
New contracts recognized
   
Issued non-onerous

contracts		 
 		  Issued onerous
contracts		 
 		       Total 
Present value of cash inflows   (5,155)   (545)   (5,701) 
Present value of cash outflows, excl. acquisition costs   4,593   583   5,176 
Risk adjustment for
non-financial
risk
   90   22   112 
Contractual service margin   473   -   473 
(Gain) / loss recognized on initial recognition
  
 
-
 
 
 
60
 
 
 
60
 
  
 
2022
  
 
New contracts recognized
   
Issued non-onerous

contracts		 
 		  Issued onerous
contracts		 
 		       Total 
Present value of cash inflows   (5,020)   (475)   (5,494) 
Present value of cash outflows, excl. acquisition costs   4,447   504   4,951 
Risk adjustment for
non-financial
risk
   98   27   125 
Contractual service margin   474   -   474 
(Gain) / loss recognized on initial recognition
  
 
-
 
 
 
57
 
 
 
57
 
1 The table do not hold results from Aegon the Netherlands; therefore, numbers differ from 29.2.2 Movement schedules by measurement component table
Annual Report on Form 20-F 2023 | 271  
Table of Contents

About Aegon  Governance and risk management  
Financial information
  Sustainability information
New reinsurance contracts recognized, no PAA
238
2023
 
Reinsurance
contracts		 
 
Present value of cash inflows
201
Present value of cash outflows
(531) 
Risk adjustment for
non-financial
risk
42
Contractual service margin
271
Income recognized on initial recognition
(17
) 
2022
Present value of cash inflows
251
Present value of cash outflows
(259) 
Risk adjustment for
non-financial
risk
21
Contractual service margin
(13) 
Income recognized on initial recognition
(0
) 
29.2.4 Maturity analysis contractual service margin
  
 
2023
 
   2022 
Maturity analysis CSM insurance contracts
   
 Discounted
CSM		 
 		   
  Discounted
CSM		 
 
<1 year
   839    1,076 
1-2
years
   756    802 
2-3
years
   684    723 
3-4
years
   618    654 
4-5
years
   559    591 
5-10
years
   2,071    2,210 
10-20
years
   1,850    2,024 
> 20 years
   748    849 
On December 31
  
 
8,124
 
  
 
8,929
 
  
 
2023
 
   2022 
Maturity analysis CSM reinsurance contracts held, no PAA
   
 Discounted
CSM		 
 		   
  Discounted
CSM		 
 
< 1yr
   8    (22) 
1 < 2 yrs
   7    (15) 
2 < 3
yrs
   6    (13) 
3 < 4 yrs
   6    (12) 
4 < 5 yrs
   5    (10) 
5 < 10 yrs
   18    (32) 
10 - 20 yrs
   17    (16) 
> 20 yrs
   12    13 
   
On December 31
  
 
78
 
  
 
(107
) 
  272 | Annual Report on Form 20-F 2023
Table of Contents
Notes to the consolidated financial statements
Note 29
 
29.2.5 Movement schedules contractual service margin by transition method
Contractual service margin recognized on contracts
in-force
on the transition date to IFRS 17
       Insurance contracts   Investment contracts with DPF        Reinsurance contracts held 
     MRA1)    FVA2)    Other     Total
CSM
     MRA     FVA    Other      Total
CSM
     MRA     FVA    Other     Total
CSM
  
On January 1, 2023   1,836   4,673   2,420   8,929   -    72   -    72   1    (129)   21   (107) 
Changes in estimates that adjust CSM   (40)   (105)   (32)   (176)   -    121   -    121   -    11   (14)   (4) 
Changes in estimates that relate to losses and reversals of losses on underlying onerous contracts   -   -   -   -   -    -   -    -   -    4   2   6 
New contracts issued:                
non-onerous
   -   -   473   473   -    -   -    -   -    -   283   283 
Earnings released from contractual service margin   (191)   (498)   (264)   (952)   -    (17)   -    (17)   -    9   (34)   (26) 
Insurance finance income / (expense)   8   159   57   223   -    -   -    -   -    (21)   8   (13) 
Cash flow - contracts disposed   -   (59)   -   (59)   -    -   -    -   -    -   -   - 
Net exchange differences   (57)   (128)   (17)   (203)   -    2   -    2   -    6   (5)   2 
Other   1   (42)   (68)   (110)   -    1   -    1   -    (30)   (33)   (63) 
On December 31, 2023
  
 
1,557
 
 
 
4,000
 
 
 
2,568
 
 
 
8,124
 
 
 
-
 
  
 
180
 
 
 
-
 
  
 
180
 
 
 
-
 
  
 
(149
) 
 
 
227
 
 
 
78
 
1 MRA: Modified Retrospective Approach
2 FVA: Fair Value Approach
       Insurance contracts   Investment contracts with DPF        Reinsurance contracts held 
     MRA1)    FVA2)    Other     Total
CSM
     MRA     FVA    Other      Total
CSM
     MRA     FVA    Other     Total
CSM
  
On January 1, 2022   2,639   7,036   2,191   11,866   -    195   -    195   -    238   (5)   233 
Changes in estimates that adjust CSM   (792)   1,101   15   323   -    (106)   -    (106)   -    167   (3)   164 
Changes in estimates that relate to losses and reversals of losses on underlying onerous contracts   -   -   -   -   -    -   -    —   -    3   8   10 
New contracts issued:                
non-onerous
   -   -   493   493   -    -   -    —   -    (8)   26   18 
Earnings released from contractual service margin   (205)   (764)   (260)   (1,229)   -    (11)   -    (11)   -    45   (4)   42 
Insurance finance income / (expense)   9   179   33   221   -    -   -    -   -    (37)   -   (37) 
Cash flow - contracts disposed   -   (96)   -   (96)   -    -   -    -   -    -   -   - 
Net exchange differences   186   246   (45)   387   -    (6)   -    (6)   -    (17)   -   (17) 
Other   -   (3,028)   (7)   (3,035)   -    -   -    -   -    (520)   -   (520) 
On December 31, 2022
  
 
1,836
 
 
 
4,673
 
 
 
2,420
 
 
 
8,929
 
 
 
-
 
  
 
72
 
 
 
-
 
  
 
72
 
 
 
1
 
  
 
(129
) 
 
 
21
 
 
 
(107
) 
1 MRA: Modified Retrospective Approach
2 FVA: Fair Value Approach
Other in the table above relates to derecognition of liabilities following the completion of the transaction with a.s.r.
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29.2.6 Investments and other assets allocated to contracts that were not transitioned fully retrospectively
On transition to IFRS 17, amounts were recognized in the revaluation reserve for insurance contracts, investment contracts with discretionary features and reinsurance contracts held using the modified retrospective approach and/or the fair value approach.
Part of the assets backing these groups of insurance contracts are measured at fair value through other comprehensive income. The movement in the period in the cumulative amount recognized in OCI for these assets is reflected in the table below:
Assets backing up:
        Insurance Contracts
On January 1, 2023(2,375) 
Gross revaluation1,137
Net gains/losses transferred to income statement309
Foreign currency translation differences55
Tax effect(322) 
Other47
On December 31, 2023
(1,147
) 
Assets backing up:
    Insurance Contracts
On January 1, 20226,456
Gross revaluation(12,445) 
Net gains/losses transferred to income statement425
Foreign currency translation differences540
Tax effect2,578
Other72
On December 31, 2022
(2,375
) 
Of the Gross revaluation, EUR 1,211 million was unrealized gains through equity (2022: loss of EUR 12,434 million). The Net gains/losses transferred to the income statement include EUR 437 million due to transfer disposal (2022: EUR 549 million).
29.3 Critical judgments and estimates
29.3.1 Fulfilment cash flows
The fulfillment cash flows comprise:
∎
Estimates of future cash flows;
∎
An adjustment to reflect time value of money and the financial risks related to future cash flows, to the extent that the financial risks are not included in the estimates of future cash flows and
∎
A risk adjustment for
non-financial
risk.
Each measurement element requires the use of significant judgment and estimates.
29.3.1.1 Valuation methods
Aegon’s objective in estimating future cash flows is to determine a range of scenarios that reflects the full range of possible outcomes. Each scenario specifies the amount and timing of the cash flows for a particular outcome, and the estimated probability of that outcome. The cash flows from each scenario are discounted and weighted by the estimated probability of that outcome to derive an expected present value.
When determining the expected value of the full range of possible outcomes, the objective is to incorporate all reasonable and supportable information available without undue cost or effort in an unbiased way, rather than to identify every possible scenario. In some cases, relatively simple modeling provides an answer within an acceptable range of precision. In other cases, more complex valuation methods are required to satisfy the measurement objective. For example, if cash flows reflect a series of interrelated (implicit or explicit) options and respond in a
non-linear
fashion to changes in economic conditions, then Aegon often uses stochastic modeling techniques to estimate the expected present value. Stochastic modeling involves projecting future cash flows under a large number of possible economic scenarios for market variables such as interest rates and
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Notes to the consolidated financial statements
Note 29
equity returns. Other methods that are used to measure
non-linear
cash flows include closed form solutions and replicating portfolio techniques.
29.3.1.2 Actuarial assumptions
When estimating future cash flows, Aegon sets actuarial assumptions for underwriting risk including policy claims (such as mortality, longevity or morbidity), policyholder behavior (such as lapses, surrender of policies or partial withdrawals), property & casualty loss ratios and expenses. Actuarial assumptions are reviewed annually, with the exception of expense assumptions which might be updated more frequently as a result on the quarterly monitoring of actual expenses.
Underwriting assumptions
Mortality tables applied are generally developed based on a blend of company experience and industry wide studies, taking into consideration product characteristics, own risk selection criteria, target market and past experience. Mortality experience is monitored through regular studies, the results of which are fed into the pricing cycle for new products and reflected in the liability calculation for
in-force
groups of contracts where appropriate. For contracts insuring survivorship or mortality, allowance is made for further longevity or mortality improvements. Morbidity assumptions are based on own claims severity and frequency experience, adjusted where appropriate for industry information. Industry survey is used for judgment-based assumptions like for example morbidity improvement and cost of long-term care (LTC) inflation.
Surrender and lapse rates depend on product features, policy duration and external circumstances such as the interest rate environment and competitor behavior. For policies where policyholders are expected to have financial incentive to choose a favorable lapse timing based on the market conditions, a dynamic lapse assumption is utilized to reflect expected policyholder behavior when applying multiple scenarios in measurement. Own experience, as well as industry published data, are used to in establishing assumptions. Lapse experience is correlated to mortality and morbidity levels, as higher or lower levels of surrenders may indicate future claims will be higher or lower than anticipated. Such correlations are accounted for in the mortality and morbidity assumptions based on the emerging analysis of experience.
Policyholder benefits that are directly linked to asset performance are projected at rates that are consistent with the discount rates applied. For cash flows like crediting rates, the projected cash flows reflect how the reporting unit would determine crediting rates in a given scenario based on the Group’s crediting policies. Other management actions are taken into account to the extent that they are part of Aegon’s regular policies and procedures.
Given that Aegon applies the premium allocation approach to most of its
non-life
insurance business, actuarial assumptions related to (ultimate) loss ratio assumptions only impact the fulfillment cash flows for onerous groups of contracts with remaining coverage and for contracts with incurred claims. Aegon uses a range of loss reserving techniques to estimate (ultimate) claims ratios, using historical claims development data as well as market observable inputs. Large ticket reported claims are assessed on an individual basis.
Expense assumptions
Expenses that are attributable to the fulfillment cash flows include acquisition expenses, maintenance expenses and claims settlement costs, as well as overhead costs that Aegon considers to be unavoidable when fulfilling the
in-force
contracts. Investment expenses are included in the fulfillment cash flows for contracts that provide investment-related or investment-return services, as well as for contracts where Aegon performs investment activities that enhance the policyholders’ benefits from insurance coverage. Aegon’s expense assumptions are based on the current level of expenses, adjusted for future expense inflation and the impact of known
one-off
projects (such as planned cost saving initiatives or projects to implement additional regulatory reporting requirements). In
not-at-scale
units, further adjustment is made to reflect a long-term scale of business.
When allocating the attributable expenses to groups of contracts, Aegon leverages allocation approaches used for pricing or regulatory reporting. Where IFRS requires a greater level of granularity, additional allocation keys are applied that have been defined based on, for example, further expense studies. The expense inflation assumption is split into a financial component that is calibrated to market observables and a
non-financial
component that is set as an actuarial assumption. The
non-financial
component of the expense inflation assumption represents the estimated difference between general market inflation implied by the market and expense inflation that is specific to Aegon’s product characteristics. Some inflation assumptions (such as LTC utilization and health medical inflation in the Americas) do not include a financial component but are entirely set as an actuarial assumption, given that they are weakly correlated with general inflation indices and there is no hedge market for such rates.
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Discount rates and other financial assumptions
Aegon adjusts the estimated future cash flows of a group of contracts to reflect the time value of money and the financial risks related to those cash flows, to the extent that the financial risks are not included in the estimates of cash flows. The discount rates applied to the estimates of the future cash flows:
∎
Reflect the time value of money, the characteristics of the cash flows and the liquidity characteristics of the insurance contracts;
∎
Are consistent with observable current market prices (if any) for financial instruments with cash flows whose characteristics are consistent with those of the insurance contracts, in terms of, for example, timing, currency and liquidity; and
∎
Exclude the effect of factors that influence observable market prices but do not affect the future cash flows of the insurance contracts.
No implicit adjustments for
non-financial
risk are included in the discount rates, as the risk adjustment for
non-financial
risks is explicitly included in the fulfillment cash flows.
When determining the discount rates at the date of initial recognition of a group of contracts, Aegon uses weighted-average discount rates over the period that contracts in that group are issued.
IFRS explicitly mentions two calibration options for the discount rate, namely the
“top-down
approach” and
“bottom-up”
approach. Aegon has generalized both approaches into a direct discounting technique in which discount rates are determined as the sum of the risk-free rate plus a percentage of the illiquidity premium (ILP). The ILP is an extra spread that an investor can earn by investing in a security that offers limited or no ability for the investor to exit the investment prior to its maturity. If an insurance liability is illiquid (meaning that the policyholder has limited or no ability to cash it in prior to maturity or contingency-based payment), the liability is discounted at a rate that includes an ILP because illiquid assets (earning an illiquidity premium) may be purchased to back or replicate that liability.
Risk-free yield curve
Aegon has identified various rates available in the EUR, GBP and USD markets that can be used as a basis for the risk-free yield curve, including EURIBOR swap rates for EUR, reformed Sterling Overnight Index Average (SONIA) for GBP, and Secured Overnight Funding Rates (SOFR) and US Treasury rates for USD. EURIBOR rates are adjusted for credit risk by subtracting a credit risk allowance. No adjustment is made to overnight swap rates and US Treasury rates, as the credit risk of these instruments is deemed negligible.
A full risk-free yield curve is derived by first interpolating between tenors for which market data is available, and then extrapolating the yield curve beyond market observable maturities. Discount rates converge linearly in 10 years to an ultimate forward rate. A uniform last liquid point for EUR and USD is set at 30 years, GBP is set at 50 years. The ultimate forward rates reflect a long-term view on nominal interest rates and is set by management per currency, considering expected real interest rates and long-term inflation together with the current market environment. The ultimate forward rates have been reviewed as part of the annual Group economic assumptions update and revised to a common level of 3.45% effective December 31, 2023. (December 31, 2022: 3.50%,3.65% and 3.45% for the USD, EUR, and GBP respectively.)
Aegon reviews the risk-free last liquid point and ultimate forward rates quarterly which, although expected to be infrequent, may lead to assumption updates if there are significant changes in market conditions.
Yield curves (zero coupon rates excluding ILP)
December 31, 2023
     1 year      5 years      10 years      15 years      20 years 
EUR   3.36%    2.33%    2.39%    2.47%    2.40% 
GBP   4.74%    3.35%    3.28%    3.40%    3.43% 
USD   4.83%    3.89%    3.90%    4.00%    4.39% 
Yield curves (zero coupon rates excluding ILP)
December 31, 2022
     1 year      5 years      10 years      15 years      20 years 
EUR   3.18%    3.10%    3.05%    2.98%    2.73% 
GBP   4.46%    4.06%    3.71%    3.62%    3.54% 
USD   4.97%    4.03%    3.83%    3.94%    4.31% 
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Notes to the consolidated financial statements
Note 29
Illiquidity premium (ILP)
Aegon sets ILPs at the level of the reporting unit or major business unit, reflecting how it manages the investments and ALM risk for the given block of liabilities. For example, in the US Aegon has set ILPs by lines of business which has resulted in 9 ILP curves. For each unit, an ILP curve is constructed that is based on the market-observables returns on a reference portfolio of assets. The reference portfolio is based on the unit’s investment policy target mix of fixed interest securities and excludes alternative investments (such as equities and real estate investments).
To derive the ILP curve for respective lines of business, market observable spreads are sourced and adjusted for expected and unexpected default losses. The ILP is based on the line of business reference portfolio and investment strategy.
The full ILP curve is derived by interpolating between the observable tenors and then extrapolating the yield linearly beyond the ILP last liquid point to the ultimate forward ILP. The last liquid point can be set separately for each duration bucket or, as a practical simplification, as a single point in time for the entire reference portfolio. The ultimate forward spread is set based on historical 50th percentile spread adjusted for expected and unexpected default losses.
Aegon updates the reference portfolio quarterly, and the ILP last liquid point and ILP ultimate forward rate are revised accordingly. The most significant products of Aegon Ltd. are presented below.
ILP per portfolio, December 31, 2023
     1 year      5 years      10 years      15 years      20 years      30 years 
Fixed Deferred Annuity   1.15%    1.21%    1.12%    1.11%    1.11%    1.11% 
Indexed Universal Life   1.20%    1.24%    1.20%    1.18%    1.18%    1.21% 
Long-Term Care   0.97%    0.98%    0.98%    1.15%    1.20%    1.30% 
Traditional Life   0.99%    1.01%    1.02%    1.15%    1.19%    1.28% 
Universal Life   1.01%    1.03%    1.02%    1.13%    1.17%    1.26% 
Variable Annuities   0.69%    0.69%    0.68%    0.67%    0.64%    0.67% 
Annuities   0.89%    0.89%    0.89%    0.89%    0.89%    0.76% 
Individual Protection   0.49%    0.49%    0.49%    0.49%    0.49%    0.40% 
ILP per portfolio, December 31, 2022
     1 year      5 years      10 years      15 years      20 years      30 years 
Fixed Deferred Annuity   1.44%    1.48%    1.31%    1.12%    1.12%    1.12% 
Indexed Universal Life   1.48%    1.45%    1.33%    1.22%    1.22%    1.21% 
Long-Term Care   1.37%    1.38%    1.38%    1.32%    1.32%    1.32% 
Traditional Life   1.41%    1.42%    1.40%    1.31%    1.31%    1.31% 
Universal Life   1.43%    1.44%    1.39%    1.29%    1.28%    1.28% 
Variable Annuities   0.67%    0.67%    0.67%    0.67%    0.67%    0.68% 
Annuities   1.08%    1.08%    1.08%    1.08%    1.08%    1.03% 
Individual Protection   0.50%    0.50%    0.50%    0.50%    0.50%    0.42% 
Illiquidity factor
The illiquidity factor reflects the liquidity characteristics of a certain group of insurance contracts. Groups of contracts whose cash flows are not dependent on the underlying assets are assigned an illiquidity factor of 100%. Groups of contracts for which the cash flows predominantly vary with the underlying assets are assigned an illiquidity factor of 0%. For example, Aegon UK does not apply an illiquidity factor to the Unit Linked products. For a few products that include both types of cash flows, such as US variable annuity products with guaranteed minimum withdrawal benefits, a combination of 100% and 0% ILP is used.
Other significant financial assumptions
Interest rate volatilities are modelled based on swaption prices, in line with current market pricing.
Risk adjustment for
non-financial
risk
The risk adjustment for
non-financial
risk is included explicitly as a separate component of the fulfillment cash flows. It reflects the compensation that Aegon requires for bearing the uncertainty about the amount and timing of the cash flows that arises from
non-financial
risk as it fulfils insurance contracts.
The
non-financial
risks considered include mortality, morbidity, policyholder behavior, expense, and product specific operational risk.
Non-financial
risks that do not arise from the insurance contracts, such as general operational risk, are not reflected in the
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risk adjustment. The risk adjustment reflects both the risk that actual experience differs from the best estimate assumption used to project future cash flows due to
mis-estimation
(parameter risk), as well as the risk of random fluctuations around the true estimates (contagion risk).
Diversification benefits are recognized at the Group level. To align with market practice, Aegon only reflects the degree of diversification between
non-financial
risks, and contrary to its pricing methodology, ignores diversification benefits between financial and
non-financial
risks. Diversification effects include the impact of reinsurance ceded, as well insurance contracts classified as held for sale.
Aegon generally applies a simplified confidence interval technique which estimates the risk adjustment for
non-financial
risk using a confidence level (probability of sufficiency) approach at the 80th percentile. Under this approach, a probability distribution is assumed for each particular risk and the amount above the expected present value of future cash flows determined (using a shock factor). The impacts for each risk are then aggregated using a correlation matrix, reflecting diversification between the various
non-financial
risk types. For some products, Aegon measures contagion risk using the Conditional Tail Expectation technique at the 75th percentile. Regardless of the technique applied, the confidence interval is computed across the entire product lifetime in order to fully reflect the risk.
Changes in methods and inputs used to measure fulfillment cash flows
Actuarial assumptions are reviewed periodically in the second quarter for the United States and in the fourth quarter for Europe and Asia, based on historical experience, observable market data, including market transactions such as acquisitions and reinsurance transactions, anticipated trends and legislative changes. Similarly, the models and systems used for determining our liabilities and reinsurance assets are reviewed periodically, and if deemed necessary, updated based on emerging best practice and available technology.
During 2023, Aegon implemented actuarial assumption and model updates which are mainly related to Aegon’s business in the Americas.
Assumption updates
(non-financial
assumptions) are absorbed in the CSM where there are sufficient balances. The change in CSM will impact the amount amortized in the current period and all prospective periods. The total
pre-tax
impact of
non-financial
assumption changes at the end of 2023 is a EUR 497 million increase to liabilities. Most of the impact was driven by the model update on policyholder behaviour mainly on Indiviual Life and Variable Annuities lines of business and expense assumption updates. Main assumption updates are all on morbidity but they are offset by a change in CSM so this change has limited impact on total liabilites.
Aegon did not make any significant changes to the contract boundaries in the current reporting period, nor did it update the approaches used to determine the discount rate or estimate the risk adjustment for
non-financial
risk.
29.3.2 Relevant other significant judgments
In addition to the judgments and estimates made in measuring the fulfillment cash flows that are described above, other significant judgments are applied in determining:
∎
The relative weighting of coverage units when multiple services are provided;
∎
The
non-distinct
investment component, which is excluded from insurance revenue; and
∎
The adjustment for nonperformance risk that is applied to reinsurance contracts held.
29.3.2.1 Weighting of coverage units
Often one single metric can be defined that captures multiple services provided under one contract. Different approaches are used by Aegon when assessing the relative weighting of the benefits of different services. In some cases, the weighting is done in a way that directly flows from the composition of the benefits under the contract. For example, for a life insurance product with an account value that can be surrendered, coverage units can be based on the total death benefit as this amount comprises both the account value (investment service) and the excess death benefits (insurance service). In other cases, significant judgment is required. For example, for US long-term care insurance products, multiple drivers impact the maximum daily benefit to which a policyholder could be entitled. To reflect this, the coverage unit is computed using a combination of the initial allowed benefit, the benefit period, as well as adjustments for any inflation protection and if the policy is
paid-up
on the contingent
non-forfeiture
option.
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Notes to the consolidated financial statements
Note 3429
   
   
34 Insurance contracts
34.129.3.2.2 Investment component
Aegon reports insurance revenue and insurance service expenses excluding
non-distinct
investment components. An investment component is defined as the amount that an insurance contract requires Aegon to repay to a policyholder, even if the insured event does not occur.
Aegon determines the investment component, when a claim is incurred as an amount is released from the liability for remaining coverage. When doing so it considers which payments would have been possible immediately prior to the claims date. For example, a payment might have needed to be made to the policyholder in light of policy surrender, the uptake of a policy loan or the partial withdrawal, or the transfer of an insurance policy to another insurer. The investment component is defined net of any penalty or similar charges.
29.3.2.3 Adjustment to reinsurance contracts held for
non-performance
risk
The nonperformance risk by the reinsurer is based on Aegon’s credit exposure, net of collateral, and the perceived counterparty default risk. In assessing the credit exposure, Aegon takes into account treaty provisions for
non-performance,
such as the automatic recapture of the reinsured business on default of the reinsurer.
When estimating a reinsurer’s default risk, Aegon considers the current financial condition and credit standing of the reinsurer, expert judgment specific to the local reinsurance market and historical data (such as Moody’s Loss Given Default rates). The ultimate adjustment reflects the risk of potential reinsurance counterparty failure due to default (i.e. credit events), as well as disputes resulting in reduced payments and the potential for current conditions to change over time.
29.4 Underwriting risk
Aegon’s earnings depend significantly upon the extent to which actual claims experience differs from the assumptions used in setting the prices for products and establishing the technical liabilities and liabilities for claims. To the extent that actual claims experience is less favorable than the underlying assumptions used in establishing such liabilities, income would be reduced. Furthermore, if these higher claims were part of a permanent trend, Aegon may be required to change best estimate assumptions for future claims which could increase the required reserves for these future claims, which could reduce income. In addition, certain acquisition costs related to the sale of new policies and the purchase of policies already in force have been recorded as assets on the statement of financial position and are being amortized into the income statement over time. If the assumptions relating to the future profitability of these policies (such as future claims, investment income and expenses) are not realized, the amortization of these costs could be accelerated and may even require write offs should there be an expectation of unrecoverability. This could have a materially adverse effect on Aegon’s business, results of operations and financial condition.
Sources of underwriting risk include policyholder behavior (such as lapses, surrender of policies or partial withdrawals), policy claims (such as mortality, longevity or morbidity) and expenses. For some product lines, Aegon is at risk if policy lapses increase as sometimes Aegon is unable to fully recover upfront expenses in selling a product despite the presence of commission recoveries or surrender charges and fees. There are also products where Aegon is at risk if lapses decrease, for example where this would result in a higher utilization rate of product guarantees. For mortality and morbidity risk, Aegon sells certain types of policies that are at risk if mortality or morbidity increases, such as term life insurance and accident insurance, Aegon also sells certain types of policies that are at risk if mortality decreases (longevity risk) such as annuity products. Aegon is also at risk if expenses are higher than the expenses assumed beforehand by management and that were priced into the products.
Aegon monitors and manages its underwriting risk by underwriting risk type. Attribution analysis is performed on earnings and reserve movements in order to understand the source of any material variation in actual results from what was expected. Aegon’s units also perform experience studies for underwriting risk assumptions, comparing Aegon’s experience to industry experience as well as combining Aegon’s experience and industry experience based on the depth of the history of each source to Aegon’s underwriting assumptions. Where policy charges are flexible in products, Aegon uses these analyses as the basis for modifying these charges, with a view to maintain a balance between policyholder and shareholder interests. Aegon also has the ability to reduce expense levels over time, thus mitigating unfavorable expense variation.
Another way to mitigate underwriting risk is through reinsurance. Aegon uses reinsurance to primarily manage and diversify risk, limit volatility, improve capital positions, limit maximum losses and gain access to reinsurer support. While the objectives and use can vary by region due to local market considerations and product offerings, the use of reinsurance is coordinated and monitored globally.
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The key areas where reinsurance is used is to reduce our exposure to mortality and morbidity risk primarily through a combination of quota-share and Excess of Loss reinsurance. Also, Excess of Loss reinsurance is used to limit our exposure to large losses on
non-life
business.
In order to minimize its reinsurer defaults exposure, Aegon regularly monitors the creditworthiness of its reinsurers, and where appropriate, arranges additional protection through letters of credit, trust agreements and over-collateralization. For certain agreements, funds are withheld for investment rather than relying on the reinsurer to meet investment expectations. Default exposure is further reduced by using multiple reinsurers within certain reinsurance agreements.
External reinsurance counterparties are, in general, major global reinsurers. At the same time, local reinsurers are utilized to ensure a balance for local capacity and diversification.
Concentration of underwriting risk
     Americas    United Kingdom      International         Total 
Insurance contracts
        
Direct participating contracts   70,436    39,687    193    110,315 
Without direct participation contracts   59,873    642    6,432    66,946 
Investment contracts with DPF
        
Direct participating contracts   -    21,594    -    21,594 
On December 31, 2023
  
 
130,308
 
  
 
61,922
 
  
 
6,625
 
  
 
198,855
 
Concentration of underwriting risk
     Americas    United Kingdom      International         Total 
Insurance contracts
        
Direct participating contracts   69,163    36,694    187    106,044 
Without direct participation contracts   61,730    927    7,383    70,039 
Investment contracts with DPF
        
Direct participating contracts   -    21,055    -    21,055 
On December 31, 2022
  
 
130,892
 
  
 
58,676
 
  
 
7,570
 
  
 
197,139
 
Sensitivity analysis of net result, shareholders’ equity and CSM to changes in various underwriting risks
Sensitivity analysis of net result and shareholders’ equity to various underwriting risks is shown in the table that follows. Aegon’s best estimate assumptions already include our view of expected future developments and the sensitivities represent an increase or decrease of lapse rates, mortality rates and morbidity rates, compared to Aegon’s best estimate assumptions. These underwriting sensitivities were run using a permanent shock applied to all of Aegon’s products, exposed to an increase and to a decrease in the corresponding rates. The table below indicatesDue to the nature of IFRS and how changes in assumptions are absorbed by the CSM while a contract is not onerous, but are reflected in the net result if it is onerous, it is possible that the morbidityresults of opposite sensitivities seem counterintuitive. For example we see how both a mortality up and down sensitivity haslead to a negative net result. This happens as the largest impact and in aggregate, Aegon iscontracts that are exposed to mortality increases, become onerous under a decreasemortality up sensitivity, leading to a negative net result. On the other hand, under a mortality down sensitivity the positive effects are absorbed by an increase in mortality rates.
CSM, leading to higher net results in the future but not in the current net result shown in the table.
 
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Notes to the consolidated financial statements
Note 29
  
  
   2023 
   On net result   On shareholders’ equity   On CSM 
Estimated approximate effect   Gross of
reinsurance
    Net of
reinsurance
    Gross of
reinsurance
    Net of
reinsurance
    Gross of
reinsurance
    Net of
reinsurance
  
Without direct participation contracts
       
20% increase in lapse rates   (95)   (58)   (43)   (7)   (126)   (151) 
20% decrease in lapse rates   57   35   41   18   117   169 
5% increase in mortality rates   (520)   (87)   (443)   (19)   (86)   11 
5% decrease in mortality rates   419   11   338   (62)   177   55 
10% increase in morbidity rates   (139)   (138)   (153)   (152)   (759)   (746) 
10% decrease in morbidity rates   53   53   75   77   908   894 
5% increase in expenses   (14)   (12)   (12)   (10)   (133)   (134) 
5% decrease in expenses   36   36   35   35   163   164 
Direct participating contracts
       
20% increase in lapse rates   55   48   56   58   (32)   (336) 
20% decrease in lapse rates   (70)   (53)   (65)   (62)   123   428 
5% increase in mortality rates   (84)   (78)   (71)   (67)   (699)   (314) 
5% decrease in mortality rates   (5)   (16)   (15)   (23)   835   436 
10% increase in morbidity rates   -   -   -   -   -   - 
10% decrease in morbidity rates   -   -   -   -   -   - 
5% increase in expenses   (13)   (13)   (13)   (14)   (205)   (201) 
5% decrease in expenses   12   12   13   13   206   203 
Non-life
contracts
       
10% increase in claims   (6)   (5)   (8)   (6)   -   - 
10% decrease in claims   6   5   9   6   -   - 
       2022             
   On net result   On shareholders’ equity   On CSM 
Estimated approximate effect   Gross of
reinsurance		 
 		  Net of
reinsurance		 
 		  Gross of
reinsurance		 
 		  Net of
reinsurance		 
 		  Gross of
reinsurance		 
 		  Net of
reinsurance		 
 
Without direct participation contracts
       
20% increase in lapse rates   (94)   (61)   (34)   (2)   67   (172) 
20% decrease in lapse rates   72   42   46   15   (83)   205 
5% increase in mortality rates   (507)   (84)   (451)   (33)   (343)   (14) 
5% decrease in mortality rates   422   11   362   (43)   430   78 
10% increase in morbidity rates   (121)   (119)   (94)   (92)   (833)   (819) 
10% decrease in morbidity rates   33   28   11   8   980   969 
5% increase in expenses   (7)   (6)   (2)   (1)   (157)   (152) 
5% decrease in expenses   5   4   1   -   183   153 
Direct participating contracts
       
20% increase in lapse rates   43   29   69   50   187   29 
20% decrease in lapse rates   (106)   (72)   (125)   (92)   68   188 
5% increase in mortality rates   (47)   (22)   (37)   (15)   (565)   (365) 
5% decrease in mortality rates   10   (14)   -   (21)   623   411 
10% increase in morbidity rates   -   -   -   -   -   - 
10% decrease in morbidity rates   -   -   -   -   -   - 
5% increase in expenses   (8)   (7)   (7)   (7)   (220)   (219) 
5% decrease in expenses   5   5   5   5   221   220 
Non-life
contracts
       
10% increase in claims   (1)   (1)   (1)   (1)   -   - 
10% decrease in claims   1   1   1   1   -   - 
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281  		 
 
Table of Contents
LOGO 
About Aegon
Governance and risk management
  
Financial information
Non-financial  Sustainability information
   
   
Sensitivity analysis of net result and shareholders’ equity to changes in various underwriting risks
   
      2022
1)
        2021
1)
 
Estimated approximate effect      On shareholders’
equity		        On net result  
    On shareholders’
equity
        On net result 
20% increase in lapse rates
   (1)   1   108   109 
20% decrease in lapse rates
   (12)   (16)   (110)   (115) 
5% increase in mortality rates
   (140)   (147)   340   295 
5% decrease in mortality rates
   (50)   (46)   (434)   (378) 
10% increase in morbidity rates
   (389)   (394)   (292)   (284) 
10% decrease in morbidity rates
   108   109   178   175 
1 
Includes the approximate effects of the disposal group
34.2 Insurance contracts for general account
    
                    2022  
                      2021  
Life insurance
   75,084    110,691 
Non-life
insurance
          
- Unearned premiums and unexpired risks
   6,181    6,548 
- Outstanding claims
   1,683    2,247 
- Incurred but not reported claims
   460    816 
Incoming reinsurance
   3,901    4,120 
At December 31
  
 
87,309
 
  
 
124,422
 
The decrease in Insurance contracts for general account in 2022 is mainly the result of the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
    
                    2022  
                      2021  
Non-life
insurance:
          
- Accident and health insurance
   8,324    9,374 
- General insurance
   -    237 
Total
non-life
insurance
  
 
8,324
 
  
 
9,611
 
Movements during the year in life insurance:
  
                    2022  
                      2021  
At January 1
   110,691    109,062 
Disposals
   (576)    - 
Portfolio transfers and acquisitions
   (18)    (26) 
Gross premium and deposits – existing and new business
   6,070    6,033 
Unwind of discount / interest credited
   3,593    4,037 
Insurance liabilities released
   (10,364)    (9,490) 
Changes in valuation of expected future benefits
   (2,840)    (1,635) 
Loss recognized as a result of liability adequacy testing
   (2,239)    (236) 
Shadow accounting adjustments
   (3,352)    (1,821) 
Net exchange differences
   4,338    4,713 
Transfer (to) / from reinsurance assets
   273    36 
Transfers to disposal groups
   (30,491)    - 
Other
   -    17 
At December 31
  
 
75,084
 
  
 
110,691
 
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Table of Contents
Notes to the consolidated financial statements
Note 34
Sensitivity analysis of net result and shareholders’ equity
  Estimated approximate
effects on net result		  
      Estimated approximate
effects on
shareholders’ equity
 
2022
1)
         
Shift up 50 basis points - Bond credit spreads
   (237)   (1,463) 
Shift down 50 basis points - Bond credit spreads
   233   1,567 
Shift up 50 basis points - Mortgage spreads
   (314)   (280) 
Shift down 50 basis points - Mortgage spreads
   156   190 
Shift up 5 basis points - Liquidity premium
   97   129 
Shift down 5 basis points - Liquidity premium
   (77)   (42) 
   
2021
1)
         
Shift up 50 basis points - Bond credit spreads
   (192)   (2,418) 
Shift down 50 basis points - Bond credit spreads
   169   2,387 
Shift up 50 basis points - Mortgage spreads
   (444)   (401) 
Shift down 50 basis points - Mortgage spreads
   452   496 
Shift up 5 basis points - Liquidity premium
   136   178 
Shift down 5 basis points - Liquidity premium
   (148)   (104) 
1 
Includes the approximate effects of the disposal group
Movements during the year in
non-life
insurance:
  
                                2022
                                  2021 
At January 1
   9,611   9,118 
Disposals
   (115)   (25) 
Portfolio transfers and acquisitions
   -   1 
Gross premiums – existing and new business
   1,310   1,508 
Unwind of discount / interest credited
   536   479 
Insurance liabilities released
   (1,198)   (992) 
Changes in valuation of expected future claims
   41   (36) 
Change in unearned premiums
   (488)   (731) 
Change in unexpired risks
   -   - 
Incurred related to current year
   642   670 
Incurred related to prior years
   262   267 
Release for claims settled current year
   (211)   (269) 
Release for claims settled prior years
   (822)   (757) 
Shadow accounting adjustments
   (734)   (153) 
Change in IBNR
   (98)   (59) 
Net exchange differences
   550   592 
Transfers to disposal groups
   (961)   - 
Other
   -   (1) 
At December 31
  
 
8,324
 
 
 
9,611
 
Movements during the year in incoming reinsurance:
  
                                2022
                                  2021 
At January 1
   4,120   3,965 
Gross premium and deposits – existing and new business
   1,142   1,276 
Unwind of discount / interest credited
   199   192 
Insurance liabilities released
   (1,885)   (1,562) 
Changes in valuation of expected future benefits
   91   (36) 
Shadow accounting adjustments
   (30)   (7) 
Loss recognized as a result of liability adequacy
   (11)   (3) 
Net exchange differences
   276   296 
Other
   (2)   (1) 
At December 31
  
 
3,901
 
 
 
4,120
 
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2022
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Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
34.3 Insurance contracts for account of policyholders
Insurance contracts for account of policyholders
  
                    2022
                      2021 
At January 1
   149,323   135,441 
Disposal of a business
   (192)   - 
Portfolio transfers and acquisitions
   (73)   (547) 
Gross premium and deposits – existing and new business
   4,831   5,532 
Unwind of discount / interest credited
   (24,402)   14,994 
Insurance liabilities released
   (10,190)   (13,199) 
Fund charges released
   (1,681)   (1,680) 
Changes in valuation of expected future benefits
   (1,121)   (145) 
Transfer (to) / from insurance contracts
   (284)   783 
Net exchange differences
   3,773   8,144 
Transfers to disposal groups
   (19,577)   - 
Other
   -   1 
At December 31
  
 
100,409
 
 
 
149,323
 
35 Investment contracts
35.1 Investment contracts for general account
29.5 Risk mitigation
    Without discretionary
participation features		  With discretionary
    participation features		                      Total 
At January 1, 2022
   21,573   194   21,767 
Deposits
   22,695   -   22,695 
Withdrawals
   (23,276)   -   (23,276) 
Investment contracts liabilities released
   -   (11)   (11) 
Interest credited
   268   -   268 
Net exchange differences
   642   (10)   632 
Transfer (to)/from other headings
   797   -   797 
Transfers to disposal groups
   (12,179)   -   (12,179) 
Other
   (35)   -   (35) 
At December 31, 2022
  
 
10,485
 
 
 
174
 
 
 
10,658
 
    
At January 1, 2021
   20,889   185   21,075 
Deposits
   20,947   -   20,947 
Withdrawals
   (21,936)   -   (21,936) 
Investment contracts liabilities released
   -   (3)   (3) 
Interest credited
   256   -   256 
Net exchange differences
   660   12   672 
Transfer (to)/from other headings
   780   -   780 
Other
   (23)   -   (23) 
At December 31, 2021
  
 
21,573
 
 
 
194
 
 
 
21,767
 
Investment contracts consist of the following:
  
                    2022
                       2021 
   
Institutional guaranteed products
   179    187 
Fixed annuities
   10,230    9,543 
Savings accounts
   -    11,586 
Investment contracts with discretionary participation features
   174    194 
Other
   76    256 
At December 31
  
 
10,658
 
  
 
21,767
 
The decrease in Investment contracts for general account in 2022 is mainly the result of the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
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Table of Contents
Notes to the consolidated financial statements
Note 36
35.2 Investment contracts for account of policyholders
    Without discretionary
participation features		  With discretionary
participation features		          Total   
At January 1, 2022
   71,242   33,350        104,592 
Gross premium and deposits – existing and new business
   11,155   677        11,832 
Withdrawals
   (15,132)   -        (15,132) 
Disposal of a business
   (182)   -        (182) 
Interest credited
   (9,691)   (4,007)        (13,698) 
Investment contracts liabilities released
   -   (3,182)        (3,182) 
Fund charges released
   (202)   -        (202) 
Net exchange differences
   382   (1,537)        (1,154) 
Transfer (to)/from other headings
   (1,396)   -        (1,396) 
Transfers to disposal groups
   (925)   -        (925) 
Other
   2   -        2 
At December 31, 2022
  
 
55,254
 
 
 
25,301
 
      
 
80,555
 
     
At January 1, 2021
   59,625   31,999        91,624 
Gross premium and deposits – existing and new business
   11,185   810        11,995 
Withdrawals
   (10,716)   -        (10,716) 
Interest credited
   7,572   3,130        10,702 
Investment contracts liabilities released
   -   (3,815)        (3,815) 
Fund charges released
   (209)   -        (209) 
Net exchange differences
   4,256   2,097        6,353 
Transfer (to)/from other headings
   (473)   (871)        (1,344) 
Other
   1   -        1 
At December 31, 2021
  
 
71,242
 
 
 
33,350
 
      
 
104,592
 
The decrease in Investment contracts for account of policyholders in 2022 is mainly the result of the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
36 Guarantees in insurance contracts
For financial reporting purposes Aegon distinguishes between the following types of minimum guarantees:
a.
Financial guarantees: these guarantees are treated as bifurcated embedded derivatives, valued at fair value and presented as derivatives (refer to note 2.9 and note 44 Fair value);
b.
Total return annuities: these guarantees are not bifurcated from their host contracts because they are presented and valued at fair value together with the underlying insurance contracts (refer to note 2.19);
c.
Life contingent guarantees in the United States: these guarantees are not bifurcated from their host contracts, presented and valued in accordance with insurance accounting together with the underlying insurance contracts (refer to note 2.19); and
d.
Minimum investment return guarantees in the Netherlands: these guarantees are not bifurcated from their host contracts, valued at fair value and presented together with the underlying insurance contracts (refer to note 2.19 and note 51).
In addition to the guarantees mentioned above, Aegon has traditional life insurance contracts that include minimum guarantees that are not valued explicitly; however,chosen to apply the adequacyrisk mitigation option and recognize changes in fulfillment value of all insurance liabilities, net of VOBA and DPAC, and including all guarantees, are assessed periodically (refer to note 2.19).
a. Financial guarantees
In the United States, a guaranteed minimum withdrawal benefit (GMWB) is offered directly on some variable annuity products Aegon issues and is also assumed from a ceding company. Variable annuities allow a customer to provide for the future on a
tax-deferred
basis and to participate in equity or bond market performance. Variable annuities allow a customer to select payout options designed to help meet the customer’s need for income upon maturity, including lump sum payment or income for life or for a period of time. This benefit guarantees that a policyholder can withdraw a certain percentage of the account value, starting at a certain age or duration, for either a fixed period or during the life of the policyholder.
In the Netherlands, individual variable unit-linked products have a minimum benefit guarantee if premiums are invested in certain funds. The sum insured at maturity or upon the death of the beneficiary has a minimum guaranteed return
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2022
  |  
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Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
(with direct participating features in the rangeP&L and OCI, instead of 3% to 4%) ifadjusting the premium has been paid for a consecutive period of at least ten years and is invested in a mixed fund and/or fixed-income funds. No guarantees are given if the invested amount is in equity only.
CSM. The following table provides information on the liabilities for financial guarantees for minimum benefits, net of present value of the expected future premiums that are received to cover these guarantees:
   
2022
      2021          
    
United States 
1)
  
The Netherlands 
2)
       
Total 
3)
  United States 
1)
  The Netherlands 
2)
       Total 
3)
 
At January 1
   1,830   1,413        3,243   2,715   2,032        4,747 
Incurred guarantee benefits
4)
   (1,251)   (660)        (1,911)   (1,047)   (619)        (1,666) 
Paid guarantee benefits
   (4)   -             (4)   (2)   -             (2) 
Net exchange differences
   136   -        136   164   -        164 
Transfers to disposal groups
   -   (753)        (753)   -   -        - 
At December 31
  
 
711
 
 
 
-
 
      
 
711
 
 
 
1,830
 
 
 
1,413
 
      
 
3,243
 
         
Account value
5)
   27,752   -        27,752   34,945   9,748        44,693 
Net amount at risk
6)
   452   -        452   314   1,538        1,852 
1 
Guaranteed minimum accumulation and withdrawal benefits.
2 
Fund plan and unit-linked guarantees.
3 
Balances are included in the derivatives liabilities on the face of the statement of financial position; refer to note 24 Derivatives.
4 
Incurred guarantee benefits mainly comprise the effect of guarantees from new contracts, releases related to expired
out-of-the-money
guarantees and fair value movements during the reporting year.
5
Account value reflects the actual fund value for the policyholders.
6 
The net amount at risk represents the sum of the positive differences between the discounted maximum amount payable under the guarantees and the account value.
The decrease of incurred guarantee benefits in 2022 mainly relates to significantly increased interest rates, partly offset by decreased equity markets. The increased interest rates and decreased equity markets also decreased account value in 2022.
Transamerica mitigates the exposure from the elective guaranteed minimum withdrawal benefit rider issued with a ceding company’s variable annuity contracts. The rider is essentially a return of premium guarantee, which is payable over a period of at least 14 years from the date that the policyholder elects to start withdrawals. At contract inception, the guaranteed remaining balance is equal to the premium payment. The periodic withdrawal is paid by the ceding company until the account value is insufficient to cover additional withdrawals. Once the account value is exhausted, Aegon pays the periodic withdrawals until the guaranteed remaining balance is exhausted. At December 31, 2022, the reinsured account value was EUR 1.4 billion (2021: EUR 1.8 billion) and the guaranteed remaining balance was EUR 0.8 billion (2021: EUR 0.9 billion).
The GMWB rider Aegon assumed from the ceding company is accounted for as a derivative and is carried in Aegon’s statement of financial position at fair value. At December 31, 2022, the contract had a value of EUR 8 million (2021: EUR 39 million). Aegon entered into a derivative program to mitigate the overall exposure to equity market and interest rate risks associated with the reinsurance contract. This program involves selling equity futures contracts and equity total return swap contracts (S&P 500, Midcap, Russell 2000, and the MCSI EAFE index in accordance with Aegon’s exposure) to mitigate the effect of equity market movement on the reinsurance contracts and the purchase of interest rate swaps, treasury futures and treasury forwards to mitigate the effect of movements in interest rates on the reinsurance contracts.
Aegon the Netherlands provides guarantees to its customers on expiry date for certain insurance contracts. In order to mitigate the risks related to the guarantees Aegon the Netherlands has setup a hedging program. Aegon the Netherlands does not use reinsurance in order to mitigate risks related to insurance contracts with a guarantee component.
b. Total return annuities
Total Return Annuity (TRA) is an annuity product in the United States which provides customers with a pass-through of the total return on an underlying portfolio of investment securities (typically a mix of corporate and convertible bonds) subject to a cumulative minimum guarantee. Both the assets and liabilities are carried at fair value, however, due to the minimum guarantee not all of the changes in the market value of the asset will be offset in the valuation of the liability. This product exists for the fixed annuity line of business and represents a closed block.
The fixed annuities product balance as of December 31, 2022, amounted to EUR 151 million (2021: EUR 179 million).
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Notes to the consolidated financial statements 
Note 36
c. Life contingent guarantees in the United States
Certain variable insurance contracts in the United States also provide guaranteed minimum death benefits (GMDB) and guaranteed minimum income benefits (GMIB). Under a GMDB, the beneficiaries receive the greater of the account balance or the guaranteed amount upon the death of the insured. The net amount at risk for GMDB contracts is defined as the current GMDB in excess of the capital account balance at the reporting date.
The GMIB feature provides for minimum payments if the contract holder elects to convert to an immediate payout annuity. The guaranteed amount is calculated using the total deposits made by the contract holder, less any withdrawals and sometimes includes a
roll-up
or
step-up
feature that increases the value of the guarantee with interest or with increases in the account value.
The additional liability for guaranteed minimum benefits that are not bifurcated are determined each period by estimating the expected value of benefits in excess of the projected account balance and recognizing the excess over the accumulation period based on total expected assessments. The estimates are reviewed regularly and any resulting adjustment to the additional liabilityCSM that would otherwise have been made in December 31, 2023 is recognized in the income statement. The benefits used in calculating the liabilities are based on the average benefits payable over a range of stochastic scenarios. Where applicable, the calculation of the liability incorporates a percentage of the potential annuitizations that may be elected by the contract holder.EUR 1,476 million.
30 Investment contracts without discretionary participating features
The following table provides information on30.1 Investment contracts without DPF where Aegon bears the liabilities for guarantees for minimum benefits that are included inrisk
         
2023
       2022 
On January 1   9,597   20,674 
Deposits   1,606   22,638 
Withdrawals   (1,405)   (23,118) 
Interest credited   221   232 
Net exchange differences   (345)   582 
Transfer to/from other headings   567   797 
Transfers to disposal groups   -   (12,179) 
Other   (18)   (29) 
On December 31
  
 
10,222
 
 
 
9,597
 
Investment contracts consist of the following:
   
     2023
         2022 
Institutional guaranteed products   169    179 
Fixed annuities   10,024    9,418 
Other   29    - 
On December 31
  
 
10,222
 
  
 
9,597
 
30.2 Investment contracts without DPF where the valuation ofpolicyholder bears the host contracts:risk
    
     2023
       2022 
On January 1   55,631   71,690 
Gross premium and deposits – existing and new business   12,648   11,261 
Withdrawals   (9,840)   (15,233) 
Interest credited   7,636   (9,864) 
Fund charges released   (313)   (324) 
Net exchange differences   (40)   437 
Transfers to disposal groups   -   (1,396) 
Transfer to/from other headings   (680)   (943) 
Other   2   2 
On December 31
  
 
65,044
 
 
 
55,631
 
31 Borrowings
 
      
2022
     2021 
      
GMDB 
1)
   
            GMIB
 2)
   
            Total 
4)
     
GMDB 
1)
   
            GMIB 
2)
   
            Total 
4)
 
At January 1
     502    529    1,031      488    638    1,127 
Incurred guarantee benefits
5)
     344    338    683      27    (127)    (99) 
Paid guarantee benefits
     (103)    (41)    (144)      (49)    (25)    (75) 
Net exchange differences
     30    31    61      36    42    79 
At December 31
    
 
773
 
  
 
857
 
  
 
1,630
 
    
 
502
 
  
 
529
 
  
 
1,031
 
       
     
GMDB 
1)
,
3)
   
GMIB 
2)
,
3)
         GMDB 
1)
,
3)
   GMIB 
2)
,
3)
     
Account value
6)
     44,488    3,911           56,426    5,186      
Net amount at risk
7)
     3,743    933           843    472      
Average attained age of contract holders
     72    73           71    72      
1 
Guaranteed minimum death benefit in the United States.
2 
Guaranteed minimum income benefit in the United States.
3 
Note that the variable annuity contracts with guarantees may offer more than one type of guarantee in each contract; therefore, the amounts listed are not mutually exclusive.
4 
Balances are included in the insurance liabilities on the face of the statement of financial position; refer to note 34 Insurance contracts.
5 
Incurred guarantee benefits mainly comprise the effect of guarantees from new contracts, releases related to expired
out-of-the-money
guarantees and value changes as a consequence of interest movements during the reporting year.
6 
Account value reflects the actual fund value for the policyholders.
7 
The net amount at risk is defined as the present value of the minimum guaranteed annuity payments available to the contract holder determined in accordance with the terms of the contract in excess of the current account balance.
d. Minimum investment return guarantees in the Netherlands
The assets and liabilities of Aegon the Netherlands are classified as held for sale, refer to note 51 Discontinued Operations.
Fair value measurement of guarantees in insurance contracts
The fair values of guarantees mentioned above (with the exception of life contingent guarantees in the United States) are calculated as the present value of future expected payments to policyholders less the present value of assessed rider fees attributable to the guarantees. For further details refer to note 44 Fair value.
For equity volatility, Aegon uses a term structure assumption with market-based implied volatility inputs for the first five years and a long-term forward rate assumption of 25% thereafter. The volume of observable option trading from which volatilities are derived generally declines as the contracts’ term increases, therefore, the volatility curve grades from implied volatilities for five years to the ultimate rate. The resulting volatility assumption in year 20 for the S&P 500 index (expressed as a spot rate) was 22.7% at December 31, 2022, and 22.3% at December 31, 2021. Correlations of market returns across underlying indices are based on historical market returns and their inter-relationships over a number of years preceding the valuation date. Assumptions regarding policyholder behavior, such as lapses, included in the models are derived in the same way as the assumptions used to measure insurance liabilities.
Aegon Annual Report on Form 20-F
2022
  |  
245
Table of Contents
About Aegon
Governance and risk management
Financial information
Non-financial information
These assumptions are reviewed at each valuation date, and updated based on historical experience and observable market data, including market transactions such as acquisitions and reinsurance transactions. Disclosure on interest rate risk, including interest rate risk sensitivity is included in note 4 Financial risks.
Aegon utilizes different risk management strategies to mitigate the financial impact of the valuation of these guarantees on the results including asset and liability management and derivative hedging strategies to hedge certain aspects of the market risks embedded in these guarantees.
Guarantees valued at fair value contributed a net loss before tax of EUR 184 million (2021: gain of EUR 63 million) to earnings. The main drivers of this loss before tax are a loss of EUR 6,366 million related to hedges related to the guarantee reserves (2021: EUR 3,855 million gain), a loss of EUR 1,019 million related decreases in equity markets (2021: EUR 1,214 million gain) and a loss of EUR 774 million related to other and DPAC offset (2021: EUR 65 million gain) and a loss of EUR 35 million related to increases in equity volatility (2021: EUR 16 million gain). These losses are partly offset by a fair value gain on increases in risk free rates of EUR 7,653 million (2021: EUR 2,795 million gain) and a gain of EUR 357 million related to widening own credit spread (2021: EUR 19 million loss).
Guarantee reserves decreased by EUR 9,051 million in 2022 (2021: decrease of EUR 2,997 million) to EUR 828 million (2021: EUR 9,878 million).
37 Borrowings
    
                            2022  
                               2021   
Capital funding
   1,245      1,292   
Operational funding
   2,806      8,369   
At December 31
  
 
4,051  
 
  
 
9,661  
 
   
Current
   1,150      824   
Non-current
   2,901      8,837   
   
Fair value of borrowings
   4,114      10,171   
The decrease in Borrowings in 2022 is mainly the result of the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
    
     2023
         2022 
Capital funding   763    1,245 
Operational funding   1,593    2,806 
On December 31
  
 
2,356
 
  
 
4,051
 
Current   32    1,150 
Non-current
   2,325    2,901 
On December 31
  
 
2,356
 
  
 
4,051
 
Fair value of borrowings    2,459    4,114 
Aegon’s borrowings are defined separately as capital funding and operational funding. Capital funding includes debt securities that are issued for general corporate purposes and for capitalizing its business units. Capital funding is part of the Company’s total capitalization that is used for financing its subsidiaries and the cash held at the holding company. Operational
  282 | Annual Report on Form 20-F 2023
Table of Contents
Notes to the consolidated financial statements
Note 32
funding includes debt securities that are issued for financing of dedicated pools of assets. These assets are either legally segregated or tracked as separate portfolios.
The difference between the contractually required payment at maturity date and the carrying amount of the borrowings amounted to EUR 76 million positive (2021:(2022: EUR 257 million positive).
Capital funding
A detailed composition of capital funding is included in the following table:
(sorted at maturity)
   Coupon rate    Coupon date    Issue / 
    Maturity 
         
2023
        2022 
EUR 500 million Senior Unsecured Notes   1.000%    December 8    2016 / 
23
 		    -    499 
GBP 250 million Medium-Term Notes   6.125%    December 15    1999 / 
31
 		    287    281 
GBP 400 million Senior Unsecured Notes   6.625%      Semi-annually, December 16    2009 / 
39
 		    457    446 
Other                  18    19 
On December 31
                 
 
763
 
  
 
1,245
 
During 2023, the EUR 500 million senior unsecured notes with a coupon rate of 1% was redeemed.
These loans are considered senior debt in calculating financial leverage in note 37 Capital management and solvency.
Operational funding
During 2023, the operational funding decreased by EUR 1.2 billion mainly due to the partial redemption of the FHLB borrowing.
    Coupon rate      Coupon date    Issue / 
  Maturity 
         
2023
        2022 
FHLB Secured borrowings
1)
   Floating    Quarterly    2021 / 24     1,562    2,806 
North Westerly VI Note
1)
   Floating    Quarterly    2020 / 32     15    - 
North Westerly VII Note
1)
   Floating    Quarterly    2021 / 34     16    - 
      
On December 31
                 
 
1,593
 
  
 
2,806
 
1 Issued by a subsidiary of Aegon Ltd.
Other
Undrawn committed borrowing facilities:
        
2023
         2022 
Floating-rate    
- Expiring beyond one year   2,623    3,435 
On December 31
  
 
2,623
 
  
 
3,435
 
There were no defaults or breaches of conditions during the period.
32 Provisions
         
2023
        2022 
On January 1   100   193 
Additional provisions   77   28 
Disposal of a business   (13)   (8) 
Unused amounts reversed through the income statement   (25)   (10) 
Used during the year   (54)   (57) 
Net exchange differences   (2)   5 
Transfers to disposal groups   -   (52) 
On December 31
  
 
83
 
 
 
100
 
Current   78   90 
Non-current
   5   10 
 
246
   
Aegon Annual Report on Form 20-F
2022
2023 | 283  		 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
The provisions on December 31, 2023 consisted of litigation provisions of EUR 65 million (2022: EUR 71 million) mainly related to settlement in the United States in case alleging mischaracterization of agents as independent contractors instead of employees (see note 39 Commitments and contingencies), restructuring provisions of EUR 9 
million
(2022: EUR 9 million) and other provisions of EUR 9 million (2022: EUR 19 million).
33 Defined benefit plans
         
2023
         2022 
Retirement benefit plans   368    225 
Other post-employment benefit plans   178    184 
Total defined benefit plans
  
 
546
 
  
 
409
 
Retirement benefit plans in surplus   103    87 
Reimbursement rights   20    - 
Total defined benefit assets
  
 
123
 
  
 
87
 
Retirement benefit plans in deficit   491    312 
Other post-employment benefit plans in deficit   178    184 
Total defined benefit liabilities
  
 
669
 
  
 
496
 
  
 
2023
 
  2022 
Movements during the year in defined
benefit plans
   Retirement
benefit plans		 
 		  
Other post-employ-

ment benefit plans		 
 		    Total   Retirement
benefit plans		 
 		  
Other post-employ-

ment benefit plans		 
 		    Total 
On January 1   225   184   409   3,547   277   3,824 
Defined benefit expenses   113   19   132   68   17   85 
Remeasurements of defined benefit plans   167   (7)   160   (837)   (67)   (904) 
Contributions paid   (83)   -   (83)   (38)   -   (38) 
Benefits paid   (39)   (12)   (51)   (117)   (17)   (134) 
Net exchange differences   (15)   (6)   (21)   21   15   36 
Transfers to disposal groups   -   -   -   (2,421)   (41)   (2,462) 
Other   -   -   -   1   -   1 
On December 31
  
 
368
 
 
 
178
 
 
 
546
 
 
 
225
 
 
 
184
 
 
 
409
 
The amounts recognized in the statement of financial position are determined as follows:
  
 
2023
 
  2022 
    Retirement
benefit plans		 
 		  
Other post-employ-

ment benefit plans		 
 		     Total   Retirement
benefit plans		 
 		  
Other post-employ-

ment benefit plans		 
 		     Total 
Present value of wholly or partly funded obligations   3,165   -    3,165   3,098   -    3,098 
Fair value of plan assets   (3,051)   -    (3,051)   (3,083)   -    (3,083) 
Fair value of reimbursement rights   (20)   2    (19)   -   -    - 
  
 
93
 
 
 
2
 
  
 
95
 
 
 
15
 
 
 
-
 
  
 
15
 
Present value of wholly unfunded obligations   275   176    451   210   184    394 
On December 31
  
 
368
 
 
 
178
 
  
 
546
 
 
 
225
 
 
 
184
 
  
 
409
 
The fair value of Aegon’s own transferable financial instruments included in plan assets and the fair value of other assets used by Aegon included in plan assets was nil in both 2023 and 2022.
  
 
2023
 
   2022 
Defined benefit expenses
   Retirement
benefit plans		 
 		   
Other post-employ-

ment benefit plans		 
 		     Total    Retirement
benefit plans		 
 		  
Other post-employ-

ment benefit plans		 
 		     Total 
Current year service cost   38    6    44    32   11    43 
Net interest on the net defined benefit liability (asset)   10    9    19    38   6    45 
Past service cost   66    4    69    (3)   -    (3) 
Total defined benefit expenses
  
 
113
 
  
 
19
 
  
 
132
 
  
 
68
 
 
 
17
 
  
 
85
 
  284 | Annual Report on Form 20-F 2023
 
 
Notes to the consolidated financial statements
Note 3733
   
   
Capital funding
A detailed composition of capital funding is included in the following table:
(sorted by maturity)
  Coupon rate   Coupon date   Issue /Maturity   
2022
   2021 
EUR 500 million Senior Unsecured Notes
   1.00%    December 8    2016/ 23    499    499 
GBP 250 million Medium-Term Notes
   6.125%    December 15    1999 /31    281    296 
GBP 400 million Senior Unsecured Notes
   6.625%    Semi-annually    2009 /39    446    472 
Other
                  19    26 
At December 31
                 
 
1,245
 
  
 
1,292
 
These loans are considered senior debt in calculating financial leverage in note 43 Capital management and solvency.
Operational funding
During 2022, the operational funding decreased by EUR 5.6 billion
mainly
due to result of the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
                     
    Coupon rate       Coupon date       Issue /Maturity     
              2022  
               2021   
Revolving Loan Facility Warehouse Mortgage Loans
1)
   Floating    Monthly    - /22      -      592   
Revolving Loan Facility Warehouse Mortgage Loans
1)
   Floating    Monthly    - /24      -      494   
EUR 875 million “SAECURE 16” RMBS Note
1)
,
2)
   Floating    Quarterly    2018 / 23      -      676   
EUR 512 million “SAECURE 18” RMBS Note
1)
,
3)
   Floating    Quarterly    2019 / 25      -      355   
EUR 657 million “SAECURE 20” RMBS Note
1)
,
4)
   Floating    Quarterly    2021 / 27      -      625   
EUR 500 million Conditional Pass-Through Covered Bond
1)
,
5)
   0.250%    Annual    2016 / 23      -      499   
EUR 500 million Conditional Pass-Through Covered Bond
1)
,
6)
   0.375%    Annual    2017 / 24      -      499   
EUR 500 million Conditional Pass-Through Covered Bond
1)
,
7)
   0.010%    Annual    2020 / 25      -      506   
EUR 500 million Conditional Pass-Through Covered Bond
1)
,
8)
   0.750%    Annual    2017 / 27      -      492   
EUR 500 million Conditional Pass-Through Covered Bond
1)
,
9)
   0.375%    Annual    2021 / 36      -      494   
FHLB Secured borrowings
1)
   Floating    Quarterly    2021 / 24      2,806      2,634   
Aegon Bank Senior
Non-Preferred
debt
1)
   0.625%    Annual    2019 / 24      -      499   
Other                  -      5   
At December 31
                 
 
2,806  
 
  
 
8,369  
 
1 
Issued by a subsidiary of Aegon N.V.
2 
The first optional redemption date is October 30, 2023; the final legal maturity date is October 30, 2091. Notes are fully collateralized by mortgage loans which are part of Aegon’s general account investments.
3 
The first optional redemption date is July 28, 2025; the final legal maturity date is April 28, 2092. Notes are fully collateralized by mortgage loans which are part of Aegon’s general account investments.
4 
The first optional redemption date is October 28, 2027; the final legal maturity date is April 28, 2093. Notes are fully collateralized by mortgage loans which are part of Aegon’s general account investments.
5 
The maturity date is May 25, 2023; the extended due for payment date is May 25, 2055.
6 
The maturity date is November 21, 2024; the extended due for payment date is November 21, 2056.
7 
The maturity date is November 16, 2025; the extended due for payment date is November 16, 2057.
8 
The maturity date is June 27, 2027; the extended due for payment date is June 27, 2059.
9 
The maturity date is June 9, 2036; the extended due for payment date is June 9, 2037.
Other
Undrawn committed borrowing facilities:
  
                        2022  
                           2021   
Floating-rate
          
- Expiring within one year
   -      408   
- Expiring beyond one year
   3,435      2,991   
At December 31
  
 
3,435  
 
  
 
3,399  
 
There were no defaults or breaches of conditions during the period.
Aegon Annual Report on Form 20-F
2022
  |  
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Table of Contents
About Aegon
 
Governance and risk management
Financial information
Non-financial information
 
38 Provisions
   
2022
  2021 
At January 1
                          193                               309 
Additional provisions
  28   91 
Disposals
  (8)   (6) 
Unused amounts reversed through the income statement
  (10)   - 
Used during the year
  (57)   (209) 
Net exchange differences
  5   9 
Transfer to disposal groups
  (52)   - 
At December 31
 
 
99
 
 
 
193
 
Current
  89   139 
Non-current
  10   54 
The decrease in Provisions in 2022 is mainly the result of the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
The provisions as at December 31, 2022 consisted of litigation provisions of EUR 71 million (2021: EUR 93 million) mainly related to a settlement in the US relating to increases in monthly deduction rates on universal life products (refer to note 45 Commitments and contingencies), restructuring provisions of EUR 9 million (2021: EUR 30 million) and other provisions of EUR 19 million (2021: EUR 70 million).
39 Defined benefit plansexpenses are included in “Post-employment benefit costs” in note 13 Other operating expenses.
 
    
2022
  2021   
Retirement benefit plans
                           225                           3,547   
Other post-employment benefit plans
   184   277   
Total defined benefit plans
  
 
409
 
 
 
3,824  
 
   
Retirement benefit plans in surplus
   87   119   
Total defined benefit assets
  
 
87
 
 
 
119  
 
   
Retirement benefit plans in deficit
   312   3,666   
Other post-employment benefit plans in deficit
   184   277   
Total defined benefit liabilities
  
 
496
 
 
 
3,944  
 
The decrease in Defined benefit plans in 2022 is mainly the result of the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Movements during the year of the present value of the defined benefit obligations
   
     2023
        2022 
On January 1   3,491   8,541 
Current year service cost   46   43 
Interest expense   172   158 
Remeasurements of the defined benefit obligations:
   
- Actuarial gains and losses arising from changes in demographic assumptions   53   (3) 
- Actuarial gains and losses arising from changes in financial assumptions   61   (2,420) 
Past service cost   109   (3) 
Benefits paid   (252)   (529) 
Net exchange differences   (65)   164 
Transfer to disposal groups   -   (2,462) 
Other   -   1 
On December 31
  
 
3,616
 
 
 
3,491
 
 
    2022  2021 
Movements during the year in defined benefit
plans
  Retirement
benefit plans		  Other post-
employment
        benefit plans		  
Total
  Retirement
    benefit plans		  Other post-
employment
        benefit plans		  Total   
At January 1
               3,547               277               3,824               4,318               275               4,593   
Defined benefit expenses
   68   17   85   (8)   16   8   
Remeasurements of defined benefit plans
   (837)   (67)   (904)   (487)   (14)   (501)   
Contributions paid
   (38)   -   (38)   (164)   -   (164)   
Benefits paid
   (117)   (17)   (134)   (110)   (15)   (125)   
Net exchange differences
   21   15   36   29   16   45   
Transfer to disposal groups
   (2,421)   (41)   (2,462)   -   -   -   
Other
   1   -   1   (32)   -   (32) 
At December 31
  
 
225
 
 
 
184
 
 
 
409
 
 
 
3,547
 
 
 
277
 
 
 
3,824  
 
Movements during the year in plan assets for retirement benefit plans
        
2023
        2022 
On January 1   3,083   4,717 
Interest income (based on discount rate)   153   114 
Remeasurements of the net defined liability (asset)   (21)   (1,518) 
Contributions by employer   83   38 
Benefits paid   (203)   (395) 
Net exchange differences   (44)   127 
On December 31
  
 
3,051
 
 
 
3,083
 
 
The amounts recognized in the statement of financial position are determined as follows:
  
 
2023
 
  2022 
Breakdown of plan assets for retirement

benefit plans
     Quoted   Unquoted  Total  
in % of
 total plan
assets
    Quoted   Unquoted  Total  
in % of
total plan
assets
 
Debt instrument   424    177   601   20%   336    154   490   16% 
Derivatives   -    (143)   (143)   (5%)   -    (218)   (218)   (7%) 
Investment funds   -    2,142   2,142   70%   -    2,214   2,214   72% 
Structured securities   -    200   200   7%   -    268   268   9% 
Other   -    252   252   8%   -    328   328   11% 
         
On December 31
  
 
424
 
  
 
  2,627
 
 
 
  3,051
 
 
 
100
% 
 
 
336
 
  
 
2,746
 
 
 
3,083
 
 
 
100
% 
 
248
Aegon Annual Report on Form 20-F
2022
Table of Contents
Notes to the consolidated financial statements
 Note 39
    
2022
  2021 
    Retirement
benefit plans		  Other post-
employment
      benefit plans		   
        Total
  Retirement
        benefit plans		  Other post-
employment
        benefit plans		           Total 
Present value of wholly or partly funded obligations
   3,098   -    3,098   4,604   -    4,604 
Fair value of plan assets
   (3,083)   -    (3,083)   (4,717)   -    (4,717) 
   
 
15
 
 
 
-
 
  
 
15
 
 
 
(112
) 
 
 
-
 
  
 
(112
) 
Present value of wholly unfunded obligations
   210   184    394   3,660   277    3,937 
At December 31
  
 
225
 
 
 
184
 
  
 
409
 
 
 
3,547
 
 
 
277
 
  
 
3,824
 
The fair value of Aegon’s own transferable financial instruments included in plan assets and the fair value of other assets used by Aegon included in plan assets was nil in both 2022 and 2021.
    
2022
   2021 
Defined benefit expenses  Retirement
benefit plans		   Other post-
employment
        benefit plans		   
        Total
   Retirement
        benefit plans		   Other post-
employment
        benefit plans		           Total 
Current year service cost
   32    11    43    48    11    59 
Net interest on the net defined benefit liability (asset)
   38    6    45    32    5    37 
Past service cost
   (3)    -    (3)    (88)    -    (88) 
Total defined benefit expenses
  
 
68
 
  
 
17
 
  
 
85
 
  
 
(8)
 
  
 
16
 
  
 
8
 
         2020                 
    Retirement
benefit plans		   Other post-
employment
        benefit plans		           Total 
Current year service cost
   52    11    63 
Net interest on the net defined benefit liability (asset)
   52    7    59 
Past service cost
   1    -    1 
Total defined benefit expenses
  
 
                104
 
  
 
18
 
  
 
122
 
Defined benefit expenses are included in ‘Commissions and expenses’ in the income statement.
Movements during the year of the present value of the defined benefit obligations
  
                    2022
                      2021 
At January 1
   8,541   9,059 
Current year service cost
   43   59 
Interest expense
   158   131 
Remeasurements of the defined benefit obligations:
         
- Actuarial gains and losses arising from changes in demographic assumptions
   (3)   (59) 
- Actuarial gains and losses arising from changes in financial assumptions
   (2,420)   (299) 
Past service cost
   (3)   (88) 
Benefits paid
   (529)   (455) 
Amounts paid in respect of settlements
   -   (140) 
Net exchange differences
   164   364 
Transfer to disposal groups
   (2,462)   - 
Other
   1   (32) 
At December 31
  
 
3,491
 
 
 
8,541
 
Aegon Annual Report on Form 20-F
2022
  |  
249
Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
Movements during the year in plan assets for retirement benefit plans
  
2022
                        2021 
At January 1
                   4,717   4,466 
Interest income (based on discount rate)
   114   94 
Remeasurements of the net defined liability (asset)
   (1,518)   144 
Contributions by employer
   38   164 
Benefits paid
   (395)   (330) 
Amounts paid in respect of settlements
   -   (140) 
Net exchange differences
   127   319 
At December 31
  
 
3,083
 
 
 
4,717
 
    
2022
       2021         
Breakdown of plan assets for retirement benefit
plans
  Quoted     Unquoted  
    Total
  
in % of
total plan
asdsets
    Quoted     Unquoted      Total  
in % of
total plan
assets
 
Equity instruments
   -    -   -   0%   -    -   -   0% 
Debt instrument
   336    154   490   16%   603    387   990   21% 
Real estate
   -    -   -   0%   -    142   142   3% 
Derivatives
   -    (218)   (218)   (7%)   -    (3)   (3)   (0%) 
Investment funds
   -    2,214   2,214   72%   -    3,069   3,069   65% 
Structured securities
   -    268   268   9%   -    -   -   0% 
Other
   -    328   328   11%   2    516   518   11% 
At December 31
  
 
336
 
  
 
2,746
 
 
 
3,083
 
 
 
100
% 
 
 
605
 
  
 
4,112
 
 
 
4,717
 
 
 
100
% 
Movements during the year of the fair value of the reimbursement rights
  
 
     2023
 
       2022 
On January 1   -   - 
Current year service cost   2   - 
Remeasurements of the defined benefit obligations:
   
- Actuarial gains and losses arising from changes in demographic assumptions   -   - 
- Actuarial gains and losses arising from changes in financial assumptions   (25)   - 
Past service cost   40   - 
Benefits paid   2   - 
On December 31
  
 
20
 
 
 
-
 
Defined benefit plans are mainly operated by Transamerica,Transamer
ic
a, Aegon the NetherlandsUK and Aegon UK.Employees Netherlands. The following sections contain a general description of the plans in each of these subsidiaries and a summary of the principal actuarial assumptions applied in determining the value of defined benefit plans. Businesses included in all other operating segments mostly operate defined contribution plans. Please refer to note 13 Other operating expenses for a total overview of employee expenses including the total defined contribution expenses.
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Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Transamerica
Transamerica has defined benefit plans covering substantially all its employees that are qualified under the Internal Revenue Service Code, including all requirements for minimum funding levels. The defined benefit plans are governed by the Board of Directors of Transamerica Corporation. The Board of Directors has the full power and discretion to administer the plan and to apply all of its provisions, including such responsibilities as, but not limited to, developing the investment policy and managing assets for the plan, maintaining required funding levels for the plan, deciding questions related to eligibility and benefit amounts, resolving disputes that may arise from plan participants and for complying with the plan provisions, and legal requirements related to the plan and its operation. The benefits are based on years of service and the employee’s eligible annual compensation. The plan provides benefits are based on the employee’s eligible annual compensation. The plans provide benefits based on a cash balance formula (which defines the accrued benefit in terms of a stated account balance), depending on the age and service of the plan participant. The defined benefit plans have a deficit of EUR 216 million on December 31, 2023 (2022: EUR 102 million at December 31, 2022 (2021: EUR 7 million deficit).
Investment strategies are established based on asset and liability studies by actuaries which are updated as they consider appropriate. These studies, along with the investment policy, assist to develop the appropriate investment criteria for the plan, including asset allocation mix, return objectives, investment risk and time horizon, benchmarks and performance standards, and restrictions and prohibitions. The overall goal is to maximize total investment returns to provide sufficient funding for the present and anticipated future benefit obligations within the constraints of a prudent level of portfolio risk and diversification. Aegon believes that the asset allocation is an important factor in determining the long-term performance of the plan. The plan uses multiple asset classes as well as
sub-classes
to meet the asset allocation and other requirements of the investment policy, which minimizes investment risk. From time to time the actual asset allocation may deviate from the desired asset allocation ranges due to different market performance among the various asset categories. If it is determined that rebalancing is required, future additions and withdrawals will be used to bring the allocation to the desired level.
Transamerica maintains minimum required funding levels as set forth by the Internal Revenue Code. If contributions are required, the funding would be provided from the Company’s general account assets. Pension plan contributions were not required for Transamerica in 20222023 or 2021.2022. However, with the Aegon Ltd. Transamerica Management Board approval of a proposal from Transamerica Corporation, Transamerica Corporation made a pension plan contribution of EUR 9145 million in August 2021September 2023 that
250
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2022
Table of Contents
Notes to the consolidated financial statements
Note 39
was over and above the minimum required funding levels as set forth by the Internal Revenue Code. In 2020,2022, Transamerica Corporation did not make a voluntary pension plan contributions.contribution.
Transamerica also sponsors supplemental retirement plans to provide senior management with benefits in excess of normal retirement benefits. The plans are unfunded and are not qualified under the Internal Revenue Code. The supplemental retirement plans are governed by either Transamerica Corporation, or the Compensation Committee of the Board of Directors of Transamerica Corporation. Transamerica Corporation, or the Compensation Committee of the Board of Directors has the full power and discretion to apply all of the plan’s provisions, including such responsibilities as, but not limited to, interpret the plan provisions, to make factual determinations under the plan, to determine plan benefits, and to comply with any statutory reporting and disclosure requirements. The benefits are based on years of service and the employee’s eligible annual compensation. The plans provide benefits based on a traditional final average formula or a cash balance formula (which defines the accrued benefit in terms of a stated account balance), depending on the age and service of the plan participant. The company funds the benefit payments of the supplemental retirement plans from its general account assets. The unfunded amount related to these plans, for which a liability has been recorded, was EUR 197174 million (2021:(2022: EUR 235197 million unfunded).
Transamerica provides health care benefits to retired employees through continuation of coverage primarily in self fundedself-funded plans, and partly in fully insured plans, which are classified as unfunded per IAS 19 financial guidance. The postretirement health care benefits under the Plans are administered by Transamerica Corporation, which has delegated the claims administration to third-party administrators. Transamerica maintains two plans which provide continuation of coverage for retiree medical benefits. For each plan, Transamerica has the fiduciary responsibility to administer the plan in accordance with its terms, and decides questions related to eligibility and determines plan provisions and benefit amounts.
Under the Employee Retirement Income Security Act (ERISA), Transamerica has the fiduciary responsibility to monitor the quality of services provided by the third-party claims administrator and to replace the third-party administrator if needed. In addition, Transamerica has the fiduciary obligation to interpret the provisions of the plans, and to comply with any statutory reporting and disclosure requirements. Finally, Transamerica reviews the terms of the plans and makes changes to the plans if and when appropriate. Transamerica funds the benefit payments or premium payments of the post-retirement health
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Notes to the consolidated financial statements
Note 33
care plans from its general account assets. The post-retirement health benefit liability amounted to EUR 184176 million (2021: (2022:
EUR 220184 million).
The weighted average duration of the defined benefit obligation is 9.89.0 years (2021: 12.9(2022: 9.8 years).
The principal actuarial assumptions that apply for the year ended December 31 are as follows:
 
Actuarial assumptions used to determine defined benefit obligations at
year-end
  
2022  
   2021 
   
Demographic actuarial assumptions
          
   
Mortality
   US mortality table
1)
  		    US mortality table
1)
 
   
Financial actuarial assumptions
          
   
Discount rate
   5.22%/5.14%      2.80%/2.61% 
   
Salary increase rate
   4.00%      4.00% 
   
Health care trend rate
   6.30%      6.10% 
Actuarial assumptions used to determine defined benefit obligations at
year-end
  
 
     2023
 
        2022 
Demographic actuarial assumptions
    
Mortality   
US mortality
 table
1)
      
US mortality
 table
1)
 
Financial actuarial assumptions
    
Discount rate   5.00%/4.93%    5.22%/5.14% 
Salary increase rate   4.00%    4.00% 
Health care trend rate   6,80%    6.30% 
 
1 
20222023 assumption
-PRI-2012
Employee, Healthy Annuitant and Contingent Survivor Tables (90% white collar/10% blue collar) projected with Scale
MP-2021.
Comparative figures are as included in the Integrated Annual Report 2021.2022.
The principal actuarial assumptions have an effect on the amounts reported for the defined benefit obligation. A change as indicated in the table below in the principal actuarial assumptions would have the following effects on the defined benefit obligation per
year-end:
 
  
 
Estimated approximate effects on
the defined benefit obligation
 
 
    2023   2022 
Demographic actuarial assumptions
   
10% increase in mortality rates   (47)   (50) 
10% decrease in mortality rates   53   54 
Financial actuarial assumptions
   
100 basis points increase in discount rate   (205)   (222) 
100 basis points decrease in discount rate   250   277 
100 basis points increase in salary increase rate   5   4 
100 basis points decrease in salary increase rate   (4)   (3) 
100 basis points increase in health care trend rate   10   10 
100 basis points decrease in health care trend rate   (9)   (9) 
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognized within the statement of financial position.
 
    Target allocation of plan assets for retirement 
benefit plans for the next annual period is: 
Equity instruments2%-4% 
Debt instruments80%-90% 
Other8%-16% 
Aegon UK
Aegon UK operated a defined benefit pension scheme providing benefits for staff based on final pensionable salary and years of service. The scheme closed to new entrants a number of years ago and closed to future accrual on March 31, 2013. Aegon UK now offers a defined contribution pension scheme to all employees.
The pension scheme is administered separately from Aegon UK and is governed by Trustees, who are required to act in the best interests of the pension scheme members.
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287  		 
 
Table of Contents
LOGO		 
About Aegon
Governance and risk management
Financial information
Non-financial  Sustainability information
   
  
The pension scheme Trustees are required to carry out triennial valuations on the scheme’s funding position, with the latest valuation being on September 30, 2022. As part of this triennial valuation process, a schedule of contributions is agreed between the Trustees and Aegon UK in accordance with UK pensions legislation and guidance issued by the Pensions Regulator in the United Kingdom. The schedule of contributions includes deficit reduction contributions to clear any scheme deficit. Under IAS 19, the defined benefit plan has a surplus of EUR 103 million on December 31, 2023 (2022: EUR 87 million surplus). During 2023, EUR 37 million (2022: EUR 38 million) of contributions were paid into the scheme.
The investment strategy for the scheme is determined by the trustees in consultation with Aegon UK. Currently 16% of assets are invested in growth assets (i.e. primarily equities) and 84% are income and liability driven investments where the investments are a portfolio of fixed interest and inflation-linked bonds and related derivatives, selected to broadly match the interest rate and inflation profile of liabilities.
Under the scheme rules, pensions in payment increase in line with the UK Retail Price Index, and deferred benefits increase in line with the UK Consumer Price Index. The pension scheme is therefore exposed to UK inflation changes as well as interest rate risks, investment returns and changes in the life expectancy of pensioners.
The scheme purchased two
buy-in
policies in the name of the Trustee to cover full scheme benefits for a group of pensioners in 2019 and 2022. The liabilities (and matching assets) calculated on the year end assumptions has been included in the funded position on December 31, 2023.
The weighted average duration of the defined benefit obligation is 14.9 years (2022: 15.3 years).
The principal actuarial assumptions that apply for the year ended December 31 are as follows:
Actuarial assumptions used to determine defined benefit obligations at
year-end
  
 
2023
 
  2022 
Demographic actuarial assumptions
   
Mortality    UK mortality table 1)    UK mortality table 2) 
Financial actuarial assumptions
   
Discount rate   4.79%   4.96% 
Price inflation   3.10%   3.20% 
1 Club Vita tables based on analysis of Scheme membership CMI 2022 1.5%/1.25% p.a. (males/females)
2 Club Vita tables based on analysis of Scheme membership CMI 2021 1.5%/1.25% p.a. (males/females)
The principal actuarial assumptions have an effect on the amounts reported for the defined benefit obligation. A change as indicated in the table below in the principal actuarial assumptions would have the following effects on the defined benefit obligation per
year-end:
  
  Estimated approximate effects on 
the defined benefit obligation
 
 
   2023    2022 
Demographic actuarial assumptions
    
10% increase in mortality rates  (20)    (19) 
10% decrease in mortality rates  23    22 
Financial actuarial assumptions
    
100 basis points increase in discount rate  (131)    (130) 
100 basis points decrease in discount rate  166    164 
100 basis points increase in price inflation  62    55 
100 basis points decrease in price inflation  (128)    (113) 
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Notes to the consolidated financial statements
Note 33
   
   
    Estimated approximate effects on
the defined benefit obligation		 
   
    
2022  
  2021 
   
Demographic actuarial assumptions
        
   
10% increase in mortality rates
  (50)     (69) 
   
10% decrease in mortality rates
  54     77 
   
Financial actuarial assumptions
  
  
     
   
100 basis points increase in discount rate
  (222)     (357) 
   
100 basis points decrease in discount rate
  277     436 
   
100 basis points increase in salary increase rate
  4      - 
   
100 basis points decrease in salary increase rate
  (3)     - 
   
100 basis points increase in health care trend rate
  10     13 
   
100 basis points decrease in health care trend rate
  (9)     (12) 
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognized within the statement of financial position.
 
   
 Target allocation of plan assets 
for retirement 
benefit plans for 
the next annual period is: 
  
Equity instruments
   2%-4%16.1%  
Debt instruments
   80%-90%  
Other
8%-16%83.9%  
Aegon theEmployees Netherlands
B.V.
The assets and liabilitiesUntil July 1, 2023, Aegon Nederland N.V. was the employer of the employees of Aegon in the Netherlands. Following the transaction with a.s.r., the remaining employees of Aegon located in the Netherlands are classified as held for sale, referwere transferred to note 51 Discontinued Operations.
Aegon UK
Employees Netherlands B.V. (AEN), an Aegon UK operated a defined benefit pension scheme providing benefits for staff based on final pensionable salary and years of service. The scheme closed to new entrants a number of years ago and closed to future accrual on March 31, 2013. Aegon UK nowsubsidiary included in the Holdings segment, per July 1, 2023. AEN offers a defined contribution pension scheme to all employees.
The pension scheme is administered separately from Aegon UK and is governed by Trustees, who are required to actemployees in the best interestsNetherlands.
Aegon Nederland N.V. operated a defined benefit pension plan under a pension contract. As of the pension scheme members.
The pension scheme Trustees are required to carry out triennial valuations on the scheme’s funding position, with the latest valuation being as at September 30, 2022. As part of this triennial valuation process, a schedule of contributions is agreed between the Trustees and Aegon UK in accordance with UK pensions legislation and guidance issued by the Pensions Regulator in the UK. The schedule of contributions includes deficit reduction contributions to clear any scheme deficit. Under IAS 19,January 1, 2020, the defined benefit pension plan has a surplusis closed for new members and there will be no further accrual of benefits to existing members. Entitlements before January 1, 2020, will remain unchanged and the indexation for those accruals will remain in force. The pension contract was updated as AEN was added as an employer upon the date of the transfer of employees to AEN.
The defined benefit plans cover retirement benefits, disability, death and survivor pensions and the defined benefit obligation amounts to EUR 8790 million at December 31, 2022 (2021:2023. The defined benefit obligation are backed by investments owned by Aegon Nederland N.V. The obligation of Aegon Nederland N.V. to fund the defined benefit obligation through these investments is reported as a reimbursement right on the balance sheet of AEN. The average remaining duration of the defined benefits obligation is 21.9 years.
Also included in the reimbursement rights is the present value of the expected guaranteed premiums and management fees to be paid to Aegon Nederland N.V. by AEN. The present value as of December 31, 2023 amounts to EUR 11969 million, surplus)discounted at a rate of 3.42%. During 2022, EUR 38 million (2021: EUR 73 million)The average remaining duration of contributions were paid into the scheme.expected guaranteed premium and management fee is 16.9 years.
The investment strategyliabilities related to other post-employment benefit plans, consisting of former Board of Directors unconditional indexation, jubilee and mortgage discount liabilities, are wholly unfunded and amount to EUR 5 million at December 31, 2023. The weighted average duration of the other post-employment benefit plans is 12.0 years.
The principal actuarial assumptions that apply for the scheme is determined by the trustees in consultation with Aegon UK. Currently 17% of assetsyear-ended December 31 are invested in growth assets (i.e. primarily equities) and 83% are income and liability driven investments where the investments are a portfolio of fixed interest and inflation-linked bonds and related derivatives, selected to broadly match the interest rate and inflation profile of liabilities.
as follows:
Under the scheme rules, pensions in payment increase in line with the UK Retail Price Index, and deferred benefits increase in line with the UK Consumer Price Index. The pension scheme is therefore exposed to UK inflation changes as well as interest rate risks, investment returns and changes in the life expectancy of pensioners.
Actuarial assumptions used to determine defined benefit
obligations at
year-end
2023  
252
Demographic actuarial assumptions
  |  Aegon
Mortality
AEGON
 2023 
1)
Financial actuarial assumptions
Discount rate3.42% 
Price inflation2.36% 
1 During 2023 the mortality table is adjusted, based on experience adjustments.
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LOGO		 
Notes to the consolidated financial statements
About Aegon  Governance and risk management  
Note 40Financial information
  Sustainability information
   
   
 
The scheme purchased two
buy-in
policies in the name of the Trustee to cover full scheme benefits for a group of pensioners in 2019 and 2022. The liabilities (and matching assets) calculated on the year end assumptions has been included in the funded position as at December 31, 2022.
The weighted average duration of the defined benefit obligation is 15.3 years (2021: 21.0 years).
The principal actuarial assumptions that apply for the year ended December 31 are as follows:
Actuarial assumptions used to determine defined benefit obligations at
year-end
 
2022  
  2021   
   
Demographic actuarial assumptions
        
   
Mortality
   UK mortality table
1)
  		    UK mortality table
2)
  		 
   
Financial actuarial assumptions
        
   
Discount rate
  4.96%     1.79%   
   
Price inflation
  3.20%     3.34%   
1 
Club Vita tables based on analysis of Scheme membership CMI 2021 1.5%/1.25% p.a. (males/females)
2 
Club Vita tables based on analysis of Scheme membership CMI 2019 1.5%/1.25% p.a. (males/females)
The principal actuarial assumptions have an effect on the amounts reported for the defined benefit obligation. A change as indicated in the table below in the principal actuarial assumptions of the retirement benefit plan would have the following effects on the defined benefit obligation per
year-end:
 
   
Estimated approximate effects
on the defined benefit obligation
 
   
   
                2022   
                  2021    
   
Demographic actuarial assumptions
        
   
10% increase in mortality rates
  (19)     (55)   
   
10% decrease in mortality rates
  22      62    
   
Financial actuarial assumptions
        
   
100 basis points increase in discount rate
  (130)     (322)   
   
100 basis points decrease in discount rate
  164      433    
   
100 basis points increase in price inflation
  55      202    
   
100 basis points decrease in price inflation
  (113)     (237)   
Estimated approximate effects on the defined benefit obligation
2023
Demographic actuarial assumptions
10% increase in mortality rates(1) 
10% decrease in mortality rates1
Financial actuarial assumptions
100 basis points increase in discount rate(14) 
100 basis points decrease in discount rate18
The above sensitivity analysis is based on a change in anone assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liabilitydefined benefit obligation recognized within the statement of financial position.
All other operating segments
Businesses included in all other operating segments mostly operate defined contribution plans. Please see note 13 Other operating expenses for the employee expenses regarding these contribution plans.
Target allocation of plan assets for  
retirement benefit plans for the  
next annual period is:  
Equity instruments
16.7%  
Debt instruments
83.3%  

All other operating segments
Businesses included in all other operating segments
mo
stly operate defined contribution plans. Please refer to note 14 Commissions and expenses for the employee expenses regarding these contribution plans.
4034 Deferred tax
 
Deferred tax
  
 
    2023
 
      2022 
Deferred tax assets   2,350   2,433 
Deferred tax liabilities   (57)   (30) 
On December 31
  
 
2,293
 
 
 
2,403
 
   
          2022   
                  2021   
    
Deferred tax assets 1,827             131   
    
Deferred tax liabilities
  4            1,559   
    
Total net deferred tax liability / (asset)
 
 
(1,823)  
 
       
 
1,428  
 
Deferred tax assets comprise temporary differences on:
  
 
    2023
 
      2022 
Real estate   (2)   (15) 
Financial assets   803   1,569 
Insurance and investment contracts   (599)   (1,416) 
Deferred expenses, VOBA and other intangible assets   539   573 
Defined benefit plans   214   196 
Tax losses and credits carried forward   1,112   1,287 
Other   283   239 
On December 31
  
 
2,350
 
 
 
2,433
 
Deferred tax liabilities comprise temporary differences on:
  
 
    2023
 
      2022 
Financial assets   (6)   (6) 
Insurance and investment contracts   62   33 
Deferred expenses, VOBA and other intangible assets   2   - 
Other   (1)   3 
On December 31
  
 
57
 
 
 
30
 
 
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Table of Contents
 
About AegonGovernance and risk management
Financial information
 Non-financial information
Notes to the consolidated financial statements
Note 34
   
   
 
The change from a net deferred tax liability at December 31, 2021 to a net deferred tax asset at December 31, 2022 is mainly the result of market movements on financial assets and the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Deferred tax assets comprise temporary differences on:
 
        2022
            2021 
   
Real estate
  (15)   - 
   
Financial assets
  737     (7) 
   
Insurance and investment contracts
  1,515   (8) 
   
Deferred expenses, VOBA and other intangible assets
  (2,350)   (133) 
   
Defined benefit plans
  199   3 
   
Tax losses and credits carried forward
  1,288      264 
   
Other
  454   11 
   
At December 31
 
 
1,827
 
 
 
131
 
Deferred tax liabilities comprise temporary differences on:
 
        2022
           2021 
   
Real estate
  -     776 
   
Financial assets
  -   1,816 
   
Insurance and investment contracts
  -   (1,410) 
   
Deferred expenses, VOBA and other intangible assets
  1   1,573 
   
Defined benefit plans
  -   (151) 
   
Tax losses and credits carried forward
  -   (754) 
   
Other
          3      (291) 
   
At December 31
 
 
4
 
 
 
1,559
 
The following table provides a movement schedule of net deferred tax broken-down by those items for which a deferred tax asset or liability has been recognized.
 
    
Real estate
  
Financial
assets
  
Insurance
and
invest-
ment
contracts
  
Deferred
expens-
es, VOBA
and other
intangible
assets
  
Defined
benefit
plans
  
Tax losses
and
credits
carried
forward
  
Other
  
Total
 
         
At January 1, 2022
   776   1,823   (1,402)   1,706   (154)   (1,018)   (303)   1,428 
         
Charged to income statement
   (75)   400   (336)   563   (187)   184   (158)   391 
         
Charged to OCI
   (0)   (3,213)   -   -   248   -   1   (2,964) 
         
Net exchange differences
   1   180   (72)   88   (12)   (24)   (13)   147 
         
Disposal of a business
   (1)   1   3   (5)   -   -   2   (0) 
         
Transfers to disposal groups
   (685)   168   195   (1)   (94)   (454)   26   (845) 
         
Transfer (to)/from current income tax
   -   -   -   -   -   25   -   25 
         
Transfer (to) /from other headings
   -   (95)   97   -   -   -   (3)   (1) 
         
Other
   -   -   -   -   -   (1)   (3)   (3) 
         
At December 31, 2022
  
 
15
 
 
 
(737
) 
 
 
(1,515
) 
 
 
2,351
 
 
 
(199
) 
 
 
(1,287
) 
 
 
(450
) 
 
 
(1,823
) 
         
At January 1, 2021
   663   2,156   (1,533)   1,433   (206)   (823)   (366)   1,323 
         
Charged to income statement
   113   (113)   217   162   (32)   (140)   54   260 
         
Charged to OCI
   (1)   (359)   -   -   100   -   (1)   (261) 
         
Net exchange differences
   1   167   (86)   112   (15)   (56)   (20)   103 
         
Transfer (to)/from current income tax
   -   -   -   -   -   2   -   2 
         
Transfer (to)/from other headings
   -   (29)   -   -   -   (1)   30   - 
         
At December 31, 2021
  
 
776
 
 
 
1,823
 
 
 
(1,402
) 
 
 
1,706
 
 
 
(154
) 
 
 
(1,018
) 
 
 
(303
) 
 
 
1,428
 
    Real
estate		 
 		  Financial
assets		 
 		  
Insurance and
investment
contracts
 
 
 
  
Deferred
expenses, VOBA
and other
intangible assets
 
 
 
 
  
Defined
benefit
plans
 
 
 
  
Tax losses
and credits
carried
forward
 
 
 
 
  Other   Total  
On January 1, 2023   15   (1,574)   1,449   (573)   (196)   (1,287)   (235)   (2,403) 
Charged to income statement   (12)   170   (479)   12   6   49   51   (204) 
Charged to OCI   -   436   (271)   -   (31)   -   -   134 
Net exchange differences   -   38   (32)   19   7   26   18   76 
Disposal of a business   -   2   (4)   -   -   (8)   2   (8) 
Transfers to disposal groups   -   -   -   -   -   (1)   1   - 
Transfer to/from other headings   -   118   -   -   -   -   (118)   - 
Transfer to/from current income tax   -   -   -   -   -   109   -   109 
Other   -   -   (1)   5   -   (1)   (2)   2 
On December 31, 2023
  
 
2
 
 
 
(809
) 
 
 
661
 
 
 
(537
) 
 
 
(214
) 
 
 
(1,112
) 
 
 
(284
) 
 
 
(2,293
) 
On January 1, 2022   776   3,336   (4,452)   (448)   (154)   (988)   (45)   (1,974) 
Charged to income statement   (75)   (2,928)   3,380   (217)   (191)   180   (105)   45 
Charged to OCI   -   (2,770)   2,256   -   252   -   (56)   (319) 
Net exchange differences   1   139   (163)   (28)   (12)   (24)   (22)   (109) 
Disposal of a business   (1)   1   (2)   -   -   -   (3)   (5) 
Transfers to disposal groups   (685)   841   306   (1)   (94)   (454)   26   (61) 
Transfer to/from other headings   -   (194)   122   121   3   (27)   (26)   (1) 
Transfer to/from current income tax   -   -   -   -   -   25   -   25 
Other   -   -   -   -   -   -   (4)   (4) 
On December 31, 2022
  
 
15
 
 
 
(1,574
) 
 
 
1,449
 
 
 
(573
) 
 
 
(196
) 
 
 
(1,287
) 
 
 
(235
) 
 
 
(2,403
) 
Transfer to/from current income tax relates to the deferred tax asset for the loss carry forward position of the Dutch fiscal unity.
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Table of Contents
Notes to the consolidated financial statements
Note 40
Deferred tax assets are recognized for tax losses and credits carried forward to the extent that the realization of the related tax benefit through future taxable profits is probable. For an amount of gross EUR 1,1762,564 million; an amount of tax EUR 477573 million related to tax losses carried forward (2021:(2022: gross EUR 1,2472,858 million; tax EUR 301635 million) and an amount of tax EUR 595583 million related to tax credits carried forward (2021:(2022: tax EUR 491595 million) the realization of the deferred tax asset is dependent on the projection of future taxable profits.
For the following amounts, arranged by loss carry forward periods, the deferred tax asset is not recognized:
 
   
                            
   
                            
   
                            
   
                            
 
   
    
Gross amounts
1)
     Not recognized deferred tax assets   
     
    
2022
   2021   
2022
   2021  
     
< 5 years
   58    62    16    15 
     
≥
5 – 10 years
   9    24    2    4 
     
≥
10 – 15 years
   -    -    59    55 
     
≥
15 – 20 years
   -    -    -    - 
     
Indefinitely
      655    598       169    151 
     
At December 31
  
 
721
 
  
 
684
 
  
 
247
 
  
 
224
 
   Gross amounts 
1)
    Not recognized deferred tax 
assets
  
   
 
    2023 
 
       2022    
 
2023
 
  2022  
< 5 years   28     58     13   16  
≥
5 – 10 years
   1     7     (0)   2  
≥
10 – 15 years
   -     -     65   59  
≥
15 – 20 years
   -     -     -   -  
Indefinitely   939     651     231   169  
On December 31
  
 
969 
 
  
 
716 
 
  
 
308
 
 
 
246 
 
 
1
The gross value of state tax loss carry forward is not summarized in the disclosure, due to the fact that the United States files in different state jurisdictions with various applicable tax rates and apportionment rules
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Table of Contents
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About Aegon  Governance and risk management  
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  Sustainability information
Deferred corporate income tax assets in respect of deductible temporary differences are recognized to the extent that the realization of the related tax benefit through future taxable profits is probable. For the following amounts relating to deductible temporary differences the realization of the deferred corporate income tax asset is dependent on future taxable profits in excess of the profits arising from the reversal of existing taxable temporary differences.
 
   
                            
   
                            
   
                            
   
                            
 
   
                Gross amounts                   Deferred tax assets     
     
    
2022
   2021   
2022
   2021
     
Deferred corporate income tax asset dependent on retaining bonds and similar investments until the earlier of market recovery or maturity
   6,265    -    1,306    -   
     
Deferred corporate income tax asset dependent on future taxable profits
   27      32    7    8 
     
At December 31
  
 
6,292
 
  
 
32
 
  
 
1,313
 
  
 
    8
 
   Gross amounts   Deferred tax assets 
   
 
    2023
  
      2022   
 
    2023
  
      2022  
Deferred corporate income tax asset dependent on retaining bond and similar investments until the earlier of market recovery or maturity   4,729   6,166   993   1,295 
Deferred corporate income tax asset dependent on future taxable profits   1,717   27   362   7 
On December 31
  
 
6,446
 
 
 
6,193
 
 
 
1,355
 
 
 
1,302
 
For an amount of gross EUR 423 million; tax EUR 109 million related to deferred tax assets for tax losses from the continued operations the recognition is depended on the reversal of taxable temporary differences, refer to note
51 Discontinued operations.
In 2022 Aegon did not recognize deferred tax assets in respect of deductible temporary differences relating to Financial assets and Other items for the amount. The amount of gross EUR 29 million; tax EUR 5 million (2021: gross EUR 30 million; tax EUR 6 million).
is no longer accounted for since this relates to the divested business of Poland.
The
In 2021 non-recognized
deferred tax liabilities have not been recognizedin 2022 for withholding tax and other taxes that would be payable on the unremitted earnings of certain subsidiaries. The unremitted earningssubsidiaries totaled gross EUR 1,770 million; tax EUR 455 million calculated at the enacted rates. In 2022 an amount of gross EUR 1,758 million; tax EUR 454 million was recognized which is accounted forsettled in discontinued operations and the remaining amount of gross EUR 11 million; tax EUR 1 million is no longer accounted for since this related to the divested business of Hungary.
2023.
Deferred taxes are
non-current
by nature and the majority of the deferred tax assets and liabilities will therefore reverse after more than one year after the balance sheet date. For an amount of EUR 109 million deferred tax assets will reverse within one year.
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Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
4135 Other liabilities
 
                                                   
   
    
        2022   
         2021 
   
Payables due to policyholders
   860     1,229   
   
Payables due to brokers and agents
   489   467 
   
Payables out of reinsurance
   823   1,384 
   
Social security and taxes payable
   49   145 
   
Income tax payable
   10   4 
   
Investment creditors
   972   1,103 
   
Cash collateral on derivative transactions
   2,483   2,708 
   
Cash collateral on securities lended
   2,417   2,171 
   
Cash collateral - other
   64   76 
   
Repurchase agreements
   107   821 
   
Lease liabilities
   210   252 
   
Other creditors
   2,301   2,556 
   
At December 31
  
 
10,785
 
 
 
12,916
 
   
Current
   10,562   12,233 
   
Non-current
   223   683 
   
 
    2023
  
      2022  
Payables due to policyholders   1,632   684 
Payables due to brokers and agents   482   454 
Social security and taxes payable   59   49 
Income tax payable   1   10 
Investment creditors   995   970 
Cash collateral on derivative transactions   964   2,483 
Cash collateral on securities lent   2,357   2,417 
Cash collateral - other   68   64 
Repurchase agreements   28   107 
Lease liabilities   205   210 
Other creditors   1,599   2,828 
On December 31
  
 
8,390
 
 
 
10,278
 
Current   8,210   10,069 
Non-current
   180   208 
The decrease in Otherother liabilities in 2022 is mainly the result of lower cash collateral on derivative transactions which is driven by the classificationdivestment of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Netherlands.
The carrying amounts disclosed reasonably approximateare reasonable approximations of the fair values at
year-end,
given the predominantly current nature of the other liabilities.
4236 Accruals
 
                                                   
   
    
                2022   
                 2021   
   
Accrued interest
   129     251   
   
Accrued expenses
   244   285   
   
At December 31
  
 
373
 
 
 
537  
 
   
 
    2023
  
      2022  
Accrued interest   47   129 
Accrued expenses   281   243 
On December 31
  
 
328
 
 
 
372
 
The carrying amounts disclosed reasonably approximate the fair values as at the
year-end.
The decrease in Accruals in 2022 is mainly the result
  292 | Annual Report on Form 20-F 2023
Table of the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.Contents
43
Notes to the consolidated financial statements
Note 37
37 Capital management and solvency
The Group’s lead regulator, the Bermuda Monetary Authority (BMA), monitors capital requirements for the Group as a whole. The Group’s individual subsidiaries are directly supervised by their local regulators. The Group is required by the BMA to hold an excess of its assets over its insurance contract liabilities calculated on a regulatory basis. Aegon’s group solvency ratio under the Bermuda solvency framework is broadly aligned with that under the previously applied Solvency II framework during a transition period until the end of 2027. This includes the method to translate Transamerica’s capital position into the group solvency position.
The Group and its individual subsidiaries may also be subject to supervisory intervention by their local regulators at local entity level. The Group and its individually regulated subsidiaries complied with all externally imposed capital requirements during 2023 and 2022.
Strategic importance
Aegon’s approach towardstoward capital management plays a vital role in supporting the execution of its strategy. The key capital management priority is to ensure adequate capitalization to cover Aegon’s obligations towardstoward its policyholders and debtholders while providing sustainable dividends to shareholders. This priority is accomplished by allocating capital to products that offer high growth and return prospects.
Management of capital
Disciplined risk and capital management support Aegon’s decisions in deploying the capital that is generated in the Company’s businesses and that is provided for by investors. Aegon balances the funding of new business growth with the funding required to ensure that its obligations towardstoward policyholders and debtholders are always adequately met and providing forprovide a sustainable dividend to shareholders.
Aegon’s goal for both its operating units and for the Aegon group as a whole is to maintain a strong financial position and to be able to sustain losses from extreme business and market conditions. Aegon’s Enterprise Risk Management (ERM) framework ensures that the Aegon Group and its operating companies are adequately capitalized and that obligations towardstoward policyholders are always adequately met. Embedded in this larger framework is Aegon’s capital management policy, which is based on adequate capitalization of the operating units, Cash Capital at Holding and leverage.
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Table of Contents
Notes to the consolidated financial statements
Note 43
Aegon manages capital in the operating units to their respective operating levels, sufficient to absorb moderate shocks and pay sustainable remittances to the Group, and above their minimum dividend payment levels. Cash Capital at Holding is maintained within an operating range of EUR 0.5 – 1.5 billion and covers holding expenses, near-term dividends, and contingencies, such as potential recapitalization of units. In 2022,2023, Aegon achieved its goal to reduce its gross financial leverage to a range ofaround EUR 5.0 billion to EUR 5.5 billion, as announced during the December 2020June 2023 Capital Markets Day. The range was based on a euro/US dollar exchange rate of 1.20, and at this constant rate the grossGross financial leverage was EUR 5.45.1 billion per December 31, 2022. Following the transaction with a.s.r. announced on October 27, 2022, Aegon intends to further reduce its2023, after a EUR 500 million reduction in gross financial leverage by up to EUR 700 million.in December 2023 funded from the proceeds of the a.s.r. transaction.
The frequent monitoring of actual and forecasted capitalization levels of its underlying businesses is an important element in Aegon’s capital framework in order to actively steer and manage towardstoward maintaining adequate capitalization levels. Group operating capital generation contributed favorably and more than offset dividend payments.
Capital ratios of Aegon’s main operating units
 
    
December 31, 2022 
1)
  
  December 31, 2021   
   
US RBC ratio
   425%     426%   
   
NL Life Solvency II ratio
   210%     186%   
   
Scottish Equitable Plc (UK) Solvency II ratio
   169%     167%   
    December 31, 2023 1)     December 31, 2022  
US RBC ratio   432%   425% 
Scottish Equitable Plc (UK) Solvency II ratio   187%   169% 
 
1 
The capital ratios are estimates and are not final until filed with the respective supervisory authority.
The estimated RBC ratio in the United States decreasedincreased from 426% on December 31, 2021, to 425% on December 31, 2022, to 432% on December 31, 2023, and remained above the operating level of 400%. Markets had beneficial impacts driven by credit spread narrowing and default experience. The impact from the negative impact of market variances (mainly negative equity variances)strong operating performances and remittances was partly
one-off
items were largely offset by strong capital generation and
one-time
items.remittances.
The estimated Solvency II ratio of NL Life increased from 186% on December 31, 2021, to 210% on December 31, 2022, which is above the operating level of 150%. The increase reflects the positive impact of model and assumption changes, which included the favorable impact of a higher factor applied when calculating the loss absorbing capacity of deferred taxes
(LAC-DT).
Lower capital requirements, including from the sale of fixed income investments to protect the liquidity position in the context of rising interest rates also contributed favorably. Market movements contributed unfavorably and included the impact of higher mortgage spreads. Operating capital generation more than offset the impact of remittances to the Holding.
The estimated Solvency II ratio for Scottish Equitable Plc increased from 167% on December 31, 2021, to 169% on December 31, 2022, to 187% on December 31, 2023, and remained above the operating level of 150%. The increase includesThis is driven by the positive impactUK Risk Margin reform, as the unfavorable impacts from market movements, reducing requiredmarkets and remittances to Aegon UK were offset by operating capital while model and assumption updates had an unfavorable impact. Operating capital generation more than offset the impactgeneration.
Annual Report on Form 20-F 2023 | 293  
Table of remittances paid.Contents
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  Sustainability information
The ability of Aegon’s operating units, principally insurance companies, to pay remittances to the holding company is constrained by the requirement for these operating units to remain adequately capitalized to the levels set by local insurance regulations and governed by local insurance supervisory authorities. Based on the capitalization level of the operating units, local insurance supervisors are able to restrict and/or prohibit the transfer of remittances to the holding company. In addition, the ability of operating units to pay remittances to the holding company can be constrained by the requirement for these operating units to hold sufficient shareholders’ equity as determined by law. The capitalization level and shareholders’ equity of the operating units can be impacted by various factors (e.g. general economic conditions, capital market risks, underwriting risk factors, changes in government regulations, and legal and arbitrational proceedings). To mitigate the impact of such factors on the ability of operating units to transfer funds, Aegon establishes an operating level of capital in each of the units, 150% SCR for Solvency II units, including the UK, and 400% RBC CAL in the US, which includes additional capital in excess of regulatory capital requirements. Aegon manages capital in the units to this operating level
over-the-cycle.
Cash Capital at Holding
Cash Capital at Holding increased from EUR 1.3 billion on December 31, 2021 to EUR 1.6 billion on December 31, 2022 driven by freeto EUR 2.4 billion on December 31, 2023. This increase was largely due to EUR 2.2 billion of cash flows from the operating units and proceeds from divestitures. Freecompleting the transaction with a.s.r., as announced on July 4, 2023. The proceeds from this divestiture provided Aegon surplus cash flows were used to pay dividendsreturn capital to Aegon’sits shareholders and to support operating units through capital injections. Proceeds from divestitures included the sale of Aegon’s Hungarian business and Turkish business to Vienna Insurance Group as well as the sale of Aegon’s stake in the joint venture with Liberbank to Unicaja Banco. These proceeds were used to reduce leverage and provide additional shareholder returns throughvia a EUR 3001,500 million share buyback program.(of which over EUR 750 million in 2023) and to have the contractual redemption of EUR
500
 million senior debt in December 2023 without replacement.
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Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
Aegon Group Solvency Ratio
To calculate its GroupAegon’s group solvency ratio and surplus under the Bermuda solvency framework is broadly in line with that under the Solvency Ratio, Aegon appliesII framework during a combinationtransition period until the end of 2027. The method to translate Transamerica’s capital position into the Group consolidation methods availablegroup solvency position is also similar to the methodology previously applied under Solvency II: the Accounting Consolidation (AC) and Deduction & Aggregation (D&A) based methods. Solvency II capital requirements are mainly used for the European Economic Area (EEA)-based insurance and reinsurance entities, applying the AC method. Local requirements are used for insurance and reinsurance entities in (provisionally) equivalent third-country jurisdictions.II. Aegon’s UK insurance subsidiaries have been included in the GroupAegon’s Solvency II calculation in accordance with UK Solvency II standards, including Aegon’sAegon UK’s approved Partial Internal Model. For more details, reference is made toAfter the section “Regulation and Supervision”.transition period, Aegon will fully adopt the Bermudian solvency framework.
The Group Solvency IIsolvency ratio is calculated as the ratio between the Eligible Own Funds and the Solvency Capital Requirement (SCR). The Eligible Own Funds equal to the Available Own Funds after applying any Own Funds eligibility restrictions.
The Group SCR is calculated based on Solvency II Partial Internal Model (PIM), which includes the SCR of AC entities, the D&A entities and the Other Financial Sector entities (including Aegon Bank). The SCR amount (or 100% Solvency II ratio) reflects a level of Eligible Own Funds that enables insurance and reinsurance entities to absorb significant losses
(1-in-200
year events) and gives reasonable assurance to policyholders and beneficiaries that payments will be made as they fall due. On December 31, 2022, Aegon’s estimated capital position was:
 
    
December 31, 2022 
1)
  
      December 31, 2021   
   
Group Own Funds
   16,332     19,431   
   
Group SCR
   7,844     9,226   
   
Group Solvency II ratio
   208%     211%   
    December 31, 2023 1)     December 31, 2022  
Group Eligible Own Funds   14,250   16,332 
Group SCR   7,366   7,844 
Group solvency ratio   193%   208% 
 
1
The Solvency IIsolvency ratios are estimates and are not final until filed with the respective supervisory authority.
AegonAegon’s Group Eligible Own Funds amounted to EUR 16,332 millionsolvency ratio was 193% on December 31, 2022 (2021: EUR 19,431 million). The decrease of EUR 3,099 million in Own Funds since December 31, 2021, was mostly driven by negative market impacts and external dividends (23 cents per share: EUR 460 million), two share buy back announcements (1Q 2022 and 1Q 2023): EUR 500 million, deleveraging: EUR 386 million and a reduction of eligible own funds due2023, compared to tiering restrictions: EUR 194 million. There was a partial offset from the proceeds from divestitures completed in 2022.
Aegon’s Group PIM SCR amounted to EUR 7,844 million208% on December 31, 2022 (2021: EUR 9,226 million).2022. The SCR decreased by EUR 1,382 million since December 31, 2021. This decrease wasin Group solvency ratio is mainly the result from the release of required capital of in force business, the impact from management actions, model and assumption changes and market impacts. This was partially offsetdriven by the need to set up SCR for new business. As a result of the above changes in Eligible Own Funds and PIM SCR, the Group Solvency II ratio decreased by 3%-points to 208% in 2022.transaction with a.s.r.
Minimum regulatory requirements
Insurance laws and regulations in local regulatory jurisdictions often contain minimum regulatory capital requirements. Bermuda and the BMA, as group supervisor and local entity supervisor of Bermuda subsidiaries, defined a minimum solvency margin. For insurance companies in the European Union Solvency II formally defines a lowerand the UK also, minimum capital requirement is defined, being the Minimum Capital Requirement (MCR).Requirement. An irreparable breach of the MCRminimum regulatory capital requirements would lead to a withdrawal of the Company’s insurance license. Similarly, for the US insurance entities the withdrawal of the insurance license is triggered by a breach of the
100% Authorized Control Level (ACL), which is set at 50% of the Company Action Level (CAL).
With the introduction of Solvency II for EEA countries, Aegon views the higher capital requirement, 100%120
% of the SCR for the Group or
100
% of local entity SCR CAL as the level around which EU supervisors will formally require management to provide regulatory recovery plans. For the US insurance entities this is viewed at 100% CAL.
During 2022,2023, the Aegon Group and the regulated entities within the Aegon Group that are subject to regulatory capital requirements on a solo-level continued to comply with the solvency requirements.
Capital quality
Aegon’s capital consists of 3 Tiers as an indication of its quality, with Tier 1 capital ranking the highest. The Available Own Funds is an estimate, has not been filed with the regulator and is subject to supervisory review. It is to be noted that the Group Own Funds do not include any contingent liability potentially arising from unit-linked products sold, issued or advised on by Aegon in the Netherlands in the past as the potential liability cannot be reliably quantified at this point.
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Table of Contents
Notes to the consolidated financial statements
Note 43
The below table provides the composition of Aegon’s Available Own Funds across Tiers:
         2022       2021 
     
Available Own Funds
  
      Available Own Funds
   
Percentage total
  
Available Own Funds
   
Percentage total
 
     
Tier 1 (Unrestricted Tier 1 + Restricted Tier 1)
   13,585    82%     16,409    84%   
     
Unrestricted Tier 1
   11,762    71%   14,044    72% 
     
Restricted Tier 1
   1,822    11%   2,364    12% 
     
Junior Perpetual Capital Securities
   993    6%   1,391    7% 
     
Perpetual Cumulative Securities
   387    2%   459    2% 
     
Perpetual Contingent Convertible Securities
   442    3%   515    3% 
     
Tier 2
   2,195    13%   2,348    12% 
     
Subordinated notes issued by AFC
   770    5%   832    4% 
     
Subordinated liabilities Aegon NV
   720    4%   767    4% 
     
Grandfathered subordinated notes
   705    4%   750    4% 
     
Tier 3
   746    5%   675    3% 
     
Total Available Own Funds
  
 
16,525
 
      
 
19,431
 
     
On December 31, 2022, Tier 1 capital amounted to EUR 13,585 million (2021: EUR 16,409), which includes EUR 1,822 million (2021: EUR 2,364 million ) restricted Tier 1 capital. Restricted Tier 1 capital consists of Aegon’s junior perpetual capital securities (2022: EUR 993 million, 2021: EUR 1,391 million), perpetual cumulative subordinated bonds (2022: EUR 387 million; 2021: EUR 459 million), and perpetual contingent convertible security (2022: EUR 442 million; 2021: EUR 515 million). Both junior perpetual capital securities and perpetual cumulative subordinated bonds are grandfathered. The reduction in junior perpetual capital securities is driven by the partial redemption of the EUR 950 million perpetual instrument. Perpetual contingent convertible securities are Solvency II compliant liabilities which were issued in 2019. Restricted Tier 1 capital is subject to eligibility restrictions to qualify as Eligible Own Funds.
On December 31, 2022, Tier 2 capital amounted to EUR 2,195 million (2021: 2,348 million). This consists of the subordinated notes issued by Aegon Funding Company LLC (AFC) in 2019 (2022: EUR 770 million; 2021: EUR 832 million), the Solvency II compliant subordinated liabilities that were issued during 2018 (2022: EUR 720 million; 2021: EUR 767 million), and grandfathered subordinated notes (2022: EUR 705 million; 2021: EUR 750 million). Tier 2 capital is subject to eligibility restrictions to qualify as Eligible Own Funds.
The grandfathered restricted Tier 1 and Tier 2 capital instruments are grandfathered such that they are considered as capital under the Solvency II framework until December 31, 2025. For the terms and conditions of these grandfathered instruments refer to note 31 Other equity instruments and note 32 Subordinated borrowings.
It is to be noted that the difference between the amounts mentioned above for junior perpetual capital securities and perpetual cumulative subordinated bonds, and those in note 31 Other equity instruments and note 32 Subordinated borrowings, stem from valuation differences between Solvency II (market value) and IFRS rules (refer to related accounting policies in note 2, paragraphs 2.17 and 2.18).
Tier 3 capital as of December 31, 2022 is comprised of deferred tax assets balances related to Solvency II entities.
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Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
IFRS equity compares to Solvency II Own Funds as follows:
                    2022                     2021     
   
IFRS Shareholders’ Equity
   12,071    23,813 
   
IFRS adjustments for Other Equity instruments and non controlling interests
   2,119   2,559 
   
IFRS Group Equity
   14,190   26,372 
   
Solvency II revaluations & reclassifications
   1,489   (9,096) 
   
Transferability restrictions
1)
   (1,771)   (1,772) 
   
Excess of Assets over Liabilities
  
 
13,908
 
 
 
15,504
 
   
Availability adjustments
   2,715   4,020 
   
Tiering restriction
   (194)   - 
   
Fungibility adjustments
   (98)   (93) 
   
Eligible Own Funds
  
 
16,332
 
 
 
19,431
 
1 
This includes the transferability restriction related to the RBC CAL conversion methodology.
The Solvency II revaluations and reclassification of EUR 1,489 million positive (2021: EUR 9,096 million negative) mainly stem from the difference in valuation and presentation between IFRS and Solvency II frameworks. The Solvency II revaluations and reclassification 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, deferred policy acquisition costs (DPAC) and other intangible assets (EUR 1,692 million negative, 2021: EUR 2,263 million negative);
◆
Items that have a different valuation treatment between IFRS and Solvency II. Solvency II is a market consistent framework hence all assets and liabilities are to be presented at fair value while IFRS 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, and technical provisions. The revaluation difference stemming from this category amounted to EUR 2,725 million positive (2021: EUR 3,666 million positive) compared to the IFRS Statement of Financial Position;
◆
The Net Asset Value of subsidiaries that are included under the D&A method (on provisional equivalence or Standard Formula basis) in the Group Solvency II results. The revaluation difference stemming from this category amounted to EUR 3,134 million positive (2021: EUR 7,331 million negative) compared to the IFRS Statement of Financial Position;
◆
Reclassification of subordinated liabilities of EUR 2,678 million negative (2021: EUR 3,168 negative).
The transferability restrictions reflect the restrictions on Tier 1 unrestricted Own Funds as a consequence of the RBC CAL conversion methodology as described above.
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 therefore are excluded for Solvency II purposes.
Capital leverage
Aegon’s total capitalization reflects the capital employed in the business units and consists of shareholders’ capitaladjusted valuation equity1 and total gross financial leverage. Aegon assesses its gross financial leverage position based on various leverage metrics, including the
1 
Adjusted valuation equity is defined as the sum of shareholders’ equity,
non-controlling
interests, long term incentive plans not yet vested and the tax adjusted contractual service margin.
  294 | Annual Report on Form 20-F 2023
Table of Contents
Notes to the consolidated financial statements
Note 38
gross financial leverage ratio, which is calculated by dividing total financial leverage by total capitalization. Aegon defines total financial leverage as debt or debt-like funding issued for general corporate purposes and for capitalizing Aegon’s business units. Total financial leverage includes hybrid instruments, in addition to both subordinated and senior debt. Aegon’s total capitalization comprises the following components:
◆
∎
Shareholders’ equity excluding revaluation reserves based on IFRS as adopted by the EU;
◆
∎
Non-controlling
interests and Long Term Incentive Plans not yet vested; andvested
◆
Total financial leverage.
260
  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
∎
 
Notes to the consolidated financial statements
Note 43
Contractual service margin net of tax; and
∎
 
Total financial leverage.
The following table shows the composition of Aegon’s total capitalization, the calculation of the gross financial leverage ratio and its fixed charge coverage:
    
Note
   
     2023
        2022 
Total shareholders’ equity - based on IFRS as adopted by the EU  
 
25
 
   7,475    8,815 
Non-controlling
interests and share options not yet exercised
  
 
26, SOFP 
2)
 
   203    243 
CSM after tax  
 
29
 
   6,403    7,227 
Adjusted valuation equity
       
 
14,080
 
  
 
16,285
 
Perpetual contingent convertible securities  
 
26
 
   500    500 
Junior perpetual capital securities  
 
26
 
   923    923 
Perpetual cumulative subordinated bonds  
 
26
 
   454    454 
Subordinated Borrowings  
 
27
 
   2,244    2,295 
Trust pass-through securities  
 
28
 
   111    118 
Currency revaluation other equity instruments
1)
        50    66 
Hybrid leverage
       
 
4,282
 
  
 
4,356
 
Senior debt  
 
31
3)
 
   782    1,265 
Senior leverage
       
 
782
 
  
 
1,265
 
Total gross financial leverage
       
 
5,064
 
  
 
5,621
 
                
Total capitalization
       
 
19,144
 
  
 
21,906
 
                
Gross financial leverage ratio
       
 
26.5%
 
  
 
25.7%
 
                
Fixed Charge Coverage
       
 
6.5 x
 
  
 
8.7 x
 
 
    
Note
   
              2022
                2021 
    
Total shareholders’ equity - based on IFRS as adopted by the EU
  
 
30
 
   11,440     24,282 
    
Non-controlling
interests and Long Term Incentive Plans not yet vested
  
 
31, SOFP 
2)
 
   242   253 
    
Revaluation reserves
  
 
30
 
   4,477   (6,442) 
    
Adjusted shareholders’ equity
       
 
16,159
 
 
 
18,093
 
    
Perpetual contingent convertible securities
  
 
31
 
   500   500 
    
Junior perpetual capital securities
  
 
31
 
   923   1,352 
    
Perpetual cumulative subordinated bonds
  
 
31
 
   454   454 
    
Fixed floating subordinated notes
  
 
32
 
   1,442   1,396 
    
Fixed subordinated notes
  
 
32
 
   852   798 
    
Trust pass-through securities
  
 
33
 
   118   126 
    
Currency revaluation other equity instruments
1)
        66   16 
    
Hybrid leverage
       
 
4,356
 
 
 
4,642
 
    
Senior debt
3)
  
 
37
 
   1,265   1,290 
    
Senior leverage
       
 
1,265
 
 
 
1,290
 
    
Total gross financial leverage
       
 
5,621
 
 
 
5,932
 
    
Total capitalization
       
 
21,780
 
 
 
24,008
 
    
               
    
Gross financial leverage ratio
       
 
25.8%
 
 
 
24.7%
 
    
               
    
Fixed Charge Coverage
       
 
9.2 x
 
 
 
9.3 x
 
1 
Other equity instruments that are denominated in foreign currencies are, for purpose of calculating hybrid leverage, revalued to the
period-end
exchange rate.
2 
Non-controlling
interests are disclosed in the statement of financial position.
3 
Senior debt for the gross financial leverage calculation also contains swaps for an amount of EUR (20)19 million (2021:(2022: EUR (2)20 million).
Distributable reserves
Aegon N.V.Ltd. is subject to legal restrictions with regard to the amount of dividends it can pay to its shareholders. Under Dutch law,
Aegon shall only declare or pay a dividend or make a distribution from contributed surplus in accordance with Bermuda law. Among other things this means that Aegon shall not declare or pay a dividend or make a distribution from contributed surplus in the amountevent that there are reasonable grounds for believing that (i) the company is, availableor would after the payment be, unable to pay dividends consistsits liabilities as they become due; or (ii) the realizable value of total shareholders’ equitythe company’s assets would thereby be less than its liabilities. 
In accordance to the Dutch act
Non-residential
companies (“Wet op de formeel buitenlandse vennootschappen”) the members of the Board of Directors will need to satisfy themselves that after distributions to shareholders, repurchase of shares and reduction of the issued and outstanding capital andwith repayment of shares Aegon Ltd. remains in the reserves required by law. The legal reserves in respectposition to proceed with the payment of the foreign currency translation reserve (FCTR), group companies and the revaluation reserves, cannot be freely distributed. In case of negative balances for individual reserves legally to be retained, no distributions can be made out of retained earnings to the level of these negative amounts. Total distributable items under Dutch law amounted to EUR 5,363 million as at December 31, 2022 (2021: EUR 14,093 million). The following table shows the composition of the total distributable items:
its due debts.
Distributable items
  
                 2022    
                  2021  
   
Equity attributable to shareholders based on IFRS as adopted by the EU
   11,440      24,282  
   
Non-distributable
items:
          
   
Share capital
   (319)     (321) 
   
Legal reserves
1)
   (5,758)     (9,868) 
   
At December 31
  
 
5,363  
 
  
 
14,093 
 
1 
The legal reserves in respect of the foreign currency translation reserve (FCTR), group companies and the positive revaluations in the revaluation reserves, cannot be freely distributed.
Besides the distributable items under Dutch law, a second restriction on the possibility to distribute dividends stems from Solvency II (Dutch Supervision act).
Distributable reserves
  
                  2022  
                    2021  
   
Reserves available for financial surpervision purposes
   16,332      19,431 
   
Solvency requirement under the Financial Supervision Act   7,844      9,226 
   
Total distributable reserves on the basis of solvency requirements
  
 
8,488  
 
  
 
10,205
 
The freely distributable reserves is the minimum of distributable items under Dutch law and the freely distributable capital on the basis of solvency requirements and amounted to EUR 5,363 million as at December 31, 2022 (2021: EUR 10,205 million).

Aegon Annual Report on Form 20-F 2022  |  261
Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
4438 Fair value
The estimated fair values of Aegon’s assets and liabilities correspond with the amounts that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When available, Aegon uses quoted market prices in active markets to determine the fair value of investments and derivatives. In the absence of an active market, the fair value of investments in financial assets is estimated by using other market observable data, such as corroborated external quotes and present value or other valuation techniques. An active market is one in which transactions are taking place regularly on an arm’s length basis. Fair value is not determined based upon a forced liquidation or distressed sale.
Annual Report on Form 20-F 2023  |  295 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Valuation techniques are used when Aegon determines the market is inactive or quoted market prices are not available for the asset or liability at the measurement date. However, the fair value measurement objective remains the same, that is, to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions (i.e. an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability). Therefore, unobservable inputs reflect Aegon’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). These inputs are developed based on the best information available.
Aegon employs an oversight structure over valuation of financial instruments that includes appropriate segregation of duties. Senior management, independent of the investing functions, is responsible for the oversight of control and valuation policies and for reporting the results of these policies. For fair values determined by reference to external quotation or evidenced pricing parameters, independent price determination or validation is utilized to corroborate those inputs. Further details of the validation processes are set out below.
Valuation of assets and liabilities is based on a pricing hierarchy, in order to maintain a controlled process that will systematically promote the use of prices from sources in which Aegon has the most confidence, where the least amount of manual intervention exists and to embed consistency in the selection of price sources. Depending on asset type the pricing hierarchy consists of a waterfall that starts with making use of market prices from indices and follows with making use of third-party pricing services or brokers.
Fair value hierarchy
The following table below provides an analysissets out the fair values of assets and liabilities recorded at fair value on a recurring basisfinancial instruments by the level of the fair value hierarchy. The decrease in assetshierarchy into which each fair value measurement is categorized. It does not include fair value information for cash and liabilities in 2022 is mainly the resultcash equivalents, receivables, and payables, whose carrying amounts are a reasonable approximation of the classification of Aegon the Netherlands as heldfair value, or for sale and discontinued operations, refer to note 51 Discontinued operations.
lease liabilities.
   
2023
 
Fair value hierarchy
       Level I        Level II        Level III        Total 
Assets measured at FVOCI
        
Shares   5    -    4    10 
Debt securities   5,644    41,031    516    47,191 
Money market and other short-term investments   3,028    97    9    3,135 
Other investments at fair value   -    29    -    29 
     
   
 
8,678
 
  
 
41,157
 
  
 
530
 
  
 
50,364
 
Financial assets measured at fair value through profit or loss
        
Shares   153    43    94    291 
Debt securities   302    2,009    86    2,396 
Money market and other short-term investments   4,041    173    -    4,215 
Other investments at fair value   1    773    4,237    5,011 
Derivatives   47    1,374    8    1,429 
Investments in real estate   -    -    55    55 
Investments in real estate for policyholders   -    -    433    433 
Investments where the policyholder bears the risk   90,027    103,022    342    193,390 
     
   
 
94,570
 
  
 
107,395
 
  
 
5,255
 
  
 
207,220
 
Revalued amounts
        
Real estate held for own use   -    -    61    61 
     
Total financial assets measured at fair value
  
 
103,248
 
  
 
148,551
 
  
 
5,846
 
  
 
257,645
 
Financial liabilities carried at fair value
        
Investment contracts without DPF where the policyholder bears the risk   -    65,044    -    65,044 
Derivatives   39    2,434    6    2,479 
     
Total financial liabilities measured at fair value
  
 
39
 
  
 
67,478
 
  
 
6
 
  
 
67,523
 
 
262  |  Aegon Annual Report on Form 20-F 2022
 296  |  Annual Report on Form 20-F 2023
Table of Contents
 
 
Notes to the consolidated financial statements
Note 44    38
   
   
   
                              
   
                              
   
                              
   
                              
 
     
    Level I   Level II   Level III   
Total 2022  
     
Assets carried at fair value
                    
     
Available-for-sale
                    
     
Shares
   22    42    131    195  
     
Debt securities
   6,624    46,254    215    53,093 
     
Money market and other short-term instruments
   3,639    1,874                        1    5,514 
     
Other investments at fair value
   -    180    660                  840 
     
   
 
10,284
 
  
 
48,351
 
  
 
1,008
 
  
 
59,643
 
     
Fair value through profit or loss
                    
     
Shares
   144    49    -    193 
     
Debt securities
   12    541    1    554 
     
Money market and other short-term instruments
   42    57    -    99 
     
Other investments at fair value
                       1                  358    3,363    3,722 
     
Investments for account of policyholders
1)
   87,358    91,799    402    179,559 
     
Derivatives
   33    2,717    11    2,760 
     
Investments in real estate
   -    -    59    59 
     
Investments in real estate for policyholders
   -    -    443    443 
     
   
 
87,590
 
  
 
95,520
 
  
 
4,279
 
  
 
187,389
 
     
Revalued amounts
                    
     
Real estate held for own use
   -    -    73    73 
     
   
 
-
 
  
 
-
 
  
 
73
 
  
 
73
 
     
Total assets at fair value
  
97,874
   
143,870
   
5,360
   
247,104  
     
Liabilities carried at fair value
                    
     
Investment contracts for account of policyholders
2)
   -    55,228    26    55,254 
     
Derivatives
   51    5,202    840    6,094 
     
Total liabilities at fair value
  
 
51
 
  
 
60,467
 
  
 
867
 
  
 
61,385
 
1 
The investments for account of policyholders include investments carried at fair value through profit or loss.
   
                              
   
                              
   
                              
   
                              
 
     
    Level I   Level II   Level III  Total 2021  
     
Assets carried at fair value
                   
     
Available-for-sale
                   
     
Shares
   84    75    191   350 
     
Debt securities
   25,166    68,131    603   93,899 
     
Money market and other short-term instruments
   1,204    3,586    -   4,790  
     
Other investments at fair value
   -    246    599   844 
     
   
 
26,453
 
  
 
72,038
 
  
 
1,393
 
 
 
99,884
 
     
Fair value through profit or loss
                   
     
Shares
   85    237    1,343   1,665 
     
Debt securities
   130    3,161    5   3,296 
     
Money market and other short-term instruments
   18    102    -   120 
     
Other investments at fair value
                       2                  389    3,010   3,401 
     
Investments for account of policyholders
1)
   129,794    119,653    943   250,390 
     
Derivatives
   150    8,676                        1   8,827 
     
Investments in real estate
   -    -    2,643   2,643 
     
Investments in real estate for policyholders
   -    -    563                 563 
     
   
 
130,178
 
  
 
132,219
 
  
 
8,507
 
 
 
270,904
 
     
Revalued amounts
                   
     
Real estate held for own use
   -    -    185   185 
     
   
 
-
 
  
 
-
 
  
 
185
 
 
 
185
 
     
Total assets at fair value
  
 
156,631
 
  
 
204,256
 
  
 
10,086
 
 
 
370,974
 
     
Liabilities carried at fair value
                   
Investment contracts for account of policyholders
2)
  
 
-
 
  
 
71,249
 
  
 
(6
) 
 
 
71,242
 
     
Derivatives
   39    7,162    3,437   10,639 
     
Total liabilities at fair value
  
 
39
 
  
 
78,411
 
  
 
3,431
 
 
 
81,881
 
1 
The investments for account of policyholders include investments carried at fair value through profit or loss.
2 
The investment contracts for account of policyholders represents only those investment contracts carried at fair value.
 
Aegon Annual Report on Form 20-F
2022
  |  
263
Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
   2022 
Fair value hierarchy
       Level I        Level II        Level III        Total 
Assets measured at FVOCI
        
Shares   5    -    4    10 
Debt securities   6,353    45,073    181    51,607 
Money market and other short-term investments   1,597    973    5    2,576 
Other investments at fair value   -    31    -    31 
     
   
 
7,956
 
  
 
46,077
 
  
 
191
 
  
 
54,223
 
Financial assets measured at fair value through profit or loss
        
Shares   160    61    127    348 
Debt securities   282    1,722    35    2,040 
Money market and other short-term investments   2,084    957    1    3,042 
Other investments at fair value   1    537    4,050    4,588 
Derivatives   33    2,728    11    2,771 
Investments in real estate   -    -    59    59 
Investments in real estate for policyholders   -    -    443    443 
Investments where the policyholder bears the risk   87,362    91,799    402    179,563 
     
   
 
89,922
 
  
 
97,804
 
  
 
5,128
 
  
 
192,855
 
Revalued amounts
        
Real estate held for own use   -    -    73    73 
     
Total financial assets measured at fair value
  
 
97,878
 
  
 
143,881
 
  
 
5,392
 
  
 
247,151
 
Financial liabilities carried at fair value
        
Investment contracts without DPF where the policyholder bears the risk   -    55,631    -    55,631 
Derivatives   51    5,111    12    5,175 
     
Total financial liabilities measured at fair value
  
 
51
 
  
 
60,742
 
  
 
12
 
  
 
60,806
 
Significant transfers between Level I, Level II and Level III
Aegon’s policy is to record transfers of assets and liabilities between Level I, Level II and Level III at their fair values as offrom the beginning of each reporting period.
The table below shows transfers between Level I and Level II for financial assets and financial liabilities recorded at fair value on a recurring basis.
 
    
Total 2022
1)
   Total 2021 
     
    Transfers Level I
to Level II		   
Transfers Level II  
to Level I  
   Transfers Level I
to Level II		   Transfers Level II
to Level I		 
     
Assets carried at fair value
                    
     
Available-for-sale
                    
     
Debt securities
   23    5      44    32 
     
Money markets and other short-term instruments
   -    721      -    - 
     
   
 
23
 
  
 
726  
 
  
 
44
 
  
 
32
 
     
Fair value through profit or loss
                    
     
Shares
   10    128      -    - 
     
Money markets and other short-term instruments
   -    13      -    - 
     
Investments for account of policyholders
   -    40      -    - 
     
   
 
10
 
  
 
181  
 
  
 
-
 
  
 
-
 
     
Total assets at fair value
  
 
34
 
  
 
907  
 
  
 
44
 
  
 
32
 
     
   
 
-
 
  
 
-  
 
          
     
Total Liabilities carried at fair value
  
 
-
 
  
 
-  
 
  
 
-
 
  
 
-
 
1 
2022 excludes the assets and liabilities of the disposal group, which are separately disclosed in note 51 Discontinued operations.
  
2023
  2022 
Significant transfers between level I, level II and level III
  Transfers Level I
to Level II
    Transfers Level II
to Level I
    Transfers Level I
to Level II
    Transfers Level II
to Level I
  
Assets measured at FVOCI
    
Debt securities  -   141   23   5 
Money market and other short-term investments  45   245   -   460 
     
  
 
45
 
 
 
386
 
 
 
23
 
 
 
464
 
Financial assets measured at fair value through profit or loss
    
Shares  -   -   10   128 
Money market and other short-term investments  -   795   -   275 
Investments where the policyholder bears the risk  1   -   -   28 
     
  
 
1
 
 
 
795
 
 
 
10
 
 
 
431
 
Revalued amounts
    
Real estate held for own use  -   -   -   - 
     
Total financial assets measured at fair value
 
 
46
 
 
 
1,182
 
 
 
34
 
 
 
895
 
Transfers are identified based on transaction volume and frequency, which are indicative of an active market.
 
264
  |  Aegon
Annual Report on Form 20-F
2022
2023  |  297 
 
Table of Contents
LOGO		 
Notes to the consolidated financial statements
About Aegon  Governance and risk management  
Note 44Financial information
  Sustainability information
   
   
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.
 
Assets carried at fair value
                            
               
Available-for-sale
                                                        
               
Shares
  191   (0)   (1)   (35)   (4)   (10)   -   12   -   -   -   (21)   131   - 
               
Debt securities
  603   -   (1)   (88)   124   (34)   (21)   26   -   43   (384)   (54)   215   - 
               
Money markets and other short-term instruments
  -   -   (0)   1   -   -   -   (0)   -   -   -   -   1   - 
               
Other investments at fair value
  599   -   (142)   22   168   (12)   (14)   39   -   -   -   -   660   - 
               
  
 
1,393
 
 
 
(0
) 
 
 
(145
) 
 
 
(100
) 
 
 
289
 
 
 
(56
) 
 
 
(34
) 
 
 
77
 
 
 
-
 
 
 
43
 
 
 
(384
) 
 
 
(75
) 
 
 
1,008
 
 
 
-
 
               
Fair value through profit or loss
                                                        
               
Shares
  1,343   -   170   -   190   (345)   -   -   -   -   -   (1,357)   -   - 
               
Debt securities
  5   -   (1)   -   44   (3)   -   -   -   -   -   (44)   1   (1) 
               
Other investments at fair value
  3,010   -   361   -   444   (578)   -   190   -   -   -   (64)   3,363   - 
               
Investments for account of policyholders
  943   -   41   (0)   (515)   873   -   (10)   -   2   -   (932)   402   (55) 
               
Derivatives
  1   -   10   -   -   -   -   (0)   -   -   -   -   11   10 
               
Investments in real estate
  2,643   -   (51)   -   42   (40)   -   3   7   -   -   (2,545)   59   1 
               
Investments in real estate for policyholders
  563   -   (61)   -   10   (42)   -   (27)   -   -   -   -   443   (69) 
               
  
 
8,507
 
 
 
-
 
 
 
470
 
 
 
(0
) 
 
 
215
 
 
 
(135
) 
 
 
-
 
 
 
155
 
 
 
7
 
 
 
2
 
 
 
-
 
 
 
(4,942
) 
 
 
4,279
 
 
 
(114
) 
               
Revalued amounts
                                                        
               
Real estate held for own use
  185   (23)   (3)   -   (1)   (8)   -   4   (5)   -   -   (76)   73   (0) 
               
  
 
 
185
 
 
 
 
 
 
(23
 
) 
 
 
 
 
(3
 
) 
 
 
 
 
-
 
 
 
 
 
 
(1
 
) 
 
 
 
 
(8
 
) 
 
 
 
 
-
 
 
 
 
 
 
4
 
 
 
 
 
 
(5
 
) 
 
 
 
 
-
 
 
 
 
 
 
-
 
 
 
 
 
 
(76
 
) 
 
 
 
 
73
 
 
 
 
 
 
(0
 
) 
 
               
Total assets at fair value
 
 
10,086
 
 
 
(24
) 
 
 
322
 
 
 
(99
) 
 
 
503
 
 
 
(199
) 
 
 
(34
) 
 
 
235
 
 
 
2
 
 
 
45
 
 
 
(384
) 
 
 
(5,092
) 
 
 
5,360
 
 
 
(115
) 
               
Liabilities carried at fair value
                                                        
               
Investment contracts for account of policyholders
  (6)   -   (26)   -   (559)   720   -   2   -   1   -   (105)   26   - 
               
Derivatives
  3,437   -   (1,986)   -   -   (7)   -   150   -   -   -   (754)   840   - 
               
  
 
3,431
 
 
 
-
 
 
 
(2,012
) 
 
 
-
 
 
 
(559
) 
 
 
713
 
 
 
-
 
 
 
152
 
 
 
-
 
 
 
1
 
 
 
-
 
 
 
(859
) 
 
 
867
 
 
 
-
 
Financial assets carried at
fair value
  2023   
Disposal
of a
business
 
 
 
  
Total gains /
losses in
income
statement 
 
 
 
1)
 
  
Total
gains /
losses in
OCI 
2)
 
 
 
 
  Purchases   Sales   Settle-
ments
 		  
Net
exchange
difference
 
 
 
  Reclas-
sification
    
Transfers
from
levels I
and II
 
 
 
 
  Transfers to
levels I and II		 
 		  
Transfers
to disposal
groups
 
 
 
  
On
December
31, 2023
 
 
 
  
Total unrealized
gains and losses
for the period
recorded in the P&L
for instruments
held on December
31, 2023
3)
 
 
 
 
 
 
 
FVOCI
              
Shares  4   -   -   -   -   -   -   -   -   -   -   -   4   - 
Debt securities  181   -   (1)   11   263   (124)   (15)   (12)   -   214   (1)   -   516   - 
Money markets and other short-term investments  5   -   -   4   -   -   -   -   -   -   -   -   9   - 
               
  
 
191
 
 
 
-
 
 
 
(1
) 
 
 
15
 
 
 
263
 
 
 
(124
) 
 
 
(15
) 
 
 
(12
) 
 
 
-
 
 
 
214
 
 
 
(1
) 
 
 
-
 
 
 
530
 
 
 
-
 
FVPL
              
Shares  127   -   2   -   12   (47)   -   (4)   -   5   -   -   94   3 
Debt securities  35   -   17   -   38   (43)   (4)   (2)   -   46   -   -   86   (8) 
Money markets and other short-term investments  1   -   -   -   -   -   -   -   -   -   (1)   -   -   - 
Other investments at fair value  4,050   -   (65)   -   652   (254)   -   (144)   -   -   -   -   4,237   (70) 
Derivatives  11   -   (3)   -   -   (1)   -   -   -   -   -   -   8   (3) 
Investments in real estate  59   -   2   -   2   (6)   -   (1)   -   -   -   -   55   - 
Investments in real estate for policyholders  443   -   (52)   -   42   (12)   -   11   -   -   -   -   433   (42) 
Investments where the policyholder bears the risk  402   -   (37)   -   37   (59)   -   (1)   -   -   -   -   342   - 
               
 
 
5,128
 
 
 
-
 
 
 
(136
) 
 
 
-
 
 
 
782
 
 
 
(422
) 
 
 
(4
) 
 
 
(142
) 
 
 
-
 
 
 
51
 
 
 
(2
) 
 
 
-
 
 
 
5,255
 
 
 
(120
) 
Revalued amounts
              
Real estate held for own use  73   -   (3)   (2)   (1)   -   -   (2)   -   -   -   -   64   - 
               
  
 
73
 
 
 
-
 
 
 
(3
) 
 
 
(2
) 
 
 
(1
) 
 
 
-
 
 
 
-
 
 
 
(2
) 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
64
 
 
 
-
 
Total financial assets
measured at fair value
 
 
5,392
 
 
 
-
 
 
 
(141
) 
 
 
13
 
 
 
1,044
 
 
 
(546
) 
 
 
(19
) 
 
 
(157
) 
 
 
-
 
 
 
265
 
 
 
(3
) 
 
 
-
 
 
 
5,849
 
 
 
(120
) 
Financial liabilities carried at fair value
              
Investment contracts without DPF where the policyholder bears the risk  -   -   -   -   -   -   -   -   -   -   -   -   -   - 
Derivatives  12   -   (6)   -   -   -   -   -   -   -   -   -   6   - 
               
  
 
12
 
 
 
-
 
 
 
(6
) 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
6
 
 
 
-
 
 
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:items Gains / (losses) on revaluation of
available-for-sale
investments, (Gains)financial assets measured at FVOCI and Gains / losses(losses) transferred to the income statement on disposal and impairment of
available-for-sale
investments and Changes in revaluation reserve real estate held for own use financial assets measured at FVOCI of the statement of other comprehensive income.
3 
Total gains / (losses) for the period during which the financial instrument was in Level III.
 
 
Aegon Annual Report on Form 20-F 2022  |  265
 298  |  Annual Report on Form 20-F 2023
 
 
About AegonGovernance and risk management
Financial information
 Non-financial information
Notes to the consolidated financial statements
Note 38
   
   
 
 
Assets carried at fair value
                        
             
Available-for-sale
                                                
             
Shares
  173   1   3   30   (26)   (0)   11   -   -   -   191   - 
             
Debt securities
  467   (1)   6   228   (29)   (46)   22   -   203   (246)   603   - 
             
Money markets and other short-term instruments
  -   -   -   -   -   -   -   -   -   -   -   - 
             
Other investments at fair value
  581   (113)   7   111   (24)   (6)   43   -   -   -   599   - 
             
  
 
1,221
 
 
 
(114
) 
 
 
16
 
 
 
368
 
 
 
(80
) 
 
 
(52
) 
 
 
77
 
 
 
-
 
 
 
203
 
 
 
(246
) 
 
 
1,393
 
 
 
-
 
             
Fair value through profit or loss
                                                
             
Shares
  1,329   150   -   179   (316)   1   1   -   -   -   1,343   147 
             
Debt securities
  242   (1)   -   124   (361)   (0)   -   -   -   -   5   1 
             
Other investments at fair value
  2,173   796   -   492   (638)   -   186   -   -   -   3,010   (1) 
             
Investments for account of policyholders
  1,012   206   (0)   (198)   (93)   -   22   -   -   (7)   943   162 
             
Derivatives
  22   (17)   -   -   (4)   -   -   -   -   -   1   (10) 
             
Investments in real estate
  2,385   253   -   48   (60)   -   3   14   -   -   2,643   253 
             
Investments in real estate for policyholders
  467   46   -   60   (43)   -   32   -   -   -   563   66 
             
  
 
7,631
 
 
 
1,433
 
 
 
(0
) 
 
 
705
 
 
 
(1,514
) 
 
 
-
 
 
 
245
 
 
 
14
 
 
 
-
 
 
 
(7
) 
 
 
8,507
 
 
 
618
 
             
Revalued amounts
                                                
             
Real estate held for own use
  209   (16)   (4)   6   -   (0)   5   (14)   -   -   185   1 
             
  
 
209
 
 
 
(16
) 
 
 
(4
) 
 
 
6
 
 
 
-
 
 
 
(0
) 
 
 
5
 
 
 
(14
) 
 
 
-
 
 
 
-
 
 
 
185
 
 
 
1
 
             
                                                 
             
Total assets at fair value
 
 
9,061
 
 
 
1,303
 
 
 
12
 
 
 
1,079
 
 
 
(1,594
) 
 
 
(52
) 
 
 
326
 
 
 
-
 
 
 
203
 
 
 
(253
) 
 
 
10,086
 
 
 
619
 
             
Liabilities carried at fair value
                                                
             
Investment contracts for account of policyholders
  (12)   (1)   -   (361)   366   -   2   -   -   -   (6)   3 
             
Derivatives
  4,902   (1,627)   -   -   (14)   -   176   -   -   -   3,437   607 
             
  
 
4,890
 
 
 
(1,628
) 
 
 
-
 
 
 
(361
) 
 
 
352
 
 
 
-
 
 
 
178
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
3,431
 
 
 
610
 
Financial assets carried at
fair value
  2022   
Disposal
of a
business
 
 
 
  
Total gains /
losses in
income
statement 
 
 
 
1)
 
  
Total
gains /
losses in
OCI 
2)
 
 
 
 
  Purchases   Sales   Settle-
ments
 		  
Net
exchange
difference
 
 
 
  Reclas-
sification
    
Transfers
from
levels I
and II
 
 
 
 
  
Transfers
to levels I
and II
 
 
  Transfers to
disposal groups
    
On
December
31, 2022
 
 
 
  
Total unrealized
gains and losses
for the period
recorded in the P&L
for instruments
held on December
31, 2022
3)
 
 
 
 
 
 
 
FVOCI
              
Shares  4   -   -   -   -   -   -   -   -   -   -   -   4   - 
Debt securities  365   -   (1)   (73)   98   (47)   (16)   23   -   37   (207)   -   181   - 
Money markets and other short-term investments  28   -   -   (23)   -   -   -   -   -   -   -   -   5   - 
               
  
 
398
 
 
 
-
 
 
 
(1
) 
 
 
(95
) 
 
 
98
 
 
 
(47
) 
 
 
(16
) 
 
 
23
 
 
 
-
 
 
 
37
 
 
 
(207
) 
 
 
-
 
 
 
191
 
 
 
-
 
FVPL
              
Shares  1,530   -   137   -   191   (365)   -   12   -   -   -   (1,378)   127   (41) 
Debt securities  242   -   (11)   -   45   (3)   (5)   3   -   2   (140)   (98)   35   (12) 
Money markets and other short-term investments  -   -   1   -   -   -   -   -   -   -   -   -   1   1 
Loans  22,727   -   (4,529)   -   1,802   (1,825)   -   -   -   -   -   (18,175)   -   - 
Other investments at fair value  3,548   -   247   -   627   (587)   (14)   229   -   -   -   -   4,050   159 
Derivatives  1   -   10   -   -   -   -   -   -   -   -   -   11   10 
Investments in real estate  2,643   -   (51)   -   42   (40)   -   3   7   -   -   (2,545)   59   1 
Investments in real estate for policyholders  563   -   (61)   -   10   (42)   -   (27)   -   -   -   -   443   (69) 
Investments where the policyholder bears the risk  895   -   43   -   (468)   876   -   (14)   -   2   -   (932)   402   (55) 
               
 
 
32,149
 
 
 
-
 
 
 
(4,214
) 
 
 
-
 
 
 
2,249
 
 
 
(1,986
) 
 
 
(19
) 
 
 
205
 
 
 
7
 
 
 
4
 
 
 
(140
) 
 
 
(23,128
) 
 
 
5,128
 
 
 
(6
) 
Revalued amounts
              
Real estate held for own use  185   (23)   (3)   -   (1)   (8)   -   4   (5)   -   -   (76)   73   - 
               
  
 
185
 
 
 
(23
) 
 
 
(3
) 
 
 
-
 
 
 
(1
) 
 
 
(8
) 
 
 
-
 
 
 
4
 
 
 
(5
) 
 
 
-
 
 
 
-
 
 
 
(76
) 
 
 
73
 
 
 
-
 
Total financial assets
measured at fair value
 
 
32,732
 
 
 
(24
) 
 
 
(4,218
) 
 
 
(95
) 
 
 
2,346
 
 
 
(2,042
) 
 
 
(34
) 
 
 
232
 
 
 
2
 
 
 
41
 
 
 
(347
) 
 
 
(23,203
) 
 
 
5,392
 
 
 
(7
) 
Financial liabilities carried at fair value
              
Investment contracts without DPF where the policyholder bears the risk  (33)   -   (23)   -   (559)   721   -   -   -   1   -   (105)   -   - 
Derivatives  41   -   (31)   -   -   -   -   3   -   -   -   (1)   12   - 
               
Total financial liabilities
measured at fair value
 
 
8
 
 
 
-
 
 
 
(54
) 
 
 
-
 
 
 
(559
) 
 
 
721
 
 
 
-
 
 
 
3
 
 
 
-
 
 
 
1
 
 
 
-
 
 
 
(106
) 
 
 
12
 
 
 
-
 
 
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:items Gains / (losses) on revaluation of
available-for-sale
investments, (Gains)financial assets measured at FVOCI and Gains / losses(losses) transferred to the income statement on disposal and impairment of
available-for-sale
investments and Changes in revaluation reserve real estate held for own use financial assets measured at FVOCI of the statement of other comprehensive income.
3 
Total gains / (losses) for the period during which the financial instrument was in Level III.
During 2022 and 2023, Aegon transferred certain financial instruments from Level I and II to Level III of the fair value hierarchy. The reason for the change in level was that the market liquidity for these securities decreased, which led to a change in market observability of prices. Prior to transfer, the fair value for the Level II securities was determined using observable market transactions, internal models or corroborated broker quotes respectively for the same or similar instruments. Since the transfer, all such assets have been valued using valuation models incorporating significant non market-observable inputs or uncorroborated broker quotes.
Similarly, during 2022 and 2023, Aegon transferred certain financial instruments from Level III to Level I and II of the fair value hierarchy. The change in level was mainly the result of a return of activity in the market for these securities and that for these securities
266  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
Notes to the consolidated financial statements
Note 44
the fair value could be determined using observable market transactions or corroborated broker quotes for the same or similar instruments.
Annual Report on Form 20-F 2023  |  299 
Table of Contents
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About Aegon  Governance and risk management  
Financial information
  Sustainability information
Valuation techniques and significant unobservable inputs
The table below presents information about the significant unobservable inputs used for recurring fair value measurements for certain Level III financial instruments.
 
    Valuation technique 
1)
   Significant unobservable
input
2)
   
December
31, 2022 
4
)
   Range
(weighted
average)		  December
31, 2021		   Range 
(weighted 
average) 
       
Assets carried at fair value
                             
       
Available-for-sale
                             
       
Shares
                             
       
    Net asset value    n.a.    126    n.a.     166    n.a. 
       
    Other    n.a.    5    n.a.   25    n.a. 
       
             
 
131
 
      
 
191
 
     
       
Debt securities
                             
       
    Broker quote    n.a.    66    n.a.   493    n.a. 
       
    Discounted cash flow    Constant Prepayment Rate    2    40.53%   5    21.43% 
       
    Discounted cash flow    Constant Prepayment Rate    -    -   22    9.95% 
       
    Other    n.a.    148    n.a.   82    n.a. 
       
             
 
216
 
      
 
603
 
     
       
Other investments at fair value
                             
Tax credit investments
   Discounted cash flow    Discount rate    610    7.10%   541    7.09% 
       
Investment funds
   Net asset value    n.a.    2    n.a.   3    n.a. 
       
Other
   Other    n.a.    48    n.a.   56    n.a. 
       
              660       
 
599
 
     
       
At December 31
            
 
1,008
 
      
 
1,393
 
     
       
Fair value through profit or loss
                             
       
Shares
   Other    n.a.    -    n.a.   1,343    n.a. 
       
Debt securities
   Other    n.a.    -    n.a.   5    n.a. 
       
Debt securities
   Discounted cash flow    Constant prepayment rate    -    7.80%   -    n.a. 
       
             
 
1
 
      
 
1,348
 
     
       
Other investments at fair value
                             
Investment funds
   Net asset value    n.a.    3,363    n.a.   2,944    n.a. 
       
Other
   Other    n.a.    -    n.a.   66    n.a. 
       
             
 
3,363
 
      
 
3,010
 
     
       
Total assets at fair value
3)
            
 
4,372
 
      
 
5,750
 
     
       
Liabilities carried at fair value
                             
       
Derivatives
                             
       
Embedded derivatives in insurance contracts
   Discounted cash flow    Own credit spread    836    0.45%   3,437    0.23% 
       
Other
   Discounted cash flow ��  Other    4    n.a   -    - 
       
Total liabilities at fair value
            
 
840
 
  
 
-
 
 
 
3,437
 
     
   Valuation technique 
1)
  		  Significant unobservable
input
2)
   December
31, 2023		 
 		   
Range
(weighted
average)
 
 
 
   December
31, 2022
     
Range
(weighted
average)
 
 
 
Assets carried at fair value
            
Fair value through OCI
            
Shares
            
  Net asset value  n.a.   -    n.a.    -    n.a.  
  Other  n.a.   4    n.a.    4    n.a. 
       
      
 
4
 
    
 
4
 
  
Debt securities
            
  Broker quote  n.a.   416    n.a.    33    n.a. 
  Discounted cash flow  Constant Prepayment Rate    2    1.81%    2    40.53% 
  Discounted cash flow  Constant Prepayment Rate         - 
  Other  n.a.   98    n.a.    147    n.a. 
       
      
 
516
 
    
 
181
 
  
Other investments at fair value
            
Investment funds  Net asset value  n.a.   -    n.a.    -    n.a. 
Other  Other  n.a.   9    n.a.    5    n.a. 
       
      
 
9
 
    
 
5
 
  
       
On December 31
        
 
530
 
       
 
191
 
     
Fair value through profit or loss
            
Shares  Net asset value  n.a.   91    n.a.    126    n.a. 
Shares  Broker quote  n.a.   4    n.a.    1    n.a. 
Debt securities  Broker quote  n.a.   80    n.a.    5    n.a. 
Debt securities  Discounted cash flow  Constant prepayment rate   -    7.10%    -    7.80% 
Debt securities  Other  n.a.   6    n.a.    30    n.a. 
       
      
 
180
 
    
 
161
 
  
Other investments at fair value
            
Investment funds  Net asset value  n.a.   3,532      3,439    n.a. 
Tax credit investments  Discounted cash flow  Discount rate   705    6.88%    610    7.10% 
Other  Other  n.a.   -      -    n.a. 
       
      
 
4,237
 
    
 
4,050
 
  
       
Total assets at fair value
3)
        
 
4,947
 
       
 
4,403
 
     
Liabilities carried at fair value
            
Derivatives
            
Embedded derivatives in insurance contracts  Discounted cash flow  Own credit spread   3    n.a    8    0.45% 
Other  Discounted cash flow  Other   3    n.a    4    n.a 
       
Total liabilities at fair value
        
 
6
 
       
 
12
 
  
 
-
 
 
1 
Other in the table above (column Valuation technique) includes investments for which the fair value is uncorroborated and no broker quote is received.
2 
Not applicable (n.a.) has been included when the unobservable inputs are not developed by the Group and are not reasonably available. Refer to the section Fair value measurement in this note for a detailed description of Aegon’s methods of determining fair value and the valuation techniques.
3 
Investments for account of policyholderswhere the policyholder bears the risk are excluded from the table above and from the disclosure regarding reasonably possible alternative assumptions. Policyholder assets,Assets where the policyholder bears the risk, and their returns, belong to policyholders and do not impact Aegon’s net result or equity. The effect on total assets is offset by the effect on total liabilities.
4 
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
For reference purposes, the valuation techniques included in the table above are described in more detail on the following pages.
 
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About AegonGovernance and risk management
Financial information
 Non-financial information
Notes to the consolidated financial statements
Note 38
   
   
 
Effect of changes in significant unobservable assumptions to reasonably possible alternatives
Own credit spread, as included in the discount rate for embedded derivatives in insurance contracts, is considered as a significant unobservable input. It is estimated that changing the other significant unobservable inputs to reflect reasonable possible alternatives in valuation would have no significant impact for the Group.
An increase in own credit spread results in lower valuation, while a decrease results in a higher valuation of the embedded derivatives.
The table below presents the impact on a fair value measurement of a change in the own credit spread by 5 basis points included in the discount rate.
    
          December
31, 2022
1)
   
  Effect of reasonably
possible alternative
assumptions (+/-)
    December
31, 2021		       Effect of reasonably
possible alternative
assumptions (+/-)		 
       
         
Increase
   
Decrease
       Increase   Decrease 
       
Financial liabilities carried at fair value
                             
       
Embedded derivatives in insurance contracts
   836    16    (16)   3,437    39    (39) 
1 
2022 excludes the liabilities of the disposal group, which are separately disclosed in note 51 Discontinued operations.
Fair value information about assets and liabilities not measured at fair value
The following table presents the carrying values and estimated fair values of assets and liabilities, excluding assets and liabilities which are carried at fair value on a recurring basis.
 
    
2022
 
  Carrying amount
    December 31,
2022
1)
              Estimated fair value hierarchy      
Total
estimated fair
    value December
31, 2022
 1)
 
      
       Level I  Level II  Level III     
      
Assets
                    
      
Mortgage loans - held at amortized cost
  10,441   -   1   9,244   9,245   
      
Private loans - held at amortized cost
  27   -   15   -   15 
      
Other loans - held at amortized cost
  2,088   39   2,049   -   2,088 
      
Liabilities
                    
      
Subordinated borrowings - held at amortized cost
  2,295   1,372   663   -   2,035 
      
Trust pass-through securities - held at amortized cost
  118   -   133   -   133 
      
Borrowings – held at amortized cost
  4,051   1,289   2,825   -   4,114 
      
Investment contracts - held at amortized cost
  10,485   -   -   9,410   9,410 
   
Carrying amount
December 31, 2023
   
Estimated fair value
hierarchy
   
 Total estimated fair value 
December 31, 2023
 
            Level I       Level II       Level III      
Assets
          
Mortgage loans - held at amortized cost   10,157    -    1    9,024    9,025 
Other loans - held at amortized cost   70    70    1    -    70 
Liabilities
          
Subordinated borrowings - held at amortized cost   2,244    1,392    730    -    2,122 
Trust pass-through securities - held at amortized cost   111    -    125    -    125 
Borrowings – held at amortized cost   2,356    879    1,580    -    2,459 
Investment contracts - held at amortized cost     10,222    -    -    8,755    8,755 
 
1 
2022 excludes the assets and liabilities of the disposal group, which are separately disclosed in note 51 Discontinued operations.
    
2021
 
  Carrying amount
    December 31,
2021
            Estimated fair value hierarchy      Total estimated fair
value December
31, 2021		 
      
       Level I  Level II  Level III     
      
Assets
                    
      
Mortgage loans - held at amortized cost
  39,991   -   1   44,366   44,366   
      
Private loans - held at amortized cost
  4,883   -   34   5,457   5,491 
      
Other loans - held at amortized cost
  1,949   21   1,923   5   1,949 
      
Liabilities
                    
      
Subordinated borrowings - held at amortized cost
  2,194   1,567   872   -   2,438 
      
Trust pass-through securities - held at amortized cost
  126   -   139   -   139 
      
Borrowings – held at amortized cost
  9,661   1,735   2,662   5,773   10,171 
      
Investment contracts - held at amortized cost
  21,573   -   -   20,861   20,861 
   
Carrying amount
December 31, 2022
   Estimated fair value
hierarchy		   
 Total estimated fair value 
December 31, 2022
 
            Level I       Level II       Level III      
Assets
          
Mortgage loans - held at amortized cost     10,407    -    1    9,218    9,218 
Other loans - held at amortized cost   46    39    7    -    46 
Liabilities
          
Subordinated borrowings - held at amortized cost   2,295    1,372    663    -    2,035 
Trust pass-through securities - held at amortized cost   118    -    133    -    133 
Borrowings – held at amortized cost   4,051    1,289    2,825    -    4,114 
Investment contracts - held at amortized cost   9,597    -    -    8,416    8,416 
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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Notes to the consolidated financial statements
Note 44
Fair value measurement
The description of Aegon’s methods of determining fair value and the valuation techniques are described on the following pages.
Shares
When available, Aegon uses quoted market prices in active markets to determine the fair value of its investments in shares. For Level III unquoted shares, the net asset value can be considered the best approximation to the fair value. Net asset value is the value of an entity’s assets minus the value of its liabilities and may be the same as the book value or the equity value of the entity.
Also for unquoted shares, the fair value may be estimated using other methods, such as observations of the price/earnings or price/cash flow ratios of quoted companies considered comparable to the companies being valued. Valuations are adjusted to account for company-specific issues and the lack of liquidity inherent in an unquoted investment. Adjustments for lack of liquidity are generally based on available market evidence. In addition, a variety of other factors are reviewed by management, including, but not limited to, current operating performance, changes in market outlook and the third-party financing environment.
Available-for-sale
shares includeIncluded in this category are shares in a Federal Home Loan Bank (FHLB) for an amount of EUR 12482 million (2021:(2022: EUR 112124 million), which are reported as part of the line-item Net asset value. A FHLB has implicit financial support from the United States government. The redemption value of the shares is fixed at par and they can only be redeemed by the FHLB.
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Debt securities
The fair values of debt securities are determined by management after taking into consideration several sources of data. When available, Aegon uses quoted market prices in active markets to determine the fair value of its debt securities. As stated previously, Aegon’s valuation policy utilizes a pricing hierarchy which dictates that publicly available prices are initially sought from indices and third-party pricing services. In the event that pricing is not available from these sources, those securities are submitted to brokers to obtain quotes, the majority of which are
non-binding.
As part of the pricing process, Aegon assesses the appropriateness of each quote (i.e. as to whether the quote is based on observable market transactions or not) to determine the most appropriate estimate of fair value.
When broker quotes are not available, securities are priced using internal cash flow modeling techniques. These valuation methodologies commonly use the following inputs: reported trades, bids, offers, issuer spreads, benchmark yields, estimated prepayment speeds, issue specific credit adjustments, indicative quotes from market makers and/or estimated cash flows.
To understand the valuation methodologies used by third-party pricing services Aegon reviews and monitors the applicable methodology documents of the third-party pricing services. Any changes to their methodologies are noted and reviewed for reasonableness. In addition, Aegon performs
in-depth
reviews of prices received from third-party pricing services on a sample basis. The objective for such reviews is to demonstrate that Aegon can corroborate detailed information such as assumptions, inputs and methodologies used in pricing individual securities against documented pricing methodologies. Only third-party pricing services and brokers with a substantial presence in the market and with appropriate experience and expertise are used.
Third-party pricing services will often determine prices using recently reported trades for identical or similar securities. The third-party pricing service makes adjustments for the elapsed time from the trade date to the reporting date to take into account available market information. Lacking recently reported trades, third-party pricing services and brokers will use modeling techniques to determine a security price where expected future cash flows are developed based on the performance of the underlying collateral and discounted using an estimated market rate.
Periodically, Aegon performs an analysis of the inputs obtained from third-party pricing services and brokers to ensure that the inputs are reasonable and produce a reasonable estimate of fair value. Aegon’s asset specialists and investment valuation specialists consider both qualitative and quantitative factors as part of this analysis. Several examples of analytical procedures performed include, but are not limited to, recent transactional activity for similar debt securities, review of pricing statistics and trends and consideration of recent relevant market events. Other controls and procedures over pricing received from indices, third-party pricing services, or brokers include validation checks such as exception reports which highlight significant price changes, stale prices or unpriced securities. Additionally,In addition, Aegon performs back testing on a sample basis. Back testing involves selecting a sample of securities trades and comparing the prices in those transactions to prices used for financial reporting.
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Significant variances between the price used for financial reporting and the transaction price are investigated to explain the cause of the difference.
Credit ratings are also an important consideration in the valuation of securities and are included in the internal process for determining Aegon’s view of the risk associated with each security. However, Aegon does not rely solely on external credit ratings and there is an internal process, based on market observable inputs, for determining Aegon’s view of the risks associated with each security.
Aegon’s portfolio of private placement securities (held at fair value under the classification of
available-for-sale
fair value through OCI or fair value through profit or loss) is valued using a matrix pricing methodology. The pricing matrix is obtained from a third-party service provider and indicates current spreads for securities based on weighted average life, credit rating, and industry sector. Each month, Aegon’s asset specialists review the matrix to ensure the spreads are reasonable by comparing them to observed spreads for similar bonds traded in the market. Other inputs to the valuation include coupon rate, the current interest rate curve used for discounting and a liquidity premium to account for the illiquid nature of these securities. The liquidity premiums are determined based upon the pricing of recent transactions in the private placements market; comparing the value of the privately offered security to a similar public security. The impact of the liquidity premium for private placement securities to the overall valuation is insignificant.
Aegon’s portfolio of debt securities can be subdivided into Residential mortgage-backed securities (RMBS), Commercial mortgage-backed securities (CMBS), Asset-backed securities (ABS), Corporate bonds and Government debt. Below relevant details of the valuation methodologies for these specific types of debt securities are described.
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Notes to the consolidated financial statements
Note 38
Residential mortgage-backed securities, commercial mortgage-backed securities and asset-backed securities
Valuations of RMBS, CMBS and ABS are monitored and reviewed on a monthly basis. Valuations per asset type are based on a pricing hierarchy which uses a waterfall approach that starts with market prices from indices and follows with third-party pricing services or brokers. The pricing hierarchy is dependent on the possibilities of corroboration of the market prices. If no market prices are available, Aegon uses internal models to determine fair value. Significant inputs included in the internal models are generally determined based on relative value analyses, which incorporate comparisons to instruments with similar collateral and risk profiles. Market standard models may be used to model the specific collateral composition and cash flow structure of each transaction. The most significant unobservable input is the liquidity premium which is embedded in the discount rate.
Aegon the Netherlands has mandated Aegon Asset Management to invest in RMBS transactions. Aegon Asset Management uses its own proprietary cash flow tools to analyze and stress test RMBS transactions. The key input parameters are default rates and loss given default assumptions, which are established based on historical pool characteristics and current loan level data.
Corporate bonds
Valuations of corporate bonds are monitored and reviewed on a monthly basis. The pricing hierarchy is dependent on the possibility of corroboration of market prices when available. If no market prices are available, valuations are determined by a discounted cash flow methodology using an internally calculated yield. The yield is comprised of a credit spread over a given benchmark. In all cases the benchmark is an observable input. The credit spread contains both observable and unobservable inputs. Aegon starts by taking an observable credit spread from a similar bond of the given issuer, and then adjust this spread based on unobservable inputs. These unobservable inputs may include subordination, liquidity and maturity differences. During 2022,2023, there were no corporate bonds that met the policy threshold to be internally modeled.
Government debt
When available, Aegon uses quoted market prices in active markets to determine the fair value of its government debt investments. When Aegon cannot make use of quoted market prices, market prices from indices or quotes from third-party pricing services or brokers are used.
Money market and other short-term investments and deposits with financial institutions
The fair value of assets maturing within a year is assumed to be approximated by their carrying amount adjusted for credit risk where appropriate. Credit risk adjustments are based on market observable credit spreads if available, or management’s estimate if not market observable.
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Notes to the consolidated financial statements
Note 44
Tax credit investments
The Level III fair value of tax credit investments is determined by using a discounted cash flow valuation technique. This valuation technique takes into consideration projections of future capital contributions and distributions, as well as future tax credits and the tax benefits of future operating losses. The present value of these cash flows is calculated by applying a discount rate. In general, the discount rate is determined based on the cash outflows for the investments and the cash inflows from the tax credits and/or tax benefits (and the timing of these cash flows). These inputs are unobservable in the market place.marketplace. The discount rate used in valuation of tax credit investments remained stable at 7.1%was 6.9% (December 31, 2021:2022: 7.1%).
Investment funds: Real estate funds, private equity funds and hedge funds
The fair values of investments held in
non-quoted
investment funds are determined by management after taking into consideration information provided by the fund managers. Aegon reviews the valuations each month and performs analytical procedures and trending analyses to ensure the fair values are appropriate. The net asset value is considered the best valuation method that approximates the fair value of the funds.
Mortgage loans, policy loans and private loans
(held (held at amortized cost)
For private loans, fixed interest mortgage loans and other loans originated by the Group, the fair value used for disclosure purposes is estimated by discounting expected future cash flows using a current market rate applicable to financial instruments with similar yield and maturity characteristics. For fixed interest mortgage loans, the market rate is adjusted for expenses, prepayment rates, lapse assumptions (unobservable inputs), liquidity and credit risk (market observable inputs). An increase in expense spread, prepayment rates and/or prepayment assumptions, would decrease the fair value of the mortgage loan portfolio.
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The fair value of floating interest rate mortgage loans, policy loans and private placements used for disclosure purposes is assumed to be approximated by their carrying amount, adjusted for changes in credit risk. Credit risk adjustments are based on market observable credit spreads if available, or management’s estimate if not market observable.
Derivatives
Where quoted market prices are not available, other valuation techniques, such as option pricing or stochastic modeling, are applied. The valuation techniques incorporate all factors that a typical market participant would consider and are based on observable market data when available. Models are validated before they are used and calibrated to ensure that outputs reflect actual experience and comparable market prices.
Fair values for exchange-traded derivatives, principally futures and certain options, are based on quoted market prices in active markets. Fair values for
over-the-counter
(OTC) derivative financial instruments represent amounts estimated to be received from or paid to a third party in settlement of these instruments. These derivatives are valued using pricing models based on the net present value of estimated future cash flows, directly observed prices from exchange-traded derivatives, other OTC trades, or external pricing services. Most valuations are derived from swap and volatility matrices, which are constructed for applicable indices and currencies using current market data from many industry standard sources. Option pricing is based on industry standard valuation models and current market levels, where applicable. The pricing of complex or illiquid instruments is based on internal models or an independent third party. For long-dated illiquid contracts, extrapolation methods are applied to observed market data in order to estimate inputs and assumptions that are not directly observable. To value OTC derivatives, management uses observed market information, other trades in the market and dealer prices.
Some OTC derivatives are
so-called
longevity derivatives. The payout of longevity derivatives is linked to publicly available mortality tables. The derivatives are measured using the present value of the best estimate of expected payouts of the derivative plus a risk margin. The best estimate of expected payouts is determined using best estimate of mortality developments. Aegon determined the risk margin by stressing the best estimate mortality developments to quantify the risk and applying a
cost-of-capital
methodology. Depending on the duration of the longevity swaps either the projected mortality development or discount rate are the most significant unobservable inputs.
Aegon normally mitigates counterparty credit risk in derivative contracts by entering into collateral agreements where practical and in ISDA master netting agreements for each of the Group’s legal entities to facilitate Aegon’s right to offset credit risk exposure. Changes in the fair value of derivatives attributable to changes in counterparty credit risk were not significant.
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Embedded derivatives in insurance contracts including guarantees
Bifurcated guarantees for minimum benefits in insurance and investment contracts are carried at fair value. These guarantees include Guaranteed minimum withdrawal benefits (GMWB) in the United States and United Kingdom which are offered on some variable annuity products and are also assumed from a ceding company; minimum investment return guarantees on insurance products offered in the Netherlands, including group pension and traditional products; variable annuities sold in Europe.
Since the price of these guarantees is not quoted in any market, the fair values of these guarantees are based on discounted cash flows calculated as the present value of future expected payments to policyholders less the present value of assessed rider fees attributable to the guarantees. Given the complexity and long-term nature of these guarantees which are unlike instruments available in financial markets, their fair values are determined by using stochastic models under a variety of market return scenarios. A variety of factors are considered, including own credit spread, expected market rates of return, equity and interest rate volatility, correlations of market returns, discount rates and actuarial assumptions. The most significant unobservable factor is own credit spread. The weighted average own credit spread used in the valuations of embedded derivatives in insurance contracts increased to 0.45% (2021: 0.23%).
The expected returns are based on risk-free rates. Aegon added a premium to reflect the credit spread as required. The credit spread is set by using the Credit default swap (CDS) spreads of a reference portfolio of life insurance companies (including Aegon), adjusted to reflect the subordination of senior debt holders at the holding company level to the position of policyholders at the operating company level (who have priority in payments over other creditors). Aegon’s assumptions are set by region to reflect differences in the valuation of the guarantee embedded in the insurance contracts.
Aegon extrapolates yield curves beyond market observable maturities. The discount rates converge linearly in 10 years to an Ultimate Forward Rate. In the Netherlands, the ultimate forward rate is 3.65% from the last liquid point. The US ultimate forward rate extrapolates linearly beyond 30 years using an average of forward interest rates implied by the market between 20 years and 30 years. In the US, the ultimate forward rate is 3.50% from the last liquid point. The uniform last liquid point for all Aegon’s major currencies (EUR, USD and GBP) is set at 30 years.
Since many of the assumptions are unobservable and are considered to be significant inputs to the liability valuation, the liability included in future policy benefits has been reflected within Level III of the fair value hierarchy. Refer to note
36 Guarantees in insurance contracts for more details about Aegon’s guarantees.
Real estate
Valuations of Level III investments in real estate and real estate held for own use are conducted in full by independent external appraisers at least every three to five years and reviewed at least once a year by qualified internal appraisers to ensure the value correctly reflects the fair value at the reporting date. Appraisals are different for each specific local market but are based on market guidelines such as International Valuation Standards, Uniform Standards of Professional Appraisal Practice or guidelines issued by the Investment Property Databank. Valuations are mostly based on active market prices, adjusted for any difference in the nature, location or condition of the specific property. If such information is not available, other valuation methods are applied, considering the value that the property’s net earning power will support, the value indicated by recent sales of comparable properties and the current cost of reproducing or replacing the property. Discount rates used in the valuation of real estate reflect the risk embedded in the projected cash flows for the asset being valued. Capitalization rates represent the income rate for a real estate property that reflects the relationship between a single year’s net operating income expectancy and the total property price or value. For property held for own use, appraisers consider the present value of the future rental income cash flows that could be achieved had the real estate been rented to a third party.
Trust pass-through securities and subordinated borrowings
Trust pass-through securities and subordinated borrowings are either carried at fair value (if they are designated as financial liabilities at fair value through profit or loss) or amortized cost (with fair value being disclosed in the notes to the consolidated financial statements). For the determination of the fair value of these instruments, the level hierarchy as described by IFRS is used. The preferred method of obtaining the fair value of the fair value option bonds is the quoted price (Level I). In case markets are less liquid or the quoted prices are not available, Aegon’s valuation policy utilizes a pricing hierarchy which dictates that publicly available prices are initially sought from indices and third-party pricing services. The US trust pass-through securities and subordinated borrowings are classified as Level II of the fair value hierarchy.
 
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Notes to the consolidated financial statements
Note 4438
   
   
 
Investment contracts
Investment contracts issued by Aegon are either carried at fair value (if they are designated as financial liabilities at fair value through profit or loss) or amortized cost (with fair value being disclosed in the notes to the consolidated financial statements). These contracts are not quoted in active markets and their fair values are determined by using valuation techniques, such as discounted cash flow methods and stochastic modeling or in relation to the unit price of the underlying assets. All models are validated and calibrated. A variety of factors are considered, including time value, volatility, policyholder behavior, servicing costs and fair values of similar instruments.
Similar to embedded derivatives in insurance contracts, certainCertain investment products are not quoted in active markets and their fair values are determined by using valuation techniques. Because of the dynamic and complex nature of these cash flows, stochastic or similar techniques under a variety of market return scenarios are often used. A variety of factors are considered, including expected market rates of return, market volatility, correlations of market returns, discount rates and actuarial assumptions.
The expected returns are based on risk-free rates, such as the current Secured Overnight Financing Rate (SOFR) swap rates and associated forward rates, the Overnight Index Swap (OIS) curve or the current rates on local government bonds. London Interbank Offered Rate (LIBOR) was replaced with SOFR in the second quarter of 2022. Market volatility assumptions for each underlying index are based on observed market implied volatility data and/or observed market performance. Correlations of market returns for various underlying indices are based on observed market returns and their inter-relationshipsinterrelationships over a number of years preceding the valuation date. Current risk-free spot rates are used to determine the present value of expected future cash flows produced in the stochastic projection process.
Assumptions on customer behavior, such as lapses, included in the models are derived in the same way as the assumptions used to measure insurance liabilities.
Summary of total financial assets and financial liabilities at fair value through profit or loss
The table that follows summarizes the carrying amounts of financial assets and financial liabilities that are classified as at fair value through profit or loss, with appropriate distinction between those financial assets and financial liabilities held for trading and those that, upon initial recognition, were designated as at fair value through profit or loss.
 
   
2022
1)
            
  2021             
     
           Trading      Designated            Trading      Designated   
     
Investments for general account
  41   4,527     41   8,440   
     
Investments for account of policyholders
  -   179,563     -   250,390   
     
Derivatives with positive values not designated as hedges
  2,434   -     8,390   -   
     
Total financial assets at fair value through profit or loss
 
 
2,475
 
 
 
184,089  
 
 
 
8,431
 
 
 
258,830  
 
     
Investment contracts for account of policyholders
  -   55,254     -   71,242   
     
Derivatives with negative values not designated as hedges
  4,877   -     9,617   -   
     
Total financial liabilities at fair value through profit or loss
 
 
4,877
 
 
 
55,254  
 
 
 
9,617
 
 
 
71,242  
 
1 
2022 excludes the assets and liabilities of the disposal group, which are separately disclosed in note 51 Discontinued operations.
  2023  2022
     Trading    Designated      Trading   Designated 
Investments where Aegon bears the risk 9,386  2,526   8,079  1,940 
Investments where the policyholder bears the risk -  193,823   -  180,006 
Derivatives with positive values not designated as hedges 1,238  -   2,445   
     
Total financial assets at fair value through profit or loss
 
10,625
  
196,349 
  
10,524
  
181,946 
Investment contracts without DPF where the policyholder bears the risk -  65,044   -  55,631 
Derivatives with negative values not designated as hedges 1,466  -   3,958  - 
     
Total financial liabilities at fair value through profit or loss
 
1,466
  
65,044 
  
3,958
  
55,631 
Investments for general account
The Group manages certain portfolios on a total return basis which have been designated at fair value through profit or loss. This includes portfolios of investments in limited partnerships and limited liability companies (primarily hedge funds and private equity funds) for whichwhere Aegon bears the performance is assessed internally on a total return basis. In addition, some investments for general account that include an embedded derivative that would otherwise have required bifurcation, such as convertible instruments, preferred shares and credit linked notes, have been designated at fair value through profit or loss.risk
Aegon has certain insurance and investment liabilities that are carried at fair value with changes in the fair value recognized in the income statement. The Group has elected to designate the investments backing those liabilities at fair value through profit or loss, as a classification of
available-for-sale
fair value through OCI would result in accumulation of unrealized gains and losses in a revaluation reserve within equity whilstwhile changes to the liability would be reflected in net result (accounting mismatch).
Investments for account of policyholders
where the policyholder bears the risk
Investments held for account of policyholderswhere the policyholder bears the risk comprise assets that are linked to various insurance and investment contracts for which the financial risks are borne by the customer. Under the Group’s accounting policies these insurance and investment
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Non-financial information
liabilities are measured at the fair value of the linked assets with changes in the fair value recognized in the income statement. To avoid an accounting mismatch the linked assets have been designated as at fair value through profit or loss.
In addition, the investment for account ofwhere the policyholders bears the risk include with profit assets, where Aegon manages these assets together with related liabilities on a fair value basis in accordance with a documented policy of asset and liability management. In accordance with the Group’s accounting policies, these assets have been designated as at fair value through profit or loss.
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Investment contracts for account of policyholderswithout discretionary participating features where the policyholder bears the risk
With the exception of the financial liabilities with discretionary participating features that are not subject to the classification and measurement requirements for financial instruments, all investment contracts for account of policyholderswithout discretionary participating features where the policyholder bears the risk that are carried at fair value or at the fair value of the linked assets are included in the table above.
Derivatives
With the exception of derivatives designated as a hedging instrument, all derivatives held for general account and held for account of policyholders are included in the table above.
Borrowings
Borrowings designated as at fair value through profit or loss includes financial instruments that are managed on a fair value basis together with related financial assets and financial derivatives (refer to note 37 Borrowings).
Gains and losses on financial assets and financial liabilities classified at fair value through profit or loss
Gains and losses recognized in the income statement on financial assets and financial liabilities classified as at fair value through profit or loss can be summarized as follows:
 
   
2022
1)
  2021 
     
           Trading      Designated             Trading         Designated   
     
Net gains and (losses)
  469   (35,054)      (2,930)      25,591   
1 
2022 excludes the disposal group, which is separately disclosed in note 51 Discontinued operations.
   2023  2022
    Trading    Designated   Trading    Designated 
Net gains and (losses)  (1,244)  21,207   (4,431)  (35,205) 
No loans and receivables were designated at fair value through profit or loss.
Changes in the fair value of investment contracts for account ofwithout discretionary participating features where the policyholders bears the risk that are designated at fair value through profit or loss were not attributable to changes in Aegon’s credit spread. There are also no differences between the carrying amounts of these financial liabilities and the contractual amounts payable at maturity (net of surrender penalties).
Refer to note 37 Borrowings for the impact of Aegon’s own credit spread on the fair value of the borrowings designated at fair value through profit or loss.
4539 Commitments and contingencies
Investments contracted
In the normal course of business, the Group has committed itself through purchase and sale transactions of investments, mostly to be executed in the course of 2023.2024. The amounts represent the future outflow and inflow, respectively, of cash related to these investment transactions that are not reflected in the consolidated statement of financial position.
 
   
2022
  2021 
     
               Purchase                  Sale                Purchase                          Sale   
     
Real estate
  -   1     129   6   
     
Mortgage loans
  468   -     1,163   67   
     
Private loans
  150   -     311   -   
     
Other
  1,408   -     1,358   -   
   2023  2022
    Purchase  Sale   Purchase  Sale 
Real estate  -  2   -  1 
Mortgage loans  421  -   468  - 
Private loans  89  -   150  - 
Other  1,292  -   1,408  - 
Aegon has committed itself, through certain subsidiaries, to invest in real estate, private loans, mortgage loans and receivables and investment funds.
Real estate commitments represent the committed pipeline of investments in real estate projects. The sale of real estate relates to properties that are under contract to be sold as per December 31.31, 2023. Mortgage loan commitments represent undrawn
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Notes to the consolidated financial statements
Note 45
mortgage loan facilities provided and outstanding proposals on mortgages. The sale of mortgage loans relates to
pre-announced
redemptions on mortgage loans. Private loans represent deals on Aegon’s portfolio of private placement securities that Aegon has committed to, but which have not yet settled and funded. Other commitments include future purchases of interests in investment funds and limited partnerships.
Future lease payments
   
< 1 year
amounts
  1 < 2 years
amounts		  2 < 3 years
amounts		  3 < 4 years
amounts		  4 < 5 years
amounts		  > 5 years  
amounts  		 
       
2022
                        
       
Operating lease rights
  10   9   7   7   6   17   
       
2021
                        
       
Operating lease rights
  8   8   6   5   5   21   
The operating lease rights relate to
non-cancellable
commercial property leases.
Other commitments and contingencies
 
    
        2022  
           2021   
   
Guarantees
   611      506   
   
Standby letters of credit
   -      12   
   
Share of contingent liabilities incurred in relation to interests in joint ventures
   -      7   
   
Other guarantees
   8      11   
   
Other commitments and contingent liabilities
   -      -   
      
2023 
    2022 
Guarantees  773   611 
Other guarantees  7   8 
Guarantees include those guarantees associated with the sale of investments in
low-income
housing tax credit partnerships in the United States, which can be called upon if there is a deficiency in the tax benefits delivered to the investor or if Aegon is in default under a material provision of the contract. Standby letters of credit amounts reflected above are the liquidity

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Notes to the consolidated financial statements
Note 39
commitment notional amounts. In addition to the guarantees shown in the table, guarantees have been given for fulfillment of contractual obligations such as investment mandates related to investment funds.
Amount of collaterals on financial guarantees is EUR 0 million on December 31, 2023 (EUR 0 million on December 31, 2022), while other commitments have EUR 1 million collateral at the end of 2023 (EUR 1 million cash collateral at the end of 2022).
Contractual obligations
In March 2019, affiliates of Transamerica Corporation and Long Term Care Group (LTCG),Illumifin, entered into a series of agreements to which Transamerica transferred to LTCGIllumifin the administration and claims management of its long term care insurance business line, enabling Transamerica to accelerate the enhancement of its digital capabilities and modernize its long term care insurance platform. Over the course of the multi-year contract, Transamerica will pay approximately USD 390 million to LTCG.Illumifin. These fees represent compensation for administering Transamerica’s long term care product line including policyholder service, claims processing and care management. The agreement also contains a termination clause in which Transamerica – subject to certain limitations – agrees to compensate LTCG,Illumifin, on a specified schedule, for early termination.
In April 2018, affiliates of Transamerica Corporation entered into a series of agreements with affiliates of Tata Consultancy Services Limited (TCS) to administer the Company’s US life insurance, voluntary benefits, and annuity business lines. The intent of the relationship iswas for Transamerica to accelerate the enhancement of its digital capabilities and the modernization of its platforms to service its customers in all lines of business. OverIn May of 2023, due to the coursethen current macro environment and the parties’ respective business priorities, Transamerica and TCS mutually agreed to end the administration arrangement for life, annuity and voluntary benefits lines of business. Transamerica and TCS agreed to work together to ensure a smooth transition of the multi-year contract, Transamerica could pay more than USD 2 billionadministration to TCS. These fees represent compensation for administering Transamerica’s over 10 million policies and are driven by botha new business and policies already in force. Included in this agreement were transition and conversion chargesservicing model which were nil at the end of 2022. There continueaims to be ongoing administrative, IT and finance service fees which are contingent on TCS meeting specified milestones in the underlying agreement with Transamerica. The agreement also contains termination clauses which in certain conditions and subject to certain limitations, could require Transamerica to compensate TCS, on a specified schedule, for early termination.
take approximately 30 months.
In November 2018, Aegon UK announced an extended partnership with Atos BPS LtdLtd. (Atos) to service and administer its Traditional Products Business
(non-Platform
customers). The agreement is a
15-year
contract under which Aegon UK pays Atos to administer around 1.4 million customers, which took effect on June 1, 2019 as planned. At
year-end
2022, outstanding transition and conversion charges are estimated to amount to approximately GBP 10 million, which are expected to be recorded
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About AegonGovernance and risk management
Financial information
Non-financial information
over the next year, with fixed payments to Atos defined in the agreement and subject to completion of milestones which have been agreed with Aegon UK.
On October 31, 2017, Aegon the Netherlands sold its shares in Unirobe Meeùs Groep (UMG) for EUR 295 million to Aon Groep Nederland. Under the share purchase agreement between Aegon Nederland and the buyer, Aegon the Netherlands indemnifies and holds the buyer and its group (including UMG) harmless for and against any damage suffered or incurred which is the result of the Unit Linked Insurances Claims until 2027 with respect to Unit Linked Policies in the portfolio of UMG prior to January 1, 2017. The aggregate liability for Aegon the Netherlands is maximized at an amount equal to the purchase price.
An Aegon N.V.Ltd. indirect US life subsidiary has a net worth maintenance agreement with its subsidiary Transamerica Life (Bermuda) Ltd,Ltd., pursuant to which Transamerica Life Insurance Company, a US life insurance subsidiary, will provide capital sufficient to maintain a S&P ‘AA’“AA” financial strength rating and capital sufficient to comply with the requirements of the countries in which its branches are located.
Aegon N.V. has guaranteed and is severally liable for the following:
¨
∎
 Due and punctual payment of payables under letter of credit agreements applied for by Aegon N.V. as
co-applicant
with its captive insurance companies that are subsidiaries of Transamerica Corporation and Commonwealth General Corporation. AtOn December 31, 2022,2023, the letter of credit arrangements utilized by captives to provide collateral to affiliates amounted to EUR 511526 million (2021:(2022: EUR 1,157511 million); as offrom that date no amounts had been drawn, or were due under these facilities;
¨
∎
 Due and punctual payment of payables by the consolidated group companies Transamerica Corporation, Aegon Funding Company LLC and Commonwealth General Corporation with respect to fixed subordinated notes, bonds, capital trust pass-through securities and notes issued under commercial paper programs amounting to EUR 1,0421,007 million (2021:(2022: EUR 9871,042 million); and
¨
∎
 Due and punctual payment of any amounts owed to third parties by the consolidated group company Aegon Derivatives N.V. in connection with derivative transactions. Aegon Derivatives N.V. enters into derivative transactions with counterparties with which ISDA master netting agreements, including collateral support annex agreements, have been agreed. Net (credit) exposure on derivative transactions with these counterparties was therefore limited as offrom December 31, 2022.2023.
Legal and arbitration proceedings, regulatory investigations and actions
Aegon faces significant risks of litigation as well as regulatory exams and investigations and actions relating to its and its subsidiaries’ businesses. Aegon is also subject to compliance with regulations applicable to it as a corporate entity.
Due to the geographic spread of its business, Aegon Group may be subject to tax audits or litigation in various jurisdictions. Although uncertainties are provided for adequately in the tax position, the ultimate outcome of tax audits or litigation may result in an outcome that differs from the amounts provided for.
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LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Insurance companies and their affiliated regulated entities are routinely subject to litigation, investigation and regulatory activity by various governmental and enforcement authorities, individual claimants and policyholder advocate groups in the jurisdictions in which Aegon does business, including the United States the Netherlands, Poland and the United Kingdom. These actions may involve issues including, but not limited to, employment or distribution relationships; operational and internal controls and processes; investment returns; sales practices; transparency and adequacy of product disclosures including regarding initial costs, ongoing costs, and costs due on policy surrender as well as changes to costs over time; environmental and climate change related matters; competition and antitrust matters; data privacy; information security; intellectual property; and anti-money laundering, anti-bribery, and economic sanctions compliance.
Over time, Aegon has made a number of acquisitions and divestments around the world, including in the Netherlands, Central and Eastern Europe, the United States, and the United Kingdom. Acquisitions and divestments involve risks, including the risk of losses resulting from claims or litigation related to contractual terms such as representations, warranties, and indemnifications.
Government and regulatory investigations may result in the institution of administrative, injunctive or other proceedings and/or the imposition of monetary fines, penalties and/or disgorgement as well as other remedies, sanctions, damages, and restitutionary amounts. Regulators may also seek changes to the way Aegon operates. In some cases, Aegon subsidiaries have modified business practices in response to inquiries.
Customers of certain Aegon products bear significant investment risks with respect to those products, which are affected by fluctuations in equity markets as well as interest rate movements. When investment returns disappoint, are volatile or change due to changes in the market or other relevant conditions, customers may threaten or bring litigation against Aegon. Disputes and investigations initiated by governmental entities and private parties may lead to orders or settlements including payments or changes to business practices even if Aegon believes the underlying claims are without merit.
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Notes to the consolidated financial statements
Note 45
The existence of potential claims may remain unknown for long periods of time after the events giving rise to such claims. Determining the likelihood of exposure to Aegon and the extent of any such exposure may not be possible for long periods of time after Aegon becomes aware of such potential claims. Litigation exposure may develop over long periods of time; once litigation is initiated, it may be protracted and subject to multiple levels of appeal, which can lead to significant costs of defense, adverse publicity and other constraints.
In some jurisdictions, plaintiffs may seek recovery of very large or indeterminate amounts under claims of bad faith, which can result in tort, punitive and/or statutory damages. Damages alleged may not be quantifiable or supportable or may have no relationship to economic losses or final awards. As a result, Aegon cannot predict the effect of litigation, investigations or other actions on its business.
Separate from financial loss, litigation, regulatory action, legislative changes or changes in public opinion may require Aegon to change its business practices, which could have a material adverse impact on Aegon’s businesses, results of operations, cash flows and financial position.
Proceedings in which Aegon is involved
Several US insurers, including Aegon subsidiaries, have been named in class actions as well as individual litigation relating to increases in monthly deduction rates (MDR) on universal life products. Plaintiffs generally allege that the increases were made to recoup past losses rather than to cover the future costs of providing insurance coverage. Aegon’s subsidiary in the US hasUnited States settled two such class actions that had been venued in the US District Court for the Central District of California.California federal court. The settlement in the first of these cases, approved in January 2019, arose from increases implemented in 2015-2016. Over 99% of affected policyholders participated in that settlement. While less than 1% of policyholders opted out of the settlement, they represented approximately 43% of the value of the settlement fund. In a second case, Aegon’s subsidiary agreed to settle a class action lawsuit arising out of MDR increases in 2017 and 2018. The court approved that settlement in September 2020. A number of policyowners
Opt-outsopted-out
in this case represented less than 7% of the value ofclass settlements, with the settlement fund. The settlement fund wasfunds reduced proportionally for opt outs. In 2022, settlements were reached with someproportionally. By the end of the2023, all material
opt-out
partieslawsuits and disputes from both settled class actions. The remaining
opt-out
cases had been resolved, and disputes are ongoing, and Aegon continues to hold a provision for the remaining
opt-outs
from the settlements that were approved by the court in 2019 and 2020. If this provision for these cases proves to be insufficient, then these matters could have an adverse effect on Aegon’s business, results of operations, and financial position.provisions adjusted accordingly. A third case was filed in October 2022 which relates to MDR increases in 2022 and 2023, Aegon’s subsidiary has filed a motion to change venue.2023. That case is venued in Iowa federal court. At this time, Aegon is unable to reliably estimate the range or potential maximum liability.exposure in this case.
Transamerica subsidiaries may face employment-related lawsuits from time to time. For example, several Transamerica
US-based
Aegon subsidiaries are defendants in a putative class action alleging that the business model at issue improperly characterizes distributorssubsidiaries mischaracterize agents as independent contractors instead of employees. While the subsidiaries disagree with these allegations and have vigorously defended the action, the parties have reached a settlement, subject to court approval, to avoid the cost, expense and risks associated with
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Notes to the consolidated financial statements
Note 40
litigation. Litigation provisions have been adjusted to account for this pending resolution. Depending on the outcome, these lawsuits, along with similarlegal or regulatory claims like this against Transamerica subsidiaries and other companies and regulatory action could result in significant settlements or judgments, and could necessitate a change in the distribution model, which would be costly and could have a material impact on the financial results for that part of the Transamerica business.
A former subsidiary of Transamerica Corporation was involved in a contractual dispute with a Nigerian travel broker that arose in 1976. That dispute was resolved in Delaware court for USD 235 thousand plus interest in 2010. The plaintiff took the Delaware judgment relating to the 1976 dispute to a Nigerian court and alleged that it was entitled to approximately the same damages for 1977 through 1984 despite the absence of any contract relating to those years. The Nigerian trial court issued a judgment in favor of the plaintiff of the alleged actual damages as well as
pre-judgment
interest of approximately USD 120 million. On appeal this decision was reversed on procedural grounds and remanded back to the trial court which ruled to dismiss the case; however, the Plaintiff appealed the trial court’s ruling. The appellate hearing, which was originally scheduled for March 2022, as well as the hearing that was scheduled for January 12, 2023, on the request for substitution of Plaintiff’s son were both cancelled by the court and neither has been rescheduled. Aegon has no material assets located in Nigeria.
In Poland, owners of unit-linked policies continue to file claims in civil court against Aegon over fees payable upon purchase or surrender of the product. Plaintiffs claim that these fees are not contractually supported. Aegon faces a significant number of these cases. For reasons of commercial necessity as well as at the instigation of the regulatory authorities, Aegon decided to modify the fee structure. As of 2023, a provision of EUR 6 million remains, which represents management’s best estimate of the exposure. The final amount may vary based on regulatory developments and the outcome of litigation.
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About AegonGovernance and risk management
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Non-financial information
In the Netherlands, unit linked products (beleggingsverzekeringen) have been controversial and the target of litigation since at least 2005. Allegations include excessive cost, unfair terms, inadequate disclosure, and failure to perform as illustrated. Consumer groups have formed to address these issues and initiate mass claims against insurers. Regulators as well as the Dutch Parliament have been involved ever since, with the principal goal of achieving an equitable resolution. Aegon has made improvements across its product lines, including after settlements reached in 2009 with Stichting Woekerpolis and Stichting Verliespolis. Aegon also decided to reduce future policy costs for the large majority of its unit-linked portfolio. Some of the unit linked products are still involved in ongoing litigation. In September 2014, consumer interest group Vereniging Woekerpolis.nl filed a claim against Aegon in court. The claim related to a range of unit linked products that Aegon sold in the past, including Aegon products involved in the earlier litigation. The claim challenges a variety of elements of these products, on multiple legal grounds, including allegations made previously. In June 2017 (and revised in December 2017), the court issued a verdict which upheld the principle that disclosures must be evaluated according to the standards at the time when the relevant products were placed
in-force.
Most of the claims of Vereniging Woekerpolis.nl were dismissed under this standard, although the court found that Aegon did not adequately disclose certain charges on a limited set of policies. The district court did not decide on the reasonableness of the cost levels and whether the previous compensation arrangements provide sufficient compensation. This court decision has been appealed by both parties. The Court of Appeal has stayed the proceedings during the preliminary proceedings at the Supreme Court in another class action of Vereniging Woekerpolis.nl against another insurance company. On February 11, 2022 the Supreme Court ruled in these preliminary proceedings. The answers to the preliminary questions of the court regarding transparency and consent about costs and cost levels are a (re)confirmation of the EU Court ruling in a previous case against another insurance company. The legal debate will now continue at the level of the Court of Appeal. Aegon expects the uncertainty about the possible impact to continue for the foreseeable future. Developments in similar cases against other Dutch insurers currently before regulators and courts may also affect Aegon. At this time, Aegon is unable to estimate the range or potential maximum liability. There can be no assurances that these matters, in the aggregate, will not ultimately result in a material adverse effect on Aegon’s business, results of operations and financial position.
Securities leasing products (aandelenlease producten) have also been the subject of litigation in the Netherlands. Although sales of securities leasing products ended more than a decade ago, litigation relating to these products has resurfaced. In December 2020 Aegon Bank N.V. reached an agreement in principle on a settlement with Leaseproces B.V. for claims regarding Vliegwiel and Sprintplan customers represented by Leaseproces. On June 4, 2021 Aegon and Leaseproces B.V. announced it had finalized its agreement to settle these claims. In September 2021, the parties announced that more than 90% of customers had agreed to the settlement, by which the last remaining threshold was met. Subsequently, most claims have been paid during the fourth quarter 2021, with a small amount remaining at
year-end.
As part of the settlement agreement, the accountant will now be instructed to perform an audit on the cash flows between Aegon-Leaseproces-clients. There are currently only two individual court cases pending regarding Sprintplan. The Court of Appeal denied all claims against Aegon in the first case and the other case is still pending. There can be no assurances that Aegon is able to resolve these cases in the way it expects and that this matter will not ultimately result in a material adverse effect on Aegon’s business, results of operations and financial position.
In 2019 Optas N.V., a life insurance company owned by Aegon merged with Aegon Levensverzekering N.V. following approval of the merger by DNB. A number of policyholders filed complaints against DNB’s decision to approve the merger and appealed this decision at the administrative Court after DNB persisted in its approval. On February 13, 2023, the administrative Court annulled DNB’s decision to approve the merger as the court is of the opinion that in the interest of policyholders, among other things, DNB should have required Aegon to individually inform all policyholders in writing regarding the merger and the possibility to oppose the merger. As at March 8, 2023 no appeal has been filed against the administrative Court’s decision. The decision is open to appeal until March 27, 2023. The Financial Markets Supervision act provides that the annulment of DNB’s approval from an administrative law perspective in itself does not affect the legality of the merger from a civil law perspective. This has been confirmed by a ruling of the civil Court in a civil case opposing the merger brought against Aegon by three policyholders. The policyholders were unsuccessful in first instance and the case is now under appeal. Although Aegon does not expect the pending litigation at the administrative Court and the civil Court to have a material, if any, impact there can be no assurances that these matters will not ultimately result in a material adverse effect on Aegon’s business, results of operations and financial position.
4640 Transfers of financial assets
Transfers of financial assets occur when Aegon transfers contractual rights to receive cash flows of financial assets or when Aegon retains the contractual rights to receive the cash flows of the transferred financial asset but assumes a contractual obligation to pay the cash flows to one or more recipients in that arrangement.
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Notes to the consolidated financial statements
Note 46
In the normal course of business Aegon is involved in the following transactions:
◆
∎
Transferred financial assets that are not derecognized in their entirety:
 ◆
∎
Securities lending; whereby Aegon legally (but not economically) transfers assets and receives cash and
non-cash
non- cash collateral. The transferred assets are not derecognized. The obligation to repay the cash collateral is recognized as a liability. The
non-cash
collateral is not recognized in the statement of financial position; and
 ◆
∎
Repurchase activities; whereby Aegon receives cash for the transferred assets. The financial assets are legally (but not economically) transferred but are not derecognized. The obligation to repay the cash received is recognized as a liability.
◆
∎
Transferred financial assets that are derecognized in their entirety and Aegon does not have a continuing involvement (normal sale);
◆
∎
Transferred financial assets that are derecognized in their entirety, but where Aegon has a continuing involvement;
◆
∎
Collateral accepted in the case of securities lending, reverse repurchase agreement and derivative transactions; and
◆
∎
Collateral pledged in the case of (contingent) liabilities, repurchase agreements, securities borrowing and derivative transactions.
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LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
The following disclosures provide details for transferred financial assets that are not derecognized in their entirety, transferred financial asset that are derecognized in their entirety, but where Aegon has a continuing involvement and assets accepted and pledged as collateral.
46.140.1 Transferred financial assets that have not been derecognized in their entirety
The following table reflects the carrying amount of financial assets that have been transferred to another party in such a way that part or all of the transferred financial assets do not qualify for derecognition. Furthermore, it reflects the carrying amounts of the associated liabilities.
 
   
2022
1)
 
   
   
    Available-for-sale financial assets
  
Financial assets at fair value through profit or  
loss  
 
     
   Shares  Debt securities          Debt securities  
  Investments for  
        account of policyholders  
 
     
Carrying amount of transferred assets
  -   2,200   16   72   
     
Carrying amount of associated liabilities
  -   2,513   17   -   
  2023 
  FVOCI financial assets   FVPL financial assets 
   Shares  
Debt
securities
   
Money
market and
other
short-term
invest-
ments
    Other   
Debt
securi-
ties
   
Invest-
ments
where the
PH bears
risk
   
Money
market and
other
short-term
invest-
ments
    Other 
Carrying amount of transferred assets  -   2,068    -    -         5    15    -    - 
Carrying amount of associated liabilities  -   2,382    -    -    9    -    -    - 
 
1 
2022 excludes the assets and liabilities of the disposal group, which are separately disclosed in note 51 Discontinued operations.
  2022 
  FVOCI financial assets   FVPL financial assets 
   Shares  
Debt
securities
   
Money
market and
other
short-term
invest-
ments
    Other   
Debt
securities
   
Invest-
ments
where the
PH bears
risk
   
Money
market and
other
short-term
invest-
ments
    Other 
Carrying amount of transferred assets  -   2,200    -    -        16    72    -    - 
Carrying amount of associated liabilities  -   2,513    -    -    17    -    -    - 
   2021 
   
   
Available-for-sale financial assets
  Financial assets at fair value through profit or loss   
     
   Shares          Debt securities  Debt securities  
Investments for account  
of policyholders  
 
     
Carrying amount of transferred assets
  34   3,705   12   96   
     
Carrying amount of associated liabilities
  37   3,941   18   -   
In transactions in which the Group neither retains nor transfers substantially all the risks and rewards of ownership of a financial asset and it retains control over the asset, the Group continues to recognize the asset to the extent of its continuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred asset.
Securities lending and repurchase activities
The table above includes financial assets that have been transferred to another party under securities lending and repurchase activities.
Aegon retains substantially all risks and rewards of those transferred assets, this includes credit risk, settlement risk, country risk and market risk. The assets are transferred in return for cash collateral or other financial assets.
Non-cash
collateral is not recognized in the statement of financial position. Cash collateral is recorded on the statement of financial position as an asset and an offsetting liability is established for the same amount as Aegon is obligated to return this amount upon termination of the lending arrangement. Cash collateral is usually invested in
pre-designated
high quality investments. The sum of cash and
non-cash
collateral is typically greater than the market value of the related securities loaned. Refer toSee note 46.340.3 Assets accepted and note 46.440.4 Assets pledged for an analysis of collateral accepted and pledged in relation to securities lending and repurchase agreements.
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Non-financial information
46.240.2 Transferred financial assets that are derecognized in their entirety, but where Aegon has continuing involvement
Aegon has no transferred financial assets with continuing involvement that are derecognized in their entirety as per
year-end
20222023 and as per
year-end
2021.2022.
46.340.3 Assets accepted
Aegon receives collateral related to securities lending, reverse repurchase activities and derivative transactions.
Non-cash
collateral is not recognized in the statement of financial position. To the extent that cash is paid for reverse repurchase agreements, a receivable is recognized for the corresponding amount.
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Notes to the consolidated financial statements
Note 40
The following tables present the fair value of the assets received in relation to securities lending and reverse repurchase activities:
 
Securities lending
 
            2022 
1)
              2021   
   
Carrying amount of transferred financial assets
  2,190    3,083   
   
Fair value of cash collateral received
  2,417   2,171   
   
Fair value of
non-cash
collateral received
  74   1,102   
   
Net exposure
 
 
(301
)  
 
 
(190) 
 
   
Non-cash
collateral that can be sold or repledged in the absence of default
  -   1,004   
   
Non-cash
collateral that has been sold or transferred
  -   -   
Securities lending
  
    2023
       2022 
Carrying amount of transferred financial assets   2,063    2,190 
Fair value of cash collateral received   2,357    2,417 
Fair value of
non-cash
collateral received
   16    74 
Net exposure
  
 
(309
) 
  
 
(301
) 
 
1 
2022 excludes the disposal group, which is separately disclosed in note 51 Discontinued operations.
Reverse repurchase agreements
 
            2022 
1)
              2021   
   
Cash paid for reverse repurchase agreements
  312    1,004   
   
Fair value of
non-cash
collateral received
  335   1,025   
   
Net exposure
 
 
(23
)  
 
 
(21) 
 
   
Non-cash
collateral that can be sold or repledged in the absence of default
  -   695   
   
Non-cash
collateral that has been sold or transferred
  -   -   
1 2022 excludes the disposal group, which is separately disclosed in note 51 Discontinued operations.
Reverse repurchase agreements
  
    2023
       2022 
Cash paid for reverse repurchase agreements   442    312 
Fair value of
non-cash
collateral received
   467    335 
Net exposure
  
 
(24
) 
  
 
(23
) 
The above items are conducted under terms that are usual and customary to standard securities lending activities, as well as requirements determined by exchanges where the bank acts as intermediary.
For 2022 and 2023 there is no
Non-cash
collateral that can be sold or repledged in the absence of default and no
Non-cash
collateral has been sold or transferred.
In addition, Aegon can receive collateral related to derivative transactions that it enters into. The credit support agreement will normally dictate the threshold over which collateral needs to be pledged by Aegon or its counterparty. Transactions requiring Aegon or its counterparty to post collateral are typically the result of
over-the-counter
derivative trades, comprised mostly of interest rate swaps, currency swaps and credit swaps. Refer toSee the credit risk section in note 4 Financial risks for details on collateral received for derivative transactions.
46.440.4 Assets pledged
Aegon pledges assets that are on its statement of financial position in securities borrowing transactions, in repurchase transactions, in derivative transactions and against long-term borrowings. In addition, in order to trade derivatives on the various exchanges, Aegon posts margin as collateral.
These transactions are conducted under terms that are usual and customary to standard long-term borrowing, derivative and securities borrowing activities, as well as requirements determined by exchanges where the bank acts as intermediary.
Non-cash
financial assets that are borrowed or purchased under agreement to resell are not recognized in the statement of financial position.
To the extent that cash collateral is paid, a receivable is recognized for the corresponding amount. If other
non-cash
financial assets are given as collateral, these are not derecognized.
The following tables present the carrying amount of collateral pledged and the corresponding amounts.
        2023        2022 
Assets pledged for general account and contingent liabilities
  
Where Aegon
bears the risk
   
 Where the PH
bears the risk
   
 Where Aegon
bears the risk
   
 Where the PH
bears the risk
 
Contingent liabilities   2,290    -    3,559    - 
Collateral pledged   4,171    -    5,745    - 
Net exposure
  
 
(1,881
) 
  
 
-
 
  
 
(2,186
) 
  
 
-
 
For 2022 and 2023 there is no
Non-cash
collateral that can be sold or repledged by the counterparty.
Assets pledged for repurchase agreements
  
    2023
       2022 
Cash received on repurchase agreements   29    107 
Collateral pledged (transferred financial assets)   25    99 
Net exposure
  
 
3
  
  
 
8
  
 
280  |  Aegon Annual Report on Form 20-F 20222023  |  311 
Table of Contents
LOGO		 
Notes to the consolidated financial statements
About Aegon  Governance and risk management  
Note 47Financial information
  Sustainability information
   
   
 
Assets pledged for general account and contingent liabilities
 
            2022 
1)
              2021   
   
General account (contingent) liabilities
  3,520     3,410   
   
Collateral pledged
  5,745   4,594   
   
Net exposure
 
 
(2,225
)  
 
 
(1,183) 
 
   
Non-cash
collateral that can be sold or repledged by the counterparty
  -   -   
1 
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
Assets pledged for repurchase agreements
 
            2022 
1)
              2021   
   
Cash received on repurchase agreements
  107     821   
   
Collateral pledged (transferred financial assets)
  99   764   
   
Net exposure
 
 
8
 
 
 
57  
 
1 
2022 excludes the assets of the disposal group, which are separately disclosed in note 51 Discontinued operations.
In order to trade derivatives on the various exchanges, Aegon posts margin as collateral. collat
era
l.
The amountamo
unt of collateral pledged for derivative transactions was EUR 4.72.3 billion (2021:(2022: EUR 2.34.7 billion).
4741 Offsetting, enforceable master netting arrangements and similar agreements
The following table only includes financial positions for which there is a recognized corresponding position that could be offset under a legally enforceable master netting arrangement or similar agreement. Aegon also enters into collateralized (reverse) repo or security lending and borrowing transaction, for which the collateral is not recognized on the balance sheet. For further information on the financial positions resulting from such transactions please refer tosee note 46.40 Transfer of financial assets. The table provides details relating to the effect, or potential effect, of netting arrangements, including rights to
set-off,
associated with the entity’s recognized financial assets and recognized financial liabilities.
Financial assets subject to offsetting,
enforceable master netting arrange-
ments and similar agreements
 
Gross
 amounts of
recognized
financial
assets
  
 Gross amounts
of recognized
financial
liabilities set off
in the statement
of financial
position
  
Net amounts of
financial assets
  presented in the
statement of
financial
position
  
Related amounts not set off in
the statements of financial
position
    
 
Financial
instruments
  
Cash collateral
received
(excluding
surplus
collateral)
   Net amount 
2023
      
Derivatives  1,341   -   1,341   631   707   2 
       
On December 31
 
 
1,341
 
 
 
-
 
 
 
1,341
 
 
 
631
 
 
 
707
 
 
 
2
 
2022
      
Derivatives  2,733   -   2,733   2,589   111   34 
       
On December 31
 
 
2,733
 
 
 
-
 
 
 
2,733
 
 
 
2,589
 
 
 
111
 
 
 
34
 
 
    
Gross amounts
of recognized
financial
liabilities set off
in the statement
of financial
position
 
Net amounts of
financial assets
presented in the
statement of
financial
position
 
 
 
Related amounts not set off in the
statements of financial position
 Net amount  
Financial assets subject to
offsetting, enforceable master
netting arrangements and
similar agreements
 Gross amounts
of recognized
financial assets		 Financial
instruments		 
Cash collateral
received
(excluding
surplus
collateral)
   
        
2022
              
        
Derivatives
 2,733 - 2,733   2,589 111 34  
        
At December 31
 
2,733
 
-
 
2,733
   
2,589
 
111
 
34  
        
2021
              
        
Derivatives
 8,811 - 8,811   6,045 2,519 247  
        
At December 31
 
8,811
 
-
 
8,811
   
6,045
 
2,519
 
247  
 
    
Gross amounts
of recognized
financial assets
set off in the
statement of
financial
position
 
Net amounts of
financial
liabilities
presented in the
statement of
financial
position
 
 
 
Related amounts not set off in the
statements of financial position
  
Financial liabilities subject to
offsetting, enforceable master
netting arrangements and
similar agreements
 
    Gross amounts
of recognized
financial
liabilities
 Financial
instruments		 
Cash collateral
pledged
(excluding
surplus
collateral)
 Net amount  
        
2022
              
        
Derivatives
 5,115 - 5,115   3,359 1,668 89  
        
At December 31
 
5,115
 
-
 
5,115
   
3,359
 
1,668
 
89  
        
2021
              
        
Derivatives
 7,043 - 7,043   6,768 224 52  
        
At December 31
 
7,043
 
-
 
7,043
   
6,768
 
224
 
52  
The decrease in derivative assets and liabilities in 2022 is mainly the result of the classification of Aegon the Netherlands as held for sale and discontinued operations, refer to note 51 Discontinued operations.
Financial liabilities subject to
offsetting, enforceable master netting
arrangements and similar agreements
 
Gross
 amounts of
recognized
financial
liabilities
  
 Gross amounts
of recognized
financial assets
set off in the
statement of
financial
position
  
Net amounts of
financial
liabilities
  presented in the
statement of
financial
position
  
Related amounts not set off in
the statements of financial
position
    
 
Financial
instruments
  
Cash collateral
pledged
(excluding
surplus
collateral)
   Net amount 
2023
      
Derivatives  2,361   -   2,361   1,245   1,026   90 
       
On December 31
 
 
2,361
 
 
 
-
 
 
 
2,361
 
 
 
1,245
 
 
 
1,026
 
 
 
90
 
2022
      
Derivatives  5,115   -   5,115   3,359   1,668   89 
       
On December 31
 
 
5,115
 
 
 
-
 
 
 
5,115
 
 
 
3,359
 
 
 
1,668
 
 
 
89
 
Financial assets and liabilities are offset in the statement of financial position when the Group has a legally enforceable right to offset and has the intention to settle the asset and liability on a net basis, or to realize the asset and settle the liability simultaneously. As shown in the second column there are no financial assets and liabilities offset in 20222023 and 2021.2022.
Aegon Annual Report on Form 20-F 2022  |  281
Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
The line Derivatives includes both derivatives for general account and for account of policyholder.
derivatives where the policyholder bears the risk.
Aegon mitigates credit risk in derivative contracts by entering into collateral agreements, where practical, and in ISDA master netting agreements for each of the Aegon’s legal entities to facilitate Aegon’s right to offset credit risk exposure. The credit support agreement will normally dictate the threshold over which collateral needs to be pledged by Aegon or its counterparty. Transactions requiring Aegon or its counterparty to post collateral are typically the result of
over-the-counter
derivative trades, comprised mostly of interest rate swaps, currency swaps and credit swaps. These transactions are conducted under terms that are usual and customary to standard long-term borrowing, derivative, securities lending and securities borrowing activities, as well as requirements determined by exchanges where the bank acts as intermediary.
 312  |  Annual Report on Form 20-F 2023
48
Notes to the consolidated financial statements
Note 42
42 Companies and businesses acquired and divested
Companies and businesses acquired
2023
There were no significant acquisitions in 2023.
2022
On February 28, 2022, Transamerica acquired 100% equity interest in TAG Resources, LLC (TAG). TAG aggregates small to
mid-market
employer retirement plans (pooled-plan space) and provides administration and fiduciary oversight services as a third-party administrator for such plans, including providing plan design, consulting, and compliance to plan sponsors. The total consideration transferred amounted to EUR 33 million. Based on the purchase price allocation, the fair value of net assets amounted to EUR 17 million, resulting in goodwill of EUR 16 million. The acquisition does not have a material impact on Aegon’s capital position or results.
2021Companies and businesses divested
There were no significant acquisitions in 2021.
20202023
On July 30, 2020,April 4, 2023 Aegon announced the sale of its UK individual protection book to Royal London. Under the terms of the agreement, Aegon UK will initially reinsure the portfolio to Royal London, followed by a Part VII transfer of the legal ownership of the individual protection book in 2024. The transfer is subject to court approval. Aegon UK’s individual protection business is a portfolio of life, critical illness, and income protection policies for 400,000
high-net
worth individual customers, which was sold via independent financial advisers. The portfolio closed to new business on April 4, 2023. The sale does not have a material impact on Aegon’s capital position or results.
On June 1, 2023 Aegon announced the completion of the expansiondivestment of its partnership with Santanderbusinesses in Spain.Poland and Romania to Vienna Insurance Group AG Wiener Versicherung Gruppe (VIG) for EUR 125 million. The book loss on the transaction is EUR 78 million and is recorded in Aegon’s 2023 results. This followswas the agreement signed on July 3, 2018 between Aegon and Banco Santanderfinal step to expand their life and
non-life
insurance partnership, following Banco Santander’s acquisitioncomplete the full sale of Banco Popular. Aegon’s insurance, joint ventures with Banco Santanderpension and asset management business in Spain completedCentral and Eastern Europe to VIG, following the acquisitionclosings 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 expansiondivestments of the joint venture with Banco Santander,Hungarian and Turkish businesses in 2022.
On July 4, 2023, Aegon paid an upfront amount of EUR 187 million – lower thanannounced 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 performancecompletion of the partnership.
Companies and businesses divested
2022
On October 27, 2022, Aegon announced it has reached an agreement with a.s.r. to combinecombination of its Dutch pension, life and
non-life
insurance, banking, and mortgage origination activities with a.s.r., and the beginning of its asset management partnership with a.s.r. As part of the transaction, Aegon will receivereceived EUR 2.2 billion in gross cash proceeds and almost a 29.99% strategic30% stake in a.s.r., with associated governance rights. see note 45 Held for sale and discontinued operations for more information.
On January 17,July 21, 2023 Aegon N.V.’s Extraordinary Meetingannounced the sale of Shareholders (EGM) has approvedits 56% stake in its associate in India, Aegon Life Insurance Company, to Bandhan Financial Holdings Limited, an Indian financial services company. The completion of the decision. Furthermore, the works council of Aegon has rendered a positive advice in relation to the proposed transaction. The transaction is subject to customary conditions, including regulatory and antitrust approvals and is expected towhich have been received in 2023. The divestment does not have a material impact on Aegon’s capital position or results. See note “46 Events after the reporting period” on the close in the second half of 2023. As at December 31, 2022, the assets and liabilities of Aegon the Netherlands are classified as held for sale and discontinued operations, please refer to note 51 Discontinued operations for more information.
On October 14, 2022, Aegon completed the divestment of its 50% stake in the Spanish insurance joint venture with Liberbank to Unicaja Banco. As announced on May 23, 2022, the sale follows the change of control in Liberbank after its merger with Unicaja Banco in 2021. The net proceeds of the transaction amount to EUR 176 million. Aegon Spain intends to upstream the net proceeds to the Group. The book gain on the transaction is EUR 87 million and is recorded in Aegon’s 2024.
2022 results.
On March 23, 2022, and on April 21, 2022, Aegon completed the divestment of its Hungarian and Turkish businesses to Vienna Insurance Group AG Wiener Versicherung Gruppe (VIG). At December 31, 2021, the total assets of the Hungarian and Turkish businesses were EUR 1.4 billion, mainly including investments, and the total liabilities were EUR 1.2 billion, mainly including insurance contracts. The gross proceeds of the transactions amount to EUR 700 million, of which EUR 96 million is cash on hand at the Hungarian and Turkish businesses and dividends. As a result of the transactions, the Group Solvency
282  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
Notes to the consolidated financial statements
Note 49
II ratio improved by approximately 7 percentage points. The book gain amounted to EUR 288 million, which includes a loss of EUR 177 million related to the recycling of the foreign currency translation reserve and revaluation reserve though the income statement. As a result of this transaction, IFRS equity has increased by EUR 465 million. The completion of this sale is part of the full closing of the sale of Aegon’s insurance, pension, and asset management businesses in Central and Eastern Europe to VIG for EUR 830 million, as announced in November 2020. The sale of Aegon Poland and Aegon Romania is subject to regulatory approval and expected to close in the first half ofwas completed on June 1, 2023.
2021
On February 28, 2021,October 14, 2022, Aegon successfully completed the divestment of Stonebridge, a
UK-based
provider of accident insurance products to Global Premium Holdings group, part of Embignell group. Under the terms of the agreement, Aegon sold Stonebridge for a consideration of approximately GBP 60 million (EUR 65 million), consisting of the purchase price and dividends related to the transaction. This excludes a contingent consideration of up to GBP 10 million. The transaction had no material impact on Aegon’s capital position and results.
2020
On January 29, 2020, Aegon completed the sale of its 50% stake in the variable annuitySpanish insurance joint ventures in Japan. The sale wasventure with Liberbank to Unicaja Banco. As announced on May 17, 2019.23, 2022, the sale follows the change of control in Liberbank after its merger with Unicaja Banco in 2021. The total cashnet proceeds areof the transaction amount to EUR 153176 million. The book gain on the transaction is EUR 87 million (JPY 18.75 billion). The divestment had no material impact onand is recorded in Aegon’s capital position and led to an IFRS gain2022 results.
Annual Report on Form 20-F 2023  |  313 
Table of EUR 53 million. This divestment had no material impact on operating result going forward.
Contents
49 Group companies
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
43 Group companies
Subsidiaries
The principal subsidiaries of the parent company Aegon N.V.Ltd. are listed by geographical segment. All are wholly owned, directly or indirectly, unless stated otherwise, and are involved in insurance or reinsurance business, pensions, asset management or services related to these activities. The voting power in these subsidiaries held by Aegon is equal to the shareholdings.
Americas
◆
Transamerica Corporation, Wilmington, Delaware (United States)
◆
∎
Transamerica Casualty Insurance Company, Cedar Rapids, Iowa (United States)
◆
∎
Transamerica Corporation, Wilmington, Delaware (United States)
∎
Transamerica Financial Life Insurance Company, Harrison, New York (United States)
◆
∎
Transamerica Life Insurance Company, Cedar Rapids, Iowa (United States)
The Netherlands (classified as disposal group)
◆
∎
Aegon Bank N.V., The Hague
World Financial Group Insurance Agency, LLC, Cedar Rapids, Iowa (United States)
◆
Aegon Cappital B.V., Groningen
◆
Aegon Hypotheken B.V., The Hague
◆
Aegon Levensverzekering N.V., The Hague
◆
Aegon Schadeverzekering N.V., The Hague
◆
Aegon Spaarkas N.V., The Hague
◆
Nedasco B.V., Amersfoort
◆
Robidus Groep B.V., Zaandam
◆
TKP Pensioen B.V., Groningen
United Kingdom
◆
∎
Aegon Investment Solutions Ltd., Edinburgh
◆
∎
Aegon Investments Ltd., London
◆
∎
Cofunds Limited, London
∎
Scottish Equitable plc, Edinburgh
◆
Cofunds Limited, London
International
◆
Aegon Towarzystwo Ubezpieczeń na Życie Spółka Akcyjna, Warsaw (Aegon Poland Life)
◆
∎
Aegon Powszechne Towarzystwo Emerytaine Spólka Akcyjna, Warsaw (Aegon Poland Pension Fund Management Co.)
◆
Aegon Pensii Societate de Administrare a Fondurilor de Pensii Private S.A., Cluj (Aegon Romania Pension Administrator Co.)
◆
Aegon España S.A.U. de Seguros y Reaseguros, Madrid (Spain)
◆
∎
Transamerica Life (Bermuda) Ltd., Hamilton (Bermuda)
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Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
Asset Management
◆
Aegon USA Investment Management, LLC, Cedar Rapids (United States)
◆
∎
Aegon USA Realty Advisors, LLC, Des Moines (United States)
◆
Aegon Asset Management Holding B.V., The Hague (The Netherlands)
◆
∎
Aegon Investment Management B.V, The Hague (The Netherlands)
◆
Aegon Asset Management UK plc, Edinburgh (United Kingdom)
∎
Aegon Investment Management B.V., The Hague (The Netherlands)
∎
Aegon USA Investment Management, LLC, Cedar Rapids (United States)
∎
Aegon USA Realty Advisors, LLC, Des Moines (United States)
The legally required list of participations as set forth in articles 379 and 414 of Book 2 of the Dutch Civil Code has been registered with the Trade Register in The Hague. Aegon N.V.Ltd. has issued a statement of liability as meant in article 403 of Book 2 of the Dutch Civil Code for its subsidiary company Aegon Derivatives N.V.
Joint ventures
The principal joint ventures are listed by geographical segment. The voting powers in these joint ventures is equal to the shareholdings, unless stated otherwise.
The Netherlands (classified as disposal group)
◆
AMVEST Vastgoed, Utrecht (50%)
◆
AMVEST Living & Care Fund, Utrecht (50%)
◆
AMVEST Development Fund, Amsterdam (50%)
International
◆
∎
Santander Generales Seguros y Reaseguros, S.A., Madrid (Spain) (51%)
◆
∎
Santander Vida Seguros y Reaseguros, S.A., Madrid (Spain) (51%)
◆
∎
Aegon Santander Portugal Não Vida – Companhia de Seguros S.A., Lisbon (Portugal) (51%)
◆
∎
Aegon Santander Portugal Vida – Companhia de Seguros de Vida S.A., Lisbon (Portugal) (51%)
◆
∎
Aegon THTF Life Insurance Co., Ltd., Shanghai (China) (50%)
◆
∎
Mongeral Aegon, Seguros e Previdencia S.A., Rio de Janeiro (Brazil) (54.9%(59.2%, where Aegon has 50% voting rights 50%)rights)
◆
∎
Sicoob Seguradode de Vida e Previdência S.A., Rio de Janeiro (Brazil) (28%(29.6%)
Asset Management
◆
∎
Aegon Industrial Fund Management Co., Ltd,Ltd., Shanghai (
China
(China) (49%) (
49
%)
Refer toSee note 2521 Investments in joint ventures and associates for further details on these investments.
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Notes to the consolidated financial statements
Note 44
Investments in associates
The principal investments in associates are listed by geographical segment. The voting powers in these associates is equal to the shareholdings, unless stated otherwise.
The Netherlands (classified as disposal group)Holding
◆
∎
AMVEST Residential Core Fund, Amsterdam (29%
ASR Nederland N.V., Utrecht (29.98%)
With respect to a.s.r., for a period of 5 years post closing. Aegon also has an exclusive right to nominate up to two members of the Supervisory Board (if Aegon holds more than 20% of the shares it may nominate two members, if it holds 20% or less but more than 10% of the shares it may nominate one member). In addition, Aegon has the right to designate its nominees for the Audit and Risk Committee and the ESG Committee if certain conditions are met. Furthermore, in case the incumbent CEO of a.s.r. does not serve the full term due to earlier resignation or dismissal, the appointment of the successor requires the unanimous vote of all Supervisory Directors in office.
For as long as Aegon holds more than 20% of the shares, the affirmative vote of the
non-independent
Aegon nominee is required for:
◆
∎
significant changes to dividend policy (as per current stated a.s.r. policies);
∎
certain dilutive transactions (issuance of equity or debt instruments);
N.V. Levensverzekeringmaatschappij ‘De Hoop’, The Hague (33%)∎
M&A transactions (acquisitions and divestments, joint ventures and long term
co-operations)
with a value exceeding EUR 500 million.
Furthermore, for as long as Aegon holds more than 20% of the shares, the below needs the unanimous vote of all Supervisory Directors in office and the affirmative vote of the
non-independent
Aegon nominee:
◆
∎
OB Capital Cooperatief U.A., Amsterdam (95%)
material decisions on capital management, material reinsurance, and capital allocation / distribution, in each case to the extent this would result in a material change to the characteristics of the risk profile of (the enterprise of) a.s.r. and other than in the ordinary course of business.
Except for significant changes to the dividend policy, the same applies when Aegon holds
20
% or less but more than
International10
◆
Aegon Life Insurance Co. ltd (India) (49%; Aegon does not have joint control of the company)
% of the shares.
Asset Management
◆
∎
La Banque Postale Asset Management, Paris (France) (25%)
Refer toSee note 2521 Investments in joint ventures and associates for further details on these investments.
284  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
Notes to the consolidated financial statements
Note 50
5044 Related party transactions
In the normal course of business, Aegon enters into various transactions with related parties. Parties are considered to be related if one party has the ability to control or exercise significant influence over the other party in making financial or operating decisions. Related parties of Aegon include, amongst others,among other things, its associates, joint ventures, key management personnel and the defined benefit and contribution plans. Transactions between related parties have taken place on an arm’s length basis. Transactions between Aegon and its subsidiaries that are deemed related parties have been eliminated in the consolidation and are not disclosed in the notes.
Related party transactions include, among others, transactions between Aegon Ltd. and Vereniging Aegon.
On December 18, 2023, Aegon repurchased 112,619,440 common shares B from Vereniging Aegon for the amount of EUR 14,804,951.58 based on
1/40
th of the Value Weighted Average Price of the common shares of the
five trading days
preceding this transaction. The repurchase of common shares B was executed to bring the aggregate holding of voting shares by Vereniging Aegon in Aegon more in line with its special cause voting rights of 32.6% following the completion of the Share Buy Back Programs, initiated by Aegon in July 2023 following the completion of the transaction with a.s.r.
On December 8, 2023, Aegon entered into a share repurchase agreement with Vereniging Aegon, pursuant to which the Vereniging Aegon agreed to participate in the second and third tranche of the Aegon’s current 1.5 billion Euro share buyback program and Aegon agreed to repurchase a certain number of Common Shares from Vereniging Aegon for an aggregate consideration equal to EUR 139.5 million Euro which will be equally distributed over the total number of trading days during the remainder of the current share buy back program of Aegon. The number of Common Shares that Aegon will repurchase
Annual Report on Form 20-F 2023  |  315 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
from Vereniging Aegon will be determined based on the daily volume-weighted average price per common share on Euronext Amsterdam on a weekly basis.
On August 16, 2023, the members of Vereniging Aegon voted to instruct the board of Vereniging Aegon, subject to the board’s fiduciary duties, to vote all of Vereniging Aegon’s common shares and common shares B (based on one vote per 40 common shares B) at Aegon N.V.’s extraordinary general meeting of September 29, 2023 and at Aegon S.A.’s extraordinary meeting of September 30, 2023 in favor the change in legal domicile of Aegon from The Netherlands to Bermuda by means of the cross-border conversion of Aegon N.V. into Aegon S.A. and the subsequent cross-border conversion of Aegon S.A. into Aegon Ltd (the “Redomiciliation”). Following such vote of the members of Vereniging Aegon, the board of Vereniging Aegon is obligated, pursuant to the terms of a voting undertaking agreement, dated June 29, 2023, between Aegon N.V. and Vereniging Aegon.Aegon, and subject to the board’s fiduciary duties, to vote all of such shares in favor of the Redomiciliation.
On December 15, 2022, Aegon repurchased 43,817,400 common shares B from Vereniging Aegon for the amount of EUR 5,113,578.21 based on
1/40
th of the Value Weight Average Price of the common shares of the
five trading days
preceding this transaction. The repurchase of common shares B was executed to bring the aggregate holding of voting shares by Vereniging Aegon in Aegon more in line with its special cause voting rights of 32.6% following the completion of the Share Buy Back Programs, initiated by Aegon in April 2022, following the completion of the sale of the Hungarian business and initiated in July and October 2022 to neutralize the dilutive effect of the distribution of the final dividend 2021 and the interim dividend 2022 in stock.
On November 21, 2022, the members of Vereniging Aegon voted to instruct the board of Vereniging Aegon, subject to the board’s fiduciary duties, to vote all of Vereniging Aegon’s common shares and common shares B (based on
one vote per 40
common shares B) at Aegon N.V.Ltd.’s next extraordinary general meeting in favor of Aegon N.V. sellingdivesting its business operations in the Netherlands to ASRA.S.R. Nederland N.V. for cash consideration and a 29.99%almost 30% share interest in ASRA.S.R. Nederland N.V (the “Transaction”). Following such vote of the members of Vereniging Aegon, the board of Vereniging Aegon is obligated, pursuant to the terms of a voting undertaking agreement, dated October 27, 2022, between Aegon N.V.Ltd. and Vereniging Aegon, and subject to the board’s fiduciary duties, to vote all of such shares in favor of the Transaction.
On December 15, 2021, Aegon repurchased 22,643,360 common shares B from Vereniging Aegon for the amount of EUR 2,285,621 based on
1/40th 40th
of the Value Weight Average Price of the common shares of the
five trading days
preceding this transaction. The repurchase of common shares B was executed to align the aggregate holding of voting shares by Vereniging Aegon in Aegon with its special cause voting rights of 32.6%.
On June 3, 2021, Vereniging Aegon exercised its options rights to purchase in aggregate 1,983,360 common shares B at fair value of a common share B (being
1/40
th of the market value of a common share in the capital of the Company at the time of issuance) to mitigate dilution caused by the issuance of shares on June 3, 2021, in connection with the Long Term Incentive Plans for senior management.
On December 11, 2020 Aegon N.V. repurchased 2,955,600 common shares B from Vereniging Aegon for the amount of EUR 228,911.22 based on 1/40th of the Value Weighted Average Price of the common shares of the five trading days preceding this transaction. The repurchase of common shares B was executed to align the aggregate shareholding of Vereniging Aegon in Aegon N.V. with its special cause voting rights of 32.6%.
On May 15, 2020, Vereniging Aegon exercised its options rights to purchase in aggregate 2,154,000 common shares B at fair value of a common share B (being 1/40th of the market value of a common share in the capital of the Company at the time of issuance) to mitigate dilution caused the issuance of shares on May 15, 2020, in connection with the Long Term Incentive Plans for senior management.
 
 316  |  Annual Report on Form 20-F 2023
Aegon Annual Report on Form 20-F 2022  |  285
Table of Contents
About AegonGovernance and risk management
Financial information
 Non-financial information
Notes to the consolidated financial statements
Note 45
   
   
 
 
Remuneration of members of the Supervisory Board, Executive BoardDirector,
Non-Executive
Directors and Key Management
The following table includes the expenses for remuneration, with amounts reflective of time spent on the Board.
Remuneration expenses
 
    
                2022
                  2021                2020  
    
Supervisory Board
1)
   1.3   0.9    0.8 
    
Executive Board
   5.2   4.9    5.9 
    
Key Management
   27.7     27.5    24.8   
    
  In fixed compensation
   16.0   16.8    14.2 
    
  In cash based variable compensation
   4.0   3.6    3.3 
    
  In share based variable compensation
   3.5   3.2    2.9 
    
  In pension contributions
   3.0   2.8    3.2 
    
  In other benefits
   1.2   1.1    1.2 
    
  2023 
    2022    2021 
Non-Executive
Directors
1
)
  1.3   1.3  0.9 
Executive Director
2
)
  0.9   n.a.  n.a. 
Executive Board
3
)
  4.3   5.2  4.9 
Key Management
4
)
  27.9   27.7  27.5 
in fixed compensation  13.8   16.0  16.8 
in cash based variable compensation  4.6   4.0  3.6 
in share based variable compensation  5.0   3.5  3.2 
in pension contributions  3.1   3.0  2.8 
in other benefits  1.3   1.2  1.1 
 
1 
Based on a Decree of the Dutch State Secretary of Finance which came into forcePreviously reported as ‘Supervisory Board’.
2 Classification established September 30, 2023. In 2023, this represents Mr. Lard Friese from May 7, 2021, the Supervisory Board fees were not subject to Dutch VAT anymore, retroactively as from June 13, 2019. Therefore, Aegon has not paid Dutch VAT anymore on the feesOctober 1, 2023.
3 Classification ended September 30, 2023. In 2023, this represents Mr. Lard Friese and Mr. Matt Rider through September 30, 2023.
4 
Key Management is inclusive of the Supervisory Board Members as from Q2 2021. Additionally, Aegon reclaimed VAT for the period Q1 2020 - Q1 2021, except for its Supervisory Board members based in the Netherlands for practical reasons.
Non-Executive
Directors, Executive Directors, also reported separately above and Executive Committee Members.
5 n.a. in above table should be read as “not applicable”.
Fixed compensation of Key Management included severance payments was EUR 2.2 million in 2021, of EUR 2.2 million.no such payments were paid in 2022 and 2023. Key Management consisted of the
Non-Executive
Directors, the Executive Director, and all members of the Supervisory Board, Executive Board and Management BoardCommittee (see the chapter Composition of the Boards for more details).
Additional information on the remuneration and share-based compensation of members of the Executive BoardDirector and the remuneration of the Supervisory Board is
Non-Executive
Directors are disclosed in the Remuneration report.
Interests in Aegon N.V.Ltd. held by active members of the Executive BoardDirector
Shares held in Aegon aton December 31, 20222023 by Mr. Friese amount to 72,081 (2021: 56,554)83,122 (2022: 72,081) and by Mr. Rider to 120,962 (2021: 103,699)130,620 (2022: 120,962). The shares held in Aegon mentioned above do not exceed 1% of total outstanding share capital at the reporting date. At the reporting date no loans with Aegon or outstanding balances such as guarantees or advanced payments exist for either Mr. Friese orand Mr. Rider.
Common shares held by Supervisory Board members
Non-Executive
Directors
Shares held in Aegon on December 31  
  2023 
    2022    2021 
Ben J. Noteboom
1
)
  -   23,500  23,500 
Dona D. Young  13,260   13,260  13,260 
    
Total
  
13,260 
  
36,760
  
36,760 
 
Shares held in Aegon at December 31  
                2022
                  2021 
   
Ben J. Noteboom
   23,500     23,500   
   
Dona D. Young
   13,260   13,260 
   
Total
  
 
36,760
 
 
 
36,760
 
1 Mr. Ben J. Noteboom stepped down in May 2023
Shares held by Supervisory Board membersthe
Non-Executive
Directors are only disclosed for the period for which they have been part of the Supervisory Board.Board of Directors. At the reporting date no loans with Aegon or outstanding balances such as guarantees or advanced payments exist for the members of
Non-Executive
Directors.
45 Held for sale and discontinued operations
This following disposal groups are classified as held for sale and/or discontinued operation.
45.1 Aegon the Supervisory Board.
51 Discontinued operations
Netherlands
On October 27, 2022, Aegon announced it hashad reached an agreement with a.s.r. to combine its Dutch pension, life and
non-life
insurance, banking, and mortgage origination activities with ASR Nederland N.V. (‘a.s.r’(“a.s.r”). Aegon will receivereceived EUR 2.2 billion in gross cash proceeds, and a 29.99% strategic stake in a.s.r., with associated governance rights. On January 17, 2023, the Extraordinary General Meeting of shareholders (“EGM”) of Aegon N.V. has approved the proposed transaction. Furthermore, the works council of Aegon has rendered a positive advice in relation to the proposed transaction. The transaction is subject to customary conditions, including regulatory and antitrust approvals, and is expected to close in the second half ofhas closed on July 4, 2023.
Per December 31, 2022 Aegon the Netherlands has been reported as held for sale and discontinued operations. This note includes the disclosures related to Aegon the Netherlands qualified as held for sale and discontinued operations.
 
286  |  Aegon Annual Report on Form 20-F 20222023  |  317 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Up to the close of the transaction, Aegon the Netherlands qualified as held for sale and discontinued operations.
This paragraph provides information on the discontinued operations up to the point of combining Aegon’s Dutch pension, life and
non-life
insurance, banking and mortgage activities with a.s.r.
Income statement of discontinued operations
EUR million  
   2023  
      2022  
Discontinued operations
  
 
      
 
 
 
     
 
Insurance revenue   1,400   2,907 
Insurance service expenses   (1,327)    (2,703)  
Net expenses on reinsurance held   (20)   (15) 
Insurance service result
  
 
52
 
 
 
189
 
Interest revenue on financial instruments calculated using the effective interest method   42   4 
Interest revenue on financial instruments measured at FVPL   582   1,281 
Other investment income   168   263 
Results from financial transactions   614   (20,328) 
Impairment (losses) / reversals   -   5 
Insurance finance income / (expenses)   (1,110)   16,906 
Net reinsurance finance income / (expenses) on reinsurance held   (6)   125 
Insurance net investment result
  
 
289
 
 
 
(1,745
) 
Interest revenue on financial instruments calculated using the effective interest method   273   496 
Interest revenue on financial instruments measured at FVPL   137   (340) 
Other investment income   11   11 
Results from financial transactions   (208)  1,638 
Impairment (losses) / reversals   3   - 
Investment contract income / (expenses)   (25)   136 
Interest expenses   (10)   (2) 
Other net investment result
  
 
180
 
 
 
1,939
 
Interest charges   (55)   (49) 
Financing net investment result
  
 
(55
) 
 
 
(49
) 
Total net investment result
  
 
(414
)
 
 
145
 
Fees and commission income   165   311 
Other operating expenses   (288)   (474) 
Other income / (charges)   96   20 
Other result
  
 
(28
) 
 
 
(142
) 
Result before share in profit / (loss) of joint ventures, associates and tax
  
 
438
 
 
 
191
 
Share in profit / (loss) of joint ventures   4   37 
Share in profit / (loss) of associates   15   15 
Result before tax
  
 
458
 
 
 
242
 
Income tax (expense) / benefi
t
   (62)  (445)
Net result from discontinued operations
  
 
396
 
 
 
(203
) 
Impairment loss on remeasurement of the disposal group   (413)  (1,094)
   
Net result from discontinued operations after remeasurement
  
 
(17
) 
 
 
(1,296
) 
Upon the completion of the transaction the difference between the carrying amount of the disposal group and the fair value of the consideration received was a net gain of EUR
93
 million recognized as a result from discontinued operations.
 318  |  Annual Report on Form 20-F 2023
 
 
Notes to the consolidated financial statements
Note 5145
   
   
 
Income statement of discontinued operations
                                                                                           
    
Amounts in EUR millions 
            2022
              2021              2020 
Discontinued operations
            
    
Premium income
  1,569   1,713   1,994 
    
Investment income
  1,725   2,074   2,062 
    
Fee and commission income
  346   331   283 
    
Other revenues
  -   -   - 
    
Total revenues
 
 
3,640
 
 
 
4,118
 
 
 
4,339
 
    
Income from reinsurance ceded
  38   26   (100) 
    
Results from financial transactions
  (9,231)   (444)   3,435 
    
Other income
  23   27   6 
    
Total income
 
 
(5,529
) 
 
 
3,727
 
 
 
7,679
 
    
Premiums paid to reinsurers
  112   99   63 
    
Policyholder claims and benefits
  (8,824)   1,755   6,140 
    
Profit sharing and rebates
  4   7   - 
    
Commissions and expenses
  739   698   730 
    
Impairment charges / (reversals)
  (0)   (2)   107 
    
Interest charges and related fees
  85   89   99 
    
Other charges
  10   3   46 
    
Total charges
 
 
(7,874
) 
 
 
2,649
 
 
 
7,185
 
    
Result from discontinued operations before share in profit / (loss) of joint ventures, associates and tax
 
 
2,344
 
 
 
1,078
 
 
 
494
 
    
Share in profit / (loss) of joint ventures
  37   33   19 
    
Share in profit / (loss) of associates
  15   127   80 
    
Result before tax from discontinued operations
 
 
2,396
 
 
 
1,238
 
 
 
593
 
    
Income tax (expense) / benefit
  (1,000)   (276)   (107) 
    
Result after tax from discontinued operations
 
 
1,396
 
 
 
960
 
 
 
487
 
    
Impairment loss on remeasurement of the disposal group
  (1,775)   -   - 
    
Net result from discontinued operations after remeasurement
 
 
(379
) 
 
 
960
 
 
 
487
 
Statement of comprehensive income of discontinued operations
 
   
                        
   
                        
   
                        
 
    
Amounts in EUR millions 
             2022
                  2021                2020 
    
Net result from discontinued operations
 
 
(379
) 
 
 
960
 
 
 
487
 
    
Items that will not be reclassified to profit or loss:
            
    
Changes in revaluation reserve real estate held for own use
  -   1   - 
    
Remeasurements of defined benefit plans
  948   156   (285) 
    
Income tax relating to items that will not be reclassified
  (245)   (24)   126 
    
Items that may be reclassified subsequently to profit or loss:
            
    
Gains / (losses) on revaluation of
available-for-sale
investments
  (2,110)   155   21 
    
(Gains) / losses transferred to income statement on disposal and impairment of
available-for-sale
investments
  185   (114)   (13) 
    
Equity movements of joint ventures
  -   -   - 
    
Equity movements of associates
  2   (1)   2 
    
Income tax relating to items that may be reclassified
  497   (18)   (27) 
    
Other
  -   1   - 
    
Total other comprehensive income / (loss) from discontinued operations
 
 
(723
) 
 
 
156
 
 
 
(176
) 
    
Total comprehensive income / (loss) from discontinued operations
 
 
(1,102
) 
 
 
1,117
 
 
 
310
 
Aegon Annual Report on Form 20-F 2022  |  287
Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
Amounts in EUR millions  
    2023  
      2022  
Net result from discontinued operations
  
 
(17
)  
 
 
(1,296
)  
Items that will not be reclassified to profit or loss:
  
 
      
 
 
 
      
 
Changes in revaluation reserve real estate held for own use   
Remeasurements of defined benefit plans   51   948 
Income tax relating to items that will not be reclassified   (13)   (245) 
Items that may be reclassified subsequently to profit or loss:
   
Gains / (losses) on financial assets measured at FVOCI   16   (461) 
(Gains) / losses transferred to income statement on disposal of financial assets measured at FVOCI   -   (5) 
Equity movements of associates   (2)   2 
Income tax relating to items that may be reclassified   (4)   120 
Other         
Total other comprehensive income / (loss) from discontinued operations
  
 
48
 
 
 
359
 
   
Total comprehensive income / (loss) from discontinued operations
  
 
31
 
 
 
(937
) 
Impairment loss
Upon classification as held for sale, as per December 31, 2022, the carrying amount of Aegon the Netherlands iswas compared to the fair value less cost to sell, which is estimated by reference to the fair value of the consideration to which Aegon N.V.Ltd. is entitled under the terms and conditions of the salesbusiness combination agreement. The fair value less cost to sell is lower than the carrying value and this impairment loss is recognized through a reduction of the carrying value of Aegon the Netherlands. The table below shows the calculated impairment loss.
The impairment loss ishas been recalculated at each reporting date untilthe closing date of the transaction, as both the fair value of the consideration to be received and the carrying value of Aegon the Netherlands arewhere subject to change. The consideration to be received includes a 29.99% stake in a.s.r. and iswas therefore contingent on the development of the a.s.r. share price. The carrying amount of Aegon the Netherlands will continuehas continued to be updated for assets and liabilities which arewere not included in the measurement scope of IFRS 5. Furthermore, AegonThe table includes the Netherlands’s carrying amount will be impacted byrecalculated impairment loss per the adoptionclosing date of the transaction.
The table below shows the calculated impairment loss under IFRS 9 “Financial instruments” and IFRS 17 “Insurance contracts”as per January 1,December 31, 2022 and as per December 31, 2023. As a consequence, the cumulative impairment loss that is recognized at the final disposal date will differ from the estimate calculated below.
   
2023  
 2022  
      (IFRS9/17)     (IFRS9/17)  
Net cash receivable after costs to sell   2,184   2,175 
Fair value of 29.99% share in a.s.r.   2,588   2,700 
Fair value less costs to sell
  
 
4,772
 
 
 
4,875
 
Carrying amount of Aegon the Netherlands       5,185       5,969 
Fair value less costs to sell minus carrying amo
u
nt
  
 
(413
)
 
 
(1,094
)
Assets in scope for impairment   1,775   1,775 
Cumulative Impairment loss recognized
  
 
1,507
 
 
 
1,094
 
The impairment loss takes into account contingent payables and receivables between Aegon N.V.Ltd. and Aegon the Netherlands that will behave been recognized prior to the closing date. These are included in the carrying amount of Aegon the Netherlands.
 
Amounts in EUR millions
          2022   
Net cash receivable after costs to sell
2,175 
  
Fair value of 29.99% share in a.s.r.
1)
 2,700 
Fair value less costs to sell
4,875 
Carrying amount of Aegon the Netherlands
2)
7,591 
Fair value less costs to sell minus carrying amount
(2,716)
Assets in scope for impairment per December 31, 2022
1,775 
Impairment loss recognized in 2022
1,775 
Impairment to be recognized upon the completion of the sale
941 
1 
Based on the closing price of a.s.r.’s shares on December 31, 2022
2 
The carrying amount of Aegon the Netherlands includes contingent payables and receivables between Aegon NV and Aegon NL that will be recognized prior to the closing date
Cashflow from discontinued operations
The table below shows details on cashflow from discontinued operations.
Amounts in EUR millions 
                2022
                  2021                  2020   
    
Net cash inflow (outflow) from operating activities
  4,646   (167)   (5,614)  
    
Net cash inflow (outflow) from investing activities
  (4)   31   (23)  
    
Net cash inflow (outflow) from financing activities
  (3,275)   (1,835)   1,700   
    
Net cash inflow (outflow) from discontinued operations
 
 
1,367
 
 
 
(1,972
) 
 
 
(3,937) 
 
288  |  Aegon Annual Report on Form 20-F 20222023  |  319 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Financial assets and liabilities in the scope of IFRS 9 “Financial instruments”
The adoption of IFRS 9 “Financial instruments” by Aegon the Netherlands impacted the measurement category and carrying amount of the financial assets and liabilities. The measurement category and the carrying amount of financial assets and liabilities in accordance with IAS 39 and IFRS 9 on January 1, 2023 are detailed in the table below, together with a reconciliation of the carrying amounts of financial assets, from their previous measurement category in accordance with IAS 39 to their new measurement categories upon transition:
Reconciliation of financial
instruments, January 1, 2023
  IAS 39
category		   IAS 39
amount		  
Reclassifi-
cation
  
Remeasurement
- ECL
  
Remeasurement
- Other
  IFRS 9 category
1)
   
IFRS 9
amount
 
Financial assets:
          
Shares   FVPL    8,256   37   -   -   FVPL (designated)    8,293 
Shares   AFS    21   (21)   -   -   FVOCI (designated)    - 
Debt securities   AFS    14,109   (12,225)   -   -   FVOCI    1,884 
Debt securities   FVPL    9,609   12,209   -   -   FVPL (designated)    21,819 
Loans   L&R    35,916   (20,004)   (82)   58   AC    15,888 
Loans   FVPL    -   20,918   -   (1,892)   FVPL (designated)    18,175 
Deposits with financial institutions   L&R    1,527   -   -   -   AC    1,527 
Unconsolidated investment funds   FVPL    631   -   -   -   FVPL (designated)    631 
Other investments   FVPL    3,464   (64)   -   -   FVPL (designated)    3,400 
Other investments   AFS    13   (13)   -   -   FVOCI    - 
Cash and cash equivalents   L&R    3,557   -   -   -   AC    3,557 
Other financial assets and receivables   L&R    1,520   114   -   -   AC    1,634 
Derivatives   FVPL    8,395   -   -   -   FVPL (mandatorily)    8,395 
        
Total
       
 
86,169
 
 
 
103
 
 
 
(82
) 
 
 
(1,853
) 
      
 
84,336
 
Financial liabilities:
          
Investment contracts   AC    (12,179)   -   -   -   AC    (12,179) 
Investment contracts   FVPL    (1,396)   -   -   -   FVPL (designated)    (1,396) 
Long-term borrowings and group loans   AC    (5,227)   -   -   -   AC    (5,227) 
Derivatives   FVPL    (9,239)   753   -   -   FVPL (mandatorily)    (8,486) 
Other liabilities   AC    (1,663)   378   -   -   AC    (1,285) 
        
Total
       
 
(29,704
) 
 
 
1,131
 
 
 
-
 
 
 
-
 
      
 
(28,573
) 
1m: mandatorily; d: designated
From January 1, 2023, EUR 103 million has been reclassified out of financial assets, and EUR 1,131 million has been reclassified out of financial liabilities which moved in scope of IFRS 17 and classified and measured as (re)insurance contracts from January 1, 2022. Remeasurement impacts included the reversal of impairments of financial assets recognized under IAS 39 in amount of EUR 39 million and the recognition of expected credit losses of EUR 82 million in line with the impairment requirements of IFRS 9. An additional remeasurement loss of EUR 1,892 was the result of the designation of loans and receivables in (previously measured at amortized cost) to measurement at fair value through profit or loss.
Cashflow from discontinued operations
Amounts in EUR millions  
     2023
       2022 
Net cash inflow (outflow) from operating activities   (519)   4,646 
Net cash inflow (outflow) from investing activities   (11)   (4) 
Net cash inflow (outflow) from financing activities   (95)    (3,275)  
   
Net cash inflow (outflow) from discontinued operations
  
 
(625
) 
 
 
1,367
 
 320  |  Annual Report on Form 20-F 2023
 
 
Notes to the consolidated financial statements
Note 5145
   
   
 
Held for sale assets and liabilities
The below table shows the assets held for sale and liabilities held for sale as aton July 4, 2023 and December 31, 2022.
 
Amounts in EUR millions
          2022    
Assets
Cash and cash equivalents
5,085
Investments
55,496
Investments for account of policyholders
19,097
Derivatives
8,394
Investments in joint ventures
-
Investments in associates
-
Reinsurance assets
79
Defined benefit assets
-
Deferred tax assets
-
Deferred expenses
212
Other assets and receivables
1,388
Intangible assets
-
Total assets held for sale
89,752
Liabilities
Amounts in EUR millions  
     2023
        2022 
Assets
    
Cash and cash equivalents   4,460    5,085 
Investments   72,345     71,991 
Derivatives   8,107    8,395 
Investments in joint ventures   382    382 
Investments in associates   1,096    1,096 
Reinsurance contract assets   395    365 
Deferred tax assets   339    - 
Other assets and receivables   1,216    1,185 
Intangible assets   165    165 
Total assets held for sale
  
 
88,505
 
  
 
88,664
  
Liabilities
    
Insurance contract liabilities   52,849    52,591 
Investment contracts without discretionary participating features   13,239    13,575 
Derivatives   7,700    8,486 
Borrowings   5,333    5,227 
Provisions   44    52 
Defined benefit liabilities   2,412    2,462 
Deferred tax liabilities   6    62 
Other liabilities   1,951    1,510 
Accruals   294    218 
Total liabilities held for sale / disposal groups
  
 
83,828
 
  
 
84,183
 
Insurance contracts
31,480
Insurance contracts for account of policyholders
19,577
Investment contracts
12,179
Investment contracts for account of policyholders
1,396
Derivatives
9,239
Borrowings
5,227
Provisions
52
Defined benefit liabilities
2,462
Deferred gains
-
Deferred tax liabilities
845
Other liabilities
1,665
Accruals
218
Total liabilities held for sale
84,339
Shareholders’ equity
Included in Group equity is cumulative other comprehensive income of EUR
-1,286 million
relating to assets and liabilities held for sale as at December 31, 2022.
Insurance contracts
  
 Contracts not measured
under the PAA
   
  Contracts measured
under the PAA
         Total 
Portfolios in an asset position   -    -    - 
Portfolios in a liability position   52,215    633    52,849 
    
Net balance, on June 30, 2023
  
 
52,215
 
  
 
633
 
  
 
52,849
  
Portfolios in an asset position   -    -    - 
Portfolios in a liability position   52,037    554    52,591 
    
Net balance, on December 31, 2022
  
 
52,037
 
  
 
554
 
  
 
52,591
 
Assets and liabilities held for sale
The details as per December 31, 2022, on assets and liabilities held for sale are disclosed below. Comparatives related to assets and liabilities held for sale in the consolidated statement of financial position of Aegon N.V. are not represented, in line with IFRS 5 requirements. The comparative amounts and additional qualitative information are included in the corresponding notes of this Annual Report.
Temporary exemption from applying IFRS 9 Financial Instruments
By qualifying for and electing the temporary exemption for IFRS 9, the IFRS 4 amendment requires certain additional disclosures; specifically, Aegon the Netherlands is required to disclose information to enable users of financial statements to compare insurers applying the temporary exemption with entities applying IFRS 9. This information is presented below:
Fair value changes
The table below presents an overview of the fair value of the classes of financial assets as of December 31, 2022, as well as the change in fair value during the reporting period. The asset classes are divided into two categories:
◆
SPPI: assets of which cash flows represent solely payments of principal and interest (SPPI) on an outstanding principal amount, excluding any financial assets that meet the definition of held for trading in IFRS 9, or that are managed and whose performance is evaluated on a fair value basis; and
◆
Other: all financial assets other than those specified in SPPI:
 
   Aegon Annual Report on Form 20-F 20222023  |  289321  
Table of Contents
LOGO		 
About Aegon
Governance and risk management
Financial information
Non-financial  Sustainability information
   
   
   
Remaining coverage
   
 Asset for Incurred claims
     
Insurance contracts PAA - by type
  
Excluding loss
recovery component
  
  Loss recovery
component
   
 Best estimate
liability
  
Risk
 adjustment
    Total 
Opening assets   -   -    -   -   - 
Opening liabilities   15   -    532   7   554 
      
Net balance, on January 1, 2023
  
 
15
 
 
 
-
 
  
 
532
 
 
 
7
 
 
 
554
 
Insurance revenue   (167)   -    -   -   (167) 
Incurred claims and other insurance service expenses   -   -    74   2   75 
Amortization of insurance acquisition cash flows   4   -    -   -   4 
Adjustments to liabilities for incurred claims   -   -    83   -   82 
Insurance service expenses
  
 
4
 
 
 
-
 
  
 
156
 
 
 
2
 
 
 
162
  
Investment components   -   -    -   -   - 
      
Insurance service result
  
 
(163
) 
 
 
-
 
  
 
156
 
 
 
2
 
 
 
(6
) 
Insurance finance (income) / expenses (P&L and OCI)   -   -    7   -   7 
Cash flows   220   -    (143)   -   77 
      
Net balance, on June 30, 2023
  
 
71
 
 
 
-
 
  
 
553
 
 
 
  9
  
 
 
633
 
Closing assets   -   -    -   -   - 
Closing liabilities   71   -    553   9   633 
   Remaining coverage    Asset for Incurred claims     
Insurance contracts PAA - by type
  
Excluding loss
recovery component
  
  Loss recovery
component
   
 Best estimate
liability
  
Risk
 adjustment
    Total 
Opening assets   -   -    -   -   - 
Opening liabilities   16   -    601   10   627  
      
Net balance, on January 1, 2022
  
 
16
 
 
 
-
 
  
 
601
 
 
 
10
 
 
 
627
 
Insurance revenue   (330)   -    -   -   (330) 
Incurred claims and other insurance service expenses   -   -    74   -   74 
Adjustments to liabilities for incurred claims   -   -    235   (3)   233 
Insurance service expenses
  
 
-
 
 
 
-
 
  
 
309
 
 
 
(3
) 
 
 
306
 
Investment components   -   -    -   -   - 
      
Insurance service result
  
 
(330
) 
 
 
-
 
  
 
309
 
 
 
(3
) 
 
 
(24
) 
Insurance finance (income) / expenses (P&L and OCI)   -   -    (110)   -   (110) 
Cash flows   329   -    (268)   -   61 
      
Net balance, on December 31, 2022
  
 
15
 
 
 
-
 
  
 
532
 
 
 
7
 
 
 
554
 
Closing assets   -   -    -   -   - 
Closing liabilities   15   -    532   7   554 
 
 
◆
with contractual terms that do not give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding;
◆
that meet the definition of held for trading in IFRS 9; or
◆
that are managed and whose performance are evaluated on a fair value basis.
 322  |  Annual Report on Form 20-F 2023
       
2022
 
    
Financial assets at fair value
     
Fair value at the end of the
reporting period
  Change in fair value during the
reporting period		 
    
Shares
1)
  SPPI                       -   - 
    
   Other   119   (7) 
    
Debt securities
  SPPI   14,106   (4,098) 
    
   Other   1,413   (166) 
    
Mortgage loans
  SPPI   28,477   (5,163) 
    
   Other   -   - 
    
Private loans
  SPPI   3,931   (1,081) 
    
   Other   38   - 
    
Other financial assets
  SPPI   -   - 
    
   Other   1,368   145 
    
At December 31
     
 
49,452
 
 
 
(10,370
) 
1 
The SPPI-compliant shares include preferred equity instruments.
Cash and cash equivalents, deposits with financial institutions, and receivables all pass the SPPI test and are held at amortized cost, whereby the amortized cost is assumed to approximate fair value due to the short-term nature of the assets.
Credit Risk
The table below details the credit risk rating grades for Aegon the Netherlands, as of December 31, 2022, for financial assets with cash flows that are SPPI, excluding any financial assets that meet the definition of held for trading in IFRS 9, or that are managed and whose performance is evaluated on a fair value basis. The table shows the carrying value of those financial assets applying IAS 39 (in the case of financial assets measured at amortized cost, before adjusting for any impairment allowances).
SPPI compliant financial assets at
carrying value
         AAA          AA          A          BBB          BB          B      CCC or
lower		  Not
Rated		      Total   
          
2022
                                    
          
Debt securities – Carried at fair value
  8,521   2,545   1,387   1,628   26   -   -   -   14,106   
          
Mortgage loans – Carried at amortized cost
  -   -   -   -   -   -   -   31,430   31,430   
          
Private loans – Carried at amortized cost
  2,622   253   195   1,025   3   -   -   349   4,447   
          
At December 31
 
 
11,143
 
 
 
2,797
 
 
 
1,582
 
 
 
2,653
 
 
 
29
 
 
 
-
 
 
 
-
 
 
 
31,779
 
 
 
49,983
 
For assets that do not qualify for the low credit risk exemption (assets rated below BBB or not rated) and of which cash flows represent SPPI, excluding any financial assets that meet the definition of held for trading in IFRS 9, or that are managed and whose performance is evaluated on a fair value basis, the table below provides the credit risk exposure from the financial assets held by Aegon the Netherlands. Mortgage loans with no low credit risk are defined as being more than 90 days past due, in line with regulatory guidelines. The financial assets are categorized by asset class with a carrying amount and fair value measured in accordance with IAS 39 measurement requirements.
   
2022
 
   
SPPI compliant financial assets rated BB or below
 
            Carrying
amount
          Fair value   
   
Debt securities – Carried at fair value
  26   26   
   
Mortgage loans – Carried at amortized cost
  31,430   28,477   
   
Private loans – Carried at amortized cost
  352   337   
   
At December 31
 
 
31,808
 
 
 
28,840  
 
290  |  Aegon Annual Report on Form 20-F 2022
 
 
 
Notes to the consolidated financial statements
Note 5145
   
   
   
Remaining coverage
         
Insurance contracts - by type
  
   Excluding loss
component
    Loss component   Incurred claims  Total 
Opening assets   -   -   -   - 
Opening liabilities   51,983   54   -   52,037 
     
Net balance, on January 1, 2023
  
 
51,983
 
 
 
54
 
 
 
-
 
 
 
      52,037
  
Insurance revenue   (1,232)   -   -   (1,232) 
Incurred claims and other insurance service expenses   -   (2)   1,159   1,156 
Amortization of insurance acquisition cash flows   2   -   -   2 
Losses (and reversal of losses) on onerous contracts   -   7   -   7 
Insurance service expenses
  
 
2
 
 
 
5
 
 
 
1,159
 
 
 
1,166
 
Investment components   (313)   -   313   - 
     
Insurance service result
  
 
(1,543
) 
 
 
5
 
 
 
1,471
 
 
 
(67
) 
Insurance finance (income) / expenses (P&L and OCI)   1,104   (1)   -   1,103 
Cash flows   614   -   (1,471)   (858) 
     
Net balance, on June 30, 2023
  
 
52,158
 
 
 
58
 
 
 
-
 
 
 
52,215
 
Closing assets   -   -   -   - 
Closing liabilities   52,158   58   -   52,215 
   Remaining coverage         
Insurance contracts - by type
  
   Excluding loss
component
    Loss component   Incurred claims  Total 
Opening assets   -   -   -   - 
Opening liabilities   71,041   -   -   71,041 
     
Net balance, on January 1, 2022
  
 
71,041
 
 
 
-
 
 
 
-
 
 
 
      71,041
 
Insurance revenue   (2,577)   -   -   (2,577) 
Incurred claims and other insurance service expenses   -   (4)   2,316   2,311 
Amortization of insurance acquisition cash flows   2   -   -   2 
Losses (and reversal of losses) on onerous contracts   -   84   -   84 
Insurance service expenses
  
 
2
 
 
 
79
 
 
 
2,316
 
 
 
2,397
 
Investment components   (736)   -   736   - 
     
Insurance service result
  
 
(3,312
) 
 
 
79
 
 
 
3,052
 
 
 
(180
) 
Insurance finance (income) / expenses (P&L and OCI)   (16,770)   (26)   -   (16,796) 
Cash flows   1,051   -   (3,052)   (2,001) 
Contracts disposed during the period   (27)   -   -   (27) 
   -   -   -   - 
     
Net balance, on December 31, 2022
  
 
51,983
 
 
 
54
 
 
 
-
 
 
 
52,037
 
Closing assets   -   -   -   - 
Closing liabilities   51,983   54   -   52,037  
 
Financial risks
Credit risk
The table that follows shows Aegon the Netherlands’ maximum exposure to credit risk from investments in general account financial assets, as well as general account derivatives and reinsurance assets, collateral held and net exposure.
 
2022
  
Maximum
exposure
to credit
risk
   Cash   Securities   
Letters
of
credit /
guaran-
tees
   Real
estate
property		   Master
netting
agree-
ments		   Other   
Total
collateral
   Surplus
collateral (or
overcollater-
alization)		   
Net
exposure
 
           
Debt securities - carried at fair value
   15,519    -    -    -    -    -    -    -    -    15,519 
           
Mortgage loans - carried at amortized cost
   31,430    2,590    -    22    60,991    -    -    63,603    32,263    90 
           
Private loans - carried at amortized cost
   4,484    -    -    -    -    -    -    -    -    4,484 
           
Other loans - carried at amortized cost
   3    -    -    -    -    -    -    -    -    3 
           
Other financial assets - carried at fair value
   76    -    -    -    -    -    -    -    -    76 
           
Derivatives
   8,394    -    -    -    -    8,394    -    8,394    -    (0) 
           
Reinsurance assets
   79    -    -    -    -    -    -    -    -    79 
           
At December 31
  
 
59,985
 
  
 
2,590
 
  
 
-
 
  
 
22
 
  
 
60,991
 
  
 
8,394
 
  
 
-
 
  
 
71,997
 
  
 
32,263
 
  
 
20,252
 
Credit rating
The ratings distribution of general account portfolios of Aegon the Netherlands, excluding reinsurance assets, are presented in the table that follows, organized by rating category and split by assets that are valued at fair value and assets that are valued at amortized cost. Aegon the Netherlands uses a composite rating based on a combination of the external ratings of S&P, Moody’s and internal ratings. The rating used is the lower of the external rating and the internal rating.
    The Netherlands 
   
Credit rating general account investments, excluding reinsurance assets 2022
  Amortized cost   Fair value 
   
AAA
   2,623    8,643 
   
AA
   253    9,425   
   
A
   233    3,411 
   
BBB
   1,025    2,327 
   
BB
   3    119 
   
B
   -    33 
   
CCC or lower
   -    1 
   
Assets not rated
   31,552    1,450 
   
Total
  
 
35,688
 
  
 
25,409
 
   
Past due and / or impaired assets
   229    17 
   
At December 31, 2022
  
 
35,917
 
  
 
25,426
 
The following table shows the credit quality of the gross positions in the statement of financial position for general account reinsurance assets specifically:
  
Carrying value
 
AAA
-
AA
22
A
55
Below A
-
Not rated
1
At December 31, 2022
79
Aegon Annual Report on Form 20-F 20222023  |  291323  
Table of Contents
LOGO		 
About Aegon
Governance and risk management
Financial information
Non-financial  Sustainability information
Credit risk concentration
The tables that follow present specific credit risk concentration information for general account financial assets.
Credit risk concentrations – debt securities and money market investments 2022
    The Netherlands    Of which past due and /
or impaired assets
Residential mortgage-backed securities (RMBSs)
65-
Commercial mortgage-backed securities (CMBSs)
2-
Asset-backed securities (ABSs) - CDOs backed by ABS, Corp. bonds, Bank loans
2,714-
Financial - Banking
1,306-
Financial - Other
569-
Capital goods and other industry
276-
Communications & Technology
715-
Consumer cyclical
373-
Consumer
non-cyclical
710-
Energy
26-
Transportation
424-
Utility
232-
Government bonds
8,106-
At December 31, 2022
15,519
-
Credit risk concentrations – Government bonds per country of risk 2022
        The Netherlands
Netherlands
2,671
United Kingdom
3
Austria
347
Belgium
675
Finland
38
France
1,226
Germany
2,412
Indonesia
33
Luxembourg
448
Rest of Europe
70
Rest of world
184
At December 31, 2022
8,106
Credit risk concentrations – Credit rating 2022
1)
  
    Government
bonds
       Corporate bonds   
    RMBSs CMBSs
ABSs
            Other   
    Total
 
       
AAA
   5,900    157    2,520         -    8,577   
       
AA
   1,907    634    228         -    2,769 
       
A
   80    1,688    12         -    1,780 
       
BBB
   194    2,087    22         -    2,302 
       
BB
   26    64    -         -    90 
       
B
   -    -    -         -    - 
       
CCC or lower
   -    1    -         -    1 
       
At December 31, 2022
  
 
8,106
 
  
 
4,631
 
  
 
2,782
 
       
 
-
 
  
 
15,519
 
1
CNLP Ratings are used and are the lower of the Barclay’s Rating and the Internal Rating with the Barclay’s rating being a blended rating of S&P, Fitch, and Moody’s.
Credit risk concentrations – mortgage loans 2022
  The Netherlands   
Of which past due
and / or impaired
assets
 
   
Retail
   6    - 
   
Other commercial
   19    1 
   
Residential
   31,404    154   
   
At December 31, 2022
  
 
31,430
 
  
 
155
 
There are no individual issuers rated below investment grade in the RMBS sector, CMBS sector and ABS sector which have unrealized loss position greater than EUR 25 million.
292  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
Notes to the consolidated financial statements
Note 51
   
   
The fair value of Aegon the Netherlands mortgage loan portfolio as per December 31, 2022, amounted to EUR 28,477 million (2021: EUR 34,198 million). The
Loan-to-Value
amounted to approximately 50% (2021: 56%). The mortgage portfolio is government guaranteed for 39% (2021: 42%). Of the portfolio, 0.1% (2021: 0.1%) is in delinquency (defined as 60 days in arrears). Impairments in 2022 amounted to a net recovery of EUR 1 million (2021: EUR 1 million). During the last ten years defaults of the portfolio have been 5 basis points on average.
Unconsolidated structured entities
For RMBSs, CMBSs and ABSs in which Aegon the Netherlands has an interest at reporting date, the following table presents total income received from those interests. The Investments column reflects the carrying values recognized in the statement of financial position of Aegon the Netherlands interests in RMBSs, CMBSs and ABSs.
    Total income for the year ended December 31, 2022   December 31,
2022		 
      
2022
  Interest
income		   Total gains and
losses on sale of
assets		       
Total
   Investments 
      
Residential mortgage-backed securities
   -    -               1    65 
      
Commercial mortgage-backed securities
   -    -        -    2   
      
Asset-backed securities
   7    (1)        7    2,714 
      
Total
  
 
8
 
  
 
(0
) 
      
 
8
 
  
 
2,782
 
Additional information on credit risk, unrealized losses and impairments
Debt instruments
The amortized cost and fair value of debt securities, money market investments and other, included in Aegon the Netherlands
available-for-sale
(AFS) portfolios, are as follows as of December 31, 2022:
2022
  Amortized
cost		   Unrealized
gains		   Unrealized
losses		  
Total fair
value
   Fair value of
instruments
with
unrealized
gains		   Fair value of
instruments
with
unrealized
losses		 
       
Debt securities, money market instruments and other
                             
       
Dutch government
   2,728    15    (72)   2,671    281    2,390 
       
Other government
   5,297    172    (244)   5,226    1,867    3,359 
       
Mortgage-backed securities
   69    -    (2)   68    9    59 
       
Asset-backed securities
   2,816    1    (102)   2,714    5    2,710 
       
Corporate
   4,100    3    (673)   3,430    60    3,370   
       
Other
   13    -    -   13    13    - 
       
Total
  
 
15,023
 
  
 
191
 
  
 
(1,092
) 
 
 
14,122
 
  
 
2,234
 
  
 
11,888
 
 
Aegon Annual Report on Form 20-F 2022  |  293
Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
Unrealized bond losses by sector
The composition by industry category of Aegon the Netherlands
available-for-sale
(AFS) debt securities, money market investments and other in an unrealized loss position at December 31, 2022, is presented in the following table:
    December 31, 2022 
   
Unrealized losses - debt securities, money market investments and other
  
Carrying value of
    instruments with
unrealized losses
       Unrealized losses 
   
Residential mortgage-backed securities (RMBSs)
   57    (2) 
   
Commercial mortgage-backed securities (CMBSs)
   2    - 
   
Asset-backed securities (ABSs) - CDOs backed by ABS, Corp. bonds, Bank loans
   2,710    (102) 
   
Financial Industry - Banking
   757    (126) 
   
Financial Industry - Insurance
   83    (14) 
   
Financial Industry - Other
   227    (80) 
   
Industrial
   2,183    (425) 
   
Utility
   122    (27) 
   
Government
   5,749    (316) 
   
Total
  
 
11,888
 
  
 
(1,092
) 
Past due and impaired assets
The tables that follow provide information on past due and individually impaired financial assets for Aegon the Netherlands.
         
2022
           
     
Past due but not impaired assets
  
0-6 months
   
6-12 months
   > 1 year   
Total
 
     
Mortgage loans
   145    3    1    149   
     
Other loans
   7    4    61    73 
     
At December 31
  
 
152
 
  
 
7
 
  
 
62
 
  
 
222
 
Impaired financial assets
                                                   Carrying amount 2022
Shares
17
Mortgage loans
6
Other loans
2
At December 31
24
Equity market risk and other investments risk
Equity, real estate and
non-fixed
income exposure
The Netherlands
Equity funds
34
Investments in real estate
2,545
Other alternative investments
349
Other financial assets
1,105
At December 31, 2022
4,032
Market risk concentrations – shares
      The Netherlands   
    Of which impaired
assets
 
   
Financials
   4    - 
   
Funds
   1,406    17   
   
At December 31, 2022
  
 
1,411
 
  
 
17
 
294  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
Notes to the consolidated financial statements
Note 51
Risks and risks management arising from financial instruments subject to interest rate benchmark reform
The table below summarize the exposures of
non-derivative
financial assets and
non-derivative
liabilities of Aegon the Netherlands that yet have to transition to alternative benchmark rates.
2022
Non derivative financial instruments to transition to alternative benchmark
        Financial assets  
non-derivatives  
    Financial liabilities  
non-derivatives  
By benchmark rate
Euribor
3,517  -  
Total
3,517  
-  
   
2022               
   
2021                 
 
Derivative financial instruments to transition to alternative benchmark
              Nominal Value                 Nominal Value   
   
By benchmark rate
          
   
GBP LIBOR
   -      -   
   
USD LIBOR
   963      -   
   
EUR LIBOR
   -      -   
   
Euribor
   119,638      112,599   
   
Fed Funds
   -      -   
   
EONIA
   -      -   
   
Total
  
 
120,601  
 
  
 
112,599
 
Liquidity risk
                                                                                                                                                                   
       
Maturity analysis – gross undiscounted
contractual cash flows (for
non-derivatives)
      On demand   < 1 yr amount   1 < 5 yrs
amount		   5 < 10 yrs
amount		   > 10 yrs
amount		   Total amount 
       
2022
                              
       
Borrowings
   -    1,574    3,321    14    503    5,412 
       
Other financial liabilities
   455    800    129    112    170    1,665 
       
Total financial liabilities (excluding
investment/insurance contracts)
  
 
455
 
  
 
2,375
 
  
 
3,450
 
  
 
126
 
  
 
673
 
  
 
7,078
 
       
Investment contracts
1)
   9,167    617    1,448    731    552    12,517 
       
Investment contracts for account of policyholders
1)
   1,396    -    -    -    -    1,396   
       
Total investment contracts
  
 
10,564
 
  
 
617
 
  
 
1,448
 
  
 
731
 
  
 
552
 
  
 
13,913
 
1 
Excluding investment contracts with discretionary participating features.
The maturity analysis below shows the remaining contractual maturities of each category of financial liabilities (including coupon interest) of Aegon the Netherlands.
To manage the liquidity risk arising from financial liabilities, Aegon the Netherlands holds liquid assets comprising cash and cash equivalents and investment grade investment securities for which there is an active and liquid market. These assets can be readily sold to meet liquidity requirements. For this reason, Aegon the Netherlands believes that it is not necessary to disclose a maturity analysis in respect of these assets to enable users to evaluate the nature and extent of liquidity risk.
                                                                                                                                                                   
       
Financial liabilities relating to insurance and
investment contracts
1)
      On demand   < 1 yr amount   1 < 5 yrs
amount		   5 < 10 yrs
amount		   > 10 yrs
amount		   Total amount 
       
2022
                              
       
Insurance contracts
   -    1,819    6,330    7,411    30,422    45,982 
       
Insurance contracts for account of policyholders
   -    1,227    4,598    5,791    16,253    27,870 
       
Investment contracts
   -    7,476    3,410    1,172    552    12,610 
       
Investment contracts for account of policyholders
   -    1,396    -    -    -    1,396   
       
Total
  
 
-
 
  
 
11,919
 
  
 
14,339
 
  
 
14,373
 
  
 
47,227
 
  
 
87,858
 
1 
The liability amount in the table reflects the discounting for interest as well as adjustments for the timing of other factors as described above. As a result, the sum of the cash benefit payments shown for all years in the table exceeds the corresponding liability amounts included in Insurance contracts and Investments contracts.
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Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
The following table details Aegon the Netherlands liquidity analysis for its derivative financial instruments, based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a net basis, and the undiscounted gross inflows and outflows on those derivatives that require gross settlement.
Maturity analysis relating to derivatives
1)
(Contractual cash flows)
  On demand   < 1 yr amount  1 < 5 yrs
amount		  5 < 10 yrs
amount		  > 10 yrs
amount		  Total amount    
       
2022
                          
       
Gross settled
                          
       
Cash inflows
   -    2,449   9,757   10,618   20,748   43,572 
       
Cash outflows
   -    (2,422)   (10,107)   (11,167)   (20,613)   (44,309) 
       
Net settled
                          
       
Cash inflows
   -    -   -   -   -   - 
       
Cash outflows
   -    -   -   -   -   - 
1 
Derivatives includes all financial derivatives regardless whether they have a positive or a negative value. It does not include bifurcated embedded derivatives. These are presented together with the host contract. For interest rate derivatives only, cash flows related to the pay leg are taken into account for determining the gross undiscounted cash flows.
Income tax
The income tax of Aegon the Netherlands is calculated against the enacted applicable tax rate and includes a
one-time
tax charge of EUR 454 million related to the anticipated settlement of a tax position in connection with the transaction with a.s.r.
Fair value
    
   Carrying amount
June 30, 2023
   
 Total estimated fair value
June 30, 2023
 
Assets
    
Mortgage loans - held at amortized cost   15,849    13,544 
Private loans - held at amortized cost   389    393 
Other loans - held at amortized cost   12    12  
Liabilities
    
Borrowings – held at amortized cost   5,333    5,059 
Investment contracts - held at amortized cost   11,736    11,448 
    
Carrying amount
   December 31, 2022
   
 Total estimated fair value
December 31, 2022
 
Assets
    
Mortgage loans - held at amortized cost   15,385    13,000 
Private loans - held at amortized cost   500    446 
Other loans - held at amortized cost   3    3 
Liabilities
    
Borrowings – held at amortized cost   5,227    4,920 
Investment contracts - held at amortized cost   12,179    11,826 
Financial assets carried at fair value
  
On January 1,
2023
   
Total gains /
losses in
income
statement
   Purchases   Sales  
On June 30,
2023
   
Total unrealized
 gains and losses
for the period
recorded in the
P&L for instru-
ments held on
June 30, 2023
 
FVPL
          
Shares   1,378    (17)   190    (120)   1,431    (17) 
Debt securities   98    1   -    (45)   53    1 
Loans   18,175    26   965    (617)   18,549    26  
Investments where the policyholder bears the risk   932    2   157    (451)   639    2 
       
   
 
20,583
 
  
 
11
 
 
 
1,312
 
  
 
    (1,234
) 
 
 
20,672
 
  
 
11
 
       
Total financial assets measured at fair value
  
 
20,583
 
  
 
11
 
 
 
1,312
 
  
 
(1,234
) 
 
 
20,672
 
  
 
11
 
Financial liabilities carried at fair value
          
Investment contracts without DPF where the policyholder bears the risk   105    -   3    (19)   90    - 
Derivatives   1    (1)   -    -   -    (1) 
       
   
 
106
 
  
 
-
 
 
 
3
 
  
 
(19
) 
 
 
90
 
  
 
-
 
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Cash and cash equivalentsTable of Contents
Cash
Notes to the consolidated financial statements
Note 45
Financial assets carried at
fair value
  
On January
1, 2022
  
Total gains /
losses in
income
statement
  Purchases  Sales  
Transfers
from
levels I
and II
   
Transfers
to levels I
and II
  
On
December
31, 2022
   
Total unrealized
gains and losses for
the period recorded
in the P&L for
instruments held on
December 31, 2022
 
FVPL
           
Shares   1,364   175   190   (350)   -    -   1,378    123   
Debt securities   196   -   44   (3)   -    (140)   98    (7)  
Loans   22,727   (4,529)   1,802   (1,825)   -    -   18,175    (4,529)  
Investments where the policyholder bears the risk   572   (62)   (562)   982   2    -   932    (53)  
         
   
 
24,859
 
 
 
(4,415
) 
 
 
1,473
 
 
 
(1,196
) 
 
 
2
 
  
 
(140
) 
 
 
20,583
 
  
 
(4,466
)  
         
Total financial assets measured at fair value
  
 
24,859
 
 
 
(4,415
) 
 
 
1,473
 
 
 
(1,196
) 
 
 
2
 
  
 
(140
) 
 
 
20,583
 
  
 
(4,466
)  
Financial liabilities carried at fair value
              
Investment contracts without DPF where the policyholder bears the risk   (33)   (23)   (559)   721   1    -   105    (18)  
Derivatives   3   (2)   -   -   -    -   1    (2)  
         
Total financial liabilities measured at fair value
  
 
(31
) 
 
 
(25
) 
 
 
(559
) 
 
 
721
 
 
 
1
 
  
 
-
 
 
 
106
 
  
 
(19
)  
45.2 Aegon UK
On April 04, 2023, Aegon announced the sale of its UK individual protection book to Royal London. Under the terms of the agreement, Aegon UK will initially reinsure the portfolio to Royal London, followed by a Part VII transfer of the legal ownership of the individual protection book in 2024. The transfer is subject to court approval. Up to the close of the sale, the UK individual protection book is classified as held for sale.
As at 31 December 2023 the held for sale assets amount to EUR 432 million and cash equivalentsconsist of reinsurance contract assets. The held for sale liabilities as at 31 December 2023 amount to EUR 389 million and consist of insurance-, and reinsurance contract liabilities.
46 Comparative information 2021
The 2022 comparatives in this 2023 Annual Report on Form
20-F
have been restated due to the initial application of IFRS 9 and IFRS 17. The 2021 comparatives have not been restated for IFRS 9 and IFRS 17 (refer to note 2.1.2. Effects of initial adoption of IFRS 9 and IFRS 17). As IFRS 17 requires to restate one year of comparative information and the Annual Report on Form
20-F
requires for certain disclosure to disclose two years of comparative information, this note includes applicable 2021 disclosures based on IFRS 4 and IAS 39.
Notes to the consolidated financial statements
46.1 Material accounting policy information
46.1.1 Basis of presentation
Aegon prepares its consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS) and with Part 9 of Book 2 of the Netherlands Civil Code for purposes of reporting with the U.S. Securities and Exchange Commission (‘SEC’), including financial information contained in this Annual Report on Form
20-F.
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A reconcilliation between IFRS and
EU-IFRS
is included in the table below.
   Shareholders’ equity  Net result 
         2021        2021 
In accordance with IFRS
  
 
23,813
 
 
 
2,029
   
Adjustment of EU ‘IAS 39’
carve-out
   632   (422)  
Tax effect of the adjustment   (163)   93   
Effect of the adjustment after tax
  
 
469
 
 
 
(328
)  
   
In accordance with
EU-IFRS
  
 
24,282
 
 
 
1,701
   
46.1.2 Basis of consolidation
Subsidiaries
The consolidated financial statements include cashthe financial statements of Aegon Ltd. and demand balancesits subsidiaries. Subsidiaries (including consolidated structured entities) are entities over which Aegon has control. Aegon controls an entity when Aegon is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The assessment of control is based on the substance of the relationship between the Group and the entity and, among other things, considers existing and potential voting rights that are substantive. For a right to be substantive, the holder must have the practical ability to exercise that right.
The subsidiary’s assets, liabilities and contingent liabilities are measured at fair value on the acquisition date and are subsequently accounted for in accordance with the Group’s accounting policies, which is consistent with IFRS. Intra-group transactions, including Aegon Ltd. shares held by subsidiaries, which are recognized as treasury shares in equity, are eliminated.
Intra-group losses may indicate an impairment that requires recognition in the consolidated financial statements. Noncontrolling interests are initially stated at their share in the fair value of the net assets on the acquisition date and subsequently adjusted for the
non-controlling
share in changes in the subsidiary’s equity.
The excess of the consideration paid to acquire the interest and the fair value of any interest already owned, over the Group’s share in the net fair value of assets, liabilities and contingent liabilities acquired is recognized as goodwill. Negative goodwill is recognized directly in the income statement. If the fair value of the assets, liabilities and contingent liabilities acquired in the business combination has been determined provisionally, adjustments to these values resulting from the emergence of new evidence within 12 months after the acquisition date are made against goodwill. Aegon recognized contingent considerations either as provision or as financial liability depending on the characteristics. Any contingent consideration payable is recognized at fair value at the Dutch Central Bank. acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognized in the income statement.
The Dutch Central Bank requiresidentifiable assets, liabilities and contingent liabilities are stated at fair value when control is obtained.
Subsidiaries are deconsolidated when control ceases to exist. Any difference between the net proceeds plus the fair value of any retained interest and the carrying amount of the subsidiary including
non-controlling
interests is recognized in the income statement.
Transactions with
non-controlling
interests
Transactions with
non-controlling
interests are accounted for as transactions with owners. Therefore, disposals to noncontrolling interests and acquisitions from
non-controlling
interests, not resulting in losing or gaining control of the subsidiary are recorded in equity. Any difference between consideration paid or received and the proportionate share in net assets is accounted for in equity attributable to shareholders of Aegon Bank N.V.Ltd.
Investment funds
Investment funds managed by the Group in which the Group holds an interest are consolidated in the financial statements if the Group has power over that investment fund and it is exposed, or has rights, to place 1% of their deposits with agreed maturity or the savings accounts (without restrictions to withdraw their money) in an accountvariable returns from its involvement with the Dutch Central Bank. These deposits are not freely available. This
so-called
minimum reserve is renewed each maintenance period consisting of approximately six weeks. At
year-end
2022,investee and has the interest of 2.5% is received on this minimum reserve (2021: No interest was paid on this minimum reserve). The
year-end
minimum required balance on depositability to affect those returns through its power over the investee. In assessing control, all interests held by the Dutch Central Bank was EUR 82 million (2021: EUR 74 million, 2020: EUR 84 million)Group in the fund are considered, regardless of whether the financial risk related to the investment is borne by the Group or by the policyholders (unless a direct link between the policyholder and the fund can be assumed).
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Insurance
Notes to the consolidated financial statements
Note 46
In determining whether Aegon has power over an investment fund all facts and circumstances are considered, including the following:
∎
Control structure of the asset manager (i.e. whether an Aegon subsidiary);
∎
The investment constraints posed by investment mandate;
∎
Legal rights held by the policyholder to the separate assets in the investment vehicle (e.g. policyholders could have the voting rights related to these investments);
∎
The governance structure, such as an independent Board of Directors, representing the policyholders, which has substantive rights (e.g. to elect or remove the asset manager); and
∎
Rights held by other parties (e.g. voting rights of policyholders that are substantive or not).
Exposure or rights to variability of returns can be the result of, for example:
∎
General account investment of Aegon;
∎
Aegon’s investments held for policyholder;
∎
Guarantees provided by Aegon on return of policyholders in specific investment vehicles;
∎
Fees dependent on fund value (including, but not limited to, asset management fees); and
∎
Fees dependent on performance of the fund (including, but not limited to, performance fees).
Investment funds where Aegon acts as an agent are not consolidated due to lack of control of the funds. In particular, for some separate accounts, the independent Board of Directors has substantive rights and therefore Aegon does not have power over these separate accounts but acts as an agent.
For limited partnerships, the assessment takes into account Aegon’s legal position (i.e. limited partner or general partner) and any substantive removal rights held by other parties. Professional judgment is applied concerning the substantiveness of the removal rights and the magnitude of the exposure to variable returns, leading to the conclusion that Aegon controls some, but not all, of the limited partnerships in which it participates.
Upon consolidation of an investment fund, a liability is recognized to the extent that the Group is legally obliged to buy back participations held by third parties. The liability is presented in the consolidated financial statements as investment contracts for account of policyholders. Where no repurchase obligation exists, the participations held by third parties are presented as
non-controlling
interests in equity. The assets allocated to participations held by third parties or by the Group on behalf of policyholders are presented in the consolidated financial statements as investments for account of policyholders.
Equity instruments issued by the Group that are held by investment funds are eliminated on consolidation. However, the elimination is reflected in equity and not in the measurement of the related financial liabilities towards policyholders or other third parties.
Structured entities
A structured entity is defined in IFRS 12 as “An entity that has been designed so that voting rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements.” In these instances the tests and indicators to assess control provided by IFRS 10 have more focus on the purpose and design of the investee (with relation to the relevant activities that most significantly affect the structured entity) and the exposure to variable returns, which for structured entities lies in interests through e.g. derivatives, and will not be focused on entities that are controlled by voting rights.
Structured entities that are consolidated include certain mortgage backed securitization deals, where Aegon was involved in the design of the structured entities and also has the ability to use its power to affect the amount of the investee’s returns. Other factors that contribute to the conclusion that consolidation of these entities is required includes consideration of whether Aegon fully services the investees and can therefore influence the defaults of the mortgage portfolios and the fact that in these cases the majority of risks are maintained by Aegon.
Structured entities that are not consolidated include general account investments in
non-affiliated
structured entities that are used for investment purposes.
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Non-current
assets held for sale and disposal groups
Disposal groups are classified as held for sale if they are available for immediate sale in their present condition, subject only to the customary sales terms of such assets and disposal groups and their sale is considered highly probable. Management must be committed to the sale, which is expected to occur within one year from the date of classification as held for sale.
Upon classification as held for sale, the carrying amount of the disposal group (or group of assets) is compared to their fair value less cost to sell. If the fair value less cost to sell is lower than the carrying value, this expected loss is recognized through a reduction of the carrying value of any goodwill related to the disposal group or the carrying value of certain other
non-current,
non-financial
assets to the extent that the carrying value of those assets exceeds their fair value. Any excess of the expected loss over the reduction of the carrying amount of these relevant assets is not recognized upon classification as held for sale, but is recognized as part of the result on disposal if and when a divestment transaction occurs.
Classification into or out of held for sale does not result in restating comparative amounts in the statement of financial position.
Discontinued operations
To qualify as a discontinued operation, Aegon requires a disposal group to be presented as a separate line of business or geographical segment. When Aegon classifies its component comprising of a cash generating unit or multiple cash generating units as a disposal group, it presents the performance of this component as discontinued operation in the statement of comprehensive income and makes separate disclosures with the analysis of the net result from discontinued operations, and cash-flow information. Aegon
re-presents
comparative information in the statement of comprehensive income and disclosures to reflect the prior years’ net result attributable to the operations discontinued until the end of the latest period.
46.1.3 Foreign exchange translation
a. Translation of foreign currency transactions
The Group’s consolidated financial statements are presented in euros. Items included in the financial statements of individual group companies are recorded in their respective functional currency which is the currency of the primary economic environment in which each entity operates. Transactions in foreign currencies are initially recorded at the exchange rate prevailing at the date of the transaction.
At the reporting date, monetary assets and monetary liabilities in foreign currencies are translated to the functional currency at the closing rate of exchange prevailing on that date, except for own equity instruments in foreign currencies which are translated using historical exchange rates.
Non-monetary
items carried at cost are translated using the exchange rate at the date of the transaction, while assets carried at fair value are translated at the exchange rate when the fair value was determined.
Exchange differences on monetary items are recognized in the income statement when they arise, except when they are deferred in other comprehensive income as a result of a qualifying cash flow or net investment hedge. Exchange differences on
non-monetary
items carried at fair value are recognized in other comprehensive income or the income statement, consistently with other gains and losses on these items.
b. Translation of foreign currency operations
On consolidation, the financial statements of group entities with a foreign functional currency are translated to euro, the currency in which the consolidated financial statements are presented. Assets and liabilities are translated 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. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are translated at the closing rates on the reporting date.
The resulting exchange differences are recognized in the ‘foreign currency translation reserve’, which is part of shareholders’ equity. On disposal of a foreign entity the related cumulative exchange differences included in the reserve are recognized in the income statement.
46.1.4 Segment reporting
Reporting segments and segment measures are explained and disclosed in note 46.3 Segment information.
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At December 31, 2022,
Notes to the consolidated financial statements
Note 46
46.1.5 Offsetting of assets and liabilities
Financial assets and liabilities are offset in the statement of financial position when the Group has a legally enforceable right to offset and has the intention to settle the asset and liability adequacy test (LAT) of Aegon the Netherlands resulted inon a net LAT deficitbasis or simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of EUR 171 million, compared to a net LAT deficitbusiness and in the event of EUR 2.243 million at December 31, 2021. The reductiondefault, insolvency or bankruptcy of the Company or the counterpart.
46.1.6 Intangible assets
a. Goodwill
Goodwill is recognized as an intangible asset for interests in subsidiaries and is measured as the positive difference between the acquisition cost and the Group’s interest in the net LAT deficitfair value of the entity’s identifiable assets, liabilities and contingent liabilities. Subsequently, goodwill is carried at cost less accumulated impairment charges. It is derecognized when the interest in the subsidiary is disposed.
b. Value of business acquired
When a portfolio of insurance contracts is acquired, whether directly from another insurance company or as part of a business combination, the difference between the fair value and the carrying amount of the insurance liabilities is recognized as value of business acquired (VOBA). The Group also recognizes VOBA when it acquires a portfolio of investment contracts with discretionary participation features.
VOBA is amortized over the useful life of the acquired contracts, based on either the expected future premiums, revenues or the expected gross profit margins. The amortization period and pattern are reviewed at each reporting date; any change in estimates is recorded in the income statement. For all products, VOBA, in conjunction with deferred policy acquisition costs (DPAC) where appropriate, is assessed for recoverability using aggregation levels on a geographical jurisdiction basis or at the level of portfolio of contracts that are subject to broadly similar risks and managed together as a single portfolio.
The improvementportion determined not to be recoverable is charged to the income statement. VOBA is considered in the liability adequacy test for each reporting period, for more details refer to 46.1.19.f Liability adequacy testing.
When unrealized gains or losses arise on
available-for-sale
assets backing the insurance liabilities, VOBA is adjusted to equal the effect that the realization of the net LAT deficitgains or losses (through a sale or impairment) would have had on VOBA. The adjustment is drivenrecognized in other comprehensive income and accumulated in the related revaluation reserve in shareholders’ equity. VOBA is derecognized when the related contracts are settled or disposed.
c. Future servicing rights
On the acquisition of a portfolio of investment contracts without discretionary participation features under which Aegon will render investment management services, the present value of future servicing rights is recognized as an intangible asset. Future servicing rights can also be recognized on the sale of a loan portfolio or the acquisition of insurance agency activities.
The present value of the future servicing rights is amortized over the servicing period and is subject to impairment testing. It is derecognized when the related contracts are settled or disposed.
Where applicable, Aegon recognizes other intangibles on the acquisition of a business combination such as those related to customer relationships. This can include customer contracts, distribution agreements and client portfolios. For these intangibles the present value of future cash flows are recognized and amortized in the period when future economic benefits arise from these intangibles. These intangible assets are also presented under future servicing rights.
d. Software and other intangible assets
Software and other intangible assets are recognized to the extent that the assets can be identified, are controlled by market movements, mainly by increased interest ratesthe Group, are expected to provide future economic benefits and widening credit spreads. This was partly offset by unfavorable modelcan be measured reliably. The Group does not recognize internally generated intangible assets arising from research or internally generated goodwill, brands, customer lists and assumptions updates.similar items.
Software and other intangible assets are carried at cost less accumulated depreciation and impairment losses. Depreciation of the asset is over its useful life as the future economic benefits emerge and is recognized in the income statement as an expense. The depreciation period and pattern are reviewed at each reporting date, with any changes recognized in the income statement.
As
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An intangible asset is derecognized when it is disposed of or when no future economic benefits are expected from its use or disposal.
46.1.7 Investments
General account investments comprise financial assets, excluding derivatives, as well as investments in real estate.
a. Financial assets, excluding derivatives
Financial assets are recognized at trade date (except for Private placements that are recognized at settlement date) when the Group becomes a resultparty to the contractual provisions of the instruments. All financial assets are classified for accounting purposes depending on the characteristics of the instruments and the purpose for which they were purchased.
Classification
The following financial assets are measured at fair value through profit or loss: financial assets held for trading, financial assets managed on a fair value basis in accordance with the Group’s investment strategy and financial assets containing an embedded derivative that is not closely related and that cannot be reliably bifurcated. In addition, in certain instances the Group designates financial assets to this category when by doing so a potential accounting mismatch in the financial statements is eliminated or significantly reduced.
Financial assets with fixed or determinable payments, that are not quoted in an active market and that the Group does not intend to sell in the near future are classified as loans. Those for which the holder may not recover substantially all of its initial investment, other than because of credit deterioration, are accounted for as
available-for-sale.
All remaining
non-derivative
financial assets are classified as
available-for-sale.
Measurement
Financial assets are initially recognized at fair value plus, in the case of a financial asset not at fair value through profit or loss, any directly attributable incremental transaction costs.
Loans and financial assets
held-to-maturity
are subsequently carried at amortized cost using the effective interest rate method. Financial assets at fair value through profit or loss are measured at fair value with all changes in fair value recognized in the income statement as incurred.
Available-for-sale
assets are recorded at fair value with unrealized changes in fair value recognized in other comprehensive income. Financial assets that are designated as hedged items are measured in accordance with the requirements for hedge accounting.
Amortized cost
The amortized cost of a debt instrument is the amount at which it is measured at initial recognition minus principal repayments, plus or minus the cumulative amortization of any difference between the initial amount and the maturity amount, and minus any reduction for impairment. The effective interest rate method is a method of calculating the amortized cost and of allocating the interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the debt instrument or, when appropriate, a shorter period to the net carrying amount of the instrument. When calculating the effective interest rate, all contractual terms are considered. Possible future credit losses are not taken into account. Charges and interest paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts are included in the calculation.
Fair value
The consolidated financial statements provide information on the fair value of all financial assets, including those carried at amortized cost where the values are provided in the notes to the financial statements. Fair value is defined as the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current deficit,market conditions (i.e. an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability). For quoted financial assets for which there is an active market, the fair value is the bid price at the reporting date. In the absence of an active market, fair value is estimated by using present value based or other valuation techniques. Where discounting techniques are applied, the discount rate is based on current market rates applicable to financial instruments with similar characteristics. The valuation techniques that include unobservable inputs can result in a different outcome than the actual transaction price at which the asset was acquired. Such differences are not recognized in the income statement immediately but are deferred. They are released
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Notes to the consolidated financial statements
Note 46
over time to the income statement in line with the change in factors (including time) that market participants would consider in setting a price for the asset. Interest accrued to date is not included in the fair value of the financial asset.
Derecognition
A financial asset is derecognized when the contractual rights to the asset’s cash flows expire or when the Group retains the right to receive cash flows from the asset but has an obligation to pay any received cash flows in full without delay to a third party and either: has transferred the asset and substantially all the risks and rewards of ownership, or has neither transferred nor retained all the risks and rewards but has transferred control of the asset. Financial assets of which the Group has neither transferred nor retained significantly all the risk and rewards and retained control are recognized to the extent of the Group’s continuing involvement. If significantly all risks are retained, the assets are not derecognized.
On derecognition, the difference between the disposal proceeds and the carrying amount is recognized in the income statement as a realized gain or loss. Any cumulative unrealized gain or loss previously recognized in the revaluation reserve in shareholders’ equity is also recognized in the income statement.
Security lending and repurchase agreements
Financial assets that are lent to a third party or that are transferred subject to a repurchase agreement at a fixed price are not derecognized as the Group retains substantially all the risks and rewards of the asset. A liability is recognized for cash (collateral) received, on which interest is accrued.
A security that has been received under a borrowing or reverse repurchase agreement is not recognized as an asset. A receivable is recognized for any related cash (collateral) paid by Aegon. The difference between sale and repurchase price is treated as investment income. If the Group subsequently sells that security, a liability to repurchase the asset is recognized and initially measured at fair value.
Collateral
With the exception of cash collateral, assets received as collateral are not separately recognized as an asset until the financial asset they secure defaults. When cash collateral is recognized, a liability is recorded for the same amount.
b. Real estate
Investments in real estate include property held to earn rentals or for capital appreciation, or both. Investments in real estate are presented as ‘Investments’. Property that is occupied by the Group and that is not intended to be sold in the near future is classified as real estate held for own use and is presented in ‘Other assets and receivables’.
All property is initially recognized at cost. Such cost includes the cost of replacing part of the real estate and borrowing cost for long-term construction projects if recognition criteria are met. Subsequently, investments in real estate are measured at fair value with the changes in fair value recognized in the income statement. Real estate held for own use is carried at its revalued amount, which is the fair value at the date of revaluation less subsequent accumulated depreciation and impairment losses. Depreciation is calculated on a straight line basis over the useful life of a building. Land is not depreciated. Revaluation of real estate for own use is recognized in other comprehensive income and accumulated in revaluation reserve in equity. On revaluation the accumulated depreciation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount.
On disposal of an asset, the difference between the net proceeds received and the carrying amount is recognized in the income statement. Any remaining surplus attributable to real estate in own use in the revaluation reserve is transferred to retained earnings.
Maintenance costs and other subsequent expenditure
Expenditure incurred after initial recognition of the asset is capitalized to the extent that the level of future economic benefits of the asset is increased. Costs that restore or maintain the level of future economic benefits are recognized in the income statement as incurred.
46.1.8 Investments for account of policyholders
Investments held for account of policyholders consist of investments in financial assets as well as investments in real estate. Investment return on these assets is passed on to the policyholder. Also included are the assets held by consolidated
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investment funds that are backing liabilities towards third parties. Investments for account of policyholders are valued at fair value through profit or loss.
46.1.9 Derivatives
a. Definition
Derivatives are financial instruments of which the value changes in response to an underlying variable, that often require little or no net initial investment and are settled at a future date.
Assets and liabilities may include derivative-like terms and conditions. With the exception of features embedded in contracts held at fair value through profit or loss, embedded derivatives that are not considered closely related to the host contract are bifurcated, carried at fair value and presented as derivatives. In assessing whether a derivative-like feature is closely related to the contract in which it is embedded, the Group considers the similarity of the characteristics of the embedded derivative and the host contract. Embedded derivatives that transfer significant insurance risk are accounted for as insurance contracts.
Derivatives with positive values are reported as assets and derivatives with negative values are reported as liabilities. Derivatives for which the contractual obligation can only be settled by exchanging a fixed amount of cash for a fixed amount of Aegon Ltd. equity instruments are accounted for in shareholders’ equity.
b. Measurement
All derivatives recognized on the statement of financial position are carried at fair value.
The fair value is calculated net of the interest accrued to date and is based on market prices, when available. When market prices are not available, other valuation techniques, such as option pricing or stochastic modeling, are applied. The valuation techniques incorporate all factors that market participants would consider and are based on observable market data, to the extent possible.
c. Hedge accounting
As part of its asset liability management, the Group enters into economic hedges to limit its risk exposure. These transactions are assessed to determine whether hedge accounting can and should be applied.
To qualify for hedge accounting, the hedge relationship is designated and formally documented at inception, detailing the particular risk management objective and strategy for the hedge (which includes the item and risk that is being hedged), the derivative that is being used and how hedge effectiveness is being assessed. A derivative has to be highly effective in accomplishing the objective of offsetting either changes in fair value or cash flows for the risk being hedged. The effectiveness of the hedging relationship is evaluated on a prospective and retrospective basis using qualitative and quantitative measures of correlation. Qualitative methods may include comparison of critical terms of the derivative to the hedged item. Quantitative methods include a comparison of the changes in the LATfair value or discounted cash flow of Aegon the Netherlands, triggered by up or down movements inhedging instrument to the hedged item. A hedging relationship is considered highly effective if the results of the hedging instrument are within a ratio of 80% to 125% of the results of the hedged item.
Following the financial crisis, the reform and replacement of benchmark interest rates such as LIBOR and credit spreads,other interbank offered rates (‘IBORs’) has become a priority for global regulators. There is currently uncertainty around the timing and precise nature of these changes, in light of which the following assumptions have been made with respect to hedge accounting:
∎
When considering the ‘highly probable’ requirement, it is assumed that the current benchmark interest rate on which the hedged positions is based will not change as a result of IBOR reform.
∎
In assessing whether the hedge is expected to be ‘highly effective’ on a forward-looking basis, it is assumed that the current benchmark interest rate on which the cash flows of the hedged item and the derivative that hedges it are based is not altered as a result of the IBOR reform.
∎
Hedge accounting is not discontinued during the period of IBOR-related uncertainty solely because the retrospective effectiveness falls outside the required
80-125%
range.
∎
The cash flows hedge reserve relating to the period after the IBOR reform is expected to take effect, is not recycled solely because cash flows are expected to change.
When the uncertainty arising from IBOR reform is no longer present with respect to the hedged risk or the timing and the amount of interest rate benchmark-based cash flows of the hedged item or of the hedging instrument, the hedge
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Notes to the consolidated financial statements
Note 46
documentation is amended to reflect the changes required by IBOR reform (i.e. a change results directly from IBOR reform and occurs on an economically equivalent basis). For this purpose, the hedge designation is amended only to make one or more of the following changes:
∎
designating an alternative benchmark rate as the hedged risk;
∎
amending the description of the hedged item, including the description of the designated portion of the cash flows or fair value being hedged;
∎
amending the description of the hedging instrument; or
∎
amending the description of the method for assessing hedge effectiveness.
Amending the formal designation of a hedging relationship to reflect the changes required by IBOR reform constitutes neither the discontinuation of the hedging relationship nor the designation of a new hedging relationship.
For hedge accounting purposes, a distinction is made between fair value hedges, cash flow hedges and hedges of a net investment in a foreign operation.
Fair value hedges
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in the profit and loss account, together with fair value adjustments to the hedged item attributable to the hedged risk. If the hedge relationship no longer meets the criteria for hedge accounting, the cumulative adjustment of the hedged item is, in the case of interest bearing instruments, amortized through the profit and loss account over the remaining term of the original hedge or recognized directly when the hedged item is derecognized.
Cash flow hedges
Cash flow hedges are hedges of the exposure to variability in cash flows that is attributable to a particular risk of a forecasted transaction or a recognized asset or liability and could affect profit or loss. To the extent that the hedge is effective, the change in the fair value of the derivative is recognized in the related revaluation reserve in shareholders’ equity. Any ineffectiveness is recognized directly in the income statement. The amount recorded in shareholders’ equity is released to the income statement to coincide with the hedged transaction, except when the hedged transaction is an acquisition of a
non-financial
asset or liability. In this case, the amount in shareholders’ equity is included in the initial cost of the asset or liability.
Net investment hedges
Net investment hedges are hedges of currency exposures on a net investment in a foreign operation. To the extent that the hedge is effective, the change in the fair value of the hedging instrument is recognized in the net foreign investment hedging reserve in shareholders’ equity. Any ineffectiveness is recognized in the income statement. The amount in shareholders’ equity is released to the income statement when the foreign operation is disposed of.
Hedge accounting is discontinued prospectively for hedges that are no longer considered effective. When hedge accounting is discontinued for a fair value hedge, the derivative continues to be carried on the statement of financial position with changes in its fair value recognized in the income statement. When hedge accounting is discontinued for a cash flow hedge because the cash flow is no longer expected to occur, the accumulated gain or loss in shareholders’ equity is recognized immediately in the income statement. In other situations where hedge accounting is discontinued for a cash flow hedge, including those where the derivative is sold, terminated or exercised, accumulated gains or losses in shareholders’ equity are amortized into the income statement when the income statement is impacted by the variability of the cash flow from the hedged item.
46.1.10 Investments in joint arrangements
In general, joint arrangements are contractual agreements whereby the Group undertakes, with other parties, an economic activity that is subject to joint control. Joint control exists when it is contractually agreed to share control over an economic activity. Joint control exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations each investor has rather than the legal structure of the joint arrangement. Aegon has assessed the nature of its joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method.
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Under the equity method of accounting, interests in joint ventures are initially recognized at cost, which includes positive goodwill arising on acquisition. Negative goodwill is recognized in the income statement on the acquisition date. If joint ventures are obtained in successive share purchases, each significant transaction is accounted for separately.
The carrying amount is subsequently adjusted to reflect the change in the Group’s share in the net assets of the joint venture and is subject to impairment testing. The net assets are determined based on the Group’s accounting policies. Any gains and losses recorded in other comprehensive income by the joint venture are recognized in other comprehensive income and reflected in other reserves in shareholders’ equity, while the share in the joint ventures net result is less sensitiverecognized as a separate line item in the consolidated income statement. The Group’s share in losses is recognized until the investment in the joint ventures’ equity and any other long-term interest that are part of the net investment are reduced to nil, unless guarantees exist.
Gains and losses on transactions between the Group and the joint ventures are eliminated to the extent of the Group’s interest rate movementsin the entity, with the exception of losses that are evidence of impairment which are recognized immediately. Own equity instruments of Aegon Ltd. that are held by the joint venture are not eliminated.
On disposal of an interest in a joint venture, the difference between the net proceeds and the carrying amount is recognized in the income statement and gains and losses previously recorded directly in the revaluation reserve are reversed and recorded through the income statement.
46.1.11 Investments in associates
Entities over which the Group has significant influence through power to participate in financial and operating policy decisions, but which do not meet the definition of a subsidiary, are accounted for using the equity method. Interests held by venture capital entities, mutual funds and investment funds that qualify as an associate are accounted for as an investment held at fair value through profit or loss. Interests held by the results from interest rate hedgingGroup in venture capital entities, mutual funds and investment funds that are managed on a fair value basis, are also accounted for as investments held at fair value through profit or loss.
Interests in associates are initially recognized at cost, which includes positive goodwill arising on acquisition. Negative goodwill is recognized in the income statement on the acquisition date. If associates are obtained in successive share purchases, each significant transaction is accounted for separately.
The carrying amount is subsequently adjusted to reflect the change in the Group’s share in the net result. Furthermore,assets of the impact from increasingassociate and is subject to impairment testing. The net assets are determined based on the Group’s accounting policies. Any gains and losses recorded in other comprehensive income by the associate are reflected in other reserves in shareholders’ equity, while the share in the associate’s net result is recognized as a separate line item in the consolidated income statement. The Group’s share in losses is recognized until the investment in the associate’s equity and any other long-term interest rates or tightening credit spreadsthat are part of the net investment are reduced to nil, unless guarantees exist.
Gains and losses on result before tax is cappedtransactions between the Group and the associate are eliminated to the extent of the Group’s interest in the entity, with the exception of losses that are evidence of impairment which are recognized immediately. Own equity instruments of Aegon Ltd. that are held by the associate are not eliminated.
On disposal of an interest in an associate, the difference between the net LAT deficit position.proceeds and the carrying amount is recognized in the income statement and gains and losses previously recorded directly in the revaluation reserve are reversed and recorded through the income statement.
46.1.12 Reinsurance assets
Reinsurance contracts are contracts entered into by the Group in order to receive compensation for claims/benefits incurred on contracts written by the Group (outgoing reinsurance). Reinsurance assets are also held as part of exiting the business. For contracts transferring sufficient insurance risk, a reinsurance asset is recognized for the expected future benefits, less expected future reinsurance premiums. Reinsurance contracts with insufficient insurance risk transfer are accounted for as investment or service contracts, depending on the nature of the agreement.
Reinsurance assets are measured consistently with the assumptions associated with the underlying insurance contracts and in accordance with the terms of each reinsurance contract. They are subject to impairment testing and are derecognized when the contractual rights are extinguished or expire or when the contract is transferred to another party.
The estimated sensitivities including Aegon the Netherlands
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34 Insurance contracts.
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Guarantees
Notes to the consolidated financial statements
Note 46
Aegon is not relieved of its legal liabilities when entering into reinsurance transactions, therefore the reserves relating to the underlying insurance contracts will continue to be reported on the consolidated statement of financial position during the contractual term of the underlying contracts.
Reinsurance premiums, commissions and claim settlements are accounted for in the same way as the original contracts for which the reinsurance was concluded. The insurance premiums for the original contracts are presented gross of reinsurance premiums paid.
46.1.13 Deferred expenses
a. Deferred policy acquisition costs (DPAC)
DPAC relates to all insurance contracts as well as investment contracts with discretionary participation features and represents directly attributable costs that are related to the selling, underwriting and initiating of these insurance contracts.
DPAC are deferred to the extent that they are recoverable and are subsequently amortized based on factors such as expected gross profit margins. For products sold in the United States and Asia with amortization based on expected gross profit margins or revenues, the amortization period and pattern are reviewed at each reporting date and any change in estimates is recognized in the income statement. Estimates include, but are not limited to: an economic perspective in terms of future returns on bond and equity instruments, mortality, morbidity and lapse assumptions, maintenance expenses and expected inflation rates.
For all products, DPAC, in conjunction with VOBA where appropriate, is assessed for recoverability at least annually as part of the liability adequacy test for each reporting period. If appropriate, the assumptions included in the determination of estimated gross profits or revenues are adjusted. The portion of DPAC that is determined not to be recoverable is charged to the income statement.
For products sold in the United States and Asia, when unrealized gains or losses arise on
available-for-sale
assets backing the insurance liabilities, DPAC is adjusted to equal the effect that the realization of the gains or losses (through sale or impairment) would have had on its measurement. This is recognized in other comprehensive income and accumulated in the related revaluation reserve in shareholders’ equity.
DPAC is derecognized when the related contracts are settled or disposed.
b. 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. When Aegon enters into a reinsurance contract as part of a plan to exit a business, an immediate loss is recognized in the income statement. Upon reinsurance, Aegon is not relieved of its legal liabilities, so the reserves relating to the underlying reinsured contracts will continue to be reported in the consolidated statement of financial position during the contractual term of the underlying contracts.
The difference, if any, between amounts paid in a reinsurance transaction and the amount of the liabilities relating to the underlying reinsured contracts is part of the deferred cost of reinsurance.
When losses on buying reinsurance are deferred, the amortization is based on the assumptions of the underlying insurance contracts. In the Netherlands, the amortization is based on the percentage of premium paid on the reinsurance contract. For products sold in the Americas and Asia where the amortization is based on expected gross profit margins (EGPs), these EGPs will be net of reinsurance (i.e., net of actual reinsurance cash flows that exceed expected reinsurance cash flows). The amortization is recognized in the income statement.
c. Deferred transaction costs
Deferred transaction costs relate to investment contracts without discretionary participation features under which Aegon will render investment management services. Incremental costs that are directly attributable to securing these investment management contracts are recognized as an asset if they can be identified separately and measured reliably and if it is probable that they will be recovered.
For contracts involving both the origination of a financial liability and the provision of investment management services, only the transaction costs allocated to the servicing component are deferred. The other transaction costs are included in the carrying amount of the financial liability.
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The deferred transaction costs are amortized in line with fee income, unless there is evidence that another method better represents the provision of services under the contract. The amortization is recognized in the income statement. Deferred transaction costs are subject to impairment testing at least annually.
Deferred transaction costs are derecognized when the related contracts are settled or disposed.
46.1.14 Other assets and receivables
Other assets include trade and other receivables, prepaid expenses, equipment and real estate held for own use. Trade and other receivables are initially recognized at fair value and are subsequently measured at amortized cost. Equipment is initially carried at cost, depreciated on a straight line basis over its useful life to its residual value and is subject to impairment testing. The accounting for real estate held for own use is described in note 46.1.7 Investments.
46.1.15 Cash and cash equivalents
Cash comprises cash at banks and
in-hand.
Cash equivalents are short-term, highly liquid investments generally with original maturities of three months or less that are readily convertible to known cash amounts, are subject to insignificant risks of changes in value and are held for the purpose of meeting short-term cash requirements. Money market investments that are held for investment purposes (backing insurance liabilities, investment liabilities or equity based on asset liability management considerations) are not included in cash and cash equivalents but are presented as investments or investments for account of policyholders.
46.1.16 Impairment of assets
An asset is impaired if the carrying amount exceeds the amount that would be recovered through its use or sale. For tangible and intangible assets, financial assets and reinsurance assets, if not held at fair value through profit or loss, the recoverable amount of the asset is estimated when there are indications that the asset may be impaired. Irrespective of the indications, goodwill and other intangible assets with an indefinite useful life that are not amortized, are tested at least annually.
There are a number of significant risks and uncertainties inherent in the process of monitoring investments and determining if impairment exists. These risks and uncertainties include the risk that the Group’s assessment of an issuer’s ability to meet all of its contractual obligations will change based on changes in the credit characteristics of that issuer and the risk that the economic outlook will be worse than expected or have more of an impact on the issuer than anticipated. Any of these situations could result in a charge against the income statement to the extent of the impairment charge recorded.
a. Impairment of
non-financial
assets
Assets are tested individually for impairment when there are indications that the asset may be impaired. For goodwill and intangible assets with an undefined life, an impairment test is performed at least once a year or more frequently as a result of an event or change in circumstances that would indicate an impairment charge may be necessary. The impairment loss is calculated as the difference between the carrying and the recoverable amount of the asset, which is the higher of an asset’s value in use and its fair value less cost of disposal. The value in use represents the discounted future net cash flows from the continuing use and ultimate disposal of the asset and reflects its known inherent risks and uncertainties. The valuation utilizes the best available information, including assumptions and projections considered reasonable and supportable by management. The assumptions used in the valuation involve significant judgments and estimates.
Impairment losses are charged to other comprehensive income to the extent that they offset a previously recorded revaluation reserve relating to the same item. Any further losses are recognized directly in the income statement. Impairment of deferred policy acquisition costs is included in note 46.13 Impairment charges/(reversals).
With the exception of goodwill, impairment losses are reversed when there is evidence that there has been a change in the estimates used to determine the asset’s recoverable amount since the recognition of the last impairment loss. The reversal is recognized in the income statement to the extent that it reverses impairment losses previously recognized in the income statement. The carrying amount after reversal cannot exceed the amount that would have been recognized had no impairment taken place.
Non-financial
assets that only generate cash flows in combination with other assets and liabilities are tested for impairment at the level of the cash-generating unit. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination. The allocation is based on the level at which goodwill is monitored internally and cannot be larger
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Notes to the consolidated financial statements
Note 46
than an operating segment. When impairing a cash-generating unit, any goodwill allocated to the unit is first
written-off
and recognized in the income statement. The remaining impairment loss is allocated on a pro rata basis among the other assets, on condition that the resulting carrying amounts do not fall below the individual assets’ recoverable amounts.
b. Impairment of debt instruments
Debt instruments are impaired if there is objective evidence that a credit event has occurred after the initial recognition of the asset that has a negative impact on the estimated future cash flows. Individually significant loans and other receivables are first assessed separately. All
non-impaired
assets measured at amortized cost are then grouped by credit risk characteristics and collectively tested for impairment.
For debt instruments carried at amortized cost, the carrying amount of impaired financial assets is reduced through an allowance account. The impairment loss is calculated as the difference between the carrying and recoverable amount of the investment. The recoverable amount is determined by discounting the estimated probable future cash flows at the original effective interest rate of the asset. For variable interest debt instruments, the current effective interest rate under the contract is applied.
For debt instruments classified as
available-for-sale,
the asset is impaired to its fair value. Any unrealized loss previously recognized in other comprehensive income is taken to the income statement in the impairment loss. After impairment the interest accretion on debt instruments is recognized using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
Impairment losses recognized for debt instruments can be reversed if in subsequent periods the amount of the impairment loss decreases and that decrease can be objectively related to a credit event occurring after the impairment was recognized. For debt instruments carried at amortized cost, the carrying amount after reversal cannot exceed what the amortized cost would have been at the reversal date, had the impairment not been recognized.
c. Impairment of equity instruments
For equity instruments, objective evidence of impairment of an investment in an equity instrument classified as
available-for-sale
includes information about significant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered. A significant or prolonged decline in fair value below initial cost is also considered objective evidence of impairment and always results in a loss being recognized in the income statement. Significant or prolonged decline is defined as an unrealized loss position for generally more than six months or a fair value of less than 80% of the cost price of the investment. Equity investments are impaired to the asset’s fair value and any unrealized gain or loss previously recognized in shareholders’ equity is taken to the income statement as an impairment loss.
The amount exceeding the balance of previously recognized unrealized gains or losses is recognized in the income statement. If an
available-for-sale
equity security is impaired based upon Aegon’s qualitative or quantitative impairment criteria, any further declines in the fair value at subsequent reporting dates are recognized as impairments. Therefore, at each reporting period, for an equity security that is determined to be impaired based upon Aegon’s impairment criteria, an impairment is recognized for the difference between the fair value and the original cost basis, less any previously recognized impairments.
Impairment losses on equity instruments cannot be reversed.
d. Impairment of reinsurance assets
Reinsurance assets are impaired if there is objective evidence, as a result of an event that occurred after initial recognition of the reinsurance asset, that not all amounts due under the terms of the contract may be received. In such a case, the value of the reinsurance asset recoverable is determined based on the best estimate of future cash flows, taking into consideration the reinsurer’s current and expected future financial conditions plus any collateral held in trust for Aegon’s benefit. The carrying value is reduced to this calculated recoverable value, and the impairment loss recognized in the income statement.
46.1.17 Equity
Financial instruments that are issued by the Group are classified as equity if they represent a residual interest in the assets of the Group after deducting all of its liabilities and the Group has an unconditional right to avoid delivering cash or another financial asset to settle its contractual obligation. In addition to common shares, the Group has issued perpetual securities. Perpetual securities have no final maturity date, repayment is at the discretion of Aegon and for junior perpetual
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capital securities, Aegon has the option to defer coupon payments at its discretion. The perpetual capital securities are classified as equity rather than debt, are measured at par and those that are denominated in US dollars are translated into euro using historical exchange rates.
Non-cumulative
subordinated notes were identified as a compound instrument due to the nature of this financial instrument. For these
non-cumulative
subordinated notes, Aegon had an unconditional right to avoid delivering cash or another financial asset to settle the coupon payments. The redemption of the principal was however not at the discretion of Aegon and therefore Aegon had a contractual obligation to settle the redemption in cash or another financial asset or through the exchange of financial assets and liabilities at potentially unfavorable conditions for Aegon. Compound instruments were separated into liability components and equity components. The liability component for the
non-cumulative
subordinated notes was equal to the present value of the redemption amount and carried at amortized cost using the effective interest rate method. The unwinding of the discount of this component was recognized in the income statement. At initial recognition the equity component was assigned the residual amount after deducting the liability component from the fair value of the instrument as a whole. The equity component in US dollars was translated into euro using historical exchange rates.
Incremental external costs that are directly attributable to the issuing or buying back of own equity instruments are recognized in equity, net of tax. For compound instruments incremental external costs that were directly attributable to the issuing or buying back of the compound instruments were recognized proportionate to the equity component and liability component, net of tax.
The Group recognizes the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where it originally recognized the past transactions or events that generated the distributable profits. A liability for
non-cumulative
dividends payable is not recognized until the dividends have been declared and approved.
Treasury shares are shares issued by Aegon Ltd. that are held by Aegon, one of its subsidiaries or by another entity controlled by Aegon. Treasury shares are deducted from Group equity, regardless of the objective of the transaction. No gain or loss is recognized in the income statement on the purchase, sale, issue or cancellation of the instruments. If sold, the difference between the carrying amount and the proceeds is reflected in retained earnings. The consideration paid or received is recognized directly in shareholders’ equity. All treasury shares are eliminated in the calculation of earnings per share and dividend per common share.
46.1.18 Trust pass-through securities and (subordinated) borrowings
A financial instrument issued by the Group is classified as a liability if the contractual obligation must be settled in cash or another financial asset or through the exchange of financial assets and liabilities at potentially unfavorable conditions for the Group.
Trust pass-through securities and (subordinated) borrowings are initially recognized at their fair value including directly attributable transaction costs and are subsequently carried at amortized cost using the effective interest rate method, with the exception of specific borrowings that are designated as at fair value through profit or loss to eliminate, or significantly reduce, an accounting mismatch, or specific borrowings which are carried as at fair value through profit or loss as they are managed and evaluated on a fair value basis. The liability is derecognized when the Group’s obligation under the contract expires, is discharged or is cancelled.
Subordinated borrowings include the liability component of
non-cumulative
subordinated notes. These notes are identified as a compound instrument due to the nature of this financial instrument. Compound instruments are separated into equity components and liability components. The liability component for the
non-cumulative
subordinated notes is related to the redemption amount. For further information on the accounting policy of the
non-cumulative
subordinated notes refer to note 46.1.17 Equity.
46.1.19 Insurance contracts
Insurance contracts are accounted for under IFRS 4 Insurance Contracts. In accordance with this standard, Aegon continues to apply the existing accounting policies that were applied prior to the adoption of IFRS with certain modifications allowed by IFRS 4 for standards effective subsequent to adoption. Aegon applies, in general,
non-uniform
accounting policies for insurance liabilities and insurance related intangible assets to the extent that it was allowed under Dutch Accounting Principles. As a result, specific methodologies applied may differ between Aegon’s operations as they may reflect local regulatory requirements and local practices for specific product features in these local markets. At the time of IFRS adoption,
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Notes to the consolidated financial statements
Note 46
Aegon was applying US GAAP for its United States operations whereas in the Netherlands and the United Kingdom, Aegon was applying Dutch Accounting Principles. Since adoption of IFRS, Aegon has considered new and amended standards in those GAAPs which have become effective subsequent to the date of transition to IFRS. If any changes are made to current accounting policies for insurance contracts, these will be in accordance with IFRS 4.
Insurance contracts are contracts under which the Group accepts a significant risk – other than a financial risk – from a policyholder by agreeing to compensate the beneficiary on the occurrence of an uncertain future event by which he or she will be adversely affected. Contracts that do not meet this definition are accounted for as investment contracts. The Group reviews homogeneous books of contracts to assess whether the underlying contracts transfer significant insurance risk on an individual basis. This is considered the case when at least one scenario with commercial substance can be identified in which the Group has to pay significant additional benefits to the policyholder. Contracts that have been classified as insurance are not reclassified subsequently.
Insurance liabilities are recognized when the contract is entered into and the premiums are charged. The liability is derecognized when the contract expires, is discharged, disposed or cancelled. Within the United States, the Netherlands and the United Kingdom, substantially modified contracts are accounted for as an extinguishment of the original liability and the recognition of a new liability.
Insurance assets and liabilities are valued in accordance with the accounting principles that were applied by the Group prior to the transition to IFRS and with consideration of standards effective subsequent to the date of transition to IFRS, as further described in the following paragraphs. In order to reflect the specific nature of the products written, subsidiaries are allowed to apply local accounting principles to the measurement of insurance contracts. All valuation methods used by the subsidiaries are based on the general principle that the carrying amount of the net liability must be sufficient to meet any reasonably foreseeable obligation resulting from the insurance contracts.
a. Life insurance contracts
Life insurance contracts are insurance contracts with life-contingent benefits. The measurement of the liability for life insurance contracts varies depending on the nature of the product.
Liabilities arising from traditional life insurance products that are offered by Aegon, particularly those with fixed and guaranteed account terms, are typically measured using the Netherlands provides guarantees to its customers on expiry date for certain insurance contracts. In order to mitigatenet premium method. Under this method the risksliability is determined as the sum of the discounted value of the expected benefits and future administration expenses directly related to the guarantees Aegoncontract, less the Netherlandsdiscounted value of the expected theoretical premiums that would be required to meet the future cash outflows based on the valuation assumptions used. The liability is either based on current assumptions or calculated using the assumptions established at the time the contract was issued, in which case a margin for risk and adverse deviation is generally included. Furthermore, the liability for life insurance comprises reserves for unearned premiums and accrued annuity benefits payable. Depending on local accounting principles, the liability may include amounts for future services on contracts where the policy administration charges are higher in the initial years than in subsequent years.
Terms and conditions, including participation features, are considered when establishing the insurance liabilities. Where the Group has setupdiscretion over the amount or timing of the bonuses distributed resulting from participation features, a hedging program. Aegonliability is recognized equal to the Netherlands does not use reinsuranceamount that is available at the reporting date for future distribution to policyholders.
In establishing the liability, guaranteed minimum benefits issued to the policyholder are measured as described in order to mitigate risks related tonote 46.1.19.c Embedded derivatives or, if bifurcated from the host contract, as described in note 46.1.9 Derivatives.
b. Life insurance contracts with a guarantee componentfor account of policyholders
Minimum investment return guarantees inLife insurance contracts under which the Netherlandspolicyholder bears the risks associated with the underlying investments are classified as insurance contracts for account of policyholders.
The traditional life and pension products offered by Aegon inliability for the Netherlands include various products that accumulate a cash value. Premiumsinsurance contracts for account of policyholders is measured at the policyholder account balance. Contracts with unit-denominated payments are paid by customersmeasured at inception orcurrent unit values, which reflect the fair values of the assets of the fund. If applicable, the liability representing the nominal value of the policyholder unit account is amortized over the term of the contract.contract so that interest on actuarial funding is at an expected rate of return.
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c. Embedded derivatives
Life insurance contracts may include derivative-like terms and conditions. With the exception of policyholder options to surrender the contract at a fixed amount, contractual features that are not closely related to the insurance contract and that do not themselves meet the definition of insurance contracts are accounted for as derivatives.
Guaranteed minimum benefits
Certain life insurance contracts, issued by the Group, contain guaranteed minimum benefits. Bifurcated guaranteed minimum benefits are classified as derivatives.
In the United States, the additional liability for guaranteed minimum benefits that are not bifurcated is determined each period by estimating the expected value of benefits in excess of the projected account balance and recognizing the excess over the accumulation period based on total expected assessments. The accumulation products payestimates are reviewed regularly and any resulting adjustment to the additional liability is recognized in the income statement. The benefits used in calculating the liabilities are commonly based on the policy maturityaverage benefits payable over a range of stochastic scenarios. Where applicable, the calculation of the liability incorporates a percentage of the potential annuitizations that may be elected by the contract holder.
In the Netherlands, an additional liability is established for guaranteed minimum investment returns on group pension plans with profit sharing and on traditional insurance contracts, with profit sharing based on an external interest index, that are not bifurcated. These guarantees are measured at fair value.
d. Shadow accounting
Shadow accounting allows that all gains and losses on investments affect the measurement of the insurance assets and liabilities in the same way, regardless of whether they are realized or unrealized and regardless of whether the unrealized gains and losses are recognized in the income statement or through other comprehensive income in the revaluation reserve. In some instances, realized gains or losses on investments have a direct effect on the measurement of the insurance assets and liabilities. For example, some insurance contracts include benefits that are contractually based on the investment returns realized by the insurer. In addition, realization of gains or losses on
available-for-sale
investments can lead to unlocking of VOBA or DPAC and can also affect the outcome of the liability adequacy test to the extent that it considers actual future investment returns. For similar changes in unrealized gains and losses, shadow accounting is applied. If an unrealized gain or loss triggers a shadow accounting adjustment to VOBA, DPAC or the insurance liabilities, the corresponding adjustment is recognized through other comprehensive income in the revaluation reserve, together with the unrealized gain or loss.
Some profit sharing schemes issued by the Group entitle the policyholder to a bonus which is based on the actual total return on specific assets held. To the extent that the bonus relates to gains or losses on
available-for-sale
investments for which the unrealized gains or losses are recognized through other comprehensive income in the revaluation reserve in shareholders’ equity, shadow accounting is applied. This means that the increase in the liability is also charged through other comprehensive income to shareholders’ equity to offset the unrealized gains rather than to the income statement.
e.
Non-life
insurance contracts
Non-life
insurance contracts are insurance contracts where the insured event is not life-contingent. For
non-life
products the insurance liability generally includes reserves for unearned premiums, unexpired risk, inadequate premium levels and outstanding claims and benefits. No catastrophe or equalization reserves are included in the measurement of the liability.
The reserve for unearned premiums includes premiums received for risks that have not yet expired. Generally, the reserve is released over the coverage period of the premium and is recognized as premium income.
The liability for outstanding claims and benefits is established for claims that have not been settled and any related cash flows, such as claims handling costs. It includes claims that have been incurred but have not been reported to the Group. The liability is calculated at the reporting date using statistical methods based on empirical data and current assumptions that may include a margin for adverse deviation. Liabilities for claims subject to survivalperiodic payment are calculated using actuarial methods consistent with those applied to life insurance contracts. Discounting is applied if allowed by the local accounting principles used to measure the insurance liabilities. Discounting of liabilities is generally applied when there is a high level of certainty concerning the insured. In addition, most policies also pay death benefits if the insured dies during theamount and settlement term of the contract. The death benefits may be stipulatedcash outflows.
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Notes to the consolidated financial statements
Note 46
f. Liability adequacy testing
At each reporting date, the adequacy of the life insurance liabilities (including life insurance contracts for account of policyholders), net of VOBA and DPAC, is assessed using a liability adequacy test.
All tests performed within the Group are based on current estimates of all contractual future cash flows, including related cash flows from policyholder options and guarantees. A number of valuation methods are applied, including discounted cash flow methods, option pricing models and stochastic modeling. Aggregation levels are set either on geographical jurisdiction or at the level of portfolio of contracts that are subject to broadly similar risks and managed together as a single portfolio. Specifically, in the policy or dependNetherlands the liability adequacy test is performed on a consolidated basis for all life and
non-life
business, whereas in the gross premiums paid to date. PremiumsAmericas and amounts insured are establishedthe UK it is performed at inceptionthe level of the contract. The amount insured canportfolio of contracts. To the extent that the tests involve discounting of future cash flows, the interest rate applied is based on market rates or is based on management’s expectation of the future return on investments. These future returns on investments take into account management’s best estimate related to the actual investments and, where applicable, reinvestments of these investments at maturity. Aegon the Netherlands, as required locally, adjusts the outcome of the liability adequacy test for the difference between the fair value and the book value of the assets that are measured at amortized cost in the statement of financial position. Only differences between the fair value and the book value build up during the period when the assets were allocated to the insurance portfolio are included in the LAT.
To the extent that the account balances are insufficient to meet future benefits and expenses, any resulting deficiency is recognized in the income statement, initially by impairing the DPAC and VOBA and subsequently by establishing an insurance liability for the remaining loss, unless shadow loss recognition has taken place. In the Netherlands, in situations where market interest rates for the valuation of debt securities lead to a change in the revaluation reserve, and where the result of using the same assumptions for the liabilities could lead to a deficiency in the liability adequacy test that should be increasedrecognized in the income statement, shadow loss recognition is applied. Shadow loss recognition is applied to the extent that the deficiency of the insurance liabilities relates to the revaluation of debt securities as a result of movements in interest rates, the addition to the insurance liabilities is then offset against the revaluation reserve. If in subsequent periods such a deficiency of the insurance liability is no longer applicable, shadow loss recognition is reversed via the revaluation reserve.
The adequacy of the
non-life
insurance liability is tested at each reporting date. Changes in expected claims that have occurred, but that have not been settled, are reflected by adjusting the liability for claims and future benefits. The reserve for unexpired risk is increased to the extent that the future claims and expenses in respect of current insurance contracts exceed the future premiums plus the current unearned premium reserve.
46.1.20 Investment contracts
Aegon conducts its operations through the following type of investment contracts:
Contracts issued by the Group that do not transfer significant insurance risk, but do transfer financial risk from the policyholder to the Group are accounted for as investment contracts. Depending on whether the Group or the policyholder runs the risks associated with the investments allocated to the contract, the liabilities are classified as investment contracts or as investment contracts for account of policyholders. Investment contract liabilities are recognized when the contract is entered into and are derecognized when the contract expires, is discharged, cancelled or substantially modified.
a. Investment contracts with discretionary participation features
Some investment contracts have participation features whereby the policyholder has the right to receive potentially significant additional benefits which are based on the performance of a specified pool of investment contracts, specific investments held by the Group or on the issuer’s net result. If the Group has discretion over the amount or timing of the distribution of the returns to policyholders, the investment contract liability is measured based on the accounting principles that apply to insurance contracts with similar features.
Some unitized investment contracts provide policyholders with the option to switch between funds with and without discretionary participation features. The entire contract is accounted for as an investment contract with discretionary participation features if there is evidence of actual switching resulting in discretionary participation benefits that are a significant part of the total contractual benefits.
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b. Investment contracts without discretionary participation features
At inception, investment contracts without discretionary participation features are carried at amortized cost.
Investment contracts without discretionary participation features are carried at amortized cost based on the expected cash flows and using the effective interest rate method. The expected future cash flows are
re-estimated
at each reporting date and the carrying amount of the financial liability is recalculated as the present value of estimated future cash flows using the financial liability’s original effective interest rate. Any adjustment is immediately recognized in the income statement. For these investment contracts deposit accounting is applied, meaning that deposits are not reflected as premium income, but are recognized as part of the financial liability.
The consolidated financial statements provide information on the fair value of all financial liabilities, including those carried at amortized cost. As these contracts are not quoted in active markets, their value is determined by using valuation techniques, such as discounted cash flow methods and stochastic modeling. For investment contracts without discretionary participation features that can be cancelled by the policyholder, the fair value cannot be less than the surrender value.
c. Investment contracts for account of policyholders
Investment contracts for account of policyholders are investment contracts for which the actual return on investments allocated to the contract is passed on to the policyholder. Also included are participations held by third parties in consolidated investment funds that meet the definition of a financial liability.
Investment contracts for account of policyholders are designated at fair value through profit sharing, ifor loss. Contracts with unit denominated payments are measured at current unit values, which reflect the fair values of the assets of the fund.
For unit-linked contracts without discretionary participation features and subject to actuarial funding, the Group recognizes a liability at the funded amount of the units. The difference between the gross value of the units and the funded value is treated as an initial fee paid by the policyholder for future asset management services and recognized as a deferred revenue liability, refer to note 46.1.23 Deferred gains.
46.1.21 Provisions
A provision is recognized for present legal or constructive obligations arising from past events, when it is probable that it will result in an outflow of economic benefits and the amount can be reliably estimated. Management exercises judgment in evaluating the probability that a loss will be incurred.
The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the reporting date, considering all its inherent risks and uncertainties, as well as the time value of money. The estimate of the amount of a loss requires management judgment in the selection of a proper calculation model and the specific assumptions related to the particular exposure. The unwinding of the effect of discounting is recorded in the income statement as an interest expense.
Onerous contracts
With the exception of insurance contracts and investment contracts with discretionary participation features for which potential future losses are already considered in establishing the liability, a provision is recognized for onerous contracts in which the unavoidable costs of meeting the resulting obligations exceed the expected future economic benefits. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfill it.
46.1.22 Assets and liabilities relating to employee benefits
a. Short-term employee benefits
A liability is recognized for the undiscounted amount of short-term employee benefits expected to be settled within one year after the end of the period in which the service was rendered. Accumulating short-term absences are recognized over the period in which the service is provided. Benefits that are not service-related are recognized when the event that gives rise to the obligation occurs.
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Notes to the consolidated financial statements
Note 46
b. Post-employment benefits
The Group has issued defined contribution plans and defined benefit plans. A plan is classified as a defined contribution plan when the Group has no further obligation than the payment of a fixed contribution. All other plans are classified as defined benefit plans.
Defined contribution plans
The contribution payable to a defined contribution plan for services provided is recognized as an expense in the income statement. An asset is recognized to the extent that the contribution paid exceeds the amount due for underservices provided.
Defined benefit plans
Measurement
The defined benefit obligation is based on the terms and conditions of the product. Minimumplan applicable on the reporting date. In measuring the defined benefit obligation the Group uses the projected unit credit method and actuarial assumptions that represent the management’s best estimates. The benefits are discounted using an interest guarantees existrate based on the market yield for allhigh-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity that approximate the terms of the related pension liability. Actuarial assumptions used in the measurement of the liability include the discount rate, estimated future salary increases, mortality rates and price inflation. To the extent that actual experience deviates from these assumptions, the valuation of defined benefit plans and the level of pension expenses recognized in the future may be affected. Plan improvements (either vested or unvested) are recognized in the income statement at the date when the plan improvement occurs.
Plan assets are qualifying insurance policies and assets held by long-term employee benefit funds that can only be used to pay the employee benefits under the plan and are not available to the Group’s creditors. They are measured at fair value and are deducted from the defined benefit obligation in determining the amount recognized on the statement of financial position.
Profit or loss recognition
The cost of the defined benefit plans are determined at the beginning of the year and comprise the following components:
∎
Current year service cost which is recognized in profit or loss; and
∎
Net interest on the net defined benefit liability (asset) which is recognized in profit or loss.
Remeasurements of the net defined benefit liability (asset) which is recognized in other comprehensive income are revisited quarterly and are not allowed to be reclassified to profit or loss in a subsequent period.
Deducted from current year service cost are discretionary employee contributions and employee contributions that are linked to service (those which are independent of the number of years of service). Net interest on the net defined benefit liability (asset) is determined by multiplying the net defined benefit liability (asset) by the applicable discount rate. Net interest on the net defined benefit liability (asset) comprises interest income on plan assets and interest cost on the defined benefit obligation. Whereby interest income on plan assets is a component of the return on plan assets and is determined by multiplying the fair value of the plan assets by the applicable discount rate. The difference between the interest income on plan assets and the actual return on plan assets is included in the remeasurement of the net defined benefit liability (asset).
Remeasurements of the net defined benefit liability (asset) comprise of:
∎
Actuarial gains and losses;
∎
The return on plan assets, excluding amounts included in net interest on the net defined benefit liability (asset); and
∎
Any change in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability (asset).
Past service cost and gains or losses on settlements
Past service cost is the change in the present value of the defined benefit obligation for employee service, resulting from a plan amendment or curtailment.
Gains or losses on curtailments or settlements of a defined benefit plan comprise of the difference between:
∎
The present value of the defined benefit obligation being settled, as determined on the date of settlement; and
∎
The settlement price, including any plan assets transferred and any payments made directly by Aegon in connection with the settlement.
 
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Aegon recognizes (in the income statement) gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs.
c. Share-based payments
The Group has issued share-based plans that allow selected employees to receive Aegon Ltd common shares, subject to
pre-defined
conditions such as the grant price of the shares and (business and personal) performance criteria. The number of shares that will vest may partly depend on Aegon’s relative total shareholder return in comparison with a peer group.
The expenses recognized for these plans are based on the fair value on the grant date of the shares. The fair value is measured at the market price of Aegon Ltd. common shares, adjusted to take into account the
non-vesting
and market conditions upon which the shares were granted. For example, where the employee is not allowed to receive dividends during the vesting period, this factor is taken into account when estimating the fair value of the shares granted. For the determination of factors such as expected dividends, market observable data has been considered. In addition, where the relative total shareholder return is included in the performance criteria, this factor represents a market condition and hence is taken into account when estimating the fair value of the shares granted.
The cost for long term incentive plans are recognized in the income statement, together with a corresponding increase in shareholders’ equity, as the services are rendered. During this period the cumulative expense recognized at the reporting date reflects management’s best estimate of the number of shares expected to vest ultimately.
The withholding of shares to fund the payment to the tax authorities in respect of the employee’s withholding tax obligation associated with the share-based payment is accounted for as a deduction from equity for the shares withheld, except to the extent that the payment exceeds the fair value at the net settlement date of the equity instruments withheld.
46.1.23 Deferred gains
Initial fees and
front-end
loadings paid by policyholders and other clients for future investment management services related to investment contracts without discretionary participation features are deferred and recognized as revenue when the related services are rendered.
46.1.24 Taxation
The income tax charge on the result for the year comprises current and deferred tax. Current tax is calculated taking into account items that are
non-taxable
or disallowed, using rates that have been enacted or substantively enacted by the reporting date and any adjustments to tax payable relating to previous years.
Current tax receivables and payables for current and prior periods reflect the best estimate of the tax amount expected to be paid or received and includes provisions for uncertain income tax positions, if any.
Deferred tax assets and liabilities are recognized, using the liability method, for temporary differences arising between the carrying value and tax value of an item on the balance sheet and for unused tax losses and credits carried forward. Deferred tax assets and liabilities are measured using tax rates applicable that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the deferred tax asset is realized, or the deferred tax liability is settled.
Deferred tax assets are recognized for deductible temporary differences and unused tax losses and credits carried forward to the extent that the realization of the related tax benefit through future taxable profits is probable. The recognition of the deferred tax assets is based on Aegon’s
mid-term
projections including sensitivities and tax planning and is reassessed periodically. Deferred tax liabilities relating to investments in subsidiaries, associates and joint ventures are not recognized if the Group is able to control the timing of the reversal of the temporary difference and it is probable that the difference will not be reversed in the foreseeable future.
Tax assets and liabilities are presented separately in the consolidated balance sheet except where there is a legally enforceable right to offset the tax assets against tax liabilities within the same tax jurisdiction and the intention to settle such balances on a net basis.
Tax assets and liabilities are recognized in relation to the underlying transaction either in profit and loss, other comprehensive income or directly in equity.
 
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Notes to the consolidated financial statements
Note 46
46.1.25 Contingent assets and liabilities
Contingent assets are disclosed in the notes if the inflow of economic benefits is probable, but not virtually certain. When the inflow of economic benefits becomes virtually certain, the asset is no longer contingent and its recognition is appropriate.
A provision is recognized for present legal or constructive obligations arising from past events, when it is probable that it will result in an outflow of economic benefits and the amount can be reliably estimated. If the outflow of economic benefits is not probable, a contingent liability is disclosed, unless the possibility of an outflow of economic benefits is remote.
46.1.26 Premium income
Gross premiums, including recurring and single premiums, from life and
non-life
insurance and investment contracts with discretionary participation features are recognized as revenue when they become receivable. A portion of the single premiums are deferred over the benefit period of the contract as unearned premium reserve. For products where deposit accounting is required, the deposits are not reflected as premium income, but are recognized as part of the financial liability. For these products the surrender charges and charges assessed have been included in gross premiums.
Premium loadings for installment payments and additional payments by the policyholder towards costs borne by the insurer are included in the gross premiums. Rebates that form part of the premium rate, such as
no-claim
rebates, are deducted from the gross premium, others are recognized as an expense. Depending on the applicable local accounting principles, bonuses that are used to increase the insured benefits may be recognized as gross premiums. The insurance premiums for the original contracts are presented gross of reinsurance premiums paid.
46.1.27 Investment income
For interest-bearing assets, interest is recognized as it accrues and is calculated using the effective interest rate method. Fees and commissions that are an integral part of the effective yield of the financial assets or liabilities are recognized as an adjustment to the effective interest rate of the instrument. Investment income includes the interest income and dividend income on financial assets carried at fair value through profit or loss.
Investment income also includes rental income due.
46.1.28 Fee and commission income
Fees and commissions from investment management services and mutual funds are performed on an ongoing basis evenly throughout the year and are accounted for monthly (1/12 of the contractual agreement). Performance fees may be charged to policyholders in the event of outperformance in the investments compared to predefined benchmark levels. They are accounted for only when specified hurdles for generating performance fees are achieved i.e. when the full performance obligation is met.
Aegon acts also as an insurance broker selling insurance contracts of other insurance companies to policyholders and receiving direct sales commission as well as commissions over time when the same policyholders renew their contracts. These commissions are recognized only when received as policyholders’ renewals are not certain enough to be recorded upfront.
46.1.29 Policyholder claims and benefits
Policyholder claims and benefits consist of claims and benefits paid to policyholders, including benefits in excess of account value for products for which deposit accounting is applied and the change in the valuation of liabilities for insurance and investment contracts. It includes internal and external claims handling costs that are directly related to the processing and settlement of claims. Amounts receivable in respect of salvage and subrogation are also considered.
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46.1.30 Results from financial transactions
Results from financial transactions include:
Net fair value change of general account financial investments at fair value through profit or loss, other than derivatives
Net fair value change of general account financial investments at fair value through profit or loss, other than derivatives include fair value changes of financial assets carried at fair value through profit or loss. The net gains and losses do not include interest or dividend income.
Realized gains and losses on financial investments
Gains and losses on financial investments include realized gains and losses on general account financial assets, other than those classified as at fair value through profit or loss.
Net fair value change of derivatives
All changes in fair value are recognized in the income statement, unless the derivative has been designated as a hedging instrument in a cash flow hedge or a hedge of a net investment in a foreign operation. Fair value movements of fair value hedge instruments are offset by the fair value movements of the hedged item, and the resulting hedge ineffectiveness, if any, is included in this line. In addition, the fair value movements of bifurcated embedded derivatives are included in this line.
Net fair value change on for account of policyholder financial assets at fair value through profit or loss
Net fair value change on for account of policyholder financial assets at fair value through profit or loss includes fair value movements of investments held for account of policyholders (refer to note 46.1.8 Investments for account of policyholders). The net fair value change does not include interest or dividend income.
Other
In addition, results from financial transactions include gains/losses on real estate (general account and account of policyholders), net foreign currency gains/(losses) and net fair value change on borrowings and other financial liabilities and realized gains on repurchased debt.
46.1.31 Impairment charges/(reversals)
Impairment charges and reversals include impairments and reversals on investments in financial assets, impairments and reversals on the valuation of insurance assets and other
non-financial
assets and receivables. Impairment of deferred policy acquisition costs is included in note 46.13 Impairment charges/ (reversals).
46.1.32 Interest charges and related fees
Interest charges and related fees includes interest expense on trust pass-through securities and other borrowings. Interest expense on trust pass-through securities and other borrowings carried at amortized cost is recognized in profit or loss using the effective interest method.
46.1.33 Leases
As a lessee
The Group recognizes a
right-of-use
asset and a lease liability at the lease commencement date. The
right-of-use
asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The
right-of-use
asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the
right-of-use
asset or the end of the lease term. The estimated useful lives of right-of use assets are determined on the same basis as those of real estate and equipment. In addition, the
right-of-use
asset is periodically reduced by impairment losses (using the same rate to measure the lease liability), if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase,
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Notes to the consolidated financial statements
Note 46
extension or termination option. The Group presents
right-of-use
assets that do not meet the definition of investment property in ‘Other assets and receivables’ and lease liabilities in ‘Other liabilities’ in the statement of financial position.
Short-term leases and leases of
low-value
assets
The Group has elected not to recognize
right-of-use
assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of
low-value
assets, including small office equipment. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
As a lessor
Where the Group is the lessor under an operating lease, the assets subject to the operating lease arrangement are presented in the statement of financial position according to the nature of the asset. Income from these leases is recognized in the income statement on a straight line basis over the lease term, unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished.
46.1.34 Events after the reporting period
The financial statements are adjusted to reflect events that occurred between the reporting date and the date when the financial statements are authorized for issue, provided they give evidence of conditions that existed at the reporting date.
Events that are indicative of conditions that arose after the reporting date are disclosed, but do not result in an adjustment of the financial statements themselves.
46.2 Financial risks
Currency exchange rate risk
Information on Aegon’s historical net result and shareholders’ equity in functional currency are shown in the table below.
2021 
Net result
Americas (in USD)1,195 
United Kingdom (in GBP)104 
Equity in functional currency
Americas (in USD)18,324 
United Kingdom (in GBP)1,260 
46.3 Segment information
Performance Measure
The items that are excluded from operating result as described further below are: fair value items, realized gains or losses on investments, impairment charges/reversals, other income or charges and share in earnings of joint ventures and associates.
Fair value items
Fair value items include the over- or underperformance of investments and guarantees held at fair value for which management’s best estimate investment return is included in operating result.
In addition, hedge ineffectiveness on hedge transactions, fair value changes on economic hedges without natural offset in earnings and for which no hedge accounting is applied and fair value movements on real estate are included under fair value items.
Certain assets held by Aegon are carried at fair value and managed on a total return basis, with no offsetting changes in the valuation of related liabilities. These include assets such as investments in hedge funds, private equities, real estate (limited partnerships), convertible bonds and structured products. Operating result exclude any over- or underperformance compared to management’s best estimate investment return on assets. Based on current holdings and asset returns, the long term expected return on an annual basis is
3-10%,
depending on asset class, including cash income and market value changes. The expected earnings from these asset classes are net of deferred policy acquisition costs (DPAC) where applicable.
In addition, certain products offered by Aegon Americas contain guarantees and are reported on a fair value basis and include the total return annuities and guarantees on variable annuities. The earnings on these products are impacted
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by movements in equity markets and risk-free interest rates. Short-term developments in the financial markets may therefore cause volatility in earnings.
The fair value movements of certain guarantees and the fair value change of derivatives that hedge certain risks on these guarantees of Aegon’s businesses in the Netherlands and Japan are excluded from operating result, because management’s best estimate expected return for these guarantees is set at zero. In addition, fair value items include market related results on the loyalty bonus reserves in the United Kingdom. The value of these reserves are directly related to policyholder investments which value is directly impacted by movements in equity and bond markets.
Holding and other activities include certain issued bonds that are held at fair value through profit or loss (FVTPL). The interest rate risk on these bonds is hedged using swaps. The fair value movement resulting from changes in Aegon’s credit spread used in the valuation of these bonds are excluded from operating result and reported under fair value items.
The periodic intangibles unlocking in the US Life and TLB business is recorded in fair value items instead of operating result.
Realized gains or losses on investments
Realized gains or losses on investments includes realized gains and losses on
available-for-sale
investments, mortgage loans and other loan portfolios.
Impairment charges/(reversals)
Impairment charges/(reversals) include impairments on
available-for-sale
debt securities, shares including the effect of deferred policyholder acquisition costs, mortgage loans and other loan portfolios at amortized cost, joint ventures and associates. Impairment reversals include reversals on
available-for-sale
debt securities. For Aegon the Netherlands, the expected impairments on alternative assets classes (e.g. illiquid investments – including consumer loans and catastrophe bonds – and residential real estate) are allocated to operating result in order to present management’s best estimate investment return in operating result. Deviations from the expected impairments are presented as part of impairment charges / (reversals) in
non-operating
result.
Other income or charges
Other income or charges includes the following:
∎
Items which cannot be directly allocated to a specific line of business;
∎
The impact of actuarial and economic assumption and model updates used to support calculations of our liabilities for insurance and investment contracts sold to policyholders and related assets; and
∎
Items that are outside the normal course of business, including restructuring charges
In the Consolidated income statement, the restructuring charges are included in operating expenses. Actuarial assumption and model updates are recorded in ‘Policyholder claims and benefits’ in the Consolidated income statement.
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Table of Contents
Notes to the consolidated financial statements
Note 46
The following table presents Aegon’s segment results:
Income statement
- Operating result
  Americas  
The
Nether-
lands
  
United
Kingdom
  International  
Asset
Manage-
ment
  
Holding and
other
activities
  Eliminations  
Segment
total
  
Joint
ventures and
associates
eliminations
  
Consoli- 
dated 
2021
           
Operating result
   790   755   184   143   253   (218)   (1)   
1,906
   42   
1,948
 
Fair value items   698   221   (62)   (18)   (1)   12   3   854   (123)   730 
Realized gains / (losses) on investments   313   118   10   2   2   1   -   446   (9)   437 
Impairment charges   (19)   (19)   -   -   (1)   (11)   -   (49)   (0)   (49) 
Impairment reversals   33   59   -   1   -   8   -   101   -   101 
Non-operating
items
  
 
1,025
 
 
 
378
 
 
 
(51
) 
 
 
(15
) 
 
 
-
 
 
 
11
 
 
 
3
 
 
 
1,352
 
 
 
(132
) 
 
 
1,220
 
Other income / (charges)   (667)   (23)   1   65   (18)   (138)   -   (780)   12   (768) 
Result before tax
  
 
1,149
 
 
 
1,110
 
 
 
134
 
 
 
193
 
 
 
235
 
 
 
(344
) 
 
 
2
 
 
 
2,478
 
 
 
(78
) 
 
 
2,400
 
Income tax (expense) / benefit   (137)   (276)   (12)   (36)   (65)   77   -   (449)   78   (371) 
Net result
  
 
1,012
 
 
 
833
 
 
 
122
 
 
 
157
 
 
 
170
 
 
 
(267
) 
 
 
2
 
 
 
2,029
 
 
 
-
 
 
 
2,029
 
Inter-segment operating result
   (20)   (95)   (96)   (31)   191   51     
Revenues
 
2021
           
Life insurance gross premiums   6,917   1,323   4,613   1,372   -   -   -   14,225   (825)   13,400 
Accident and health insurance   1,273   254   3   179   -   -   -   1,709   (67)   1,643 
General insurance   -   136   -   432   -   -   -   569   (168)   401 
Total gross premiums
  
 
8,190
 
 
 
1,713
 
 
 
4,616
 
 
 
1,984
 
 
 
-
 
 
 
-
 
 
 
-
 
 
 
16,504
 
 
 
(1,060
) 
 
 
15,444
 
Investment income   2,909   2,088   1,691   361   12   242   (261)   7,042   (75)   6,967 
Fee and commission income   1,920   300   223   59   800   -   (183)   3,120   (335)   2,785 
Other revenues   -   -   -   14   2   12   -   27   (15)   13 
Total revenues
  
 
13,019
 
 
 
4,101
 
 
 
6,531
 
 
 
2,418
 
 
 
814
 
 
 
254
 
 
 
(444
) 
 
 
26,693
 
 
 
(1,484
) 
 
 
25,209
 
Inter-segment revenues
   1   14   -   -   182   247                 
The Americas recorded other charges of EUR 667 million in 2021 mainly due to a
one-time
charge as a result of management actions to release capital and increase the predictability of capital generation from the US variable annuity business and unfavorable impacts from model and assumption updates.
The Group uses operating result in its segment reporting as an important indicator of its financial performance. The reconciliation from operating result to result before tax from continuing operations, being the most comparable IFRS measure, is presented in the table below. For those items that cannot be directly reconciled to the respective notes, the explanation is provided below the table. Aegon believes that operating result, together with the other information included in this report, provides a meaningful measure for the investing public to evaluate Aegon’s business relative to the businesses of its peers.
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Presentation
Non-Operating
result
  
Note
   2021 
Result before tax from continuing operations
     1,164 
Result before tax from discontinued operations  
 
46.22
 
   1,237 
Impairment loss on remeasurement of disposal group  
 
46.22
 
   - 
Result before tax from continuing operations and discontinued operations
    
 
2,400
 
Elimination of share in earnings of joint ventures and associates     (42) 
Premium income  
 
46.4
 
   5 
Rental income  
 
46.5
 
   71 
Dividend income  
 
46.5
 
   (76) 
Fee and commission income  
 
46.6
 
   (30) 
Recovered claims and benefits  
 
46.7
 
   31 
Change in valuation of reinsurance ceded  
 
46.7
 
   43 
Net fair value change of general account financial investments at fair value through profit or loss, other than derivatives  
 
46.8
 
   4 
Net fair value change on borrowings and other financial liabilities  
 
46.8
 
   13 
Realized gains and losses on financial investments  
 
46.8
 
   (463) 
Gains and (losses) on investments in real estate  
 
46.8
 
   (253) 
Net fair value change of derivatives  
 
46.8
 
   471 
Other income  
 
46.9
 
   (77) 
Benefits and claims paid life  
 
46.10
 
   217 
Change in valuation of liabilities for insurance contracts  
 
46.10
 
   (994) 
Change in valuation of liabilities for investment contracts  
 
46.10
 
   8 
Policyholder claims and benefits - Other  
 
46.10
 
   (38) 
Commissions and expenses  
 
46.12
 
   715 
Impairment (charges) reversals  
 
46.13
 
   (53) 
Interest charges and related fees  
 
46.14
 
   - 
Other charges  
 
46.15
 
   37 
Results of CEE businesses which were previously reported in operating results     (85) 
Operating result
        
    1,906
 
∎
Net fair value change of general account financial investments at fair value through profit or loss, other than derivatives is reported as part of the respective line in note 46.8 and reflects the over- or underperformance of investments and guarantees held at fair value for which the expected long-term return is included in operating result.
∎
Net fair value change of derivatives is reported as part of the respective line in note 46.8 and includes: 1) the over- or underperformance of derivatives of EUR 8 million loss for which the expected long-term return is included in operating result; 2) Net fair value change on economic hedges where no hedge accounting is applied of EUR 466 million loss; 3) Ineffective portion of hedge transactions to which hedge accounting is applied of EUR 2 million gain.
∎
Net foreign currency gains and (losses) are reported as part of the respective line in note 46.8.
∎
Benefits and claims paid life relate to the
lump-sum
buy-out
program for certain variable annuities in the Americas and is reported as part of the respective line in note 46.10.
∎
Change in valuation of liabilities for insurance contracts is reported as part of the respective line in note 46.10.
∎
Change in valuation of liabilities for investment contracts is reported as part of the respective line in note 46.10.
∎
Policyholder claims and benefits - Other are reported as part of the ‘Other’ line in note 46.10 and is related to policyholder tax.
∎
Commissions and expenses include: 1) Restructuring charges of EUR 240 million charge which are reported as part of Employee and Administration expenses lines in note 46.12; 2) Amortization of deferred expenses of EUR 260 million income which is reported as part of the respective line in note 46.12. This is offset against realized gains and losses and impairments on financial investments; 3) Amortization of VOBA and future servicing rights of EUR 87 million charge which is reported as part of the respective line in note 46.12. Commissions and expenses include a DPAC/VOBA fair value adjustment of EUR 51 million).
∎
Impairment (charges) reversals include: 1) Impairment charges and reversals on financial assets, excluding receivables of EUR 45 million reversal, as shown in note 46.13; 2) Impairment charges and reversals on
non-financial
assets and receivables of EUR 60 million charge reported as part of the respective line in note 46.13.
∎
There are no interest charges and related fees that are classified for segment reporting purposes as
non-operating
result.
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Table of Contents
Notes to the consolidated financial statements
Note 46
Impact from assumption and model update
The 2021 assumption changes and model updates resulted in a negative impact of EUR 298 million and mainly relates to Aegon’s businesses in the Americas and the Netherlands. Assumption changes and model updates in the Americas led to a net negative impact of EUR 250 million. This mainly reflects a charge of EUR 123 million related to an update of the minimum surrender rate assumption for variable annuities with guaranteed lifetime withdrawal benefits from 2% to 1.5% to reflect latest portfolio and industry experience. Assumption changes and model updates in the Netherlands led to a negative impact of EUR 52 million, mainly related to adverse impacts from a more granular modeling driven by the conversion of the administration of defined benefit pensions to TKP. This was partly offset by the favorable impact of model updates relating to interest guarantees and indexation assumptions for certain pension products.
Other selected income statement items
  Americas  
The
 Netherlands
  
United
 Kingdom
    International   
Asset
 Management
   
 Holding and
other
activities
    Total  
2021
           
Amortization of deferred expenses, VOBA and future servicing rights   929   -   113    61    -    -   1,103 
Depreciation   56   20   6    15    2    1   99 
Impairment charges / (reversals) on financial assets, excluding receivables   (23)   (14)   -    -    -    (8)   (45)  
Impairment charges / (reversals) on non-financial assets and receivables   37   12   -    -    1    11   60 
46.4 Premium income and premium paid to reinsurers
2021 
Life insurance12,077 
Non-life
insurance
1,654 
Total premium income
13,731 
Accident and health insurance1,389 
General insurance265 
Non-life
insurance premium income
1,654 
2021 
Life insurance3,292 
Non-life
insurance
126 
Total premiums paid to reinsurers
3,418 
Accident and health insurance118 
General insurance8 
Non-life
insurance premiums paid to reinsurers
126
46.5 Investment income
2021 
Interest income3,536 
Dividend income1,327 
Rental income29 
Total investment income
4,893 
Interest income accrued on impaired financial assets53 
Interest income on financial assets that are not carried at Fair value through profit or loss3,047 
Lease income is included within rental income.
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Total investment income from:
2021
Shares1,327
Debt securities and money market instruments2,970
Loans499
Real estate29
Other68
Total
4,893
Investment income is split into:
2021
Investment income related to general account3,249
Investment income for account of policyholders1,644
Total
4,893
Investment income from financial assets held for general account:
Available-for-sale
2,674
Loans499
Financial assets designated at fair value through profit or loss97
Real estate(1) 
Derivatives(4) 
Other(15) 
Total
3,249
46.6 Fee and commission income
2021
Fee income from asset management1,647
Commission income640
Other168
Total fee and commission income
2,454
Included in fee and commission income:
Fees on trust and fiduciary activities259
46.7 Income from reinsurance ceded
2021
Recovered claims and benefits3,377
Change in technical provisions738
Commissions147
Amortization charges2
Total
4,263
46.8 Result from financial transactions
Results from financial transactions comprise:
2021
Net fair value change of general account financial investments at fair value through profit or loss, other than derivatives807
Realized gains and (losses) on financial investments392
Gains and (losses) on investments in real estate-
Net fair value change of derivatives761
Net fair value change on account of policyholder financial assets at fair value through profit or loss22,539
Net fair value change on investments in real estate for account of policyholders46
Net foreign currency gains and (losses)182
Net fair value change on borrowings and other financial liabilities(13) 
Total
24,715
 352  |  Annual Report on Form 20-F 2023
Notes to the consolidated financial statements
Note 46
Net fair value change of general account financial investments at
fair value through profit or loss, other than derivatives comprise:
2021
Shares27
Debt securities and money market investments(26) 
Other807
Total
807
Other mainly includes net fair value changes of limited partnerships such as hedge and private equity funds.
Realized gains and losses on financial investments comprise:
2021
Shares16
Debt securities and money market investments281
Loans125
Other(30) 
Total
392
Realized gains and losses on financial investments comprise:
2021
Available-for-sale
investments
268
Loans125
Total
392
Net fair value change of derivatives comprise:
2021
Net fair value change on economic hedges where no hedge accounting is applied(265) 
Net fair value change on bifurcated embedded derivatives1,023
Ineffective portion of hedge transactions to which hedge accounting is applied4
Total
761
The ineffective portion of hedge transactions to which hedge
accounting is applied comprises:
2021
Fair value change on hedging instruments in a fair value hedge(3) 
Fair value change on hedged items in a fair value hedge6
Ineffectiveness fair value hedge3
Ineffectiveness cash flow hedges1
Total
4
Net fair value change on for account of policyholder financial
assets at fair value through profit or loss comprise:
2021
Shares2,661
Debt securities and money market investments(557) 
Unconsolidated investment funds20,833
Derivatives(398) 
Total
22,539
Net fair value change on borrowings and other financial liabilities
2021
Borrowings-
Other financial liabilities(13) 
Total
(13
) 
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46.9 Other income
2021
Other income49
Other income in 2021 includes a gain of EUR 38 million related to the sale of a
small-sized
Individual Retirement Account (IRA) portfolio to a third party.
46.10 Policyholder claims and benefits
2021
Benefits and claims paid life16,971
Benefits and claims paid
non-life
1,240
Change in valuation of liabilities for insurance contracts19,504
Change in valuation of liabilities for investment contracts2,420
Other(38) 
Total
40,097
Policyholder claims and benefits includes claims and benefits in excess of account value for products for which deposit accounting is applied and the change in valuation of liabilities for insurance and investment contracts. The lines ‘‘Change in valuation of liabilities for insurance contracts’’ and ‘‘Change in valuation of liabilities for investment contracts’’ reflect movements in technical provisions resulting from “Net fair value change on for account of policyholder financial assets at fair value through profit or loss” included in this note (refer to 46.8 Results from financial transactions) of EUR 22,539 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 863 million.
46.11 Profit sharing and rebates
2021
Surplus interest bonuses1
Profit appropriated to policyholders7
Total
8
46.12 Commissions and expenses
2021
Commissions2,539
Employee expenses1,511
Administration expenses1,294
Deferred expenses(1,160) 
Amortization of deferred expenses933
Amortization of VOBA and future servicing rights171
Total
5,286
Included in administration expenses:
Depreciation of equipment, software and real estate held for own use80
 354  |  Annual Report on Form 20-F 2023
Table of Contents
Notes to the consolidated financial statements
Note 46
Employee expenses
2021
Salaries1,092
Post-employment benefit costs126
Social security charges100
Other personnel costs150
Shares43
Total
1,511
Included in employee expenses:
Defined contribution expenses35
In 2021, Aegon expanded the dynamic hedge covering the equity and interest rate risks of its US Variable Annuities block with guaranteed minimum withdrawal benefits (GMWB) to the entire VA portfolio. Implementing the VA dynamic hedging program for variable annuities with interest sensitive guaranteed minimum income benefits (GMIBs) and guaranteed minimum death benefits (GMDBs) resulted in an EUR 350 million
one-time
charge as per December 31, 2021, of which EUR 254 million is reported as “Amortization of deferred expenses” and EUR 96 million is reported as “Amortization of VOBA and future servicing rights”.
46.13 Impairment charges / (reversals)
Impairment charges / (reversals) comprise:
2021
Impairment charges on financial assets, excluding receivables11
Impairment reversals on financial assets, excluding receivables(42) 
Impairment charges and reversals on
non-financial
assets and receivables
48
Total
16
Impairment charges on financial assets, excluding receivables,
from:
2021
Shares1
Debt securities and money market instruments9
Loans-
Total
11
Impairment reversals on financial assets, excluding receivables, from:
2021
Shares(8) 
Debt securities and money market instruments(30) 
Loans(0) 
Other(4) 
Total
(42
)  
46.14 Interest charges and related fees
2021
Subordinated loans110
Trust pass-through securities8
Borrowings65
Other64
Total
246
Included in interest charges and related fees:
Interest charges accrued on financial liabilities not carried at fair value through profit or loss121
Other includes interest charges on short term borrowings and bank fees.
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46.15 Other charges
2021
Other charges
101
Other charges in 2021 are mainly related to settlements of certain universal life policies in the US.
46.16 Income tax
2021
Current tax
Current year(18) 
Adjustments to prior years(6) 
(24
) 
Deferred tax
Origination / (reversal) of temporary differences163
Changes in tax rates / bases(39) 
Changes in deferred tax assets as a result of recognition / write off of previously not recognized / recognized tax losses, tax credits and deductible temporary differences(5) 
Non-recognition
of deferred tax assets
9
Adjustments to prior years(9) 
119
Income tax for the period (income) / charge
95
Reconciliation between standard and effective income tax:
2021
Result before tax from continuing operations1,164
Income tax calculated using weighted average applicable statutory tax rates231
Difference due to the effects of:
Non-taxable
income
(57) 
Non-tax
deductible expenses
21
Changes in tax rate/base(39) 
Different tax rates on overseas earnings-
Tax credits(48) 
Other taxes38
Adjustments to prior years(15) 
Change in uncertain tax positions(16) 
Changes in deferred tax assets as a result of recognition / write off of previously not recognized / recognized tax losses, tax credits and deductible temporary differences(5) 
Non-recognition
of deferred tax assets
9
Tax effect of (profit) / losses from joint ventures and associates(18) 
Other(5) 
(136
)
Income tax for the period (result) / charge
95
The weighted average applicable statutory tax rate for 2021 is 19.9%.
Non-taxable
income in 2021 is comprised of the regular
non-taxable
items such as the dividend received deduction in the United States and the participation exemption in the Netherlands.
In the Netherlands, the enacted corporate income tax rate increased from 25% to 25.8% as from January 1, 2022 which resulted in a favorable tax rate impact in 2021.
 356  |  Annual Report on Form 20-F 2023
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Notes to the consolidated financial statements
Note 46
Tax credits mainly include tax benefits from United States investments that provide affordable housing to individuals and families that meet median household income requirements.
In 2021, changes in uncertain tax positions relate to a partial release of certain reassessed tax provisions in the United States.
The following tables present income tax related to components of other comprehensive income and retained earnings.
2021
Items that will not be reclassified to profit and loss:
Changes in revaluation reserve real estate held for own use1
Remeasurements of defined benefit plans(78) 
(77
)
Items that may be reclassified subsequently to profit and loss:
(Gains) / losses on revaluation of
available-for-sale
investments
269
(Gains) / losses transferred to the income statement on disposal and impairment of
available-for-sale
investments
71
Changes in cash flow hedging reserve47
Movement in foreign currency translation and net foreign investment hedging reserve3
390
Total income tax related to components of other comprehensive income
313
2021
Income tax related to equity instruments and other
Income tax related to equity instruments13
Other3
Total income tax recognized directly in retained earnings
16
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46.17 Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the net result attributable to owners, after deduction of coupons on perpetual securities and
non-cumulative
subordinated notes by the weighted average number of common shares, excluding common shares purchased by the Company and held as treasury shares.
2021
Continuing and discontinued operations
Net result attributable to owners of Aegon Ltd from continuing and discontinued operations1,980
Coupons on perpetual securities(39) 
Net result attributable to owners for basic earnings per share calculation from continuing and discontinued operations
1,941
Net result attributable to common shareholders from continuing and discontinued operations1,928
Net result attributable to common shareholders B from continuing and discontinued operations13
Weighted average number of common shares outstanding (in million)2,043
Weighted average number of common shares B outstanding (in million)559
Basic earnings per common share (EUR per share) from continuing and discontinued operations0.94
Basic earnings per common share B (EUR per share) from continuing and discontinued operations0.02
Continuing operations
Net result attributable to owners of Aegon Ltd from continuing operations1,019
Coupons on perpetual securities(39) 
Net result attributable to owners for basic earnings per share calculation from continuing operations
981
Net result attributable to common shareholders from continuing operations974
Net result attributable to common shareholders B from continuing operations7
Weighted average number of common shares outstanding (in million)2,043
Weighted average number of common shares B outstanding (in million)559
Basic earnings per common share (EUR per share) from continuing operations0.48
Basic earnings per common share B (EUR per share) from continuing operations0.01
Discontinued operations
Net result attributable to owners of Aegon Ltd from discontinued operations960
Coupons on perpetual securities-
Net result attributable to owners for basic earnings per share calculation from discontinued operations
960
Net result attributable to common shareholders from discontinued operations954
Net result attributable to common shareholders B from discontinued operations7
Weighted average number of common shares outstanding (in million)2,043
Weighted average number of common shares B outstanding (in million)559
Basic earnings per common share (EUR per share) from discontinued operations0.47
Basic earnings per common share B (EUR per share) from discontinued operations0.01
46.18 Derivatives
Derivatives designated as fair value hedges
For the years ended December 31, 2021, the gains and (losses) related to the ineffectiveness portion of designated fair value hedges Aegon recognized are as follows:
2021
Gains (losses) related to the ineffectiveness portion of designated fair value hedges3
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Notes to the consolidated financial statements
Note 46
Derivatives designated as cash flow hedges
Hedge ineffectiveness and reclassification of gains (losses)
2021
Hedge ineffectiveness on cash flow hedges1
Gains (losses) reclassified from equity into the income statement(38) 
Expected deferred gain (loss) to be reclassified from equity into net result during the next 12 months113
46.19 Shareholders’ equity
    
Note
       2021 
Share capital – par value     321 
Share premium        7,033 
Total share capital
    
 
7,354
 
Retained earnings     12,166 
Treasury shares        (273) 
Total retained earnings
    
 
11,892
 
Revaluation reserves  
 
46.19.1
 
   6,442 
Remeasurement of defined benefit plans  
 
46.19.2
 
   (2,199) 
Other reserves  
 
46.19.3
 
   325 
   
Total shareholders’ equity
       
 
23,813
 
46.19.1 Revaluation reserves
    
Available-for-sale
investments
  
 Real estate held for
own use
  
Cash flow
hedging reserve
      Total 
At January 1, 2021   6,248   35   1,197   7,480 
Gross revaluation   (3,930)   (4)   (122)   (4,057) 
Shadow accounting adjustment   2,759   -   -   2,759 
Net (gains) / losses transferred to income statement   (450)   -   (106)   (556) 
Foreign currency translation differences   362   1   84   447 
Tax effect   322   1   47   370 
Other   (1)   -   -   (1) 
     
At December 31, 2021
  
 
5,309
 
 
 
32
 
 
 
1,100
 
 
 
6,442
 
The revaluation accounts for both
available-for-sale
investments and for real estate held for own use include unrealized gains and losses on these investments, net of tax. Upon sale, the amounts realized are recognized in the income statement (for
available-for-sale
investments) or transferred to retained earnings (for real estate held for own use). Upon impairment, unrealized losses are recognized in the income statement.
The closing balances of the revaluation reserve for
available-for-sale
investments relate to the following instruments:
2021
Shares49
Debt securities5,276
Other(15) 
Revaluation reserve for
available-for-sale
investments
5,309
The cash flow hedging reserve includes (un)realized gains and losses on the effective portions of hedging instruments, net of tax. The amounts are recognized in the income statement at the moment of realization of the hedged position to offset the gain or loss from the hedged cash flow. No amounts have been released from equity to be included in the initial measurement of
non-financial
assets or liabilities.
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46.19.2 Remeasurement of defined benefit plans
2021
At January 1(2,534) 
Remeasurements of defined benefit plans501
Tax effect(102) 
Net exchange differences(65) 
At December 31, 2021
(2,199
) 
46.19.3 Other reserves
    
Foreign
currency
translation
reserve
  
Net foreign
investment
hedging reserve
  
Equity
movements of
joint ventures
and associates
      Total 
At January 1, 2021   (403)   (199)   48   (554) 
Movement in foreign currency translation and net foreign investment hedging reserves   1,013   (165)   -   848 
Disposal of a business   10   (2)   -   8 
Tax effect   (24)   27   -   3 
Equity movements of joint ventures   -   -   25   25 
Equity movements of associates   -   -   (6)   (6) 
     
At December 31, 2021
  
 
596
 
 
 
(338
) 
 
 
67
 
 
 
325
 
The foreign currency translation reserve includes the currency results from investments in
non-euro
denominated subsidiaries. The amounts are released to the income statement upon the sale of the subsidiary.
The net foreign investment hedging reserve is made up of gains and losses on the effective portions of hedging instruments, net of tax. The amounts are recognized in the income statement at the moment of realization of the hedged position to offset the gain or loss from the net foreign investment.
The equity movements of joint ventures and associates reflect Aegon’s share of changes recognized directly in the joint venture’s and associate’s equity.
46.20 Companies and businesses aquired and divested
Companies and businesses acquired
2021
There were no significant acquisitions in 2021
Companies and businesses divested
2021
On February 28, 2021, Aegon successfully completed the divestment of Stonebridge, a
UK-based
provider of accident insurance products to Global Premium Holdings group, part of Embignell group. Under the terms of the agreement, Aegon sold Stonebridge for a consideration of approximately GBP 60 million (EUR 65 million), consisting of the purchase price and dividends related to the transaction. This excludes a contingent consideration of up to GBP 10 million. The transaction had no material impact on Aegon’s capital position and results
 360  |  Annual Report on Form 20-F 2023
Table of Contents
Notes to the consolidated financial statements
Note 46
46.21 Related party transactions
2021
Board of Directors
1)
0.9
CEO Meeting4.9
Key Management27.5
- In fixed compensation16.8
- In cash based variable compensation3.6
- In share based variable compensation3.2
- In pension contributions2.8
- In other benefits1.1
1 Based on a Decree of the Dutch State Secretary of Finance which came into force as from May 7, 2021, the Board of Directors fees were not subject to Dutch VAT anymore, retroactively as from June 13, 2019. Therefore, Aegon has not paid Dutch VAT anymore on the fees of the Board of Directors Members as from Q2 2021. Additionally, Aegon reclaimed VAT for the period Q1 2020 - Q1 2021, except for its Board of Directors members based in the Netherlands for practical reasons.
46.22 Discontinued operations
Amounts in EUR millions2021
Discontinued operations
Premium income1,713
Investment income2,074
Fee and commission income331
Other revenues-
Total revenues
4,118
Income from reinsurance ceded26
Results from financial transactions(444) 
Other income27
Total income
3,727
Premiums paid to reinsurers99
Policyholder claims and benefits1,755
Profit sharing and rebates7
Commissions and expenses698
Impairment charges / (reversals)(2) 
Interest charges and related fees89
Other charges3
Total charges
2,649
Result from discontinued operations before share in profit /
(loss) of joint ventures, associates and tax
1,078
Share in profit / (loss) of joint ventures33
Share in profit / (loss) of associates127
Result before tax from discontinued operations
1,237
Income tax (expense) / benefit(276) 
Result after tax from discontinued operations
960
Impairment loss on remeasurement of the disposal group-
Net result from discontinued operations after remeasurement
960
Annual Report on Form 20-F 2023  |  361 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Amounts in EUR millions2021
Net result from discontinued operations
960
Items that will not be reclassified to profit or loss:
Changes in revaluation reserve real estate held for own use1
Remeasurements of defined benefit plans156
Income tax relating to items that will not be reclassified(24) 
Items that may be reclassified subsequently to profit or loss:
Gains / (losses) on revaluation of
available-for-sale
investments
155
(Gains) / losses transferred to income statement on disposal and impairment of
available-for-sale
investments
(114) 
Equity movements of joint ventures-
Equity movements of associates(1) 
Income tax relating to items that may be reclassified(18) 
Other1
Total other comprehensive income / (loss) from discontinued operations
156
Total comprehensive income / (loss) from discontinued operations
1,117
Amounts in EUR millions2021
Net cash inflow (outflow) from operating activities(167) 
Net cash inflow (outflow) from investing activities31
Net cash inflow (outflow) from financing activities(1,835) 
Net cash inflow (outflow) from discontinued operations
(1,972
) 
46.23 Other financial information
Schedules to the financial statements
Schedule III
Supplementary insurance information
Segment
Amounts in EUR million
  
Deferred policy
acquisition costs
   
Future policy
benefits
   
 Unearned
premiums
   
 Other policy claims
and benefits
   
Premium
revenue
 
2021
          
Americas   8,648    192,099    6,335    1,934    8,190 
The Netherlands   235    67,226    50    1,019    1,713 
United Kingdom   796    111,458    -    -    4,616 
International   391    9,735    163    110    924 
Holding and other activities   -    -    -    -    - 
Eliminations   -    (1,611)    -    -    - 
      
Total
  
 
10,070
 
  
 
378,907
 
  
 
6,548
 
  
 
3,062
 
  
 
  15,444
 
Amounts in EUR million  
Net investment
income
  
 Benefits, claims
and losses
   
Amortization of
deferred policy
 acquisition costs
   
Other
operating
  expenses
  
Premiums
written
 
2021
        
Americas   2,909   10,111    741    3,003   5,023 
The Netherlands   2,088   3,249    -    806   1,614 
United Kingdom   1,691   7,343    96    523   4,419 
International   298   757    62    345   870 
Asset Management   -   -    -    411   - 
Holding and other activities   (4)   -    -    180   - 
Eliminations   (15)   -    -    (183)   - 
      
Total
  
 
6,967
 
 
 
21,460
 
  
 
899
 
  
 
5,085
 
 
 
  11,926
 
 362  |  Annual Report on Form 20-F 2023
Table of Contents
Notes to the consolidated financial statements
Note 51
 
generations of traditional accumulation products written. Older generations contain a 4% guarantee; in 1999 the guarantee decreased to 3% and in 2013 the guarantee decreased to 0%.
The traditional group pension contracts offered by Aegon in the Netherlands include large group insurance contracts that have an individually determined asset investment strategy underlying the pension contract. The guarantee given is that the profit sharing is the minimum of 0% and the realized return on an asset portfolio specified in the policy conditions, adjusted for technical interest rates ranging from 3% to 4%. If the adjusted return is negative, the 0% minimum is effective, but the loss in any given year is carried forward to be offset against any future surpluses within the contract period. In general, a guarantee is given for the life of the underlying employees so that their pension benefit is guaranteed. Large group contracts also share technical results (mortality risk and disability risk). The contract period is typically five years and the premiums are fixed over this period.
These guarantees are valued at fair value and are included as part of insurance liabilities with the underlying host insurance contracts in note 34 Insurance contracts.
The following table provides information on the liabilities for guarantees that are included in the valuation of the host contracts, net of the present value of the expected future premiums that are received to cover these guarantees:
          2022              2021            
   
   
GMI 
1), 2)
  GMI 
1), 2)
   
At January 1
   6,429   7,973 
   
Incurred guarantee benefits
3)
   (3,471)   (1,544) 
   
At December 31
  
 
2,958
 
 
 
6,429
 
   
Account value
4)
   16,559   20,176 
   
Net amount at risk
5)
   3,133   6,794 
1 
Guaranteed minimum investment return in the Netherlands.
2 
Balances are included in the insurance liabilities on the face of the statement of financial position; refer to note 34 Insurance contracts.
3 
Incurred guarantee benefits mainly comprise the effect of guarantees from new contracts, releases related to expired
out-of-the-money
guarantees and fair value movements during the reporting year.
4 
Account value reflects the liability value of the insurance contracts as a whole.
5 
The net amount at risk represents the sum of the differences between the guaranteed and actual amount that is credited to the policyholders. For Individual policies only positive differences are included, for Group pensions contracts carry forwards of negative differences are recognized.
Borrowings
Operational funding
    Coupon rate    Coupon date    Issue / Maturity   
 
                    2022
 
     
Revolving Loan Facility Warehouse Mortgage Loans
   Floating    Monthly    - / 23    260 
     
Revolving Loan Facility Warehouse Mortgage Loans
   Floating    Monthly    - / 24    250 
     
Revolving Loan Facility Warehouse Mortgage Loans
   Floating    Monthly    - / 25    271 
     
EUR 875 million “SAECURE 16” RMBS Note
1)
   Floating    Quarterly    2018 / 23    609 
     
EUR 550 million “SAECURE 18” NHG RMBS Note
2)
   Floating    Quarterly    2019 / 25    300   
     
EUR 750 million “SAECURE 20” RMBS Note
3)
   Floating    Quarterly    2021 / 27    542 
     
EUR 500 million Conditional Pass-Through Covered Bond
4)
   0.250%    Annual    2016 / 23    500 
     
EUR 500 million Conditional Pass-Through Covered Bond
5)
   0.375%    Annual    2017 / 24    499 
     
EUR 500 million Conditional Pass-Through Covered Bond
6)
   0.010%    Annual    2020 / 25    505 
     
EUR 500 million Conditional Pass-Through Covered Bond
7)
   0.750%    Annual    2017 / 27    493 
     
EUR 500 million Conditional Pass-Through Covered Bond
8)
   0.375%    Annual    2021 / 36    494 
     
Aegon Bank Senior
Non-Preferred
debt
   0.625%    Annual    2019 / 24    499 
     
Other
                  5 
     
At December 31
                 
 
5,227
 
1 
The first optional redemption date is October 30, 2023; the final legal maturity date is October 30, 2091. Notes are fully collateralized by mortgage loans which are part of Aegon’s general account investments.
2 
The first optional redemption date is July 28, 2025; the final legal maturity date is April 28, 2092. Notes are fully collateralized by mortgage loans which are part of Aegon’s general account investments.
3 
The first optional redemption date is October 28, 2027; the final legal maturity date is April 28, 2093. Notes are fully collateralized by mortgage loans which are part of Aegon’s general account investments.
4 
The maturity date is May 25, 2023; the extended due for payment date is May 25, 2055.
5 
The maturity date is November 21, 2024; the extended due for payment date is November 21, 2056.
6 
The maturity date is November 16, 2025; the extended due for payment date is November 16, 2057.
7 
The maturity date is June 27, 2027; the extended due for payment date is June 27, 2059.
8 
The maturity date is June 9, 2036; the extended due for payment date is June 9, 2037.
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Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
Defined benefit plans
Aegon the Netherlands has a number of defined benefit plans and defined contribution plans. The defined benefit plans are subject to Dutch Pension regulations and governed by the Board of Directors of Aegon the Netherlands. The Board of Directors has the full power and discretion to administer the plan including developing investment policy and managing assets for the plans (although these assets do not qualify as ‘plan assets’ as defined by IFRS), deciding questions related to eligibility and benefit amounts, and any disputes that may arise from plan participants and for complying with the plan provisions, and legal requirements related to the plan and its operation. Aegon the Netherlands runs, in principle, full actuarial and investment risk regarding the defined benefit plans. This includes the risks of low interest rates, low returns and increased longevity. A part of this risk can be attributed to plan participants by lowering indexation or by increasing employee contributions.
Furthermore, the specific statutory requirements governing the administration of group pension schemes have been laid down in the Pension Act (Pensioenwet / Pw). Insurers are subject to prudential supervision pursuant to the Financial Supervision Act (Wet op het financieel toezicht / Wft).
Investment strategies are established based on asset and liability studies. The overall goal is to maximize total investment returns to provide sufficient funding for the present and anticipated future benefit obligations within the constraints of a prudent level of portfolio risk. These studies use for example return objectives and various investment instruments. Investment restrictions are updated regularly and they result in asset allocation mix and hedges.
As at December 31, 2019, Aegon the Netherlands amended the defined benefit pension plan for their own employees. As of January 1, 2020, the defined benefit pension plan is closed for new members and there will be no further accrual of benefits to existing members. Entitlements before January 1, 2020, will remain unchanged and the indexation for those accruals will remain in force.
The contributions to the retirement benefit plan of Aegon the Netherlands are paid by both the employees and the employer, with the employer contribution being variable. Aegon the Netherlandsdeducts employee contributions from the total pension expenses. The benefits covered are retirement benefits, disability, death and survivor pension. The defined benefit plans were unfunded by EUR 2,421 million at December 31, 2022 (2021: EUR 3,409 million). The defined benefit plans are largely backed by investment, although these assets do not qualify as ‘plan assets’ as defined by IFRS. The average remaining duration of the defined benefits obligation is 14.3 years (2021: 20.9 years).
Aegon the Netherlands also has a post-retirement medical plan that contributes to the health care coverage of employees and beneficiaries after retirement. For this plan, Aegon the Netherlands has the responsibility to administer the plan in accordance with its terms, and decides on questions related to eligibility and determines plan provisions and benefit amounts. In addition, Aegon the Netherlands has the obligation to interpret the provisions of the plans, and to comply with any statutory reporting and disclosure requirements. Finally, Aegon the Netherlands reviews the terms of the plans and makes changes to the plans if and when appropriate. The liabilities related to these other post-employment benefit plans are fully unfunded and amount to EUR 41 million at December 31, 2022 (2021: EUR 57 million). The weighted average duration of the other post-employment benefit plans is 10.2 years (2021: 12.7 years).
The principal actuarial assumptions that apply for the year-ended December 31 are as follows:
Actuarial assumptions used to determine defined benefit obligations at
year-end
              2022     2021  
   
Demographic actuarial assumptions
          
   
Mortality   
NL mortality
table
1)
 
 		   
    NL mortality
table
1)
 
 
   
Financial actuarial assumptions
          
   
Discount rate   3.61%    1.01% 
   
Salary increase rate
2)
   Curve 2022    Curve 2021   
   
    Percentage is no    53.05% of 
Indexation
2)
   longer derived    Curve 2021 
1 
Based on prospective mortality table of the Dutch Actuarial Society with minor methodology adjustments.
2 
Based on Dutch Consumer Price Index.
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Table of Contents
Notes to the consolidated financial statements
Note 51
The principal actuarial assumptions have an effect on the amounts reported for the defined benefit obligation. A change as indicated in the table below in the principal actuarial assumptions of the retirement benefit plan would have the following effects per
year-end:
    Estimated approximate effects on  
the defined benefit obligation  		 
   
   
2022
  2021     
   
Demographic actuarial assumptions
        
   
10% increase in mortality rates
  (38)   (100) 
   
10% decrease in mortality rates
  41   112 
   
Financial actuarial assumptions
        
   
100 basis points increase in discount rate
  (221)   (622) 
   
100 basis points decrease in discount rate
  281   849 
   
100 basis points increase in salary increase rate
  -   - 
   
25 basis points increase in indexation
  n/a   187     
   
25 basis points decrease in indexation
  n/a   (170) 
The above sensitivity analysis is based on a change in one assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit obligation recognized within the statement of financial position.
Fair value
Fair value hierarchy
The table below provides an analysis of assets and liabilities of Aegon the Netherlands recorded at fair value on a recurring basis by level of the fair value hierarchy:
              Level I             Level II             Level III   
          Total 2022
 
     
Assets carried at fair value
                    
     
Available-for-sale
investments
                    
     
Shares
   -    -    21    21 
     
Debt securities
   7,897    6,159    54    14,109   
     
Other investments at fair value
   -    13    -    13 
     
   
 
7,897
 
  
 
6,171
 
  
 
75
 
  
 
14,143
 
     
Fair value through profit or loss
                    
     
Shares
   32    -    1,357    1,390 
     
Debt securities
   87    1,279    44    1,410 
     
Other investments at fair value
   -    -    64    64 
     
Investments for account of policyholders
1)
   10,782    7,383    932    19,097 
     
Derivatives
   127    8,268    -    8,394 
     
Investments in real estate
   -    -    2,545    2,545 
     
   
 
11,029
 
  
 
16,930
 
  
 
4,942
 
  
 
32,900
 
     
Revalued amounts
                    
     
Real estate held for own use
   -    -    76    76 
     
    -    -    76    76 
     
Total assets at fair value
  
 
18,925
 
  
 
23,101
 
  
 
5,092
 
  
 
47,118
 
     
Liabilities carried at fair value
                    
     
Investment contracts for account of policyholders
2)
   -    1,291    105    1,396 
     
Derivatives
   3    8,482    754    9,239 
     
Total liabilities at fair value
3)
  
 
3
 
  
 
9,773
 
  
 
859
 
  
 
10,635
 
1 
The investments for account of policyholders included in the table above only include 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.

Aegon Annual Report on Form 20-F 2022  |  299
Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
Significant transfers between Level I, Level II and Level III
The table below shows transfers between Level I and Level II of Aegon the Netherlands for financial assets and financial liabilities recorded at fair value on a recurring basis.
Total 2022
Transfers Level I
to Level II		  Transfers Level II
to Level I
Assets carried at fair value
Available-for-sale
Investments for account of policyholders
-12
Total assets at fair value
 
-
 
12
Valuation techniques and significant unobservable inputs
The table below pres
e
nts information about the significant unobservable inputs used for recurring fair value measurements for certain Level III financial instruments of Aegon the Netherlands.
Valuation
technique 
1)
Significant
unobservable input 
2) 
December 31, 2022  
Assets carried at fair value
Available-for-sale
Shares
Net asset valuen.a.-
Othern.a.21
21
Debt securities
Broker quoten.a.54
54
At December 31
75
Fair value through profit or loss
Shares
Othern.a.1,357
Debt securities
Othern.a.44
1,401
Other investments at fair value
Investment funds
Net asset valuen.a.-
Other
Othern.a.64
64
Total assets at fair value
3)
1,540
Liabilities carried at fair value
Derivatives
Embedded derivatives in insurance contracts
Discounted cash flowOwn credit spread754
Total liabilities at fair value
754
1 
Other in the table above (column Valuation technique) includes investments for which the fair value is uncorroborated and no broker quote is received.
2 
Not applicable (n.a.) has been included when the unobservable inputs are not developed by the Group and are not reasonably available. Refer to the section Fair value measurement in this note for a detailed description of Aegon’s methods of determining fair value and the valuation techniques.
3 
Investments for account of policyholders are excluded from the table above and from the disclosure regarding reasonably possible alternative assumptions. Policyholder assets, and their returns, belong to policyholders and do not impact Aegon’s net result or equity. The effect on total assets is offset by the effect on total liabilities.
300  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
Notes to the consolidated financial statements
Note 51
Effect of changes in significant unobservable assumptions to reasonably possible alternatives
The table below presents the impact on a fair value measurement of Aegon the Netherlands of a change in the own credit spread by 5 basis points included in the discount rate.
   
December 31, 2022
   
Effect of reasonably possible
alternative assumptions (+/-)
 
    
         
Increase
   
Decrease
 
    
Financial liabilities carried at fair value
               
    
Embedded derivatives in insurance contracts
   754    4    (4)   
Fair value information about assets and liabilities not measured at fair value
The following table presents the carrying values and estimated fair values for Aegon the Netherlands of assets and liabilities, excluding assets and liabilities which are carried at fair value on a recurring basis.
    
Carrying amount
December 31,
2022
   
Estimated fair
value hierarchy
        
Total estimated  
fair value  
December 31,  
2022  
 
      
         Level I   Level II   Level III      
      
Assets
                         
      
Mortgage loans - held at amortized cost
   31,430    -    -    28,477    28,477   
      
Private loans - held at amortized cost
   4,484    -    -    3,966    3,966 
      
Other loans - held at amortized cost
   3    -    -    3    3 
      
Liabilities
                         
      
Borrowings - held at amortized cost
   5,227    -    -    4,920    4,920 
      
Investment contracts - held at amortized cost
   12,179    -    -    11,826    11,826 
Summary of total financial assets and financial liabilities at fair value through profit or loss
The table that follows summarizes the carrying amounts of financial assets and financial liabilities of Aegon the Netherlands that are classified as at fair value through profit or loss, with appropriate distinction between those financial assets and financial liabilities held for trading and those that, upon initial recognition, were designated as at fair value through profit or loss.
   
2022        
 
    
            Trading                Designated   
    
Investments for general account
   -         2,864 
    
Investments for account of policyholders
   -         19,097   
    
Derivatives with positive values not designated as hedges
   6,522         - 
    
Total financial assets at fair value through profit or loss
  
 
6,522
 
       
 
21,960
 
    
Investment contracts for account of policyholders
   -         1,396 
    
Derivatives with negative values not designated as hedges
   8,378         - 
    
Total financial liabilities at fair value through profit or loss
  
 
8,378
 
       
 
1,396
 
Gains and losses on financial assets and financial liabilities classified at fair value through profit or loss
Gains and losses recognized in the income statement on financial assets and financial liabilities classified as at fair value through profit or loss can be summarized as follows:
   
2022        
 
    
            Trading               Designated  
    
Net gains and (losses)
   (6,495)        (4,031)  
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Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
Commitments and contingencies
Investments contracted
In the normal course of business, Aegon the Netherlands has committed itself through purchase and sale transactions of investments, mostly to be executed in the course of 2022. The amounts represent the future outflow and inflow, respectively, of cash related to these investment transactions that are not reflected in the consolidated statement of financial position.
   
2022
 
    
            Purchase                   Sale 
    
Real estate
   341        4 
    
Mortgage loans
   1,094         37   
    
Private loans
   752        - 
    
Other
   209        - 
In the Netherlands, mortgage customers can take on top of their mortgage a construction deposit for home improvements. Undrawn amounts of construction deposits are netted against the outstanding total mortgage loans. Per December 31, 2022 an amount of EUR 387 million (2021: EUR 319 million) of construction deposits is undrawn.
    < 1 year
amounts		  1 < 2 years
amounts		  2 < 3 years
amounts		  3 < 4 years
amounts		  4 < 5 years
amounts		  > 5 years
amounts		 
       
2022
                         
       
Operating lease rights
   (2)   (2)   (1)   (1)   (1)   (2) 
2022
Guarantees
12
Standby letters of credit
11
Share of contingent liabilities incurred in relation to interests in joint ventures
5
Transfers of financial assets
Transferred financial assets that have not been derecognized in their entirety
The following table reflects the carrying amount of financial assets of Aegon the Netherlands that have been transferred to another party in such a way that part or all of the transferred financial assets do not qualify for derecognition. Furthermore, it reflects the carrying amounts of the associated liabilities.
   
                     
   
                     
   
                     
   
       ��             
 
  
    
2022
 
   
    
        Available-for-sale financial assets
   
        Financial assets at fair value through
profit or loss
 
     
    Shares   Debt securities   Debt securities   
Investments for
account of
policyholders
 
     
Carrying amount of transferred assets
   40    656    -    - 
     
Carrying amount of associated liabilities
   43    676    -    
-
   
Assets accepted
The following tables present the fair value of the assets received by Aegon the Netherlands in relation to securities lending and reverse repurchase activities:
Securities lending
                                                        2022
Carrying amount of transferred financial assets
696
Fair value of cash collateral received
-
Fair value of
non-cash
collateral received
719
Net exposure
(23
) 
Non-cash
collateral that can be sold or repledged in the absence of default
719
Non-cash
collateral that has been sold or transferred
-
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Table of Contents
Notes to the consolidated financial statements
Note 51
Reverse repurchase agreements
                                                    2022
Cash paid for reverse repurchase agreements
220
Fair value of
non-cash
collateral received
220
Net exposure
-
Non-cash
collateral that can be sold or repledged in the absence of default
220
Non-cash
collateral that has been sold or transferred
-
As part of Aegon’s mortgage loan funding program in the Netherlands, EUR 5.0 billion (2021: EUR 5.1 billion) has been pledged as security for notes issued (refer to section on Borrowings in this note). The notes of SAECURE 17 and SAECURE 19 are held intercompany and are eliminated against the notes issued by the special purpose entity (SPE) in the consolidation process. Per December 31, 2022, as part of SAECURE 17, EUR 600 million has been posted as collateral with respect to the longevity reinsurance contract with Canada Life Reinsurance (2021: EUR 600 million) and EUR 295 million has been posted as collateral with respect to the longevity reinsurance contract with RGA. The notes from SAECURE 19 are European Central Bank eligible retained notes and therefore generated increased liquidity capacity.
Offsetting, enforceable master netting arrangements and similar agreements
The following table only includes financial positions of Aegon the Netherlands for which there is a recognized corresponding position that could be offset under a legally enforceable master netting arrangement or similar agreement. Aegon the netherlands also enters into collateralized (reverse) repo or security lending and borrowing transaction, for which the collateral is not recognized on the balance sheet. The table provides details relating to the effect, or potential effect, of netting arrangements, including rights to
set-off,
associated with the entity’s recognized financial assets and recognized financial liabilities.
                                                                                                                                                                                     
      
   
Gross amounts
of recognized
financial
assets
   
Gross amounts
of recognized
financial
liabilities set
off in the
statement of
financial
position
   
Net amounts of
financial
assets
presented in
the statement
of financial
position
   
Related amounts not set off in
the statements of financial
position
     
Financial assets subject to
offsetting, enforceable master
netting arrangements and similar
agreements
  Financial
instruments		   Cash collateral
received
(excluding
surplus
collateral)		   Net amount 
       
2022
                              
       
Derivatives
   8,394    -    8,394    8,394    -    -   
       
At December 31
  
 
8,394
 
  
 
-
 
  
 
8,394
 
  
 
8,394
 
  
 
-
 
  
 
-
 
                                                                                                                                                                                                 
      
   
Gross amounts
of recognized
financial
liabilities
   
Gross amounts
of recognized
financial
assets set off
in the
statement of
financial
position
   
Net amounts of
financial
liabilities
presented in
the statement
of financial
position
   
Related amounts not set off in
the statements of financial
position
     
Financial liabilities subject to
offsetting, enforceable master
netting arrangements and similar
agreements
  Financial
instruments		   Cash collateral
pledged
(excluding
surplus
collateral)		   Net amount 
       
2022
                              
       
Derivatives
   8,485    —      8,485    8,419    66    -   
       
At December 31
  
 
8,485
 
  
 
—  
 
  
 
8,485
 
  
 
8,419
 
  
 
66
 
  
 
-
 
Aegon Annual Report on Form 20-F 2022  |  303
Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
52 Events after the reporting period
On January 17, 2023, the Extraordinary General Meeting of shareholders (“EGM”) of Aegon N.V. approved the strategic decision to combine Aegon’s Dutch pension, life and
non-life
insurance, banking and mortgage origination operations with a.s.r. For more information about this transaction, refer to note 51 Discontinued operations.
The Hague, the Netherlands, March 
22
, 2023
Supervisory Board
Executive Board
William L. Connelly
Lard Friese
Mark A. Ellman
Matthew J. Rider
Karen Fawcett
Jack McGarry
Ben J. Noteboom
Caroline Ramsay
Thomas Wellauer
Corien M. Wortmann-Kool
Dona D. Young
304  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
Financial statements of Aegon N.V.
   
   
Schedule IV
Reinsurance
Amounts in EUR million  Gross amount   Ceded to
other companies		   
Assumed from
other companies
   Net amount   
% of amount
assumed to net
 
For the year ended December 31, 2021
          
Life insurance in force
   977,293    611,912    397,882    763,263    52% 
Premiums
          
Life insurance
   13,400    3,326    -    10,074    - 
Non-life insurance
   2,044    192    -    1,852    - 
      
Total premiums
   15,444    3,518    -    11,926    - 
Schedule V
Valuation and qualifying accounts
Amounts in EUR million2021
Balance at January 1
276
Addition charged to earnings
12
Amounts written off and other changes
(57) 
Transfers to disposal groups
-
Currency translation
7
Balance at December 31
238
The provisions can be analyzed as follows:
Mortgages
6
Other loans
112
Receivables
120
Total
238
47 Events after the reporting period
On February 26, 2024 Aegon announced the completion of the sale of its 56% stake in its joint venture in India, Aegon Life Insurance Company, to Bandhan Financial Holdings Limited, an Indian financial services company. The sale was announced in July 2023 and following the receipt of the relevant regulatory approvals, the transaction was closed on February 23, 2024.
The Hague, the Netherlands, April 3, 2024
Board of Directors
Lard Friese
William L. Connelly
Mark A. Ellman
Karen Fawcett
Jack McGarry
Caroline Ramsay
Thomas Wellauer
Corien M. Wortmann-Kool
Dona D. Young
 
Table of contents
 
Financial statements of Aegon N.V.
306
 
Income statement of Aegon N.V.
307
 
Statement of financial position of Aegon N.V.
Notes to the financial statements
of Aegon N.V.
308
 1 
General information
308
 2 
Significant accounting policies
308
 3 
Investment income
308
 4 
Results from financial transactions
309
 5 
Commissions and expenses
309
 6 
Interest charges and related fees
309
 7 
Income tax
309
 8 
Shares in group companies
309
 9 
Loans to group companies
310
 10 
Non-current assets
310
 11 
Receivables
310
 12 
Other current assets
310
 13 
Share capital
312
 14 
Shareholders’ equity
315
 15 
Other equity instruments
316
 16 
Subordinated borrowings
316
 17 
Long-term borrowings
316
 18 
Current liabilities
317
 19 
Commitments and contingencies
317
 20 
Number of employees
317
 21 
Auditor’s remuneration
318
 22 
Events after the reporting period
318
 23 
Proposal for profit appropriation
Other information
319
 
Profit appropriation
320
 
Major shareholders
Other financial information
323
 
Schedule I
324
 
Schedule II
326
 
Schedule III
328
 
Schedule IV
329
 
Schedule V
330
 
Auditor’s report on the
Annual Report on Form 20-F
  
Aegon Annual Report on Form 20-F
2022
2023  |  305
363 		 
Table of Contents
LOGO		 About Aegon
 Governance and risk management
Table of contents
Financial statements of Aegon Ltd.
365  Income statement of Aegon Ltd.
366  Statement of financial position of Aegon Ltd.
Notes to the financial statements
of Aegon Ltd.
367
  1  General information
367
  2  Material accounting policies information
368
  3  Investment income
368
  4  Results from financial transactions
369
  5  Commissions and expenses
369
  6  Interest charges and related fees
369
  7  Income tax
369
  8  Shares in group companies
370
  9  Loans to group companies
370
  10  Non-current assets
370
  11  Receivables
370
  12  Other current assets
370
  13  Share capital
372
  14  Shareholders’ equity
375
  15  Other equity instruments
376
  16  Subordinated borrowings
376
  17  Long-term borrowings
376
  18  Current liabilities
376
  19  Commitments and contingencies
377
  20  Number of employees
377
  21  Auditor’s remuneration
377
  22  Events after the reporting period
378
  23  Proposal for profit appropriation
Other information
379  Profit appropriation
380  Major shareholders
Other financial information
384  Schedule I
385  Schedule II
387  Schedule III
388  Schedule IV
389  Schedule V
390
  
Auditor’s report on the
Annual Report on Form 20-F
 364  |  Annual Report on Form 20-F 2023
Table of Contents
 
Financial informationstatements of Aegon Ltd.  
Non-financial information
   
   
Income statement of Aegon N.V.Ltd.
For the year ended December 31
Amounts in EUR million  
    Note
   
    2023
      2022 
1)
 
Result
     
Investment Income  
 
3
 
   88   21 
Total revenues
    
 
88
 
 
 
21
 
Results from financial transactions  
 
4
 
   21   (30) 
Total result
    
 
108
 
 
 
(9
) 
Charges
     
Commissions and expenses  
 
5
 
   104   68 
Interest charges and related fees  
 
6
 
   137   127 
Total charges
       
 
241
 
 
 
196
 
Result before tax
    
 
(133
) 
 
 
(204
) 
Income tax  
 
7
 
   19   47 
Result after tax
    
 
(114
) 
 
 
(158
) 
Net result group companies  
 
8
 
   (65)   (411) 
Net result
       
 
(179
) 
 
 
(569
) 
 
Amounts in EUR million  
Note
   
            2022     
              2021 
    
Result
              
    
Investment Income
  
 
3
 
   21   13 
    
Total revenues
       
 
21
 
 
 
13
 
    
Results from financial transactions
  
 
4
 
   (30)   3 
    
Total result
       
 
(9
) 
 
 
16
 
    
Charges
              
    
Commissions and expenses
  
 
5
 
   68   80 
    
Interest charges and related fees
  
 
6
 
   127   129 
    
Total charges
 
       
 
 
196
 
 
 
 
 
 
210
 
 
 
    
Result before tax
       
 
(204
) 
 
 
(193
)  
    
Income Tax
  
 
7
 
   47   54 
    
Result after tax
       
 
(158
) 
 
 
(139
) 
    
Net result group companies
  
 
8
 
   (1,275)   2,119 
    
Net result
       
 
(1,433
) 
 
 
1,980
 
1 Comparatives have been restated due to the initial application of IFRS 9 and IFRS 17. Note 2 to the financial statements includes further details on the changes in accounting policies.
 
306  |  Aegon Annual Report on Form 20-F 20222023  |  365 
Table of Contents
LOGO 
About Aegon  Governance and risk management  
Financial statements of Aegon N.V.information
  Sustainability information
   
   
 
Statement of financial position of Aegon N.V.Ltd.
As atOn December 31
Before profit appropriation, amounts in EUR million  
    Note
   
    2023
      2022 
1)
 
Non-current
assets
     
Financial fixed assets
     
Shares in group companies  
 
8
 
   8,536   10,338 
Loans to group companies  
 
9
 
   780   1,435 
Other
non-current
assets
  
 
10
 
   -   109 
    
 
9,316
 
 
 
11,882
 
Current assets
     
Receivables
     
Receivables from group companies  
 
11
 
   138   31 
Other receivables  
 
11
 
   77   236 
Other current assets  
 
12
 
   48   123 
Accrued interest and rent        18   9 
    
 
281
 
 
 
398
 
Cash and cash equivalents
     
Cash and cash equivalents        2,304   1,619 
Total assets
    
 
11,900
 
 
 
13,899
 
Shareholders’ equity
     
Share capital  
 
13
 
   265   319 
Share premium  
 
14
 
   6,853   6,853 
Revaluation account  
 
14
 
   (3,760)   (4,551) 
Legal reserves – foreign currency translation reserve  
 
14
 
   474   736 
Legal reserves in respect of group companies  
 
14
 
   1,134   2,821 
Retained earnings, including treasury shares  
 
14
 
   3,693   4,771 
Remeasurement of defined benefit plans of group companies  
 
14
 
   (1,006)   (1,565) 
Net result  
 
14
 
   (179)   (569) 
    
 
7,475
 
 
 
8,815
 
Other equity instruments  
 
15
 
   1,951   1,943 
Total equity
    
 
9,426
 
 
 
10,758
 
Provisions
     
Deferred tax liability        3   - 
    
 
3
 
 
Non-current
liabilities
     
Subordinated borrowings  
 
16
 
   1,418   1,442 
Long-term borrowings  
 
17
 
   745   1,226 
    
 
2,163
 
 
 
2,669
 
Current liabilities
  
 
18
 
   
Loans from group companies     4   13 
Payables to group companies     73   147 
Other current liabilities     202   282 
Accruals and deferred income        30   31 
        
 
309
 
 
 
472
 
Total liabilities
       
 
2,475
 
 
 
3,141
 
Total equity and liabilities
       
 
11,900
 
 
 
13,899
 
 
             
    
Before profit appropriation, amounts in EUR million  
Note
   
                    2022
                      2021 
    
Non-current assets
              
    
Financial fixed assets
              
    
Shares in group companies
  
 
8
 
   13,594   26,042 
    
Loans to group companies
  
 
9
 
   1,435   1,829 
    
Other non-current assets
  
 
10
 
   109   138 
    
        
 
15,138
 
 
 
28,009
 
    
Current assets
              
    
Receivables
              
    
Receivables from group companies
  
 
11
 
   31   35 
    
Other receivables
  
 
11
 
   236   181 
    
Other current assets
  
 
12
 
   123   90 
    
Accrued interest and rent
        9   6 
    
        
 
398
 
 
 
312
 
    
Cash and cash equivalents
              
    
Cash and cash equivalents
        1,619   1,204 
    
Total assets
       
 
17,155
 
 
 
29,524
 
    
Shareholders’ equity
              
    
Share capital
  
 
13
 
   319   321 
    
Paid-in surplus
  
 
14
 
   6,853   7,033 
    
Revaluation account
  
 
14
 
   (4,465)   6,453 
    
Legal reserves – foreign currency translation reserve
  
 
14
 
   1,008   258 
    
Legal reserves in respect of group companies
  
 
14
 
   2,439   2,316 
    
Retained earnings, including treasury shares
  
 
14
 
   8,916   7,652 
    
Remeasurement of defined benefit plans of group companies
  
 
14
 
   (1,565)    (2,199)  
    
Net result
  
 
14
 
   (1,433)   1,980 
    
        
 
12,071
 
 
 
23,813
 
    
Other equity instruments
  
 
15
 
   1,943   2,363 
    
Total equity
       
 
14,014
 
 
 
26,176
 
    
Non-current liabilities
              
    
Subordinated borrowings
  
 
16
 
   1,442   1,396 
    
Long-term borrowings
  
 
17
 
   1,226   1,266 
    
        
 
2,669
 
 
 
2,662
 
    
Current liabilities
  
 
18
 
         
    
Loans from group companies
        13   7 
    
Payables to group companies
        147   422 
    
Other current liabilities
        282   227 
    
Accruals and deferred income
        31   31 
    
        
 
472
 
 
 
686
 
    
Total liabilities
       
 
3,141
 
 
 
3,349
 
    
Total equity and liabilities
       
 
17,155
 
 
 
29,524
 
1 Comparatives have been restated due to the initial application of IFRS 9 and IFRS 17. Note 2 to the financial statements includes further details on the changes in accounting policies.
 
Aegon Annual Report on Form 20-F
2022
 366  |  Annual Report on Form 20-F 2023
  |  307
 
About AegonGovernance and risk management
Financial information
 Non-financial information
Notes to the financial statements of Aegon Ltd.
Note 1
   
   
Notes to the financial statements
1 General information
On September 29,2023 it was resolved to convert Aegon N.V. into Aegon S.A. via a cross border conversion. On September 30, 2023 the cross border conversion into Aegon S.A. was effectuated and subsequently Aegon S.A. was converted into Aegon Ltd, a Bermuda limited company, and effectuated the change of its legal seat to Bermuda. From October 1, 2023 the Bermuda Monetary Authority has been Aegon’s group supervisor.
Aegon N.V., incorporated and domiciled in the Netherlands,Ltd. is a publican exempted company with liability limited liability companyby shares organized under Dutch lawthe laws of Bermuda and registered with the Bermuda Registrar of Companies under number 202302830 and recorded in the Commercial Register of The Hague registered under number 27076669 and with its registered address at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.
Aegon Ltd. has its headquarters in the Netherlands at Aegonplein 50, 2591 TV, The Hague,Hague. As Aegon Ltd. currently qualifies as
Non-Resident
Company under Dutch law, certain Dutch law provisions remain applicable to it, including certain provisions of title 9 Book 2 of the Netherlands. Dutch Civil Code regarding the preparation and publication of its annual accounts.
Aegon N.V.Ltd. serves as the holding company for the Aegon Group and has listings of its common shares inon Euronext Amsterdam and New York.on NYSE.
Aegon N.V.Ltd. (or ‘the Company’“the Company”) and its subsidiaries (‘Aegon’(“Aegon” or ‘the Group’“the Group”) have life insurance and pensions operations and are also active in savings and asset management operations, accident and health insurance and general insurance and to a limited extent banking operations.insurance. Fully owned businesses by Aegon focuses on three core markets (theinclude the United States, the Netherlands,United Kingdom and the United Kingdom), three growth markets (Spainasset management, and Aegon also operates partnerships in Spain & Portugal, China, and Brazil)Brazil, and one global asset manager. Furthermore, Aegon has activitiesa strategic partnership in Asia and Southern and Eastern Europe. Headquarters are located in The Hague, the Netherlands. The Group employs around 19,00015,700 people worldwide (2021: over 22,000).
(2022: around 15,500)
Please note that the designation is uniformly Aegon Ltd. even if it was Aegon N.V. before October 1, 2023.
2 SignificantMaterial accounting policies information
The financial statements have been prepared in accordance with accounting principles in the Netherlands as embodied in Part 9 of Book 2 of the Dutch Civil Code. In accordance with 2:362.8362 (8) of the Dutch Civil Code, the Company’s financial statements are prepared based on the accounting principles of recognition, measurement and determination of profit, as applied in the consolidated financial statements. These principles also include the classification and presentation of financial instruments, being equity instruments or financial liabilities.
The group companies are stated at their net asset value, determined on the basis of the consolidated accounting policies as applied in the consolidated financial statements of the Group. For details on the accounting policies applied for the group companies, refer tosee the consolidated financial statements.
Revaluation account includes unrealized gains and losses on available-for-sales assets and the positive changes in value that have been recognized in net result relating to investments (including real estate) and which do not have a frequent market listing.
Legal reserves in respect of group companies include net increases in net asset value of subsidiaries and associates since their first inclusion, less any amounts that can be distributed without legal restrictions.
A reference is made to note 2 SignificantMaterial accounting policies information of the consolidated financial statements for the description of the accounting policies applied.
Annual Report on Form 20-F 2023  |  367 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Impact of the implementation of the new accounting policies effective in 2023 is provided in the following tables, including the references to the notes that are impact by the implementation of the accounting policies.
Impact of changes in accounting policies on the income
statement
  
 
Note
 
  
 

 
December 31, 2022
(as previously
reported) 
1)
 
 
 
 
 
Impact of the
change in account-
ing policies (IFRS 9
and 17)
 
 
 
 
  
 
December 31, 2022
(restated)
 
 
Net result group companies  
 
8
 
   (1,275)   864    (411) 
Impact on net result
    
 
(1,433
) 
 
 
864
 
  
 
(569
) 
1 As reported in Aegon’s 2022 Integrated Annual Report dated March 15, 2023.
Impact of changes in accounting policies on the statement
of changes in equity
  
 
Note
 
  
 
December 31, 2022
(as previously
reported) 
1)
 
 
 
 
 
Impact of the
change in account-
ing policies (IFRS 9
and 17)
 
 
 
 
 
 
December 31, 2022
(restated)
 
 
Share capital  
 
13
 
   319   -   319 
Share premium  
 
14
 
   6,853   -   6,853 
Revaluation account  
 
14
 
   (4,465)   (85)   (4,551) 
Legal reserves – foreign currency translation reserve  
 
14
 
   1,008   (272)   736 
Legal reserves in respect of group companies  
 
14
 
   2,439   382   2,821 
Retained earnings, including treasury shares  
 
14
 
   8,916   (4,145)   4,771 
Remeasurement of defined benefit plans of group companies  
 
14
 
   (1,565)   -   (1,565) 
Net result  
 
14
 
   (1,433)   864   (569) 
     
Shareholders’ equity
       
 
12,071
 
 
 
(3,256
) 
 
 
8,815
 
1 As reported in Aegon’s 2022 Integrated Annual Report dated March 15, 2023.
Impact of changes in accounting policies on the statement
of financial position
  
 
Note
 
  
 
December 31, 2022
(as previously
reported) 
1)
 
 
 
  
 
Impact of the
change in account-
ing policies (IFRS 9
and 17)
 
 
 
 
 
 
December 31, 2022
(restated)
 
 
Assets
       
Shares in group companies  
 
8
 
   13,594    (3,256)   10,338 
Equity and liabilities
       
Shareholders’ equity  
 
14
 
   12,071    (3,256)   8,815 
1 As reported in Aegon’s 2022 Integrated Annual Report dated March 15, 2023.
3 Investment income
 
    
                2022
                  2021 
   
Interest income from intercompany loans
   14     12   
   
Interest income from derivatives
   7   1 
   
Total
  
 
21
 
 
 
13
 
    
    2023
       2022 
Interest income from short-term investments   82    - 
Interest income from intercompany loans   20    14 
Interest income from derivatives   (14)    7 
Total
  
 
88
 
  
 
21
 
4 Results from financial transactions
 
    
                2022
                  2021 
   
Net fair value change of derivatives
   (30)    5 
   
Net foreign currency gains and (losses)
   -   (1)  
   
Total
  
 
(30
) 
 
 
3
 
    
    2023
       2022 
Net fair value change of derivatives   19    (30) 
Net foreign currency gains and (losses)   1    - 
Total
  
 
21
 
  
 
(30
) 
Net fair value change of derivatives mostly comprises of fair value changes on derivatives that are designated as economic hedges for which no hedge accounting is applied.
 
308  |  Aegon Annual Report on Form 20-F 2022
 368  |  Annual Report on Form 20-F 2023
Table of Contents
 
 
Notes to the financial statements of Aegon N.V.
Ltd.
Note 5
   
   
 
5 Commissions and expenses
 
    
                2022
                      2021 
   
Employee expenses
   82     84   
   
Administration expenses
   63   71 
   
Cost sharing to group companies
   (76)   (75) 
   
Total
  
 
68
 
 
 
80
 
    
    2023
       2022 
Employee expenses   82    82 
Administration expenses   80    63 
Cost sharing to group companies   (58)    (76) 
Total
  
 
104
 
  
 
68
 
6 Interest charges and related fees
 
    
                2022  
                      2021   
   
Subordinated borrowings
   72    68 
   
Borrowings
   52    54 
   
Other
   3    8 
   
Total
  
 
127
 
  
 
129
 
    
    2023
       2022 
Subordinated borrowings   69    72 
Borrowings   53    52 
Other   14    3 
Total
  
 
137
 
  
 
127
 
7 Income tax
 
    
                2022
                      2021 
   
Current Tax
         
   
Current Tax
   47     54   
   
Income tax for the period (result) / charge
  
 
47
 
 
 
54
 
   
Reconciliation between standard and effective tax
         
   
Result before tax
   (204)   (193) 
   
Tax on result at Dutch corporate result tax rate
   53   48 
   
Differences due to the effect of:
         
   
Tax rate changes
   -   4 
   
Change in uncertain tax positions
   -   8 
   
Non deductible expenses
   (7)   (7) 
   
Total
  
 
47
 
 
 
54
 
    
    2023
       2022 
Current tax
    
Current tax   19    47 
   
Income tax for the period (result) / charge
  
 
19
 
  
 
47
 
Reconciliation between standard and effective tax
    
Result before tax   (133)    (204) 
Tax on result at Dutch corporate result tax rate   34    53 
Differences due to the effect of:    
Prior year adjustments   (2)    - 
Non deductible expenses   (14)    (7) 
Total
  
 
19
 
  
 
47
 
8 Shares in group companies
 
    
    2023
       2022 
On January 1
   10,338    26,042 
Restated opening balance
1)
   -    (12,795) 
On January 1 (restated)
   10,338    13,247 
Capital contributions and acquisitions   3,752    36 
Dividend received   (6,613)    (1,634) 
Net result for the financial year   (65)    (411) 
Revaluations   1,124    (900) 
   
On December 31
  
 
8,536
 
  
 
10,338
 
    
                2022
                      2021 
   
At January 1
   26,042     24,846   
   
Capital contributions and acquisitions
   36   65 
   
Dividend received
   (1,634)   (1,196) 
   
Net result for the financial year
   (1,275)   2,120 
   
Revaluations
   (9,575)   209 
   
At December 31
  
 
13,594
 
 
 
26,042
 
1 Opening balance as per January 1, 2022, has been restated due to the initial application of IFRS 9 and IFRS 17. Note 2 to the financial statements includes further details on the changes in accounting policies.
Capital contributions and acquisitions relates to executed capital contributions from the parent company to the business units and also reflects the impact of legal changes within the Group. The movement in 2023 is predominantly reflecting the completion of the combination with a.s.r. Dividend received is reflecting the upstream of dividends from the business units to the parent company. The movement in 2023 is largely related to the upstream of the proceeds from the divestment of Aegon the Netherlands.
For a list of names and locations of the most important group companies, refer tosee note 4943 Group companies of the consolidated financial statements of the Group. The legally required list of participations as set forth in article 379 of Book 2 of the Dutch Civil Code has been registered with the Commercial Register of The Hague.
Annual Report on Form 20-F 2023  |  369 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
9 Loans to group companies
 
    
                2022
                      2021 
   
At January 1
   1,829     1,392   
   
Additions / (repayments)
   (502)   308 
   
Other changes
   109   128 
   
At December 31
  
 
1,435
 
 
 
1,829
 
   
Current
   932   639 
   
Non-current
   503   1,190 
Aegon Annual Report on Form 20-F 2022  |  309
Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
    
    2023
       2022 
On January 1   1,435    1,829 
Additions / (redemptions)   (605)    (502) 
Other changes   (52)    109 
   
On December 31
  
 
780
 
  
 
1,435
 
Current   520    932 
Non-current
   260    503 
The other changes in Loans to group companies mainly relate to currency exchange rate fluctuations.
10
Non-current
assets
There were no other
non-current
Other non-current assets relates toin 2023 (2022 had deferred tax assets of EUR 109 million (2021: EUR 138 million).
11 Receivables
Receivables from group companies and other receivables have a maturity of less than one year.
Until September 30, 2023, Aegon N.V., together with certain of its subsidiaries, iswas part of a tax groupingfiscal unity for Dutch corporate income tax purposes. Taxes payable were immediately settled with Aegon N.V., being the head of the fiscal unity. The members of the fiscal unity arewere jointly and severally liable for any taxes receivable ortax payable by the fiscal unity. Following the conversion from Aegon N.V. into Aegon Ltd. in 2023, the Dutch tax grouping.authorities deemed the Aegon N.V. fiscal unity to be terminated per September 30, 2023.
Other receivables included an income tax receivable of EUR 18920 million (2021: 157(2022: EUR 189 million).
12 Other current assets
Other current assets include derivatives with positive fair values of EUR 11839 million (2021:(2022: EUR 77118 million).
13 Share capital
 
Issued and outstanding capital
  
                 2022   
                   2021   
   
Common shares
   253    253 
   
Common shares B
   66    68 
   
Total share capital
  
 
319
 
  
 
321
 
Issued and outstanding capital
  
 
    2023
 
       2022 
Common shares   218    253  
Common shares B   47    66 
   
Total share capital
  
 
265
 
  
 
319
 
 
Common shares
  
                 2022   
                   2021   
   
Authorized share capital
   720    720 
   
Number of authorized shares (in million)
   6,000    6,000 
   
Par value in cents per share
   12    12 
Common shares
  
 
    2023
 
       2022 
Authorized share capital   480    720  
Number of authorized shares (in million)   4,000    6,000 
Par value in cents per share   12    12 
 
Common shares B
  
                 2022   
                   2021   
   
Authorized share capital
   360    360 
   
Number of authorized shares (in million)
   3,000    3,000 
   
Par value in cents per share
   12    12 
Common shares B
  
 
    2023
 
       2022 
Authorized share capital   240    360  
Number of authorized shares (in million)   2,000    3,000 
Par value in cents per share   12    12 
All issued common shares and common shares B each have a nominal value of EUR 0.12 and are fully paid up. Repayment of capital can only be initiated by the ExecutiveThe Board is authorized, subject to approvalcertain restrictions of the Supervisory BoardBermuda law and must be resolved by the General Meeting of Shareholders. Moreover, repayment on common shares B needs approval of the related shareholders. Refer
Bye-Laws,
to Other information for further information on dividend rights.repurchase Aegon Ltd. shares.
Vereniging Aegon, based in The Hague, the Netherlands, holds all of the issued and outstanding common shares B.
For detailed information on the transactions between Aegon N.V.Ltd. and Vereniging Aegon, refer tosee note 5044 Related party transactions into the consolidated financial statements of the Group.
 370  |  Annual Report on Form 20-F 2023
Table of Contents
Notes to the financial statements of Aegon Ltd.
Note 13
The following table shows the movement during the year in the number of common shares and common shares B:
 
   Common shares  Common shares B 
     
   Number of shares
(thousands)		          Total amount  Number of shares
(thousands)		          Total amount 
     
At January 1, 2021
 
 
2,098,114
 
 
 
252
 
 
 
571,795
 
 
 
69
 
     
Shares withdrawn
  (2,466)   -   (2,956)   - 
     
Dividend
  10,665   1   -   - 
     
At December 31, 2021
 
 
2,106,313
 
 
 
253
 
 
 
568,839
 
 
 
68
 
     
Shares withdrawn
  (10,665)   (1)   (22,643)   (3) 
     
Dividend
  13,782   2   -   - 
     
At December 31, 2022
 
 
2,109,430
 
 
 
253
 
 
 
546,196
 
 
 
66
 
310  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
Notes to the financial statements of Aegon N.V.
Note 13
   Common shares  Common shares B 
      Number of shares
(thousands)		     Total amount  
  Number of shares
(thousands)
     Total amount 
On January 1, 2022
  
 
2,106,313
 
 
 
253
 
 
 
568,839
 
 
 
68
 
Shares withdrawn   (10,665)   (1)   (22,643)   (3) 
Dividend   13,782   2   -   - 
On December 31, 2022
  
 
2,109,430
 
 
 
253
 
 
 
546,196
 
 
 
66
 
Shares withdrawn   (294,703)   (35)   (156,437)   (19) 
On December 31, 2023
  
 
1,814,727
 
 
 
218
 
 
 
389,759
 
 
 
47
 
The following table shows the weighted average number of common shares and common shares B:
 
   Weighted average number of
common shares (thousands)		  Weighted average number of
common shares B (thousands)		 
   
2021
 
 
2,101,231
 
 
 
570,629
   
   
2022
 
 
2,107,315
 
 
 
559,906
 
    
Weighted average number of
common shares (thousands)
   
Weighted average number of 
 common shares B (thousands) 
   
2022
  
 
2,107,315
 
  
559,906 
   
2023
  
 
2,067,119
 
  
523,149 
The shares repurchased by Aegon N.V.Ltd. during the share-buy-backshare buyback programs to undo the dilution caused by the distribution of dividend in stock, although included in the issued and outstanding number of shares, are excluded from the calculation of the weighted average number of shares.
Long-term incentive plans
For detailed information on the Long Term Incentive Plans refer tolong-term incentive plans, see note 14 Commissions and13 Other operating expenses to the consolidated financial statements of the Group.
Board remuneration
Detailed information on remuneration of active and retired members of the Executive Board of Directors including their share plans, remuneration of active and retired members of the Supervisory Board along with information about shares held in Aegon by the members of the Boards is included in note 5044 Related party transactions to the consolidated financial statements of the Group and in the remuneration report on page 57.62.
 
   Aegon Annual Report on Form 20-F 20222023  |  311371  
Table of Contents
LOGO		 
About Aegon
Governance and risk management
Financial information
Non-financial  Sustainability information
   
   
 
 
14 Shareholders’ equity
 
    
Share
capital
  
Share
premium
   
Revaluation
account
  
Legal
reserves
FCTR
  
Legal
reserves
group
companies
  
Retained
earnings
  
Remeasurement
of defined benefit
plans of group
companies
  
Treasury
shares
  
Net
result
  Total 
On January 1, 2023
1)
   319   6,853    (4,551)   736   2,821   5,439   (1,565)   (668)   (569)   8,815 
Net result 2022 retained   -   -    -   -   -   (569)   -   -   569   - 
Net result 2023 recognized in the income statement   -   -    -   -   -       -   -   (179)   (179) 
Total net result
  
 
-
 
 
 
-
 
  
 
-
 
 
 
-
 
 
 
-
 
 
 
(569
) 
 
 
-
 
 
 
-
 
 
 
390
 
 
 
(179
) 
Foreign currency translation differences and movement in foreign investment hedging reserves   -   -    -   (262)   -   -   14   -   -   (248) 
Changes in revaluation in subsidiaries   -   -    799   -   -   -   -   -   -   799 
Changes in revaluation reserve real estate held for own use   -   -    (6)   -   -   -   -   -   -   (6) 
Remeasurement of defined benefit plans of group companies   -   -    -   -   -   -   545   -   -   545 
Disposal of group assets   -   -    -   -   -   (634)   -   -   -   (634) 
Changes and transfer to legal reserve   -   -    (2)   -   (1,687)   1,662   -   -   -   (27) 
Other   -   -    -   -   -   9   -   -   -   9 
Total other comprehensive income / (loss)
  
 
-
 
 
 
-
 
  
 
791
 
 
 
(262
) 
 
 
(1,687
) 
 
 
1,037
 
 
 
559
 
 
 
-
 
 
 
-
 
 
 
438
 
Shares withdrawn   (54)   -    -   -   -   54   -   -   -   - 
Dividends paid on common shares   -   -    -   -   -   (495)   -   -   -   (495) 
Issuance and purchase of treasury shares   -   -    -   -   -   (1,374)   -   322   -   (1,052) 
Dividend withholding tax reduction   -   -    -   -   -   1   -   -   -   1 
Coupons on perpetual securities   -   -    -   -   -   (48)   -   -   -   (48) 
Incentive plans   -   -    -   -   -   (5)   -   -   -   (5) 
           
On December 31, 2023
  
 
265
 
 
 
6,853
 
  
 
(3,760
) 
 
 
474
 
 
 
1,134
 
 
 
4,039
 
 
 
(1,006
) 
 
 
(346
) 
 
 
(179
) 
 
 
7,475
  
                  
    
At January 1, 2022
  321     7,033     6,453     258     2,316     7,924     (2,199)    (273)    1,980     23,813   
Net result 2021 retained
  -     -     -     -     -     1,980     -     -     (1,980)     -   
Net result 2022
  -     -     -     -     -     -     -     -     (1,433)    (1,433)  
Total net result
 
 
-  
 
 
 
-  
 
 
 
-  
 
 
 
-  
 
 
 
-  
 
 
 
1,980  
 
 
 
-  
 
 
 
-  
 
 
 
(3,413) 
 
 
 
(1,433) 
 
Foreign currency translation differences and movement in foreign investment hedging reserves
  -     -     -     750     -     -     (20)    -     -     730   
Changes in revaluation in subsidiaries
  -     -     (10,901)    -     -     -     -     -     -     (10,901)  
Changes in revaluation reserve real estate held for own use
  -     -     (17)    -     -     16     -     -     -     (1)  
Remeasurement of defined benefit plans of group companies
  -     -     -     -     -     -     655     -     -     655   
Changes and transfer to legal reserve
  -     -     -     -     123     (201)    -     -     -     (78)  
Other
  -     -     -     -     -     38     -     -     -     38   
Other comprehensive income / (loss)
 
 
-  
 
 
 
-  
 
 
 
(10,918) 
 
 
 
750  
 
 
 
123  
 
 
 
(146) 
 
 
 
635  
 
 
 
-  
 
 
 
-  
 
 
 
(9,557) 
 
Shares issued
  2     -     -     -     -     -     -     -     -     2   
Shares withdrawn
  (4)    -     -     -     -     -     -     -     -     (4)  
Dividends paid on common shares
  -     (180)    -     -     -     (167)    -     -     -     (346)  
Issuance and purchase of treasury shares
  -     -     -     -     -     9     -     (402)    -     (393)  
Redemption other equity instruments
  -     -     -     -     -     32     -     -     -     32   
Coupons on perpetual securities
  -     -     -     -     -     (36)    -     -     -     (36)  
Incentive plans
  -     -     -     -     -     (5)    -     -     -     (5)  
At December 31, 2022
 
 
319  
 
 
 
6,853  
 
 
 
(4,465) 
 
 
 
1,008  
 
 
 
2,439  
 
 
 
9,591  
 
 
 
(1,565) 
 
 
 
(675) 
 
 
 
(1,433) 
 
 
 
12,071  
 
1 Opening balance as per January 1, 2023, has been restated due to the initial application of IFRS 9 and IFRS 17. Note 2 to the financial statements includes further details on the changes in accounting policies.
 
312  |  Aegon Annual Report on Form 20-F 2022
 372  |  Annual Report on Form 20-F 2023
 
 
Notes to the financial statements of Aegon N.V.
Ltd.
Note 141
4
   
   
 
                     
At January 1, 2021
  320     7,160     7,491     (601)    1,710     8,798     (2,534)    (181)    (146)    22,018   
           
Net result 2020 retained
  -     -     -     -     -     (146)    -     -     (146)    -   
           
Net result 2021
  -     -     -     -     -     -     -     -     1,980     1,980   
           
Total net result
 
 
-  
 
 
 
-  
 
 
 
-  
 
 
 
-  
 
 
 
-  
 
 
 
(146) 
 
 
 
-  
 
 
 
-  
 
 
 
2,125  
 
 
 
1,980  
 
           
Foreign currency translation differences and movement in foreign investment hedging reserves
  -     -     -     859     -     -     (65)    -     -     795   
           
Changes in revaluation in subsidiaries
  -     -     (1,035)    -     -     -     -     -     -     (1,035)  
           
Changes in revaluation reserve real estate held for own use
  -     -     (3)    -     -     -     -     -     -     (3)  
           
Remeasurement of defined benefit plans of group companies
  -     -     -     -     -     -     399     -     -     399   
           
Changes and transfer to legal reserve
  -     -     -     -     606     (587)    -     -     -     19   
           
Other
  -     -     -     -     -     14     -     -     -     14   
           
Other comprehensive income / (loss)
 
 
-  
 
 
 
-  
 
 
 
(1,038) 
 
 
 
859  
 
 
 
606  
 
 
 
(573) 
 
 
 
335  
 
 
 
-  
 
 
 
-  
 
 
 
189  
 
           
Shares issued
  1     -     -     -     -     -     -     -     -     1   
           
Shares withdrawn
  (1)    -     -     -     -     -     -     -     -     (1)  
           
Dividends paid on common shares
  -     (127)    -     -     -     (120)    -     -     -     (247)  
           
Issuance and purchase of treasury shares
  -     -     -     -     -     4     -     (92)    -     (88)  
           
Coupons on perpetual securities
  -     -     -     -     -     (39)    -     -    -     (39)  
           
At December 31, 2021
 
 
321  
 
 
 
7,033  
 
 
 
6,453  
 
 
 
258  
 
 
 
2,316  
 
 
 
7,924  
 
 
 
(2,199) 
 
 
 
(273) 
 
 
 
1,980  
 
 
 
23,813  
 
The balance of the revaluation account, which includes revaluation reserves for real estate, cash flow hedging and investments that do not have a frequent market listing, consisted of EUR 2,311 million (2021: EUR 7,294 million) of items with positive revaluation and of EUR 6,776 million (2021: EUR 840 million) of items with negative revaluation (on cash flow hedging and AFS investments). The revaluation linked to cash flow hedging hedging is identified on individual cash flow hedge positions.
    
Share
capital
  
Share
premium
  
Revaluation
account
  
Legal
reserves
FCTR
   
Legal
reserves
group
companies
   
Retained
earnings
  
Remeasurement
of defined benefit
plans of group
companies
  
Treasury
shares
  
Net
result
  Total 
Opening balance (IAS 39 / IFRS 4 on January 1, 2022
1)
   321   7,033   6,453   258    2,316    7,924   (2,199)   (273)   1,980   23,813 
IFRS 9/17 opening balance impacts   -   -   (9,021)   -    -    (3,782)    8   -   12,795 
Restated opening balance on January 1, 2022
   321   7,033   (2,568)   258    2,316    4,142   (2,199)   (265)   1,980   11,018 
Net result 2021 retained   -   -   -   -    -    1,980   -   -   (1,980)   - 
Net result 2022 recognized in the income statement   -   -   -   -    -    -   -   -   (569)   (569) 
Total net result
  
 
-
 
 
 
-
 
 
 
-
 
 
 
-
 
  
 
-
 
  
 
1,980
 
 
 
-
 
 
 
-
 
 
 
(2,549
) 
 
 
(569
) 
Foreign currency translation differences and movement in foreign investment hedging reserves   -   -   -   478    -    -   (20)   -   -   458 
Changes in revaluation in subsidiaries   -   -   (1,966)   -    -    -   -   -   -   (1,966) 
Changes in revaluation reserve real estate held for own use   -   -   (17)   -    -    16   -   -   -   (1) 
Remeasurement of defined benefit plans of group companies   -   -   -   -    -    -   655   -   -   655 
Changes and transfer to legal reserve   -   -   -   -    506    (573)   -   -   -   (68) 
Other   -   -   -   -    -    40   -   -   -   40 
Total other comprehensive income / (loss)
  
 
-
 
 
 
-
 
 
 
(1,983
) 
 
 
478
 
  
 
506
 
  
 
(517
) 
 
 
635
 
 
 
-
 
 
 
-
 
 
 
(881
) 
Shares issued   2   -   -   -    -    -   -   -   -   2 
Shares withdrawn   (4)   -   -   -    -    -   -   -   -   (4) 
Dividends paid on common shares   -   (180)   -   -    -    (167)   -   -   -   (346) 
Issuance and purchase of treasury shares   -   -   -   -    -    9   -   (402)   -   (393) 
Redemption other equity instruments   -   -   -   -    -    32      32 
Coupons on perpetual securities   -   -   -   -    -    (36)   -   -   -   (36) 
Incentive plans   -   -   -   -    -    (5)   -   -   -   (5) 
           
On December 31, 2022
  
 
319
 
 
 
6,853
 
 
 
(4,551
) 
 
 
736
 
  
 
2,821
 
  
 
5,439
 
 
 
(1,565
) 
 
 
(668
) 
 
 
(569
) 
 
 
8,815
 
The legal reserves in respect of the foreign currency translation reserve (FCTR), group companies and the revaluation reserves, cannot be freely distributed. In case of negative balances for individual reserves legally to be retained, no distributions can be made out of retained earnings to the level of these negative amounts.
Certain of Aegon’s subsidiaries, principally insurance companies, are subject to restrictions on the amounts of funds they may transfer in the form of cash dividends or otherwise to their parent companies. There can be no assurance that these restrictions will not limit or restrict Aegon in its ability to pay dividends in the future.
1 Opening balance as per January 1, 2022, has been restated due to the initial application of IFRS 9 and IFRS 17. Note 2 to the financial statements includes further details on the changes in accounting policies.
For more
details
on
distributable
reserves refer to
,
see
note 4337 Capital management and solvency ofto the consolidated financial statements.
On the reporting date, Aegon N.V. and its subsidiaries held 146,606,837 (2021: 71,780,196) of its own common shares and 51,762,840 (2021: 30,588,800) own common shares B with a par value of EUR 0.12 each.
 
   Aegon Annual Report on Form 20-F 20222023  |  313373  
Table of Contents
LOGO		 
About Aegon
Governance and risk management
Financial information
Non-financial  Sustainability information
   
   
 
 
Movements in the number of treasury common shares held by Aegon N.V.Ltd. were as follows:
 
   
2022
  2021 
     
   Number of shares
(thousands)		              Amount   Number of shares
(thousands)		              Amount 
     
At January 1
  70,958   262   52,686   171 
     
Transactions in 2022:
                
     
Purchase: 1 transaction, average price EUR 4.92
  10,158   50         
     
Sale: 4 transactions, average price EUR 2.46
  (4,708)   (12)         
     
Sale: 1 transaction, average price EUR 3.12
  (18,676)   (58)         
     
Purchase: 1 transaction, average price EUR 4.38
  24,364   107         
     
Share withdrawn: 1 transaction, average price EUR 3.70
  (10,665)   (39)         
     
Sale: 1 transaction, average price EUR 3.91
  (21,365)   (84)         
     
Purchase: 1 transaction, average price EUR 4.49
  29,833   134         
     
Purchase: 3 transactions, average price EUR 4.58
  65,921   302         
     
Transactions in 2021:
                
     
Sale: transactions, average price 3.90
          (4,139)   (16) 
     
Shares witdrawn: 1 transaction, average price EUR 3.89
          (2,466)   (10) 
     
Sale: 1 transaction, average price 3.89
          (15,274)   (59) 
     
Purchase: 1 transaction average price 3.70
          35,933   133 
     
Sale: 1 transaction, average price 3.02
          (17,314)   (52) 
     
Purchase: 1 transaction average price 4.46
          21,532   96 
     
At December 31
 
 
145,821
 
 
 
662
 
 
 
70,958
 
 
 
262
 
   
2023
  2022 
    
Number of shares
(thousands)
      Amount  
Number of shares
(thousands)
      Amount 
On January 1   145,821   662   70,958   262 
Transactions in 2023:
     
Purchase: 1 transaction, average price EUR 5.00   8,516   43   
Sale: 2 transactions, average price EUR 4.46   (4,924)   (22)   
Purchase: 1 transaction, average price EUR 4.27   46,798   200   
Sale: 1 transaction, average price EUR 4.46   (69)   (0)   
Share withdrawn: 1 transaction, average price EUR 4.59   (79,703)   (366)   
Purchase: 2 transactions, average price EUR 4.77   170,881   815    
Share Withdrawn: 1 transaction, average price EUR 4.59   (215,000)   (986)   
Transactions in 2022:
     
Purchase: 1 transaction, average price EUR 4.92     10,158   50 
Sale: 4 transactions, average price EUR 2.46     (4,708)   (12) 
Sale: 1 transaction, average price EUR 3.12     (18,676)   (58) 
Purchase: 1 transaction, average price EUR 4.38     24,364   107  
Share withdrawn: 1 transaction, average price EUR 3.70     (10,665)   (39) 
Sale: 1 transaction, average price EUR 3.91     (21,365)   (84) 
Purchase: 1 transaction, average price EUR 4.49     29,833   134 
Purchase: 3 transactions, average price EUR 4.58     65,921   302 
     
On December 31
  
 
72,320
 
 
 
345
 
 
 
145,821
 
 
 
662
 
Movements in the number of treasury common shares B held by Aegon N.V.Ltd. were as follows:
 
   
2022
  2021 
     
   Number of shares
(thousands)		              Amount    Number of shares
(thousands)		               Amount   
     
At January 1
  30,589   3   12,884   1   
     
Transactions in 2022:
             
 
  
 
     
Share withdrawn: 1 transaction, average price EUR 0.10
  (22,643)   (2)          
     
Purchase: 1 transaction, average price EUR 0.12
  43,817   5          
     
Transactions in 2021:
             
 
  
 
     
Sale: 1 transaction, average price EUR 0.10
          (1,983)   -   
     
Shares withdrawn: 1 transaction, average price EUR 0.10
          (2,956)   -   
     
Purchase: 1 transaction, average price EUR 0.10
          22,643   2   
     
At December 31
 
 
51,763
 
 
 
6
 
 
 
30,589
 
 
 
3  
 
   
2023
  2022 
    
Number of shares
(thousands)
      Amount  
Number of shares
(thousands)
      Amount 
On January 1   51,763   6   30,589   3  
Transactions in 2023:
     
Share withdrawn: 1 transaction, average price EUR 0.11   (43,817)   (5)   
Purchase: 1 transaction, average price EUR 0.13   112,619   15    
Share withdrawn: 1 transaction, average price EUR 0.13   (112,619)   (15)   
Transactions in 2022:
     
Share withdrawn: 1 transaction, average price EUR 0.10     (22,643)   (2) 
Purchase: 1 transaction, average price EUR 0.12     43,817   5 
     
On December 31
  
 
7,945
 
 
 
1
 
 
 
51,763
 
 
 
6
 
As part of their insurance and investment operations, subsidiaries within the Group also hold Aegon N.V. common shares, both for their own account and for account of policyholders. These shares have been treated as treasury shares and are included at their consideration paid or received.
 
   
2022
  2021 
     
   Number of shares
(thousands)		        Total amount    Number of shares
(thousands)		        Total amount   
     
Common shares
                
     
Held by Aegon N.V.
  145,821   662    70,958   262   
     
Held by subsidiaries
  785   8    822   8   
     
Common shares B
                
     
Held by Aegon N.V.
  51,763   6    30,589   3   
     
At December 31
 
 
198,369
 
 
 
676 
 
 
 
102,369
 
 
 
273  
 
The consideration for the related shares is deducted from or added to the retained earnings.
 374  |  Annual Report on Form 20-F 2023
314    Aegon Annual Report on Form 20-F 2022
Table of Contents
 
 
Notes to the financial statements of Aegon N.V.
Ltd.
Note 151
5
   
   
 
15 Other equity instruments
 
                                                                                                                         
      
    Perpetual
contingent
convertible
securities		   Junior
perpetual
capital
securities		  Perpetual
cumulative
subordinated
bonds		   
Long Term
Incentive
Plans
1)
  Total 
      
At January 1, 2022
   500    1,352   454    57   2,363 
      
Shares granted
   -    -   -    32   32 
      
Shares vested
   -    -   -    (23)   (23) 
      
Securities redeemed
   -    (429)   -    -   (429) 
      
At December 31, 2022
  
 
500
 
  
 
923
 
 
 
454
 
  
 
66
 
 
 
1,943
 
      
 
At January 1, 2021
   500    1,564   454    50   2,569 
      
Shares granted
   -    -   -    27   27 
      
Shares vested
   -    -   -    (21)   (21) 
      
Securities redeemed
   -    (212)   -    -   (212) 
      
At December 31, 2021
  
 
500
 
  
 
1,352
 
 
 
454
 
  
 
57
 
 
 
2,363
 
    
Perpetual
contingent
convertible
securities
   
 Junior perpetual
 capital securities
  
Perpetual
cumulative
 subordinated
bonds
   
 Share options and
incentive plans
1)
  Total 
On January 1, 2023   500    923   454    66   1,943 
Shares granted / Share options cost incurred   -    -   -    33   33 
Shares vested / Share options forfeited   -    -   -    (25)   (25) 
      
On December 31, 2023
  
 
500
 
  
 
923
 
 
 
454
 
  
 
74
 
 
 
1,951
 
On January 1, 2022   500    1,352   454    57   2,363 
Shares granted   -    -   -    32   32 
Shares vested   -    -   -    (23)   (23) 
Securities redeemed   -    (429)   -    -   (429) 
      
On December 31, 2022
  
 
500
 
  
 
923
 
 
 
454
 
  
 
66
 
 
 
1,943
 
 
1 
Long Term Incentive Plansplans include the shares granted to personnel which are not yet vested.
Perpetual contingent convertible securities  Coupon rate   Coupon date    Year of next call     2023     2022 
EUR 500 million   5.625%
1)
    Semi-annually, April 15    2029    500    500  
      
On December 31
                
 
500
 
 
 
500
 
 
Perpetual contingent convertible securities
  Coupon rate  Coupon date  
        Year of next  
call  
   
            2022
               2021 
      
EUR 500 million
          5.625%
1)
      Semi-annually, April 15   2029      500    500 
      
At December 31
             
 
500
 
  
 
500
 
1
The coupon is fixed at 5.625% until the first call date and reset thereafter to a 5 year mid swap plus a margin of 5.207%.
1 The coupon is fixed at 5.625% until the first call date and reset thereafter to a 5 year mid swap plus a margin of 5.207%.
The securities have been issued at par and have subordination provisions, rank junior to all other liabilities and senior to shareholders’ equity only. The conditions of the securities contain certain provisions for optional and required coupon payment cancelation.deferral. Although the securities have no stated maturity, Aegon has the right to call the securities for redemption at par for the first time between April 15, 2029 and October 15, 2029 and every reset date (October 15, with five year intervals) thereafter. Upon breach of certain regulatory capital requirement levels, the securities convert into common shares.
 
Junior perpetual capital securities
  Coupon rate  Coupon date      Year of next  
call  		   
            2022
               2021 
      
USD 500 million
  floating CMS rate 
1)
              Quarterly, July 15   2023    402    402 
      
EUR 950 million
  floating DSL rate 
2)
  Quarterly, July 15   2023    521    950 
      
At December 31
             
 
923
 
  
 
1,352
 
Junior perpetual capital securities
  Coupon rate   Coupon date    Year of next call     
2023
     2022 
USD 500 million   floating CMS rate 
1)
    Quarterly, July 15    2024   402   402  
EUR 950 million
3)
   floating DSL rate
2)
    Quarterly, July 15    2024    521   521 
      
On December 31
                
 
923
  
 
 
923
 
 
1 
The coupon of the USD 500 million junior perpetual capital securities is reset each quarter based on the then prevailing ten-year US dollar interestaggregate of (i) the
10-year
USD SOFR ICE swap rate, swap yield plus(ii) a spread adjustment often
29
basis points and (iii) a credit spread of
ten
basis, with a maximum of 8.5%.
2 
The coupon of the EUR 950 million junior perpetual capital securities is reset each quarter based on the then prevailing
ten-year
Dutch government bond yield plus a spread of
ten
basis points, with a maximum of 8%.
3 On April 5, 2022 Aegon completed a tender offer buying back EUR 429 million of perpetual capital securities, part of the EUR 950 million notes issued in 2004.
The interest rate exposure on some of these securities has been swapped to a three-month LIBOR and/SOFR or EURIBOR based yield.
On April 5, 2022 Aegon completed a tender offer buying back EUR 429 million of perpetual capital securities, part of the EUR 950 million notes issued in 2004. Aegon bought back the securities at a purchase price of 90%. The gain realized on this tender offer amounts to EUR 43 million before tax and is recognized in retained earnings in 2022.
The securities have been issued at par. The securities have subordination provisions, rank junior to all other liabilities and senior to shareholders’ equity only. The conditions of the securities contain certain provisions for optional and required coupon payment deferral and, in situations under Aegon’s control, mandatory coupon payment events. Although the securities have no stated maturity, Aegon has the right to call the securities for redemption at par for the first time on the coupon date in the years as specified, or on any coupon payment date thereafter.
 
Perpetual cumulative subordinated bonds
  Coupon rate   Coupon date    Year of next call  
   2023
      2022 
EUR 114 million   1.506% 
1), 4)
   Annually, June 8    2025   114    114  
EUR 136 million   1.425% 
2), 4)
    Annually, October 14    2028   136    136 
EUR 203 million   0.496% 
3), 4)
    Annually, March 4    2031    203    203 
      
On December 31
                
 
454
 
  
 
454
 
 
Aegon Annual Report on Form 20-F 2022  |  315
Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
Perpetual cumulative subordinated bonds
  Coupon rate  Coupon date   Year of next  
call  		   
          2022  
        2021  
      
EUR 114 million
   1.506%
1),
 4)
   Annually, June 8    2025      114    114 
      
EUR 136 million
   1.425%
2),
 4)
       Annually, October 14    2028      136    136 
      
EUR 203 million
   0.496%
3),
 4)
   Annually, March 4    2031      203    203 
      
At December 31
                
 
454
 
  
 
454
 
1 
The coupon of the EUR 114 million bonds was originally set at 8% until June 8, 2005. Subsequently, the coupon has been reset at 4.156% until June 8, 2015 and 1.506% until June 8, 2025.
2 
The coupon of the EUR 136 million bonds was originally set at 7.25% until October 14, 2008. Subsequently, the coupon has been reset at 5.185% until October 14, 2018 and 1.425% until October 14, 2028.
3 
The coupon of the EUR 203 million bonds was originally set at 7.125% until March 4, 2011. Subsequently, the coupon has been reset at 4.26% until March 4, 2021 and 0.496% until March 4, 2031.
4 
If the bonds are not called on the respective call dates and after consecutive period of ten years, the coupons will be reset at the then prevailing effective yield of
ten-year
Dutch government securities plus a spread of 85 basis points.

Annual Report on Form 20-F 2023  |  375 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
These bonds have the same subordination provisions as dated subordinated debt. In addition, the conditions of the bonds contain provisions for interest deferral.coupon payment defe
rra
l. Although the bonds have no stated maturity, Aegon has the right to call the bonds for redemption at par for the first time on the coupon date in the year of next call.ca
ll
.
16 Subordinated borrowings
 
    Coupon rate   Coupon date   
Issue /
Maturity
   
Year of next  
call  
   
            2022  
        2021  
       
Fixed to floating subordinated notes
                              
       
EUR
700 million
   4%
1)
    Annually, April 25    2014/44    2024      699    698 
       
USD
800 million
   5.5%
2)
    
Semi-annually, April 11
    2018/48    2028      743    697 
       
At December 31
                      
 
1,442
 
  
 
1,396
 
       
Fair value of subordinated borrowings
                       1,372    1,567 
    Coupon rate   Coupon date   Issue /Maturity   Year of next call   
  2023
     2022 
       
Fixed to floating subordinated notes
                              
EUR 700 million   4%
1)
    Annually, April 25    2014/
44
    2024    700    699 
USD 800 million   5.5%
2)
    Semi-annually, April 11    2018/
48
    2028    718    743  
       
On December 31
                      
 
1,418
 
  
 
1,442
 
Fair value of subordinated borrowings                       1,392    1,372 
 
1 
The coupon is fixed at 4% until the first call date and floating thereafter with a 3 months Euribor plus a margin of
335
bps.
2 
The coupon is fixed at 5.5% until the first call date in 2028 and floating thereafter with a 6 month USD LIBOR (subject to US LIBOR Act) plus a margin of 3.539%.
These securities are subordinated and rank senior to the junior perpetual capital securities, equally with the perpetual cumulative subordinated bonds and junior to all other liabilities. The conditions of the securities contain certain provisions for optional and required deferral of interest payments.coupon payment deferral. There have been no defaults or breaches of conditions during the period.
17 Long-term borrowings
 
    
    2023
       2022 
Remaining terms less than 1 year   -    499 
Remaining terms 1 - 5 years   -    - 
Remaining terms 5 - 10 years   287    281  
Remaining terms over 10 years   457    446 
   
On December 31
  
 
745
 
  
 
1,226
 
Fair value of long-term borrowings   847    1,289 
During 2023, the EUR 500 million senior unsecured notes with a coupon rate of 1% was redeemed.
    
                2022
                  2021 
   
Remaining terms less than 1 year
   499   - 
   
Remaining terms 1 - 5 years
   -   499 
   
Remaining terms 5 - 10 years
   281   296 
   
Remaining terms over 10 years
   446     472   
   
At December 31
  
 
1,226
 
 
 
1,266
 
   
Fair value of long-term borrowings
   1,289   1,735 
The repaymentredemption periods of borrowings vary from 18 year up to 1716 years. The interest rates vary from 1.000%6.125% to 6.625% per annum.
18 Current liabilities
Loans from and payables to group companies have a maturity of less than one year. Other current liabilities include derivatives with negative fair values of EUR 18990 million (2021:(2022: EUR 116189 million).
316  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
Notes to the financial statements of Aegon N.V.
Note 19
19 Commitments and contingencies
Aegon N.V.Ltd. has guaranteed and is severally liable for the following:
◆
∎
Due and punctual payment of payables due under letter of credit agreements applied for by Aegon N.V. as
co-applicant
with its captive insurance companies that are subsidiaries of Transamerica Corporation and Commonwealth General Corporation. At December 31, 2022,2023, the letter of credit arrangements utilized by captives to provide collateral to affiliates amounted to EUR 511526 million (2021:(2022: EUR 1,157511 million); as offrom that date, no amounts had been drawn, or were due under these facilities;
◆
∎
Due and punctual payment of payables by the consolidated group companies Transamerica Corporation, Aegon Funding Company LLC and Commonwealth General Corporation with respect to fixed subordinated notes, bonds, capital trust pass-through securities and notes issued under commercial paper programs amountedamounting to EUR 1,007 million (2022: EUR 1,042 million (2021: EUR 987 million); and
◆
∎
Due to the intended sale of Aegon Nederland N.V. to ASR Nederland N.V. (a.s.r.), Aegon Nederland N.V. has recognized a deferred tax liability of EUR 454 million on the undistributed profits of certain subsidiaries, which were previously not recognized. The actual settlement of this deferred tax liability is planned prior to the transaction and is subject to the approval of the sale of Aegon Nederland N.V. by the regulators. Aegon N.V., through Aegon Europe Holding B.V., has agreed to compensate this negative equity effect of Aegon Nederland N.V. before closure of the deal with a.s.r. during 2023; and
◆
Due and punctual payment of any amounts owed to third parties by the consolidated group company Aegon Derivatives N.V. in connection with derivative transactions. Aegon Derivatives N.V. enters into derivative transactions with counterparties with which ISDA master netting agreements, including collateral support annex agreements, have been agreed; netagreed. Net (credit) exposure on derivative transactions with these counterparties was therefore limited as offrom December 31, 2022.2023.
 376  |  Annual Report on Form 20-F 2023
Notes to the financial statements of Aegon Ltd.
Note 20
20 Number of employees
There were no employees employed by Aegon N.V.Ltd. in 2022 (2021:2023 (2022: nil).
21 Auditor’s remuneration
 
                                                                                                                         
   
    Total remuneration of the group  Of which PricewaterhouseCoopers
Accountants N.V. (NL)		 
     
    
2022
  2021  
2022
  2021 
     
Audit fees
   35   31   10   9 
     
Audit-related service fees
   10   3   1   1 
     
Tax
   1   -     -     -   
     
Other services
   -     -     -     -   
     
Total
  
 
45
 
 
 
35
 
 
 
12
 
 
 
10
 
   Total remuneration of the group   
Of which PricewaterhouseCoopers
Accountants N.V. (NL)
 
    
2023
   2022   
2023
   2022 
Audit fees   33    35    4    10 
Audit-related service fees   11    10    -    1  
Tax   -    1    -    - 
Other services   -    -    -    - 
     
Total
  
 
44
 
  
 
45
 
  
 
4
 
  
 
12
 
Audit fees consist of fees billed for the annual financial statements
audit (including
(including quarterly reviews), subsidiary audits, equity investment audits and other procedures required to be performed by the independent auditor to be able to form an opinion on Aegon’s consolidated financial statements. These other procedures include information systems and procedural reviews and testing performed in order to understand and place reliance on the systems of internal control, and consultations relating to the audit or quarterly review. They also include fees billed for other audit services, which are those services that only the external auditor reasonably can provide, and include statutory audits or financial audits for subsidiaries or affiliates of the Company and services associated with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings.
Audit-related services include, among others, assurance services to report on internal controls for third parties, due diligence services pertaining to potential business acquisitions/dispositions; discussions, review and testing of certain information related to the adoption of new accounting standards impacting future periods, financial reporting or disclosure matters not classified as ‘Audit services’“Audit services”; financial audits of employee benefit plans; and agreed-upon or expanded audit procedures related to accounting and/or billing records required to respond to or comply with financial, accounting or regulatory reporting matters.
Decrease in audit fees of PricewaterhouseCoopers Accountants N.V. (NL) is due to the transaction with a.s.r. to combine Aegon’s Dutch pension, life and
non-life
insurance, banking, and mortgage origination activities with a.s.r.
22 Events after the reporting period
On February 26, 2024 Aegon announced the completion of the sale of its 56% stake in its joint venture in India, Aegon Life Insurance Company, to Bandhan Financial Holdings Limited, an Indian financial services company. The sale was announced in July 2023 and following the receipt of the relevant regulatory approvals, the transaction was closed on February 23, 2024.
 
   Aegon Annual Report on Form 20-F 20222023  |  317377  
Table of Contents
LOGO		 
About Aegon
Governance and risk management
Financial information
Non-financial  Sustainability information
   
   
 
 
22 Events after the reporting period
On January 17, 2023, the Extraordinary General Meeting of shareholders (“EGM”) of Aegon N.V. approved the strategic decision to combine Aegon’s Dutch pension, life and non-life insurance, banking and mortgage origination operations with a.s.r. For more information about the this agreement, refer to note 51 Discontinued operations of the consolidated financial statements.
23 Proposal for profit appropriation
AtAegon aims to pay a sustainable dividend to allow equity investors to participate in the Annual General Meetingcompany’s performance. The Board of Shareholders currently scheduled for May 25, 2023, the Executive BoardDirectors will, in line with its earlier announcement and barringthe absence of unforeseen circumstances, propose a final dividend for 20222023 of EUR 0.120.16 per common share and EUR 0.0030.004 per common share B. Aegon intends to move to a cash-only dividend as of the final dividend of 2023. To this end, Aegon will present an update to its dividend policy for discussionB at the Annual General Meeting of Shareholders.Shareholders to be held on June 12, 2024. Although not formally required under Aegon’s current
bye-laws,
Aegon has decided to make the approval of the 2023 final dividend subject to a binding vote at the June 12, 2024, general meeting. This is because Aegon will be proposing to amend its
bye-laws
at that same general meeting to include, amongst other things, a binding vote on the approval of final dividends, as previously announced. If approved, and in combination with the interim dividend of EUR 0.14 per share paid over the first half of 2023, Aegon’s total dividend over 2023 will amount to EUR 0.30 per common share.
If the proposed dividend is approved by shareholders, Aegon’s shares will be quoted
ex-dividend
on the New York Stock
Exchange on May 26, 2023June 14, 2024, and also on Euronext Amsterdam on May 29, 2023.June 14, 2024. The record date for the dividend will be May 30, 2023June 17 2024, and the dividend will be payable as of June 29, 2023.from July 8, 2024.
 
    
    2023
       2022 
1)
 
Final dividend on common shares   280    237 
To be deducted from retained earnings   (459)    (806) 
   
Net result attributable to owners of Aegon Ltd.
  
 
(179
) 
  
 
(569
) 
    
            2022    
             2021  
   
Final dividend on common shares
   237   184 
   
Earnings to be retained
   -   1,795 
   
To be deducted from retained earnings
   (1,670)   - 
   
Net result attributable to owners of Aegon N.V.
  
 
(1,433
) 
 
 
1,980
 
1 Comparatives have been restated due to the initial application of IFRS 9 and IFRS 17. Note 2 to the financial statements includes further details on the changes in accounting policies.
The Hague, the Netherlands, March 
2April 3, 2024
2
, 2023
Board of Directors
Lard Friese
William L. Connelly
Mark A. Ellman
Karen Fawcett
Jack McGarry
Caroline Ramsay
Thomas Wellauer
Corien M. Wortmann-Kool
Dona D. Young
 
 378  |  Annual Report on Form 20-F 2023
Table of Contents
Supervisory Board
 
Executive Board    
Profit appropriation  
  
William L. Connelly
 Lard Friese
  
Mark A. Ellman
 Matthew J. Rider
Other information
Profit appropriation
Appropriation of profit will be determined in accordance with the articles 3, 32 and 33 of the
Bye-Laws
of Aegon Ltd.
The relevant provisions are as follows:
1.The Board of Directors may, before declaring any dividend or distribution out of contributed surplus, set aside such sums as it thinks proper as reserves which shall, at the discretion of the Board of Directors, be applicable for any purpose of Aegon and pending such application may, also at such discretion, either be employed in the business of Aegon or be invested in such investments as the Board of Directors may from time to time think fit. The Board of Directors may also without placing the same to reserve carry forward any sums which it may think it prudent not to distribute.
2.The Board of Directors may from time to time declare dividends or distributions out of contributed surplus to be paid to the Shareholders according to their rights and interests including such interim dividends as appear to the Board of Directors to be justified by the position of Aegon.
3.The Board of Directors may also pay any fixed cash dividend which is payable on any shares of Aegon half yearly or on such other dates, whenever the position of Aegon, in the opinion of the Board of Directors, justifies such payment.
4.The holder of a Common Share shall be entitled to receive dividends, on a pari passu and pro rata basis based on the number of Common Shares outstanding from time to time, as and when declared by the Board of Directors on the Common Shares as a class.
5.The holder of a Common Share B shall be entitled to receive dividends in an amount equal to one fortieth (1/40th) of the profits or reserves which the Board of Directors resolves to distribute to the holder of a Common Share, on a pari passu and pro rata basis based on the number of Common Shares B outstanding from time to time, as and when declared by the Board of Directors on the Common Shares B as a class.
6.The Board of Directors may withhold and deduct from any dividend, distribution or other monies payable to a Shareholder by Aegon on or in respect of any shares any applicable dividend withholding tax and all sums of money (if any) presently payable by him to Aegon on account of calls or otherwise in respect of shares of Aegon.
7.No dividend, distribution, or other monies payable by Aegon on or in respect of any share shall bear interest against Aegon.
8.Any dividend or distribution out of contributed surplus unclaimed for a period of five (5) years from the date of declaration of such dividend or distribution shall be forfeited and shall revert to Aegon.
  
Karen Fawcett
 
Jack McGarry
Ben J. Noteboom
Caroline Ramsay
Thomas Wellauer
Corien M. Wortmann-Kool
Dona D. Young
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LOGO		 
OtherAbout Aegon  Governance and risk management  
Financial information
Profit appropriation
  Sustainability information
   
   
Other information
Profit appropriation
Appropriation of profit will be determined in accordance with the articles 31 and 32 of the Articles of Association of Aegon N.V. The relevant provisions are as follows:
1.
The General Meeting of Shareholders will adopt the Annual Accounts;
2.
If the adopted profit and loss account shows a profit, the Supervisory Board may decide, upon the proposal of the Executive Board, to set aside part of the profit to augment and/or form reserves;
3.
The profits remaining after application of 2 above shall be put at the disposal of the General Meeting of Shareholders. The Executive Board, subject to the approval of the Supervisory Board, shall make a proposal for that purpose. A proposal to pay a dividend shall be dealt with as a separate agenda item at the General Meeting of Shareholders;
4.
The Executive Board may, subject to the approval of the Supervisory Board, make one or more interim distributions to the holders of common shares and common shares B;
5.
Distributions are made in accordance with the principle set forth in article 4 of the Articles of Association of Aegon N.V. that the financial rights of a common share B are one fortieth (1/40th) of the financial rights of a common share;
6.
The Executive Board may, subject to the approval of the Supervisory Board, decide that a distribution on common shares and common shares B shall not take place as a cash payment but as a payment in common shares. Alternatively, it may decide that holders of common shares and common shares B shall have the option to receive a distribution as a cash payment and/or as a payment in common shares, out of the profit and/or at the expense of reserves, provided that the Executive Board is designated by the General Meeting to issue shares. Subject to the approval of the Supervisory Board, the Executive Board shall also determine the conditions applicable to the aforementioned choices; and
7.
The Company’s policy on reserves and dividends shall be determined and can be amended by the Supervisory Board, upon the proposal of the Executive Board. The adoption and each amendment of the policy on reserves and dividends thereafter, shall be discussed and accounted for at the General Meeting of Shareholders under a separate agenda item.
 
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Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
Major shareholders
General
As ofFrom December 31, 2022,2023, Aegon’s total authorized share capital consisted of 6,000,000,0004,000,000,000 common shares with a par value of EUR 0.12 per share and 3,000,000,0002,000,000,000 common shares B with a par value of EUR 0.12 per share. At the same date, there were 2,109,430,2291,814,726,912 common shares and 546,196,080389,759,240 common shares B issued. Of the issued common shares, 315,532,860313,944,810 common shares and 494,433,240381,813,800 common shares B were held by Vereniging Aegon and 785,490no common shares were held by Aegon’s subsidiaries.
All of Aegon’s common shares and common shares B are fully paid and not subject to calls for additional payments of any kind. All of Aegon’s common shares are registered shares. New York Registry Shares (“NYRS”) are common shares and are traded at the New York Stock Exchange. Holders of NYRS hold their shares in the registered form issued by Aegon’s New York transfer agent on Aegon’s behalf. NYRS and shares of listed at Euronext are exchangeable on a
one-to-one
basis and are entitled to the same rights, except that cash dividends are paid in US dollars on NYRS.
As of December 31, 2022, 2672023, 252 million common shares were held in the form of NYRS. As of December 31, 2022,2023, there were approximately 12,1228,990 record holders of Aegon’s NYRS resident in the United States.
Vereniging Aegon
Vereniging Aegon is the continuation of the former mutual insurer AGO. In 1978, AGO demutualized and Vereniging AGO became the only shareholder of AGO Holding N.V., which was the holding company for its insurance operations. In 1983, AGO Holding N.V. and Ennia N.V. merged into Aegon N.V. Vereniging AGO initially received approximately 49% of the common shares and all of the preferred shares in Aegon, giving it voting majority in Aegon. At that time, Vereniging AGO changed its name to Vereniging Aegon.
The main purpose of the Association is a balanced representation of the direct and indirect interests of Aegon and of companies with which Aegon forms a group, of insured parties, employees, shareholders and other related parties of these companies. Influences that threaten the continuity, independence or identity of Aegon, in conflict with the aforementioned interests will be resisted as much as possible.
In accordance with the 1983 Amended Merger Agreement, Vereniging Aegon had certain option rights on preferred shares to prevent dilution of voting power as a result of share issuances by Aegon. This enabled Vereniging Aegon to maintain voting control at the General Meeting of Shareholders of Aegon. In September 2002, Aegon effected a capital restructuring whereby Vereniging Aegon’s ownership interest in Aegon’s common shares decreased from approximately 37% to approximately 12% and its aggregate ownership interest in Aegon’s voting shares decreased from approximately 52% to approximately 33%.
In May 2003, Aegon’s shareholders approved certain changes to Aegon’s corporate governance structure, introducing a second class of preferred shares. Both classes of preferred shares had a nominal value of EUR 0.25 each. The voting rights pertaining to the preferred shares were adjusted accordingly to 25/12 vote per preferred share. However, in May 2003, Aegon and Vereniging Aegon also entered into a Preferred Shares Voting Agreement, pursuant to which Vereniging Aegon agreed to exercise one vote only per preferred share, except in the event of a ‘Special Cause’“Special Cause”, as defined below. At that time Aegon and Vereniging Aegon amended the option arrangements under the 1983 Amended Merger Agreement so that, in the event of an issuance of shares by Aegon, Vereniging Aegon could purchase as many class B preferred shares as would enable Vereniging Aegon to prevent or correct dilution to below its actual percentage of voting shares, to a maximum of 33%.
On February 15, 2013, Aegon and Vereniging Aegon entered into an agreement to simplify the capital structure of Aegon and to cancel all of Aegon’s preferred shares, of which Vereniging Aegon was the sole owner. The execution of this agreement was approved by the Annual General Meeting of Shareholders on May 15, 2013.
The simplified capital structure entailed, but was not limited, to the conversion of all outstanding preferred shares A and B, with a nominal value of EUR 0.25 each, into a mix of common shares and common shares B, with a nominal value of EUR 0.12 each. The financial rights attached to a common share B were determined at 1/40th of the financial rights attached to a common share.
The simplified capital structure also entailed the amendment of the Voting Rights Agreement between Aegon and Vereniging Aegon, known as the Preferred Shares Voting Agreement before May 2013. As a matterThe shares of Dutch corporate law, the shares
both classes offer equal full voting
 
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 380  |  Annual Report on Form 20-F 2023
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Other information
Major shareholders
   
   
 
of both classes offer equal full voting rights, as they have equal nominal values (EUR 0.12). The amended Voting Rights Agreement ensures that under normal circumstances, i.e. except in the event of a Special Cause, Vereniging Aegon will no longernot exercise more votes than is proportionate to the financial rights represented by its shares. This means that in the absence of a Special Cause Vereniging Aegon may cast one vote for every common share it holds and one vote only for every 40 common shares B it holds. As Special Cause qualifies the acquisition of a 15% interest in Aegon, a tender offer for Aegon shares or a proposed business combination by any person or group of persons, whether individually or as a group, other than in a transaction approved by the Executive Board and the Supervisory Board.of Directors of Aegon. If, in its sole discretion, Vereniging Aegon determines that a Special Cause has occurred, Vereniging Aegon will notify the General Meeting of Shareholders and retain its right to exercise the full voting power of one vote per common share B for a limited period of six months.
The simplified capital structure also included an amendment to the 1983 Amended Merger Agreement between Aegon and Vereniging Aegon. Following this 2013 amendment, Vereniging Aegon’s call option relates to common shares B. Vereniging Aegon may exercise its call option to keep or restore its total stake at 32.6%, irrespective of the circumstances which cause the total shareholding to be or become lower than 32.6%.
On May 15, 2020,June 3, 2021, Vereniging Aegon exercised its options rights to purchase in aggregate 2,154,0001,983,360 common shares B at fair value of a common share B (being 1/40th of the market value of a common share in the capital of the Company at the time of issuance) to mitigate dilution caused by the issuance of shares on May 15, 2020, in connection with the Long Term Incentive Plans for senior management.
On December 14, 2020, Aegon repurchased 2,955,600 common shares B from Vereniging Aegon for the amount of EUR 228,911.22 based on 1/40
th
of the Value Weight Average Price of the common shares of the five trading days preceding this transaction. The repurchase of common shares B was executed to align the aggregate holding of voting shares by Vereniging Aegon in Aegon with its special cause voting rights of 32.6% following the completion of the Share Buy Back Program, initiated by Aegon in October 2020 to neutralize the dilutive effect of the distribution of interim dividend 2020 in stock.
On June 3, 2021, Vereniging Aegon exercised its options rights to purchase in aggregate 1,983,360 common shares B at fair value of a common share B (being 1/40
th
of the market value of a common share in the capital of the Company at the time of issuance) to mitigate dilution caused by the issuance of shares on June 3, 2021, in connection with the Long Term Incentive Planslong-term incentive plans for senior management.
On December 15, 2021, Aegon repurchased 22,643,360 common shares B from Vereniging Aegon for the amount of EUR 2,285,621 based on 1/40
th
40th of the Value Weight Average Price of the common shares of the five trading days preceding this transaction. The repurchase of common shares B was executed to align the aggregate holding of voting shares by Vereniging Aegon in Aegon with its special cause voting rights of 32.6% following the completion of the Share Buy Back Programs, initiated by Aegon in July and October 2021 to neutralize the dilutive effect of the distribution of the final dividend 2020 and the interim dividend 2021 in stock.
On November 21, 2022, the members of Vereniging Aegon voted to instruct the board of Vereniging Aegon, subject to the board’s fiduciary duties, to vote all of Vereniging Aegon’s common shares and common shares B (based on one vote per 40 common shares B) at Aegon N.V.’s next extraordinary general meeting in favor of Aegon N.V. sellingdivesting its business operations in the Netherlands to ASR Nederland N.V. for cash consideration and a 29.99% share interest in ASR Nederland N.V (the “Transaction”). Following such vote of the members of Vereniging Aegon, the board of Vereniging Aegon is obligated, pursuant to the terms of a voting undertaking agreement, dated October 27, 2022, between Aegon N.V. and Vereniging Aegon, and subject to the board’s fiduciary duties, to vote all of such shares in favor of the Transaction.
On December 15, 2022, Aegon repurchased 43,817,400 common shares B from Vereniging Aegon for the amount of EUR 5,113,578.21 based on 1/40
th
40th of the Value Weight Average Price of the common shares of the five trading days preceding this transaction. The repurchase of common shares B was executed to bring the aggregate holding of voting shares by Vereniging Aegon in Aegon more in line with its special cause voting rights of 32.6% following the completion of the Share Buy Back Programs, initiated by Aegon in April 2022 following the completion of the sale of the Hungarian business and initiated in July and October 2022 to neutralize the dilutive effect of the distribution of the final dividend 2021 and the interim dividend 2022 in stock.
At the Extraordinary meeting of shareholders of Aegon N.V. on January 17, 2023 Vereniging Aegon voted on all of its shares in favor of the Transaction.
On August 16, 2023, the members of Vereniging Aegon voted to instruct the board of Vereniging Aegon, subject to the board’s fiduciary duties, to vote all of Vereniging Aegon’s common shares and common shares B (based on one vote per 40 common shares B) at Aegon N.V.’s extraordinary general meeting of September 29, 2023 and at Aegon S.A.’s extraordinary meeting of September 30, 2023 to vote in favor the change in legal domicile of Aegon from the Netherlands to Bermuda by means of the cross-border conversion of Aegon N.V. into Aegon S.A. and the subsequent cross-border conversion of Aegon S.A. into Aegon Ltd (the “Redomiciliation”). Following such vote of the members of Vereniging Aegon, the board of Vereniging Aegon is obligated, pursuant to the terms of a voting undertaking agreement, dated June 29, 2023, between Aegon N.V. and Vereniging Aegon, and subject to the board’s fiduciary duties, to vote all of such shares in favor of the Redomiciliation.
At the Extraordinary General Meeting of shareholders of Aegon N.V. on September 29, 2023 and on the Extraordinary General
 
   Aegon Annual Report on Form 20-F 20222023  |  321381  
Table of Contents
LOGO		 
About Aegon
Governance and risk management
Financial information
Non-financial  Sustainability information
   
   
 
 
Meeting of shareholders of Aegon S.A. on September 30, 2023, Vereniging Aegon voted on all its shares in favor of the Redomiciliation.
On September 30, 2023 Aegon N.V. changed its legal domicile from the Netherlands to Bermuda and became Aegon Ltd. Following the redomiciliation, the governance position of and arrangements with Vereniging Aegon remained materially unchanged. The existing arrangements between Aegon and Vereniging Aegon continued under the Voting Rights Agreement and the Amended 1983 Merger Agreement as well as under Bermuda law and the
Bye-Laws
of Aegon.
On December 8, 2023, Aegon entered into a share repurchase agreement with Verening Aegon, pursuant to which the Vereniging Aegon agreed to participate in the second and third tranche of the Aegon’s current 1.5 billion Euro share buyback program and Aegon agreed to repurchase a certain number of Common Shares from Vereniging Aegon for an aggregate consideration equal to EUR 139,5 million Euro which will be equally distributed over the total number of trading days during the remainder of the current share buy back program of Aegon. The number of Common Shares that Aegon will repurchase from Vereniging Aegon will be determined based on the daily volume-weighted average price per common share on Euronext Amsterdam on a weekly basis.
On December 18 December, 2023, Aegon repurchased 112,619,440 common shares B from Vereniging Aegon for the amount of EUR 14,804,951.58 based on 1/40th of the Value Weighted Average Price of the common shares of the five trading days preceding this transaction. The repurchase of common shares B was executed to bring the aggregate holding of voting shares by Vereniging Aegon in Aegon more in line with its special cause voting rights of 32.6% following the completion of the Share Buy Back Programs, initiated by Aegon in July 2023 following the completion of the transaction with a.s.r.
Development of shareholding in Aegon
Accordingly, aton December 31, 2022,2023, the voting power of Vereniging Aegon under normal circumstances amounted to approximately 16.59%,18.46 %, based on the number of outstanding and voting shares (excluding issued common shares held in treasury by Aegon). In the event of a Special Cause, Vereniging Aegon’s voting rights will increase, currently to 32.6%, for up to six months.
AtOn December 31, 2022,2023, the General Meeting of Members of Vereniging Aegon consisted of nineteen16 members. The majority of the voting rights is with the seventeen14 members who are not employees or former employees of Aegon or one of the Aegon Group companies, nor current or former members of the Supervisory Board or the Executive Board of Aegon.Aegon N.V. or of the Board of Directors of Aegon Ltd. The other two members are from the Executive Director of the Board of Aegon.Aegon and a member of Aegon’s Executive Committee.
Vereniging Aegon has an Executive Committee consisting of seven members, five of whom are not, nor have ever been, related to Aegon, including the Chairman and the Vice-Chairman. The other two members are alsothe Executive Director of the Board of Aegon and a member of theAegon’s Executive Board of Aegon.Committee. Resolutions of the Executive Committee, other than regarding the amendment of the Articles of Association of Vereniging Aegon, are made with an absolute majority of the votes. When a vote in the Executive Committee results in a tie, the General Meeting of Members has the deciding vote. Regarding the amendment of the Articles of Association of Vereniging Aegon, a special procedure requires a unanimous proposal from the Executive Committee, thereby including the consent of the representatives of Aegon at the Executive Committee. This requirement does not apply in the event of a hostile change of control at the General Meeting of Shareholders of Aegon, in which event Vereniging Aegon may amend its Articles of Association without the cooperation of Aegon. Furthermore, the two members of the Executive Boardthat are representatives of Aegon who are also members ofat the Executive Committee, have no voting rights on several decisions that relate to Aegon, as set out in the Articles of Association of Vereniging Aegon.
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Major shareholders 
Other major shareholders
In this section, where reference is made to any filings with the Dutch Autoriteit Financiële Markten or the SEC, the terms issued capital’ and ‘voting rights’“voting rights” are used as defined in the Wet op het Financieel Toezicht.
To Aegon’s knowledge based on the filings made with the Dutch Autoriteit Financiële Markten, Dodge & Cox Stock Fund, BlackRock, Inc., Norges, EuroPacific Growth Fund, Capital Research and Management Company and Dodge & Cox International Stock Fund hold a capital or voting interest in Aegon of 3% or more.
Based on its filing with the Dutch Autoriteit Financiële Markten as at January 6, 2023,on February 2, 2024, BlackRock, Inc. stated to hold 85,294,99470,072,692 common shares, representing 3.2% of the issued capital as aton December 31, 2022,2023, and 107,390,38892,951,586 voting rights, representing 4.0%4.2% of the issued capital as aton December 31, 2022.2023.
On February 1,June 8, 2023, BlackRock, Inc.’s filing with the US Securities and Exchange Commission (SEC) shows that BlackRock holds 114,047,254101,704,491 common shares, representing 4.3%4.6% of the issued capital as aton December 31, 2022,2023, and has voting rights for 104,668,16891,892,649 shares, representing 3.9%4.2% of the issued capital as aton December 31, 2022.2023.
Based on its last filing with the Dutch Autoriteit Financiële Markten as aton November 26, 2021, Dodge & Cox Stock Fund stated to hold 80,432,242 common shares, representing 3.0%3.6% of the issued capital as aton December 31, 2022.2023.
Based on its last filing with the Dutch Autoriteit Financiële Markten as aton February 26, 2021, Dodge & Cox International Stock Fund stated to hold 80,049,394 common shares, representing 3.0%3.6% of the issued capital as aton December 31, 2022.2023.
On February 14, 2023,9, 2024, Dodge & Cox’s filing with the US Securities and Exchange Commission (SEC) shows that Dodge & Cox holds 199,224,483198,263,105 common shares, representing 7.5%9.0% of the issued and outstanding capital as aton December 31, 2022, and has voting rights for 191,198,558 shares, representing 7.2% of the votes as at December 31, 2022.2023.
Based on its last filing with the Dutch Autoriteit Financiële Markten as at August 25, 2022, EuroPacific Growth Fundon January 9, 2024, Capital Research and Management Company stated to hold 88,492,143 common shares,125,917,974 voting rights, representing 3.3%5.7% of the issued capital as aton December 31, 2022.2023.
Based on its last filing with the Dutch Autoriteit Financiële Markten as at August 25, 2022, Capital Research and Management Companyon September 5, 2023, EuroPacific Growth Fund stated to hold 123,170,266 voting rights,87,021,380 common shares, representing 4.6%3.9% of the issued capital as aton December 31, 2022.2023.
Based on its last filing with the Dutch Autoriteit Financiële Markten on January 8, 2024, Norges Bank stated to hold 74,374,694 common shares, representing 3.4% of the issued capital on December 31, 2023.
 
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LOGO		 
Other financialAbout Aegon  Governance and risk management  
Financial information
Schedule I
  Sustainability information
   
   
Other financial information
Schedules to the financial statements
Index to schedules
Schedule I—I–Summary of Investments other than Investments in Related Parties as aton December 31, 20222023
Schedule II—II–Condensed Financial Information of Registrant (Parent Company Only)
Schedule II—II–Statement of Financial Position as of December 31, 20222023 and 2021
2022
Schedule II—II–Income Statement (Loss) for the years ended December 31, 2022, 20212023 and 2020
2022
Schedule II—II–Condensed Cash Flow Statement for the years ended December 31, 2022, 20212023 and 2020
2022
Schedule II—II–Dividends from and Capital Contributions to Business Units for the years ended December 31, 2022, 20212023 and 20202022
Schedule III—III–Supplementary Insurance Information for the years ended December 31, 2022, 20212023 and 20202022
Schedule IV—IV–Reinsurance for the years ended December 31, 2022, 20212023 and 20202022
Schedule V—V–Valuation and Qualifying Accounts for the years ended December 31, 2022, 20212023 and 2020
2022
Schedule I
Summary of investments other than investments in related parties
As at December 31 2022
On December 31, 2023
Amounts in EUR million
       Cost1)      Fair value      Book value 
Shares:
    
Fair value through profit or loss   279   10   10 
Fair value through other comprehensive income   6   291   291 
Bonds:
    
Fair value through other comprehensive income:    
US government   7,562   6,562   6,562 
Dutch government   2   2   2 
Other government   1,007   906   906 
Mortgage backed   3,085   2,840   2,840 
Asset backed   3,360   3,102   3,102 
Corporate   36,617   33,779   33,779 
Money market investments   3,135   3,135   3,135 
Other   35   29   29 
Subtotal - Fair value through other comprehensive income
  
 
54,803
 
 
 
50,354
 
 
 
50,354
 
Bonds:
    
Fair value through profit or loss   1,648   2,396   2,396 
Other investments at fair value through profit or loss   8,287   9,226   9,226 
Mortgages   10,157   9,025   10,157 
Private loans   (0)   (0)   (0) 
Deposits with financial institutions   18   18   18 
Other   1   1   1 
Subtotal
  
 
10,175
 
 
 
9,044
 
 
 
10,175
 
Real estate:
    
Investments in real estate   55   55   55 
    
Total
  
 
75,254
 
 
 
71,376
 
 
 
72,508
 
 
Amounts in EUR million 
                    Cost
1) 
  
            Fair value
  
            Book value  
Shares:
   
Available-for-sale
  192   195   195 
Fair value through profit or loss
  190   193   193 
Bonds:
   
Available-for-sale and held-to-maturity:
   
US government
  8,386   7,226   7,226 
Dutch government
  -   -   - 
Other government
  1,700   1,484   1,484 
Mortgage backed
  4,218   3,939   3,939 
Asset backed
  3,269   2,905   2,905 
Corporate
  42,507   37,538   37,538 
Money market investments
  5,511   5,514   5,514 
Other
  863   840   840 
Subtotal
 
 
66,455
 
 
 
59,447
 
 
 
59,447
 
Bonds:
   
Fair value through profit or loss
  466   554   554 
Other investments at fair value through profit or loss
  3,447   3,821   3,821 
Mortgages
  10,441   9,245   10,441 
Private loans
  27   27   27 
Deposits with financial institutions
  45   45   45 
Policy loans
  2,042   2,042   2,042 
Other
  -   -   - 
Subtotal
 
 
12,556
 
 
 
11,359
 
 
 
12,556
 
Real estate:
   
Investments in real estate
  -   59   59 
Total
 
 
83,306
 
 
 
75,628
 
 
 
76,825
 
 384  |  Annual Report on Form 20-F 2023
1 
Cost is defined as original cost for available-for-sale shares and amortized cost for available-for-sale and held-to-maturity bonds
Schedule II 
  
 
Schedule II
Condensed financial information of registrant
Statement of financial position of Aegon Ltd.
As at December 31
Before profit appropriation, amounts in EUR million  
    2023
       2022
1)
  January 1, 2022
1)
 
Non-current
assets
     
Financial fixed assets
     
Shares in group companies   8,536    10,338   13.247 
Loans to group companies   780    1,435   1,829 
Other
non-current
assets
   -    109   138 
  
 
9,316
 
  
 
11,882
 
 
 
15,214
 
Current assets
     
Receivables
     
Receivables from group companies   138    31   35 
Other receivables   77    236   181 
Other current assets   48    123   90 
Accrued interest and rent   18    9   6 
  
 
281
 
  
 
398
 
 
 
312
 
Cash and cash equivalents
     
Cash and cash equivalents   2,304    1,619   1,204 
Total assets
  
 
11,900
 
  
 
13,899
 
 
 
16,729
 
Shareholders’ equity
     
Share capital   265    319   321 
Paid-in
surplus
   6,853    6,853   7,033 
Revaluation account   (3,760)    (4,551)   (2,568) 
Legal reserves – foreign currency translation reserve   474    736   258 
Legal reserves in respect of group companies   1,134    2,821   2,316 
Retained earnings, including treasury shares   3,693    4,771   3,877 
Remeasurement of defined benefit plans of group companies   (1,006)    (1,565)   (2,199) 
Net result   (179)    (569)   1,980 
  
 
7,475
 
  
 
8,815
 
 
 
11,018
 
Other equity instruments   1,951    1,943   2,363 
Total equity
  
 
9,426
 
  
 
10,758
 
 
 
13,381
 
Provisions
     
D
eferred tax l
iability
   3    -   - 
   
 
3
 
  
 
-
 
 
 
-
 
             
Non-current
liabilities
     
Subordinated borrowings   1,418    1,442   1,396 
Long-term borrowings   745    1,226   1,266 
  
 
2,163
 
  
 
2,669
 
 
 
2,662
 
Current liabilities
     
Loans from group companies   4    13   7 
Payables to group companies   73    147   422 
Other current liabilities   202    282   227 
Accruals and deferred income   30    31   31 
   
 
309
 
  
 
472
 
 
 
686
 
Total liabilities
  
 
2,475
 
  
 
3,141
 
 
 
3,349
 
    
Total equity and liabilities
  
 
11,900
 
  
 
13,899
 
 
 
16,729
 
1 Comparatives have been restated due to the initial application of IFRS 9 and IFRS 17. Note 2 to the financial statements includes further details on the changes in accounting policies.
Annual Report on Form 20-F 20222023  |  323385  
Table of Contents
LOGO		 
About Aegon
Governance and risk management
Financial information
Non-financial  Sustainability information
Schedule II
Condensed financial information of registrant
Statement of financial position of Aegon N.V.
As at December 31
Before profit appropriation, amounts in EUR million 
                2022
                  2021 
   
Non-current assets
  
Financial fixed assets
  
Shares in group companies
  13,594   26,042 
Loans to group companies
  1,435   1,829 
Other non-current assets
  109   138 
 
 
15,138
 
 
 
28,009
 
Current assets
  
Receivables
  
Receivables from group companies
  31   35 
Other receivables
  236   181 
Other current assets
  123   90 
Accrued interest and rent
  9   6 
 
 
398
 
 
 
312
 
Cash and cash equivalents
  
Cash and cash equivalents
  1,619   1,204 
Total assets
 
 
17,155
 
 
 
29,524
 
Shareholders’ equity
  
Share capital
  319   321 
Paid-in surplus
  6,853   7,033 
Revaluation account
  (4,465)   6,453 
Legal reserves – foreign currency translation reserve
  1,008   258 
Legal reserves in respect of group companies
  2,439   2,316 
Retained earnings, including treasury shares
  8,916   7,652 
Remeasurement of defined benefit plans of group companies
  (1,565)    (2,199) 
Net result
  (1,433)   1,980 
 
 
12,071
 
 
 
23,813
 
Other equity instruments
  1,943   2,363 
Total equity
 
 
14,014
 
 
 
26,176
 
Non-current liabilities
  
Subordinated borrowings
  1,442   1,396 
Long-term borrowings
  1,226   1,266 
 
 
2,669
 
 
 
2,662
 
Current liabilities
  
Loans from group companies
  13   7 
Payables to group companies
  147   422 
Other current liabilities
  282   227 
Accruals and deferred income
  31   31 
  
 
472
 
 
 
686
 
Total liabilities
 
 
3,141
 
 
 
3,349
 
Total equity and liabilities
 
 
17,155
 
 
 
29,524
 
324  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
Other financial information
Schedule II
   
   
 
Condensed income statement of Aegon N.V.
Ltd.
For the year ended December 31
Amounts in EUR million  
    2023
      2022 
1)
 
Net result group companies   (65)   (411) 
Other income / (loss)   (114)    (158) 
   
Net result
  
 
(179
) 
 
 
(569
)  
 
Amounts in EUR million 
                  2022
                  2021                  2020 
Net result group companies
  (1,275)    2,119   -   
Result after tax
  (158)    (139)   (146)  
Net result
 
 
(1,433
)  
 
 
1,980
 
 
 
(146
)  
1 Comparatives have been restated due to the initial application of IFRS 9 and IFRS 17. Note 2 to the financial statements includes further details on the changes in accounting policies.
Condensed cash flow statement of Aegon N.V.
Ltd.
For the year ended December 31
Amounts in EUR millions  
    2023
      2022 
1)
 
Result before tax
  
 
(133
) 
 
 
(204
) 
Adjustments   (264)   (138) 
Net cash flows from operating activities
   (397)   (342) 
Dividends and capital repayments of subsidiaries, associates and joint ventures   2,567   1,530 
Net cash flows from investing activities
  
 
2,567
 
 
 
1,530
 
Purchase of treasury shares   (1,072)    (597)  
Issuance and repurchase of borrowings   145   469 
Repayment of perpetuals   -   (429) 
Dividends paid   (494)   (169) 
Coupons on perpetual securities   (65)   (48) 
Net cash flows from financing activities
  
 
(1,485
) 
 
 
(773
) 
   
Net increase / (decrease) in cash and cash equivalents
  
 
685
 
 
 
415
 
 
Amounts in EUR million 
                   2022  
                   2021                   2020   
Result before tax
 
 
(204) 
 
 
 
(193) 
 
 
 
(185) 
 
Adjustments
  (138)    428     (330)  
Net cash flows from operating activities
 
 
(342) 
 
 
 
235  
 
 
 
(515) 
 
Dividends and capital repayments of subsidiaries, associates and joint ventures
  1,530     500     606   
Other
  -     (3)    (1)  
Net cash flows from investing activities
 
 
1,530  
 
 
 
497  
 
 
 
605  
 
Purchase of treasury shares
  (597)    (231)    (59)  
Issuance and repurchase of borrowings
  469     197     (58)  
Repayment of perpetuals
  (429)    (212)    -   
Dividends paid
  (167)    (121)   (63)  
Coupons on perpetual securities
  (48)    (52)   (55)  
Net cash flows from financing activities
 
 
(773) 
 
 
 
(417)
 
 
 
(235) 
 
Net increase / (decrease) in cash and cash equivalents
 
 
415  
 
 
 
316
 
 
 
(146) 
 
1 Comparatives have been restated due to the initial application of IFRS 9 and IFRS 17. Note 2 to the financial statements includes further details on the changes in accounting policies.
Five-year schedule of maturities of debt
As at December 31
 
   
2022
  2021 
Amounts in EUR million
       Subordinated  
borrowings  		  Long-term  
        Borrowings  		       Subordinated
borrowings		  Long-term 
      Borrowings 		 
Remaining terms less than 1 year
  -     499   -   - 
Remaining terms 1 - 2 years
  -     -   -   499 
Remaining terms 2 - 3 years
  -     -   -   - 
Remaining terms 3 - 4 years
  -     -   -   - 
Remaining terms 4 - 5 years
  -     -   -   - 
Remaining terms longer than 5 years
  1,442     727   1,396   768 
At December 31
 
 
1,442  
 
 
 
1,226
 
 
 
1,396
 
 
 
1,266
 
   
2023
  2022 
Amounts in EUR million  
 Subordinated
borrowings
   
Long-term
  Borrowings
  
 Subordinated
borrowings
   
Long-term
  Borrowings
 
Remaining terms less than 1 year   -    -   -    499 
Remaining terms 1 - 2 years   -    -   -    - 
Remaining terms 2 - 3 years   -    -   -    - 
Remaining terms 3 - 4 years   -    -   -    -  
Remaining terms 4 - 5 years   -    -   -    - 
Remaining terms longer than 5 years   1,418    745   1,442    727 
     
At December 31
  
 
1,418
 
  
 
745
  
 
 
1,442
 
  
 
1,226
 
Remittances from and capital contributions to business units
During 2023, Aegon received EUR 1.0 billion of remittances from its business units duringthe Americas, United Kingdom, International, and Asset Management, as well as dividend from a.s.r. Aegon spent EUR 0.1 billion on capital contributions to International and Asset Management.
During 2022, Aegon received EUR 1.0 billion of remittances from its business units from the Americas, the Netherlands, United Kingdom, International, and Asset Management. Aegon spent EUR 0.1 billion on capital contributions, mainly on International.
Aegon received EUR 1.0 billion of remittances from its business units during 2021 from the Americas, the Netherlands, United Kingdom, International, and Holdings. Aegon spent EUR 0.1 billion on capital contributions, mainly on International and Asset Management.
Aegon received EUR 0.8 billion of remittances from its business units during 2020 from the Americas, the Netherlands, United Kingdom, International, and Asset Management. Aegon spent EUR 0.2 billion on capital contributions, mainly on International.
 
 386  |  Annual Report on Form 20-F 2023
Aegon Annual Report on Form 20-F 2022  |  325
 

About AegonGovernance and risk management 
Financial informationSchedule III
Non-financial information
   
   
Schedule III
Supplementary insurance information
 
Column A
  Column B  Column C  Column D   Column E   Column F   
Segment
                       
Amounts in EUR million
  Deferred
policy
acquisition
costs		  Future policy
benefits		  Unearned
premiums		   Other policy
claims and
benefits		   Premium  
revenue  		 
2022
        
Americas
   12,225   176,753   6,058    2,112    8,742   
The Netherlands
   -   -   -    -    -   
United Kingdom
   710   92,504   -    -    4,081   
International
   (507)   8,575   123    30    369   
Holding and other activities
   -   -   -    -    -   
Eliminations
   -   (7,223)   -    -    -   
Total
  
 
12,428
 
 
 
270,608
 
 
 
6,181
 
  
 
2,143
 
  
 
13,192  
 
2021
        
Americas
   8,648   192,099  ��6,335    1,934    8,190   
The Netherlands
   235   67,226   50    1,019    1,713   
United Kingdom
   796   111,458   -    -    4,616   
International
   391   9,735   163    110    924   
Holding and other activities
   -   -   -    -    -   
Eliminations
   -   (1,611)   -    -    -   
Total
  
 
10,070
 
 
 
378,907
 
 
 
6,548
 
  
 
3,062
 
  
 
15,444  
 
2020
        
Americas
   7,181   174,167   5,897    1,858    8,326   
The Netherlands
   136   70,915   50    1,026    1,994   
United Kingdom
   789   95,788   20    5    4,858   
International
   289   9,245   150    112    919   
Holding and other activities
   -   -   -    -    1   
Eliminations
   -   (1,488)   -    -    -   
Total
  
 
8,395
 
 
 
348,627
 
 
 
6,117
 
  
 
3,001
 
  
 
16,099  
 
Segment
Amounts in EUR million
  
Insurance liability
- CSM
  
Insurance liability
- BEL
  
Insurance liability
- RA
  
Insurance liability
- PAA contracts
   
   Insurance
revenue
 
2023
       
Americas   6,494   126,762   2,860   -    9,468 
United Kingdom   1,595   59,898   429   -    663 
International   247   6,177   165   39    305 
Asset Management   -   -   -   -    - 
Holding and other activities   -   -   -   -    - 
Eliminations   (36)   (5,515)   (76)   -    (51) 
      
Total
  
 
8,300
 
 
 
187,322
 
 
 
3,379
 
 
 
39
 
  
 
10,386
  
2022
       
Americas   7,038   127,245   2,912   -    10,174 
United Kingdom   1,657   56,453   566   -    701 
International   421   6,586   124   439    408 
Asset Management   -   -   -   -    - 
Holding and other activities   -   -   -   -    - 
Eliminations   (180)   (6,029)   (57)   -    (32) 
      
Total
  
 
8,937
 
 
 
184,255
 
 
 
3,545
 
 
 
439
 
  
 
11,251
 
The numbers included in Schedule III are based on IFRS and excludes the proportionate share in Aegon’s joint ventures and Aegon’s associates.
Amounts in EUR million  
Investment
income
1)
  
Insurance
service
expenses
  
 Other operating
expenses
 
2023
    
Americas   3,461   9,578   2,148 
United Kingdom   2,362   406   353 
International   86   275   93 
Asset Management   2   -   440 
Holding and other activities   90   -   85  
Eliminations   (6)   (33)   (158) 
    
Total
  
 
    5,995
 
 
 
    10,226
 
 
 
2,961
 
2022
    
Americas   3,365   10,324   1,916 
United Kingdom   1,940   443   287 
International   187   350   103 
Asset Management   -   -   437 
Holding and other activities   2   -   155 
Eliminations   (5)   (20)   (187) 
    
Total
  
 
5,490
 
 
 
11,097
 
 
 
2,712
 
1 Sum of Interest revenue on financial instruments calculated using the effective interest method, Interest revenue on financial instruments measured at FVPL and Other investment income.
Deferred policy acquisition costs also include deferred costs of reinsurance.
 
326  |  Aegon Annual Report on Form 20-F 20222023  |  387 
Table of Contents
LOGO
About Aegon  Governance and risk management  
Financial information
  Sustainability information
Schedule IV
Reinsurance
Amounts in EUR millions   December 31, 2023   December 31, 2022 
Life insurance in force
   
Gross amount   813,550   905,455 
Ceded to other companies   (366,577)   (541,793) 
Assumed from other companies   273,421   342,375 
Net amount
   720,394    706,037  
% of amount assumed to net   38%   48% 
Net insurance revenue & insurance service expenses
   
Net insurance revenue & insurance service expenses - Life   (121)   188 
Net insurance revenue & insurance service expenses - Non life   281   (33) 
Total net insurance revenue & insurance service expenses
  
 
160
 
 
 
155
 
Net income / (expenses) on reinsurance held
   
Net income / (expenses) on reinsurance held - Life   221   306 
Net income / (expenses) on reinsurance held - Non life   (39)   (31) 
Total net income / (expenses) on reinsurance held
  
 
182
 
 
 
275
 
 388  |  Annual Report on Form 20-F 2023
Table of Contents
 
 
Other financial information
Schedule III
V
   
   
 
   Column G  Column H  Column I  Column J  Column K   
Amounts in EUR million
 Net
investment
income		  Benefits,
  claims and
losses		    Amortization
of deferred
policy
acquisition
costs		  Other
    operating
expenses		  
    Premiums  
written  
 
2022
     
Americas
  3,467   12,149   670   3,476   6,798   
The Netherlands
  3   -   -   75   -   
United Kingdom
  1,951   6,058   91   505   3,880   
International
  195   682   31   185   325   
Asset Management
  -   -   -   436   -   
Holding and other activities
  2   -   -   175   -   
Eliminations
  (5)   (271)   -   (187)   -   
Total
 
 
5,613
 
 
 
18,617
 
 
 
793
 
 
 
4,666
 
 
 
11,003  
 
2021
     
Americas
  2,909   10,111   741   3,003   5,023   
The Netherlands
  2,088   3,249   -   806   1,614   
United Kingdom
  1,691   7,343   96   523   4,419   
International
  298   757   62   345   870   
Asset Management
  -   -   -   411   -   
Holding and other activities
  (4)   -   -   180   -   
Eliminations
  (15)   -   -   (183)   -   
Total
 
 
6,967
 
 
 
21,460
 
 
 
899
 
 
 
5,085
 
 
 
11,926  
 
2020
     
Americas
  2,984   7,171   547   3,127   5,930   
The Netherlands
  2,083   3,244   -   837   1,931   
United Kingdom
  1,795   6,278   102   529   4,670   
International
  307   810   105   350   860   
Asset Management
  -   -   -   382   -   
Holding and other activities
  4   7   -   185   5   
Eliminations
  (24)   (5)   -   (180)   -   
Total
 
 
7,149
 
 
 
17,505
 
 
 
753
 
 
 
5,230
 
 
 
13,396  
 
 
Schedule V
Valuation and qualifying accounts
Amounts in EUR millions  
    2023
      2022 
Loss allowance on January 1
  
 
(287
) 
 
 
(364
) 
Impact on year end ECL of exposures transferred between stages during the year   (5)   (69) 
Financial assets derecognized during the period   74   103 
New financial assets originated or purchased   (26)   (56) 
Change in models   (28)   30 
Net exchange differences   9   (15) 
Transfers to disposal groups   -   84 
   
Loss allowance on December 31
  
 
(263
) 
 
 
(287
) 
ECL per asset type
   
Mortgage loans   (26)   (12) 
Debt securities   (237)   (276) 
   
Total ECL on December 31
  
 
(263
) 
 
 
(287
) 
Impairment charge in P&L of IFRS 9 instruments and
non-financial
assets
   
Mortgage loans measured at amortized cost   (15)   10 
Debt securities measured at FVOCI   (44)   (108) 
Other   (60)   (41) 
   
Net impairment charge in P&L
  
 
(119
) 
 
 
(138
) 
Auditor information
∎
Auditor Name: PricewaterhouseCoopers Accountants N.V.
∎
Auditor Firm Id: PCAOB ID 1395
∎
Auditor Location: Amsterdam, the Netherlands
 
   Aegon Annual Report on Form 20-F 20222023  |  327389  
 
Table of Contents

LOGO		 
About Aegon
Governance and risk management
Financial information
Non-financial  Sustainability information
Schedule IV
Reinsurance
Amounts in EUR million  Gross
amount		   Ceded to
other
companies		   Assumed
from other
companies		   Net amount   % of amount
assumed to
net		 
For the year ended December 31, 2022
          
Life insurance in force
   905,455    541,793    342,375    706,037    48%   
Premiums
          
Life insurance
   11,680    2,057    -    9,623    0% 
Non-life insurance
   1,512    132    -    1,380    0% 
Total premiums
  
 
13,192
 
  
 
2,189
 
  
 
-
 
  
 
11,003
 
  
 
0%
 
For the year ended December 31, 2021
          
Life insurance in force
   977,293    611,912    397,882    763,263    52% 
Premiums
          
Life insurance
   13,400    3,326    -    10,074    0% 
Non-life insurance
   2,044    192    -    1,852    0% 
Total premiums
  
 
15,444
 
  
 
3,518
 
  
 
-
 
  
 
11,926
 
  
 
0%
 
For the year ended December 31, 2020
          
Life insurance in force
   895,593    599,091    408,201    704,703    58% 
Premiums
          
Life insurance
   13,929    2,541    -    11,387    0% 
Non-life insurance
   2,165    162    5    2,008    0% 
Total premiums
  
 
16,094
 
  
 
2,703
 
  
 
5
 
  
 
13,396
 
  
 
0%
 
328  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
Other financial information
Schedule V
   
   
 
Schedule V
Valuation and qualifying accounts
Amounts in EUR million  
                2022
                  2021                  2020 
Balance at January 1
   238   276   199 
Addition charged to earnings
   18   12   154 
Amounts written off and other changes
   (45)   (57)   (70) 
Transfers to disposal groups
   (81)   -   - 
Currency translation
   7   7   (7) 
Balance at December 31
  
 
138
 
 
 
238
 
 
 
276
 
The provisions can be analyzed as follows:
    
Mortgages
   4   6   6 
Other loans
   -   112   182 
Receivables
   134   120   88 
Total
  
 
138
 
 
 
238
 
 
 
276
 
Auditor information
◾Auditor Name: PricewaterhouseCoopers Accountants N.V.
◾Auditor FirmId:
PCAOB ID 1395
◾Auditor Location: Amsterdam, the Netherlands
 
Auditor’s report on
Aegonthe Annual Report on Form 20-F 2022  |  329
Table of Contents

About AegonGovernance and risk management
Financial information
Non-financial information
Auditor’s report on the Annual Report
on Form
20-F
Report of Independent Registered Public Accounting Firm
To: The SupervisoryTo the Board and Shareholdersof Directors of Aegon N.V.Ltd.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statement of financial position of Aegon N.V.Ltd. and its subsidiaries (the “Company”) as of December 31, 2023, 2022 and 2021,January 1, 2022, and the related consolidated statementsincome statement, consolidated statement of income, comprehensive income, changes in equity, and consolidated cash flow statement for each of the three years in the period ended December 31, 2022,2023, including the related notes and the financial statement schedules listed in the index appearing under the section Other Financial Information (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2022,2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023, 2022 and 2021,January 1, 2022 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20222023 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.Board Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022,2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Change in Accounting Principle
As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for insurance contracts in 2023.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on internal controlInternal Control over financial reporting appearing under Item 15.Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary
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to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts
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and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committeeAudit Committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Valuation and accounting of the stake in a.s.r.
As described in Note 21, ‘Investments in joint ventures and associates’, note 42, ‘Companies and business acquired and divested’ and note 43, ‘Group companies’ to the consolidated financial statements, on July 4, 2023, Aegon completed the combination of its Dutch pension, life and non-life insurance, banking, and mortgage origination activities with ASR Nederland N.V. (a.s.r.) which resulted in Aegon receiving cash of EUR 2.2 billion and a 29.99% ownership interest in the combined entity. In conjunction with this transaction the Company also recorded EUR .12 billion of goodwill and EUR 2.6 billion related to the carrying value of a.s.r. as of December 31, 2023. The accounting for the acquisition of this stake in a.s.r. involves significant judgement over the fair value of assets and liabilities (including insurance contract liabilities) and identification of acquisition related intangibles. In addition, the consistency of accounting policies between Aegon and a.s.r. required assessment by management and, if needed, alignment to enable Aegon to report on the basis of the equity method of accounting.
The principal considerations for our determination that performing procedures relating to the Valuation and accounting of the 29.99% stake in a.s.r. is a critical audit matter are (i) there was significant judgment by management when determining these estimates, which in turn led to a high degree of auditor judgment and subjectivity in evaluating the audit evidence relating to the valuation of the stake in a.s.r. (ii) significant audit effort was necessary in evaluating the audit evidence relating to the aforementioned significant assumptions ; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing procedures and evaluating the audit evidence obtained.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of the stake in a.s.r., including both IFRS and SII impacts. These procedures also included, among others,(i) obtaining an understanding of the transaction rationale, the business case driving the transaction and the regulatory perspective on the transaction, (ii) addressing the appropriateness of the methodology and assumptions used in the fair valuation of the assets and insurance contract liabilities by reference to industry data, (iii) assessing the appropriateness of the data, assumptions and methodologies applied in the recognition and valuation of the identified intangibles and contingent liabilities, (iv) assessing the amortization scheme for the recognized intangibles based on the expected useful life of the intangibles, (v) testing the disclosed consideration transferred and resulting goodwill based on underlying evidence, (vi) evaluating possible impairment triggers and adjustments to the goodwill resulting from the initial acquisition accounting and we evaluated such triggers that may require consideration for the valuation at
year-end,
(vii) in relation to the equity method of accounting, we obtained an assessment and determination from management bridging the gaps between a.s.r. accounting policies to Aegon accounting policies, viii) the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing procedures and evaluating the audit evidence obtained.
Valuation of certain assets and liabilities arising from insurance contracts
As described in notesNote 2, ‘Material accounting policy information’, note 3, 27,‘Critical accounting estimates and judgment in applying accounting policies’, note 6, ‘Insurance revenue’, and note 29 34‘Insurance contracts, reinsurance contracts held and 44investment contracts with discretionary participating features’ to the consolidated financial statements, the Company had deferred policy acquisition costs (DPAC)reinsurance contract assets of EUR 11.816.6, 16.9, and 21.3 billion, included in the deferred expenses line item, value of business acquired (VOBA)insurance contract assets of EUR 0.80.19, .04, and .11 billion, included in the intangible assets line item, insurance contractscontract liabilities of EUR 87.3177.5, 176.1, and 290.1 billion and embedded derivatives in insurance contractsinvestment contract liabilities with discretionary participating features of EUR 0.821.6, 21.1, and 27.4 billion included in the derivatives liability line item as of December 31, 2023, December 31, 2022, and January 1, 2022, respectively (collectively, ‘certain assets and liabilities arising from insurance contracts’). Management’s estimation of the valuation of certain assets and liabilities arising from insurance contracts is developed using significant assumptions, including mortality, morbidity, future expenses, surrender, lapse, utilization rates and, for embedded derivatives, own credit spread. In addition, Aegon Nederland N.V. adjusts the outcome of the liability adequacy test (LAT)IFRS 17, ‘Insurance Contracts’ which became effective for the difference between the fair value and the book value of mortgage loans and private loans, which are valued using significant assumptions, including prepayment and lapse assumptions for mortgage loans and credit spread and liquidity spread assumptions for private loans.annual
 
 
 
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About Aegon
Governance and risk management
Financial information
Non-financial  Sustainability information
   
   
 
 
reporting of the Group as from January 1, 2023. For IFRS 17, the measurement of the insurance contracts is primarily performed applying a model that estimates the present value of future best estimate cash flows that will arise as these contracts are fulfilled, which includes an explicit risk adjustment and a contractual service margin reflecting unearned profits. The estimates are to be current, unbiased and probability weighted incorporating all available information in a way that is consistent with observable market data. The prescribed modifications are applied for contracts with direct participation features and for reinsurance contracts held. For certain short-term contracts, Aegon applies the premium allocation approach. The non-economic key assumptions used in measuring the liabilities for insurance contracts relate to mortality, morbidity, future expenses, surrender, lapse, and utilization rates. Given the magnitude of the insurance contract liabilities, a change in non-market observable inputs (especially mortality and morbidity) could have a significant effect on the contractual service margin (CSM) and/ or the best estimate of liabilities (BEL).
The principal considerations for our determination that performing procedures relating to the valuation of certain assets and liabilities arising from insurance contracts is a critical audit matter are (i) there was significant judgment by management when determining these estimates, which in turn led to a high degree of auditor judgment and subjectivity in evaluating the audit evidence relating to the valuation of certain assets and liabilities arising from insurance contracts; (ii) significant audit effort was necessary in evaluating the audit evidence relating to the aforementioned significant assumptions; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing procedures and evaluating the audit evidence obtained.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of certain assets and liabilities arising from insurance contracts, and the valuation of the relevant mortgage and private loans considered in the LAT, including controls over the development of significant assumptions. These procedures also included, among others, testing the completenessgovernance, model development, and accuracymodelling methodology for the most significant portfolios together with our modelling specialists, performing risk-based testing of keymodels, including challenging the Group’s significant assumptions, testing of management’s validation and integrity checks on the data underlyingused as input for the development ofsignificant assumptions and the aforementioned significant assumptions,inputs into the valuation models, and the involvement of professionals with specialized skill and knowledge to assist in testing management’s process for determining the valuation of certain assets and liabilities arising from insurance contracts, which included (i) evaluating the appropriateness of the models used in the valuation of certain assets and liabilities arising from insurance contracts, and (ii) evaluating the reasonableness of the aforementioned significant assumptions, taking into account the impact of the COVID-19 pandemic. Professionals with specialized skills and knowledge were used to assist in evaluating the reasonableness of management’s estimate of the valuation of mortgage loans and private loans by developing an independent range of prices and comparing management’s estimate to the independently developed ranges. Developing the independent estimate involved utilizing a range of available market inputs and assumptions and testing the completeness and accuracy of data provided by management.
Valuation of certain Level 3 investments
As described in notes 3 and 44 to the consolidated financial statements, the Company had investments of EUR 76.8 billion as of December 31, 2022, of which EUR 2.6 billion were categorized as Level 3 debt securities and investments in real estate in the valuation hierarchy. Management’s estimation of the valuation of Level 3 debt securities and investments in real estate is developed using quotes from brokers, internal cash flow modelling techniques and external appraisals that use significant unobservable inputs, including discount and capitalization rates, default rate and liquidity assumptions, issue specific credit adjustments and indicative quotes from market makers.
The principal considerations for our determination that performing procedures relating to the valuation of certain Level 3 investments is a critical audit matter are (i) there was significant judgment by management in determining the fair value of Level 3 debt securities and investments in real estate as the valuation uses the aforementioned significant unobservable inputs, which led to a high degree of auditor judgment, subjectivity and effort in performing the procedures relating to the estimate; and (ii) the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing procedures and evaluating the audit evidence obtained.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of Level 3 debt securities and investments in real estate, including controls over the development of the model and the significant unobservable inputs. These procedures also included, among others, developing an independent estimate of the value for a sample of the investments by obtaining independent pricing from third party vendors, if available. For a sample of Level 3 investments, professionals with specialized skill and knowledge were used to assist in developing an independent range of prices and comparing management’s estimate to the independently developed ranges. Developing the independent estimate involved utilizing a range of available market inputs and assumptions and testing the completeness and accuracy of data provided by management.
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Disclosure over the estimated impact of IFRS 17 and IFRS 9 in accordance with IAS 8
As described in Note 2 to the consolidated financial statements, as from January 1, 2023 both IFRS 17, ‘Insurance Contracts’ and IFRS 9, ‘Financial Instruments’ will become effective for the annual reporting of the Company and in accordance with IAS 8, the Company has disclosed that the IFRS 17 and IFRS 9 adoption is expected to overall reduce shareholders’ equity as at January 1, 2022 by EUR 12.6 billion. Management’s estimation of the expected impact to shareholders’ equity has been developed based on new accounting policy choices and judgment decisions taken by management on the implementation of IFRS 17 and IFRS 9. This included for IFRS 17 models that measure groups of contracts based on management’s estimate of the present value of the future cash flows that will arise as these contracts are fulfilled, and which includes an explicit risk adjustment for non-financial risk and a contractual service margin (CSM) reflecting unearned profits. This included for IFRS 9 management’s determination of the classification and measurement for debt and equity instruments, as well as new impairment models where management will assess on a forward-looking basis the expected credit losses (‘ECL’) associated with its debt instrument assets carried at amortized cost and FVOCI.
The principal considerations for our determination that performing procedures relating to management’s estimate of the impact of IFRS 17 and IFRS 9 to shareholders equity a critical audit matter are (i) there was significant judgment by management when determining these estimates, which in turn led to a high degree of auditor judgment and subjectivity in evaluating the audit evidence relating to the disclosure over the estimated impact of IFRS 17 and IFRS 9 in accordance with IAS 8; (ii) significant audit effort was necessary in evaluating the audit evidence relating to the aforementioned models of IFRS 17 and IFRS 9; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing procedures and evaluating the audit evidence obtained.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s governance and model development, data input and validation controls, as well as testing of the controls performed by management over the disclosed impact of adopting IFRS 17 and IFRS 9. These procedures also included, among others, together with our professionals with specialized skill and knowledge, testing the modelling methodology for the most significant portfolios, risk-based testing of models including challenging the main assumptions, and assessing management’s disclosure on the presentation of the impact, judgments and uncertainties of IFRS 17 and IFRS 9 in the context of the IAS 8 disclosure requirements.assumptions.
/s/ R.E.H.M. van Adrichem RA
PricewaterhouseCoopers Accountants N.V.
Amsterdam, the Netherlands
March 22, 2023April 3, 2024
We have served as the Company’s auditor since 2014.
 
 
 
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Table of Contents

Table of contents

Additional information
394		 About AegonGovernance and risk management
Financial information
Non-financial information
Table of contents
Additional information
335

Overview of Americas

341
401		 
Overview of the Netherlands
347

Overview of United Kingdom

351
405		 

Overview of International

357
410		 

Overview of Asset Management

360
413		 

Risk factors Aegon N.V.Ltd.

384
436		 

Compliance with regulations

385
437		 

Property, plant and equipment

386
438		 

Employees and labor relations

387
439		 

DividendGroup dividend policy

388
440		 

The offer and listing

389
441		 

Memorandum and Articles of AssociationBye-Laws

391
444		 

Differences between DutchBermuda and US company laws

392
445		 

Material contracts

393
446		 

Exchange controls

394
447		 

United States tax consequences to holders of shares

398
451		 

Principal accountant fees and services

399
452		 

Purchases of equity securities by the issuer and affiliated purchasers

453

Cybersecurity

 

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AdditionalAbout Aegon  Governance and risk management  Financial information
Overview of Americas
  Sustainability information
   
   

Overview of Americas

Aegon Americas operates primarily in the United States and also has operations in Canada.

Aegon in the United States and Canada

In the United States, Aegon Americas operates primarily under two brands: Transamerica and World Financial Group Insurance Agency, an affiliated insurance agency. In Canada, Aegon Americas operates primarily through World Financial Group Insurance Agency of Canada. The use of the term “Transamerica” throughout this business overview refers to the operating subsidiaries in the United States and Canada, collectively or individually, through which Aegon conducts business, except those United States operations further described in the “Overview of Aegon Asset Management”.

Transamerica is one of thea leading life insurance companiescompany in the United States, and the largest of Aegon’s operating units worldwide. Transamerica employs approximately 7,0006,600 people, and its businesses in the United States serve customers in all 50 states, the District of Columbia, Puerto Rico, the US Virgin Islands, and Guam. The company’s primary offices are in Cedar Rapids, Iowa; Denver, Colorado; and Baltimore, Maryland. There are additional offices located throughout the United States. Effective January 1, 2022, all of MAG Seguros, Aegon’s operation in Brazil, is reported as part of Aegon International.

Organizational structure

Transamerica Corporation is the holding company for Aegon’s US and Canadian operations, and all US and Canadian business is conducted through its subsidiaries. Transamerica entities collectively have operating licenses in every US state, in addition to the District of Columbia, Puerto Rico, the US Virgin Islands, and Guam.

Transamerica is structured to provideprovides customer solutions that are easy to understand and thatunderstand. They address the full range of customers’ financial protection and savings needs at every stage of life. Moreover, Transamerica’s structureTransamerica leverages its brand strength, expertise, and capabilities to fulfill Aegon’s purpose of

Helpinghelping people live their best lives
.

Transamerica is organized into two business divisions,divisions: Individual Solutions and Workplace Solutions. Individual Solutions offers life insurance, annuities, and mutual funds to retail customers. Workplace Solutions offers retirement plan record-keeping, advisory services, employee benefits (life insurance and supplemental health insurance), group annuities, collective investment trusts, health savings and flexible savings accounts, individual retirement accounts, and stable value solutions to employers and their employees. Transamerica offers these product lines, described in greater detail below, through several distribution and sales channels and delivers insurance primarily through one of its key insurance subsidiaries Transamerica Life Insurance Company and, in New York, Transamerica Financial Life Insurance Company.

Aegon has designated the Unites States as a core market, with

Transamerica’s businesses are classified as either Strategic Assets or Financial Assets.

Strategic Assets are those considered to have a greater potential for an attractive return on capital and growth. In Individual Solutions, Transamerica focuses on select life insurance and investment products, including term life insurance, final expense whole life insurance, indexed universal life insurance, mutual funds, structuredand registered index-linked annuities and certain variable annuities with limited interest rate sensitive guarantees.(RILAs). In Workplace Solutions, Transamerica focuses on small-to small- to mid-sized retirement plan administration, employee benefits, general account, separate account, and synthetic GIC stable value solutions, and the Transamerica Advice Center. It also continues to operate in the retirement plan administration market for large employers. In addition, Workplace Solutions provides value-added services, such as Managed Advice

®
and its proprietary investment solutions.

Several Transamerica product lines are considered Financial Assets. Financial Assets are capital intensive assets with relatively low returns on capital. In Individual Solutions, these are traditional variable annuities (VAs) with significant interest rate-sensitive guaranteed living benefits and death benefits;annuities; standalone individual long-term care (LTC) insurance; secondary guarantee universal life insurance; and fixed annuities. Universal life and single premium group annuities (SPGA) were added to the scope of Financial Assets in June 2023 at Capital Markets Day. Transamerica generally ceased new sales of these products in the first half of 2021.2021 or earlier. New sales for Financial Assets will be limited, if any, and focused on products with higher returns and a moderate risk profile. In October 2022, Transamerica Life Bermuda (TLB) reinsured its closed block of universal life (UL) insurance with Transamerica. Transamerica will manage this block as a Financial Asset, while TLB will continue to write new business on a selective basis.

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About AegonGovernance and risk management
Financial information
Non-financial information
   

Overview of sales and distribution channels

Transamerica offers its products and services through affiliated and non-affiliated distributors to meet customer needs and provide guidance to its customers. Individual Solutions supports individual customers, whereas Workplace Solutions supports individuals primarily through their employers as customers.

employers.

Individual Solutions

Transamerica’s Individual Solutions division products are sold through three primary distribution channels. The wholesale distribution channel consists of wholesale agreements with banks and wirehouses through our wholesale broker-dealer,broker dealer, Transamerica Capital Inc.Inc (TCI). The brokerage distribution channel offers product solutions through independent insurance producers. The affiliated retail agency and broker-dealerbroker dealer channel comprises of World Financial Group (WFG), Transamerica Agency Network (TAN), and Transamerica Financial Advisors (TFA), who serve clients across allprimarily in the middle market.

World Financial Group (WFG) is an affiliated insurance distribution network of around 74,000 agents who offer both Transamerica and third-party products. WFG provides differentiated access to the underserved and fast-growing middle market segments.

through a large and diverse agent force. WFG empowers agents to engage people in their local communities through financial education.

Workplace Solutions

Transamerica distributes its employer-sponsored Workplace Solutions products and services to employers through independent financial advisors, benefits consultants, and insurance agents. In addition, the Advice Center deploys a team of experienced registered representatives, investment advisor representatives, and licensed insurance agents to serve group plan participants and assist with IRA rollovers and retirement portfolio management.

Overview of business lines

Individual Solutions

Life Solutions

Transamerica offers a portfolio of protection solutions to customers in a broad range of market segments. Life insurance products include term life, indexindexed universal life, and whole life insurance. UniversalLegacy universal life and variable universal lifeproducts are managed as a closed block.

Financial Assets.

Term life insurance

Term life (TL) insurance provides death benefit protection without cash value accumulation. Benefits are paid to policy beneficiaries in the event of the death of the insured during a specified period. Living benefit riders that provide accelerated benefits for an insured’s critical illnessesillness or chronic conditionscondition are available on term life insurance.

Index

Indexed universal life insurance

Indexed universal life (IUL) insurance provides permanent death benefit protection until the policy maturity age and cash value accumulation with flexible premium payments. What distinguishes it from other types of permanent life insurance is the way in which interest earnings are credited. Net premiums may be allocated to either a fixed account or indexed accounts. Indexed accounts credit interest based in part on the performance of one or more market indices. The credited interest is based on the index, but with a floor and a cap. IUL offers both market-paced growth potential in the indexed accounts and downside protection. LTC riders and other living benefit riders are available on IUL products.

Whole life insurance

Whole life (WL) insurance provides permanent death benefit protection until the policy maturity age provided that the required premiums are paid, while accumulating cash values based on statutory requirements. Premiums are generally fixed and usually payable over the life of the policy. Among the WL insurance products offered is final expense WL insurance, which is intended to cover the insured’s medical bills and burial expenses.

Universal life insurance

Universal life (UL) insurance is flexible permanent life insurance that offers death benefit protection until the policy maturity age together with the potential for cash value accumulation. After the first few years, there is usually no set premium. The policyholder can adjust the frequency and amount of premium payments, as long as sufficient premiums are accumulated in the policy’s account value to cover charges in the month that follows, which are called “monthly deductions”.deductions.” Some versions of this product, which are not actively sold, have “secondary guarantees”.guarantees.” These maintain life insurance coverage even when the cash

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value is insufficient, as long as the customer pays a specified minimum premium.

The UL block with secondary guarantees is managed as a Financial Asset.

Variable universal life insurance

Variable universal life (VUL) insurance is permanent life insurance that offers both a death benefit protection until the policy maturity age and cash value accumulation potential with financial market participation. The premium amount for VUL insurance is flexible and may be changed by the policyholder within contract limits. Coverage amounts may change as well. The investment feature usually includes “sub-accounts”,”sub-accounts,” which provide exposure to underlying investments, such as stocks and bonds. This exposure increases cash value return

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Overview of Americas
potential but also the risk of additional premium requirements or lower coverage amounts in comparison with a traditional, non-variable life insurance policy. Transamerica did not actively marketoffer new sales of VUL insurance in 2022.
2023.

Accident and health

Transamerica Individual Solutions no longer actively offers supplemental health insurance and standalone LTC insurance. Transamerica manages the standalone LTC business as a Financial Asset.

Supplemental health insurance

Supplemental health insurance products include policies covering accidental death and dismemberment, accidental injury, cancer, critical illness, disability, hospital indemnity, Medicare supplement, retiree medical, dental, vision, and supplemental medical expense indemnity issued by affiliated and/or unaffiliated insurance companies. Supplemental health insurance products within Individual Solutions are managed as a closed inforcein-force block.

Long-term care insurance

LTC insurance products are a category of health insurance and provide benefits to policyholders that require qualified LTC services when they are unable to perform two or more specified activities of daily living or develop a severe cognitive impairment. LTC insurance helps protect against the high cost of LTC services, and it may also help families better manage the financial, health, and safety issues associated with persons requiring LTC. Transamerica offers aan LTC rider on certain life insurance products and stopped offering standalone LTC products in 2021.

Transamerica manages the standalone LTC insurance business as a Financial Asset.

Mutual Funds and Collective Investment Trusts (CITs)

Mutual funds are professionally managed investment vehicles comprised of pooled money invested by numerous individuals or institutions. Such funds are invested in various underlying security types such as stocks, bonds, money market instruments, and other securities. Transamerica offers mutual funds that are focused on several different asset classes, including US equity, global/international equity, fixed income, money markets and alternative investments, as well as asset allocation and target-date funds with combined equity and fixed income strategies. Transamerica mutual funds utilize the portfolio management expertise of asset managers across the industry in a sub-advised platform, which are both affiliated with and not affiliated with Aegon. These managers are subject to a rigorous selection and monitoring due diligence process conducted by Transamerica Asset Management.

A CIT is a pooled investment fund, held by a bank or trust company, including Transamerica Trust Company, and is generally available only to certain types of retirement plans and other institutional investors. Transamerica serves as the advisor to some of the CITs it offers, which focus on several different asset classes including US equity, international equity, and fixed income. Transamerica also leverages the portfolio management expertise of asset managers across the industry.

Annuity Solutions

Registered Index Linked Annuites (RILAs)

Index-Linked Annuities

Transamerica began selling registered index linkedindex-linked annuities (RILAs) in the second quarter of 2022. A RILA is a RILAs offer tax-deferred long-term savings optionoptions that limitslimit exposure to downside risk and providesprovide the opportunity for growth. RILAs provide the opportunity for growth based, in part, on the performance of a stock market index.indices. RILAs offer tax-deferred growth potential, annual free withdrawal amounts, and an option to convert the annuity into a stream of income for retirement or for other long-term financial planning.needs. RILA owners do not invest directly in the underlying index. Premiums are invested at Transamerica’s discretion as outlined in the contract and the RILA owner receives index-linked crediting, which can be positive or negative. The owner accepts a level of risk of market loss in exchange for higher upside potential.

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Overview of Americas 

Variable Annuities

Variable Annuities (VAs) allow the policyholdercontractholder to accumulate assets for retirement on a tax-deferred basis and to participate in equity or bond market performance. Additional insuranceOptional guarantees, which are offered through riders that can be added to VAs, includinga contract for an additional fee. VA riders include: guaranteed minimum death benefits (GMDBs) and guaranteed living benefits (GLBs). GMDBs provide a guaranteed benefit in the event of the annuitant’s death. GLBs are intended to provide a measure of protection against market risk while the annuitant is alive.living. Different forms of GLBs are offered, such as guaranteeing anavailable, offering a guaranteed income stream for life and/or guaranteeing principal protection. While Transamerica continues to offer certain variable annuities,VAs, it discontinued sales of variable annuitiesVAs with significant interest rate sensitive living and death benefits in the first quarter of 2021 and now manages that business as a Financial Asset.

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About AegonGovernance and risk management
Financial information
Non-financial information

Fixed Annuities

Fixed annuities allow the policyholdercontractholder to accumulate assets for retirement on a tax-deferred basis through periodic interest crediting and principal protection. Transamerica stopped new sales of fixed and fixed indexed annuities in the first quarter of 2021. Premium additions on in forceinforce fixed annuities are allowed in some contracts. However, Transamerica’s fixed indexed annuityTransamerica stopped receiving any premium deposits on fixed annuities after the second quarter of 2022,2022. Fixed annuities are managed as the contracts allow for additions only for one year after issue.

a Financial Asset.

Workplace Solutions

Life

Transamerica offers a suite of employee benefit plans that can help employees and their families in case of events that can throw saving and retirement plans off track. The Workplace Solutions life offerings include employer sponsored group life and supplemental life insurance products (term life, whole life, universal life). Workplace Solutions also offers individual life through the Advice Center, which offers customers the ability to confer with a registered retirement planning consultant regarding their investment strategy and additional needs for life events.

Accident and health

The Workplace Solutions employee benefit plans offer accident and health products including accidental death and dismemberment (AD&D), disability, and supplemental health insurance products (accident, cancer, critical illness, disability, executive medical, hospital indemnity, medical expense (gap), retiree medical).

Retirement Plans and IRAs

Comprehensive and customized retirement plan services are offered to employers across the entire range of defined benefit, defined contribution, and non-qualified deferred compensation plans for single employer plans, multiple employer plans (MEPs), and pooled employer plans (PEPs). Services are also offered to individuals rolling over funds from other qualified retirement funds or IRAs.

Retirement plan services, including administration, record-keeping and related services are offered to employers of all sizes and to plans across all market segments with focus on small to mid-sized organizations. Transamerica also works closely with plan advisors and third-party administrators to serve their customers. Transamerica Retirement Solutions is a top-ten defined contribution record-keeper in the United States based on number of plan participants.

Plan sponsors have access to a wide array of investment options.options, including CITs offered by Transamerica Trust Company and stable value group annuity contracts offered by Transamerica Life Insurance Company or Transamerica Financial Life Insurance Company. Tools are provided to help plan participants monitor their retirement accounts and engage in behavior to stay on track towardstoward a funded retirement. Managed Advice

®
is a managed account option that plan sponsors can make available to participants that provides investment advice to participants using the plan’s slate of funds.

For individuals, retirement-related services and products include IRAs, advisory services, and annuities as well as access to other financial insurance products and resources.

Stable Value Solutions

Transamerica’s Stable Value Solutions business offers synthetic guaranteed investment contracts (GICs) primarily to tax-qualified institutional entities such as 401(k) plans and other retirement plans and college savings plans. A synthetic GIC “wrapper” is offered around fixed-income invested assets, which are owned by the plan and managed by the plan or a third-party money manager hired by the plan. A synthetic GIC is typically issued with an evergreen maturity and may be terminated under certain conditions. Such a contract helps to reduce fluctuations in the value of the wrapped assets and provides book value withdrawals for plan participants.

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Competition

The US marketplace is highly competitive. Transamerica’s competitors include other large insurance carriers, in addition to certain banks, securities brokerage firms, investment advisors, and other financial intermediaries marketing insurance, products, annuities, and mutual funds.

In individual life insurance, leading competitors include Pacific Life, Lincoln National, Prudential Financial, John Hancock, National Life, Nationwide, and Corebridge Financial. Competitors for supplemental health include a wide range of companies and company types based on the nature of the coverage including Aflac, MetLife, Colonial Life, Allstate, Unum, and Guardian Life.

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Transamerica’s primary competitors in the VA market are Jackson National, Lincoln National, AIG, Nationwide, and Equitable.

In the RILA market, for RILAs, the largest issuers are Equitable, Brighthouse Financial, Prudential Financial, Allianz, and Lincoln.

Lincoln National.

Some of Transamerica’s main competitors in the mutual fund market include John Hancock, Hartford Funds, Lord Abbott,Abbett, PGIM, and American Century.

In the defined contribution plan administration market, Transamerica’s largest competitors (based on assets under administration) are Fidelity, Empower, TIAA, Vanguard, Alight, Principal Financial, Voya, and BofA Securities. Transamerica’s largest competitors in the defined benefit segment are Alight, Willis Towers Watson, Conduent, Fidelity, Aon, Mercer, and Milliman.

In the market for synthetic GICs, Transamerica’s Stable Value Solutions business, the largest competitors are Prudential Financial, MetLife, Voya, and Pacific Life.

Regulation and supervision

Transamerica’s insurance companies are regulated primarily at the state level. Some activities, products, and services are also subject to federal regulation.

State regulation

The Transamerica insurance companies are licensed as insurers and are regulated in each US state and jurisdiction in which they conduct insurance business. The insurance regulators in each state carry out their mission by providing oversight in the broad areas of consumer protection, market conduct and financial solvency.

Transamerica’s largest insurance company, Transamerica Life Insurance Company, is domiciled in Iowa, and the Iowa Insurance Division exercises principal regulatory jurisdiction over it. Iowa is Transamerica’s designated lead state, giving Iowa a coordinating role in the collective supervision of Transamerica’s insurance entities.

In the areas of licensing and market conduct, states grant or revoke licenses to transact insurance business, regulate trade, advertising and marketing practices, approve policy forms and certain premium rates, review and approve new products and features, and certain rates prior to sale, address consumer complaints, and perform market conduct examinations on both a regular and targeted basis.

In the area of financial regulation, state regulators implement and supervise statutory reserve and minimum risk-based capital requirements. Insurance companies are also subject to extensive reporting requirements, investment limitations, and required approval of significant transactions. State regulators conduct extensive financial examinations of insurers every three to five years.

State regulators have the authority to impose a variety of corrective measures, including the revocation of an insurer’s license, and financial penalties for failure to comply with applicable regulations. All state insurance regulators are members of the National Association of Insurance Commissioners (NAIC), a non-regulatory industry association that works to achieve uniformity and efficiency of insurance regulation across the United States and US territories.

Recent state-level regulatory developments that impact Transamerica include changesnew NAIC rules that allow negative interest maintenance reserves (IMR), up to 10% of statutory surplus, to be admitted. The IMR is a mechanism that defers the product illustration rules for IUL insurance.recognition of interest-related capital gains or losses. Recent interest rate increases have led to negative IMRs, which historically have not been admitted. The new rules attempt to make product illustrations more consistent across various product designs and should lead to a more level playing field for new sales within the industry.

The NAIC has finalized and is gradually implementing a liquidity stress testing framework for large life insurers, including Transamerica. The requirements are effectuated by changes to the NAIC’s Insurance Holding Company System Regulatory Act, which must be adopted by each state, but current submissions are occurring under existing authority. It is anticipated that the required liquidity stress testing exercise will be performed annually.
Recent amendments (adopted in 2018) to the Life and Health Insurance Guaranty Association Model Act adjust guaranty fund assessments for future LTC insurance-related insolvencies so that 50% of such assessments come from life/annuity accounts, with the other 50% from health/Health Maintenance Organization accounts. Under the new formula, in the event of an LTC-related insolvency, Transamerica would be subject to a relativelycould give companies greater burden for assessments imposed by state guaranty associations. To date, 36 states have adopted the amended model. State laws must be changed for the amendments to be effective, which occurs gradually (or not at all in some states).investment flexibility.

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The NAIC and states are also reviewing investment-related and reinsurance-related factors connected with structural shifts in the insurance industry. Investment-related initiatives focus on the regulatory treatment and oversight of private, complex, structured, and/or illiquid assets, which have been used increasingly to generate competitive investment yields. Regulators are focusing on whether regulatory risk capital charges are appropriate and whether the risks of these assets are appropriately considered. The reinsurance-related issues focus on the collectability of asset-intensive offshore reinsurance, which is frequently used to optimize capital management.

Other emerging state issues that may impact Transamerica include aan NAIC project by the NAIC to updatereplace the economic scenario generator that is required to be used to calculate prudential provisions for variable annuitiesVAs and other products. In addition, theThe new scenario generator iswill also be used to project “C-3“C-3 Phase 1” capital requirements for fixed annuities. The fixed annuity blockSeparately, the Interstate Insurance Compact is not fully hedged,finalizing a product standard for RILAs, which increases the likelihoodwill allow RILAs that meet certain design standards to be sold in most states after a single Compact approval. Finally, state regulators are also working to standardize approaches to state reviews of a material impact from the economic scenario generator initiative. The NAIC is also investigating emerging simplified and automated underwriting methodologies in light of nondiscrimination objectives. Finally, the NAIC is also exploring enhancements to existing climate risk regulation, including solvency assessment and risk disclosure.

long-term care rate increase requests.

Federal regulation

Although the insurance and retirement-related directed trustee and CIT business is primarily regulated at state level, securities products, and retirement plans products and services are also subject to federal regulation.

regulation by the Securities and Exchange Commission (SEC) and the Department of Labor (DOL), respectively.

Variable life insurance, productsVAs (including RILAs) and mutual funds offered by Transamerica are subject to regulation under the federal securities laws administered and enforced by the Securities and Exchange Commission (SEC).SEC. The distribution and sale of SEC-registered products by broker-dealers is regulated by the SEC, the Financial Industry Regulatory Authority (FINRA), and state securities regulators. A number of Transamerica companies are also registered as investment advisorsBroker-dealers and their representatives are subject to the SEC’s Regulation Best Interest (Regulation BI), which establishes a “best interest” standard of conduct for broker-dealers and investment advisors when making a recommendation to a retail customer and requires potential conflicts of interest to be disclosed. Several states have adopted an NAIC model law that imposes similar standards as Regulation BI for the sale of non-variablefixed annuities.

A number of Transamerica companies are also registered as investment advisors. Investment advisors owe a fiduciary duty to clients and are regulated by the SEC.

There continues to beare a very activenumber of pending US federal legislative and regulatory environmentproposals with respect to financial services. While thereFor example, the DOL has proposed a new definition of who should be considered an “investment advice fiduciary,” as well as another proposal to determine whether a worker should be considered an independent contractor or employee. Similarly, the SEC has proposed new rules concerning the climate risk disclosure obligations of corporate issuers and asset managers as well as the use of predictive data analytic tools (see below). There is no certainty whether or in what form these regulatory proposals might be adopted, emerging federal proposals that may impact the businesses of Transamerica include a Department of Labor fiduciary advice proposal, several legislative proposals considering independent contractor classification, and new requirements regarding the disclosure of climate risks and potentially other environmental, social, and governance factors.

finalized.

Information security and privacy regulation

Transamerica’s businesses are regulated with respect to information security, data breach response, privacy, and data use at both the federal and state levels. At the federal level, various Transamerica companies are subject to the Gramm-Leach-Bliley Act (GLBA), the Fair Credit Reporting Act (FCRA), and the Health Insurance Portability and Accountability Act (HIPAA), among other laws. At the state level, the various departments of insurance typically administer a series of privacy and information security laws and regulations that impact several Transamerica businesses. In addition, in recent years numerous state legislatures have passed or have attempted to pass additional, more broad-based general consumer privacy laws, such as the California Consumer Privacy Act, and the California Privacy Rights Act. Those California laws, as amended,Act, which will be administered by the newly formed California Privacy Protection Agency. Additional laws and regulations with respect to these topics are also anticipated to be promulgated and to go into effect in the coming years, and they may be administered by new or different state agencies or by the Offices of State Attorneys General. For example, NYDFS also published the Draft Amendment toNew York Department of Finance Services (NYDFS) amended its Part 500 Cybersecurity Rules that includes significant changes to adopt heightened information security requirements in relation to areas such as cybersecurity governance, cybersecurity risk assessments, and incident reporting. Implementation of the original Rule potentially resultingAmendment will occur in further implementation effort for Transamerica.2024 and 2025 consistent with NYDFS requirements and guidance. The White House, SEC, and other regulators have also increased their focus on companies’ cybersecurity vulnerabilities and risks, including in relation to third-party service providers. The SEC proposed twohas recently adopted the Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure by Public Companies on July 26th, 2023 (“The Rule”). The Rule enhances and standardizes disclosures for public companies with regards to their cybersecurity risk strategy, management and governance. The Rule also requires the reporting of a cybersecurity incident within four business days of determining that an incident is deemed material. The new rules also establish disclosure requirements for Foreign Private Issuers (FPIs) parallel to those for domestic insurers in March 2022 related to cybersecurity disclosuresthe Form 8-K and Form 10-K.

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The SEC has further proposed rules regarding cybersecurity requirements that apply to registered investment advisors and fundsfunds. The proposed rules would, among other things, require broker-dealers and investment advisers to Public Companies. Both rules are expected toeliminate or neutralize the effect of certain conflicts of interest associated with their use of artificial intelligence and other technologies that optimize for, predict, guide, forecast or direct investment-related behaviors or outcomes that could potentially have an impact to Transamerica should they be passed. Final actionand Aegon reporting. In addition, on these rules is expectedDecember 4, 2023, the National Association of Insurance Commissioners adopted a model bulletin on regulatory expectations for the use of artificial intelligence system by insurers, following Colorado’s finalization of a similar regulation earlier in April 2023.the year and in advance of possible state-by-state activity in 2024.

 

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Overview of the Netherlands

United Kingdom 

   
   

Overview of the Netherlands
For almost 180 years, Aegon has operated in the Netherlands, where it is a leading provider of life insurance and pensions. Aegon the Netherlands employs approximately 3,600 people has its main office in The Hague, with its other main offices in Amsterdam, Groningen, and Leeuwarden.
In October 2022 Aegon announced that it had reached an agreement with a.s.r. to combine its Dutch pension, life and non-life insurance, banking, and mortgage origination activities with a.s.r. The combination will create a leading Dutch insurance company. This step enables Aegon to accelerate its strategy and represents a major step in its ambition to become a leader in its chosen markets. Aegon will receive EUR 2.2 billion in gross cash proceeds and a 29.99% strategic stake in a.s.r., with associated governance rights.
The closing of the transaction is subject to customary conditions, including regulatory and antitrust approvals. Based on the required steps, and necessary approvals, the transaction is expected to close in the second half of 2023.
Organizational structure
Aegon the Netherlands also operates through several other brands next to Aegon brand, including Knab, TKP Pensioen, Nedasco, and Robidus.
Aegon the Netherlands has four lines of business:
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Life
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Mortgages
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Banking
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Workplace Solutions
Aegon the Netherlands’ primary subsidiaries are:
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Aegon Bank N.V.
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Aegon Cappital B.V.
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Aegon Hypotheken B.V.
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Aegon Levensverzekering N.V.
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Aegon Schadeverzekering N.V.
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Aegon Spaarkas N.V.
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Nedasco B.V.
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Robidus Groep B.V.
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TKP Pensioen B.V.
Aegon the Netherlands is organized into Financial Assets and Strategic Assets.
The life insurance activities of Aegon the Netherlands are considered Financial Assets. Aegon has established a dedicated team to manage these businesses, which is responsible for maximizing its value,. Aegon selectively competes in the defined benefit market. This also includes supporting employers in their transition towards defined contribution solutions under the new pension agreement. New sales for these blocks are limited and focused on products with higher returns and a moderate risk profile: mainly immediate pensions annuities, indexations on existing group life contracts and risk insurance.
Strategic Assets are the businesses in which Aegon the Netherlands will invest to grow its customer base and increase margins. Aegon the Netherlands strategically focuses on the following business: Mortgages (Aegon Hypotheken), Banking (Knab); and Workplace solutions for employers. The last category consists of the following businesses: Aegon Cappital, TKP Pensioen, Aegon Schadeverzekering, Robidus, and Nedasco.
Overview of sales and distribution channels
Aegon the Netherlands uses a variety of distribution channels to help customers access the products and services appropriate to their needs. All business lines use an intermediary channel, which focuses on independent brokers in different market segments in the Netherlands. Aegon the Netherlands continues to invest in online capabilities to support customers and intermediaries, to further enhance the digital self-service experience.
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Overview of business lines
Life
Aegon the Netherlands’ Life entity (Aegon Levensverzekering) is managed as a Financial Asset. This means that the focus is on maximizing its value through active in-force management, disciplined risk management, and capital management actions. These actions focus on protecting the capital position, increasing capital generation, and reducing expenses by outsourcing the servicing of the life-books.
Pensions
In recent years there has been a shift from Defined Benefit (DB) pension plans to Defined Contribution (DC) pensions plans. In 2020, fundamental changes were proposed to the Dutch pension system. Although implementation has been delayed from 2026 to 2027, these changes include that new pension accrual is only allowed in DC schemes. As Aegon the Netherlands offers DC schemes through a separate legal entity - Aegon Cappital - the consequence for Aegon Levensverzekering is that all of its Group pension products will become service books.
Aegon the Netherlands will only selectively compete in the defined benefit market. This also includes supporting employers in their transition towards defined contribution solutions under the new pension agreement. Renewals of existing contracts are possible, but only if the renewal facilitates the existing customers in their transition to DC. In addition, Aegon Levensverzekering will continue to sell risk insurance and annuities that are closely linked to DC schemes. More detail on annuities is provided further below.
The Group DB products that remain on the balance sheet of Aegon Levensverzekering are as follows:
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Separate account group contracts with individually determined asset investment strategies, profit sharing and guarantees
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Contracts with profit sharing based on a pre-determined interest rate
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DB subscriptions, a standardized product that offers a one-year guarantee
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Contracts without profit sharing
As the DB subscription product remains open for existing customers and, as some contracts have a due date in the future, there are still premiums received for these products.
Annuities
The actively sold products in this category are simple payout annuities and variable annuities without guarantees. These products are linked to DC schemes in which participants build up their capital and are obliged, by law, to purchase an annuity at the pension date. Participants can choose between a guaranteed annuity - where all risks are borne by Aegon - or a variable annuity without investment guarantees, where all risks are borne by the participant. Given that a significant shift has been observed toward DC schemes, these annuities are a natural driver of growth as they provide a solution for the payout phase. Annuity insurance also includes older products with guaranteed interest rates and profit sharing for which no new business is written.
Risk insurance
This category mainly includes the survivor’s pension insurance sold as a rider to DC pension schemes. Premiums are mainly paid by the employer and the product pays benefits to the spouse/children in the event of the death of the insured.
Endowment insurance
Endowment insurance includes several products that accumulate a cash value. Premiums are paid at inception or over the term of the contract. These products pay benefits on the policy maturity date, subject to survival of the insured. Most policies also pay death benefits should the insured die during the term of the contract. Minimum interest guarantees exist for all generations of endowment insurance products written, except for universal life products, for which premiums are invested solely in equity funds. These products are no longer being sold.
Term and whole life insurance
Term life insurance pays out death benefits should the insured die during the term of the contract. Whole life insurance pays out death benefits in the event of death, regardless of when this occurs. Premiums and amounts insured are established at inception of the contract and are guaranteed. The amount insured may be adjusted at the request of the policyholder. Term life insurance policies do not include profit-sharing mechanisms. Part of the whole life insurance portfolio has profit-sharing features, which are based on external indices or the return of related assets. In the first quarter of 2020, Aegon the Netherlands stopped offering these products.
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Mortgages
Aegon the Netherlands offers mainly annuity and linear residential mortgages, while also catering to consumers requiring interest only mortgage loans. Mortgage loans are originated both as investments for Aegon the Netherlands’ insurance and bank entities as well as distributed to third-party investors. Such investors are provided access to this high-quality asset class through the Aegon Dutch Mortgage Fund, Robuust (a third-party label where Aegon has the exclusive right to purchase and distribute the mortgages receivables), SAECURE (Aegon’s Dutch residential mortgage-backed securities program), Aegon Bank N.V.’s covered bond program, and various bespoke structures to tailor to investors’ needs. Investors value our mortgage offering for the attractive spread and low credit-loss experience through disciplined underwriting. Consumers and independent financial advisors choose Aegon mortgages for the high quality of service, reliable operations, and accessibility through the economic cycle.
Banking
Introduced in 2012 and operating under Aegon Bank N.V.’s banking license, Knab was the first fully online bank in the Netherlands. Knab’s ambition is to be the online bank for entrepreneurs and their families. Knab focusses on digital innovation, human service, and user friendliness. As an online bank, Knab offers meaningful, understandable, and easy-to-use products and services for convenience today (such as payments and bookkeeping) and solutions for tomorrow helping customers to protect and grow their businesses and wellbeing (such as insurances and business loans). Knab aims to optimize wealth by closing the pension gap to help its customers to plan and attain their financial freedom in the future (such a savings, investments, and pension products).
Workplace solutions
Non-life
Accident and Health
Aegon the Netherlands offers disability and sick leave products to employers to cover payments to their employees that are not covered by social security and where the employer bears the risk. For some risks, employers can choose to use the government provided system, self-insure, or buy commercial insurance via, for instance, Aegon. Private insurance appeals to employers, because it offers a wider set of coverage options and can therefore be better tailored to the needs of the employer in protecting its employees. Waiver of pension premium in case of disability is offered through Aegon Cappital.
For individuals, Aegon the Netherlands offers a disability product mainly targeted at the growing self-employed market.
Property and Casualty (P&C)
Aegon the Netherlands has focused exclusively on retail lines in P&C insurance, offering products in the segments of property, motor, travel, legal assistance, private liability claims, pet insurance, and injury. The ambition for the P&C retail segment is to provide the best digital service in the Dutch P&C market while building long-lasting relationships with customers and distribution partners.
Through the service concepts, Aegon the Netherlands supports intermediaries with excellent digital processes to help their customers live their best lives. This is done by stimulating performance at sustainable levels for customers, intermediaries, and the insurer. In addition to the intermediary market, Aegon the Netherlands has further developed digital and online capabilities, especially as the direct market has sustained a sizable share in the overall distribution in the past years, in particular for the Motor segment. The direct market includes sales via Aegon’s own website and affiliates, as well as through aggregator websites.
Aegon Cappital
Aegon Cappital is a low-cost provider of DC pension schemes offered through intermediary advisors. Aegon Cappital offers DC pension schemes in a standardized subscription-based model and via customized contracts. The model enables employers to choose from a variety of contribution tables and social security offsets, while remaining flexible for regulatory changes, such as changes in pension age or fiscal contribution limits. Savings premiums are invested in life cycle funds managed by Aegon Investment Management B.V.
Aegon Cappital is one of the largest pension premium institutions (“PPIs”) in the Netherlands and benefits considerably from economies of scale. Aegon the Netherlands has identified this market as an opportunity for growth and intends to maintain its leadership position with Aegon Cappital in cooperation with other Aegon units. The volatile interest rate environment, which result in unpredictable DB pension costs for the employer did result in a continued shift from DB to DC schemes. In addition,
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the fundamental changes of the Dutch pension system as of mid-2023 will add to this shift up until the implementation of the new pension system will be completed (January 1, 2027).
The schemes include disability and/or life insurance which are offered by partners Aegon Levensverzekering, Aegon Schadeverzekering, and Elips Life AG, and the option for participants to buy deferred annuities offered by partner Aegon Levensverzekering. The main risks for Aegon Cappital are operational and regulatory risk.
TKP Pensioen, Robidus, and Nedasco
TKP Pensioen is a top-three player in the Dutch market for pension administration. TKP Pensioen administers pension rights for several large company and industry pension funds, as well as other pension providers such as premium pension institutions. Their customers – 105,000 employers representing 3.8 million participants – rely on TKP Pensioen for correct and timely pension payments, and clear and accessible pension information and communication. This ranges from the mandatory pension statements to customer contact and digital customer services.
Robidus Groep advises corporations on the risks and associated costs of absenteeism and disability under Dutch social security legislation and acts as an insurance broker for income related insurances.
Nedasco is an intermediary service provider that is mainly active in non-life business domains.
Competition
Aegon the Netherlands faces strong competition in all markets from insurers, banks, investment companies, and pension funds. Its main competitors are NN Group, a.s.r., and Allianz Benelux.
Aegon has been a key player in the total life market for many years and was ranked fourth in 2021 based on gross premium income. The life insurance market in the Netherlands comprises of pensions and life insurance. The top-five life insurance companies in the Netherlands by gross premium income accounted for over 75% of total premium (Individual Life and Pensions) income in 2021. In the non-life market in 2021, Aegon the Netherlands is one of many insurers with a market share of around 5% in Income Protection and 1% in Property and Casualty Insurance, making it the fifth and nineteenth largest company in these markets respectively.
In the mortgage loans market, Aegon the Netherlands held a market share of over 6% based on new sales in 2021, making it the fifth-largest mortgage loan provider in the market. The top-three banks (ABN AMRO, ING Bank, and Rabobank) remain the largest mortgage loan providers in the market and competition is increasing from the entry of foreign competitors and capital pension funds.
Aegon the Netherlands’ share in the market for Dutch household savings was just over 2% in 2021, which is relatively small in comparison to the top-three which are ABN AMRO, ING, and Rabobank.
In the pensions market, the defined contribution (PPI) segment is set to grow further due to the fundamental changes of the Dutch pension system as of July 2023, with final implementation date 1 January 2027, and the demand for transparent and cost-effective pension products. Aegon Cappital is the number one in the market based on number of participants and the number two in the market based on assets under management in 2021.
The market for buy-outs is expected to be large and Aegon will deploy its capital strategically and participate selectively when it fits the strategy, meaning that value add for customers and growth of strategic assets will be the main considerations.
Regulation and supervision
General
Regulation of the financial sector in the Netherlands is included in the Financial Supervision Act (Wet op het financieel toezicht or Wft). The Wft embeds the cross-sectorial functional approach within the Dutch supervisory system. The supervision of financial institutions pursuant to the Wft rests with the Dutch Central Bank (DNB) and the Dutch Authority for the Financial Markets (AFM).
The DNB is responsible for prudential supervision, while the AFM supervises the conduct of business of financial institutions, and the conduct of business on financial markets. The aim of the DNB’s prudential supervision is to ensure the solidity
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of financial institutions and contribute to the stability of the financial sector. Regarding banks, the DNB undertakes its supervisory role, in particular with respect to prudential supervision, together with the European Central Bank (ECB).
The AFM’s conduct of business supervision focuses on ensuring orderly and transparent financial market processes, integrity in relations between market parties, and due care in the provision of services to customers.
The Dutch supervisory authorities have several formal tools to exercise their supervisory tasks. These tools include the authority to request information, if this is necessary for the purpose of prudential supervision, and the power to issue formal instructions to financial institutions, to impose fines, or to publish sanctions. The DNB, as prudential supervisory authority, can, under certain circumstances, require a recovery plan, a short-term financing plan, appoint a trustee, draw up a transfer plan or (ultimately) withdraw the license of a financial institution.
The Dutch Data Protection Authority (Dutch DPA) supervises processing of personal data in order to ensure compliance with laws that regulate such use. The tasks and powers of the Dutch DPA are described in the General Data Protection Regulation (GDPR), supplemented by the Dutch Implementation Act of the GDPR.
Financial supervision of insurance companies
The Solvency II framework consists of, inter alia, an EU Directive and EU Delegated Regulation. The EU Directive has been transposed into Dutch legislation, in particular the Wft. The EU Delegated Regulation is directly applicable, without transposition into local legislation.
The following insurance entities of Aegon the Netherlands are subject to prudential supervision by the DNB:
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Aegon Levensverzekering
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Aegon Schadeverzekering
◆
Aegon Spaarkas
An insurance company is neither permitted to conduct both life insurance and non-life insurance business within a single legal entity (except for reinsurance), nor to carry out both insurance and banking activities within the same legal entity. Within Aegon the Netherlands, Aegon Levensverzekering and Aegon Spaarkas conduct life insurance activities. Aegon Schadeverzekering conducts non-life insurance activities.
Solvency II
The Solvency II framework is described in more detail in the section “Regulation and supervision” of Aegon’s Annual Report 2022.
Aegon the Netherlands uses a partial internal model (PIM) to calculate the solvency position of its life insurance activities under Solvency II. The calculation includes the use of the volatility adjustment (VA) but does not include the use of any transitional measures. The initial internal model of Aegon the Netherlands was approved on November 26, 2015, by the supervisor, the DNB, as part of the Internal Model Application Process. Following the Internal Model Application Process, Aegon the Netherlands made several major changes to its PIM, which have all been approved by DNB.
Dutch Act on Recovery & Resolution for Insurers
The Dutch Act on Recovery & Resolution for Insurers (R&R Act) is the applicable intervention regime for insurance and reinsurance companies in the Netherlands faced with financial difficulties.
The R&R Act has introduced a revised regulatory framework for recovery and resolution of Dutch insurance and reinsurance companies and provides for a range of measures to be taken by these companies and the DNB ex ante, in order for these insurance and reinsurance companies to be prepared for recovery in circumstances where it no longer meets the required solvency requirements and for orderly resolution, in circumstances where it is failing or is likely to fail.
Financial supervision of credit institutions
Pursuant to the SRM (Single Resolution Mechanism) Regulation and the BRRD (Banking Recovery and Resolution Directive), Aegon Bank N.V. is at all times required to meet a minimum amount of own funds and eligible liabilities (“MREL”), expressed as a percentage of the total liabilities and own funds. The DNB sets a level of minimum MREL on a bank-by-bank basis, where DNB will set a requirement for Aegon Bank N.V. that will become effective by January 1, 2024. This requirement is still to be finalized based on the annual Supervisory Review and Evaluation Process (“SREP”) decision in 2023.
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The implementation of Basel IV in EU regulation will be completed through amendments in the Capital Requirements Regulation 3 (“CRR3”) and the Capital Requirement Directive 6 (“CRD6”) framework, for which EU Council agreed on its position on the implementation of the Basel III reforms. With the proposals made public the EU Council, it is ready to start negotiations with the European Parliament in order to agree on a final version of the texts, which are expected to be ready in 2023 or 2024 to become effective at a later date. The impact for Aegon Bank N.V. is expected to be limited or positive as it applies the Standardized Approach and is therefore not impacted by the output floor as would be the case for banks using the Internal Rating Based models. The proposed changes include, among others, stricter rules for internal models, a capital floor, and revisions to the standardized approaches for credit risk. Aegon Bank N.V. is expected to be mainly impacted by the changes in Standardized Approach (“SA”) for Credit Risk on mortgages where buckets and risk weights are revised versus the existing regulation.
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Overview of United Kingdom

Overview of United Kingdom

Aegon United Kingdom (Aegon UK)UK is the market-leadinga leading investment platform in the United Kingdom, providing a broad range of savings, investment and retirement solutions and protection products to individuals, advisers, and employers.

Aegon UK accesses customers through the workplaceWorkplace and retailRetail financial advisers and has a market-leadingleading position in each. It actively trades with over 4,000 advisers and around 10,000 employers giving it 4.1 million customers and GBP 187 billion assets under administration (AUA).

each channel.

Aegon has designated the United Kingdom as a core market with strategicUK’s focus is on growing theits Workplace and Retail channels, and on retaining customers in its traditional insurance book. Aegon UKIt is viewed as a Strategic Asset, which Aegon plans to invest in with a view to growing the customer base, improving customer retention, and growing margins.

It employs over 2,500 people and its main offices are in Edinburgh, London, Peterborough, and Witham.

Organizational structure

Aegon UK plc is Aegon’s holding company in the United Kingdom. It was registered as a public limited company in December 1998. The leading operating subsidiaries, which all operate under the Aegon brand, are:

Scottish Equitable plc
◆
Scottish Equitable plc
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Cofunds Limited
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Aegon Investment Solutions Limited
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Aegon Investments Limited
Aegon Investment Solutions Limited
Aegon Investments Limited
Origen Financial Services Limited

Overview of business Lines

Aegon UK operates a modern fee-based investment “platform” business along with a “traditional insurance” business.

Aegon UK’s platform business delivers a range of propositions through Workplace and Retail channels, together with protection products and an institutional trading platform business. This is supported by an investment solutions capability that allows customers to invest in proprietary Aegon funds, driving additional fee margin.

Aegon UK’s traditional insurance business consists of older contractsproducts that are no longer actively marketed to new customers.

marketed. It actively trades with over 4,000 adviser firms and around 10,000 employers giving it 4 million customers and GBP 203 billion assets under administration (AUA) as at 31 December 2023.

Overview of sales and distribution

Aegon UK has two principal distribution channels: the Workplace accessed through employers and Retail via financial advisers.

Aegon UK works with those employers and advisers to deliver an online experience for customers. The platform is designed to support customers throughout their life as needs evolve by providing a comprehensive range of products and funds, moving with them each time they change employers and allowing them to engage with different advisers.

This single set of products gives Aegon UK the flexibility required to support the modern, complex lives customers are living to and through retirement. Aegon UK is aiming to provide customers with the support they need to make the big financial decisions implicit in this life by embedding a digital first ecosystem of education, guidance, and advice to complement the comprehensive product offering.

Aegon UK is investing to capitalize on its strong positions in the Workplace and Retail markets, which are forecast to grow materially in the medium to long term.

Workplace channel

The Workplace channel provides UK-based employers with Workplace pensions and savings schemes. It allows Aegon UK to participate in the strongly growing auto-enrolment market by delivering a market leading financial wellbeing proposition allowing itproposition. This has allowed Aegon UK to cost effectively acquire around 250,000280,000 individual customer relationships every year.on average over the last 3 years.

 

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Aegon UK has a leading position covering all major Workplace savings products and participates in both the small and medium-sized (SME) and large employer segments. A key driver of growth is in the Master Trust market, the fastest-growing sector of the UK Defined Contribution market, where Aegon UK has an established and market-leading offering.

Aegon UK works with leading employee benefits consultants and corporate advisers to provide a Workplace savings platform to employers such as WH Smith, EasyJet, and Skanska. This combines its core pension capabilities with Individual Savings Accounts (ISAs) and General Investment Accounts (GIAs), which allows employees to maximize their savings while employed.

At the heart of this is Aegon UK’s employee digital portal providing a personalized customer experience. This provides tools to enable employees to make more informed decisions. The portal also links into the wider engagement activities such as seminars in the workplace, and online innovationstools that help customers consolidate assets held elsewhere, increase their savings, and transition into retirement.

Aegon UK is investing in two key areasareas:

Personalized Member Experience – A series of developments to drive differentiation:
enhance its employee digital portal and app starting with the launch of a new digital financial education platform supported by live television events from Pension Geeks. This is being followed by a series of enhancements to digitize key journeys and enhance the tools/support provided to customers and supported by the launch of its new website.
◆•
Personalized Member Experience – A series of developments to enhance our employee digital portal and app starting with the launch of a new digital financial education platform supported by live television events from Pension Geeks in 2022. This will be followed by a series of enhancements to digitize key journeys and enhance the tools/support provided to customers.
◆
Environmental, social, and governance (ESG) Integration – ESG is now integrated within our workplaceits Workplace default investments with c. GBP 15.623.4 billion of assets aton December 31, 20222023 in optimisedstrategies that include screens and screeded strategies (2021:optimization techniques to enhance ESG characteristics (2022: c. GBP 12.115.6 billion).
To support its net zero commitment across its workplace default estate by 2050, Aegon UK has also published its transition plan to achieve this target. The transition plans include short and medium-term targets, including 50% reductions in scope 1 and scope 2 greenhouse gas emissions by 2030 and a commitment to invest GBP 500 million in climate solutions by 2026.

Retail channel

The Retail channel provides financial advisers and other institutions access to long-term savings and retirement products, through an open architecture investment platform. It aims to capitalize on the strong demand for advice, especially within the growing affluent population nearing and in retirement.

Aegon UK offers a comprehensive proposition allowing advisers to manage their clients’ long-term investments by offering equity trading, and a choice of over 4,5004,000 investment options. Aegon UK is continuing to develop a strong range of own brand investment solutions and plans to extend them in 2023.

2024.

Aegon UK provides a technology platform that supports advisers and their customers in managing their finances and is integrated with the back offices of the advisers. The aim is to create a primary platform relationship, which positions Aegon UK to receive the majority of new business flows from the adviser partner.

Over 4,000 adviser firms have placed business with Aegon UK in the last year across a wide range of business models. These include leading wealth management firms such as Chase De Vere, financial services networks, such as Quilter, and execution-only brokers.

Nationwide Building Society has been an important partner for Aegon UK since the relationship was established in 2017. An important dimension of the Nationwide partnership is the inclusion of Aegon UK’s own investment solutions.

Aegon UK’s investment in the retailRetail channel focuses on transforming the user experience and core journeys for the core Aegon Retirement Choices/Aegon One Retirement offerings – this has been developed over the last two years and has been rolled out to advisers and customers during 2023 with a series of improvements planned for 2024 to build on this new offering.

Own-Advice channel

Aegon UK has an established advisory business in two key areas:Origen, Financial Services Limited (Origen), providing independent advice directly to high-net-worth clients.

In 2023 Aegon agreed a transaction with the Nationwide Building Society which concluded on 1 February 2024. The agreement extends the existing product manufacturing partnership with the transfer of c. 300 staff to Origen along with the agreement of a new introducer arrangement for those advisers to continue to provide services to Nationwide customers.

 

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◆
Delivering a program of enhancements to existing processes/journeys to drive value through existing adviser relationships.
◆
Transforming the user experience and core journeys for the core Aegon Retirement Choices/Aegon One Retirement offerings – this has been developed over the last two years and will be rolled out to advisers and customers during 2023 which will accelerate the pace of new proposition delivery.
Protection channel

Aegon UK offers a range of products for Retail customers, including life cover, critical illness, and income protection available through financial advisers. The target market is wealthier customers over the age of 40, where Aegon UK’s underwriting expertise helps it to provide a customer-centric proposition.
In addition, Aegon UK offers a range of protection products for small to medium-sized companies that wish to insure key personnel, complementing the core offerings in the Workplace channel.
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Overview of United Kingdom

   
   

Institutional

Protection channel

In 2023, Aegon UK alsoclosed its protection channel to new business and sold the business to Royal London. The sale requires a court sanctioned transfer of the customers to be arranged and the legal process is expected to conclude in the second half of 2024.

Institutional channel

Aegon UK participates in the institutional market in two areas where investment trading capability is provided to other parties who provide policy administration to the end-client:

◆
An institutional trading platform which powers 26 of the UK’s leading platforms, wealth management firms, and investment houses (for example Brooks Macdonald and Charles Stanley)

◆
An investment-only proposition for Workplace pension schemes, which provides access to insured funds for approximately 140 clients.
An institutional trading platform which powers 25 of the UK’s leading platforms, wealth management firms, and investment houses (for example Brooks Macdonald and Charles Stanley).
An investment-only proposition for Workplace pension schemes, which provides access to insured funds for approximately 120 clients.

UK Stewardship Code and Mansion House Compact agreement

During 2023, Aegon UK was accepted as a signatory to the Financial Reporting Council’s UK Stewardship Code. Being accepted to join the UK Stewardship Code is a significant achievement, and further demonstrates Aegon UK’s commitment to become one of the top 25% responsible businesses in the United Kingdom by 2025. The UK Stewardship Code is a set of voluntary principles that aim to improve the quality of stewardship practices by asset owners, managers and service providers. To become a signatory, organizations must clearly demonstrate that they have exercised effective stewardship over the previous 12 months through good governance and active engagement which has helped to generate long-term positive impacts for the economy, the environment, and/or society. For a summary and copy of our Responsible Investment and Stewardship Report 2022, please see here.

Also during 2023 Aegon UK became a founding signatory of the Mansion House Compact agreement. The Compact is a voluntary, industry-led expression of intent to take meaningful action to secure better outcomes for UK pension savers through increased investment in unlisted equities. In line with the Compact’s intention, Aegon UK is committing to increasing the proportion of the pension assets it manages for clients which are invested in unlisted equities. The target is to allocate at least 5% of defined contribution default funds to unlisted equities by 2030, importantly in a way that is consistent with acting in the best interests of its pension scheme members.

Competition

Aegon UK is well positioned for growth, possessing market leading positions in the markets it operates in with strong growth potential.

Aegon UK is unique in the way it supports intermediaries wishing to operate across channels providing an end-to-end customer experience.

In the Workplace market, Aegon UK provides employee benefits, engagement, and scheme governance. Competitors include Aviva, Legal & General and Willis Towers Watson.

In the Retail market, Aegon UK aims to become the “primary platform” for intermediariesintermediaries. Competitors include Aviva, Quilter and competitors include Fidelity, Transact, and Quilter.

Abrdn.

Regulation and supervision

All relevant Aegon UK companies based in the UKUnited Kingdom are either: authorized by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA; or authorized and regulated by the FCA, dependent on firm type.

The PRA is responsible for the prudential regulation of deposit takers, insurers, and major investment firms. The FCA is responsible for regulating firms’ conduct in Retail and Wholesale markets. It is also responsible for the prudential regulation of those financial services firms that do not come under the PRA’s remit.
The Aegon Master Trust is subject to regulatory oversight by The Pensions Regulator.
Following the United Kingdom’s exit from the European Union, financial regulation derived originally from EU legislation and has been retained by the United Kingdom. In light of their autonomy, the UK Government and Regulators reviewed the UK Regulatory Framework and are reverting to a model in which UK financial services Regulators lead on developing regulatory requirements for firms, subject to arrangements allowing for accountability to and scrutiny by HM Treasury and Parliament. In the long run, retained EU law will be repealed and replaced, or moved to the Regulators’ rulebooks. The Regulators and Government are also making targeted interventions to amend certain aspects of retained EU law, with changes in areas such as Solvency II.
Financial supervision of insurance companies

Scottish Equitable plc is authorized by the PRA and is subject to prudential regulation by the PRA and conduct regulation by the FCA. Every life insurance company licensed by and/or falling under the supervision of the PRA must file audited regulatory reports at least annually. These reports are primarily designed to enable the PRA to monitor the solvency of the insurance company, and include a (consolidated) balance sheet, a (consolidated) income statement, a breakdown of the Solvency Capital Requirements, extensive actuarial information, and detailed information regarding the investments of the insurance company. With effect from December 31, 2022, Aegon UK is also subject to group supervision at the level of Aegon UK plc under the UK Solvency II regulationsregulations.

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The Aegon Master Trust is subject to regulatory oversight by The Pensions Regulator as a result of the UKUnited Kingdom’s exit from the EU.

Following the United Kingdom’s exit from the European Union, financial regulation derived originally from EU legislation has been retained by the United Kingdom. The UK Government and Regulators have reviewed the UK Regulatory Framework and are moving to a model in which UK Regulators lead on developing regulatory requirements for financial services firms. The UK Regulators are accountable to, and scrutinized by, HM Treasury and Parliament. The Edinburgh Reforms announced by the UK Government in December 2022 aim to drive growth and competitiveness in the financial services sector. The reforms include repealing and reforming EU law using powers within the Financial Services and Markets Bill to build a regulatory framework for the UK. The first tranche of reforms was implemented with effect from 31 December 2023, including the reform of the Risk Margin. Further tranches of reforms are planned for implementation in 2024.

Regulatory Solvency Requirements

The UK adopted Solvency II regulations and Binding Technical Standards as they stood at the end of the Brexit transition period on December 31, 2020, into UK law. Consequently, the United Kingdom continues to adopt regulatory solvency requirements which are broadly aligned to those under Solvency II. UK life insurance companies are required to maintain Own Funds which are sufficient to withstand a 1-in-200-year shock on a 1-yearvalue-at-risk basis, subject to certain absolute minimum requirements.

One area of divergence is that the PRA now publishes its own Technical Information, including basic risk-free term structures, which must be used by UK Solvency II firms. The United Kingdom and the European Union are both conducting separate reviews of Solvency II which may lead to some further divergence.
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Since the introduction of Solvency II on January 1, 2016, Scottish Equitable plc has been using the Aegon’s Partial Internal Model (PIM) to calculate its solo solvency position and its contribution to group solvency.position. Following the end of the Brexit transition period, the PRA approved the use of the existing PIM for the calculation of the solo regulatory solvency requirements of Scottish Equitable plc. Aegon UK intends to maintain close alignment of the UK PIM and Group PIM in the future, where this remains appropriate.

Scottish Equitable plc uses the Matching Adjustment in the calculation of the technical provisions for its annuities and uses the Volatility Adjustment in the calculation of the technical provisions for the With-Profits business with investment guarantees.

Aegon UK plc uses the Aegon UK PIM to calculate Aegon UK’s group solvency position. The PRA approved the use of this model to calculate Aegon UK’s group solvency position, with effect from March 31 2023, following the introduction of group supervision at the level of Aegon UK plc as a result of the United Kingdom’s exit from the European Union.

Regulatory requirements for investment firms

From January 1, 2022, the FCA’s Investment Firm Prudential Regime (IFPR) rules entered into force. These are relevant to

Cofunds Limited, Aegon Investment Solutions Limited and Aegon Investments Limited.Limited apply requirements under the FCA’s Investment Firm Prudential Regime (IFPR). The IFPR rules establish minimum capital requirements as the higher of the Own Funds Requirement (OFR) and the Overall Financial Adequacy Requirement (OFAR). The OFR is the higher of the Fixed Overhead Requirement, the Permanent Minimum Requirement, or the new “K-factor” requirement (which replaced“K-factor” requirement. Under the credit risk requirement). The IFPR, also replaces the Internal Capital Adequacy Assessment Process (ICAAP), with a new Internal Capital Adequacy and Risk Assessment (ICARA) process.process assesses the OFAR.

Information security and privacy regulation

Privacy regulations that impact Aegon UK currently are the UK General Data Protection Regulation (GDPR), Data Protection Act 2018, Privacy and Electronic Communications Regulations (PECR). The outcomeData Protection and Digital Information Bill, which is in the process of this assessment isgoing through UK Parliament, will amend all three of these regulations. As noted above, all relevant Aegon UK companies are either: authorized by the OFAR. Under ICARA, there is more focus onPRA and regulated by the impact of risksFCA and the potential harmPRA; or authorized and regulated by the FCA. Therefore, in relation to clients, liquidity, wider markets,Cyber Security, Aegon UK is subject to annual independent financial and the firm itself.Information Technology audits by both internal and independent third-party auditors. These address Aegon UK’s security controls and risk management.

 

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Additional information

Overview of International

   
   

Overview of International

Aegon International consists of Aegon’s three growth markets,includes partnerships in Spain & Portugal, China and Brazil and China. It also includes Aegon’s businesses in Central and Eastern Europe, the as well as our high-net-worth (HNW) life insurance company Transamerica Life Bermuda (TLB), and some smaller ventures in Asia.

Aegon’s presence in the Spanish insurance market dates back to 1980. The activities in Spain (and Portugal) have developed largely through distribution partnerships with Spanish banks Banco Santander S.A. Operations in Asia were established in 2003, starting with a joint venture in China. Transamerica Life Bermuda (TLB), was established and incorporated in Hamilton, Bermuda in 2005. Its full-service branches in Hong Kong and Singapore were established in 2006.

In 2008, Aegon entered into a joint venturelife insurance partnership in India was formed.

India. In July 2023, Aegon announced the sale of its 56% stake in its associate Aegon Life Insurance Company, to Bandhan Financial Holdings Limited.

In November 2020, Aegon announced an agreement to sell its Central & Eastern European operations (Hungary, Poland, Romania, and Turkey) to Vienna Insurance Group AG Wiener Versicherung Gruppe, as part of its strategy to focus on three core markets (the United States,chosen markets. During the United Kingdom, andcourse of 2022, the Netherlands), three growth markets (Spain & Portugal, Brazil, and China), and one global asset manager.

transaction completed for all four businesses. This transaction closed over several stages, with the final stage completed in June 2023.

Since January 1, 2022, Mongeral Aegon Group (MAG Seguros) is reported as part of Aegon International. Aegon has a 54.9%59.2% of economic interest, including 50% of the voting common shares, in MAG Seguros. The joint venture was formed in 2009 with local traditional group Mongeral, which was founded in 1835.

Organizational structure

The key lines of business within Aegon International are China, Brazil, Spain & Portugal TLB, China, and Brazil.TLB. The remaining business units are grouped in one category called “Others” for reporting purposes. The corresponding principal subsidiaries and affiliates (including Aegon’s ownership percentages, where relevant) are as follows:

Spain & Portugal:

◆

Aegon España S.A.U. de Seguros y Reaseguros (Aegon España Insurance and Reinsurance)
◆
Santander Generales Seguros y Reaseguros S.A. (Santander General Insurance and Reinsurance) (51%)
◆
Santander Vida Seguros y Reaseguros S.A. (Santander Life Insurance and Reinsurance) (51%)
◆•
Aegon Santander Portugal Não Vida-Companhia de Seguros S.A. (Aegon Santander Portugal Non-Life Insurance Co.) (51%)
Aegon Santander Portugal Vida-Companhia de Seguros de Vida S.A. (Aegon Santander Portugal Life Insurance Co.) (51%)
◆
Aegon Santander Portugal Vida-Companhia de Seguros de Vida S.A. (Aegon Santander Portugal Life Insurance Co.) (51%)

China:

Aegon THTF Life Insurance Co., Ltd. (50%) in China

Brazil:

Mongeral Aegon Seguros e Previdência S.A. (59.2% and 50% voting rights)
Sicoob Seguradora de Vida e Previdência S.A. (29.6%)

TLB:

TLB:Transamerica Life (Bermuda) Ltd.
◆
Transamerica Life (Bermuda) Ltd.
China:
◆
Aegon THTF Life Insurance Co., Ltd. (50%) in China
Brazil:
◆
Mongeral Aegon Seguros e Previdência S.A. (54.9%)
◆
Sicoob Seguradora de Vida e Previdência S.A. (27.5%)

Other subsidiaries:

Aegon Insights Ltd.
Aegon Life Insurance Company Ltd. (56%) in India
◆
Aegon Towarzystwo Ubezpieczeń na Życie Spółka Akcyjna (Aegon Poland Life)
◆
Aegon Powszechne Towarzystwo Emerytalne Spółka Akcyjna (Aegon Poland Pension Fund Management Co.)
◆
Aegon Pensii Societate de Administrare a Fondurilor de Pensii Private S.A (Aegon Romania Pension Administrator Co.)
◆
Aegon Life Insurance Company Ltd. (49%) in India
◆
Aegon Insights Ltd

Overview of sales and distribution channels

Aegon International distributes its products directly to consumers (online and/or physical branches) and via banks, brokers, (tied) agents, and other digital/ e-commerce partners.

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The sales and distribution channel mix varies per country, reflecting the differences in the local insurance markets.

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Spain & Portugal

In Spain & Portugal, the life insurance and health products are sold by Santander Life Insurance and Reinsurance, whereas the non-life insurance (accident, home, unemployment, disability, critical illness dependency, and funeral) products are sold by Santander General Insurance and Reinsurance Company.

Unicaja Bank S.A. (previously Liberbank, S.A.) was another bancassurance partner of Aegon up until 2022. On July 30, 2021, a merger between Liberbank and Unicaja Bank was completed, with Unicaja being the acquiring legal entity. Liberbank has ceased to be a distinct legal entity and all of its assets and liabilities have been transferred to Unicaja. As a result of the merger, Unicaja Bank has had temporary bancassurance agreements with each of Aegon, MAPFRE and Santa Lucía. On May 23, 2022, Aegon announced it had decided to sell its 50% stake in the Spanish insurance joint venture with Liberbank to Unicaja Banco. The net proceeds of the transaction amount to EUR 145 million. The sale of the 50% stake in the joint venture with Liberbank was completed in October 2022 with net proceeds upstreamed to Aegon in December 2022.

Aegon España’s own distribution channel offers life, health, and pension products. The network of brokers and agents accounts for approximately 80% of the total sales of the fully owned subsidiary, and the remaining 20% is generated by the direct channel.

Central & Eastern Europe
Distribution channels in Central & Eastern Europe (CEE) are dominated by tied and external agents as well as brokers. In Romania, our main distribution channel is bancassurance, where we have partnerships with Banca Transilvania and Alpha Bank.
TLB and Aegon Insights
TLB distributes its life insurance products to HNW customers through targeted distribution relationships with selected local and international brokers, financial advisors, and via bancassurance channels.
With its singular focus on the HNW segment, TLB has extensive experience in handling large sums assured and complex cases supporting HNW customers’ legacy and business planning needs.
In October 2022, TLB reinsured its closed block of universal life (UL) insurance with Transamerica. Transamerica will manage this block as a financial asset, while TLB will continue to write new business on a selective basis.
Aegon Insights is a marketing, distribution, and administration services business operating in Asia Pacific. It primarily works with local insurers to develop tailored solutions to specific needs. The revenue is generated through underwriting reinsurance agreements and fee income. With changes in consumer preferences, Aegon made the strategic decision to discontinue Aegon Insights’ new business acquisition, while continuing to provide services to the existing customer base in Australia, Hong Kong, Indonesia, and Japan.

China: Aegon THTF

Aegon operates in China through a joint venture with Tongfang Co. Ltd., Aegon THTF Life Insurance Co., Ltd. (hereafter: Aegon THTF). The joint venture is licensed to sell life insurance, annuity, accident and health products in China. Since 2003, the company has expanded its network of branches, primarily in the coastal provinces of Eastern China. It has access to a potential market of approximately 700 million people.

Aegon THTF follows a multi-channel distribution strategy, including agency, brokers, banks, group sales and digital e-commerce platforms.

India: Aegon Life
Since 2008, Aegon operates in India through its joint venture with Bennett, Coleman & Co. Ltd. (BCCL). The joint venture, Aegon Life Insurance Company, Ltd. (hereafter: Aegon Life) has a mobile and digital consumer model, working through large-scale digital partners since December 2020.

Brazil: MAG Seguros

In Brazil, the joint venture has two major insurance companies generating revenue streams, MAG Seguros and Sicoob Seguradora. Together, they have 66.25 million clients in 2022.2023. More than half of MAG Seguros’ annual new premium is sold by home-

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recruitedhome-recruited individual brokers and market life insurance specialists, hosted in a proprietary environment called Sales Rooms. The independent investment agents are the second-largest distribution model, selling mostly term and whole life policies. The rest is spread among individual and/or group life products distributed through large brokerage firms, digital direct sales, and partners/cooperatives, including affinities and credit life in B2B2C models. Sicoob Seguradora distributes individual, group and credit life protection products in a bancassurance model through affiliate agencies to its cooperative associates.

TLB and Aegon Insights

TLB distributes its life insurance products to HNW customers through targeted distribution relationships with selected local and international brokers, financial advisors, and via bancassurance channels.

With its singular focus on the HNW segment, TLB has extensive experience in handling large sums assured and complex cases supporting HNW customers’ legacy and business planning needs.

Aegon Insights is a marketing, distribution, and administration services business operating in Asia Pacific. With changes in consumer preferences, in 2017 Aegon made the strategic decision to discontinue Aegon Insights’ and put it in run-off. In 2023 it sold its Japanese and Hong Kong operations, while continuing to provide services to the existing customer base in Australia.

India: Aegon Life

Since 2008, Aegon operates in India through its partnership with Bennett, Coleman & Co. Ltd. (BCCL). Our associate, Aegon Life Insurance Company, Ltd. (hereafter: Aegon Life) has a mobile and digital consumer model, working through large-scale digital partners since December 2020.

Overview of business lines

Aegon International focuses on serving retail customers with individual life and different types of general, accident, and health insurances.

Life insurance, savings and protection

Spain & Portugal’s life insurance business comprises of life savings and individual and group protection products, where individual life-risk and health products form the larger part of the business. Customers’ savings needs are serviced by Aegon España through its affiliates, offering universal life and unit-linked products. Protection business, pursued both in Spain & Portugal, includes primarily life, health, accident, and disability cover distributed through the joint ventures and Aegon España’s own channels. These products can typically be complemented with critical illness, income protection, and other riders.

In Poland, Aegon focuses on unit-linked and traditional life products. The Romanian branch currently sells term life insurance policies with guaranteed interest, with or without a profit-sharing component.

In Asia, Aegon provides a broad range of life insurance products, including unit-linked, universal life, and traditional life products.

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Overview of International

Over the past year,

TLB has updated anda diversified its product suite. Along with its enhanced flagship productsuite of Universal Life Alpha Pro & Pro Century, its offerings now include the Genesis Indexed Universal Life (IUL) product, that provides a lower guarantee combined with a greater wealth accumulation potential, and the Trendsetter Ultra Term Life, designedproducts tailored for HNW personal and business protection.

protection as well as wealth accumulation potential.

In China, regular premium whole life products with increasing sum assured, whole life products with level sum assured, and whole life critical illness products are key products for many channels, such as agencies, banks, and brokers. Products such as participating annuity and endowment (via agency) are also offered. Single premium endowment is the key product offered in the banks channel, while the digitalDigital channel currently focuses on offering protection products, such as term life.

In India, Aegon Life currently offers Group term plans, individual term plans, and unit-linked life insurance plans.

In July 2023, Aegon announced the sale of its 56% stake in its associate Aegon Life Insurance Company, to Bandhan Financial Holdings Limited.

In Brazil, most of the new businesses of MAG Seguros are individual life-risk products. The greater part of them are whole life or yearly renewable policies without cash value with riders such as temporary disability, critical illness, surgeries, or home services. Sicoob Seguradora sells individual and credit life policies. Both companies offer group life solutions for corporate markets.

Health insurance

Health insurance is primarily offered as riders on life insurance policies in Spain & Portugal and China and as a standalone health insurance in Spain.

Spain and China.

In Spain, health insurance is offered through Aegon’s own channels and through Santander’s branches. Aegon collaborates with medical partners across the country. In Portugal, it is also offered through Santander Totta’s distribution network.

Aegon THTF offers various kinds of health insurance, such as middle-endshort-term medical reimbursement, and short-term critical illness,insurance, mainly through agencies, brokers, banks, digital, and group channels.

In Brazil, MAG Seguros has developed a segment of portfolio within its life insurance operation called “Well being Pillar” aimed a target market of 100 million people underserved by public health and people that cannot afford a private health plan in Brazil. The main products offered are protection for disabilities – both permanent or temporary – critical illness, surgeries, services such as online medical consultations, and network of pharmacies discounts.

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Pensions

As at December 31, 2022, Aegon managed the savings of approximately three million pension fund members in Spain and the CEE.
In Spain, customers’ pension saving needs are serviced by Aegon España through its managed pension funds.
Aegon’s pension business in CEE was impacted by reforms to the pension system during the past years. In 2022, Aegon was active in the (formerly mandatory) private pension market in Poland and Romania.

In Brazil, the joint venture operates pensions throughout several strategies. Its main company, MAG Seguros,It partners with existing pension funds and offers embedded life and disabilities insurance within the pension funds’ new enrollee application form. MAG Seguros is currently leader in this segment.

General insurance

Aegon España has been offering general insurance products, mainly household protection, unemployment, accident, dependency, and funeral insurance, since 2013 through its joint ventures with Banco Santander.

Aegon THTF

In Brazil, MAG Seguros launched in China also2022 a new general insurance company called Simple2U under Brazil regulator’s sandbox. The startup offers short-term accident products.

a fully digital on-demand portfolio of home insurance and other items, primarily through B2B2C distribution partnerships.

Competition

Spain & Portugal

The Spanish insurance market is highly competitive. For traditional life, unit-linked variable life and pension products, the major competitors are retail bank-owned insurance companies. For health and general insurance products, the main competitors are both foreign and local companies. Aegon España is the exclusive provider of protection products to Banco Santander. The exclusive partnership also holds for Portugal. Key competitors for Aegon’s joint ventures with Banco Santander in Spain and& Portugal are large traditional insurance companies.

Central & Eastern Europe
Aegon is the eleventh largest life insurance market participant in Poland (based on standardized APE), with PZU as a market leader. In Romania, Aegon ranks as the sixth player as of December 2022.
In the pension fund market in 2022, Aegon ranked fourth in Poland (open pension fund) and Romania (mandatory private pension scheme) in terms of both the number of participants and managed assets. Aegon has a smaller share in the voluntary pension market in Romania.

China

As of

From June 30, 2022,2023, there were 91 life insurance companies in the market, including 64 domestic life companies and 27 foreign life insurers. Based on the gross written premium (GWP), Aegon THTF ranked forty-fourthforty-sixth among 7374 companies that

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have published their GWP data and thirteenthfifteenth among foreign life companies in China. Aegon THTF’s market share among foreign life insurers was 2.1%2.0% in terms of total premium.

India
There were 24 licensed life insurers in India at the end of August 2022. While the state-owned Life Insurance Corporation of India continues to hold a dominant share of 68% of the market share of the sector’s total new business premiums (both individual and group) during the period of April 2022 to August 2022. Private sector companies have grown only modestly to obtain more than 63% of the individual recurring new business premiums written (April 2022 to August 2022). Aegon Life India ranked twenty-third among private life insurers according to individual recurring premiums (April 2022 to August 2022).
TLB
TLB’s competitors in Asia have mainly been other global life insurance providers such as HSBC Life, Manulife Bermuda, and Sun Life Bermuda. The local subsidiaries of both Sun Life and Manulife, in addition to domestic insurers such as AIA, Great Eastern Life, Singapore Life, Generali, AXA, and FWD, have also been developing competitive offerings for the HNW market segment.

Brazil

In Brazil, MAG Seguros operates predominantly in life insurance. Although less than in the past, 65% of the market is still concentrated in bank-owned companies. With 18%11% of market share of the independent specialized life insurance companies,

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the joint venture ended during the first semester of 20222023 holding the third position in the ranking, behind Prudential (34.6%(21.5%) and Icatu (21.2%(13.6%). The asset management company MAG Investimentos is ranked sixtiethnumber 65 in a market with 800949 companies.

TLB

TLB’s competitors have mainly been other global life insurance providers such as, Manulife Bermuda, Sun Life Bermuda. The local subsidiaries of both Sun Life and Manulife, in addition to domestic insurers such as AIA, HSBC, Great Eastern, Singapore Life, Generali, AXA, and FWD, have also been developing competitive offerings for the HNW market segment.

Regulation and supervision

Spain & Portugal and Central & Eastern Europe

In the European Union, a single insurance company may only be licensed for and conduct either a life insurance business or a non-life insurance business, not both.

State supervision and oversight of the insurance industry is conducted by the following bodies and institutions:

◆

General Directorate of Insurance and Pension Funds (DGSFP) (Spain)
◆
The Insurance and Pension Funds Supervisory Authority (ASF) (Portugal)
◆
The Financial Supervision Authority (KNF) (Poland)
◆
Authority for Financial Supervision (ASF) (Romania)
The Insurance and Pension Funds Supervisory Authority (ASF) (Portugal)

The authorities mentioned above promote consumer protection and have the right to investigate prudential activities and conduct, financial position and solvency, and compliance with all relevant laws.

In Romania, the private and voluntary pension system is regulated and supervised by the ASF. The mandatory pension system is subject to the Privately Administered Pension Funds Act and the voluntary pension system is subject to the Voluntary Pension Law, both complemented by individual regulations (as secondary legislation). In Poland, this activity is supervised by the KNF and governed by the Organization and Operation of Pension Funds Act.

In Spain, the pension system is supervised by DGSFP and governed by Law on Pension Funds and Plans approved by Royal Legislative Decree, and its implementing regulations.

China

China’s insurance industry is regulated by

In the first half of 2023, the National Administration of Financial Regulation (NAFR) was officially inaugurated in Beijing. The NAFR was established on the basis of the former China Banking and Insurance Regulatory Commission, (CBIRC). In 2022,which will comprehensively strengthen supervision.

During this period, the CBIRC integrated and standardizedNAFR strengthened the supervision measures from related party transaction governance, product management, and sales behavior management. The CBIRC lowered the upper limit of the proportion of related party transactions on insurance funds, issued a “negative list” of life insurance products and standardized insurance sales behavior for pre-sale, in-sale and after-sale.

Sales conduct compliance management is still the focus of supervision. According to the 2022 regulations and legislation work plan of the CBIRC, it will issue compliance management measures, insurance sales behavior management measures, consumer suitability management measures, and life insuranceby lowering pricing interest rates, implementing new product information disclosure rules and clarifying the commission ceiling of bank insurance business. At the same time, the NAFR released regulations in order to optimize requirements of the company’s solvency management.

The regulation and legislation of the NAFR will further strengthen the governance system of financial institutions by carefully reviewing of shareholder qualifications and shareholder behaviors.

Brazil

In Brazil, Aegon has operations involving life insurance, non-life insurance, and supplementary private pension, as well as financial asset management measures.and collection. Considering this portfolio of operations, the state supervision and oversight of Aegon’s companies is conducted by the following bodies and institutions:

Private Insurance Superintendence (SUSEP) (Insurance and Open Private Pension)
National Superintendence of Complementary Pensions (PREVIC) (Pension Funds)
The Brazilian Central Bank (BACEN) (Collection)
Securities and Exchange Commission (CVM) (Asset Management)

The authorities mentioned above have the right to investigate prudential activities and conduct, financial position and solvency, and compliance with all relevant laws.

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Overview of International

India
Indian life insurance companies are regulated by the Insurance Regulatory and Development Authority of India (IRDAI). The IRDAI regulates, promotes, and encourages the orderly growth of insurance and reinsurance businesses in India. Established by the government of India, it safeguards the interests of the country’s insurance policyholders.

TLB

TLB is incorporated in Bermuda and regulated by the Bermuda Monetary Authority, the Regulator of the financial services sector in Bermuda. TLB has full-service branches which are registered and licensed in Hong Kong and Singapore, respectively. The Insurance Industry is regulated in Hong Kong by the Hong Kong Insurance Authority (HKIA) and in Singapore by the Monetary Authority of Singapore (MAS). Hong Kong’s Insurance Authority (IA) is currently developing HK RBC,Hong Kong risk-based capital (HK RBC), a risk-based capital regime that is consistent with core principles issued by the International Association of Insurance Supervisors (IAIS). Under this regime, the capital requirements of licensed insurers will be determined based on the level of risk faced by the insurer. Once in effect, HK RBC will significantly transform the current capital framework defined in the Hong Kong Insurance Ordinance (HKIO). TLB is advanced in its RBC developments.

Aegon Insights

A broad range of regulations apply to Aegon Insights’ activities. Depending on the precise nature of the activities undertaken and the form of business entity used in the jurisdictions in which Aegon Insights operates, relevant regulations include marketing/consultancy business licensing rules, insurance laws, and personal data protection laws. In addition, various regulators also keep oversight of activities undertaken by entities licensed by Aegon Insights. These regulators include the Australian Securities and Investments Commission in Australia, and the Hong Kong Insurance Authority.

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Brazil
In Brazil, Aegon has operations involvingAustralia.

India

Indian life insurance non-lifecompanies are regulated by the Insurance Regulatory and Development Authority of India (IRDAI). The IRDAI regulates, promotes, and encourages the orderly growth of insurance and supplementary private pension, as well as financial asset management and collection. Considering this portfolio of operations, the state supervision and oversight of Aegon’s companies is conductedreinsurance businesses in India. Established by the following bodies and institutions:

◆
Private Insurance Superintendence (SUSEP) (Insurance and Open Private Pension)
◆
National Superintendence of Complementary Pensions (PREVIC) (Pension Funds)
◆
The Brazilian Central Bank (BACEN) (Collection)
◆
Securities and Exchange Commission (CVM) (Asset Management)
The authorities mentioned above havegovernment of India, it safeguards the right to investigate prudential activities and conduct, financial position and solvency, and compliance with all relevant laws.
Solvency II
The Solvency IIinterests of the country’s insurance solvency regime became effective in European Economic Area (EEA) countries on January 1, 2016. policyholders.

Solvency

Aegon’s EU-domiciled entities in Spain & Portugal and Romania use the Solvency II Standard Formula to calculate the solvency position of their insurance activities. Aegon Spain no longer appliesdoes not apply the matching adjustment or transitional arrangements.

Aegon’s Asian insurance activities are included in Aegon’s Group Solvency II ratio through Deduction & Aggregation. For TLB, Deduction & Aggregation is applied using available and required capital as per the local Bermuda capital regime. The regulatory regime of Bermuda was granted full equivalence at the inception of Solvency II in 2016.

 

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Overview of Asset Management
  Sustainability information
   
   

Overview of Aegon Asset Management

Aegon Asset Management (Aegon AM) is an active global investor. Its 390385 investment professionals manage and advise on assets of EUR 293305 billion as atof December 31, 2022,2023, for a global client base of corporate and public pension plans, public funds, insurance companies, banks, wealth managers, family offices, and foundations.

Organizational structure

Aegon AM provides investment management expertise to institutional and private investors around the world. It has offices in the United States, the Netherlands, the United Kingdom, China, Germany, Hungary,Spain and Spain.Hungary. Its investment capabilities are focused around four investment platforms, each with asset-class expertise: private and public fixed income, real assets, private and public equities, and multi-asset and& solutions. Across these platforms, the investment teams are organized globally and there is a common belief in fundamental, research-driven active management, underpinned by a focus on risk management and a strong commitment to responsible investing. Further to these investment platform,platforms, Aegon AM also operates a fiduciary business.

By organizing its investment teams globally, Aegon AM harnesses its expertise and research resources across regional boundaries. Aegon AM believes this enhances performance potential and generates better investment outcomes for clients. The four investment platforms are led globally by two chief investment officers who are part of the Global Board of Aegon AM. Aegon AM also has a Fiduciary services and multi-manager business in the Netherlands.

Aegon AM holds two key strategic partnerships:

In China, Aegon AM owns 49% of Aegon Industrial Fund Management Company (AIFMC), a Shanghai-based fund management company that offers mutual funds, segregated accounts, and advisory services; and
◆
In China, Aegon AM owns 49% of Aegon Industrial Fund Management Company (AIFMC), a Shanghai-based asset manager that offers mutual funds, segregated accounts, and advisory services
◆
In France, Aegon AM owns 25% of La Banque Postale Asset Management (LBPAM). LBPAM offers a comprehensive range of investment strategies to French institutional clients and to retail investors through La Banque Postale group’s retail banking network and affiliated insurance company Caisse Nationale de Prévoyance (CNP)
Aegon AM’s main entities are Aegon USA Investment Management LLC, Aegon USA Realty Advisors LLC, Aegon Investment Management B.V., Aegon Asset Management UK plc,(LBPAM). LBPAM offers a comprehensive range of investment strategies to French institutional clients and Aegon Investment Management (Shanghai) Ltd. (a wholly foreign-owned enterprise).
In November 2020, Aegon announced an agreement to sell its Central & Eastern European operations (Poland, Romania, Turkey, and Hungary) to Vienna Insuranceretail investors through La Banque Postale group’s retail banking network, affiliated insurance company CNP Assurances Group AG Wiener Versicherung Gruppe, as part of its strategy to focus on three core markets (the United States, the United Kingdom, and the Netherlands), three growth markets (Spain & Portugal, Brazil, and China), and one global asset manager. The asset management division (Aegon Hungary AM Company Zrt.) was included in this transaction.well as other unaffiliated distributors.

On October 27, 2022, Aegon agreed an exclusive long-term partnership with a.s.r. to manage the illiquid fixed income investments that are part of the general account of the combined businesses, subject to regulatory approvals.Aegon Netherlands and a.s.r. insurance businesses. In addition, it will continuecontinues to be the asset manager for Aegon Netherlands’ legacy retirement and unit-linked products and the investments of Aegon Cappital’s PPI proposition and willproposition. It also agreed to take over the management of a.s.r.’s mortgage and private debt funds. Through these steps,

On July 4, 2023, Aegon AM willannounced the closure of the transaction with a.s.r. With it, Aegon AM further strengthenstrengthened its positionalternative fixed income capabilities. At the same time, management of Aegon Netherlands’ general account liquid fixed income assets transferred to a.s.r. Asset Management. The deal saw Aegon AM welcome 20 FTEs from a.s.r. while transferring 28 FTEs the other way. Aegon AM also welcomed 135 third-party mortgage clients and in excess of EUR 16 billion AuM in mortgage and illiquid debt assets, as well as two new funds. Liquid assets worth around EUR 9.4 bn were transferred to a.s.r. Asset Management.

Aegon AM also acquired NIBC Bank’s European Collateralized Loan Obligation (North Westerly) business with EUR 1.2 billion in AuM at the end of June 2023. In the US CLO business, Aegon AM experienced growth with a providernew $400 million CLO, Cedar Funding 17, which funded in July 2023. This was the first CLO with Aegon AM’s new equity sponsor, Lakemore Partners, who is helping it gain enhanced market access and further solidify Aegon AM’s ability to take full advantage of new issue CLO opportunities.

In 2023, Aegon AM’s joint venture, LBPAM acquired La Financière de l’Echiquier (LFDE), a French equity investment platform with a growing presence in France, Germany, Italy, Spain, Belgium and Switzerland. The transaction further accelerated LBPAM’s journey to become a multi-specialist, multi-channel French champion in active asset management. There are furthermore strong synergies between LBPAM and LFDE in terms of customers and distribution channels. By co-funding the acquisition Aegon maintained its 25% shareholding in the Dutch market of fiduciary services, retirement multi-assets and solutions, fixed income, including alternative fixed-income investments and responsible investing.

In 2020, Aegon supported a restructuring of LBPAM’s insurance-related Euro fixed income asset management activities, contributing them to a joint venture (“Ostrum”)and extended the partnership for an additional 12 years (until 2035) with Natixis. In October 2021, as part of a larger strategic restructuring of French state-owned banking and insurance companies, LBP (who owns 70% of our LBPAM JV, alongside AAM’s 25% stake and Malakoff Humanis’ 5% stake) announced that it will take full control of insurer CNP, and LBPAM will sell its 45% stake in Ostrum to Natixis (as a result of which Natixis will own 100% of the shares in Ostrum). This resulted in an EUR 50 billion transfer of Assets under Management from LBPAM to Natixis.
reinforced distribution agreements.

Aegon AM has a global operational management board (Global Board).board. The strategic direction and global oversight of business performance is executed by this Global Board, which has both global and local roles and responsibilities. This board is supported by several sub-committees. Members of the Board are appointed by Aegon N.V., The Risk Advisory Committee and the Remuneration Committee.Ltd. This supports Aegon’s oversight of Aegon AM.

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Overview of sales and distribution channels

Aegon AM uses both institutional and wholesale distribution channels combining a global perspective with a focus on local relationships in the Americas, Europe and Asia.China. Client types include banks, pensions funds, insurance companies, fiduciary managers and Outsourced Chief Investment Officers (OCIO’s), family offices, investment consultants, wealth managers, charities, foundations, and endowments, third-party investment platforms, as well as its affiliated companies and joint ventures.

Overview of business lines

Aegon AM has three distinct business lines:

lines.

Third-party business accounts for approximately 48%65% of its Assets under Management (AuM) as at December 31, 2022. The main sources for this include third-party business where Aegon AM distributes its investment strategies directly to its clients.2023. The wholesale businesseschannel typically sellsells collective investment vehicles to customers through wholesale distributors and independent intermediaries. The asset classes are fixed income, equities, real assets, and multi-asset and solutions with fund performance usually measured against a benchmark or peer group. The institutional businessesbusiness typically sell theirsells its services to large insurance companies, fiduciary managers, and OCIOs and pension funds. Aegon AM manages a full range of asset classes and manages the strategies against objectives, targets and risk profiles agreed with clients. It offers both absolute and relative return products.

In the Netherlands, Aegon AM is a leading player in the Fiduciary business.

Affiliates also source third-party business in areas where Aegon AM manages funds for Aegon insurers and retirement companies approximately 21%(approximately 12% of AuM). These funds have various legal structures and performance is usually measured against a benchmark or peer group. The main asset classes include fixed income, equities, real estate, and multi-asset.

The Aegon and Transamerica general account isaccounts are the third source approximately 31%of assets (approximately 23% of AuM). This consists of funds held on the balance sheet of Aegon’s insurance companies to back policyholder liabilities, typically when the insurer has given the policyholder a guarantee. These assets are managed to match the insurers’ liabilities. As a rule, general account assets are managed in a closed architecture structure, and the main asset classes are fixed income and real assets.

Furthermore, Aegon AM managesmanaged the general account derivatives book of Aegon the Netherlands until the closing of the a.s.r partnership after which this activity will bewas transitioned to a.s.r.

Following the closure of the transaction with a.s.r., the assets managed by Aegon AM that previously related to Aegon the Netherlands’ General Account (EUR 17.8 billion) and Affiliates (EUR 24.4 billion) are now recorded as Third-party assets.

Aegon AM has decided to further simplify its activities in Global Platforms to improve efficiency and profitability. Focus lies on three priorities: growth in real assets and alternative fixed income assets, being a recognized leader in responsible investing and helping partners with our core offerings to build market leading retirement and insurance platforms. As a result, Aegon AM will further rationalize its product set and has taken cost reduction measures.

Competition

Aegon AM competes with other asset management companies to acquire business from Aegon customers in the open-architecture parts of the affiliate business and from third parties.

In the United States, Aegon AM focuses on offering investors core fixed income, alternative fixed income, equity, and real estateasset related strategies. It works directly with pension funds, insurance companies, family offices, endowments, and foundations as well as investment consultants within the institutional market. In the wholesale market, Aegon AM works as a sub-advisor with its insurance company affiliates and other partners to offer competitive and relevant strategies for its client base. It also works with investment consultants and other partners to offer products to third-party institutions. Primary competitors in the United States include AllianceBernstein,Voya IM, BlackRock, Invesco, JP Morgan Legg Mason, Principal,AM, Franklin Templeton, PGI, PIMCO, and PGIM.

In continental Europe, Aegon AM focuses on offering investors core and alternative fixed income, equities, real estate, and multi-asset and solutions strategies to institutional and wholesale clients, and through its affiliated insurance company to retail clients. In the Netherlands, Aegon AM also offers fiduciary services to institutional clients. In the third-party institutional market, it competes with domestic and global asset managers, as well as with fiduciary and balance sheet managers. Competition continues to be strong in the institutional market due to both the ongoing consolidation of pension funds and the growing service requirements of pension fund clients. Primary competitors in the Netherlands include BlackRock, Robeco, NN Investment Partners,GSAM, Achmea, and Kempen.Kempen van Lanschot.

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In the United Kingdom, Aegon AM focuses on offering investors fixed income, equities, real estate, and multi-asset and& solutions strategies. It serves institutional clients and their advisors and is active in the wholesale market. Primary competitors in the United Kingdom include Aberdeen,Abrdn, Aviva Investors, LGIM, Janus Henderson, Insight Investment, M&G, and M&G.

Royal London.

In mainland China, AIFMC focuses on Chinese equity, fixed income, multi-asset and money market strategies. It competes against a wide range of locally based asset managers including Alibaba’s Yuebao fund, China Universal Asset Management, E Fund Management, Fullgoal Fund Management, and Yinhua Fund Management. The company’s products are distributed through banks, securities brokers, and digital platforms.

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In France, La Banque Postale Asset Management services private investors through La Banque Postale’s retail banking network and with LFDE through independent advisors, representing LBPAM, LFDE, and Aegon AM-advised strategies. In the institutional market, it also offers investment strategies from Aegon AM to compete for affiliate and third-party insurance and pension clients with large local asset managers and specialized international competitors. In France, primary competitors include Amundi Asset Management, AXA Investment Management, and BNP Paribas Investment Partners. In the course of the second half of 2022, LBPAM has sold its 45% stake in Ostrum Asset Management, a joint-venture with Natixis that focuses on providing public market fixed-income asset managementPartners, Carmignac and operational investment services to insurance companies.

Edmond de Rothschild.

Regulation and supervision

Regulation of asset management companies in general differs to that of insurers. Aegon AM’s local operating entities are regulated by their local regulators, most notably the Dutch Authority for the Financial Markets (AFM) (conduct of business supervision) and the DNB (prudential supervision) for Dutch-based entities, the Financial Conduct Authority (FCA) for Aegon Asset Management UK plc, and the Securities & Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) for the US-based entities. Aegon Asset Management UK is also regulated by the SEC for its activities in the US market. Aegon Hungary AM is supervised by the National Bank of Hungary. From a regulatory perspective, the asset management activities of the US-based entities of Aegon AM in the United States do not fall directly under the responsibility of Aegon Asset Management Holding B.V., as these entities are subsidiaries of Transamerica Corporation.

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Risk factors Aegon Ltd.

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Risk factors Aegon N.V.

Ltd.

Aegon faces numerous risks, some of which risks may arise from internal factors, such as failures of compliance systems and other operational risks. Other risks may arise from external factors, such as developments in financial markets, the business and/or political environment, economic trends politics and regulations. Any of the risks described below, whether internal or external, may materially and adversely affect the Company’s operations, its earnings, the value of its investments, the sale of certain products and services or its ability to fulfil its obligations in respect of securities issued or guaranteed by it. The market price of Aegon securities could decline due to any of the risks described in this section and investors could lose some or all of the value of their investments.investments in Aegon securities. Additional risks of which Aegon is not presently aware could also materially and adversely affect its operations and share price. As with all businesses, Aegon is inherently exposed to risks that may only become apparent with the benefit of hindsight.

This chapter groups the risk factors into different categories based on the origin of the risk, while recognizing that the identified risk factor can have broader consequences, e.g. developments on financial markets, (included under financial risks) can impact of policyholder behavior (included under underwriting risk).and development in informational technology systems and tools. The categories used are: 1) financial risks, 2) underwriting risks, 3) operational risks, 4) political, regulatory and supervisory risks, 5) legal and compliance risks, and 6) risks relating to Aegon’s common shares. Within each category, the most material risk factors are presented first. The order in which the remaining risk factors are presented is not necessarily an indication of the likelihood of occurrence or the potential magnitude of the consequences of the materialization of risks, as that can rarely be determined with any degree of certainty. Furthermore, risks with a low likelihood can have a large impact should they materialize.

Summary

The risk factors cover the following topics in the designated categories:

1. Financial risks

Rapidly rising interest rates

Sustained low or negative interest rate levels
◆
Rapidly rising interest rates

Disruptions in the global financial markets and general economic conditions
◆
Interest rate volatility, and sustained low or negative interest rate levels

Higher inflation
◆
Disruptions in the global financial markets and general economic conditions

Illiquidity of certain investment assets
◆
Higher inflation

Credit risk, declines in value and defaults in Aegon’s debt securities, private placements, mortgage loan portfolios and other instruments or the failure of certain counterparties
◆
Illiquidity of certain investment assets

Decline in equity markets
◆
Credit risk, declines in value and defaults in Aegon’s debt securities, private placements, mortgage loan portfolios and other instruments or the failure of certain counterparties

Downturn in the real estate market
◆
Decline in equity markets

Default of a major market participant
◆
Downturn in the real estate market

Failure by reinsurers to which Aegon has ceded risk
◆
Default of a major market participant

Downgrade in Aegon’s credit ratings
◆
Failure by reinsurers to which Aegon has ceded risk

Fluctuations in currency exchange rates
◆
Downgrade in Aegon’s credit ratings

Unsuccessful management of derivatives
◆
Fluctuations in currency exchange rates

Subjective valuation of Aegon’s investments, allowances and impairments
◆
Unsuccessful management of derivatives
◆
Subjective valuation of Aegon’s investments, allowances and impairments

2. Underwriting risks

Differences between actual claims experience/underwriting and reserve assumptions

Losses on products with guarantees due to volatile markets
◆
Differences between actual claims experience/underwriting and reserve assumptions

Restrictions on underwriting criteria and the use of data
◆
Products with guarantees

Unexpected return on offered financial and insurance products
◆
Restrictions on underwriting criteria and the use of data

Reinsurance may not be available, affordable, or adequate
◆
Unexpected return on offered financial and insurance products

Catastrophic events
◆
Reinsurance may not be available, affordable, or adequate
◆
Catastrophic events

3. Operational risks

Competitive factors

Difficulty in managing the company’s acquisitions and divestments

Difficulties in distributing and marketing products through its current and future distribution channels.

Inability to adapt to and apply new technologies

Failure of data management and governance

Epidemics or pandemics
◆
Competitive factors
◆
Difficulty in managing the company’s acquisitions and divestments
◆
Difficulties in distributing and marketing products through its current and future distribution channels.
◆
Inability to adapt to and apply new technologies
◆
Failure of data management and governance
◆
Epidemics or pandemics

 

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Unsuccessful in managing exposure to climate risk and adequately adapting investment portfolios

Unidentified or unanticipated risk events

Failure of Aegon’s information technology or communications systems

Computer system failure or security breach

Breach of data privacy or security obligations

Inaccuracies in econometric, financial, or actuarial models, or differing interpretations of underlying methodologies

Inaccurate, incomplete or unsuccessful quantitative models, algorithms or calculations

• 
◆
Unsuccessful in managing exposure to climate risk and adequately adapting investment portfolios
◆
Unidentified or unanticipated risk events
◆
Failure of Aegon’s information technology or communications systems
◆
Computer system failure or security breach
◆
Breach of data privacy or security obligations
◆
Inaccuracies in econometric, financial, or actuarial models, or differing interpretations of underlying methodologies
◆
Inaccurate, incomplete or unsuccessful quantitative models, algorithms or calculations
◆
Issues with third party providers, including events such as bankruptcy, disruption of services, poor performance, non-performance, or standards of service level agreements not being upheld

Inability to attract and retain personnel
◆
Inability to attract and retain personnel

4. Political, regulatory and supervisory risks

Requirement to increase technical provisions and/or hold higher amounts of regulatory capital as a result of changes in the regulatory environment or changes in rating agency analysis

Political or other instability in a country or geographic region
◆
Requirement to increase technical provisions and/or hold higher amounts of regulatory capital as a result of changes in the regulatory environment or changes in rating agency analysis

Changes in accounting standards
◆
Political or other instability in a country or geographic region

Inability of Aegon’s subsidiaries to pay dividends to Aegon Ltd.
◆
Changes in accounting standards

Risks of application of intervention measures
◆
Inability of Aegon’s subsidiaries to pay dividends to Aegon N.V.
◆
Risks of application of intervention measures

5. Legal and compliance risks

Unfavorable outcomes of legal and arbitration proceedings and regulatory investigations and actions

Changes in government regulations in the jurisdictions in which Aegon operates
◆
Unfavorable outcomes of legal and arbitration proceedings and regulatory investigations and actions

Increased attention to ESG matters and evolving ESG standards and requirements
◆
Changes in government regulations in the jurisdictions in which Aegon operates

Tax risks
◆
Increased attention to ESG matters and evolving ESG standards and requirements

Difficulty to effect service of process or to enforce judgments against Aegon in the US
◆
Tax risks

Inability to manage risks associated with the reform and replacement of benchmark rates
◆
Judgments of US courts may not be enforceable against Aegon in Dutch courts

Inability to protect intellectual property
◆
Inability to manage risks associated with the reform and replacement of benchmark rates
◆
Inability to protect intellectual property

6. Risks relating to Aegon’s common shares

Volatility of Aegon’s share price

Offering of additional common shares in the future
◆
Volatility of Aegon’s share price

Significant influence of Vereniging Aegon over Aegon’s corporate actions
◆
Offering of additional common shares in the future

Currency fluctuations
◆
Significant influence of Vereniging Aegon over Aegon’s corporate actions

Influence of Perpetual Contingent Convertible over the market price for Aegon’s common shares
◆
Currency fluctuations
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Influence of Perpetual Contingent Convertible over the market price for Aegon’s common shares

Financial risks

Rapidly rising interest rates may adversely affect Aegon’s profitability and available liquidity.

Aegon uses derivative instruments to help manage interest rate risk. In periods of rapidly rising rates Aegon is required to post more collateral under these derivative contracts, which can cause a strain on liquidity, as experienced insince 2022. In addition, rapidly rising interest rates can cause policy loans, surrenders and withdrawals to increase. This activity may result in cash payments by Aegon requiring the sale of invested assets at a time when the prices of those assets are affected adversely by the increase in market interest rates. This may result in realized investment losses.

These cash payments to policyholders also result in a decrease in total assets. Early withdrawals may also require accelerated amortization of deferred policy acquisition costs (‘DPAC’),impact the CSM which results in turn reduceslower future CSM releases and as such lower future net result.

In addition, if interest rates rise, unrealized losses on assets carried at fair value will be recorded in other comprehensive income (available-for-sale investments) as losses (investments at fair value through profit or loss) under International Financial Reporting Standards as issued by the IASB (‘IFRS’). This is inconsistent with the IFRS accounting on much of Aegon’s liabilities, where corresponding economic gains from higher interest rates do not affect shareholders’ equity or net income in the shorter term. Such temporal mismatch could cause Aegon’s results of operations to fluctuate significantly in the short-term.
Interest rate volatility and sustainedresults.

Sustained low or negative interestinte414r414est rate levels may adversely affect Aegon’s profitability and shareholders’ equity.

Aegon is exposed to interest rate risk as both its assets and liabilities are sensitive to movements in long- and short-term interest rates as well as to changes in the volatility of interest rates.

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During periods of decreasing interest rates, sustained low or even negative interest rates, Aegon may not be able to preserve profit margins in spread-based businesses due to the existence of minimum interest rate guarantees and minimum guaranteed crediting rates provided in policies. Investment earnings may be lower because the interest earnings on new fixed-income investments are likely to have declined with the market interest rates. A prolonged low or even negative interest rate environment may also result in a lengthening of maturities of the policyholder liabilities from initial estimates, due to lower

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policy lapses and longer duration of annuities. In this context, negative interest rates have comparable but larger impacts than low but positive rates.

Particularly during periods of low interest rates, in-force life insurance and annuity policies may be relatively more attractive to consumers due to built-in minimum interest rate guarantees, resulting in increased premium payments on products with flexible premium features and a higher percentage of insurance policies remaining in force year-to-year. The majority of assets backing the insurance liabilities are invested in fixed-income securities.

Aegon, in managing its investments and derivative portfolio, considers a variety of factors, including the relationship between the expected duration of its assets and liabilities. However, if interest rates remain low or even negative, the yield earned upon reinvesting interest payments from current investments, or from their sale or maturity, may decline. Reinvestment at lower yields may reduce the spread between interest earned on investments and interest credited to some of Aegon’s products and accordingly profitability may decline. In addition, borrowers may prepay or redeem fixed maturity investments or mortgage loans in Aegon’s investment portfolio in order to borrow at lower rates. Aegon’s ability to lower crediting rates on certain products to offset the decrease in spread may be limited by contractually guaranteed minimum rates or competitive influences.

Depending on economic developments, interest rates for securities with shorter maturities may remain at low or even negative levels for a prolonged period. In such an environment, an anchored expectation of low inflation or deflation could further push down the longer end of the interest rate curve, which could have significant implications for Aegon’s profitability.

Disruptions in the global financial markets and general economic conditions may affect, and could have material adverse effects on, Aegon’s businesses, profitability, liquidity and financial condition.

Aegon’s profitability and financial condition may be materially affected by uncertainty, fluctuations or negative trends in general economic conditions, such as economic growth, levels of unemployment, consumer confidence, inflation and interest rate levels in the countries in which Aegon operates. Continuing global economic and geopolitical volatility (including the ongoing conflict between Ukraine and Russia)Russia, andthe war between Israel and Hamas), rising inflation and interest rates, for example, have caused significant volatility and disruption in the financial markets.

Any disruptions or downturns in the global financial markets or general economic conditions may result in reduced demand for Aegon’s products as well as impairments and reductions in the value of the assets in Aegon’s general account, separate account, and company pension schemes. Aegon may also experience a higher incidence of claims and unexpected policyholder behavior such as unfavorable changes in lapse rates. Aegon’s policyholders may choose to defer or stop paying insurance premiums, which may impact Aegon’s businesses, profitability, cash flows and financial condition, and Aegon cannot predict with any certainty if or when such actions may occur.

Governmental action in the United States, the Netherlands, the United Kingdom, the European Union and elsewhere to address market disruptions and economic conditions may impact Aegon’s businesses. Aegon cannot predict the effect that these or other government actions, including economic sanctions, as well as actions by the European Central Bank (ECB) or the US Federal Reserve may have on financial markets or on Aegon’s businesses, profitability, cash flows and financial condition.

Higher inflation may adversely affect Aegon’s business plans and strategy and the profitability of its business.

Inflation has recently increased in the

The major global economies.economies have experienced elevated levels of inflation in recent years. It is driven by many factors, such as supply chain disruption, energy and commodity costs. While it remains uncertain whether inflation increases are transitionary or lasting, central banks have started to increaseincreased interest rates and adjustadjusted monetary policies to combat inflation.

A high inflation environment can adversely affect Aegon directly through higher claims and higher expenses or through broader macro-economic impacts that are associated with high inflation, such as a reduction to the market value of assets.

Certain products Aegon offers have a direct or very strong link to inflation, most notably index linked pension products. Other products have a correlation to inflation over the longer term, such as long termlong-term care insurance products. It is Aegon’s practice to hedge

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the indexation of pension products but it is not possible to hedge the inflation associated with long termlong-term care insurance products as no instrument exists to match this risk. Aegon mitigates this risk by close management of claims costs and benefits in the US.United States.

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Operating expenses have a strong correlation with inflation (wage and price inflation). An increase in observed inflation may lead to increased expenses and a lower earnings if Aegon is unable to offset the expense of inflation through expense savings initiatives.

Higher inflation may have broader economic impacts on asset valuations and economic activity, which will adversely impact Aegon’s business plans and strategy and its profitability.

Illiquidity of certain investment assets may prevent Aegon from selling investments at fair prices in a timely manner and Aegon’s access to external financing sources may be constrained under certain circumstances.

Aegon must maintain sufficient liquidity to meet short-term cash demands under normal circumstances, as well as in crisis situations. Liquidity risk is inherent in many of Aegon’s businesses. Each asset purchased and liability (e.g. insurance products) sold has unique liquidity characteristics. Some liabilities can be surrendered, while some assets, such as privately placed loans, mortgage loans, real estate and limited partnership interests, are to some degree illiquid. In depressed markets, Aegon may be unable to sell or buy significant volumes of assets at quoted prices.

Any security Aegon issues in significant volume may be issued at higher financing costs if funding conditions are impaired. The necessity to issue securities can be driven by a variety of factors; for instance, Aegon may need liquidity for operating expenses, debt servicing and the maintenance of capital levels of insurance subsidiaries. If impaired funding conditions were to persist, Aegon may need to sell assets substantially below the prices at which they are currently recorded to meet its insurance obligations.

Aegon makes use of bilateral and syndicated credit facilities to support liquidity requirements and meet payment obligations under adverse (market) conditions. An inability to access these credit facilities, for example due to non-compliance with conditions for borrowing or the default of a facility provider under stressed market circumstances, could have an adverse effect on Aegon’s ability to meet liquidity needs and to comply with contractual and other requirements.

Aegon’s derivatives transactions require Aegon to provide collateral against declines in the fair value of these contracts. Volatile financial markets may significantly increase requirements to provide collateral and adversely affect its liquidity position. Further, a downgrade of Aegon’s credit ratings may also result in additional collateral requirements.

Aegon’s investments are subject to credit risks, decline in value and defaults in debt securities, private placements, mortgage loan portfolios and other instruments held in Aegon’s general and separate accounts, or the failure of certain counterparties, may have a material adverse effect on Aegon’s businesses, profitability, cash flows and financial condition.

Credit risk is the risk of loss resulting from the default by, or failure to meet contractual obligations of, issuers and counterparties. Aegon also considers credit risk to include spread risk, that is, a decline in the value of a bond due to a general widening of credit spreads. For general account products, Aegon typically bears the risk for investment performance equalingequalling the return of principal and interest on fixed income instruments. Aegon is exposed to credit risk on its general account fixed-income portfolio (debt securities, mortgages, consumer loans and private placements), over-the-counter (‘OTC’ (“OTC”) derivatives and reinsurance contracts. In addition, financial institutions acting as a counterparty on derivatives may not fulfill their obligations. Default by issuers and counterparties on their financial obligations may be due to, among other things, bankruptcy, lack of liquidity, or operational failures, and any collateral or security they provide may prove inadequate to cover their obligations at the time of the default. Losses in excess of predicted losses due to any such default or series of defaults by issuers or counterparties may have a material adverse effect on Aegon’s profitability and financial condition.

Additionally,

In addition, Aegon is indirectly exposed to credit risk on the investment portfolios underlying separate account liabilities. Changes to credit risk can decrease the value of fixed interest assets in the separate accounts. Reduced separate account values will decrease fee income and may accelerate DPAC amortization. In addition, certain separate account products sold in the United States and the Netherlands include guarantees that protect policyholders against some or all of the downside risks in their separate account portfolios. Revision of assumptions might also affect the DPAC amortization schedule. These factors may have a material adverse effect on Aegon’s profitability and financial position.

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Aegon’s investment portfolio includes Dutchholds government bonds, including US Treasury, agency and state bonds, other government-issued securities and corporate bonds. Especially in a weak economic environment Aegon may incur significant investment impairments due to defaults and overall declines in the capital markets. Defaults or other reductions in the value of these securities and loans may have a material adverse effect on Aegon’s businesses, profitability, cash flows and financial condition.

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A decline in equity markets may adversely affect Aegon’s profitability and shareholders’ equity, sales of savings and investment products, and the value of assets under management.

Aegon and its customers run the risk that the market value of their equity investments can decline. Exposure to equity markets exists in both assets and liabilities. Asset exposure exists through direct equity investment where Aegon bears all or most of the volatility in returns and investment performance risk. Equity market exposure is also present in policyholders’ accounts for insurance and investment contracts (such as variable annuities, unit-linked products, and mutual funds) where funds are invested in equities. Although most of the risk remains with the policyholder, guarantees within certain products may transfer some or all of this risk to Aegon. Lower investment returns also reduce the asset management and administration fee that Aegon earns on the asset balance in these products, and prolonged investment under-performance may cause existing customers to withdraw funds and potential customers not to grant investment mandates.

Some of Aegon’s insurance and investment contract businesses have minimum return or accumulation guarantees, which require Aegon to establish reserves to fund these future guaranteed benefits when equity market returns do not meet or exceed these guarantee levels. Aegon’s reported results under IFRS are also at riskimpacted if returns are not sufficient to allow amortization of DPAC,certain insurance and/ or investments contracts become onerous which may impactdecreases the reported net result as well as shareholders’ equity.result. Volatile or poor market conditions may also significantly reduce the demand for some of Aegon’s savings and investment products, which may lead to lower sales and

reduced profitability.

A downturn in the real estate market may adversely impact valuations and cash flows.

Aegon’s investment portfolio

Aegon has a largeexposure to the real estate market in the United States through commercial mortgage loans. Aegon also has an indirect exposure to the residential real estate market in the Netherlands through the residential mortgages sourced by Aegon andits shareholding in a.s.r, via the AMVEST funds. Aegon also has exposure to the real estate market in the US through commercial mortgage loans.funds and residential mortgages. Risks for Aegon in the USUnited States and indirectly in the Netherlands in the event of a downturn in the real estate market include lower returns or valuation losses on its mortgage portfolio, lower real estate valuations, lower margins due to higher prepayment in the mortgage portfolio in the event of lower interest rates and increased payment defaults.

The default of a major financial market participant and systemic risk may disrupt the markets and affect Aegon.

The failure of a sufficiently large and influential financial market participant may disrupt securities markets or clearing and settlement systems in Aegon’s markets. This may cause market declines or volatility. Such a failure may lead to a chain of defaults that may adversely affect Aegon and Aegon’s contract counterparties. In addition, such a failure may impact future product sales as a potential result of reduced confidence in the insurance industry. The default of one or more large international financial institutions, which may result in disruption or termination of their cash, custodial and/ or administrative services, may also have a material adverse impact on Aegon’s ability to run effective treasury and asset management operations.

Even the perceived lack of creditworthiness of a government or financial institution (or a default by any such entity) may lead to market-wide liquidity problems and losses or defaults. This risk is sometimes referred to as ‘systemic risk’ and may adversely affect financial intermediaries, such as clearing members or futures commissions merchants, clearing houses, banks, securities firms and exchanges with which Aegon interacts on a daily basis and financial instruments of governments in which Aegon invests. Systemic risk could have a material adverse effect on Aegon’s ability to raise new funds and on its business, financial condition, profitability, liquidity and/or prospects.

Reinsurers to which Aegon has ceded risk may fail to meet their obligations.

Aegon’s insurance subsidiaries cede premiums to other insurers under various agreements that cover individual risks, group risks or defined blocks of business, on a co-insurance, yearly renewable term, excess or catastrophe excess basis. The purpose of these reinsurance agreements is to spread the risk and offset the effect of losses. The amount of each risk retained depends on an evaluation of the specific risk, which is subject, in certain circumstances, to maximum limits based on the characteristics of coverage. Under the terms of the reinsurance agreements, the reinsurer agrees to reimburse for the ceded amount in the event a covered claim is paid. However, Aegon’s insurance subsidiaries remain liable to their policyholders for ceded insurance if any reinsurer fails to meet the obligations assumed by it. A bankruptcy or insolvency or inability of any of Aegon’s reinsurance counterparties to satisfy its obligations may have a material adverse effect on Aegon’s financial conditions and results of operations.

 

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A downgrade in Aegon’s credit ratings may increase policy surrenders and withdrawals, adversely affect Aegon’s relationships with distributors, and negatively affect Aegon’s results of operations.

Claims-paying ability and financial strength ratings are factors in establishing the competitive position of insurers. A rating downgrade (or a change in outlook indicating the potential for such a downgrade) of Aegon or any of its rated insurance subsidiaries may, among other things, materially increase the number of policy surrenders and withdrawals by policyholders of cash values from their policies. Aegon cannot predict what actions rating agencies may take, or what actions Aegon may take in response to the actions of rating agencies. As with other companies in the financial services industry, Aegon’s credit ratings may be downgraded at any time and without notice by any rating agency.

Withdrawals by policyholders may require the sale of invested assets, including illiquid assets, at a price that may result in realized investment losses. These cash payments to policyholders would result in a decrease in total invested assets and a decrease in net result. Among other things, early withdrawals may also cause Aegon to accelerate amortization of DPAC, reducingimpact the CSM, which in turn results in lower future CSM releases and as such lower future net result.

results.

Aegon has experienced downgrades and negative changes to its outlook in the past and may experience rating and outlook changes in the future. A downgrade or potential downgrade, including changes in outlook, may result in higher funding costs on future long-term debt funding transactions and/or affect the availability of funding in the capital markets and lead to increased fees on credit facilities. In addition, a downgrade may adversely affect relationships with broker-dealers, banks, agents, wholesalers and other distributors of Aegon’s products and services, which may negatively impact new sales and adversely affect Aegon’s ability to compete. A downgrade of Aegon’s credit ratings may also affect its ability to obtain reinsurance contracts at reasonable prices or at all.

Reference is made to section

See the “Capital and liquidity management” section for Aegon’s current credit ratings.

Fluctuations in currency exchange rates may affect Aegon’s financial condition and reported results of operations.

As an international group, Aegon is subject to foreign currency translation risk. At a local level, assets allocated to equity are kept in local currencies to the extent shareholders’ equity is required to satisfy regulatory and Aegon’s self-imposed capital requirements. Therefore, currency exchange rate fluctuations may affect the level of Aegon’s consolidated shareholders’ equity as a result of translation of the equity of Aegon’s subsidiaries into euro, Aegon’s reporting currency. Aegon holds the remainder of its consolidated capital base (capital securities, subordinated and senior debt) in various currencies in amounts that are targeted to correspond to the book value of Aegon’s business units. This balancing is intended to mitigate currency translation impacts on equity and leverage ratios. Foreign currency exposure also exists when policies are denominated in currencies other than Aegon’s functional currency. Currency risk in the investment portfolios backing insurance and investment liabilities is managed using asset liability matching principles. Aegon may also hedge proceeds from divestments or the foreign exchange component of expected dividends from its principal business units that maintain their equity in currencies other than the euro.

To the extent the foreign exchange component of proceeds from divestments or the expected dividends is not hedged, or actual dividends vary from expected, Aegon’s net result and shareholders’ equity may fluctuate. As Aegon has significant business segments in the Americas and in the United Kingdom, the principal sources of exposure from currency fluctuations are from the differences between the US dollar and the euro and between the UK pound and the euro. Aegon may experience significant changes in net result and shareholders’ equity because of these fluctuations.

Aegon may be unable to manage asset liability management risks successfully through derivatives.

Aegon is exposed to changes in the fair value of its investments, as a result of the impact of interest rate, equity markets and credit spread changes, currency fluctuations and changes in mortality and longevity. Aegon uses common financial derivative instruments, such as swaps, options, futures, and forward contracts, to hedge some of the exposures related to both investments backing insurance products and Companyits own borrowings. Aegon may not be able to manage these asset liability management risks associated with these activities successfully through the use of derivatives. In addition, a counterparty may fail to honor the terms of its derivatives contracts with Aegon. In addition clearing members and clearing houses may terminate their derivatives contracts with Aegon. Aegon’s inability to manage risks successfully through derivatives, a counterparty’s failure to honor Aegon’s obligations or a systemic risk that is transmitted from counterparty to counterparty may each have a material adverse effect on Aegon’s businesses, net result and financial condition.

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Valuation of Aegon’s investments, allowances and impairments is subjective, and discrepant valuations may adversely affect Aegon’s net result and financial condition.

The valuation of many of Aegon’s financial instruments is based on subjective methodologies, estimations, and assumptions. Changes to investment valuations may have a material adverse effect on Aegon’s net result and financial condition. In addition, the determination of the amount of allowances and impairments taken on certain investments and other assets is subjective and based on assumptions, estimations and judgments that may not reflect or correspond to Aegon’s actual experience, any of which may materially impact Aegon’s net result or financial condition.

Underwriting risks

Aegon’s reported results of operations and financial condition may be affected by differences between actual claims experience and underwriting and reserve assumptions both due to incurred gains/losses and from potential changes in best estimate assumptions that are used to value insurance liabilities.

There is a risk that the pricing of Aegon’s products turns out to be inadequate if the assumptions used for pricing do not materialize. Aegon’s earnings depend significantly on the extent to which actual claims experience is consistent with the assumptions used in setting the prices for Aegon’s products and the extent to which the established technical provisions for insurance liabilities, both under IFRS and statutory reporting, prove to be sufficient. If actual claims experience is less favorable than the underlying assumptions used in establishing such liabilities, Aegon’s net incomeresult would be reduced. Furthermore, if less favorable claims experience became sustained, Aegon may be required to change its best estimate assumptions with respect to future experience, potentially increasing the technical provisions for insurance liabilities, which may reduce Aegon’s net incomeresult and solvency ratio. In addition, under IFRS17 the Contractual Service Margin (‘CSM’(“CSM”), established on transition or when writing new business represents the unearned profit that the company expects to earn in the future. If the assumptions relating to this future profitability (such as future claims, investment net income and expenses) are not realized, this can lead to changes in the CSM, changingwhich in turn could change future profitability and if the CSM turns negative triggeringtrigger onerous contracts leading to an immediate loss. This may have a material adverse effect on Aegon’s results of operations and financial condition.

Sources of underwriting risk include policyholder behavior (such as lapses or surrender of policies), policy claims (such as mortality and morbidity) and expenses. In most cases, the expectations for these risks are used to calculate the technical provisions so the main risk is ifthat the realizations turn out different than what was expected. For some product lines, Aegon is at risk if policy lapses increase, as sometimes Aegon is unable to fully recover up-front sales expenses despite the presence of commission recoveries or surrender charges and fees. In addition, some policies have embedded options which at times are more valuable to the client if they stay (lower lapses) or leave (higher lapses), which may result in losses to Aegon’s businesses. Aegon sells certain types of policies such as term life insurance and accident insurance, whose profitability is at risk if mortality or morbidity increases. Aegon also sells certain other types of policies, such as annuity and LTC insurance products, that are at risk if mortality decreases (longevity risk). For example, certain current annuity products, as well as products sold in previous years, have seen their profitability deteriorate as longevity assumptions have been revised upward. Despite the disruption caused by the COVID-19 pandemic, it remains likely for the long-term trend toward increased longevity to continue, such that Aegon’s annuity products may continue to experience adverse effects due to longer expected benefit payment periods. Aegon is also at risk if expenses are higher than assumed.

Some of

Losses on Aegon’s products havewith guarantees due to volatile markets that may adversely affect its results of operations, financial condition or liquidity.

Some products, particularly Aegon’s variable annuity products in the US and defined benefit pension business in the Netherlands,United States include death benefit guarantees, guarantees of minimum surrender values or income streams for stated periods or for life, which may be more than account values. These guarantees are designed, among other things, to protect policyholders against downturns in equity markets and interest rates. The value of the guarantees depends on market prices of such products. Failure to re-price the products following a fall in interest rates or a move into more volatile markets could result in Aegon writing business at a loss and potentially writing higher volumes of loss making business if competitors re-price their products. Alternatively, if competitors re-price their products on aggressive pricing terms, then Aegon may be pressured to re-price with less favorable terms than it is willing to take without the pressure. Each of these circumstances may adversely affect Aegon’s results of operations, financial condition or liquidity.

Restrictions on underwriting criteria and the use of data may adversely impact Aegon’s results of operations.

Some jurisdictions impose restrictions on particular underwriting criteria, such as gender or race, or use of genetic test results, for determination of premiums and benefits of insurance products. Such restrictions, now or in the future, could adversely impact Aegon’s results of operationoperations if it is unable to take into consideration some or all factors that potentially bear correlation with

 

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with risk. Further developments in underwriting, such as automation and use of additional types and sources of data, may also be affected by future regulatory developments regarding privacy and other restrictions with respect to the use of personal data.

Aegon’s products may not achieve expected returns and Aegon may be confronted with litigation and negative publicity.

Aegon may face lawsuits from customers and experience negative publicity if Aegon’s products fail to perform as expected, regardless of the suitability of products for customers or the adequacy of the disclosure provided to customers by Aegon and by the intermediaries who distribute Aegon’s products. Products that are less well understood and that have a lower performance track record may be more likely to be the subject of such lawsuits. Any such lawsuits, court judgments and regulatory fines may have a material adverse effect on Aegon’s results of operations, corporate reputation, and financial condition.

Reinsurance may not be available, affordable, or adequate to protect Aegon against losses.

As part of Aegon’s overall risk and capital management strategy, Aegon purchases reinsurance for certain risks underwritten by Aegon’s various business segments. Market conditions beyond Aegon’s control determine the availability and cost of the reinsurance protection Aegon purchases. In addition, interpretations of terms and conditions may differ over time from anticipated coverage as contracts extend for decades, which may lead to denials of coverage and potentially protracted litigation, which may lead to Aegon incurring losses.

Catastrophic events, which are unpredictable by nature, may result in material losses and abruptly and significantly interrupt Aegon’s business activities.

Aegon’s results of operations and financial condition may be adversely affected by volatile natural and man-made disasters such as hurricanes, windstorms, earthquakes, terrorism, cyber-crime, riots, wars, fires and explosions, pandemics, and other catastrophes. Over the past several years, the presumed effects of climate change have started to become noticeable in the form of more extreme weather patterns, adding to the unpredictability, increased intensity and frequency of natural disasters in certain parts of the world and creating additional uncertainty as to future trends and exposure. Aegon is also exposed to the risk of epidemics or pandemics occurring in one or more of the countries in which Aegon operates or globally. For instance, Aegon can be impacted through higher mortality rates in the countries in which it operates and through lower sales and higher lapses on its products due to limitations on customer interactions, pressure on customer income and increased uncertainty. Such events may lead to considerable financial losses to Aegon’s businesses. These catastrophic events may also lead to adverse market movements which increase the adverse impacts to Aegon’s financial position. For instance, the prices and credit quality of investments can be impacted. In addition, monetary policy measures from central banks can result in fluctuations in interest rates, as Aegon recently experienced in a post lock-down world combined with the effects of the war in Ukraine. Furthermore, natural disasters, pandemics, terrorism, civil unrest, military actions, acts of war and fires may disrupt Aegon’s operations and result in significant loss of property, key personnel, and information about Aegon and its clients. If its business continuity plans have not included effective and sufficient contingencies for such events, Aegon may also experience business disruption and damage to its corporate reputation and financial condition.

Operational risks

Competitive factors may adversely affect Aegon’s market share and profitability.

Competition in Aegon’s business segments is based on, among other things, service, product features, price, commission structure, financial strength, claims paying ability, ratings, and name recognition. Aegon faces intense competition from a large number of other insurers, as well as non-insurance financial services companies such as banks, broker-dealers and asset managers, for individual customers, employers, other group customers, and agents and other distributors of insurance and investment products. Consolidation in the global financial services industry can enhance the competitive position of some of Aegon’s competitors by broadening the range of their products and services and increasing their distribution channels and their access to capital. New competitors backed by private equity investors may lead to further pressure on Aegon’s margins. In addition, development of alternative distribution channels for certain types of insurance and securities products, including use of digital technologies and platforms, may result in increasing competition as well as pressure on margins for certain types of products. Traditional distribution channels are also challenged by a ban on sales-based commissions in some countries. These competitive factors may result in increased pricing pressures on Aegon’s products and services, particularly as competitors seek to win market share. This may harm Aegon’s ability to maintain or increase profitability.

Adverse market and economic conditions can be expected to result in changes to the competitive landscape. Financial distress experienced by financial services industry participants as a result of weak economic conditions and newly imposed regulations may lead to acquisition opportunities. Additionally,In addition, the competitive landscape in which Aegon operates may

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be affected by government-sponsored programs or actions taken in response to, for instance, dislocations in financial markets.

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Aegon’s ability or that of Aegon’s competitors to pursue such opportunities may be limited due to lower earnings, reserve increases, capital requirements or a lack of access to debt capital markets and other sources of financing. Such conditions may also lead to changes by Aegon or Aegon’s competitors in product offerings and product pricing that may affect Aegon and Aegon’s relative sales volumes, market shares and profitability.

Aegon may have difficulty managing its expanding operations, and Aegon may not be successful in acquiring new businesses or divesting existing operations.

Over time, Aegon has made a number of acquisitions and divestments around the world and it is possible that Aegon may make further acquisitions and divestments in the future. Acquisitions and divestments involve risks that may adversely affect Aegon’s results of operations and financial condition. These include: the potential diversion of financial and management resources from existing operations; difficulties in assimilating or disentangling operations, technologies, products and personnel; significant delays in completing the integration or disentangling of operations; the potential loss of key employees or customers; and potential losses from resulting litigation and tax and accounting issues. In addition, expansion into new and emerging markets may involve heightened political, legal and regulatory risks, such as discriminatory regulation, nationalization or expropriation of assets, price controls and exchange controls.

Aegon’s acquisitions may result in additional indebtedness, costs, contingent liabilities, and impairment expenses related to goodwill and other intangible assets. Acquisitions may also have a dilutive effect on the ownership and voting percentages of existing shareholders if shares are used as consideration. Divestments of existing operations may result in Aegon assuming or retaining certain contingent liabilities. Aegon may not be able to divest assets within the time or at the price planned. Certain assets may prove to be organized within the business in such a way as to make divestment too complex and/or uneconomical. All of these factors may adversely affect Aegon’s businesses, results of operations and financial condition. There can be no assurance that Aegon will successfully identify suitable acquisition candidates or buyers for operations to be divested or that Aegon will properly value acquisitions or divestments. Aegon is unable to predict whether or when any prospective acquisition candidate or buyer for operations to be divested will become available, or the likelihood that any transaction will be completed once negotiations have commenced.

Aegon may experience difficulties in distributing and marketing products through its current and future distribution channels.

Although Aegon distributes its products through a wide variety of distribution channels, Aegon’s ability to market its products could be affected if key relationships are interrupted. Distributors may elect to reduce or terminate their distribution relationship with Aegon due to adverse developments in its (or their) business. Further, key distribution partners may also merge or change their business models in ways that affect how Aegon’s products are sold, or new distribution channels could emerge and adversely impact the effectiveness of its current distribution efforts.

When Aegon’s products are distributed through unaffiliated firms, Aegon may not always be able to monitor or control the manner of their distribution despite its significant compliance training and programs. If Aegon’s products are distributed by such firms in an inappropriate manner, or to customers for whom they are unsuitable, Aegon may suffer reputational and other harm to its business.

Aegon may be unable to adapt to and apply new technologies.

New technologies are transforming the insurance industry. New technologies include but are not limited to communication channels, automation, artificial intelligence and machine learning, additional processing platforms and cloud services, data analytics and distributed ledger technology. These technologies are changing the way insurance is distributed and sold. They are also changing the way insurers manage their businesses and the skills they need in their workforces. Furthermore, the new technologies are influencing customer and consumer demands. Technology makes it easier to move into new markets. This increases competition, not just among peers, but also from new competitors and disruptors. An inability to adapt and apply these technologies quickly, and in a controlled manner may impact Aegon’s competitive position, and its ability to maintain profitability, and may adversely affect Aegon’s future financial condition and results of operations.

Failure of data management and governance can result in regulatory and reputational risk as well as missed business opportunities.

Data is essential for Aegon’s operational performance. However, much of the data held by Aegon is subject to various legal, regulatory and contractual restrictions. To be able to benefit from the data that Aegon holds, areas like data management and governance are of key importance. Most internal processes and customer interactions are dependent on accessible, reliable,

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and compliant data practices and operations. If Aegon fails to adequately execute on these obligations, it faces potential legal,

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regulatory, contractual and reputational risks. Aegon also must endeavor to obtain adequate data rights to be able to execute its business strategy. Failure to do so will expose it to additional legal risks, including litigation risks.

Aegon may be impacted by epidemics or pandemics.

Aegon’s operations are exposed to the risk of an epidemic or a pandemic – such as Asian flu, SARs or COVID-19 – occurring in one or more of the countries in which it operates or globally. If the health of a significant number of employees or key functions is compromised or internal controls need to be executed in an atypical way, these could have an impact on core business processes, service levels to customers, and the effectiveness of the control environment. In addition, Aegon faces operational risks related to continued working from home/home and/or remote working by Aegon’s workforce, such as additional remote access to company information which could increase information security risk. Also, Aegon can be impacted via its relationships with third parties. These third parties can also be impacted by an epidemic or pandemic with consequential impacts on Aegon such as disruption in service. The described risks may directly or indirectly impact Aegon’s financial health and its ability to generate capital in the medium to long term.

Aegon may not be successful in managing its exposure to sustainability and climate risk and adequately adapting its investment portfolios for the transition to a low-carbon economy.

Climate change is a long-term risk associated with high uncertainty regarding timing, scope and severity of potential impacts. Climate risks can be grouped into physical risks and transition risks. Physical risks relate to losses from overall climate changes (i.e. changing weather patterns and sea level rise) and acute climate events (i.e. extreme weather and natural disasters). These physical risks not only impact property & casualty (P&C) insurance through increased claims, but also potentially life insurance, for instance through higher-than-expected mortality rates. Losses can also follow from credit risk and collateral linked to Aegon’s mortgage portfolio. From a physical risk standpoint, Aegon is exposed to mortality risk and mortgage underwriting risks. Beyond insured losses, climate change may have disrupting and cascading effects on the wider environment and economy and may lead to adverse market movements – prices and credit quality of investments and defaults on investments – and monetary policy measures resulting in lower interest rates.

Transition risks are those arising from the shift to a low-carbon economy. These risks are a function of policy, regulatory and economic uncertainty, including political, social and market dynamics and technological innovations. Transition risks can affect the value of assets and investment portfolios. Furthermore, Aegon may be unable to, or may be perceived as not taking sufficient action to, adjust to environmental and sustainability expectations or goals. For more information, see our risk factor titled

“Increased attention to ESG matters may subject Aegon to additional costs or risks or otherwise adversely impact Aegon businesses. Aegon may not be able to meet evolving ESG

standards and requirements, or may fail to meet its sustainability and ESG-related goals and targets.”

Physical and transition risks may impact our investment performance, as well as our business operations. For more information, please see our disclosures in the section titled “Task Force on Climate-related Financial Disclosures. Linked to both the physical and the transition risks, there could also be litigation and reputational risks following from (being perceived to) not fully considering or responding to the impacts of climate change, or not providing appropriate disclosure of current and future risks.risks, or not meeting Aegon’s fiduciary duties. Aegon may not be able to fully predict or manage the financial risks stemming from climate change, resource depletion, environmental degradation and related social issues. The risks can relate both to Aegon and the companies in which it invests. Efforts that Aegon may take to reduce the Company’s climate-related risks may be costly (including requiring us to forego certain business opportunities the Company may otherwise pursue) and may not be successful.

Given the significant uncertainties related to climate change impacts and its long-term nature, it cannot be ruled out that climate change may have a materialan adverse effect on Aegon’s businesses, results of operations and financial condition.

Aegon’s risk management policies and processes may leave it exposed to unidentified or unanticipated risk events, adversely affecting its businesses, results of operations, and financial condition.

Aegon has devoted significant resources to the implementation and maintenance of a comprehensive enterprise risk management framework. Nevertheless, it is possible that risks present in its business strategies and initiatives are not fully identified, monitored, and managed or that risks are not properly measured. Risk measurements often make use of historic data that may be inaccurate or may not predict future exposures. As a result, Aegon’s businesses, results of operations, and financial condition may be adversely affected.

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Failure of Aegon’s information technology or communications systems may result in a material adverse effect on Aegon’s businesses, results of operations, financial condition and corporate reputation.

Any failure of or gap in the systems and processes necessary to support business operations and avoid and/or detect systems failure, fraud, information security failures, processing errors, cyber intrusion, loss of data and breaches of regulation

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may lead to a material adverse effect on Aegon’s results of operations and corporate reputation. In addition, Aegon must commit significant resources to maintain and enhance its existing systems in order to keep pace with applicable regulatory requirements, industry standards and customer preferences. If Aegon fails to maintain secure, compliant and well-functioning information systems, Aegon may not be able to rely on data for product pricing, compliance obligations, risk management and underwriting decisions. In addition, Aegon cannot assure investors or consumers that interruptions, failures or breaches in security of these processes and systems will not occur, or that if they do occur, that they can be timely detected and remediated. The occurrence of any of these events may have a material adverse effect on Aegon’s businesses, results of operations, financial condition and corporate reputation.

A perceived or actual computer system failure or security breach of Aegon’s IT systems or that of critical third parties may disrupt Aegon’s business, damage Aegon’s reputation and adversely affect Aegon’s results of operations, financial condition, and cash flows.

Aegon relies heavily on its own computer and information systems and internet and network connectivity as well as those of third parties (collectively, “IT systems”) to conduct a large portion of its business operations. This includes the need to securely store, process, transmit and dispose of (confidential)confidential information, including personal information through a number of complex systems.and confidental company information as well as trade secrets, financial and other confidental information relating to Aegon. In many cases this also includes transmission and processing to or through customers, business partners, (semi-) governmental agencies and third-party service providers. IT system failures, cyber-crime attacks or security or data privacy breaches may materially disrupt Aegon’s business operations, damage Aegon’s reputation, result in regulatory and litigation exposure (including class actions), investigation and remediation costs, and materially and adversely affect Aegon’s results of operations, financial condition and cash flows.

The information security risk that Aegon faces includes the risk of malicious outside forces using public networks and other methods, including social engineering, ransomware and the exploitation of targeted offline processes, to attack Aegon’s IT systems and information, making it inaccessible to its intended users and potentially demanding ransom. It also includes inside threats, both malicious and accidental. For example, human error, bugs and vulnerabilities that may exist in Aegon’s systems or software, unauthorized user activity and lack of sufficiently automated processing or sufficient logging and monitoring can result in improper information exposure or failure or delayed detection of such activity in a timely manner. Aegon also faces risk in this area due to its reliance in many cases on third-party systems, all of which may face cyber and information security risks of their own. Third-party administrators or distribution partners used by Aegon or its subsidiaries may not adequately secure their own IT systems or may not adequately keep pace with the dynamic changes in this area. Potential bad actors that target Aegon and applicable third parties may include, but are not limited to, criminal organizations, foreign government bodies, political factions, and others.

In recent years, information security risk has increased due to a number of developments in how information systems are used, not only by companies such as Aegon, but also by society in general. Threats have increased in frequency and magnitude, and are expected to continue to increase, as criminals and other bad actors become more organized and employ more sophisticated techniques. At the same time companies increasingly make information systems and data available through the internet, mobile devices or other network connections to customers, employees and business partners, thereby expanding the attack surface that bad actors can potentially exploit. Aegon’s partners and service providers continue working remotely, which creates additional opportunities for cybercriminals to launch social engineering attacks and exploit vulnerabilities in non-corporate IT environments resulting in an increased cybersecurity risk.

The SEC and other regulators have also increased their focus on cybersecurity vulnerabilities and risks. The SEC proposed two rulesadopted a rule in March 20222023 related to cybersecurity disclosures for Public Companies and risk managementthe SEC has proposed rules regarding cybersecurity requirements that apply to registered investment advisors and fundsfunds. The adopted rule has had an impact to Aegon and to Public Companies. Boththe proposed rules are expected to have an impact to Aegon should they become effective as currently proposed.

Large, global financial institutions such as Aegon, and their third-party service providers, have been, and will continue to be, subject to information security attacks for the foreseeable future. The nature of these attacks will also continue to be unpredictable, and in many cases may arise from circumstances or at third parties that are beyond Aegon’s control. Attackers are also increasingly using tools (including artificial intelligence) and techniques that are specifically designed to circumvent

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controls, to evade detection and even to remove or obfuscate forensic evidence. As a result, Aegon may be unable to timely or effectively detect, identify, contain, investigate or remediate IT systems in response to future cyberattacks or security breaches. Especially if and to the extent Aegon fails to adequately invest in defensive infrastructure, timely response capabilities, technology, controls and processes or to effectively execute against its information security strategy, it may suffer material adverse consequences.

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To date the highest impact information security incidents that Aegon has experienced are believed to have been the result of e-mail phishing attacks targeted at Aegon’s business partners and customers. This in turn led to the unauthorized use of valid Aegon website credentials to engage in fraudulent transactions and improper data exfiltration. Additionally,In addition, Aegon has faced other types of attacks, including, but not limited to, other types of phishing attacks, distributed denial of service (DDoS) attacks, technology implementation and update errors, various human errors, e-mail related errors, paper-based errors, exploitations of vulnerabilities and certain limited cases of unauthorized internal user activity, including activity between different Aegon country units. Like many other companies, Aegon could also be subject to malware, ransomware and similar types of attacks or intrusions. There is no guarantee that the measures that Aegon takesand its third-party service providers take will be sufficient to stop all types of attacks or mitigate all types of information security or data privacy risks.

Aegon maintains cyber liability insurance to decrease the financial impact of cyber-attacks and information security events, subject to the terms and conditions of the policy. However, such insurance may not be sufficient to cover all applicable losses that Aegon may suffer.

A perceived or actual breach of data privacy or security obligations may disrupt Aegon’s business, damage Aegon’s reputation and adversely affect financial conditions and results of operations.

Pursuant to applicable laws, various government and semi-governmental and other administrative bodies have established numerous rules protecting the privacy and security of personal information and other confidential or sensitive information held by Aegon. Notably, certain of Aegon’s businesses are subject to laws and regulations enacted by US federal and state governments, the EU, orthe UK and other non-US/EUEU/UK jurisdictions and/or enacted by various regulatory organizations relating to the privacy and/or information security of the information of customers, employees or others. Aegon’s EuropeanEU operations and UK operations are mainly subjected to the EU and UK General Data Protection Regulation (GDPR)(EU GDPR and UK GDPR). In addition, in several Asian jurisdictions but also in Latin America where Aegon has activities, new privacy and information security laws and regulations have been enacted or existing legislation has been strengthened and updated.

In the United States, the New York Department of Finance Services (NYDFS), pursuant to its cybersecurity regulation, requires financial institutions regulated by the NYDFS, including certain Aegon subsidiaries, to, among other things, satisfy an extensive set of minimum information security requirements, including but not limited to governance, management, reporting, policy, technology and control requirements. Other states have adopted similar, but not as stringent, cybersecurity laws and regulations.regulations as New York. In November 2023, NYDFS also published the Draft Amendment toamended its Part 500 Cybersecurity Rules to adopt heightened information security requirements in relation to cybersecurity governance, cybersecurity risk assessments, incident reporting, and other requirements that includes significant changesapply to the original Rule potentially resulting inAegon’s operations and will require further implementation effort for Aegon.

Numerous other US state and federal laws also impose various information security and privacy related obligations with respect to various Aegon subsidiaries operating in the US,United States, including but not limited to the Gramm-Leach-Bliley Act and related state laws and implementing regulations (GLBA), the California Consumer Privacy Act (CCPA), as amended by the California Privacy Rights Act (CPRA), and the Health Insurance Portability and Accountability Act (HIPAA), among many others. These laws generally provide for governmental investigative and enforcement authority, and in certain cases provide for private rights of action.

Numerous other legislators and regulators with jurisdiction over Aegon’s businesses are considering or have already enacted enhanced information security risk management and data (and data privacy) laws and regulations, with the overall number and scope of such laws and regulations continuing to increase every year. A number of Aegon’s subsidiaries are also subject to contractual restrictions with respect to the use and handling of the sensitive information of Aegon’s clients and business partners.

Aegon, and numerous of its systems, employees, third-party providers and business partners have access to, and routinely process, the personal information of consumers and employees. Aegon relies on a large number of processes and controls to protect the confidentiality, integrity and availability of personal information and other confidential information that is accessible to, or in the possession of, Aegon, its systems, employees and business partners. It is possible that an Aegon

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Risk factors Aegon Ltd.

or a third party’s employee, contractor, business partner or system could, intentionally or unintentionally, inappropriately disclose or misuse personal or confidential information. Aegon’s data or data in its possession could also be the subject of an unauthorized information security attack. If Aegon fails to maintain adequate processes and controls or if Aegon or its business partners fail to comply with relevant laws and regulations, policies and procedures, misappropriation or intentional or unintentional inappropriate disclosure or misuse of personal information or other confidential information could occur. Such control inadequacies or non-compliance could cause disrupted operations and misstated or unreliable financial data, materially damage Aegon’s reputation or lead to increased regulatory scrutiny or civil or criminal penalties or (class action) litigation, which, in turn, could have a material adverse effect on Aegon’s business, financial condition and results of operations.

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In addition, Aegon analyzes personal information and customer data to better manage its business, subject to applicable laws and regulations and other restrictions. It is possible that additional regulatory or other restrictions regarding the use of such information may be imposed. Additional privacy and information security obligations have been imposed by various governments with jurisdiction over Aegon or its subsidiaries in recent years, and more obligations are likely to be imposed in the near future. Such restrictions and obligations, as well as the actual or perceived failure to comply with them, could have material impacts on Aegon’s business, financial conditions and results of operations.

Inaccuracies in econometric, financial, or actuarial models, or differing interpretations of underlying methodologies, assumptions and estimates, could have a material adverse effect on Aegon’s business, results of operations and financial condition.

Aegon uses econometric, financial, and actuarial models to measure and manage multiple types of risk, to price products and to establish and assess key valuations and report financial results. All these functions are critical to Aegon’s operations. Aegon has a model risk management framework in place to manage modellingmodeling risk. If, despite this framework, models, their underlying methodologies, assumptions and estimates, or their implementation and monitoring prove to be inaccurate, this could have a material adverse effect on Aegon’s business, results of operations and financial condition.

Many of Aegon’s business units offer investment products that utilize quantitative models, algorithms or calculations that could experience errors or prove to be incorrect, incomplete or unsuccessful, resulting in losses for clients who have invested in such products and possible regulatory actions and/or litigation against Aegon and/or its affiliates.

Aegon’s business units may utilize quantitative models, algorithms or calculations (whether proprietary or supplied by third parties) (Models) or information, or data supplied by third parties (Data) for the management of, or to assist in the management of, investment products offered to clients. Examples of such investment products include volatility-controlled funds, mutual funds, separately managed accounts, and other types of advisory accounts. Models and Data are used to construct sets of transactions and investments, to provide risk management insights, and may be used to assist in hedging investments. If Models and Data prove to be incorrect or incomplete, any decisions made, in whole or part, in reliance thereon expose the investment product to additional risks. For example, by utilizing Models or Data, certain investments may be bought at prices that are too high, certain other investments may be sold at prices that are too low, or favorable opportunities may be missed altogether. Similarly, any hedging based on faulty Models and Data may prove to be unsuccessful. The applicable investment product bears the risk that Models or Data used will not be successful and the product may not achieve its investment objective.

Models can be predictive in nature. The use of predictive Models has inherent risks. For example, such Models may incorrectly forecast future behavior, leading to potential losses on a cash flow and/or a mark-to-market basis. In addition, in unforeseen or certain low-probability scenarios (often involving a market disruption of some kind), such Models may produce unexpected results, which can result in losses for an investment product. Furthermore, the success of relying on or otherwise using Models depends on a number of factors, including the validity, accuracy and completeness of the Model’s development, implementation and maintenance, the Model’s assumptions, factors, algorithms and methodologies, and the accuracy and reliability of the supplied historical or other Data.

Models rely on, among other things, correct and complete Data inputs. If incorrect Data is entered into even a well-founded Model, the resulting information will be incorrect. However, even if Data is input correctly, Model prices may differ substantially from market prices, especially for securities with complex characteristics. Investments selected with the use of Models may perform differently than expected as a result of the design of the Model, inputs into the Model or other factors.

Additionally,

In addition, if investment products offered by Aegon’s affiliates experience Model errors or use erroneous Data, this could result in regulatory actions and/or litigation brought against Aegon and/or its affiliates.

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Issues with third party providers (outsourcing partners and suppliers), including events such as bankruptcy, disruption of services, poor performance, non performance,non-performance, or standards of service level agreements not upheld may adversely impact Aegon’s operational effectiveness and financial condition.

As Aegon continues to focus on reducing expenses necessary to support its business, a key part of its operating strategy has been to outsource certain services that are important to its business. Aegon outsources certain information technology, business processes, finance and actuarial services, investment management services and policy administration operations to third party providers and may do so increasingly in the future. If Aegon fails to maintain an effective outsourcing strategy or if third party providers do not provide the core administrative, operational, financial, and actuarial services Aegon requires and anticipates, or perform as contracted, such as compliance with applicable laws and regulations, or suffer an information

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security or data privacy breach, Aegon may not realize the desired operational improvements, cost efficiencies or customers might experience lower service levels. In addition, Aegon may not be able to find an adequate alternative service provider, and instead experience financial loss, reputational harm, operational difficulties, increased costs, a loss of business and other negative consequences potentially impactimpacting policy holders/customers. This could have a material adverse effect on Aegon’s financial condition. Aegon’s reliance on third party providers does not relieve Aegon of its responsibilities and requirements towardstoward its policy holders/customers. Any failure or negligence by such third-party providers in carrying out their contractual duties may result in Aegon being subjected to liability and litigation. Any litigation relating to such matters could be costly and time-consuming, and the outcome would be uncertain. Moreover, any adverse publicity arising from such litigation, even if the litigation is not successful, could adversely affect Aegon’s reputation and distribution of its products. Finally, Aegon’s ability to receive services from third party providers based in different countries might be impacted by political instability, cultural differences, regulatory requirements or policies inside or outside of the countries within which Aegon has operations. As a result, Aegon’s ability to conduct its business might be adversely affected.

Aegon may be unable to attract and retain personnel who are key to the business.

As a global financial services enterprise, Aegon relies, to a considerable extent, on the quality of local management and personnel in the various countries in which Aegon operates. The success of Aegon’s operations is dependent, among other things, on Aegon’s ability to attract and retain highly qualified professional personnel. The right talent for critical positions and availability of required capabilities determines Aegon’s ability to deliver on its strategic objectives. Competition for key personnel in most countries in which Aegon operates is intense. Aegon competes for talent in areas such as digital, information technology, with companies in the consumer products, technology, financial sectors. Aegon’s success attracting and retaining key personnel is very much dependent on the competitiveness of the compensation and benefits package and flexibility for employees in the market in which it competes and the work environment it offers.

In addition, Aegon may pursue acquisitions, divestitures, and other strategic initiatives from time to time, and such initiatives may disrupt Aegon’s business, impact its morale and ability to preserve its culture, and negatively affect its ability to attract and retain personnel. Such initiatives can also make it more difficult for Aegon to attract, retain and motivate senior management and employees, and achieve Aegon’s intended operational and financial goals.

Political, Regulatory and Supervisory risks

Aegon may be required to increase its technical provisions and/or hold higher amounts of regulatory capital as a result of changes in the regulatory environment or changes in rating agency analysis,analyses, which may impact Aegon’s financial condition and/or decrease Aegon’s returns on its products.

Prudential regulatory requirements such as requirements with respect to the calculation of technical provisions, capital requirements, the eligibility of own funds and the regulatory treatment of investments may change, whichchange. Such changes could require Aegon to increase technical provisions, hold higher amounts of regulatory capital and subject it to more stringent requirements with respect to investments and/or own funds. Important examples include changes to applicable capital requirements by the BMA, as group supervisor, or European Union and/or the interpretation thereof by the European Insurance and Occupational Pensions Authority (‘EIOPA’(“EIOPA”), the National Association of Insurance Commissioners (‘NAIC’(“NAIC”) in the USUnited States or US state regulators, Prudential Regulatory Authority (‘PRA’), the Bermuda Monetary Authority (‘BMA’) in Bermuda, or other local regulators in jurisdictions in which Aegon operates. Aegon cannot predict specific proposals that might be adopted, or what impact, if any, such proposals or, if enacted, such laws may have on its businesses, results of operations, or financial condition.

Prudential regulatory requirements mayapply not only apply to the individual entities in the Aegon group but may additionally apply at group level or apply to part of the Aegon group. Consequently, those requirements may have different, and more or less impact depending on their scope. Important examples of such requirements are Solvency II group supervision and consolidated requirements resulting from the Capital Requirements Directive (‘CRD’) and the Capital Requirements Regulation (‘CRR’), as applied to groups containing bank and/or asset management activities.

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The way such requirements are applied to groups like Aegon has an impact on the Aegon group’s capital position, as well as on the availability of capital at a group level. Changes to prudential regulatory requirements may have an impact on Aegon’s competitive position versus companies that are not subject to these or similar requirements at group level. As an example, as part ofAegon’s group solvency ratio and surplus under the Bermuda solvency framework will be broadly in line with that under the Solvency II Regime during a transition period until the end of 2027. This includes the method to translate Transamerica’s capital position into the group calculation, Aegon applies a specific methodology for its US insurance and reinsurance subsidiaries at group level, in addition to the requirements to which these subsidiaries are subject under their local prudential regime. This methodology is approved by Aegon’s group supervisor, De Nederlandsche Bank N.V. (‘DNB’), but remains subject to periodic review.solvency position. Changes to this methodology might have an impact on Aegon’s capital position, as calculated under Solvency II group requirements and/or the manner in which DNB otherwise exercises group supervision on Aegon, for example through more stringent requirements with respect to intra-group transactions, risk concentrations and reporting.

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position.

There are several important regulatory standards with respect to capital adequacy that apply to Aegon and are subject to change, which changes could impact Aegon’s financial condition and results:

Changes to BMA regulations such as the recent enhancements to the Regulatory Regime announced during 2023 will impact the Group Solvency Position after the end of the transition period agreed with the BMA;
On December 13, 2023 the European Council and the Parliament reached a provisional agreement on amendments to the Solvency II directive. During the transition period, impacts of amendments to the Solvency II directive would be principally felt in the Group’s EU subsidiaries, with second order impacts on Group in line with their materiality to the Group
◆•
On September 22, 2021 the European Commission has recently published a formal legislative proposal for amendments to the Solvency II Directive following an extensive technical advice by EIOPA to the European Commission. Proposals to amend the Solvency II Delegated Regulation, amend existing or introduce additional technical standards and/or EIOPA guidelines may follow in a later stage. The impact on Aegon’s financial position and results depends on the final form of the requirements, standards and guidelines;
◆
Following the end of the Brexit transition period on December 31, 2020, UK insurers are no longer directly subject to regulation under the EU’s Solvency II. However, the delegated regulation remained in place in the UK. The UK government held a consultation between the end of April and July 2022 as a part of its review ofis reviewing the insurance prudential regime in the UK,United Kingdom, with the stated aim to introduce a simpler, clearer, and much more tailored regime, comparedregime. As part of this review, the UK government and the UK prudential regulator implemented reforms to European Union’s Solvency II framework. Increasingper year-end 2023. These changes had a significant positive impact on the Solvency II ratio of Aegon UK’s insurance subsidiary. Any further regulatory divergence cannot be ruled out going forward which could further impact the UK capitalthat solvency ratio;
In the United States, the NAIC periodically updates various prudential requirements. The NAIC is currently embarking on a project to reconsider the RBC treatment of structured investments. These initiatives or other regulatory changes to capital factors may lead to higher risk-based capital requirements. In addition, the NAIC has constructed a US group capital calculation (“GCC”) using an RBC aggregation approach that would be used by regulators as a monitoring tool. The results of the GCC could impact the translation of US RBC in Aegon’s Group capital ratio.
◆
In the US, the NAIC periodically updates various prudential requirements. The NAIC is currently embarking on a project to reconsider the RBC treatment of structured investments. These initiatives or other regulatory changes to capital factors may lead to higher risk-based capital requirements. In addition, the NAIC has constructed a US group capital calculation (‘GCC’) using an RBC aggregation approach that would be used by regulators as a monitoring tool. The results of the GCC could impact the translation of RBC in the Group capital ratio for the United States; and
◆
Aegon utilizes affiliated captive insurance companies to manage risks of various insurance policies issued before the adoption of principle-based reserves, including universal life with secondary guarantees and level term life insurance. These structures have been utilized to finance regulatory reserves. To the extent that state insurance regulations restrict or require insurers to restate the valuation of the assets used to finance these structures, this could increase costs or reduce available capital.

In addition to requirements imposed by regulatory and/or supervisory authorities, rating agencies may incorporate higher capital thresholds into their quantitative analyses, thus requiring additional capital for Aegon GroupLtd. and/or its regulated subsidiaries to maintain their desired credit ratings.

The application of these capital standards and changes thereto could adversely affect Aegon’s ability to compete with other insurers that are not subject to those capital requirements. These requirements may also lead Aegon to engage in transactions that affect capital and constrain Aegon’s ability to pay dividends or repurchase its own shares. Furthermore, such requirements may constrain Aegon’s ability to provide guarantees and may increase the cost to Aegon of offering certain products, resulting in price increases, discontinuance of offering of certain products or reducing the amount of risk Aegon takes on. Aegon may also consider structural and other business alternatives in light of requirements or standards applicable with respect to systemic entities or activities associated with systemic risk. The impact of which the impactthese alternatives on shareholders cannot be predicted. For further detail on developments in these areas, reference is made tosee the section ‘Regulation“Regulation and supervision’supervision” section of Aegon’s Annual Report 2022.

2023.

Political or other instability in an impacted country or region, could adversely affect Aegon’s international business activities and financial condition.

Political developments such as, foreign investment restrictions, civil unrest, geopolitical tensions, or military action (e.g., the Russia - Ukraine war, and Israel - Hamas war), and new or evolving legal and regulatory requirements on business investment, hiring, migration, and global supply chains could have an adverse effect on Aegon businesses, results of operations, financial condition and liquidity in many ways, including disruption to its business operations in countries experiencing geopolitical tensions as well as increased costs associated with meeting customer needs in such regions, and impediments to its ability to execute strategic transactions.

Changes in accounting standards may affect Aegon’s reported results of operations and shareholders’ equity.

Aegon’s financial statements are prepared and presented in accordance with IFRS. Any future changes in these accounting standards may have a significant impact on Aegon’s reported results of operations, financial condition, shareholders’ equity and dividend. This includes the level and volatility of reported results of operations and shareholders’ equity. New accounting standards that have a significant impact on Aegon’s reported results, financial condition and shareholders’ equity include, but are not limited to, IFRS 9 – Financial Instruments and IFRS 17 – Insurance Contracts.

The IASB issued the complete version of IFRS 9 Financial Instruments in July 2014, which was endorsed by the European Union in November 2016. The IASB issued IFRS 17 Insurance Contracts in May 2017 and issued amendments to the standard in June 2020. Both IFRS 9 and IFRS 17 were endorsed by the European Union, except that the endorsement of IFRS 17 included

 

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  Sustainability information
   
   

an optional carve-out regarding the grouping of policies for certain contracts. For Aegon, both standards will apply across the group for reporting periods beginning on or after January 1, 2023.

Further detail on the impact from both the accounting standards IFRS 9 and IFRS 17 on Aegon are included in note 2 to the 20222023 consolidated financial statements of Aegon.

Local statutes, regulators, and decisions of supervisory and other authorities may limit the ability of Aegon’s subsidiaries and participations to pay dividends to Aegon N.V.Ltd., thereby limiting Aegon’s ability to make payments on debt obligations and operating expenses.

Aegon’s ability to make payments on debt obligations and pay operating expenses is dependent upon the receipt of dividends from subsidiaries and participations, in particular, but not limited to the US,United States, the Netherlands, and the UK.United Kingdom. Many of these entities are subject to regulatory restrictions that can limit the payment of dividends. In addition, local regulators in the countries where Aegon operates, supervisory authorities and other authorities (such as the BMA, EIOPA or the European Systemic Risk Board) may decide to impose or advise on further restrictions to dividend payments, or discourage such payments, specifically in exceptional and unpredictable economic circumstances. This may affect Aegon’s ability to satisfy its debt obligations or pay its operating expenses.

Risks of application of intervention measures may adversely affect Aegon’s business, results of operations and financial condition.

Bermuda’s Insurance Act 1978 has been amended to give the BMA powers to make rules for recovery planning, and the BMA is finalising requirements for recovery plans. In 2025, the BMA plans to publicly consult on the design and implementation of an insurance resolution regime in line with the standards of the IAIS.

The Dutch Act on Recovery & Resolution for Insurers (‘(“R&R Act’Act”) allows DNB to intervene in situations where a Dutch insurer or reinsurer is faced with financial difficulties. The powers under the R&R Act may also extend to the level of the Groupa group to which a Dutch insurer belongs, and to entities, in addition to insurance or reinsurance entities in the Netherlands, which are part of the Group,that group, such as Aegon N.V. until the completion of the a.s.r. transaction.

In addition, the R&R Act allows DNB to require a Dutch insurance or reinsurance company or a group to remove, ex ante, material impediments to effective resolution of a Dutch insurance or reinsurance undertaking (such as the revision of financing arrangements, the reduction of exposures, the transfer of assets, the termination or limitation of business activities, or the prohibition on starting certain business activities, changing the legal or operational structure of the Group,its group, or securing certain critical business lines). The use of this tool by DNB in relation to a.s.r. may adversely affect the value of Aegon’s business, results of operations and financial condition.

participation in a.s.r.

In September 2021, the European Commission published a formal proposal for a European Insurance Recovery & Resolution Directive, which will introduce minimum standards at European level for recovery & resolution frameworks in EU member states, such as the Dutch R&R Act. This might lead to the introduction of intervention tools, largely similar to those included in the R&R Act, also in other EU member states in whichSpain and Portugal where Aegon’s insurance subsidiaries and joint ventures are active.

Furthermore, to parts of the Aegon group, in particular Aegon Bank N.V., the framework of the EU Directive on the recovery and resolution of credit institutions and investment firms (the ‘Bank Recovery and Resolution Directive’) is applicable. The Bank Recovery and Resolution Directive contains provisions that where both Aegon Bank N.V. and Aegon N.V. fail or are likely to fail, could be applied to mixed financial holding companies such as Aegon N.V., including the right of bail-in of creditors. Following the completion of the a.s.r. transaction, Aegon Bank N.V. will no longer form part of the Aegon group and Aegon N.V. will no longer qualify as a mixed financial holding company.

Lastly, when the stability of the financial system is threatened by the condition of a financial institution, such as a.s.r., the Dutch Minister of Finance may intervene immediately, in which case legal or statutory provisions, applicable to the financial institution, might be superseded. The intervention measures available to the Minister of Finance include, in particular, the right to expropriate assets of the financial institution, as well as securities and/or other financial instruments issued by or with the cooperation of the financial institution. The exercise of this power may significantly impact the rights of the owners or holders of these assets, securities and/or financial instruments.

instruments, such as the rights of Aegon as shareholder of a.s.r.

There is a risk that the possible exercise of powers, or any anticipated exercise of powers, by the BMA, DNB or the MinistryDutch Minister of Finance could have a material adverse effect on the performance by the failing institution, including Aegon and a.s.r., of its obligations (of payment or otherwise) under contracts of any form, including the expropriation, write-off, write-down or conversion of securities such as shares, and debt obligations issued by the failing institution. The R&R Act and the regime of the Bank Recovery and Resolution Directive are described in the section ‘Regulation and supervision’ of Aegon’s Annual Report 2022.

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Legal and Compliance

The outcome of legal and arbitration proceedings and regulatory investigations and actions may adversely affect Aegon’s business, results of operations and financial condition.

Aegon faces significant risks of litigation as well as regulatory exams and investigations and actions relating to its and its subsidiaries’ businesses. Aegon is also subject to compliance with regulations applicable to it as a corporate entity.

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Insurance companies and their affiliated regulated entities are routinely the subject of litigation, investigation and regulatory activity by various governmental and enforcement authorities, individual claimants, and policyholder advocate groups in the jurisdictions in which Aegon does or did business, including the United States, the Netherlands, and the United Kingdom. These actions may involve issues including, but not limited to, employment or distribution relationships; operational and internal controls and processes; investment returns; sales practices; claims payments and practices; transparency and adequacy of product disclosures including regarding costs; environmental and climate change related matters; competition and antitrust matters; data privacy; information security; and intellectual property.

Aegon entities are subject to anti-money laundering laws and regulations, and these require Aegon to develop and implement customer identification and risk-based anti-money laundering programs, report suspicious activity, and maintain certain records. Further, Aegon entities are required to adhere to certain economic and trade sanctions programs, including EU, US, UK, and UN programs, that prohibit or restrict transactions with suspected persons, governments, and in certain circumstances, geographies. Changes in, or violations of, any of these laws or regulations may require additional compliance procedures, or result in enforcement proceedings, sanctions or penalties, which could have a material adverse effect on Aegon’s businesses, financial condition and result of operations.

Aegon entities are subject to anti-bribery legislation. Any violations of these or other anti-bribery laws by Aegon, its employees, subsidiaries or local agents, could have a material adverse effect on its businesses and reputation and result in substantial financial penalties or other sanctions.

Government and regulatory investigations may result in the institution of administrative, injunctive, or other proceedings and/or the imposition of monetary fines, penalties and/or disgorgement as well as other remedies, sanctions, damages and restitutionary amounts. Regulators may also seek changes to the way Aegon operates. In some cases, Aegon subsidiaries have modified business practices in response to inquiries.

Customers of certain of Aegon’s products bear significant investment risks with respect to those products which are affected by fluctuations in equity markets as well as interest rate movements. When investment returns disappoint, are volatile, or change due to changes in the market or other relevant conditions, customers may threaten or bring litigation against Aegon.

The existence of potential claims may remain unknown for long periods of time after the events giving rise to such claims. Determining the likelihood of exposure to Aegon and the extent of any such exposure may not be possible for long periods of time after Aegon becomes aware of such potential claims. Litigation exposure as well may develop over long periods of time; once litigation is initiated, it may be protracted and subject to multiple levels of appeal, which can lead to significant costs of defense, distraction, and other constraints.

In some jurisdictions, plaintiffs may seek recovery of very large or indeterminate amounts under enhanced liability legal theories or claims of bad faith, which can result in tort, punitive and/or statutory damages. Damages alleged may not be quantifiable or supportable or may have no relationship to economic losses or final awards. As a result, Aegon cannot predict the effect of litigation, investigations or other actions on its business.

Separate from financial loss, litigation, regulatory action, legislative changes or changes in public opinion may require Aegon to change its business practices, which could have a material adverse impact on Aegon’s businesses, results of operations, cash flows and financial condition. Disputes and investigations initiated by governmental entities and private parties may lead to orders or settlements, including payments or changes to business practices, even if Aegon believes the underlying claims are without merit.

Several US insurers, including Aegon subsidiaries, have been named in class actions as well as individual litigationslitigation relating to increases in monthly deduction rates (“MDR”)(MDR) on universal life products. Plaintiffs generally allege that the increases were made to recoup past losses rather than to cover the future costs of providing insurance coverage. Aegon’s subsidiary in the USUnited States has settled two such class actions that had been venued in the US District Court for the Central District of California.California federal court. The settlement

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in the first of these cases, approved in January 2019, arose from increases implemented in 2015 and 2016. Over 99% of affected policyholders participated in that settlement. While less than 1% of policyholders opted out of the settlement, they represented approximately 43% of the value of the settlement fund. 2015-2016.

In thea second case, Aegon’s subsidiary agreed to settle a class action lawsuit arising out of MDR increases in 2017 and 2018. The court approved that settlement onin September 16, 2020. Opt-outsA number of policyholders opted-out of the class settlements, with the settlements funds reduced proportionally. By the end of 2023, all material opt-out lawsuits and disputes from both cases had been resolved, and provisions adjusted accordingly.

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A third case was filed in October 2022 which relates to MDR increases in 2022 and 2023, that case is venued in Iowa federal court. At this time, Aegon is unable to reliably estimate the potential exposure in this case represent less than 7% of the value of the settlement fund. The settlement fund was reduced proportionally for opt outs. In 2022, settlements were reached with some of the remaining opt-out parties from the first of the settled class actions. The remaining opt-out cases and disputes are ongoing, and Aegon continues to hold a provision for the remaining opt-outs from the settlements that were approved by the court in 2019 and 2020. If this provision for these cases proves to be insufficient, then these cases could have an adverse effect on Aegon’s business, results of operations, and financial condition. In October 2022, a new putative class action was filed against one of Aegon’s subsidiaries challenging certain MDR increases, which began in 2022.

case.

In addition, insurance companies and their affiliated regulated entities may face lawsuits that threaten their business models. For example, several US-based Aegon subsidiaries are defendants in a putative class action alleging that the business model improperly characterizes distributorssubsidiaries mischaracterize agents as independent contractors instead of employees. While the subsidiaries disagree with these allegations and have vigorously defended the action, the parties have reached a settlement, subject to court approval, to avoid the cost, expense and risks associated with litigation. Litigation provisions have been adjusted to account for this pending resolution. Depending on the outcome, legal or regulatory claims like this lawsuit, along with similar claims against Transamerica subsidiaries and other companies as well as regulatory action,could result in significant settlements or judgments, and could necessitate a change in the businessdistribution model, and/which would be costly and could have a material impact on the financial results for that part of the Transamerica business. Depending on the outcome, legal or regulatory claims like this against Transamerica subsidiaries and other companies could result in significant settlements or judgments, and could necessitate a significant settlement or judgment.

Inchange in the Netherlands, unit linked products (beleggingsverzekeringen)distribution model, which would be costly and could have been controversial anda material impact on the target of litigation since 2005. Allegations include excessive cost, unfair terms, inadequate disclosure, and failure to perform as illustrated. Consumer groups have formed to address these issues and initiate mass claims against insurers. Regulators as well as the Dutch Parliament have been involved ever since, with the principal goal of achieving an equitable resolution. Aegon has made improvements across its product lines, including after settlements reached in 2009 with Stichting Woekerpolis and Stichting Verliespolis. Aegon also decided to reduce future policy costsfinancial result for the large majority of its unit-linked portfolio. Somethat part of the unit linked products are still involved in ongoing litigation. In September 2014, the consumer interest group Vereniging Woekerpolis.nl filed a claim against Aegon in court. The claim related to a range of unit linked products that Aegon sold in the past, including Aegon products involved in the earlier litigation. In June 2017 (and revised in December 2017), the court issued a verdict which upheld the principle that disclosures must be evaluated according to the standards at the time when the relevant products were placed in-force. Most of the claims of Vereniging Woekerpolis.nl were dismissed under this standard, although the court found that Aegon did not adequately disclose certain charges on a limited set of policies. The district court did not decide on the reasonableness of the cost levels and whether the previous compensation arrangements provide sufficient compensation. This court decision has been appealed by both parties. The Court of Appeal has stayed the class action proceedings during the preliminary proceedings at the Supreme Court in another class action of Vereniging Woekerpolis.nl against another insurance company. On February 11, 2022, the Supreme Court ruled in these preliminary proceedings. The answers to the preliminary questions regarding transparency and consent about costs and cost levels are a (re)confirmation of the EU Court ruling in a previous case against another Dutch insurance company. The legal debate will now continue at the level of the Court of Appeal, Aegon expects the uncertainty about the possible impact to continue for the foreseeable future. Aegon expects the claims and litigation, whether collective or on an individual basis and in court or through alternative dispute resolution mechanisms, on unit linked products to continue for the foreseeable future. Developments in similar cases against other Dutch insurers currently before regulators and courts may also affect Aegon.
Lawsuits have also been brought against providers of securities leasing products (aandelenlease producten). Although sales of securities leasing products ended more than a decade ago, litigation relating to these products has resurfaced.
In December 2020, Aegon reached an agreement on a settlement with Leaseproces B.V. for claims regarding Vliegwiel and Sprintplan customers represented by Leaseproces. The execution of the settlement was finalized in 2022. There are still some individual claims pending.
Transamerica business.

There is also an increasing risk of climate-related litigation. For example, plaintiffs have brought litigation against a variety of companies alleging that their actions have contributed to the increase of greenhouse gas emissions and resultant physical climate impacts or that such companies have been aware of the negative consequences of climate change for some time but failed to adequately disclose those risks to their investors or customers. While Aegon is not currently subject to any such litigation, certain company practices have been criticized by certain NGOs, including NGOs which have previously successfully brought climate litigation successfully against Dutch companies. While Aegon has engaged with NGOs to reduce the risk of litigation, it cannot guarantee that these will be successful.

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There can be no assurances that these matters will not ultimately result in a material adverse effect on Aegon’s business, results of operations, competitive position, reputation, and financial condition. For additional information on proceedings in which Aegon is involved, reference is made to the consolidated financial statements, note 45 ‘Commitments39 Commitments and contingencies’contingencies of Aegon’s Annual Report 2022.

2023.

Changes in government regulations in the jurisdictions in which Aegon operates may affect profitability and operating models.

Aegon’s regulated businesses, such as insurance banking, and asset management, are subject to comprehensive regulation and supervision. The primary purpose of such regulation is to protect clients of these regulated businesses (e.g. policyholders), rather than holders of Aegon shares, capital securities and debt instruments. Changes in existing laws and regulations may affect the way in which Aegon conducts its businesses, including its relationship with distributors of its products and other third parties and the structure of its relationship with employees. These changes may evolve over time and be open to interpretation and evolution through judicial and enforcement action. Such changes may also affect the profitability of its businesses and the products it offers. Additionally,In addition, the laws or regulations adopted or amended from time to time may impose greater restrictions on Aegon’s financial flexibility and operations or may result in higher costscosts. Such laws or regulations may relate to operate than currently is the case,topics including but not limited to financial and accounting requirements; information security, data privacy, transfer, storage, and usage requirements; modeling and other actuarial requirements and standards; and investments, reserves, and financial management.

Aegon may not be able to comply fully with, or obtain appropriate exemptions from, the wide variety of laws and regulations applicable to its businesses and legal entities. Failure to comply with or to obtain appropriate exemptions under any applicable laws and regulations may result in restrictions on Aegon’s ability to do business in one or more of the jurisdictions in which Aegon operates and may result in fines and other sanctions, which may have a material adverse effect on Aegon’s businesses, financial condition or results of operations.

Certain key regulatory proposals that could materially impact Aegon’s financial condition and results of operations include the European Commission’s proposal for amendments to the Solvency II framework, following the Solvency II 2020 review and the European Commission’s proposal for an Insurance Recovery & Resolution Directive. Both proposals serve (inter alia) as the implementation of the IAIS Holistic Framework for Systemic Risk in the Insurance Sector in the European Union and to some extent the IAIS Common Framework for the supervision of internationally active insurance groups (‘ComFrame’).

Regulatory changes include preventive and corrective supervisory measures that aim to address macro-prudential concerns, referred to in the Holistic Framework for Systemic Risk in the Insurance Sector, as adopted by the IAIS in November 2019 and in the European Commission’s proposal to amend the Solvency II Directive in the context of the Solvency II 2020 review, which includes macro-prudential tools, as well as in the European Commissions’ proposal for an Insurance Recovery & Resolution Directive, both of which were published on September 22, 2021.

In addition, regulatory changes may include measures that are addressed specifically to certain types of insurers or groups, in particular larger and internationally active groups. ComFrame, which was adopted in November 2019 by the IAIS, establishes minimum supervisory standards and guidance on the effective group-wide supervision of Internationally Active Insurance Groups (IAIGs) and builds on the IAIS Insurance Core Principles (a set of principles that is applicable to all insurers). Therefore, IAIGs may be subject to additional standards that other insurers or other insurance groups are not subject to. In Europe, such additional standards would be introduced throughPursuant to section 27H of the Solvency II framework.
On May 12, 2020, DNB announced, that itInsurance Act 1978, the BMA has identified Aegon as one of the two IAIGs in the Netherlands, based on the size and international activities of the Aegon group. Although generally large insurance groups are subject to a high level of supervisory scrutiny by DNB, thus far no requirements have been introduced in the Netherlands or by DNB that have specifically been targeted at IAIGs.
IAIG.

The implementation of ComFrame and the holistic framework, as well as other requirements aimed to address macro-prudential or concerns or concerns related to its capacity as internationally active group, may cause Aegon to engage

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in transactions that affect capital or constrain Aegon’s ability to pay dividends or repurchase its own shares. Furthermore, such requirements may constrain Aegon’s ability to provide guarantees and increase the cost to Aegon of offering certain products resulting in price increases, leading to the discontinuance of offering of certain products or reducing the amount of risk Aegon takes on. Aegon may consider structural and other business alternatives in light of requirements or standards applicable with respect to systemic entities or activities, of which the impact on shareholders cannot be predicted.

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As referred

During the transition period to above, the Solvency II 2020 review covers a broad range of topics of the Solvency II framework.Bermuda solvency requirements for Aegon, at Group level is (partly) and Aegon’s EU insurance subsidiaries are, subject to the Solvency II framework. If the European Commission’s Directive proposal is taken over by the European co-legislators without material changes, and depending on the scopeImpacts of further amendments to the Solvency II Delegated Regulation,directive would be principally felt in the related technical standards and EIOPA guidelines (that might be necessary as a consequence of changesGroup’s EU subsidiaries, with second order impacts on Group in line with their materiality to the Solvency II Directive), the amendments to the Solvency II framework may have a significant impact on the activities, profitability and financial condition of Aegon and Aegon’s subsidiaries in the European Union.

The potential impact of the regulatory developments discussed above is expected to be significantly affected by the completion of the a.s.r. transaction.
In the United States, the Patient Protection and Affordable Care Act (PPACA) adopted in 2010 has been challenged in whole or in part since its adoption. Changes to the PPACA and to other laws and regulations impacting the US health insurance industry could have a material adverse effect on Aegon’s financial condition, results of operations, and competitive position. The extent to which employers or individuals may discontinue their purchase of supplemental health insurance products as a result of any such changes may significantly impact Transamerica’s supplemental health insurance products business. The extent of any such changes or the corresponding impact on Transamerica’s supplemental health insurance business cannot be determined at this time.
Group.

On June 5, 2019, the SEC adopted Regulation Best Interest (Regulation BI), a new rule requiring broker-dealers and investment advisers to recommend only those financial products to their customers that are in their customers’ best interest, and to clearly identify any potential conflicts of interest and financial incentives the broker-dealer may have in connection with the sale of such products. In addition,On October 31, 2023, the U.S. Department of Labor (DOL) has announced its expectation that it will proceed(“DOL”) proposed a regulation titled “Retirement Security Rule: Definition of an Investment Advice Fiduciary” (the “Proposed Fiduciary Rule”) and proposed amendments to propose yet another iterationseveral prohibited transaction exemptions. With these proposals, the DOL aims to expand the criteria for determining who would be an “investment advice fiduciary” for purposes of investment advice guidance underSection 3(21) of the Employee Retirement Income Security Act of 1974, as amended (ERISA), possibly one even more rigorous than itsand force many such fiduciaries to comply with Prohibited Transaction Exemption 2020-02 for fee and affiliated investment conflicts. The Proposed Fiduciary Rule, if finalized, would modify the “five-part test” for determining fiduciary status that has been in effect since 1975. The Proposed Fiduciary Rule is the third attempt since 2010 by the DOL to replace the five-part test. The most recent attempt was an updated regulatory definition of investment advice fiduciary issued on April 8, 2016, Rule thatwhich was vacated in its entirety by the US Court of Appeals for the Fifth Circuit Courtin 2018. The comment period for the Proposed Fiduciary Rule ended on January 2, 2024. The 2023 Proposed Fiduciary Rule has generated considerable controversy and is the subject of Appeals.

industry efforts to advocate for changes to the proposed rule. The success or failure of these efforts cannot be predicted.

If implemented without significant changes, the Proposed Fiduciary Rule could have a material adverse impact with regard to Aegon Americas’ retirement plan and annuity businesses, including by increasing the cost and administrative burdens with respect to those Aegon entities that provide services to and through IRAs and defined contribution plans. Additionally, implementation of the rule as proposed could create challenges to the operating model of these businesses. Until a final rule is issued, it is not possible to quantify the impact of the proposal on the Company’s business or the challenges that it may present.

The foregoing regulations and proposed regulations, along with any future regulations by the federal government and/or states that impose new, heightened, conflicting or differing standards of care or restrictions on broker-dealers, insurance agents, or advisers, could have a material impact on annuity sales and, as applicable, life insurance sales.

Changes in pension and employee benefit regulation, social security regulation, financial services regulation, taxation and the regulation of securities products and transactions, and regulation of employee workplace standards may adversely affect Aegon’s ability to sell new policies or claims exposure on existing policies.

The introduction of state-run retirement programs for private-sector employees in the United States could directly compete with private-market retirement plans. More than 30 US states have considered legislation that would establish state-run plans but fewer than 10 states have enacted legislation, and among those, even fewer have implemented them. Federal ERISA law raises questions as to whether such plans are pre-empted by ERISA.

In general, changes in laws and regulations may materially increase Aegon’s direct and indirect compliance costs and other ongoing business expenses and have a material adverse effect on Aegon’s businesses, results of operations or financial condition.

Increased attention to ESG matters may subject Aegon to additional costs or risks or otherwise adversely impact Aegon businesses. Aegon may not be able to meet evolving ESG standards and requirements or may fail to meet its sustainability and ESG-related goals and targets.

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Companies across industries, including insurance companies, asset managers, and banks are facing increasing scrutiny from a variety of stakeholders related to their ESG and sustainability practices. Such companies are expected and/or required to engage in certain initiatives and/or disclose the extent to which their activities and products, including their investments and the activities of the companies they invest in, meet ESG standards which may be set by regulators, sustainability-focused NGOs, or other third parties. For example, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on ESG matters, and such ratings are used by some investors to inform their investment or voting decisions. These requirements and standards are continuously and rapidly evolving and have not yet crystalized.-, which may include different standards accross various jurisdictions. While Aegon strives to meet applicable ESG standards to the best of its abilities, it may not be successful in doing so, due to the dynamic nature and evolution of these standards and might not be able to anticipate

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in all respects the further evolution of such standards. This may have an impact on its reputation, products and sales, as well as on its activities and investments, including long term investments. Compliance with these standards may require it to incur substantial costs, including but not limited to the gathering, monitoring, and disclosure of relevant information. Aegon may face additional costs in the event its efforts do not meet expectations. In addition, as part of its corporate efforts, Aegon has adopted certain sustainability and ESG-related goals, targets and metrics, including in relation to greenhouse gas emissions reduction, inclusion and diversity and inclusion targetsgoals and other sustainability initiatives. However, such initiatives may be costly or subject to numerous conditions that are outside its control, and the Company cannot guarantee that they will have the desired effect. In addition, we may be subject to competing demands from different investors and other stakeholder groups with divergent views on ESG matters, including the role of ESG in the investment process. Investors may decide not to invest in our stock or provide their funds for us to manage if they disagree with our ESG and I&D strategies. In addition, there has been increased regulatory focus on ESG-related disclosures including whether they may be inaccurate or misleading. If Aegon cannot meet these goals fully or on time, or if it is perceived to have not sufficiently addressed ESG matters, the Company may face reputational damage, litigation or unexpected costs. Reputational impacts may also impact Aegon’s ability to recruit and retain customers and employees.

Moreover, while Aegon may createcreates and publishpublishes disclosures, some of which are voluntary disclosures regarding ESG matters from time to time, many of these statements are based on hypothetical expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith. Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of any established single approach to identifying, measuring and reporting on many ESG matters. Such disclosures may also be at least partially reliant on third-party information that Aegon has not independently verified or cannot be independently verified. In addition, Aegon expectsvarious policymakers have adopted, or are considering adopting, requirements for extensive disclosures on climate-related and/or other ESG information, which may require us to incur significant additional costs to comply, including the implementation of significant new internal controls on matters historically not subject to such controls, and impose increased oversight obligations on our management and board. Simultaneously, there will likely be increasing levels of regulation, disclosure-relatedare efforts by some stakeholders to reduce companies’ efforts on certain ESG-related matters. Both advocates and otherwise, with respectopponents to certain ESG matters are increasingly resorting to a range of activism forms, including media campaigns and increased regulationlitigation, to advance their perspectives. To the extent we are subject to such activism, it may require us to incur costs or otherwise adversely impact our business. This and other stakeholder expectations will likely lead to increased compliance costs as well as scrutiny that could heighten all of the risks identified in this risk factor. Additionally,In addition, there has been a trend in certain states of the U.S. to constrain the use of ESG-related considerations by financial institutions in business decision-making. Balancing these countervailing expectations may subject us to additional costs, require us to forego certain business opportunities, or otherwise adversely impact our business or results of operations. Such ESG matters may also impact Aegon’s suppliers or customers, which may adversely impact its business, financial condition, or results of operations.

Tax risks may have a material adverse effect on Aegon’s businesses, profits, capital position, and financial condition.

Tax risks are risks associated with the organization’s tax practices that might lead to a negative effect on the goals of the organization and to financial or reputational damage. The majority of tax risks relate to both Aegon’s products and its businesses. Types of tax risks vary from changes in legislation, compliance risks, reporting risks, or a perception of aggressive tax practices.

The first type of risk may materialize due to (i) changes in tax laws, (ii) changes in interpretation of tax laws, (iii) later jurisprudence or case law, or (iv) the introduction of new taxes or tax laws. These tax risks include for example the risk of changes in tax rates, changes in loss carry-over rules and changes in customer taxation rules. Most of Aegon’s insurance products enjoy certain policyholder tax advantages. This permits, for example, the build-up of earnings on gross premium amounts with deferred taxation, if any, when the accumulated earnings are actually paid to Aegon’s customers. Legislators have, from time to time, considered legislation that may make Aegon’s products less attractive to consumers, including legislation that would reduce or eliminate this deferral of taxation. This may have an impact on insurance products and sales. Non-complianceNon-

 432  |  Annual Report on Form 20-F 2023

Risk factors Aegon Ltd. 

compliance is caused by inaccurate, incomplete, and/or not timely reports of tax information, filings and/or payments required by regulatory agencies. Materialization of this risk could lead to increased tax charges, penalties, and interest.

Failure to manage reporting risks may lead to tax positions in financial reporting that do not represent a true and fair view.

The risk of the perception of aggressive tax practices may lead to reputational impact and could negatively affect Aegon’s businessesbusinesses. Overall, tax risks may have a material adverse effect on Aegon’s businesses, profits, capital position, and financial condition.

Judgments

Aegon is a Bermuda company and it may be difficult to effect service of US courts may notprocess on, or enforce judgments against the company or its Directors and executive officers in the United States.

Aegon is incorporated under the laws of Bermuda, and the rights of its shareholders will be enforceable againstgoverned by Bermuda law and its memorandum of continuance and bye-laws. In addition, certain of our Directors and officers reside outside the United States. Aegon in Dutch courts.

Therehas been advised by Bermuda counsel that there is no treaty in force between the United StatesU.S. and the NetherlandsBermuda providing for the reciprocal recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. JudgmentsAs a result, it may be difficult for investors to effect service of USprocess on those persons in the United States or to enforce in the United States judgments obtained in U.S. courts includingagainst us or those predicatedpersons based on the civil liability provisions of the USU.S. securities laws. It is doubtful whether courts in Bermuda will enforce judgments obtained in other jurisdictions, including the United States, against Aegon or its Directors or officers under the securities laws of those jurisdictions or entertain actions in Bermuda against Aegon or its Directors or officers under the securities laws of other jurisdictions.

In addition to and irrespective of jurisdictional issues, the Bermuda courts will not enforce a U.S. federal securities law that is either penal or contrary to public policy in Bermuda. It is the advice of our Bermuda counsel that an action brought pursuant to a public or penal law, the purpose of which is the enforcement of a sanction, power or right at the instance of the state in its sovereign capacity, will not be entertained by a Bermuda court. Certain remedies available under the laws of U.S. jurisdictions, including certain remedies under U.S. federal securities laws, maywould not be available under Bermuda law or enforceable in Dutch courts. Therefore, Aegon’s investors that obtain a judgmentBermuda court, as they would be contrary to Bermuda public policy. Further, no claim may be brought in Bermuda against Aegon or its Directors and officers in the United Statesfirst instance for violation of U.S. federal securities laws because these laws have no extraterritorial jurisdiction under Bermuda law and do not have force of law in Bermuda. A Bermuda court may, not be able to requirehowever, impose civil liability on Aegon to payor its Directors and officers if the amount of the judgment unless a competent court in the Netherlands gives binding effect to the judgment, or, if possible, the US investor has brought a successful original actionfacts alleged in a Dutch court. Therefore, investors are requiredcomplaint constitute or give rise to undertake morea cause of action in order to enforce a US court judgment than in relation to any US counterparty.

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Additional information
Risk factors Aegon N.V.    
under Bermuda law.

Aegon may not manage risks associated with the reform and replacement of benchmark rates effectively.

Aegon recognizes that the reform of Interbank Offered Rates (‘IBORs’(“IBORs”) and any transition to replacement rates entail risks for all its businesses across its assets and liabilities. These risks include, but are not limited to:

◆

Financial risks, arising from any changes in the valuation of financial instruments linked to benchmark rates, such as derivatives and floating rate notes, issued by, or invested in by Aegon;
◆
Pricing risks, as changes to benchmark indices could impact pricing mechanisms on some funding instruments or investments;
◆
Operational risks, due to the potential requirement to adapt informational technology systems, trade reporting infrastructure and operational processes; and
◆
Conduct risks, relating to communication regarding potential impact on Aegon’s customers, and engagement during the transition period.
The EUR 2 billion syndicated revolving credit facility and floating rate notes, issued by, or invested in by Aegon;

Pricing risks, as changes to benchmark indices could impact pricing mechanisms on some funding instruments or investments; and

Conduct risks, relating to communication regarding potential impact on Aegon’s customers, and engagement during the USD 2 billion Letter of Credit “LOC” facility have been updated in order to prepare for the cessation of the relevant benchmark rates.transition period.
The United Kingdom’s Financial Conduct Authority (the “FCA”), which regulates London Interbank Offered Rate (“LIBOR”), has announced that the publication of USD LIBOR on the current basis would cease and no longer be representative immediately after June 30th 2023. All sterling, euro, Swiss franc, Japanese yen and one-week and two-month USD LIBORs had already ceased to exist at the end of 2021. If Aegon adopts alternative benchmarks for its current or future debt, interest rates on its debt obligations may be adversely affected.

Aegon may not be able to protect its intellectual property and may be subject to infringement claims.

Aegon relies on a combination of contractual rights with third parties and copyright, trademark, patent, and trade secret laws to establish and protect Aegon’s intellectual property. Third parties may infringe on or misappropriate Aegon’s intellectual property, and it is possible that third parties may claim that Aegon has infringed on or misappropriated their intellectual property rights. Any resulting proceedings in which Aegon would have to enforce and protect its intellectual property or defend itself against a claim of infringement of a third party’s intellectual property, may require significant effort and resources and may not prove successful. As a result of any proceeding in which Aegon would have to enforce and protect its intellectual property, Aegon may lose intellectual property protection, which may have a material adverse effect on Aegon’s businesses, results of operations, financial condition and Aegon’s ability to compete and pursue future business opportunities. As a result of any proceeding in which Aegon would have to defend itself against a claim of infringement of a third-party’s intellectual property, Aegon may be required to pay damages and provide injunctive relief, which may have a material adverse effect on Aegon’s businesses, results of operations and financial condition.

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LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

Risks relating to Aegon’s common shares

Aegon’s share price could be volatile and could drop unexpectedly, and investors may not be able to resell Aegon’s common shares at or above the price paid.

The price at which Aegon’s common shares trade is influenced by many factors, some of which are specific to Aegon and Aegon’s operations, and some of which are related to the insurance industry and equity markets in general. As a result of these factors, investors may not be able to resell their common shares at or above the price paid for them. In particular, the following factors, in addition to other risk factors described in this section, may have a material impact on the market price of Aegon’s common shares:

◆

Investor perception of Aegon as a company;
◆
Actual or anticipated fluctuations in Aegon’s results of operations;
◆
Announcements of intended acquisitions, disposals (and related approvals or refusals from governmental or regulatory authorities) or financings, or speculation about such acquisitions, disposals (and related approvals or refusals from governmental or regulatory authorities) or financings;
◆
Changes in Aegon’s dividend policy, which may result from changes in Aegon’s cash flow and capital position;
◆
Offering of additional shares by Aegon or sales of blocks of Aegon’s shares by significant shareholders, including Vereniging Aegon;
◆
A downgrade or rumored downgrade of Aegon’s credit or financial strength ratings, including placement on credit watch;
◆
Potential litigation or regulatory actions involving Aegon or the insurance industry in general;
◆
Changes in financial estimates and recommendations by securities research analysts;
◆
Fluctuations in capital markets, including foreign exchange rates, interest rates and equity markets;
◆
The performance of other companies in the insurance sector;
Aegon Annual Report on Form 20-F 2022  |  381
Table of ContentsAegon as a company;

Actual or anticipated fluctuations in Aegon’s results of operations;

Announcements of intended acquisitions, disposals (and related approvals or refusals from governmental or regulatory authorities) or financings, or speculation about such acquisitions, disposals (and related approvals or refusals from governmental or regulatory authorities) or financings;

Changes in Aegon’s dividend policy, which may result from changes in Aegon’s cash flow and capital position;

Offering of additional shares by Aegon or sales of blocks of Aegon’s shares by significant shareholders, including Vereniging Aegon;

About AegonGovernance and risk management
Financial information
Non-financial information
A downgrade or rumored downgrade of Aegon’s credit or financial strength ratings, including placement on credit watch;

Potential litigation or regulatory actions involving Aegon or the insurance industry in general;

Changes in financial estimates and recommendations by securities research analysts;

Fluctuations in capital markets, including foreign exchange rates, interest rates and equity markets;

The performance of other companies in the insurance sector;

Regulatory developments in the United States, the Netherlands, the United Kingdom, Bermuda and other countries in which Aegon operates;

International political and economic conditions, including the effects of terrorist attacks, military operations and other developments stemming from such events, and the uncertainty related to these developments;

News or analyst reports related to markets or industries in which Aegon operates; and

General insurance market conditions.
◆
Regulatory developments in the United States, the Netherlands, the United Kingdom, and other countries in which Aegon operates;
◆
International political and economic conditions, including the effects of terrorist attacks, military operations and other developments stemming from such events, and the uncertainty related to these developments;
◆
News or analyst reports related to markets or industries in which Aegon operates; and
◆
General insurance market conditions.

Aegon and its significant shareholders may offer additional common shares in the future, and these and other sales may adversely affect the market price of the outstanding common shares.

Aegon may decide to offer additional common shares in the future, for example, to strengthen Aegon’s capital position in response to regulatory changes or to support an acquisition.

An additional offering of common shares by Aegon, the restructuring of Aegon’s share capital, the sales of common shares by significant shareholders, or the public perception that an offering or such sales may occur, may have an adverse effect on the market price of Aegon’s common shares.

Vereniging Aegon, Aegon’s major shareholder, holds a large percentage of the voting shares and therefore has significant influence over Aegon’s corporate actions.

Vereniging Aegon holds 32.6% of Aegon’s voting shares. For details on the shareholding of Vereniging Aegon, its developments, the Amended 1983 Merger Agreement and the Voting Rights Agreement, please see the section Major shareholders section on pages 320380 through 322383 of the Annual Report 2022.

2023.

Following the 1983 Amended Merger Agreement between Aegon N.V.Ltd. and Vereniging Aegon, Vereniging Aegon has a call option on common shares B, which Vereniging Aegon may exercise to keep or restore its total stake at 32.6%, irrespective of the circumstances which cause the total shareholding to be or become lower than 32.6%.

As a matter of Dutch corporate

Under Bermuda law and Aegon’s bye-laws, common shares and common shares B offer equal full voting rights, as they have equal nominal values (EUR 0.12). The financial rights attached to a common share B are 1/40 of the financial rights attached to a common share. The Voting Rights Agreement between Aegon N.V.Ltd. and Vereniging Aegon ensures that under normal circumstances, i.e. except in the event of a Special Cause, Vereniging Aegon will no longer be able to exercise more votes than is proportionate to the financial rights represented by its shares. This means that in the absence of a Special Cause, Vereniging Aegon will cast one vote for every common share it holds and one vote only for every 40 common shares B. It is at the sole discretion of Vereniging Aegon if a Special Cause has occurred. A Special Cause includes the acquisition of a 15% interest in Aegon N.V.Ltd., a tender offer for Aegon N.V.Ltd. shares or a proposed business combination by any person or group or persons, whether individually or as a group, other than in a transaction approved by the ExecutiveCEO and Board and the Supervisory Board.of Directors. In the event

 434  |  Annual Report on Form 20-F 2023

Risk factors Aegon Ltd. 

of a Special Cause, Vereniging Aegon’s voting rights will increase to 32.6% for up to six months. Consequently, Vereniging Aegon may have substantial influence on the outcome of corporate actions requiring shareholder approval.

Currency fluctuations may adversely affect the trading prices of Aegon’s common shares and the value of any cash distributions made.

Since Aegon’s common shares listed on Euronext Amsterdam are quoted in euros and Aegon’s common shares listed on NYSE New York are quoted in US dollars, fluctuations in exchange rates between the euro and the US dollar may affect the value of Aegon’s common shares. In addition, Aegon declares cash dividends in euros, but pays cash dividends, if any, on Aegon’s New York registry Shares in US dollars based on an exchange rate set the business day following the shareholder meeting approving the dividend. As a result, fluctuations in exchange rates may affect the US dollar value of any cash dividends paid.

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Additional information
Risk factors Aegon N.V.    

Perpetual Contingent Convertible Securities (or other securities that permit or require Aegon to satisfy its obligations by issuing common shares) that Aegon may issue could influence the market price for Aegon’s common shares.

In April 2019, Aegon issued EUR 500 million Perpetual Contingent Convertible Securities (‘PCCS’(“PCCS”). Upon the occurrence of a conversion trigger event the PCCS will be converted into common shares of the Company at the prevailing conversion price. A conversion trigger event shall occur if at any time: (i) the amount of eligible own funds items eligible to cover the Solvency Capital Requirement is equal to or less than 75% of the Solvency Capital Requirement; (ii) the amount of own fund items eligible to cover the Minimum Capital Requirement is equal to or less than the Minimum Capital Requirement; (iii) in case the Minimum Capital Requirement is an event, such event occurs; or (iv) a breach of the Solvency Capital Requirement has occurred and such breach has not been remedied within a period of three months from the date on which the breach was first observed. The conversion price was set at EUR 2.994 per common share and will be adjusted upon occurrence of dilutive events like stock splits, extraordinary dividends or stock dividends, rights issues and others. A reduction of the conversion price will result in an increase in the number of common shares to be issued.

The PCCS and other convertible securities may influence the market for Aegon’s common shares. For example, the price of Aegon’s common shares may become more volatile and may be depressed by the issue of common shares upon conversion of the PCCS and/or any convertible securities or by the acceleration by investors of any convertible securities (or other such securities) that Aegon may have issued. Negative price developments may also result from hedging or arbitrage trading activity by holders of such convertible securities that may develop involving such convertible securities (or other such securities) and Aegon’s common shares. Any such developments may negatively affect the value of Aegon’s common shares.

 

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About AegonGovernance and risk management
Financial information
Non-financial information
   

Compliance with regulations

Disclosure pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012

Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 requires Aegon to disclose whether Aegon N.V.Ltd. or any of its affiliates have knowingly engaged during the calendar year in certain activities, transactions or dealings relating to Iran or with designated natural persons or entities sanctioned under programs relating to terrorism or the proliferation of weapons of mass destruction. The amounts in this section are reported in EUR 1 or GBP 1.

In the UK, Aegon maintained a limited number of plans that are reportable under Section 219. The non-US based subsidiaries of Aegon N.V.Ltd. do operate in compliance with applicable laws and regulations of the jurisdictions where they conduct business.

Aegon UK has five active UK resident customers who have one active Individual Pension Plan (IPP). Aegon UK did have one additional UK resident customer who held an Individual Pension Plan (IPP) until May 23, 2022. Two.One of the active customers received contributions into their plansplan in 20222023 as employeesan employee of a UK-based British registered charity that appears on the Specially Designated Nationals (SDN) List with the identifier Specially Designated Global Terrorist (SDGT); the charity made contributions to the pensions. Threepension. Four of these customers had previously received contributions into their plans as employees of the same entity prior to 20222023 and Aegon now deems these threefour customers are no longer employed by the entity, also one of the two active customers who did receive contributions in 2022 is now also deemed as no longer employed by the entity as the contributions ceased on April 14, 2022.entity. Aegon does not hold a direct relationship with this charity, the customers are not SDNs; the charity does not own, benefit from, or have control over the pensions. All payments have been paid in UK Pounds from a UK bank account.

The pensions are managed in line with applicable legislation and regulation in the UK and the charity is not subject to sanctions in the UK or EU. The relationships are under close ongoing review. IPP #1 has a value of GBP 8,219361,590 as of January 31, 2023, and monthly contributions of GBP 18.61 were received until the last payment of April 14, 2022. IPP #2 has a value of GBP 308,477 as of January 31, 2023,16, 2024, and monthly contributions of GBP 527.91 are being received. IPP #2 has a value of GBP 10,052 as of January 16, 2024, and no contributions are being received. IPP #3 has a value of GBP 62,19272,387 as of January 31, 2023,16, 2024, and no contributions are being received. IPP #4 has a value of GBP 13,58916,619 as of January 31, 2023,16, 2024, and no contributions are being received. IPP #5 has a value of GBP 14,40817,624 as of January 31, 2023,16, 2024, and no contributions are being received. IPP #6 has no value as it was as the customer surrendered their plan on May 23, 2023, GBP 14,766 was paid to the customer and a tax of GBP 4,918 was paid to the UK HMRC by Aegon UK. The related annual net profit arising from these contracts is difficult to calculate with precision but is estimated to be no greater than GBP 12,766.

14,348.

Aegon N.V.Ltd. is not aware of any other activity, transaction or dealing by itself or any of its affiliates during the fiscal year that is disclosable in this report under Section 13(r) of the Exchange Act. As of the date of this report, Aegon N.V.Ltd. does not anticipate that any activity, transaction or dealing that may be disclosable will be conducted during the fiscal year ending March 31, 2023,2024, except as described above.

 

 436  |  Annual Report on Form 20-F 2023

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Additional information

Property, plant and equipment 

   
   

Property, plant and equipment

Aegon owns 5 offices located in Cedar Rapids, United States with a total square footage of 0.6 million. Aegon also leases space for various offices located throughout the United States under long-term leases with a total square footage of 0.6 million. Aegon’s principal offices in the United States are located in Baltimore, MD; Denver, CO; Cedar Rapids, IA; Atlanta,Johns Creek, GA; Baltimore, MD;Knoxville, TN; Harrison, NY, St. Petersburg, FL and Plano, TX.

Other

In Canada, Aegon leases space for various offices under long-term leases with a total square footage of 17.5 thousand. Aegon’s principal offices owned by Aegon are located in The HagueToronto, ON.

Aegon leases its headquarters in the Netherlands (The Hague) under a short term lease. Also, Aegon leases office space in Hungary (budapest) and Groningen, The Netherlands, and Budapest, Hungary.Bermuda (Hamilton) under long term leases. Aegon Spain owns some commercial offices while its headquarters and leasessome other commercial offices in the Netherlands (Amsterdam, Leeuwarden and Zaandam),are leased under long term leases. Other offices in the United Kingdom and in Spain underare long-term leases. Aegon believes that its properties are adequate to meet its current needs.

 

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About AegonGovernance and risk management
Financial information
Non-financial information
   

Employees and labor relations

A break-down of the number of employees by segments is provided below:

      
2022
     2021     2020 
Americas
     6,153        7,675      7,960 
The Netherlands
     4,567      3,855      3,930 
United Kingdom
     2,621      2,476      2,307 
International
     4,281      6,590      6,598 
Asset Management
     1,464      1,675      1,527 
    
 
19,087
 
    
 
22,271
 
    
 
22,322
 
Of which Aegon’s share of employees in joint ventures and associates
     3,507      4,228      4,193 

    2023   2022 

Americas

   6,967    6,153 

United Kingdom

   2,591    2,621 

International

   3,654    4,281 

Asset Management

   1,409    1,464 

Holdings and other activities

   1,037    958 
      15,658       15,478 

Of which Aegon’s share of employees in joint ventures and associates

   3,204    3,507 

Note that employees who work at Aegon’s Corporate Center are included in numbers of the countrysegment in which they are located.

All

After the divestment of Aegon’sAegon NL, the remaining employees in the Netherlands other thanare employed by a new entity named Aegon Employees Netherlands B.V. All its employees, excluding senior management, arecontinue to be covered by the collective labor agreement of Aegon Nederland N.V. Aegon, the unions and the Dutch Central Works Council are working closely together in a co-creation steering group which prepares new agreements and tracks the implementation thereof. The current collective labor agreementthat has a duration of two years, from July 1, 2022 up to and including June 30, 2024. Aegon has experienced no significant strike, work stoppage or labor disputeThe European Works Council is consulted on decisions that affect employees in recent years.

multiple European Economic Area countries.

Under Dutch law, members of the Central Works Council responsible for Aegon in the Netherlands are elected by the employees of Aegon the Netherlands’ employees. The Central Works Council has certain defined powers at the level of the Dutch subsidiary company Aegon Nederland N.V., including the right to make non-binding recommendations for appointments to its Supervisory Board and the right to enter objections against proposals for appointments to that Supervisory Board.

Employees Netherlands B.V.

See note 14 Commissions and13 Other operating expenses of the Notes to the consolidated financial statements of this Annual Report on Form 20-F for details on employee expenses.

 

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Additional information
Dividend

Group dividend policy 

   
   

Dividend

Group dividend policy

Under Dutch law and Aegon’s articles of association, holders of Aegon’s common shares are entitled to dividends paid out of the profits remaining, if any, after the creation of a reserve account. Aegon’s Executive Board may determine the dividend payment date and the dividend record date for the common shares, which may vary for the various kinds of registered shares. Aegon’s Executive Board, with the approval of Aegon’s Supervisory Board, may also determine the currency or currencies in which the dividends will be paid. Aegon may make one or more interim distributions to the holders of common shares.

Aegon aims to pay out a sustainable dividend to allow equity investors to share in Aegon’s performance, which can grow over time if Aegon’s performance so allows. Aegon’s plans for returning capital to shareholders are based onon: the actual and expected capital position of its operating units, the expected levels of capital generation and free cash flow, and the expected allocation of capital to invest in Aegon’s strategy and in the quality of its balance sheet.

Capital remittances from Aegon’s local units

After investment in new business to generate organic growth, the expected capital generation in Aegon’s operating subsidiariesunits is available for distribution to the holding company,Company, while maintaining a capital and liquidity position in the operating subsidiariesunits in line with Aegon’s capital management and liquidity risk policies in addition to adhering to local regulatory and statutory requirements and restrictions.

Prior to any remittances, an assessment has to be performed.

Capital return to shareholders

Aegon uses cash flows from its operating subsidiariesunits to pay unallocated holding expenses, including funding costs. The remaining cash flow is available to execute Aegon’s strategy and to fund dividends on its shares, subject to maintaining the Holding’sCompany’s capital and liquidity in line with its capital management and liquidity risk policies. Aegon’s Executive Board

Aegon takes into account the applicable laws, the actual and expected capital positionpositions of its operating units, Cash Capital at Holding balances, leverage ratios and strategic considerations when declaring or proposing dividends on common shares. Depending on circumstances, future prospects and other considerations, Aegon’s Executive Board of Directors has discretion to deviate from the aforementioned capital and liquidity measures.

Under normal circumstances,

While Aegon would expectuses dividend as the primary means to declaredistribute capital to Aegon’s shareholders, share buy-back programs are also recognized as an interimappropriate means to return capital.

If Aegon decides to distribute (interim) dividends, it is Aegon’s intention to pay these dividends in cash. However, Aegon’s Board of Directors will have the discretion to make dividend when announcing Aegon’s second quarter results and to proposepayments solely in stock or offer the holder of common shares a final dividend at the Annual General Meeting of Shareholders for approval. Dividends would normally be paid inchoice between cash or stock at the election of the shareholder. The relative value of cash and stock dividends may vary. Stock dividends paid may, subject to capital management and other considerations, be repurchased in order to limit dilution.

When determining whether to declare or propose a dividend, Aegon’s Executive Board balances prudence versus offering an attractive return to shareholders. This is particularly important during adverse economic and/or financial market conditions. Furthermore, Aegon’s operating subsidiaries are subject to local insurance regulations that could restrict dividends to be paid to the Company. There is no requirement or assurance that Aegon will declare and pay any dividends.
Holders of common shares historically have been permitted to elect to receive dividends, if any,appropriate under the prevailing circumstances.

In connection with dividends that are paid out in cash or in common shares. For dividends, which holders may elect to receive in either cash or common shares, the value of the stock alternative may differ slightly from the value of the cash option.Aegon’s corporate website will publish if and where Dividend Reinvestment Programmes (“DRIP”) are available. Aegon pays cash dividends on shares of New York registry in US dollars through Citibank, N.A., Aegon’s NYSE paying agent, based on the foreign exchange reference rate (WM/Reuters closing spot exchange rate fixed at 5.00 pm Central European Summer Time (‘CEST’)) on theone business day before the US-ex dividend day. For dividends, which holders may elect to receive in either cash or in stock, the value of the stock alternative may differ from the value of the cash option. The value of shares distributed as stock dividend may be repurchased in the market in order to undo the dilution caused by the distribution of dividend in stock.

Governance

Under Bermuda law and Aegon’s Bye-laws, the Board of Directors may, before declaring any dividend, set aside such sums as it thinks proper as reserves which shall, at the discretion of the Board of Directors, be applicable for any purpose of Aegon.

Aegon may make one or more dividend distributions to the holders of common shares. The decision to declare an interim dividend is at the full discretion of Aegon’s Board of Directors.

The Board of Directors determines the dividend payment date and the dividend record date for the common shares and also determines the currency or currencies in which the dividends are paid. Under normal circumstances, Aegon expects to declare a final dividend at the Annual General Meeting of Shareholders and to propose an interim dividend when announcing its second quarter results. Depending on circumstances, future prospects and other considerations, Aegon’s Board of Directors may choose to deviate from this approach.

There is no requirement or assurance that Aegon will declare and pay any dividends.

 

Annual Report on Form 20-F 2023  |  439 

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The offer and listing

The principal market for Aegon’s common shares is Euronext Amsterdam, where they are listed under the symbol ‘AGN’. Aegon’s common shares are also listed on NYSE New York under the symbol ‘AEG’. Aegon’s common shares B are not listed to trade on any securities market.

On Euronext Amsterdam, only Euronext registered shares may be traded. On NYSE, only New York Registry Shares may be traded.

 

 440  |  Annual Report on Form 20-F 2023

388  |  Aegon Annual Report on Form 20-F 2022

Table of Contents
 
Additional information

Memorandum and Articles of Association    

Bye-Laws 

   
   

Memorandum and ArticlesBye-Laws

Aegon is a Bermuda exempted company with liability limited by shares, having its registered office in Hamilton, Bermuda. Aegon has its principal place of Association

business in The Hague, The Netherlands, where its headquarters are. Aegon is registered in the Bermuda Registrar of Companies under number 27076669 in202302830 and the Commercial Register of the Chamber of Commerce and Industries for Haaglanden, The Hague, the Netherlands.
Dutch trade register under number 27076669.

Certain provisions of Aegon’s current Articles of AssociationBye-Laws are discussed below.

Objects and purposes

The objects of Aegon are to incorporate, acquire and alienate shares and interests in, to finance and grant security for obligations of, to enter into general business relationships with, and to manage and grant services to legal entities and other entities, in particular those involved in the insurance business, and to do all that is connected therewith or which may be conducive thereto, all to be interpreted in the broadest sense; and

In achieving the aforesaid objects due regard shall be taken, within the scope of sound business operations, to provide fair safeguards for the interests of all the parties directly or indirectly involved in Aegon.
◆
The objects of Aegon are to incorporate, acquire and alienate shares and interests in, to finance and grant security for commitments of, to enter into general business relationships with, and to manage and grant services to legal entities and other entities, in particular those involved in the insurance business, and to do all that is connected therewith or which may be conducive thereto, all to be interpreted in the broadest sense; and
◆
In achieving the aforesaid objects due regard shall be taken, within the scope of sound business operations, to provide fair safeguards for the interests of all the parties directly or indirectly involved in Aegon.

Provisions related to directors

Directors

For information with respect to provisions in the ArticlesBoard of Association relating to members of the Supervisory Board and Executive Board,Directors, refer to the Governance section (see pages 36-40)42-46).

Description of Aegon’s capital stock

Aegon has two types of shares: common shares (par value EUR 0.12) and common shares B (par value EUR 0.12).

Common characteristics of the common shares and common shares B

◆
All shares are in registered form;
◆
All shares have dividend rights except for those shares (if any) held by Aegon as treasury stock. Dividends which have not been claimed within five years lapse to Aegon;
◆
Each currently outstanding share is entitled to one vote except for shares held by Aegon as treasury stock. There are no upward restrictions;
◆
However, under normal circumstances, i.e. except in the event of a Special Cause, based on the Voting Rights Agreement, Vereniging Aegon will not be able to exercise more votes than is proportionate to the financial rights represented by its shares. This means that in the absence of a Special Cause, Vereniging Aegon may cast one vote for every common share it holds and one vote only for every 40 common shares B it holds. As Special Cause qualifies the acquisition of a 15% interest in Aegon N.V., a tender offer for Aegon N.V. shares or a proposed business combination by any person or group of persons, whether individually or as a group, other than in a transaction approved by the Executive Board and the Supervisory Board. If, in its sole discretion, Vereniging Aegon determines that a Special Cause has occurred, Vereniging Aegon will notify the General Meeting of Shareholders and retain its right to exercise the full voting power of one vote per common share B for a limited period of six months;
◆
All shares have the right to participate in Aegon’s net profits. Net profit is the amount of profits after contributions, if any, to a reserve account;
◆
In the event of liquidation, all shares have the right to participate in any remaining balance after settlement of all debts;
◆
The General Meeting of Shareholders may, at the proposal of the Executive Board, as approved by the Supervisory Board, resolve to reduce the outstanding capital either by (i) repurchasing shares and subsequently canceling them, or (ii) by reducing their nominal share value;
◆
There are no sinking fund provisions;
◆
All issued shares are fully paid-up; so, there is no liability for further capital calls; and
◆
There are no provisions discriminating against any existing or prospective holder of shares as a result of such shareholder owning a substantial number of shares.

• All shares are in registered form;

• All shares have dividend rights except for those shares (if any) held by Aegon as treasury stock. Dividends which have not been claimed within five years lapse to Aegon;

• Each currently outstanding share is entitled to one vote except for shares held by Aegon as treasury stock. There are no upward restrictions;

• However, under normal circumstances, i.e. except in the event of a Special Cause, based on the Voting Rights Agreement, Vereniging Aegon will not be able to exercise more votes than is proportionate to the financial rights represented by its shares. This means that in the absence of a Special Cause, Vereniging Aegon may cast one vote for every common share it holds and one vote only for every 40 Common Shares B it holds. As Special Cause qualifies the acquisition of a 15% interest in Aegon, a tender offer for Aegon shares or a proposed business combination by any person or group of persons, whether individually or as a group, other than in a transaction approved by the Board of Directors. If, in its sole discretion, Vereniging Aegon determines that a Special Cause has occurred, Vereniging Aegon will notify the General Meeting of Shareholders and retain its right to exercise the full voting power of one vote per common share B for a limited period of six months;

• All shares have the right to participate in Aegon’s net profits. Net profit is the amount of profits after contributions, if any, to a reserve account;

• In the event of liquidation, all shares have the right to participate in any remaining balance after settlement of all debts;

• The Board of Directors may resolve to repurchase shares and subsequently cancel these treasury shares. In all other events the General Meeting of Shareholders may resolve to alter the capital by cancellation of the shares, change the currency denomination of its share capital, consolidate and divide all or any of the Aegon’s share capital into shares of larger par value than the existing shares and sub-divide the Aegon’s shares into shares of smaller par value than is fixed by the Aegon’s Bye-Laws;

• There are no sinking fund provisions;

• All issued shares are fully paid-up; so, there is no liability for further capital calls; and

• There are no provisions discriminating against any existing or prospective holder of shares as a result of such shareholder owning a substantial number of shares.

Differences between common shares and common shares B

• The Common Shares are listed; the Common Shares B are not listed;

• The financial rights attaching to a common share B are one-fortieth (1/40th) of the financial rights attaching to a common share; and

• A repayment on Common Shares B needs approval of the holders of Common Shares B.

• A transfer of Common Shares B requires approval of the Board of Directors of Aegon

Annual Report on Form 20-F 2023  |  441 

◆
The common shares are listed; the common shares B are not listed;
◆
The financial rights attaching to a common share B are one-fortieth (1/40th) of the financial rights attaching to a common share; and
◆
A repayment on common shares B needs approval of the holders of common shares B.
◆
A transfer of common shares B requires approval of the Supervisory Board of Aegon N.V.

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Actions necessary to change the rights of shareholders

A

To change the right of shareholder the Bye-Laws and the Memorandum of Continuance need to the rightsbe amended. The Board of shareholders would requireDirectors resolves on an amendment of the Bye-Laws. In order for such amendment to take effect, it must be approved by the Articles of Association. The General Meeting of Shareholders (AnnualShareholders. An amendment of the Memorandum of Continuation needs to be approved by the Board and the General Meeting of Shareholders. Under Bermuda law, shareholders who, alone or Extraordinary General Meeting) may only passjointly, represent at least 20% of Aegon’s paid-up share capital or any class thereof have the right to, within 21 days after a resolution to amend the ArticlesMemorandum of Association pursuantContinuation has been adopted by the General Meeting of Shareholders, apply to a proposalthe Supreme Court of Bermuda for an annulment of such amendment of the Executive Board with the approvalMemorandum of Continuation, other than an amendment which alters or reduces Aegon’s share capital as provided in Bermuda law. No application may be made by Shareholders voting in favor of the Supervisory Board. The resolution requires a majority of the votes cast at the meeting in order to pass. The actual changes to the text of the Articles of Association will be executed by a civil law notary.

amendment.

Furthermore, a resolution of the General Meeting of Shareholders to amend the Articles of AssociationBye-Laws which has the effect of reducing the rights attributable to holders of a specific class shall be subject to the approval of the meeting of holders of such class.

Conditions under which meetings are held

Annual

A General MeetingsMeeting of Shareholders must be convened at least 30 days prior to the day of the General Meeting of Shareholders and Extraordinaryshall be called by way of a press release and publication on the website. The notice shall specify the place, day and time of the meeting, the record date, means of electronic communication, if any, and the agenda of the meeting. General Meetings of Shareholders shallwill be convened by public notice. Notice must be given no later than 42 days prior to the dateBoard of Directors. Shareholders representing at least ten per cent (10%) of the meeting. The notice must containpaid-up share capital may request a summary agenda and indicateGeneral Meeting of Shareholders. Shareholders representing at least one per cent (1%) of the place where the complete agenda together with the documents pertainingissued capital or one hundred (100) or more shareholders jointly may request one or more items to be added to the agenda of a General Meeting of Shareholders. Such a request must be received by Aegon not less than six (6) weeks before the General Meeting of Shareholders. Matters that are not reserved for, or do not require a resolution of the General Meeting of Shareholders pursuant to the Bye-Laws or Bermuda law, may only be obtained.included as a non-voting discussion item that shall be non-binding to the company and the Board of Directors unless otherwise and at its sole discretion determined by the Board of Directors. The agenda is also sent to shareholders registered with the Company Register. New York Registry shareholders or their brokers receive a proxy solicitation notice.

For admittance to and voting at the meeting, shareholders must produce evidence of their shareholding as of the record date.

The Dutch law determines that the record date is 28used to determine shareholders’ entitlements with regard to their participation and voting rights in a General Meeting of Shareholders. The record date may be determined by the Board of Directors and may not be more than sixty (60) days prior tobefore or later than twenty (20) business days before the date fixed for the General Meeting of Shareholders. Shareholders must notify Aegon of their intention to attend the meeting.

Limitation on the right to own securities

There are no limitations, either under the laws of the NetherlandsBermuda or in Aegon’s Articles of Association,Bye-Laws on the rights of non-residents of the NetherlandsBermuda to hold or vote Aegon common sharesCommon Shares or common sharesCommon Shares B.

Provisions that would have the effect of delaying a change of control

A resolution

The General Meeting of Shareholders appoints the members of the Board of Directors. If the appointment of a member of the Board of Directors is proposed by the Board of Directors, the General Meeting of Shareholders to suspendresolution requires a simple majority of the votes cast, while otherwise, the resolution requires a two-thirds majority of the votes cast, which majority must represent more than half of the issued share capital. Members of the Board of Directors will be appointed for a term of not more than four years. If the removal or dismisssuspension of a member of the Executive Board or a member of the Supervisory Board, other than pursuant to a proposalDirectors is proposed by the Supervisory Board shall require at least two-thirdsof Directors, the General Meeting resolution requires a simple majority of the votes cast, representingwhile otherwise, the resolution requires a two-thirds majority of the votes cast, which majority must represent more than one-halfhalf of the issued share capital.

In the event a Special Cause occurs (such as the acquisition of 15% of Aegon’s voting shares, a tender offer for Aegon’s shares or a proposed business combination by any person or group of persons, whether individually or as a group, other than in a transaction approved by the Executive Board and Supervisory Board)of Directors), Vereniging Aegon will be entitled to exercise its full voting rights of one vote per each common share B for up to six months per Special Cause, thus increasing its current voting rights to 32.6%.

 442  |  Annual Report on Form 20-F 2023

Memorandum and Bye-Laws

Threshold above which shareholder ownership must be disclosed

There are no such provisions in the Articles of Association.Bye-Laws. Aegon is listed in the Netherlands and Dutch law applies to its listing. Dutch law requires public disclosure with the Authority for Financial Markets with respect to the ownership of listed shares when the following thresholds are met: 3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%.

Material differences between DutchBermuda law and US company law with respect to the items above

Reference is made to the paragraph ‘Differences between DutchBermuda and US company laws’ included in the section Differences between DutchBermuda and US company laws of this Annual Report (see page 391)444).

Special conditions governing changes in the capital

There are no conditions more stringent than what is required by law.

 

390  |  Aegon Annual Report on Form 20-F 20222023  |  443 

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Differences between DutchBermuda and US company laws

Dutch

Bermuda company law is differentdiffers in certain material respects from US law in the following respects: Aegon, like most large Dutch public companies, has a two-tier governance system comprising an Executive Board and a Supervisory Board. The Executive Board is the executive body. Its members are not Aegon employees and have an engagement agreement with the Company. Memberslaw.

Amendment of the Executiveconstitutional documents

The Board are appointed and dismissedresolves on the amendment of the Bye-Laws. In order for such amendment to take effect, it must be approved by the General Meeting of Shareholders, as inside directors are in the United States. The Remuneration Policy as regards the membersMeeting. An amendment of the ExecutiveMemorandum of Association needs to be approved by the Board isand the General Meeting. Under Bermuda law, shareholders who, alone or jointly, represent at least 20% of Aegon Ltd.’s paid-up share capital or any class thereof have the right to, within 21 days after a resolution to amend the Memorandum of Association has been adopted by the General Meeting, apply to the Supreme Court of Shareholders. The numberBermuda for an annulment of such amendment of the Executive Board members and the termsMemorandum of their engagement are determinedAssociation, other than an amendment which alters or reduces Aegon Ltd.’s share capital as provided in Bermuda law. No application may be made by the Supervisory Board within the scopeshareholders voting in favor of the adopted Remuneration Policy.

amendment.

The Supervisory Board performs supervisory and advisory functions only, and its members are outsiderscorporation law of many US states require that, are not employed byunless a greater percentage is provided for in the Company. The Supervisory Board has the duty to supervise the performancecertificate of incorporation, a majority of the Executive Board,outstanding stock entitled to vote is required to approve the Company’s general course of affairs and the business connected with it. The Supervisory Board also assists the Executive Board by giving advice. Other powersamendment of the Supervisory Board includecertificate of incorporation at the prior approvalstockholders’ meeting. Additionally, the corporation law of certain important resolutionsmany US states provide that holders of a majority of the Executive Board. Membersvoting power of a corporation and, if so provided in the certificate of incorporation, the Directors of the Supervisory Board are appointedcorporation, have the power to adopt, amend and repeal the bylaws of a corporation.

Calling of Special Shareholders Meetings

See “Corporate Governance” for a four-year term and may then be reappointed for another four year period. Subsequently, a Supervisory Board member can be reappointed again for a period of two years, and then extended by two years at the most. A Supervisory Board member can be dismissed by the General Meeting of Shareholders. The remuneration of Supervisory Board members is fixed by the General Meeting of Shareholders. Resolutions entailing a significant change in the identity or characterdiscussion of the Companyprocedures related to calling of special shareholders meetings under our Bye-Laws and Bermuda law.

The corporation laws of many US states permit the Board of Directors or its business require the approvalany person who is authorized under a corporation’s certificate of the General Meetingincorporation or by-laws to call a special meeting of Shareholders.shareholders.

 444  |  Annual Report on Form 20-F 2023

Material contracts 

   Aegon Annual Report on Form 20-F 2022  |  391
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Material contracts

On October 27, 2022, Aegon and a.s.r. announced that they had reached agreement on the terms of the Business Combination Agreement, pursuant to which they will combine Aegon’s Dutch pension, life and non-life insurance, banking, and mortgage origination activities with a.s.r.’s business (the Transaction). As part of the Transaction, Aegon will receive from a.s.r. (i) a cash consideration of EUR 2.5 billion, subject to a downward adjustment of approximately EUR 0.3 billion and to certain other customary adjustments and (ii) a 29.99% shareholding in the combined company, with associated governance rights including the right to nominate two persons to the a.s.r. supervisory board.

The downward adjustment of the cash amount by approximately EUR 0.3 billion relates to the additional a.s.r. shares that Aegon will receive with a value of approximately EUR 0.3 billion to maintain a 29.99% shareholding in a.s.r. at the time of closing of the proposed transaction.

On January 17, 2023, the general meeting of shareholders of Aegon N.V. and the general meeting of shareholders of a.s.r. approved the Transaction. Furthermore, the works councils of Aegon and a.s.r. rendered a positive advice in relation to the Transaction.

In July 2023, Aegon completed the transaction to combine its Dutch pension, life and non-life insurance, banking and mortgage origination activities with a.s.r. The Transaction is further subject to customary conditions, including regulatory and antitrust approvals, and is expected to close incompletion of the second halftransaction also marked the beginning of 2023.

Aegon’s asset management partnership with a.s.r.

In connection with this Transaction the following material contract has been identified:

Business Combination Agreement (BCA); Agreement between Aegon Europe Holding B.V. and Aegon N.V. and ASR Nederland N.V., dated October 26, 2022, relating to the combination of ASR Nederland N.V. and Aegon Nederland N.V.
◆
Business Combination Agreement (BCA); Agreement between Aegon Europe Holding B.V. and Aegon N.V. and ASR Nederland N.V., dated October 26, 2022, relating to the combination of ASR Nederland N.V. and Aegon Nederland N.V.

The full terms and conditions of the Transaction are laid down in the BCA. The BCA has been filed as an Exhibit to Aegon’s Annual Report on Form 20-F for fiscal year ended December 31, 2022. Refer to separate section on Exhibits.

There are no other material contracts.

 

392  |  Aegon Annual Report on Form 20-F 20222023  |  445 

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Exchange controls

Under the Bermuda Exchange Control Act 1972 and the Bermuda Exchange Control Regulations 1973, the specific permission of the Bermuda Monetary Authority is required for all issues and transfers of securities of Bermuda companies to persons who are non-resident, other than in cases where general permission has been given. General permission can be given where a Bermuda company has equity securities listed on an appointed stock exchange.

The Bermuda Monetary Authority has issued its general permission to Aegon Ltd. As a result of the listing of Aegon Ltd.’s shares on the Euronext Amsterdam and New York Stock Exchange, it can rely on this general permission. This means that Aegon does not need to apply for specific permission for the issue or transfer of its shares, to pay dividends or distribute capital, open and maintain bank accounts in any currency or to acquire assets or meet its liabilities.

 446  |  Annual Report on Form 20-F 2023

United States tax consequences to holders of shares 

   
Exchange controls
There are no legislative or other legal provisions currently in force in the Netherlands or arising under Aegon’s Articles of Association restricting payments to holders of Aegon’s securities that are not resident in the Netherlands. Cash dividends payable in euros on Aegon’s common shares may be officially transferred from the Netherlands and converted into any other convertible currency.
There are no legislative or other legal provisions currently in force in the Netherlands or arising under Aegon’s Articles of Association restricting the import or export of capital, including the availability of cash and cash equivalents for use by the company’s group.
   Aegon Annual Report on Form 20-F 2022  |  393

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United States tax consequences to holders of shares

Introduction

This section describes certain US Federal income tax consequences to beneficial holders of common shares that are held as capital assets, including certain Dutch withholding tax considerations. This section does not address all US Federal income tax matters that may be relevant to a particular holder. Each investor should consult their tax advisor with respect to the tax consequences of an investment in the common shares. This section does not address tax considerations for holders of common shares subject to special tax rules including, without limitation, the following:

◆

Financial institutions;
◆
Insurance companies;
◆
Dealers or traders in securities or currencies;
•Tax-exempt entities;
◆
Tax-exempt entities;
◆
Regulated investment companies;
◆
Persons that at any time hold the common shares as part of a ‘hedging’ or ‘conversion’ transaction or as a position in a ‘straddle’ or as part of a ‘synthetic security’ or other integrated transaction for US Federal income tax purposes;
◆
US expatriates and former citizens or former residents of the United States;
◆
Persons subject to special tax accounting rules as a result of any item of gross income with respect to the stock being taken into account in an applicable financial statement;
◆
Holders that own (or are deemed to own for US Federal income tax purposes) 10% or more of the shares of Aegon by vote or value;
◆
Partnerships, or arrangements treated as partnerships for US tax purposes, or pass-through entities or persons who hold common shares through partnerships or other pass-through entities; and
◆
Holders that have a ‘functional currency’ other than the US dollar.
Persons that at any time hold the common shares as part of a ‘hedging’ or ‘conversion’ transaction or as a position in a ‘straddle’ or as part of a ‘synthetic security’ or other integrated transaction for US Federal income tax purposes;
US expatriates and former citizens or former residents of the United States;
Persons subject to special tax accounting rules as a result of any item of gross income with respect to the stock being taken into account in an applicable financial statement;
Holders that own (or are deemed to own for US Federal income tax purposes) 10% or more of the shares of Aegon by vote or value;
Partnerships, or arrangements treated as partnerships for US tax purposes, or pass-through entities or persons who hold common shares through partnerships or other pass-through entities; and
Holders that have a ‘functional currency’ other than the US dollar.

Further, this section does not address alternative minimum tax consequences or the indirect effects on the holders of equity interests in a holder of common shares. This section also does not describe any tax consequences arising under the laws of any taxation jurisdiction other than the Federal income tax laws of the US Federal government.

This section is based on the US Internal Revenue Code of 1986, as amended, US Treasury regulations and judicial and administrative interpretations, in each case as in effect and available on the date of this Annual Report. All of the foregoing is subject to change, which change could apply retroactively and could affect the tax consequences described below.

For the purposes of this section, a ‘US holder’ is a beneficial owner of common shares that is, for US Federal income tax purposes:

◆
A citizen or individual resident of the United States;
◆
A corporation created or organized in or under the laws of the United States or any state of the United States (including the District of Columbia);
◆
An estate, the income of which is subject to US Federal income taxation regardless of its source;
◆
A trust, if a court within the United States is able to exercise primary supervision over its administration and one or more US persons have the authority to control all of the substantial decisions of such trust.

A citizen or individual resident of the United States;
A corporation created or organized in or under the laws of the United States or any state of the United States (including the District of Columbia);
An estate, the income of which is subject to US Federal income taxation regardless of its source;
A trust, if a court within the United States is able to exercise primary supervision over its administration and one or more US persons have the authority to control all of the substantial decisions of such trust.

A non-US holder is a beneficial owner of common shares that is neither a US holder nor an entity treated as a partnership for US federal income tax purposes.

If an entity treated as a partnership for US Federal income tax purposes holds common shares, the tax treatment of a partner in the partnership will depend on the status of the partner, the activities of the partnership and certain determinations made at the partner level. Accordingly, partnerships holding common shares and the partners in such partnerships should consult their tax advisors regarding the US Federal income tax consequences to them.

 

394  |  Aegon Annual Report on Form 20-F 20222023  |  447 

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Dividend withholding tax in the Netherlands

Withholding requirement

Aegon is required to withhold 15% Dutch dividend withholding tax in respect of the gross dividends paid on its common shares. In the Dutch Dividend Withholding Tax Act 1965 (Wet op de dividendbelasting 1965), dividends are defined as the proceeds from shares, which include:

◆

Direct or indirect distributions of profit, regardless of their name or form.
◆•
Liquidation proceeds, proceeds on redemption of Aegon common shares and, as a rule, the consideration for the repurchase of its own common shares by Aegon in excess of the average paid-in capital recognized for Dutch dividend withholding tax purposes, unless a particular statutory exemption applies.
◆•
The nominal value of new common shares issued to a holder of Aegon common shares or an increase of the nominal value of Aegon common shares, except insofar as the (increase in the) nominal value of Aegon common shares is funded out of its paid-in capital as recognized for Dutch dividend withholding tax purposes.
◆•
Partial repayments of paid-in capital recognized for Dutch dividend withholding tax purposes, if and to the extent there are qualifying profits (zuivere winst), unless Aegon’s General Meeting of Shareholders has resolved in advance to make such repayment and provided that the nominal value of Aegon common shares concerned has been reduced by an equal amount by way of an amendment of the Articles of Association. The term ‘qualifying profits’ includes anticipated profits that have yet to be realized.

US residents

Residents of the United States that qualify for and comply with the procedures for claiming benefits under the Convention between the Kingdom of the Netherlands and the United States of America for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income 1992 (the US/NL Income Tax Treaty) may, under various specified conditions, be eligible for a reduction of the Dutch dividend withholding tax rate from 15% to 5% if the resident of the United States is a company which holds directly at least 10% of the voting power in Aegon. The US/NL Income Tax Treaty provides, subject to certain conditions, for a complete exemption from, or refund of, Dutch dividend withholding tax for dividends received by exempt pension trusts and exempt organizations, as defined therein.

Beneficial owner

A recipient of proceeds from Aegon common shares will not be entitled to any exemption, reduction, refund or credit of Dutch dividend withholding tax if such recipient is not considered to be the beneficial owner of such proceeds. The recipient will not be considered the beneficial owner of these proceeds, if, in connection with such proceeds, the recipient has paid a consideration as part of a series of transactions in respect of which it is likely:

◆

That the proceeds have in whole or in part accumulated, directly or indirectly, to a person or legal entity that would: (i) as opposed to the recipient paying the consideration, not be entitled to an exemption from dividend withholding tax; or (ii) in comparison to the recipient paying the consideration, to a lesser extent be entitled to a reduction or refund of dividend withholding tax; and
◆
That such person or legal entity has, directly or indirectly, retained or acquired an interest in Aegon common shares or in profit sharing certificates or loans, comparable to the interest it had in similar instruments prior to the series of transactions being initiated.
That such person or legal entity has, directly or indirectly, retained or acquired an interest in Aegon common shares or in profit sharing certificates or loans, comparable to the interest it had in similar instruments prior to the series of transactions being initiated.

US tax treatment of distributions

The gross amount of any distribution (including any amounts withheld in respect of Dutch withholding tax) actually or constructively received by a US holder with respect to common shares will be taxable to the US holder as a dividend. Such dividends will not qualify for the dividends received deduction otherwise allowable to corporations. The amount of any distribution of property other than cash will be the fair market value of that property on the date of distribution.

Certain ‘qualified dividend income’ received by certain non-corporate US holders may be taxed at a reduced tax rate under current law. Only dividends received from US corporations or from a ‘qualified foreign corporation’ and on shares held by a non-corporate US holder for a minimum holding period (generally, 61 days during the 121-day period beginning 60 days before the ex-dividend date) can qualify for this reduced rate. Aegon is eligible for benefits under the comprehensive income tax treaty between the Netherlands and the US; therefore, Aegon should be considered a ‘qualified foreign corporation’ for this purpose. Accordingly, dividends paid by Aegon to non-corporate US holders on shares held for the minimum holding period may qualify for a reduced income tax rate. Each US holder should consult their tax advisor regarding the applicable tax rate.

 448  |  Annual Report on Form 20-F 2023

United States tax consequences to holders of shares 

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Financial information
Non-financial information
  
 



In addition, US holders receiving dividends may be subject to a net investment income tax (NIIT). The NIIT is an additional tax on the lesser of net investment income or the amount of modified adjusted gross income (MAGI) that is over a threshold amount based on filing status. Each US holder should consult their tax advisor regarding applicability of the NIIT.

Distributions paid in currency other than US dollars (a ‘foreign currency’), including the amount of any withholding tax thereon, must be included in the gross income of a US holder in an amount equal to the US dollar value of the foreign currency calculated by reference to the exchange rate in effect on the date of receipt. This is the case regardless of whether the foreign currency is converted into US dollars. If the foreign currency is converted into US dollars on the date of receipt, a US holder generally should not be required to recognize foreign currency gain or loss in respect of the dividend. If the foreign currency received in the distribution is not converted into US dollars on the date of receipt, a US holder will have a basis in the foreign currency equal to its US dollar value on the date of receipt. Any gain or loss on a subsequent conversion or other disposition of the foreign currency will be treated as ordinary income or loss.

Dividends received by a US holder with respect to common shares will be treated as foreign source income for foreign tax credit limitation purposes. Subject to certain conditions and limitations, any Dutch dividend withholding tax may be deducted from taxable income or credited against a US holder’s Federal income tax liability. The limitation on foreign taxes eligible for the US foreign tax credit is calculated separately with respect to specific categories of income. Dividends distributed by Aegon generally will constitute ‘passive category income’. Each US holder should consult their tax advisor regarding the availability of the foreign tax credit under their particular circumstances.

The amount of the qualified dividend income paid by Aegon to a US holder that is subject to the reduced dividend income tax rate and that is taken into account for purposes of calculating the US holder’s US foreign tax credit limitation must be reduced by the ‘rate differential portion’ of such dividend. Each US holder should consult their tax advisor regarding the implications of the rules relating to qualified dividend income on the calculation of US foreign tax credits under their particular circumstances.

In general, upon making a distribution to shareholders, Aegon is required to remit all Dutch dividend withholding taxes to the Dutch tax authorities. In such circumstances, the full amount of the taxes so withheld should (subject to certain limitations and conditions) be eligible for the US holder’s foreign tax deduction or credit as described above. Investors are urged to consult their tax advisors regarding the general creditability or deductibility of Dutch withholding taxes, including potential disallowance of credit to the extent Aegon is not required to remit all Dutch dividend withholding taxes withheld from a US holder to the Dutch authorities.

Aegon generally affords shareholders an option to receive dividend distributions in cash or in stock. A distribution of additional common shares to US holders with respect to their common shares that is made pursuant to such an election will generally be taxable in the same manner as a cash dividend under the rules described above.

Sale or other disposition of shares

Upon the sale or exchange of common shares, a US holder will generally recognize gain or loss for US Federal income tax purposes on the difference between the US dollar value of the amount realized from such sale or exchange and the US dollar value of the tax basis in those common shares. This gain or loss will be a capital gain or loss and will generally be treated as from sources within the United States. Investors should consult their tax advisors with respect to the treatment of capital gains (which may be taxed at lower rates than ordinary income for taxpayers who are individuals, trusts or estates that have held the common shares for more than one year) and capital losses (the deductibility of which is subject to limitations), and with respect to the treatment of foreign currency gains or losses.

In addition, US holders with capital gains may be subject to a NIIT. The NIIT is an additional tax on the lesser of net investment income or the amount that is over a threshold amount based on filing status. Each US holder should consult their tax advisor regarding applicability of the NIIT.

If a US holder receives foreign currency upon a sale or exchange of common shares, gain or loss, if any, recognized on the subsequent sale, conversion or disposition of such foreign currency will be ordinary income or loss, and will generally be income or loss from sources within the United States for foreign tax credit limitation purposes. However, if such foreign currency is converted into US dollars on the date received by the US holder, the US holder generally should not be required to recognize any gain or loss on such conversion.

 

396  |  Aegon Annual Report on Form 20-F 20222023  |  449 

Table of Contents
LOGO		 
AdditionalAbout Aegon  Governance and risk management  Financial information
United States tax consequences to holders of shares    
  Sustainability information
  
 

Passive foreign investment company considerations

Based on the nature of Aegon’s gross income, the average value of Aegon’s gross assets and the active conduct of Aegon’s insurance business, Aegon does not believe that it could be classified as a passive foreign investment company (PFIC). If Aegon were treated as a PFIC in any year during which a US holder owns common shares, certain adverse tax consequences could apply. Investors should consult their tax advisors with respect to any PFIC considerations.

Tax consequences to non-US holders

A non-US holder generally will not be subject to US Federal income tax on dividends received on common shares or on any gain realized on the sale or exchange of common shares unless the gain is connected with a trade or business that the non-US holder conducts in the United States or unless the non-US holder is an individual, such holder was present in the United States for at least 183 days during the year in which such holder disposes of the common shares, and certain other conditions are satisfied. Non-US holders should consult their tax advisors with respect to the US Federal income tax consequences of dividends received on, and any gain realized from the sale or exchange of, the common shares.

US withholding and information reporting

Backup withholding and information reporting requirements may apply to certain payments on the common shares and to proceeds of a sale or redemption of the common shares to US holders made within the United States. Aegon, its agent, a broker, or any paying agent, as the case may be, may be required to withhold tax from any payment that is subject to backup withholding if a US holder fails to furnish the US holder’s taxpayer identification number, fails to certify that such US holder is not subject to backup withholding, or fails to otherwise comply with the applicable requirements of the backup withholding rules. Certain US holders are not subject to the backup withholding and information reporting requirements.

US and non-US holders may also be subject to withholding and/or reporting to the US Foreign Account Tax Compliance Act (FATCA) if they do not provide required documentation and certifications to the appropriate reporting agent. When documentation and certifications are required, they will generally be requested by the appropriate reporting agent.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a US holder or a non-US holder generally may be claimed as a credit against such holder’s US Federal income tax liability provided that the required information is furnished to the US Internal Revenue Service (IRS). Investors should consult their tax advisors as to their qualification for exemption from backup withholding and withholding under FATCA.

Individual US holders may be required to report to the IRS certain information with respect to their beneficial ownership of certain foreign financial assets, such as the common shares, if the aggregate value of such assets exceeds USD 50,000 and the assets are not held through a US financial institution. US holders who fail to report required information could be subject to substantial penalties. Prospective investors should consult their own tax advisors concerning the application of the information reporting rules to their particular circumstances.

 450  |  Annual Report on Form 20-F 2023

Principal accountant fees and services 

   Aegon Annual Report on Form 20-F 2022  |  397
Table of Contents
About AegonGovernance and risk management
Financial information
Non-financial information
  
 



Principal accountant fees and services

PricewaterhouseCoopers Accountants N.V. (PwC) has served as Aegon’s independent public accountant for each of the years in the three-year period ended December 31, 2022,2023, for which audited financial statements appear in this Annual Report.

The following table presents the aggregate fees for services rendered by PwC in 20222023 and 2021.

2022.

Independent public accountant fees

in EUR million    
2022
     2021 
Audit fees
     35      31 
Audit-related service fees
     10      3 
Tax
     1      - 
Other services
     -      - 
Total
    
 
45
 
    
 
35
 

in EUR million

        2023        2022 

Audit fees

   33   35 

Audit-related service fees

   11   10 

Tax

   -   1 

Total

   44    45  

Audit fees consist of fees billed for the annual financial statements audit (including quarterly reviews), subsidiary audits, equity investment audits and other procedures required to be performed by the independent auditor to be able to form an opinion on Aegon’s consolidated financial statements. These other procedures include information systems and procedural reviews and testing performed in order to understand and place reliance on the systems of internal control, and consultations relating to the audit or quarterly review. They also include fees billed for other audit services, which are those services that only the external auditor reasonably can provide, and include statutory audits or financial audits for subsidiaries or affiliates of the Company and services associated with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings.

Audit-related services include, among others, assurance services to report on internal controls for third parties, due diligence services pertaining to potential business acquisitions/dispositions; discussions, review and testing of certain information related to the adoption of new accounting standards impacting future periods, financial reporting or disclosure matters not classified as ‘Audit services’; financial audits of employee benefit plans; and agreed-upon or expanded audit procedures related to accounting and/or billing records required to respond to or comply with financial, accounting or regulatory reporting matters.

Audit Committee pre-approval policies and procedures

Aegon’s Audit Committee is responsible, among other matters, for the oversight of the external auditor. The Audit Committee has adopted a policy regarding pre-approval of audit and permissible non-audit services provided by Aegon’s independent auditors (the Pre-approval Policy).

Under the Pre-approval Policy, proposed services either:

◆•
May be pre-approved by the Audit Committee without consideration of specific case-by-case services (general pre-approval); or
◆•
Require the specific pre-approval of the Audit Committee (specific pre-approval). Appendices to the Pre-approval Policy (that are adopted each year) set out the audit, audit-related, tax and other services that have received general pre-approval of the Audit Committee. All other audit, audit-related, tax and other services must receive specific pre-approval from the Audit Committee.

For the period 20212022 to 2022,2023, all services provided to Aegon by its independent public accountant were pre-approved by the Audit Committee in accordance with the Pre-approval Policy.

 

398  |  Aegon Annual Report on Form 20-F 20222023  |  451 

Table of Contents
LOGO		 
AdditionalAbout Aegon  Governance and risk management  Financial information
Purchases of equity securities by the issuer and affiliated purchasers    
  Sustainability information
  
 

Purchases of equity securities by the issuer and affiliated purchasers

Period
  
Total number of
shares
purchased
1)
   Average price
paid per share
in EUR		   Total number of
shares
purchased as part of
publicly
announced plans or
programs		   Maximum
number of shares
that may yet be
purchased under
the plans or
programs at end
of month		 
January 1 - 31, 2022
   10,158,360    4.92    10,158,360    -   
February 1 - 28, 2022
   -    -    -    - 
March 1 - 31, 2022
   -    -    -    65,921,332 
April 1 - 30, 2022
   6,590,000    5.06    6,590,000    59,331,332 
May 1 - 31, 2022
   3,540,000    4.85    3,540,000    55,791,332 
June 1 - 30, 2022
   10,375,405    4.80    10,375,405    45,415,927 
July 1 - 31, 2022
   14,183,639    4.08    14,183,639    55,596,183 
August 1 - 31, 2022
   16,505,470    4.52    16,505,470    39,090,713 
September 1 - 30, 2022
   16,659,593    4.50    16,659,593    52,264,510 
October 1 - 31, 2022
   20,889,768    4.20    20,889,768    31,374,742 
November 1 - 30, 2022
   22,356,335    4.69    22,356,335    9,018,407 
December 1 - 31, 2022
   9,018,408    4.67    9,018,408    - 
Total
  
 
130,276,978
 
       
 
130,276,978
 
     

Period

   
  Total number of shares
purchased1)		 
 		   
 Average price paid per
share in EUR		 
 		   


 Total number of shares
purchased as part of
publicly announced
plans or programs		 
 
 
 		   

Maximum number of

 shares that may yet be

purchased under the

plans or programs at

end of month

 

 

 

 

 

January 1 - 31, 2023

   8,516,263    5.00    8,516,263    - 

February 1 - 28, 2023

   5,959,061    5.03    5,959,061    40,838,506 

March 1 - 31, 2023

   18,734,994    4.23    18,734,994    22,103,512 

April 1 - 30, 2023

   8,605,944    4.08    8,605,944    13,497,568 

May 1 - 31, 2023

   12,135,613    4.12    12,135,613    1,361,955 

June 1 - 30, 2023

   1,361,955    4.15    1,361,955    - 

July 1 - 31, 2023

   17,735,076    4.77    17,735,076    283,724,922 

August 1 - 31, 2023

   33,975,519    4.83    33,975,519    249,749,403 

September 1 - 30, 2023

   48,201,072    4.66    48,201,072    201,548,331 

October 1 - 31, 2023

   38,502,642    4.54    38,502,642    163,045,689 

November 1 - 30, 2023

   6,813,921    4.73    6,813,921    156,231,768 

December 1 - 31, 2023

   25,652,916    5.23    25,652,916    130,578,852  

Total

   226,194,976         226,194,976      

1 
The shares have been purchased as part

Aegon intends to return EUR 1.5 billion of the cash proceeds to shareholders – barring unforeseen circumstances – through a share purchase program, to neutralize the dilution effect of issued stock dividends and agent-related incentive programs. Excluding Aegon shares purchased by index funds controlled by Aegon. Such purchases are made to the extent necessary to maintain a basket of securities within the relevant fund reflecting the underlying index. Please refere to note 20 ‘Dividend per common share’ and to the section ‘Major shareholders’ in the ‘Other information’.

buyback program.

2 
Share purchase program to neutralize impact of 2021 final stock dividend and share based-variable compensation plans announced on July 1, 2022
3 
Share purchase program to neutralize impact of 2022 interim stock dividend announced on September 27, 2022

 452  |  Annual Report on Form 20-F 2023

Cybersecurity 

  
 

Cybersecurity

Cybersecurity Risk Management and Strategy

Aegon employs an IT security strategy and maintains a suite of systems, procedures and controls that are designed to protect the confidentiality, integrity and availability of critical systems owned or used by us as well as the information that flows through those systems.

Our Cybersecurity risk program (1) is focused on the highest-risk assets, (2) aims to mitigate the highest risks, and (3) aims to be responsive to evolving threats based on learnings from industry security events and developments.

Cybersecurity risk management is an integral part of our IT Risk Management Framework developed as part of our IT and Cyber risk management oversight. IT and Cyber risk management is integrated into our Enterprise Risk Management (ERM) program and shares common methodologies, policies, standards, and governance processes.

Key elements of our cybersecurity risk management include, but are not limited to the following:

Global policies (e.g., Global Information Security policy, Global IT Risk Management policy), which set out minimum requirements to help ensure controls are implemented and cybersecurity risk is adequately managed.
Aegon has developed the Information Technology Control Framework (ITCF) as the library of Aegon’s global IT controls based on certain industry standards.
Technology and cybersecurity risks are part of Aegon’s risk universe and are aggregated and reported as part of Aegon’s IT Risk profile.
The IT and cybersecurity risk management lifecycle is a process of identifying, assessing, controlling, monitoring, and reporting risks. The processes and procedures to manage risks in the first, second, and third lines above, integrated within existing ERM processes, IT management domains, and capabilities.
Aegon has developed and maintains a Global Incident Response plan, which is a collection of documented processes, technical playbooks, and resources needed in order to respond to potential cybersecurity incidents.
Global Training and Awareness campaigns include all Aegon employees and are conducted routinely.
Aegon uses external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls.
Aegon manages a third-party risk management process for key service providers based on our assessment of their criticality to our operations and respective risk profile.

We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition.

Cybersecurity risks and threats continuously evolve and we face risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. See “Risk Factors – a perceived or actual computer system failure or security breach of Aegon’s IT systems or that of critical third parties may disrupt Aegon’s business, damage Aegon’s reputation and adversely affect Aegon’s results of operations, financial condition, and cash flows” for additional detail.

Cybersecurity Governance

Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Aegon Risk Committee (Committee) oversight of cybersecurity and other IT risks. The Committee reports directly into the Board and focuses on the effectiveness of the design, operation and appropriateness of the enterprise risk management framework and the internal control systems of Aegon.

The Committee receives regular reports from Aegon’s Chief Risk Officer covering all known material cybersecurity risks of the Company including but not limited to operational risk, technology and information security risks. In addition, management updates the Committee, as necessary, regarding significant or potentially significant cybersecurity incidents.

The Committee receives periodic updates from our Global Chief Information Security Officer. These include, but are not limited to: progress updates on cybersecurity strategy and execution against the Aegon strategic roadmap, a review of cybersecurity metrics, updates on the evolving threat landscape, and a review of our control environment.

Annual Report on Form 20-F 20222023  |  399453  

Table of Contents
Non-financial
information
2022
LOGO		 About Aegon  Governance and risk management  Financial information  Sustainability information
401
 
Basis of preparation
 
401 
Defining content
402
Reporting process for non-financial data
405
Sustainability approach
405
Our ambition
405
Non-financial key performance indicators
407
Policies and procedures
410
Regulation and compliance
410
EU Non-Financial Reporting Directive
413
EU Corporate Sustainability Reporting Directive
413
EU Taxonomy Regulation
417
Dutch Act on gender diversity at the top
419
Our commitments
419
United Nations Global Compact
422
United Nations Sustainable Development Goals
424
UNEP-FI’s Principles for Sustainable Insurance
426
International Responsible Business Conduct
Agreement in the insurance sector
427
Task Force on Climate-related
Financial Disclosures
427
Governance
427
Strategy
430
Risk management
430
Metrics and targets
434
Value created
434
Customers
435
Employees
438
Business partners
439
Investors
441
Society
447
External recognition
448
Disclaimer
451
Contact

400

Our management team, including our Global Chief Technology Officer, Global Chief Information Security Officer, Directors of various Security Services (e.g., Identity, Cloud, Data, SOC) along with Business Unit Security Officers (BISOs), is responsible for assessing and managing our material risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management program, and is informed about cybersecurity incidents and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Our Management team includes broad range of executive, strategic, and technical experiences across diverse number of technology and cybersecurity domains.

 454  |  Aegon  Annual Report on Form 20-F 20222023

LOGO

Sustainability information 2023 456 Basis of preparation 456 Defining content 458 Reporting process 461 Our material topics 461 Our approach 462 Climate change mitigation and adaptation 465 Inclusion and diversity 467 Customer empowerment 469 Employee wellbeing 472 Data security and privacy 473 Business conduct 476 Policies and statements 480 Regulation and compliance 480 EU Directives 483 Our commitments 483 United Nations Global Compact 483 United Nations Sustainable Development Goals 483 UNEP-FI Principles for Sustainable Insurance 486 Task Force on Climate-related Financial Disclosures 486 Introduction 486 Governance 486 Strategy 492 Risk management 495 Metrics and targets 499 EU Taxonomy 499 EU Taxonomy Regulation 500 EU Taxonomy eligibility 501 EU Taxonomy alignment 506 Voluntary information 506 Introduction 506 Extra metrics 508 External recognition 509 Disclaimer 512 Contact Annual Report on Form 20-F 2023 | 455

Table of Contents
LOGO 
Basis of preparation
About Aegon  Governance and risk management  Financial information  Sustainability information
  
 

Basis of preparation

This Annual Report on Form 20-F (also referred to in this document as “Annual Report”)

The consolidated sustainability (non-financial) information has been prepared in accordance with the International Financialapplicable reporting requirements under the Dutch Civil Code, including the EU Non-Financial Reporting Directive (NFRD) and the EU Taxonomy Regulation. As of January 2024, the EU Corporate Sustainability Reporting Directive (CSRD) will replace the NFRD. For the report over 2024, Aegon has to comply with the disclosure requirements of the CSRD and the related legislation, namely, the European Sustainability Reporting Standards (IFRS)(ESRS).

This chapter contains a new section entitled “Our material topics”, as issued by the IASB, as well as the Integrated Reporting <IR> Framework, which is currently a joint responsibility ofstructured around the IFRS Foundation’s International Accounting Standards Board (IASB)six topics identified through the double materiality assessment (DMA). Each topic has its own section where definitions and International Sustainability Standards Board (ISSB).related impacts, risks, and opportunities are disclosed, along with related policies, key performance indicators, targets, and metrics. Each topic is also mapped against the related UN Sustainable Development Goals (SDGs) to highlight Aegon’s contribution to these goals. Aegon’s actions on these topics, where

Defining content

In 2023, Aegon has used the Integrated Reporting Framework since 2014, and this chapter includes a table demonstrating Aegon’s alignment with the “Guiding Principles” and the “Content Elements” of the <IR> Framework.

In 2022, Aegon took further steps to prepare for the forthcomingupcoming sustainability-related disclosure requirements of the Corporate Sustainability Reporting Directive (CSRD)CSRD and ESRS. The concept of the European Union. To that end, we undertook our first double materiality assessment (DMA) as“double materiality” is one of the steps toward meeting the requirementscornerstones of the CSRD;CSRD framework. It requires that a sustainability matter is assessed based on two perspectives: financial materiality and we proactivelyimpact materiality. Subsequently, the matters/topics identified and included additional disclosures in this Annual Report. We usedas material according to the resultscriteria under one or both of the financial/ impact materiality perspectives, will form the basis of the sustainability-related information for future reporting.

Our sustainability disclosures have been mapped to our six DMA topics and their disclosure requirements, as defined by the ESRS, as well as to frame our sustainability-related disclosures againstspecific to Aegon. As the identified material topics. More specifically,DMA process was concluded in the last quarter of 2023, we will continue to develop the disclosures for each of these topics during 2024.

The information on material topic, we mapped our existing indicators against the requirements and in some cases we identified new indicators for disclosure. In preparation for the CSRD we restructured the tables in the “Value created” section and mapped the performance indicators to the material topics.

This chapter of the Annual Reporttopics is also designed to provide evidence and support Aegon’s overarching approach to value creation. Accordingly, the “Value created” section (pages 434-446) is structured based on five main stakeholder groups as presentedprovided mainly in the “Sharing value with our stakeholders”stakeholders in 2023” (pages 24-35) and “Our material topics” (pages 461-477) sections.

General ESRS disclosures are included in various sections of the Management report. This includes information about Aegon’s sustainability governance, which is disclosed in the “Governance and risk management 2023” section (page 51). The composition and diversity of the members of the Board of Directors and the Executive Committee can be found in the “Report of the Board of Directors” section

available, are disclosed in the “Creating sustainable value for our stakeholders in 2023” section (pages 20-29)19-20).

Moreover, this

The chapter of the Annual Report containsalso includes voluntary disclosures related to sustainability initiatives such as the UN Global Compact (UNGC), the UN Sustainable Development Goals (SDGs), the UNEP-FI’sUNEP-FI Principles for Sustainable Insurance (PSI), and the Task Force on Climate-related Financial Disclosures (TCFD), as well as.

Voluntary information required by regulatory authorities such asnot linked to a material topic but relevant to our sustainability approach and benchmarking is presented in the EU Non-Financial Reporting Directive (NFRD)“Voluntary Information” and the EU Taxonomy Regulation. “External Recognition” sections (pages 506-508).

The non-financialsustainability information in this sectionchapter of the report is also part of the “Management report” as defined byin Part 9 of Book 2 of the Dutch law.

Civil Code. In this Annual Report,report, we use the words “non-financial”“non-financial” and “sustainability” interchangeably. We also use the term “ESG” when referring to environmental, social or governance related riskrisks or performance.
Defining content
This

(page 60-61). The interests and views of our stakeholders including the engagement process are described in the “Understanding and engaging with our stakeholders” section of(page 21). Our market position, strategy, and business model are described in the Annual Report contains non-financial information that is deemed important to either Aegon’s stakeholders or Aegon. Aegon applies the principle of “materiality” to determine the content that is disclosed in this Annual Report. In previous years, Aegon followed the <IR> Framework“Who we are” and the “materiality” definition used by this Framework. This year, in preparation for the forthcoming CSRD requirements, Aegon conducted its first“Our strategy” sections (pages 2-3 and 9-13).

The double materiality assessment

According to the ESRS, “a sustainability topic or information is material from an impact perspective if it is related to actual or potential, positive or negative impacts that an undertaking - in this case Aegon - has on the environment and usedsociety. A sustainability topic or information is material from a financial perspective if it as the basis for its sustainability-related disclosures. (Further information on our sustainability reporting program can be found under the sections “Sustainability” on page 17, and “Regulation and compliance” on page 410.)

The “double materiality” concept, outlined by the draft European Sustainability Reporting Standards (ESRS), requires that the significance of sustainability matters is assessed based on two perspectives: financial materiality, which covers thetriggers financial effects on Aegon, i.e., generates risks or opportunities that influence or are likely to influence the companyfuture cash flows and impact materiality, which coverstherefore, the impact on people or environment. A sustainability matter meets the double materiality criterion if it is material from either the impact perspective, or the financial perspective, or both perspectives. Accordingly, Aegon considers each materiality perspective in its own right, meaning, it discloses information that is material from both perspectives, as well as information that is material from only one perspective.
The scopeenterprise value of the 2022 double materiality assessment covers all business units where Aegon has majority ownership or operational control, and their related value chain partners. The assessment does not include joint ventures or associates.
The 2022 double materiality assessment uses company and stakeholder insights provided as part of the Business Environment Scan (BES) exercise. These are complemented byAegon”.

In 2023, we conducted our second DMA, following a broader impact assessment, which is formed through interviews with internal and external experts as well as desk research. These views led to a long list of sustainability matters, which were grouped into a shortlist. The shortlist was assessed against financial and impact materiality to reach an initial assessment. The outcome was discussed by our Local Sustainability Board chairs, endorsed by our Global Sustainability Board, and approved by our Management Board.four-step methodology.

1.

Understand the landscape: Desk research, which included peer analysis, media scan, high-level scan of reporting and regulatory requirements and an analysis of sustainability trends for the insurance sector.

2.

Consultation: Harmonizing a long list of topics and preparing for stakeholder engagement, where the long list of topics that emerged from the desk research was aligned with the ESRS requirements, resulting in a medium list of topics; and identifying stakeholders to engage with.

The assessment identified ten material topics and validated Aegon’s priority themes of climate change and inclusion and diversity. This is reflected in our Sustainability Roadmap 2025 which aims to further integrate sustainability into Aegon’s business, particularly in the areas of business conduct and risk management, responsible products and responsible investing.
 

 456  |  Annual Report on Form 20-F 2023

Basis of preparation

   Aegon Annual Report on Form 20-F 2022  |  401
Table of Contents
    About Aegon    Governance and risk management    Financial information   

Non-financial information

3.  Assess impacts, risks, and opportunities: Assess impact materiality and financial materiality through a survey of stakeholders representing different business units and external stakeholders. Conduct interviews with key internal and external stakeholders, including a separate workshop on financial materiality.

4.  Validation, approval, and integration: Validation of the results by key internal stakeholders, endorsement of the short-listed material topics by the Global Sustainability Board, and approval by the CEO, supported by the Executive Committee.

Assessment criteria

For the 2023 DMA, we used the descriptions and the following assessment criteria as prescribed by the ESRS as a basis for our approach:

1.  We assessed the materialityof actual and potential impacts by asking key stakeholders to prioritize the topics and rank their impacts.

2.  For the assessment of financial materiality1, we gathered input on the potential risks and opportunities of a topic. We used our existing ERM methodology for scoring the impacts, consisting of financial, customer, regulatory, and reputational categories.

3.  For the selection of material topics, we ranked them as highly, moderately, or less material. Those ranked as highly material from either an impact or financial materiality perspective were included in our list of material topics. We then “sense checked” the results with stakeholders through several consultations.

Through this assessment, we identified six material topics. The “Our material topics” section is structured around these topics.

  

Comparison with previous DMA topics

For our 2023 DMA, we established a methodology that builds on the process we developed for our 2022 DMA. Compared to our 2022 DMA, our two priority themes (climate change and inclusion and diversity) are again confirmed as material. Topics such as responsible investing, responsible products, and solid financial performance, which were identified as material topics in 2022, are now considered mechanisms or direct results that stem from addressing our material topics effectively. Some topics have evolved since last year. For example, talent development is an element of the wider topic of employee wellbeing, and customer experience has been sharpened to become customer empowerment.

Value chain

In our double materiality assessment, we have considered the impacts, risks, and opportunities (IROs) along our value chain in broad terms. We approached this through the different perspectives that define Aegon’s operations and impact areas: our underwriting role (focusing on our insurance/ products perspective), our role as an investor (emphasizing our investment perspective), and our role as a responsible company (highlighting our own operational practices and supply chain).

The scope of the sustainability information disclosed in this report includes both upstream and downstream actors in the value chain, where possible and where information is available. For example, our climate change disclosures cover our own operations as well as our investments.

The following table illustrates our value chain. In 2024, we will continue to refine the definition of our value chain and further mature the assessment of material topics within the value chain.

   
Position in value chain Value chain dimension Value chain element
   

Upstream

SuppliersSupply chain

Aegon

Own operations

Workforce

Real estate

Sponsorships and partnerships, community investment

Downstream

Underwriting

Customers

Distribution, claims, and underwriting process

Joint ventures and associates

Investments and asset management

Investments

Joint ventures and associates

Third-party investments

Next steps

Over the next year, we will continue to develop the material disclosures, as necessary, to meet the ESRS requirements. Where action is required on material topics, this will be integrated into our sustainability approach and other mechanisms. In 2024, we will continue to mature

the processes we follow as part of our DMA approach. In particular, we will refine our approach to assessing double materiality within the value chain. We will also enhance our stakeholder engagement strategy to improve our engagement with key external stakeholders.

1

This assessment of financial materiality is informed by relevant European laws and standards, it may not always align with the definition under US securities laws.

Annual Report on Form 20-F 2023  |  457 

LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

Reporting process for non-financial data

Unless otherwise stated,

The qualitative sustainability information disclosed has been compiled based on the non-financial metrics detailedDMA output and through dedicated interviews with internal subject matter experts.

Quantitative sustainability information is maintained in this section ofdifferent information systems throughout the Annual Report cover the same period as the financial statements, which is the full calendar year 2022. Whenever possible, figures for the past two full calendar years have alsoorganization. The information has been included (in the tables provided in the “Value created” section) for comparison purposes. It is important to note that there have been divestments that were closed during the financial year 2022; therefore historical figures might not be always relevant for comparison. Explanatory notescollected and definitions are provided as footnotes to the accompanying tables in the “Value created” section (pages 434-446).

The non-financial data included in this section is collected mainlyaggregated at group-level through an online data collection platform. The aggregatedtool. All data has been reviewed and validated by dedicated subject matter experts at Aegon. The non-financialTo prepare for limited assurance for the financial year 2024, we have documented all material sustainability reporting processes and key controls. This year’s sustainability information in this Annual Report has not been subject to an external audit or review.

In 20222023, we further enhanced our Sustainability Reporting Program, building on the process initiated the previous year.Program. The program aims to meet evolving regulatory requirements, provide data for sustainability performance benchmarks, and support our Sustainability Roadmapsustainability approach and other sustainability commitments. Responsibility for sustainability reporting was extended beyondis a collaboration between Aegon’s Global Corporate Sustainability Team to include the company’s finance function, which has beenand our Finance function. Finance are tasked with collecting non-financialsustainability and ESG data, establishing processes and controls, and implementing robust reporting tooling. This will also helpcollaboration aims to prepare Aegon for limited assurance on non-financial reportingsustainability information, as required from 2024 under the CSRD. For more information on the CSRD, please refer to the section on page 413.

Estimations

Estimations (i.e. assumptions or extrapolations) may be applied where data is incomplete or unavailable. For thisthe 2023 reporting year, the following significant estimations have been made:

∎
EU Taxonomy’sTaxonomy eligibility and alignment assessment (please see “EU Taxonomy” section on page 413).500)
∎
Operational energy consumption, air travel and associated GHG emissions: we extrapolate by the area of floorspace where we are missing data on energy use.
∎
Investment carbon footprint: Wewe use extrapolation for indicators including Relative intensity, Weightedthe weighted average carbon intensity and Carbon risk rating when underlying carbon data is not available. The availability of data for eachthis indicator is expressed inas a coverage ratio, as disclosed in the TCFDTask Force on Climate-related Financial Disclosures (TCFD; pages 484-498) and “Climate change mitigation and adaptation” section (pages 427-433)462-464). For Aegon UK, there was no disclosed data coverage for the 2019 baseline. An assumption was made to extrapolate based on a comparable level of data coverage in line with subsequent years. For direct real estate investments, relative intensity is calculated based on the floor space with carbon data available (sqm). Additionally, the data coverage % for direct real estate only includes those properties with available floor space data.
∎Operational energy consumption (gas and Value created sections (pages 434-446).electricity) and associated GHG emissions: we extrapolate by floor area in cases where we are missing data on energy use.
∎For business travel by car: where we do not have the information to specify between cars running on electricity or fossil fuel, we assume they are using fossil fuel.
∎For energy consumed by employees classified as permanent home workers: we extrapolate by using the total headcount and the energy intensity for our overall office space.

 458  |  Annual Report on Form 20-F 2023

Basis of preparation

Restatements

Revisions of comparative information

When compiling and disclosing non-financialsustainability data, in some cases values reported inreclassifications of prior years have been reclassifiedyears’ data may be applied to align with changing circumstances in the 20222023 reporting year. Such circumstances might include, but are not limited to, changes in the definitions of data, and refining the methodology for data approximation.approximation, and exclusion of data from divested businesses. For thisthe 2023 reporting year, the following significant restatementsmain revisions have been made:

∎
As a result of the combination of Aegon the Netherlands with a.s.r. on July 4, 2023, we have excluded the data relating to Aegon the Netherlands from the 2023 figures. Where possible and relevant, data from 2022 has been restated to enable a comparison between 2023 and 2022. The following 2022 indicators were not restated:
∎Number and proportion of women in senior management (reported under “Inclusion and diversity”)
∎Global Employee Survey (GES) results and participation rate (reported under “Employee wellbeing”)
∎Ratio of CEO compensation to average compensation (reported under “Employee wellbeing”)
∎Proportion of compliance with the Global Remuneration Framework (reported under “Employee wellbeing”) and Anti-bribery and Conflict of interest policy requirements (reported under “Business conduct”)
∎Systematic Integrity Risk Assessment (SIRA) (reported under “Business conduct”)
∎Responsible tax (reported under “Business conduct)
∎Metrics relating to “Responsible investment solutions” (RIS) and “Engagement and voting” (reported under “Voluntary information”)
∎Although our divested Eastern European businesses were excluded from our 2022 reporting, Poland and Romania were nevertheless included in the total number of customers for 2022 (reported under “Customer empowerment”). To enable a comparison, we have restated the 2022 figure of “Total customers” in the 2023 Integrated Annual Report to exclude customers from Poland and Romania.
∎Total GHG emissions per EURm revenue: the definition of “Direct employees”revenues has changed in 2022 compared to previous years. Based on the new definition, direct employees include employees of Aegon N.V. and its 100% subsidiaries only, and is therefore limited to entities over which Aegon has direct control. In previous years, the employees ofunder IFRS 17. For this metric, we now use total revenues, excluding joint ventures and associates, wereas presented as partin the segment results table in the financial statements under “Segment total”. We have restated the 2022 figure based on this new definition of Direct employees. total revenue to enable a comparison.
∎Until the end of 2022, customer satisfaction was measured centrally using the benchmarked Net Promoter ScoreSM (NPS®) metric. In 2023, customer satisfaction in the United States was measured through RepTrak and in the United Kingdom through the relationship Net Promoter ScoreSM (NPS®) metric. For more details, see the footnote under the customer satisfaction metrics (reported under “Customer empowerment”).
∎The 2021 figures have been restated to reflect the new definition. This also impacts the following indicators in Value created table “Employees”: Number of directabsence rate excludes Transamerica employees, as well as all indicators disclosed under the headings Recruitment and retention, Average investment in training and career development per employee and Proportionthis type of women employees, and the following indicators in Value created table “Society”: Total GHG emissions / employee (location-based) and Total GHG emissions / employee (market-based). The 2020 figures wereabsence is not updated for practical reasons. For more information see the Value created table on pages 434-446.
∎
In the Value created table “Customers” we disclose the number of customers, including a breakdown by region. The number of customers of our joint venture in Brazil is now reportedregistered in the category International. In previous years this was reported under Americas.United States but combined with annual leave. The 2020 and 2021 figures were2022 balance did include an estimate for Transamerica’s absence. To make a comparison possible, we restated 2022 to reflect this change.
exclude Transamerica.
∎
In the Value created table “Society”, the 2021 figures for the indicators “Absolute reduction against baseline” and “Relative reduction of scope 1+2 against baseline 2019 (%)” regarding operational carbon footprint have been restated. The 2021 figures have been restated to remove carbon emissions due to air travel (Scope 3).

Reporting scope

Unless otherwise stated, the disclosed sustainability information (qualitative and quantitative) covers the same period as the financial statements, which is the full calendar year 2023. Explanatory notes and definitions are provided as footnotes to the accompanying disclosures.

The scope of non-financialsustainability data reported in this section includes all consolidated entities over which Aegon has management control.similar to the financial statements as explained in note 2.2 of the financial statements (Basis of consolidation), unless otherwise stated. Divested businesses or joint ventures and associates, are excluded from the scope unless otherwise stated in the footnotes under the “Our material topics/Metrics” sections. In July 2023, the combination of our Dutch activities with a.s.r. was completed. As a result of this transaction, we no longer have management control over our Dutch activities, which is why we have excluded Aegon the Netherlands from the sustainability information for the data tables in the “Value created” section. In 2020 we announced the divestment of our Eastern European businesses, and these were excluded from our 2021 reporting. Closings were not finalized for our Poland and Romania businesses in 2022, and they continue to be excluded from our reporting.

full year 2023.

The “Disclosure by segment” table provides an overview of the scope of non-financialthe sustainability data included in this chapter of the Annual Report for each of our segments. In some cases, the scope does not apply to certain segments, and this is indicated in the table.

 

402  |  Aegon Annual Report on Form 20-F 20222023  |  459 

Table of Contents
LOGO		 
Basis of preparation
About Aegon  Governance and risk management  Financial information  Sustainability information
   
Disclosure by segment
Indicator topics by stakeholder
  
 
Segment
 
                                
    
    
    
    
    
    
 
                                
       
Customers
                              
Number of customers
   
    
    
    
    
    – 
Benchmarked Net Promoter Score (NPS)
   
    
    
    
    –    – 
Complaints
   
    
    
    
    –    – 
Fines and settlements
   
    
    
    
    
    
 
Claims, benefits and retirement plan withdrawals
   
    
    
    
    
    – 
                                
       
Employees
                              
Workforce
   
    
    
    
    
    
 
Recruitment and retention
   
    
    
    
    
    
 
Employee engagement
   
    
    
    
    
    
 
Inclusion and diversity
   
    
    
    
    
    
 
Health and safety
   
    
    
    
    
    
 
Compensation and benefits
   
    
    
    
    
    
 
Collective bargaining
   
    
    
    
    
    
 
                                
       
Business partners
                              
Premiums and commissions
   
    
    
    
    
    – 
Goods and services
   
    
    
    
    
    
 
                                
       
Investors
                              
Corporate governance
   
    
    
    
    
    
 
Supervisory Board oversight
   
    
    
    
    
    
 
Financial returns
   
    
    
    
    
    
 
Sustainability benchmarks
   
    
    
    
    
    
 
                                
       
Society
                              
Responsible investment
   
    
    
    
    
    
 
Climate change (investment footprint)
   
    
    
    
    
    – 
Climate change (operational footprint)
   
    
    
    
    
    
 
Compliance
   
    
    
    
    
    
 
Information security
   
    
    
    
    
    
 
Responsible tax
   
    
    
    
    
    
 
Community investment
   
    
    
    
    
    
 
                                
reported
not reported
  

Disclosure by segments

 Indicators per material topic  Segment                     
                           
    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO 

Climate change

            

Investment footprint

   🌑    🌑    🌑    🌑    –    🌑 

Operational footprint

   🌑    🌑    🌑    🌑    🌑    🌑 
                               

Inclusion and diversity

            

Diversity

   🌑    🌑    🌑    🌑    🌑    🌑 

Work-related incidents

   🌑    🌑    🌑    🌑    🌑    🌑 

Diversity among senior management

   🌑    🌑    🌑    🌑    🌑    🌑 
                               

Customer empowerment

            

Total customers and news customers

   🌑    🌑    🌑    🌑    –    🌑 

Customer satisfaction

   🌑    🌑    🌑    –    –    🌑 

Customer complaints

   🌑    🌑    🌑    –    –    🌑 

Significant mis-selling fines

   🌑    🌑    🌑    🌑    –    🌑 

Pricing and product development (policy compliance)

   🌑    🌑    🌑    –    –    🌑 
                               

Employee wellbeing

            

Number of employees

   🌑    🌑    🌑    🌑    🌑    🌑 

Direct employees

   🌑    🌑    🌑    🌑    🌑    🌑 

Non-employees

   🌑    🌑    🌑    🌑    🌑    🌑 

New employees, leavers, and turnover

   🌑    🌑    🌑    🌑    🌑    🌑 

Performance and development reviews

   🌑    🌑    🌑    🌑    🌑    🌑 

Employee engagement

   🌑    🌑    🌑    🌑    🌑    🌑 

Investment in training and career development

   🌑    🌑    🌑    🌑    🌑    🌑 

Collective bargaining

   🌑    🌑    🌑    🌑    🌑    🌑 

Compensation and benefits

   🌑    🌑    🌑    🌑    🌑    🌑 

Absenteeism

   🌑    🌑    🌑    🌑    🌑    🌑 

Family-related leave

   🌑    🌑    🌑    🌑    🌑    🌑 
                               

Data security and privacy

            

Information security training and phishing-awareness

   🌑    🌑    🌑    🌑    🌑    🌑 

Data privacy training

   🌑    🌑    🌑    🌑    🌑    🌑 
                               

Business conduct

            

Code of conduct attestation

   🌑    🌑    🌑    🌑    🌑    🌑 

Policy compliance and Systematic Integrity Risk Assessment

   🌑    🌑    🌑    🌑    🌑    🌑 

Fraudulent activity

   🌑    🌑    🌑    🌑    🌑    🌑 

Responsible tax

   🌑    🌑    🌑    🌑    🌑    🌑 
                               

🌑 reported

🌑 not reported

–  not applicable

 460  |  Annual Report on Form 20-F 2023

– not applicable

Our material topics

  
  

Our material topics

Our approach

Sustainability topics are moving up the corporate agenda. For Aegon, this means integrating sustainability issues into its business in a meaningful way in order to meet the expectations of relevant stakeholders across its value chain and to act on its purpose from an impact perspective. In addition, business risks and opportunities stemming from sustainability topics are becoming increasingly important as the competitive and regulatory landscape evolves in the regions where Aegon operates.

In 2023, our sustainability approach focused primarily on our two priority themes – climate change and inclusion and diversity. The structure of our non-financial reporting for 2023 is wider, encompassing the six topics identified by our DMA process. For these topics, we have already begun the process of identifying policies, metrics, and (where they are already in place) targets.

Through Aegon’s sustainability approach and other delivery mechanisms, as necessary, we will continue to embed these topics within the business and develop our approach as sector-specific guidance on the implementation of the CSRD becomes available.

For each material topic, the following aspects are presented: related sub-topics, definitions, related impacts, risks, and opportunities, as well as related policies, key performance indicators, targets, metrics (where available) and Aegon’s contribution to the SDGs. As part of our preparations for the CSRD, we have listed metrics and KPIs under each of the material topics. These are not yet fully reflective of ESRS and include a mix of ESRS and entity-specific disclosures. Aegon’s actions in relation to these material topics are disclosed in the “Creating sustainable value for our stakeholders in 2023” section (pages 20-35). A “Policies and Statements” table is included at the end of this section, where each policy is explained in detail.

Annual Report on Form 20-F 20222023  |  403461  

Table of Contents
LOGO		 About Aegon  Governance and risk management  Financial information
Non-financialSustainability information
   
The Integrated Reporting Framework
  Disclosure
Topic
Page reference
1
(or details of omissions if applicable)
  Guiding principles      
Strategic focus and future orientation      
Our strategy and value creation (pages 8-12)
  
Sustainability (pages 13-17)
 
Connectivity of information
The topics mentioned in Sharing value with our stakeholders (pages 20-29), and performance data provided in Value Created (pages 434-446)
Stakeholder relationships
Sharing value with our stakeholders (pages 20-29)
Sustainability (page 13)
Materiality
Basis of preparation (pages 401-402)
Sustainability (page 13)
Conciseness
The section “About Aegon (pages 1-32)” is structured around our material topics, risks, opportunities, strategy, and the performance and value associated with these. We have also applied the materiality principle to define the content of this Annual Report as explained in the sections Sustainability (page 13) and Basis of preparation (pages 401-402)
Reliability and completeness
Basis of preparation (pages 401-402)
Consistency and comparability
This Annual Report is prepared in accordance with the International Financial Reporting Standards (IFRS), as issued by the IASB, as well as the Integrated Reporting Framework. Aegon has used the <IR> Framework since 2014.
We are making the shift to integrating more material frameworks; like that of the Task Force on Climate-related Financial Disclosures (pages 427-433).
  Content elements
Organizational overview and external environment
About Aegon (pages 2-3)
Governance
Corporate governance, including Sustainability governance (pages 36-41)
Business model
Our strategy and value creation (pages 8-12)
Value creation (pages 18-19)
Risk and opportunities
Sustainability (pages 13-17)
Strategy and resource allocation
Our strategy and value creation, including Sustainability (pages 8-17)
Sharing value with our stakeholders (pages 20-29)
Performance
Performance in 2022 (pages 30-32)
Value created (pages 434-446)
Outlook
Performance in 2022 (pages 30-32)
Basis of preparation and presentation
Basis of preparation (pages 401-404)

1 
All page numbers in this table refer to Aegon’s Annual Report 2022, unless otherwise stated. Where there are several examples,
only principal references are included.

Climate change mitigation and adaptation

404  |  Aegon Annual Report on Form 20-F 2022
Table

Definition

“Climate change mitigation” refers to the process of Contents

Sustainability approach
Sustainability approach
Our ambition
As introducedreducing greenhouse gas (GHG) emissions and keeping the increase in “Our strategythe global average temperature to well below 2 °C and value creation” (pages 8-12)pursuing efforts to limit it to 1.5 °C above pre-industrial levels, as set out in the Paris Agreement. “Climate change adaptation” refers to the process of adjusting to actual and “Sustainability” sections (pages 13-17), in 2022, we continued to take steps to further embed sustainability into Aegon’s strategic approach. Our ambition is to embed sustainability across the business through Aegon’s Sustainability Roadmap 2025. The roadmap sets out the steps we are taking on our two priority themes,expected climate change and inclusionits impacts.

Sub-topics

∎Investment footprint, including engagement with investee companies
∎Operational footprint, including energy use

Impacts, risks, and diversity,opportunities

Aegon has an impact on climate change mitigation primarily through its investment portfolio. Aegon has identified two main risks regarding climate change mitigation that could have a significant to severe impact on Aegon, namely the exposure of the investment portfolio to both physical and transition risks caused by a lack of mitigation. The transition risks come from the potential sensitivity of our investment portfolio to rapid implementation of climate policies, changes in investor preferences, costs of non-compliance or technological disruptions. The physical risks are due to the impact of climate change on global supply chains or physical assets. Climate change will also have other material topicsindirect impacts on public health and longevity in the medium to long term.

There are also significant opportunities arising from climate change mitigation, such as investing in the technology and infrastructure needed to transition away from carbon emissions, including renewable energy sources, low-carbon properties, low-carbon heating, electrification of transport, and nature-based solutions.

To mitigate its impact and capitalize on opportunities, Aegon is investing in line with our net-zero commitments. This includes reducing the carbon intensity of our general account and investing USD 2.5 billion to help mitigate climate change or adapt to the associated impacts by 2025 (scope 3 emissions). Aegon is also working on reducing its direct operational impact (scope 1 and 2 emissions).

Aegon’s impact on climate change adaptation is shaped by how Aegon invests within its existing portfolio and how it approaches future portfolio allocation/asset selection decisions. The main risks identified by our initial double materiality analysis.

We have set targets for our sustainability approach basedAegon regarding climate change adaptation are, again, related to physical and transition risks, such as the potential impact of extreme weather events on careful assessment of stakeholder needs, regulatory developmentsdirect operations, infrastructure, assets, and industry trends. Further detailssupply chains.

Climate change mitigation and adaptation also means actively engaging with the companies in which Aegon invests.

Additional information on how our key business activities impact our key stakeholders can be foundclimate change related risks and opportunities is disclosed in the “Sharing value withTCFD section (page 486-498).

Policies and commitments

Our Group Responsible Investment Policy and Net-Zero Asset Owner Alliance (NZAOA) membership provide a framework and guide our stakeholders” section (pages 20-29).

From roadmap to action
Realizing our sustainability ambition and delivering our roadmap requires close collaboration across all levels of the organization. To achieve this, we have put in place a clear governance approach (please see the governance diagramsteps on page 17). The Corporate Sustainability Team isclimate change mitigation at the centerportfolio level. These steps involve assessing the feasibility of this collaboration to help develop and update Aegon’s sustainability roadmap, and monitor progress on behalf of the MB and Global Sustainability Board (GSB).
To further strengthen ownership of Aegon’s sustainability ambition and roadmap, a number of sustainability indicators are linked to executive remuneration. Further details are shared on pages 57-76.
The different owners at Corporate Center and in the business units, are responsible for translating the roadmap goals into detailed action plans and milestones. These milestones and actions are regularly discussed in the Local Sustainability Boards and Global Sustainability Board. Each year, the Sustainability Roadmap 2025 will be reviewed and updated to make sure it incorporates the latest stakeholder expectations and industry developments.
Together we go further
We acknowledge that we cannot achieve our sustainability ambitions on our own. Tackling global challenges such as climate change and inequality requires collaboration with our stakeholders. Our sustainability approach is focused onestablished targets, actively engaging with our clients, NGOs, industry bodies, regulators,companies in which Aegon invests, and other stakeholder groups to find out where we can support one another and create partnerships. In 2022, we added a stakeholder engagement officer to the Corporate Sustainability Team to deliver on this ambition.
Non-financial key performance indicators
In alignmentpotentially divesting from sectors with our company strategy and our material topics, we have identified key performance indicators (KPIs) to measure our non-financial performance. In addition, we have set targets for 2022 and 2023 for a number of these KPIs.particularly negative impacts.

The table on the next page provides an overview of our KPIs and targets for 2022 and 2023 for our non-financial material topics, including our performance in 2022. The table excludes the material topic of “solid financial performance”, which is handled in detail in the “Financial performance” section of this Annual Report (page 30).
 

Key performance indicator(s) and target(s)  

KPI(s)

  Aegon Annual Report on Form 20-F 2022  |  405Target for 2023  
Table of Contents
Performance in 2023		      About Aegon    Governance and risk management    Financial information
Non-financial information
Target for 2024
Non-financial key performance indicators
Material Topic
KPI(s)
Target for 2022
Performance in 2022
Target for 2023
Climate change
Priority theme
∎
Weighted average carbon intensity for corporate fixed income and listed equity in our general account
1
1) (metric tons CO
2
e / EURm revenue)
  
∎
25% reduction by 2025 against 2019 baseline
  
∎
  On track. 20%Ahead of target. 37% reduction by 20222023 against 2019 baseline
  
∎

25% reduction by 2025 against 2019 baseline

∎
  Absolute operational carbon emissions
2
(Scopes 1&2) (metric tons CO
2
e)
∎
  25% reduction by 2025 against 2019 baseline
∎
  Well ahead of target. 59% reduction by 2022 against 2019 baseline
∎
  25% reduction by 2025 against 2019 baseline
∎
Amount of investmentsinvested in activitiescompanies to help mitigate climate change or adapt to the associated impacts by 2025 (USD billion)
  
∎
  No target 2022
∎
  Not measured
∎
USD 2.5 billion investments by 2025
Slightly behind projected budget. USD 1.8 billion invested

USD 2.5 billion investments by 2025

∎
Number of engagements with the largest corporate carbon emitters in our investment portfolio by 2025  
∎
  No target 2022
∎
  Not measured
∎
Engagement with at least the top 20 corporate carbon emitters by 2025
  On track. 19 investees were engaged  

Engagement with at least the top 20 corporate carbon emitters by 2025

Inclusion
Carbon intensity of our directly held real estate investments (Scopes 1 and diversity
Priority theme
2) (kgCO2e/m2)		  
∎
  Proportion of women in senior management
3
(%)
New target		  
∎
  Minimum 36%
Ahead of target. 46% reduction by 2023 against 2019 baseline		  
∎
  36%

25% reduction by 2025 against 2019 baseline

Absolute operational carbon emissions (Scopes 1 and 2) (metric tons CO2e)  
∎
  Minimum 38%
25% reduction by 2025 against 2019 baseline  Ahead of target. 68% reduction by 2023 against 2019 baseline  
Responsible investing
∎
  Number of engagements with investee companies
4
∎
  No target 2022
∎
  832
∎
  No target 2023
Responsible products,
treating customers fairly
∎
  Significant fines to address cases of mis-selling (number and EUR)
∎
  0 fines
∎
  0 fines
∎
  0 fines
Talent management
∎
  Result of the most recent employee engagement survey
5
(%)
∎
  At least 70%
∎
  70%
∎
  At least 72%
Business conduct
and risk management
∎
  Proportion of employees completed training on Code of Conduct
∎
  95% completed training
∎
  99% completed training
∎
  95% completed training
Customer experience
∎
  Benchmarked Net Promoter Score(SM) (NPS
®
) in our core markets
6
∎
  In line with or above the average of those of our peers
∎
  US = market average
∎
  NL < market average
∎
  UK < market average
∎
  In line with or above the average of those of our peers
Cybersecurity
and data protection
∎
  Proportion of employees completed the annual training on Information Security (%)
∎
  No target 2022
∎
  95%
∎
  No target 2023
Good health and
wellbeing
∎
  Employee absence rate
7
(%)
∎
  No target 2022
∎
  2.4%
∎
  No target 2023

25% reduction by 2025 against 2019 baseline

1 

Aegon hasis committed to transitioning its general account* investment portfolio to net-zero greenhouse gas (GHG) emissions by 2050. The commitment includes an intermediate target to reduce the carbon intensity for corporate fixed income and listed equity in our general account by 25% in 2025 compared with 2019. For details on the methodology used, please see the TCFD section (Methodology) on page 433.498. (* The general account portfolio consists of assets where Aegon can takemake the investment decisions, considering thetaking into account Aegon’s legal obligations of Aegon as prescribed byunder local laws and regulations. A similar approach applies to selected investments where Aegon AM in its capacity ofas manager takesmakes the investment decisions. For discretionary investments for accounton behalf of third parties and off-balance sheet investments, the investment decisions are driven by the relevant third parties as well as the legal and/or fiduciary obligations of Aegon, as prescribedrequired by local laws and regulations.)

 462  |  Annual Report on Form 20-F 2023

Our material topics

Metrics              
   unit           2023      2022      % 

Climate change mitigation and adaptation

                 

Investment footprint

              

Corporate Fixed Income + Listed Equity (CFI)1)

              

Total carbon emissions

  tCO2e         2,036,000       2,640,000       (23%)  

Carbon footprint

  tCO2e/EURm invested       82     84     (2%) 

Total carbon emissions and carbon footprint (coverage)

  %       90%     89%     1pp 

Weighted average carbon intensity

  tCO2e/EURm revenue       338     428     (21%) 

Weighted average carbon intensity (coverage)

  %       97%     97%     0pp 

Reduction of weighted average carbon intensity vs 2019 baseline

  %           (37%)      (20%)      (17pp) 

Sovereign Fixed Income (SFI)2) - excluding LULUCF

              

Total carbon emissions

  tCO2e       1,411,000     n.m.     n.m. 

Carbon footprint

  tCO2e/EURm invested       270     n.m.     n.m. 

Total carbon emissions and carbon footprint (coverage)

  %       76%     n.m.     n.m. 

Weighted average carbon intensity3)

  tCO2e/EURm invested       270     n.m.     n.m. 

Weighted average carbon intensity (coverage)

  %       76%     n.m.     n.m. 

Sovereign Fixed Income (SFI)2) - including LULUCF

              

Total carbon emissions

  tCO2e       1,237,000     n.m.     n.m. 

Carbon footprint

  tCO2e/EURm invested       240     n.m.     n.m. 

Total carbon emissions and carbon footprint (coverage)

  %       76%     n.m.     n.m. 

Weighted average carbon intensity3)

  tCO2e/EURm invested       240     n.m.     n.m. 

Weighted average carbon intensity (coverage)

  %       76%     n.m.     n.m. 

Climate change resiliency (ND GAIN rating)

  score       64     n.m.     n.m. 

Climate change resiliency (coverage)

  %           100%      n.m.      n.m. 

Real estate4)

              

Total carbon emissions

  tCO2e       4,783     n.m.     n.m. 

Total floor space

  m2       78,680     n.m.     n.m. 

Carbon intensity

  kgCO2e/m2       0.08     n.m.     n.m. 

Carbon intensity (coverage)

  %       74%     n.m.     n.m. 

Reduction of carbon intensity vs. 2019 baseline

  %           (46%)      n.m.      n.m. 

Active ownership

              

Number of engagements with heaviest emitters (based on WACI)5)

  nr       19     n.m.     n.m. 

Investment in companies contributing to climate mitigation and/or adaptation6)

  USDb           1.8      n.m.      n.m. 

Operational footprint

              

Greenhouse gas (GHG) emissions7)

              

Scope 1 - gas

  tCO2e       1,945     3,361     (42%) 

Scope 2 - electricity - location based

  tCO2e       11,301     11,068     2% 

Scope 2 - electricity - market based

  tCO2e       229     335     (32%) 

Scope 3 - business travel

  tCO2e       10,255     6,350     61% 

Air travel - total emissions

  tCO2e       8,301     n.m.     n.m. 

Train travel - total emissions

  tCO2e       59     n.m.     n.m. 

Car travel - total emissions

  tCO2e       1,895     n.m.     n.m. 

Total GHG emissions (location-based)

  tCO2e       23,501     20,780     13% 

Total GHG emissions per EURm revenue

  tCO2e/EURm revenue       1.3     1.1     14% 

Total GHG emissions per employee8)

  tCO2e/ employee       2.0     1.8     12% 

Total GHG emissions (market-based)

  tCO2e       12,429     10,047     24% 

Total GHG emissions per EURm revenue

  tCO2e/EURm revenue       0.7     0.5     32% 

Total GHG emissions per employee9)

  tCO2e/ employee           1.1      0.9      19% 

Total scope 1+2 emissions (location-based)

  tCO2e       13,246     14,430     (8%) 

Absolute reduction of scope 1+2 vs. 2019 baseline

  tCO2e       (28,551)     (27,367)     4% 

Relative reduction of scope 1+2 vs. 2019 baseline

  %           (68.0%)      (65.5%)      (2.5pp) 

Energy consumption

              

Total energy (fuel and electricity)

  MWh       40,744     43,965     (7%) 

Fuel - gas

  MWh       9,901     15,284     (35%) 

Total electricity

  MWh       30,843     28,680     8% 

Renewable electricity

  MWh       30,489     28,105     8% 

Green tariff/Renewable Energy Certificate (REC)

  MWh       30,489     28,105     8% 

Self-generated

  MWh           -      -      - 

Annual Report on Form 20-F 2023  |  463 

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   unit           2023       2022       % 

Non-renewable electricity

  MWh              354          575          (38%) 

Renewable electricity - % of total electricity

  %       99%      98%      1pp 

Renewable energy - % of total energy

  %           75%       64%       11pp 

Business travel

                

Air travel - total distance

  million km       53.3      46.9      14% 

Economy (as % of total distance)

  %       76%      81%      (5pp) 

Premium (as % of total distance)

  %       24%      19%      5pp 

Short distance (as % of total distance)

  %       4%      6%      (2pp) 

Long distance (as % of total distance)

  %       96%      95%      1pp 

Train travel - total distance

  million km       1.67      n.m.      n.m. 

Car travel - total distance

  million km           6.86       n.m.       n.m. 

1

The scope covers global general account assets only. The disclosures are based on Aegon calculations. Relative intensity, weighted average carbon intensity and carbon risk rating are extrapolated in case carbon data is not available. The availability of data for each indicator is expressed in a coverage ratio as disclosed above. Climate change data availability may change over time and characteristics will vary. Certain information from ©2023 Sustainalytics and MSCI ESG Research L.L.C. is reproduced with permission and is not for further distribution. For more information see the TCFD section in this report.

2

The scope covers global general account assets only. The disclosures are based on Aegon calculations. The availability of data for each indicator is expressed in a coverage ratio as disclosed above. Data coverage for SFI indicators is based on UNFCCC national emissions inventory. As a result, indicators reflect coverage of available data and are not extrapolated. Climate change data is subject to delays, and availability may change over time and characteristics may vary. Climate change data used to calculate the Climate change resiliency (ND GAIN rating) is subject to its own methodology and may differ from the data used to calculate SFI indicators. For more information, see the TCFD section in this report. LULUCF stands for the sectors Land use, Land-use change, and Forestry. The scope 1 emissions are reported both including and excluding LULUCF.

3

The weighted average carbon intensity is calculated based on the purchasing power parity (PPP)-adjusted GDP. In previous years, this figure was calculated based on national debt. This change is a result of the revisions to the methodology used to calculate PCAF-financed emissions methodology of December 2022. Figures for previous years are not calculated using this new methodology. Therefore, data for 2022 is disclosed as “not measured”.

4

This metric covers “fully and jointly owned” commercial and residential real estate of Aegon’s general account portfolio, where Aegon directly owns physical buildings, or in the case of joint ownership, has a 25% or greater share. The indicator includes both landlord controlled and tenant-controlled buildings and areas. It does not include Real Estate Investment Trust (REIT), funds or other listed vehicles which should be captured under listed equity and corporate debt. The metric only covers scope 1 and 2 emissions from these buildings. Currently, data is only available for directly held real estate in Transamerica’s general account holdings. Also due to data limitations, it does not include tenant-related scope 3 emissions resulting from heating and electricity consumption.

5

Aegon has setseeks to establish a targetconstructive dialogue with the top 20 heaviest emitters in Aegon’s general account either bilaterally or as part of an investor consortium, as we promote responsible business practices, including the reduction of our carbon footprint. This metric represents the number of companies that have been engaged by Aegon. The ranking of the top emitters is based on the weighted average carbon intensity (WACI) of Aegon’s corporate fixed income assets in the general account.

6

Climate solution investments are investments in economic activities considered to reducecontribute substantially to climate change mitigation (solutions substantially reducing greenhouse gases by avoiding emissions or sequestering carbon dioxide already in the carbon footprintatmosphere) or climate change adaptation (activity that substantially contributes to enhancing adaptive capacity, strengthening resilience, and reducing vulnerability to climate change). Economic activities making a substantial contribution to the first two objectives must be assessed to ensure they do not cause significant harm to all remaining environmental or social objectives. When reviewing assets for inclusion, the use of its operational activitiesproceeds must align with at least one of the stated Climate Solution Themes deemed acceptable by 25%the Net Zero Asset Owners’ Alliance (Pollution Waste, & Water Solutions, Sustainable Land & Marine, Sustainable Transportation, Manufacturing & Industry, ICT Solutions, Green Buildings & Homes, and Renewable Energy). For labelled “Green” or “Sustainability” bonds, Bloomberg data is typically the source used to confirm that the stated use of proceeds meet eligibility criteria. Where available, third-party opinions are considered for support (e.g. Sustainalytics). Note that these investments are held in the Transamerica general account, and are not available for direct investment or co-investment by 2025 against a 2019 baseline (using the location-based measurement). Transamerica clients.

7

Operational GHG emissions includecover own energy consumption and business travel. Energy consumption data is extrapolated by floorspace for sites where consumption data is missing. A further extrapolation is made for employees working permanently from home by applying an average employee consumption to our office premises for each business unit. Where possible, GHG emissions are calculated on the basis of locally-specific conversion factors. Scope 1 conversion factors for gas consumption are sourced from the UK Department for Environment, Food & Rural Affairs (Defra) using “100% mineral” for the United States, and “5% biofuel blend” for the Netherlands, United Kingdom, Spain, and Hungary. Scope 2 emissions.GHG emissions are expressed through both the GHG Protocol “location-based” and “market-based” approaches, with location-based conversion factors for electricity consumption sourced from the US Environmental Protection Agency (eGRID regions), the European Environment Agency for the Netherlands, Spain and Hungary, and Defra for the United Kingdom. For the market-based approach, conversion factors are sourced from individual electricity suppliers. Conversion factors for air travel are sourced solely from Defra as they are applicable to all countries. Conversion factors for car and train travel are sourced from UK Department for Environment, Food & Rural Affairs (Defra), US Environmental Protection Agency, and the European Environment Agency.

8

Direct employees include employees from Aegon Ltd. and its wholly owned subsidiaries only.

9

Total GHG emissions (scope 1+2 and scope 3 Business travel) is divided by total revenues, excluding Joint ventures and associates, as presented in the segment results table in the financial statements under “Segment total”.

SDGs

We are committed to contributing to three UN SDGs and their targets related to climate change:

7. Affordable and clean energy Ensure access to affordable, reliable, sustainable, and modern energy for all. Target 7.2 Increase substantially the share of renewable energy in the global energy mix.

Target 7.3 Double the global rate of improvement in energy efficiency.

9. Industry, innovation, and infrastructure Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation.

Target 9.4 Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes, with all countries taking action in accordance with their respective capabilities.

13. Climate action Take urgent action to combat climate change and its impacts.

Target 13.1 Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries.

 464  |  Annual Report on Form 20-F 2023

Our material topics

Inclusion and diversity

Definition

Providing all employees with a safe and fulfilling work environment where people treat each other with respect and dignity. Providing equal opportunities means that employees are selected solely on the basis of their ability to do the job and that there is no distinction, exclusion, or preference made on other grounds, either during the recruitment process or after. Promoting inclusion and diversity in the value chain.

Sub-topics

∎Equal treatment and opportunities for all
∎Diversity (including measures against violence and harassment in the workplace)
∎Gender equality and equal pay for work of equal value

Impacts, risks, and opportunities

Aegon’s vision is to have impact on inclusion and diversity (I&D) by building a fair and inclusive company, where we overcome obstacles to participation and increase our diversity so that everyone belongs and plays a role in fostering inclusion. Our global inclusion and diversity strategy sets out policies and actions for all parts of Aegon to make an active contribution to building a more inclusive and diverse organization through a consistent and coherent way of working across the whole company. Aegon’s inclusion and diversity strategy is led from the top, with Aegon’s senior leadership serving as role models for I&D. They achieve this by sharing their own inclusion stories and actively championing areas of diversity excellence. We focus on five core areas pertinent to our workforce and customers: disability, sexual orientation, gender balance, life stages, and race/ethnicity.

Currently our efforts are directed toward addressing the gender imbalance that persists in financial services by refining our hiring practices with a focus on inclusive recruitment, gender diversity within senior management,

addressing gaps in our diversity data, and building an inclusive culture.

The main risks and opportunities identified by Aegon in relation to inclusion and diversity are Aegon falling behind its peers in terms of customer understanding and talent attraction (business and reputational risk). Furthermore, with the rapid development of artificial intelligence (AI), there is an increasing risk of unintentional discrimination or bias, which could result in damage to (prospective) customers, as well as reputational and financial damage. By welcoming a broader range of perspectives into our workforce, we increase the opportunity to unlock new customer segments from historically underserved communities. We also become a more attractive employer, increasing the chances of securing the best talent for our business. Diversity and the ability to speak up also help us balance our risk profile and continue to support the long-term sustainability of our business.

Policies and commitments

∎Our Statement on Inclusion and Diversity sets out Aegon’s approach to inclusion and diversity to create an environment where employees can bring their authentic selves to work. The statement incorporates Aegon’s commitment to enable this through its actions and inclusive policies in the workplace, the marketplace, and the communities in which it operates.

∎Our Diversity and Inclusion Policy addresses Aegon’s concrete targets for diversity in terms of nationality, age, gender, educational, professional and geographical background, and experience, in order to have a balanced and diverse composition of the Board and Executive Committee.

∎Our Statement on Human Rights provides a framework for Aegon’s ongoing stewardship of human rights, including both the direct impacts of our daily operations as well as the indirect impacts of our business activities.

Key performance indicator(s) and target(s)

KPI(s)Target for 2023Performance in 2023Target for 2024

Proportion of women in senior management (%)

Minimum 38%On track. 38%Minimum 40%

In this context, senior management includes individuals up to two levels below the CEO (three levels for Corporate Center), provided they have direct reports. If the person has no direct reports, but the job title indicates the required

seniority, the individual is also considered part of senior management. People working in the “administration” group are excluded from the list, unless their job title indicates the required seniority.

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LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

Metrics

      unit      2023      2022      % 

Equal treatment and opportunities for all

                                        

Diversity1)

                            

Female employees

     nr          5,830          5,211          12% 

Proportion of female employees

     %             51%             48%             2pp 

Proportion of employees <30 years old

     %          12%          n.m.          n.m. 

Proportion of employees 30-50 years old

     %          55%          n.m.          n.m. 

Proportion of employees >50 years old

     %             34%             n.m.             n.m. 

Work-related incidents (reported)

     nr          53          79          (33%) 

Concerning discrimination

     nr          3          10          (70%) 

Total amount of material fines penalties and compensations

     EURm             -             -             - 

Gender equality and equal pay for work of equal value

                            

Senior management2)

                            

Number of women in senior management

     nr          164          177          (7%) 

Proportion of women in senior management

     %             38%             36%             2pp 

1

The diversity figures are based on direct employees of Aegon. Direct employees include employees of Aegon Ltd. and its wholly owned subsidiaries.

2

In this context, senior management includes our Management Board and extendsindividuals up to two levels below the Management Board (depending onCEO (three levels for Corporate Center), provided they have direct reports. If the numberperson has no direct reports, but the job title indicates the required seniority, the individual is also considered part of employees in each business unit). The 2021 and 2022 target and performance data do not include employees in our Central & Eastern Europe businesses that aresenior management. People working in the process“administration” group are excluded from the list, unless their job title indicates the required seniority.

SDGs

We are committed to contributing to two UN SDGs and their targets related to inclusion and diversity:

5. Gender equality: Achieve gender equality and empower all women and girls.

Target 5.5 Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic and public life.

10. Reduced inequalities: Reduce inequality within and among countries.

Target 10.2 Empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.

Target 10.4 Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality.

 466  |  Annual Report on Form 20-F 2023

Customer empowerment

Customer empowerment

Definition

Helping people to live healthy, sustainable lives, and delivering long-term value to our customers by expanding and tailoring our offering to customers’ evolving needs, promoting financial literacy and the financial inclusion of underserved groups. This includes product innovation and social inclusion of our customers, for example by enabling individuals to save for their own retirement, thereby reducing their reliance on public pension systems. It also entails responsible marketing practices, providing transparent product information, fair pricing of products, and offering high levels of customer service, designed around customers’ changing needs.

Sub-topics

∎Customer service
∎Social inclusion of being divested. The 2023 target does not cover Aegon the Netherlands due to the expected divestment in 2023.customers
4 
Aegon actively engages with investee companies across a wide range of industries to improve their ESG profile and address sustainability issues.
5 
The Global Employee Survey is provided through Culture Amp
®
. All employees, including those in joint ventures, participate in the survey on a voluntary basis. New hires employed for under three months do not participate. Employee engagement is measured on a five-point scale (strongly disagree to strongly agree), and it is the average score of four statements:
 
◾
∎
The company motivates me
Access to go beyond expectationsproducts and services
 
◾
∎
I am proud
Responsible marketing practices
∎Product innovation

Impacts, risks, and opportunities

Aegon has a direct positive impact on its customers by offering a range of investment, retirement, and protection solutions. These encompass workplace and individual solutions, covering life insurance, long-term savings options, pension, and annuity solutions, and mortgages. These offerings work together to ensure the financial security of customers, thereby contributing to their overall financial wellbeing. This, in turn, supports their longevity, physical health, and mental wellbeing. Aegon does this by providing transparent information about our products and promoting financial education, enabling customers to make well-informed decisions about their financial futures. This is where Aegon has one of its greatest impacts, due to the size of the customer base and the number of people it can potentially influence.

In its role as a financial institution, Aegon also has the potential to foster positive change through financial inclusion. Bridging gaps in access to financial products can be achieved by incorporating inclusion and diversity principles into product development and strategy. This

approach can particularly benefit underserved groups, ethnic minorities, and reduce the gender pension gap.

Additional aspects, such as fair pricing and responsible marketing, can contribute to customer empowerment.

The main risks identified by Aegon are not attracting potential new customers or losing existing ones by not offering products or services in an appealing way to customers. On the other hand, offering more individualized products can reach a wider consumer base, leading to growth and increased market share, which are opportunities. However, the opportunities for individualized products may be limited by ethical issues such as privacy. As both a pension and life insurance provider, changing demographics have impacts for Aegon. For example, a healthier customer base and the provision of preventative services (for example, offering a free cancer scan to high-risk professionals), could lead to increased longevity whereas an unhealthier population will result in higher mortality.

There is also an opportunity to embed I&D in product development, in order to provide financial inclusion to underserved segments of society. For example, products that specifically target women and communities traditionally not targeted by the financial services sector.

Policies and commitments

∎The Pricing and Product Development Policy details Aegon’s approach to workpricing and product development. It takes into account, among other things, ensuring a reasonable distribution of return/value to all stakeholders, the fair treatment of customers, and taking into account customer needs, including sustainability preferences, in the product approval process.

∎The Market Conduct Compliance Policy sets out key market conduct requirements, designed to prevent or mitigate customer detriment, support the proper management of conflicts of interest (including acting in the best interests of customers) and ensure that the interests, objectives, and characteristics of customers are duly taken into account.

Key performance indicator(s) and target(s)

KPI(s)Target for this company2023Performance in 2023Target for 2024

Significant fines to address cases of mis-selling (EUR)

0 EUR0 EUR0 EUR

Until the end of 2022, customer satisfaction was measured using two KPIs, namely “Significant fines to address cases of mis-selling” and “Net Promoter Score(SM) (NPS®)”. From 2023, we will continue to measure customer satisfaction

through the KPI “Significant fines to address cases of mis-selling”, which includes any fines for mis-selling in excess of EUR 100,000.

Annual Report on Form 20-F 2023  |  467 

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◾
I see myself still working at this company in two years’ time
 
◾
I

Metrics

    unit    2023   2022   % 

Customer service

                  

Total customers1)

   million      23.9   26.8     (11%) 

Americas

   million      10.3   10.8     (5%) 

United Kingdom

   million      4.0   4.1     (0%) 

International

   million      9.6   9.1     6% 

New customers2)

   million         4.0   3.6        9% 

Customer satisfaction (starting from 2023)3)

          

United States - RepTrak

   %      49.0   n.m.     n.m. 

United Kingdom - rNPS®

   -100 to 100      (5)   n.m.     n.m. 

Customer satisfaction (until 2022)4)

          

United States - bNPS®

   n.a.      n.m.   = Market Average     n.m. 

United Kingdom - bNPS®

   n.a.      n.m.   < Market Average     n.m. 

Customer complaints5)

   nr         85,133   74,368        14% 

Social inclusion of customers

          

Responsible marketing practices

          

Significant mis-selling fines6)

   EURm      -   -     - 

Proportion of compliance with Pricing and product development policy requirements

   %         98%   98%        0pp 

1

Customers are those with individual, group or corporate policies. It also includes those participating in pension plans controlled by trustees or who have white label products serviced by Aegon or Transamerica. Customers of our joint ventures are included on a 100% basis. The customers of our joint venture in Brazil are reported in the segment International.

2

New customers are those who acquired a product or service during the reporting period (and who were not previously customers of Aegon). Customers of our joint ventures are included on a 100% basis.

3

In 2023, customer satisfaction in the United States was measured through RepTrak and in the United Kingdom through relationship Net Promoter Score(SM) (NPS®). RepTrak measures customer satisfaction based on the statement: “I would recommend this company asthe products & services of Transamerica. Customers can provide a great place to work

In 2022, three engagement surveys were conducted throughoutrating between 1 “strongly disagree” and 7 “strongly agree. The outcome represents the year (Q1, Q2, and Q3)percentage of customers who responded with either 6 “agree” or 7 “strongly agree”. The participation rate for the most recent survey was 79%.
6 
CustomerrNPS measures customer satisfaction is measured in terms of benchmarked Net Promoter Score(SM) (NPS
®
), and is based on the question: “How likely are you to recommend Aegon/TransamericaAegon UK to a friend or colleague?” It is a single, easy-to-understand metric that predicts overall company growth and customer lifetime value.. Customers answer based on a 0 to 10 scale, where those answering 9 or 10 are deemed “promoters”, those answering 7 or 8 are “passive”, and 0 to 6 are “detractors”. NPS
®
The net promoter score is calculated by subtractingbased on % of promoters minus the percentage% of detractors. A negative NPS represents a higher % of detractors fromamongst respondents than promoters. Net promoter score can be anywhere between -100 and +100.

4

Until the percentageend of promoters.2022, customer satisfaction was measured centrally through benchmarked Net Promoter Score(SM) (NPS®). On an annual basis, we measuremeasured the NPS ofin our core markets (the Netherlands, the United Kingdom, and the United States) and comparecompared findings against peers in each local market. To achieve this,Our target was to ensure that customer satisfaction in each of our core market worked with local research experts who specialize in NPS benchmarking.markets remains at or above the average of our peers. The peer groups are were re-assessed each year to ensure a fair representation of the market.

5

Includes all written and verbal complaints from our customers.

6

Includes any fines for mis-selling in excess of EUR 100,000.

SDGs

We are committed to contributing to two UN SDGs and their targets related to customer empowerment:

3. Good health and wellbeing Ensure healthy lives and promote wellbeing for all at all ages.

Target 3.8 Achieve universal health coverage, including financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all.

8. Decent work and economic growth Promote sustained, inclusive, and sustainable economic growth, full and productive employment and decent work for all.

Target 8.10 Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all.

 468  |  Annual Report on Form 20-F 2023

Employee wellbeing

Employee wellbeing

Definition

Creating a work environment that promotes a state of contentment that allows employees to thrive and achieve their full potential for the benefit of themselves and their organization. It covers talent management, working conditions, and employee engagement.

Sub-topics

∎Talent attraction, development, and retention
∎Employee engagement
∎Working conditions
 
◾
∎
Social dialog
∎Work-life balance

Impacts, risks, and opportunities

Aegon’s actual positive and negative impacts are spread across various dimensions of talent management and working conditions. These include recruitment and retention, the performance and development cycle, education and training, compensation and benefits, engagement, and the physical and mental health and wellbeing of employees.

Aegon aims to amplify its potential impact, contribute to meaningful and fulfilling careers for both young and older talent, and embody the characteristics of a modern and responsible employer. It also includes enhancing employee engagement, creating a vibrant and supportive work environment, providing wider benefits, helping employees to live their best lives and live Aegon’s purpose, promoting physical and mental wellbeing, and fostering entrepreneurial spirit in the company.

The main risks identified by Aegon are difficulties in retaining and attracting employees due to a lack of flexibility, quality and relevance of work, career path, and competitive compensation and benefits. In addition to the loss of the

human capital itself, a lack of talent could lead to dissatisfied customers and greater pressure on the existing workforce. Furthermore, low employee engagement can affect performance, which can lead to poor customer experience and a lack of innovation. Finally, the lack of availability of qualified staff is exacerbated for insurers competing for skilled talent not just with peers but also with other industries (business risk).

By offering strong compensation programs and flexible working policies (hybrid and remote), and by investing in talent attraction, retention, training, and skills development, Aegon is able to create attractive prospects for existing and future employees and contribute to overall engagement and employee development.

Policies and commitments

∎The Netherlands: In partnership with Ipsos,Talent Principles and Talent Review Framework sets out Aegon’s approach to talent management to ensure we have the aggregated gap-to-market average score was calculated as a weighted average of the gap-to-market average of the various lines of business in active marketsright people in the Netherlands. Weights areright place to deliver our business ambitions.
∎The Performance and Development Cycle sets out Aegon’s approach to managing the performance of its people, focusing on current performance and future development and growth potential.
∎The Global Health and Safety Statement commits Aegon to achieving and maintaining high health and safety standards in all its business units worldwide, and outlines Aegon’s objectives and expectations.
∎The Global Remuneration Framework details Aegon’s remuneration philosophy and principles, as well as its approach to remuneration in general. The framework is based on the numberprinciple of contractspay for performance and sets out the principles of governance covering both fixed and variable pay.

Key performance indicator(s) and target(s)

KPI(s)

Target for 2023Performance in each business line.2023Target for 2024

Result of the most recent employee engagement score (%)

At least 72%On track. 77%At least 78%

The Global Employee Survey is provided through Culture Amp®. All employees, including those in joint ventures, participate in the survey on a voluntary basis.

Employee engagement is measured on a five-point scale (strongly disagree to strongly agree), and it is the average score of four statements:

∎The company motivates me to go beyond expectations
∎I am proud to work for this company
∎I see myself still working at this company in two years’ time
∎I would recommend this company as a great place to work

In 2023, three employee surveys were conducted throughout the year including a short check-in survey in Q1, a focused I&D survey for most business units, excluding Transamerica, in Q2, and a full employee survey in Q3. The participation rate for the most recent survey was 78%.

Annual Report on Form 20-F 2023  |  469 

LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information
 

Metrics

Talent attraction, development, and retention

   unit          2023         2022         % 

Number of employees1)

   nr      15,658      15,478      1% 

Americas

   nr      6,967      6,153      13% 

United Kingdom

   nr      2,591      2,621      (1%) 

International

   nr      3,654      4,281      (15%) 

Asset Management

   nr      1,409      1,464      (4%) 

Holding and other activities

   nr         1,037         958         8% 

Direct employees by business unit2)

   nr      11,526      10,781      7% 

Permanent

   nr      11,378      n.m.      n.m. 

Americas

   nr      6,319      n.m.      n.m. 

United Kingdom

   nr      2,264      n.m.      n.m. 

International

   nr      694      n.m.      n.m. 

Asset Management

   nr      1,130      n.m.      n.m. 

Holding and other activities

   nr      971      n.m.      n.m. 

Temporary

   nr      148      n.m.      n.m. 

Americas

   nr      -      n.m.      n.m. 

United Kingdom

   nr      75      n.m.      n.m. 

International

   nr      13      n.m.      n.m. 

Asset Management

   nr      40      n.m.      n.m. 

Holding and other activities

   nr      20      n.m.      n.m. 

Non-guaranteed

   nr      -      n.m.      n.m. 

Americas

   nr      -      n.m.      n.m. 

United Kingdom

   nr      -      n.m.      n.m. 

International

   nr      -      n.m.      n.m. 

Asset Management

   nr      -      n.m.      n.m. 

Holding and other activities

   nr         -         n.m.         n.m. 

Direct employees by gender2)

   nr      11,526      n.m.      n.m. 

Permanent

   nr      11,378      n.m.      n.m. 

Male

   nr      5,449      n.m.      n.m. 

Female

   nr      5,747      n.m.      n.m. 

Other

   nr      66      n.m.      n.m. 

Not reported

   nr      116      n.m.      n.m. 

Temporary

   nr      148      n.m.      n.m. 

Male

   nr      65      n.m.      n.m. 

Female

   nr      83      n.m.      n.m. 

Other

   nr      -      n.m.      n.m. 

Not reported

   nr      -      n.m.      n.m. 

Non-guaranteed

   nr      -      n.m.      n.m. 

Male

   nr      -      n.m.      n.m. 

Female

   nr      -      n.m.      n.m. 

Other

   nr      -      n.m.      n.m. 

Not reported

   nr      -      n.m.      n.m. 

Non-employee workers in own workforce3)

   nr         3,093         n.m.         n.m. 

New hires

   nr      2,333      2,033      15% 

Leavers4)

   nr      1,466      2,062      (29%) 

Proportion of leavers - voluntary

   %      74%      83%      (9pp) 

Proportion of leavers - involuntary

   %      26%      17%      9pp 

Turnover rate

   %      13%      18%      (5pp) 

Turnover rate - voluntary

   %      10%      15%      (5pp) 

Turnover rate - involuntary

   %         3%         3%         0pp 

Proportion of employees participating in performance and development reviews5)

   %      89%      n.m.      n.m. 

Male

   %      89%      n.m.      n.m. 

Female

   %      89%      n.m.      n.m. 

Other

   %      92%      n.m.      n.m. 

Not reported

   %         92%         n.m.         n.m. 

Investment in training and career development

   EURm      5.5      6.3      (12%) 

Average investment in training and career development per employee

   EUR         479         561         (14%) 

 470  |  Annual Report on Form 20-F 2023

◾
The United Kingdom: With input from Bilendi, an independent market sample was obtained to gather information about

Employee wellbeing

                                    

Employee engagement

                 

Global Employee Survey (GES)6)

              

GES - Engagement

   %      77%      70%      7pp 

GES - Leadership

   %      66%      61%      5pp 

GES - Inclusion

   %      79%      78%      1pp 

GES - Diversity

   %      79%      76%      3pp 

GES - Wellbeing

   %      71%      n.m.      n.m. 

GES - Participation rate

   %         82%         79%         3pp 

Working conditions

              

Proportion of employees covered by collective bargaining / labor agreements7)

   %      30%      n.m.      n.m. 

Americas

   %      0%      n.m.      n.m. 

United Kingdom

   %      100%      n.m.      n.m. 

International

   %      13%      n.m.      n.m. 

Asset Management

   %      55%      n.m.      n.m. 

Holding and other activities

   %      38%      n.m.      n.m. 

Proportion of employees covered by workers’ representatives (EEA countries)8)

   %      94%      n.m.      n.m. 

Proportion of employees covered by social protection9)

   %         98%         n.m.         n.m. 

Total employment costs

   EURb      1.7      1.7      0.0% 

Salary costs

   EURb      1.1      1.1      0.0% 

Ratio of CEO compensation to average compensation10)

   n.a.      25:1      23:1      n.a. 

Proportion of compliance with the Global Remuneration Framework11)

   %         100%         95%         5pp 

Total employee absence12)

   days      24,760      27,937      (11.4%) 

Employee absence rate

   %      1.9%      2.1%      (0.2pp) 

Percentage of employees entitled to take family-related leave13)

   %      87%      n.m.      n.m. 

Percentage of entitled employees that took family-related leave13)

   %      7%      n.m.      n.m. 

Male

   %      6%      n.m.      n.m. 

Female

   %      8%      n.m.      n.m. 

Other

   %      4%      n.m.      n.m. 

Not reported

   %         3%         n.m.         n.m. 

1

Number of employees on the last day of the reporting period, including all direct employees of Aegon, tied agents, and employees in Aegon’s subsidiaries and joint ventures.

2

Direct employees include employees of Aegon Ltd. and its competitors.wholly owned subsidiaries only.

3

Non-employee workers in our own workforce include individuals with a contract with Aegon to supply labour (“self-employed workers”) and workers provided by third-party companies primarily engaged in “employment activities”. Workers hired from third-party companies typically perform the same work as employees, such as workers who fill in for employees who are temporarily absent (due to illness, holiday, parental leave, etc.).

4

Leavers refer to direct employees whose contract termination date is within the reporting period. Involuntary turnover rate refers to direct employees whose contract termination date is within the reporting period and the reason for leaving is involuntary. The gap-to-market score is calculated asdata does not include transfers where employees continue paid employment outside Aegon. In this respect, the divested businesses of Aegon Turkey and Aegon Hungary were not included in the “leavers” figure for 2022, and the divested businesses of Aegon the Netherlands were not included in the “leavers” figure for 2023. Therefore, the difference between new hires and leavers is not consistent with the Aegon NPS

®
decrease of direct employees from 2022 to 2023.

5

Includes direct employees who participated in annual performance and the average NPS

®
of all active brandscareer development reviews. The breakdown by gender provides insight in the market.proportion of each category (male, female, other and not reported) that participated in performance and development reviews.

6 
◾

The Global Employee Survey is provided by the third-party service provider Culture Amp. All employees, including those in joint ventures, participate in the survey on a voluntary basis. Three employee surveys are conducted during each reporting year (Q1, Q2, and Q3). The results and participation rate disclosed reflect the most recent survey conducted in the third quarter of each year.

7

The United States: In partnership with Qualtrics,figures include direct employees who are covered by a collective bargaining agreement or a collective labour agreement. Employees in higher salary scales who are not part of these agreements are also included in the required sample size was collectedcoverage, as these salary scales are also determined or influenced by collective bargaining agreements. The split per business unit shows for each unit the proportion of direct employees of that unit covered by collective bargaining / labor agreements.

8

This includes direct employees covered by the works council. This data point is applicable for our European entities. It does not reflect employees that are member of a trade union.

9

This includes direct employees covered by social protection against loss of income due to sickness, unemployment, employment injury and acquired disability, maternity leave, and retirement either through an external consumer panelgovernment policies or company plans.

10

The ratio of CEO compensation to average employee compensation is based on the IFRS remuneration expenses for both the LifeCEO and Retirement businesses. The aggregated gap-to-market averageAegon’s employees in the reporting year.

11

Policy compliance reflects the extent to which business units comply with specific requirements of those policies. Where there is calculated by weighingless than full compliance, this does not indicate a breach of the gap-to-market average for Life and Retirement. Weights are based on the number of contracts for Life and the number of participants for Retirement.policy, but rather areas where business units have requested time to further strengthen internal governance.

12 
◾
With regards to the definition of “peers” for each core market:
◾
In the Netherlands, the competitive set used per line of business for the survey consisted of 31 brands (life), 37 brands (pension schemes), 25 brands (savings), 42 brands (P&C), and 35 brands (mortgages)
◾
In the United Kingdom, the competitive set used for the survey consisted of 10 brands (pension provider peers)
◾
In the United States, the competitive set per line of business used for the survey consisted of 19 brands (life) and 19 brands (retirement)
7

Employee absence refers to time off from work as a result of illness or injury. It excludes permittedapproved leave of absence such as holiday, study/training, maternity or paternity leave, parental leave, and compassionatecaregiver leave.

The absence rate is calculated as follows: (number of days lost to employee absence) / (total days worked by employees multiplied by the direct headcount). The number of days worked is the sum of all offical working days minus national holiday days in the country of operation. The absence rate excludes Transamerica employees, as this type of absence is not registered in the United States, but combined with annual leave.

13

Family-related leave includes maternity leave, paternity leave, parental leave, and caregiver leave. The breakdown by gender provides insight in the proportion of each category (male, female, other and not reported) that took family related leave.

SDGs

We are committed to contributing to two UN SDGs and their targets related to employee wellbeing:

3. Good health and wellbeing Ensure healthy lives and promote wellbeing for all at all ages.

Target 3.4 Reduce by one third premature mortality from non-communicable diseases through prevention and treatment and promote mental health and wellbeing.

8. Decent work and economic growth Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.

Target 8.5 Achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.

 

406  |  Aegon Annual Report on Form 20-F 20222023  |  471 

Table of Contents
LOGO		 
About Aegon  Governance and risk management  Financial information  Sustainability approach
information
  
   

Policies

Data security and procedures

privacy

Definition

Data security entails preserving the confidentiality, integrity, and availability of information assets of Aegon is committed to doing business responsibly. We have internal policies and procedures explaining how decisions should be made in areas such as procurement, investment, tax, product development, remuneration,its customers. It also includes ensuring the data privacy of Aegon’s employees, customers, and information security. The following table demonstrates the incorporation of sustainability themes into Aegon’s decision-making

processes through specific policies, statements, and procedures with a focus on our material topics. The Aegon website includes a dedicated library for these policies.
Policies, statements, and procedures related to other relevant (emerging) topics are also included as a separate table below.
1
stakeholders.

Sub-topics

  Material topic
∎		 
Related Policy /
Statement / Procedure
Data security
∎ 
Description
Privacy

Impacts, risks, and opportunities

Data security and privacy is considered a key aspect of Aegon’s business, and Aegon has a duty to uphold strong cybersecurity and privacy measures. Aegon has various policies, procedures, and a set of information security requirements metrics to secure and protect data and to meet regulatory requirements (for example, privacy). Aegon is making a positive impact on this topic by protecting customer and employee data and establishing robust governance designed to prevent cyber issues and minimize the impact of any potential data breach.

A breach of data privacy or security obligations may disrupt Aegon’s business, damage Aegon’s reputation, and adversely affect its financial condition and the results of its operations. Aegon’s businesses are subject to various laws and regulations relating to the privacy and/or information security

of customers, employees, or others. Aegon relies on a variety of processes and controls to protect confidentiality, integrity, and availability of personal information and other confidential information. If Aegon fails, or its third-party providers fail, to maintain adequate processes and controls or fail to comply with relevant laws and regulations, inappropriate disclosure or misuse of personal information could occur. For more information on Data security and privacy risks, see the Risk factors section on pages 420-426.

Advances in data management, analytics and AI are important considerations for Aegon. Data is an asset that helps us support our customers’ needs and preferences in terms of products and services through data-driven decision-making and leveraging emerging technologies. Robust data management and controls are a core foundation for leveraging these capabilities while ensuring we remain within our risk tolerances.

Policies and commitments

Climate change
∎		 
EnvironmentalThe Global Information Security Policy
Externally published statement outlining how Aegon seeks to reduce the negative impacts of its direct business operations on the environment whilst maximizing opportunities for performance improvement.
Responsible Investment
Policy
Please see below in this table the description of the Responsible Investment Policy.
Inclusion and
diversity
Statement on Inclusion
and Diversity
Externally published statement setting sets out Aegon’s approach to inclusioncyberthreats and diversity to create an environment where our employees can bring their authentic selves to work. The statement incorporates our commitment to enabling this through our actions and inclusive policies. The statement applies to all Aegon businesses worldwide.
data protection, supported by mandatory training in information security.
Responsible
investing
∎		 
Responsible Investment
Policy
Externally published policy acting asThe Aegon Privacy Control Framework is the basis for how our assets should be managed consistently with our responsible business objectives and relevant laws and governance standards. It is applicable to all of our proprietary assets globally, regardless of country of operation or whether they are managed bymeasuring privacy maturity at Aegon, business units or externally. Local business units within Aegon may implement additional mechanisms to further identify, manage, and mitigate ESG risks, within the context of local norms and stakeholder expectations. The policy covers all major asset classes and sets out minimum social and environmental standards for Aegon’s investments that incorporates exclusions in areas including controversial weapons, tobacco, Arctic or oil sands production, and transportation and thermal coal. The policy also incorporates a commitment to
net-zero
emissions, to help to ensure the reduction in the weighted average carbon intensity of the company’s investment portfolio is aligned with its
net-zero
ambitions.
Investment and
Counterparty Risk Policy
An internal policy which includes requirements for constructing investment mandates between the asset owner and the asset manager. Sustainability risks relating to the investment portfolio need to be identified, assessed and managed, and taken into account in the Asset Liability Management strategy. It applies to all assets and liabilities from the general account and the separate account of all material businesses of Aegon for which it has operational control.
Solid financial
performance
Enterprise Risk
Management (ERM) Policy
Internal policy document which sets the risk appetite of the company. Among others, it aims to ensure that Aegon and its operating companies are adequately capitalized and that obligations towards policyholders are always adequately met. It applies to all material businesses of Aegon for which the company has operational control.
Capital Management
Policy
Internal policy document which governs the company’s view on the level of capitalization of local units, and the capitalization of the company through the amount of Cash Capital and gross financial leverage. In addition, it sets out key expectations on when business units are expected to pay remittances, and when business units can expect capital support from the Holding.
Responsible
products,
treating
customers fairly
Pricing and Product
Development Policy
Internal policy overseen by the Global Chief Actuary, detailing the company’s approach to pricing and product development. It takes into account, among others, ensuring a reasonable distribution of return/value to all stakeholders, fair treatment of customers, and taking customer needs, including sustainability preferences, into account in the product approval process.
Talent
management
Talent principles and
talent review framework
Internal guidelines and processes setting out the company’s approach to talent management,personal data protection, one of the controls of which is mandatory privacy training.

Key performance indicator(s) and target(s)

KPI(s)

Target for 2023 Performance in 2023 Target for 2024 

Proportion of employees who completed the annual Information Security training (%)

No target 202394%No target 2024

Metrics        
            unit           2023     2022    %  

Data security

           

Number of employees who received the annual Information security training1)

   nr     13,546          13,540    0% 

Proportion of employees who completed the annual Information security training

   %     94%     96%    (2pp) 

Number of enterprise-wide phishing campaigns launched during the year2)

   nr     4     4    0% 

Privacy

              

Number of employees who received specific training on data privacy3)

   nr     12,754     11,905    7% 

Proportion of employees who completed specific training on data privacy

   %     97%     99%           (2pp) 

1

Direct employees and eligible contingent workers who are enrolled in Information security training at least annually. The training covers relevant information security topics based on risk assessments, best practices, and appropriate behaviors. Eligible contingent workers are contractors with an (Active Directory) Aegon or Transamerica account who are selected for the training. The selection is performed at the discretion of each business unit.

2

Enterprise wide phishing campaigns are run on a quarterly basis and covers all direct employees and all contingent workers with an e-mail account on the Aegon or Transamerica network. In addition, targeted campaigns are run periodically with a subset of users based on a common risk profile (e.g., Human Resources).

3

Direct employees and eligible contingent workers who are enrolled in an annual data privacy training. The training modules are different per region to ensure we haveaddress specific local legislation. The focus in Europe is on GDPR. Eligible contingent workers are contractors with an (Active Directory) Aegon or Transamerica account and selected for the right people intraining. The selection is performed at the right place to deliver on ourdiscretion of each business ambitions.unit.

SDGs

We are committed to contributing to one UN SDG and its target related to data security and privacy:

16. Peace, justice, and strong institutions Promote peaceful and inclusive societies for sustainable development,

provide access to justice for all and build effective, accountable and inclusive institutions at all levels.

Target 16.10 Ensure public access to information and protect fundamental freedoms, in accordance with national legislation and international agreements.

 

 472  |  Annual Report on Form 20-F 2023

Business conduct

 
Performance and
development cycle
 
Internal guidelines

Business conduct

Definition

Conducting business ethically, with integrity and transparency, includes anti-corruption and anti-bribery measures, and protection for whistleblowers. Corruption is the abuse of power for private gain. Bribery is a form of corruption, and is defined as the offering, giving, receiving, or soliciting of anything of value to improperly influence the actions of another, whether a government official (public bribery) or a private party (commercial bribery). It also covers measures to prevent doing business with people or parties who may be involved in financial crimes. Whistleblowing mechanisms enable individuals to raise concerns about wrongdoing or breaches of the law in the organization’s operations or business relationships, regardless of whether the individuals themselves are harmed or not. Protection means without fear of retaliation. Responsible tax means being transparent about paying the right amount of tax in the right place.

Sub-topics

∎Anti-corruption and anti-bribery, including whistleblower protection
∎Responsible tax

Impacts, risks, and opportunities

Business conduct is a fundamental area where Aegon can make an impact. The subject is heavily influenced by legal requirements and includes aspects such as business ethics, anti-corruption and bribery, whistleblower protection, and responsible tax. At its core, Aegon makes a positive actual impact internally by aligning itself with international governance frameworks and implementing robust policies and procedures to ensure ethical business decisions that cater to stakeholders’ interests. This commitment also involves providing a safe environment for individuals to raise concerns regarding potential misconduct.

Externally, Aegon has a positive influence throughout its wider value chain by implementing responsible investment and sourcing policies and managing relationships with various partners, including investee companies, customers, and suppliers. Another aspect of business conduct pertains to corporate culture and enhancing transparency, which includes being clear about Aegon’s products and activities.

Business conduct is a fundamental and already well-established element within the business, with a well-established Code of Conduct and regular training on business conduct topics.

Trust, transparency, and accountability are necessary for fostering long-term investment, financial stability, and business integrity. For example, the publication of a Global Tax Report provides stakeholders with a comprehensive

overview of our approach to tax and our tax contributions on a country-by-country basis.

Aegon has identified the following risks associated with doing business in a rapidly changing and highly politicized and regulated landscape.

∎Reputational risk as a result of increasing stakeholder expectations on business conduct and transparency, and the risk of not meeting or only partially meeting stated commitments if activities are not aligned across the group;
∎Failure to implement robust controls in relation to financial crime can result in regulatory penalties and damage to Aegon’s reputation;
∎Conduct risk as an important operational risk: avoiding conduct risk requires strong systems, processes, and governance; weakness or failure in those systems and processes, setting outerrors and omissions, or the company’s approach to performance management for its people with a focus on current performance,loss of key personnel could result in financial loss or adversely affect our customers and future development and growth potential.
reputation;
Business
conduct and risk
management
∎		 
Geopolitical instability, including the challenges of navigating increasingly polarized societies, requires considerable effort to engage and communicate effectively with stakeholders. This can create potential strategic risks for Aegon.

Ensuring good governance and strengthening internal control and risk management systems can turn these risks into opportunities. For example, by paying close attention to business conduct and risk management, we can proactively manage the risks associated with issues such as money laundering, bribery and corruption, and anti-competitive behavior, forging better relationships with stakeholders by building a reputation for taking action on business conduct and enhancing trust in the Aegon brand; engaging with investee companies, governments, and stakeholders to jointly encourage good business conduct, for example through the Vendor Code of Conduct.

Policies and commitments

∎The Code of Conduct
Externally published document prescribing prescribes a mandatory set of conditions for how Aegon employees should conduct business, comply with all applicable laws and regulations, and exercise sound judgment in reachingmaking ethical business decisions in the long-term interests of our stakeholders. Training on the Code of Conduct is mandatory for all employees.
CONTINUED >
1 
These policies and procedures are simply being provided for informational purposes and are not incorporated into our Annual Report on Form
20-F,
except where expressly indicated.
∎ Aegon Annual Report on Form 20-F 2022  |  407
Table of Contents
About AegonGovernance and risk managementFinancial information
Non-financial information
  Material topic
Related Policy /
Statement / Procedure
Description
Business
conduct and risk
management
Speak Up
Externally published policy supplementingSupplementing the Aegon Code of Conduct. Conduct, Aegon Speak Up provides a safe environment for anyone who wishes to raise a concern (“whistleblowing”) about suspected or observed misconduct that involves Aegon. The policy applies to all Aegon businesses worldwide (including all business units, subsidiaries and joint ventures that are majority owned, and controlled by Aegon). It also extends to customers, business partners, shareholders and the public in general.
Anti-Bribery and Corruption Policy
∎		 
The Aegon Code of Conduct containsprovides guidance on the prevention of bribery and corruption (including gifts and entertainment). The internally published Aegon Anti-Bribery and Corruption (ABC) Policy provides further principles and guidelines to help Aegon employees to make the right decision. The policy is applicable to all Aegon business units.
 

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Conflict of Interest Policy
 

∎The Aegon Code of Conduct containsprovides guidance on conflicts of interest. The internally published Aegon aim of the Conflict of Interest Policy defines the principles regarding potential conflicts of interest applicable to all Aegon business units, which should be implemented in their local unit. The aim of the policy is to provide further guidelines to help Aegon employees recognize a potential conflict of interest and how to help them handle the situation.

∎ The Global Tax Policy and Principles of Conduct outlines Aegon’s approach to responsible taxpaying, which seeks to align the long-term interests of all our stakeholders, including customers, employees, business partners, investors, and society at large. Aegon aims to pay “fair taxes”, which means paying the right amount of tax in the right place.

∎ The Group Anti-Money Laundering & Counter Terrorist Financing Policy aims to protect Aegon and its subsidiaries, assets, clients, and external entities or individuals from being used by criminals to launder their proceeds from criminal activities or to finance terrorist activities.

∎ The Group Anti-Fraud Policy aims to protect Aegon and clients’ assets from fraudulent behavior of clients, business partners, employees, or any other external entity or individual.

∎ The Group Sanctions Policy aims to protect Aegon’s organization, products, and services from being used for prohibited transactions and for the purpose of evading, avoiding, or otherwise circumventing sanctions.

Key performance indicator(s) and target(s)    

KPI(s)

  Target for 2023  Performance in 2023  Target for 2024 

Proportion of new employees who completed the Code of Conduct attestation

  95% Ahead of target. 99% 95%

 474  |  Annual Report on Form 20-F 2023

Business conduct

 
Operational Risk Policy
 
Internal policy covering the operational risk universe (taxonomy), including conduct. It aims to ensure that Aegon maintains a prudent operational risk profile under both normal business conditions and under extreme conditions caused by unforeseen events. It applies to all businesses of Aegon for which it has operational control.
Customer experience
 
Market Conduct Compliance Policy

Metrics       
    unit   2023     2022    %  

Corruption and bribery including whistleblower protection

       

Proportion of new employees who completed the Code of Conduct attestation

   %   99%     99%    (0pp) 

Proportion of compliance with Anti-bribery policy requirements

   %   100%     87%    13pp 

Proportion of compliance with Conflict of interest policy requirements

   %   97%     98%    (1pp) 

Systematic Integrity Risk Assessment (SIRA)1)

       

Proportion of actions completed

   %    58%     73%    (16pp) 

Proportion of actions completed or progressing within deadline

   %   76%     82%    (5pp) 

Fraudulent activity

       

Incidents - bribery or corruption2)

   nr   -     n.m.    n.m. 

Number of convictions

   nr   -     n.m.    n.m. 

Value of fines

   EURm   -     n.m.    n.m. 

Number of dismissed or disciplined workers

   nr   -     n.m.    n.m. 

Number of contracts with business partners terminated or not renewed

   nr   -     n.m.    n.m. 

Incidents - fraud3)

   nr   156     584    (73%) 

Employees

   %   0.0%     0.2%    (0.2pp) 

Intermediaries

   %   15%     3%    12pp 

Third parties

   %   85%     97%    (11pp) 

Responsible tax

       

Total taxes borne by Aegon4)

   EURm   637     362    76% 

Corporate income tax4)

   EURm   314     32    n.a. 

Americas

   EURm   30     (3)    n.a. 

The Netherlands

   EURm   263     3    n.a. 

United Kingdom

   EURm   15.6     0.4    n.a. 

Others

   EURm   5     32    n.a. 

Taxes collected on behalf of others4)

     EURm        2,321           2,585         (10%) 

1

Aegon conducts an annual Systematic Integrity Risk Assessment (SIRA). All regions provide insight into their local anti-fraud programs and indicate that controls with regard to internal, external, and intermediary fraud are properly designed and operating effectively. Aegon takes action to address any gaps in performance.

2 
Internal policy containing key requirements regarding market conduct, aiming to prevent

This includes confirmed incidents of bribery or mitigate customers detriment, to support a proper managementcorruption conducted by employees. Incidents that are still under investigation at the end of conflictsthe reporting period are excluded.

3

This includes confirmed incidents of interestsfraud conducted by employees, intermediaries, and third parties (including acting in accordance withcustomers). Incidents that are still under investigation at the best interestend of customers) and to ensure that the interests, objectives and characteristics of customersreporting period are duly taken into account. It applies toexcluded.

4

The data covers all strategic business unitsentities over which Aegon has operational control.management control including divested businesses, up to the date of closing. For corporate income tax, there is often no direct correlation between tax reported on earnings for any given year and amounts paid or received in tax. Part of the explanation for this is that certain tax-deductible items are not recognized in the company’s profit & loss statement but directly in equity. In addition, payments and refunds for prior years can impact the amounts paid or received in the current year. For more information see Aegon’s Global Tax Report.

SDGs

We are committed to contributing to one UN SDG and its target related to business conduct:

16. Peace, justice and strong institutions Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels.

Target 16.6 Develop effective, accountable and transparent institutions at all levels.

 

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Benchmarked NPS
®
Process
 
Internal process document outlining

Policies and statements

Aegon is committed to doing business responsibly.

The following table demonstrates the policies and statements related to our material topics as identified through the DMA.

Where the policies and statements are available externally, a link to Aegon’s website is provided as well as a link to the relevant principles of the UN Global Compact.

Material

topic

Value chain

dimension

Related Policy

or Statement

Description

Link to UN Global

Compact

principles

Climate change (mitigation and adaptation)Investments and asset managementAegon Group Responsible Investment Policy

Externally published policy acting as the processbasis for how Aegon’s general account assets should be managed, consistent with its responsible investment objectives, relevant laws, and governance standards. (Responsible investment (RI) is an umbrella term that covers various tools and approaches to measure Benchmarked NPS

®
in Aegon’s core markets (the United States, the United Kingdom,incorporate environ- mental, social and the Netherlands). The quality control, including the approachgovernance (ESG) considerations into investment decision-making processes. It may include ESG integration and methodology, is centrally ensured, while the business units in the company’s core markets are responsible for commissioning field studies,active ownership as well as monitoringdedicated, RI-focused capabilities.) The policy applies to the general account assets of Aegon business units, where Aegon has management control and communicating results.
Cybersecurity
can take the investment decisions. Aegon’s Executive Committee has ultimate responsibility for the execution of this policy and privacy
for its integration into investment strategy and other relevant company processes and practices. Climate change is one of the responsible investment focus areas, which outlines Aegon’s net-zero commitments and exclusion criteria for certain activities considered to have significant adverse impacts on climate change.

  
Global Information Security Policy
1, 2, 3, 4, 5, 6 (Human Rights and Labour), 7, 8, 9 (Environment), 10 (Anti-Corruption)
Inclusion and diversity  
Internal policy overseen by the Global Chief Information Security Officer,Own operations
Statement on Inclusion & DiversityExternally published statement setting out the company’sAegon’s approach to cyberthreatsinclusion and data protection.diversity to create an environment where its employees can bring their authentic selves to work. The policystatement incorporates Aegon’s commitment to enable this through its actions and inclusive policies in the workplace, the marketplace, and the communities in which it operates. The statement applies to all Aegon businesses worldwide (including all units, entities, or joint ventures where Aegon has operational control) and is supported by mandatory training in data and cybersecurity.
Good health
and wellbeing
(longevity)
worldwide.		  
Global Health1, 2, 3, 4, 5, 6 (Human Rights and Safety Statement
Labour).
Diversity and Inclusion Policy 
ExternallyInternally published statement committing Aegonpolicy outlining Aegon’s concrete targets relating to providediversity in terms of nationality, age, gender, educational, professional and maintain high healthgeographical background, and safety standards across all its business units worldwide, outlining our objectivesexperience, in order to have a balanced and expectations.
diverse composition of the Board and Executive Committee.		1, 2, 3, 4, 5, 6 (Human Rights and Labour).
    
  Other topics
  
Related Policy /
Statement / Procedure
Description
Community
investment
Charitable Donations Standards
Externally published set of standards covering Aegon’s objectives with regard to community investment, including key themes (“financial security and education” and “wellbeing and longevity”), selection criteria, governance, and approval. The standards also detail Aegon’s contribution to humanitarian aid.
Compensation
and benefits
Global Remuneration Framework
Internal framework, detailing the company’s approach to pay. The Framework is based on the principle of pay for performance, setting down the principles of governance covering both fixed and variable pay. On variable pay, remuneration for Aegon executives and other senior management is based on both financial and
non-financial
performance metrics (including employee engagement and customer loyalty scores).
Human rights
Statement on Human Rights
 

Externally published statement designed to frame Aegon’s ongoing stewardship of human rights, including both the direct impacts of our daily operations as well as the indirect impacts of our business activities. Based on the Universal Declaration of Human Rights, core standards of the International LaborLabour Organization (ILO), and the principles of the UN Global Compact. The statement commits Aegon to upholding international human rights standards at all businesses where the company has sufficient management control and, where possible, to help ensure partners uphold the same standards. The statement is supported by a regular human rights risk assessment, covering Aegon’s businesses in the Americas, Europe, and Asia. (Note: Please see below for further information on our approach to human rights.)

Responsible
sourcing

  1, 2, 3, 4, 5, 6 (Human Rights and Labour).

Customer

empowerment

Own

operations

Pricing and Product Development PolicyInternal policy detailing Aegon’s approach to pricing and product development. It takes into account, among other things, ensuring a reasonable distribution of return/value to all stakeholders, the fair treatment of customers, and taking into account customers’ needs, including sustainability preferences, taking into account in the product approval process. The Global Chief Actuary (GCA) is the owner of the policy. The key requirements of the policy apply to all in-scope products, sold by all of Aegon’s strategic business units where Aegon has operational control.

Broadly supports

Principle 1 (Human Rights).

Underwriting (insurance related VC)Market Conduct Compliance Policy

Internal policy setting out key requirements regarding market conduct, designed to prevent or mitigate customers detriment, to support the proper management of conflicts of interests (including acting in accordance with the best interests of customers) and to ensure that the interests, objectives and characteristics of customers are duly taken into account. It applies to all strategic business units over which Aegon has operational control. The key requirement of this policy applies to all business units that deal with customers directly or indirectly through distributors, brokers, and vendors. Group oversight is the accountability and responsibility of the Board of Directors, supported by the Executive Committee.

Employee wellbeingOwn operationsTalent principles and talent review frameworkInternal guidelines and processes setting out Aegon’s approach to talent management, to ensure we have the right people in the right place to deliver our business ambitions.3 and 6 (Labour).
Performance and development cycleInternal guidelines and processes setting out Aegon’s approach to managing the performance of its people, focusing on current performance and future development and growth potential.
Global Health & Safety Statement

Externally published statement committing Aegon to achieving and maintaining high health and safety standards in all its business units worldwide and outlining Aegon’s objectives and expectations.

3, 4, 5, 6 (Labour).

 476  | Annual Report on Form 20-F 2023

Policies and statements

Vendor

Material

topic

Value chain dimension

Related Policy

or Statement

Description

Link to UN Global

Compact

principles

Global Remuneration Framework

Internal framework, detailing Aegon’s remuneration philosophy and principles, as well as its approach to remuneration in general. The Framework is based on the principle of pay for performance and sets out the principles of governance covering both fixed and variable pay. The variable remuneration for Aegon executives and other senior management is based on both financial and non-financial performance metrics. It contains general guidelines that apply to all staff within Aegon Group. In addition, there are specific policies that detail, among other things, the compensation structure and target setting requirements that apply to specific groups of employees.

Broadly supports Principle 6 (Labour).
Data security and privacyOwn operationsGlobal Information Security PolicyInternal policy setting out Aegon’s approach to cyberthreats and data protection, supported by mandatory training in information security. The policy applies to all Aegon businesses worldwide (including all units, entities, or joint ventures where Aegon has operational control) and is owned and maintained by the Global Chief Information Security Officer.Broadly supports Principle 1 (Human Rights).
Aegon Privacy Control Framework

The Aegon Privacy Control Framework is the basis for measuring Privacy maturity at Aegon, which sets out the company’s approach to personal data protection where one of the controls is mandatory privacy training.

Business conductOwn operationsCode of Conduct 
Externally published document containing the standardsprescribing a mandatory set of conditions for thehow Aegon employees should conduct business, relationship between Aegon and its vendors in order to enable Aegon to manage the most material business conduct, social, and environmental risks (also referred to as sustainability risks) associated with its procurement of goods and services under the following categories:
- Corporate governance
- Human rights
- Labor rights and good health and wellbeing
- Climate change and biodiversity
Aegon requires its vendors to comply with all applicable laws and regulations, and exercise sound judgment in making ethical business decisions in the long-term interests of our stakeholders. Training on the Code of Conduct is mandatory for all employees. The Code of Conduct applies to all Directors, officers, and assessesemployees of all Aegon companies, including the
ESG-related
performance of those vendors against its standards.
Responsible tax
Board members. It also applies to employees who represent Aegon at associate companies, joint ventures and other cooperative ventures.		  
1, 2, 3, 4, 5, 6 (Human Rights and Labour).
Speak UpExternally published policy supplementing the Aegon Code of Conduct. Aegon Speak Up provides a safe environment for anyone who wishes to raise a concern about suspected or observed misconduct that involves Aegon. The policy applies to all Aegon businesses worldwide (including all business units, subsidiaries and joint ventures that are majority owned, and controlled by Aegon). It also extends to customers, business partners, shareholders and the public in general.10 (Anti-Corruption).
Anti-Bribery & Corruption (ABC) PolicyThe Aegon Code of Conduct provides guidance on the prevention of bribery and corruption (including gifts and entertainment). The internally published Aegon Anti-Bribery and Corruption (ABC) Policy provides further principles and guidelines to help Aegon employees to make the right decision. The policy applies to all Aegon business units.10 (Anti-Corruption).
Conflict of Interest PolicyThe Aegon Code of Conduct provides guidance on conflicts of interest. The internally published Aegon Conflict of Interest Policy defines the principles regarding potential conflicts of interest that apply to all Aegon business units, and should be implemented in their local unit. The aim of the policy is to provide further guidelines to help Aegon employees recognize a potential conflict of interest and to help them handle the situation.
Global Tax Policy and Principles of Conduct 
Externally published policy outlining Aegon’s approach to responsible taxpaying, which seeks to align the long-term interests of all our stakeholders, including customers, employees, business partners, investors, and wider society.society at large. Aegon seeksaims to pay “fair taxes”, which means paying the right amount of taxtaxes in the right places.
408  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
  
Sustainability approach
10 (Anti-Corruption).
Anti-Money Laundering & Counter Terrorist Financing Policy (AML & CTF)Internally published policy aiming to protect Aegon and its subsidiaries, assets, clients, and external entities or individuals from being used by criminals to launder their proceeds from criminal activities, or being used to finance terrorist activities. It applies to all entities and business units of Aegon providing products or services subject to (local) legal AML & CTF requirements. It also includes arrangements where Aegon has a controlling interest in other Aegon entities, entities or joint ventures delivering these products or services. It also applies to all employees, including temporary staff and Board members.10 (Anti-Corruption).
Anti-Fraud PolicyInternally published policy aiming to protect Aegon and clients’ assets from fraudulent behavior by clients, business partners, employees, or any other external entity or individual. It covers all Aegon entities. This includes arrangements where Aegon has a controlling interest in other Aegon entities, entities or joint ventures. It also covers all employees, including temporary staff and Board members.10 (Anti-Corruption).
      Sanctions Policy

Internally published policy aiming to protect Aegon’s organization, its products, and services from being used for prohibited transactions and for the purposes of evading, avoiding or otherwise circumventing sanctions. It covers all Aegon business units and all wholly owned (directly or indirectly) Aegon entities, as well as arrangements where Aegon has a controlling interest in other business entities or joint ventures. It also covers all employees, including temporary staff and Board members.

10 (Anti-Corruption).

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LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

Policies and statements related to other topics are also included as a separate table below.

Other

(non-mate-

rial) topics

Value Chain

dimension

Related Policy /

Statement /

Procedures

Description

Link to UN Global

Compact (UNGC)

principles

Human rightsInvestments and asset managementAegon Group Responsible Investment PolicyExternally published policy acting as the basis for how Aegon’s general account assets should be managed, consistent with its responsible investment objectives, relevant laws, and governance standard. (Responsible investment (RI) is an umbrella term that covers various tools and approaches to incorporating environmental, social and governance (ESG) considerations into investment decision-making processes. It may include ESG integration and active ownership as well as dedicated, RI-focused capabilities.) The policy applies to the general account assets of Aegon business units, where Aegon has management control and can take the investment decisions. Aegon’s Executive Committee has ultimate responsibility for the execution of this policy and for its integration into investment strategy and other relevant company processes and practices.1, 2, 3, 4, 5, 6 (Human Rights and Labour), 7, 8, 9 (Environment), 10 (Anti-Corruption).
Own operationsCode of ConductExternally published document prescribing a mandatory set of conditions for how Aegon employees should conduct business, comply with all applicable laws and regulations, and exercise sound judgment in making ethical business decisions in the long-term interests of our stakeholders. Training on the Code of Conduct is mandatory for all employees. The Code of Conduct applies to all Directors, officers, and employees of all Aegon companies, including the Board members. It also applies to employees who represent Aegon at associate companies, joint ventures and other cooperative ventures.1, 2, 3, 4, 5, 6 (Human Rights and Labour).
Statement on Inclusion & DiversityExternally published statement setting out Aegon’s approach to inclusion and diversity to create an environment where its employees can bring their authentic selves to work. The statement incorporates Aegon’s commitment to enable this through its actions and inclusive policies in the workplace, the marketplace, and the communities in which it operates. The statement applies to all Aegon businesses worldwide.1, 2, 3, 4, 5, 6 (Human Rights and Labour).
Statement on Human Rights

Externally published statement designed to frame Aegon’s ongoing stewardship of human rights, including both the direct impact of our daily operations as well as the indirect impacts of our business activities. Based on the Universal Declaration of Human Rights, core standards of the International Labour Organization (ILO), and the principles of the UN Global Compact. The statement commits Aegon to upholding international human rights standards at all businesses where the company has sufficient management control and, where possible, to help ensure partners uphold the same standards. The statement is supported by a regular human rights risk assessment, covering Aegon’s businesses in the Americas, Europe, and Asia. (Note: Please see below for further information on our approach to human rights.)

1, 2, 3, 4, 5, 6 (Human Rights and Labour).
Responsible sourcingSupply chainVendor Code of Conduct

Externally published document that sets out the standards for the business relationship between Aegon and its vendors in order to enable Aegon to manage business conduct, social, and environmental risks (also referred to as sustainability risks) associated with the procurement of goods and services under the following categories: - Corporate governance - Human rights - Labor rights and good health and wellbeing - Climate change and biodiversity Aegon requires its vendors to comply with the code and assesses the ESG-related performance of those vendors against its standards.

1, 2, 3, 4, 5, 6 (Human Rights and Labour), 7, 8, 9 (Environment).
Community investmentOwn operationsCharitable Donations Standards

Externally published set of standards covering Aegon’s objectives with regard to community investment, including key themes (“financial security and education” and “wellbeing and longevity”), selection criteria, governance and approval. The Standards also detail Aegon’s contribution to humanitarian aid. In 2023, Aegon published its Global Community investment framework, which is aligned with its purpose and key priorities. This framework will guide Aegon’s community investment approach.

Broadly supports various principles through community engagement and support.

 478  |  Annual Report on Form 20-F 2023

Policies and statements

Human Rights

Statement on Human Rights

Aegon has an externally published Statement on Human Rights, which represents our overarching position and approach regardingto the responsible stewardship of human rights. This includes both the direct impacts of our daily operations as well as the indirect impacts of our business activities.

Aegon’s Statement on Human Rights is based on the Universal Declaration of Human Rights, core standards of the International LaborLabour Organization (ILO), and the principles of the UN Global Compact. The statement commits Aegon to upholding international human rights standards at all businesses where the company has sufficient management control and, where possible, to encourage partners to uphold the same standards.

In addition to our Human Rights Statement, human rights considerations are built into Aegon’s Responsible Investment Policy, Vendor Code of Conduct, and Statement on Inclusion and Diversity. Aspects of human rights are also covered by our Code of Conduct, our Speak Up program, and our policies including Anti-bribery and Corruption, Conflict of Interest, Employment Screening, Anti-Money Laundering, Sanctions, Anti-Fraud, Distribution Risk Management, and Third Party Risk Management.

Aegon UK also issues a modern slavery statement (in line with the UK government’s 2015 Modern Slavery Act).

Indicators

Results of Aegon’s biennial global Human Rights Risk Assessment (conducted internally and based on external sources). The assessment scores Aegon’s countries against a combination of 10 publicly available indicators including: Civil and political rights, Corruption, Human development, Health coverage, Property rights, Illicit economy, Gender development, Working conditions, Rule of law, and Internet inclusion.

Outcome / Performance 2022

2023

In 2022, we carried out our biennial Human Rights Risk Assessment (HRRA). Aegon also annually assesses ethics and culture via the Systematic Integrity Risk Assessments (SIRA), part of which is to assure it is not directly or indirectly violating the principles in the Code of Conduct and our core values.

2023 SIRA results indicate adequate controls are in place and residual risk is minimal in terms of non-compliance with the Code of Conduct and underlying procedures.

The findings from these assessments areindicate that forthe operating environment of most Aegon units the operating environment presentsposes little or no significant human rights risk. Aegon is exposed to reduced risks in the potentially more difficult environments of Hungary, Turkey, and Indonesia due to divestments in those countries. In the Americas, corruption is a concern, as well as the working conditions. We face human rights risks in China, and India, although most of these risks relateare related to outsideexternal political factors.

Compliance and Riskrisk leaders in countries with higher risk levels were asked to assess the local environment and to put in placedevelop action plans to manageaddress identified risks. Preventative and remedial measures were recommended to local management in higher risk countries, and the 2022 HRRA concluded that the necessary measures are in place with respect to address specific risks.

 

 

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   Aegon Annual Report on Form 20-F 2022  |  409
Table of Contents
    About Aegon    Governance and risk management    Financial information
Non-financial information
   

Regulation and compliance

Around the world, governments are passing legislation to make sure that companies are more transparent about how sustainablethe sustainability of their economic activities are.activities. This is also in line with their strategies to finance the transition to a more sustainable economy. For example, the EUEU’s Sustainable Finance Disclosure Regulation (SFDR) is driving morepromotes greater transparency regardingon how financial market participants and financial advisors integrate sustainability risks and, where appropriate, sustainability factors (the impact of economic activities on people and the environment) into their investment decisions or insurance advice.

According to the SFDR, financial market participants should disclose information on thosethese procedures and descriptions, andas well as the impact of sustainability risks on the performance of the financial products, as well as,and, where appropriate, the impact of these products on people and the environment. To do so,this, they need sustainability-related information about their investees (companies). This is why the European Union has been developing two other key pieces of legislation, namely the Corporate Sustainability Reporting Directive (CSRD)CSRD and the EU Taxonomy. The CSRD and EU Taxonomy, which aim to ensure that investees(investee) companies report on these topics, so that financial institutions can use this information in return. The 2021 reporting year was the first step in the implementation of the

EU Taxonomy.

Directives

For more information on the EU Taxonomy please refer to the “EU Taxonomy Regulation” section on page 413.
EU
Non-Financial
Reporting Directive

Non-financial

reporting has been a regulatory requirement for Aegon since the implementation of EU Directive 2014/95/ EU on
non-financial
reporting, hereafter referred to as the EU
Non-Financial
Reporting Directive (NFRD), as of the 2018 reporting year. The NFRD requirements applicable to Aegon N.V.Ltd. are included in article 29a of Directive 2013/34/ EU (Accounting Directive). In the Netherlands, article 29a of the Accounting Directive is implemented in Dutch law on the basis of article 391 of Book 2 of the Dutch Civil Code in the Decree on the contents of the management report (“Besluit inhoud bestuursverslag”), in the Decree on the establishment of further provisions on the content of the Annual Report (“Besluit tot vaststelling van nadere voorschriften omtrent de inhoud van het jaarverslag”) and in the Decree on the publication of
non-financial
information (“Besluit bekendmaking niet-financiële informatie”).
by two decrees.

The NFRD requires “large companies”companies such as Aegon to disclose information regarding the way they operate and manage social and environmental challenges. The disclosures pursuant to the NFRD relate to the impact on the company’s development, performance, and position, which indicates financial materiality. In addition, the NFRD disclosures should relate to the impact of the company’s activities with respect to environmental and social matters. This refers to the external impacts of the company.

More specifically, the NFRD requires companies to report on social, employee, and environmental matters (including climate change), human

rights, bribery, and anti-corruption, as well as to disclose information on board diversity. Information on board diversity is included in the diversity section of Aegon’s Corporate Governance Statement. Climate-related information forms part of the information that needs to be disclosed on environmental matters, including those provided on the basis of the recommendations of the Task Force on Climate-Related Disclosures (TCFD). These disclosures are covered in the TCFD section of this report.

On the basis of the above-mentioned Decrees,

Aegon is required to publish

non-financial
(sustainability) information in a (consolidated)
non-financial
statement. To this end, the table on the next page detailsreferences the required disclosures, required, additionally referencing the corresponding requirement of the NFRD itself andper the corresponding requirements of the NFRD.

From January 1, 2024, the CSRD will replace the NFRD and will apply to Aegon’s 2024 Annual Report to be published in 2025. Aegon is preparing for this change. EU Taxonomy disclosures are already required based on article 8 of the Dutch decrees.EU Taxonomy Regulation. Disclosures related to the EU Taxonomy can be found on pages 499-505.

 
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Table of Contents

Regulation and compliance

  
 

EU

Non-Financial
Reporting Directive
1
(NFRD) requirement1)

Topic  
Sub-topic
  
Section Reference (AR 2022)
20-F 2023)		  
Equivalent
requirement

under Dutch
law
2
2)
Business model
  Brief description of company’s business model  

Our strategy and(pages 9-13)

How we create value creationfor our stakeholders (pages

8-12)
Value creation (pages
18-19)
22-23)

  

Decree

non-financial

information (article 3.1.a)

Relevant

environmental matters (including (e.g.

climate-related

impacts)

  
Description of policies relating to environmental matters (including due diligence processes implemented)
  

Sustainability (pages

13-17)
14-18)

Table underin section “Policies and procedures”Statements” (pages

407-408)
476-477)

TCFD (pages

427-433)
486-498)

  

Decree

non-financial

information (article

(article 3.1.b)

The outcome of these policies

  

Sustainability (pages

13-17)
14-18)

Sharing value with our stakeholders (page 28)

in 2023 (pages 24-35)

TCFD (pages

427-433)
Tables under “Value created”:
Society/Responsible investment and 486-498)

Our material topics/Climate change (Investment footprint,mitigation and Operational footprint)adaptation (pages

441-446)
462-464)

   
  Description of the principal risks (in own operations and in value chain) and how these risks are managed  

Our material topics/Climate change mitigation and adaptation (pages 462-464)

TCFD (pages 486-498)

Risk management (pages

77-82)
Regulation and supervision (pages
89-92)
79-84)

Risk factors Aegon N.V.Ltd. (pages

360-383)
TCFD (pages
427-433)
420-426)

  
Decree
non-financial
information (article 3.1.c)
   
Non-financial
key performance indicators relating to environmental matters
  
Sustainability approach/
Non-financial
key performance indicators (pages
405-406)
TCFD (pages
427-433)
Tables

KPIs and targets table and Metrics table under “Value created”:

Society/Responsible investment and the section:

Our material topics/Climate change (Investment footprint,mitigation and Operational footprint)adaptation (pages

441-446)
462-464)

TCFD (pages 486-498)

  
Decree
non-financial
information (article 3.1.d)
Relevant social and employee matters
  
Description of the policies relating to social and employee matters (including due diligence processes implemented)
  

Sustainability (pages

15-16)
14-18)

Table underin section “Policies and procedures”Statements” (pages

407-408)
476-477)

  

Decree

non-financial
information (article

(article 3.1.b)

  

The outcome of these policies

  

Sustainability (pages

15-16)
14-18)

Sharing value with our stakeholders in 2023 (pages

20-26,
28)
Tables under “Value created”:
Customers/Customer experience (Customer satisfaction) (page 434)
Employees/24-35)

Our material topics/Inclusion and diversity Talent management(pages 465-466)

Our material topics/Customer empowerment (pages 467-468)

Our material topics/Employee wellbeing (pages 469-471)

Our material topics/Data security and Good health and wellbeing) (pages

435-437)
Society/Responsible investment (pages
441-446)
privacy (page 472)

   
Description of the principal risks (in own operations and in value chain) and how these risks are managed
  

Our material topics/Inclusion and diversity (pages 465-466)

Our material topics/Customer empowerment (pages 467-468)

Our material topics/Employee wellbeing (pages 469-471)

Our material topics/Data security and privacy (page 472)

Risk management (pages

77-82)
Regulation and supervision (pages
89-92)
79-84)

Risk factors Aegon N.V.Ltd. (pages

360-383)
420-426)

  
Decree
non-financial
information (article 3.1.c)
   
Non-financial
key performance indicators relating to social and employee matters
  
Sustainability approach/
Non-financial
key performance indicators (pages
405-406)
Tables

KPIs and targets tables and Metrics tables under “Value created”:

Customers/Customer experience (Customer satisfaction) (page 434)
Employees/the sections:

Our material topics/Inclusion and diversity Talent management (Recruitment(pages 465-466)

Our material topics/Customer empowerment (pages 467-468)

Our material topics/Employee wellbeing (pages 469-471)

Our material topics/Data security and retention, and Employee engagement), and Good health & wellbeing (pages

435-437)
Society/Responsible investment (pages
441-446)
privacy (page 472)

  
Decree
non-financial
information (article 3.1.d)

 
1 
As included in the EU Accounting Directive.
2 
The EU
Non-Financial
Reporting Directive was transposed into Dutch law through two decrees relating respectively to
non-financial
information and diversity policy (“Besluit bekendmaking niet-financiële informatie”/”Besluit Bekendmaking diversiteitsbeleid”, included in the “Besluit tot vaststelling nadere voorschriften omtrent de inhoud van het jaarverslag”).

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LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information
   Aegon Annual Report on Form 20-F 2022  |  411
Table of Contents
    About Aegon    Governance and risk management    Financial information
Non-financial information
  
 





Topic  
Sub-topic
 
Section Reference (AR 2022)
20-F 2023)		  
Equivalent
requirement

under Dutch
law
2
2)
Relevant matters with respect for human rights
  
Description of policies relating to respect for human rights (including due diligence processes implemented)
 

Table in section “Policies and Statements” (pages 476-477)

Additional table underin section “Policies and procedures” (page 408)

Sustainability approach/Human rights (page 409)
Statements” (pages 478-479)

  Decree
non-financial
information (article 3.1.b)
  The outcome of these policies 
Sustainability approach/Policies and statements/Human rights (page 409)
Tables under “Value created”:
Employees/Inclusion and diversity (Work-related incidents and complaints) (pages
435-437)
Society/Responsible investment (pages
441-442)
479)		   
  
Description of the principal risks (in own operations and in value chain) and how these risks are managed
 Sustainability approach/Policies and statements/Human rights (page 409)479)  Decree
non-financial
information (article 3.1.c)
   
Non-financial
key performance indicators relating to human rights matters
 Sustainability approach/

Policies and statements/Human rights (page 409)479)

KPIs and targets table and Metrics tables under the section:

Our material topics/Inclusion and diversity (pages 465-466)

Voluntary information/Extra metrics/RI solutions by Aegon AM (page 506)

  Decree
non-financial
information (article 3.1.d)

Relevant matters with respect to anti-corruption

and bribery

  
Description of policies relating to anti-corruptionanti- corruption and bribery matters (including due diligence processes implemented)
 

Table underin section “Policies and procedures”Statements” (pages

407-408)
476-477)

Governance and risk management/management 2023/Code of conduct (page 93)

  Decree
non-financial
information (article 3.1.b)

The outcome of these policies

 
Tables under “Value created”:
Society/Responsible investment and ComplianceOur material topics/Business conduct (pages
441-446)
473-475)		   

Description of the principal risks with regard to anti- corruptionanti-corruption and bribery; and, how these risks are managed

 

Sharing value with our stakeholders in 2023 (pages 24-35)

Risk management (pages

77-82)
Regulation and supervision (pages
89-92)
79-84)

Decree non-financial information

(article 3.1.c)

Risk factors Aegon N.V.Ltd. (pages

360-383)
Decree
non-financial
information (article 3.1.c)
420-426)

   

Non-financial

key performance indicators relating to anti-corruption and bribery

 
Sustainability
approach/Non-financial
key performance indicators

KPIs and targets table and Metrics table under the section:

Our material topics/Business conduct (pages

405-406)
Tables under “Value created”:
Society/Responsible investment and Compliance (pages
441-446)
473-475)

  Decree
non-financial
information (article 3.1.d)
Diversity
  
Diversity of the Management Board of Directors and Supervisory Board
the Executive Committee		 
Diversity section

Report of Aegon’s Corporate Governance Statement 2022.

Regulation and compliance/ Dutch Act on gender diversity at the topBoard of Directors (pages
417-418)
Tables under “Value created”:
Employees/Inclusion and diversity56-57)

Sharing value with our stakeholders in 2023/Employees (pages

435-437)
Investors/Corporate governance (pages
439-440)
27-31)

  
Decree content of the management report
(article (article 3a)

1 

As included in the EU Accounting Directive.

Directive

2 

The EU

Non-Financial
Reporting Directive was transposed into Dutch law through two decrees relating respectively to
non-financial
information and diversity policy (“Besluit(Besluit bekendmaking niet-financiële informatie”/”informatie/Besluit Bekendmaking diversiteitsbeleid”,diversiteitsbeleid, included in the “BesluitBesluit tot vaststelling nadere voorschriften omtrent de inhoud van het jaarverslag”)jaarverslag).

 

 482  |  Annual Report on Form 20-F 2023

Our commitments

412  |  

Our commitments

Aegon applies over-arching and sector-specific global sustainability frameworks and initiatives, both to align with and to report against its sustainability strategy, policies, and performance.

We understand that we cannot achieve our sustainability ambitions on our own. We are therefore contributing towards a number of over-arching international initiatives, including the United Nations Global Compact (UNGC), the UN SDGs, and the Task Force on Climate-related Financial Disclosures (TCFD). These initiatives guide our internal practices and policies and help shape our overall approach to sustainability.

In addition, Aegon has signed up and committed to sector-specific initiatives, including the UNEP-FI Principles for

Sustainable Insurance, and the Principles for Responsible Investment (PRI).

A full list of our commitments is available on our website.

Net-Zero Asset Owner Alliance

Aegon became a member of the Net-Zero Asset Owner Alliance in 2021. The NZAOA is a UN-convened group of institutional investors committed to transitioning their portfolios to net-zero greenhouse gas emissions by 2050. As a member, we have committed to transitioning our general account investment portfolio1 to net-zero greenhouse gas (GHG) emissions by 2050, with clear medium-term targets for 2025. For more information on our targets please see page 16.

United Nations Global Compact

In 2021, Aegon became a signatory of the UNGC, thereby committing to implement universal sustainability principles in the fields of human rights, labor, environment, and anti-corruption, as well as taking steps to support the UN goals;

currently the SDGs. As a signatory, Aegon is committed to disclosing its progress annually via a Communication on Progress (COP) submission, which can be accessed here.

United Nations Sustainable Development Goals

In 2015, the United Nations adopted 17 SDGs. These goals cover poverty reduction, education, gender equality, climate change, and health. Accompanying each of these goals is a series of targets and indicators.

At Aegon, we are committed to supporting the UN SDGs, both as a financial services provider and as an investor. We recognize that sustainable development is in the long-

term interest of business and the global economy, but that a sustainable future for people and the planet will not be attainable without cooperation between the public and private sectors.

We have linked our contributions to the SDGs relating to our material topics in the “Our material topics” section.

UNEP-FI Principles for Sustainable Insurance

Aegon is one of the founding signatories of the UNEP-FI PSI. The aim of the PSI is to make sure sustainability becomes “business as usual”. The PSI comprises four basic principles. As a signatory, Aegon reports annually on the actions taken to implement the PSI’s four principles on its website. The following table summarizes actions taken towards implementing the principles in 2023.

1

The general account portfolio consists of assets where Aegon can take the investment decisions, considering the legal obligations of Aegon as prescribed by local laws and regulations. A similar approach applies to selected investments where Aegon Asset Management in its capacity of manager takes the investment decisions. For discretionary investments for account of third parties and off-balance sheet investments, the investment decisions are driven by the relevant third parties as well as the legal and/or fiduciary obligations of Aegon, as prescribed by local laws and regulations.

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Table of Contents
LOGO		 
RegulationAbout Aegon  Governance and compliance
risk management  Financial information  Sustainability information
  
 

EU Corporate Sustainability Reporting Directive
From January 1, 2024, the Corporate Sustainability Reporting Directive (CSRD) will apply to large companies, such as Aegon N.V., and replace the NFRD. As mentioned in “Reporting process for
non-financial
data” section on page 402, Aegon is preparing for this change. The CSRD will require companies, including Aegon N.V., to include in their management report information necessary to understand their impacts on sustainability matters, and how sustainability matters affect their development, performance, and position, including the information that they are required to disclose pursuant to article 8 of the Taxonomy Regulation. In line with and building on the approach of the NFRD, the CSRD also adopts a “double-materiality” perspective.
The detailed reporting requirements under the CSRD will be included in sustainability reporting standards. The first set of standards is expected to be formally
PrinciplesOur GoalsOur progress (as of 2023)

1.  We will embed in our decision-making environmental, social and governance (ESG) issues relevant to the insurance business.

Streamline the group- wide sustainability governance.

∎  In 2022, the Global Sustainability Board (GSB) oversaw our sustainability approach, including the strategic measures we are undertaking to fulfill our sustainability ambitions.

∎  In 2023, the Responsible Working Group marked a significant milestone by consolidating the previous PRI and Active Management Working Groups, streamlining Aegon’s approach to Responsible Investment (RI). In line with our sustainability approach, we also established an Inclusion and Diversity (I&D) Working Group to intensify our focus on this priority theme for Aegon.

Integrate ESG issues into key stakeholder discussions, decision- making, risk management, underwriting, and capital adequacy decision-making processes.

∎  In 2023, building on our first DMA in 2022, Aegon conducted a second double materiality assessment to prepare for the European Union’s Corporate Sustainability Reporting Directive (CRSD), which will apply to Aegon from the 2024 reporting year. Aegon’s 2023 DMA was guided by the European Sustainability Reporting Standards (ESRS) adopted by the European Commission in July 2023. Aegon was supported by external advisors in the development of its DMA process. The methodology will be enhanced further in coming years to expand stakeholder consultation and refine our value chain analysis.

Develop products and services which reduce risk, have a positive impact on ESG issues, and encourage better risk management.

∎  In Q1 2023, Aegon Asset Management increased access to sustainability products with clients, citing EUR 100 million inflows to its Short Dated Climate Fund.

∎  In Q1 2023 Aegon THTF launched “Aegon THTF YiXinAn critical illness insurance product”, to fill an existing gap between the need for health insurance and the high-cost threshold of existing commercial health insurance.

∎  In Q1 and Q2 2023, Transamerica expanded choice for clients by incorporating ESG into its product offering and launched a series of ESG sustainable funds.

∎  In Q2 2023, Aegon expanded its 2025 climate targets to support its commitment to achieving net-zero emissions by 2050.

∎  In Q3 2023, Aegon UK was accepted as a signatory to the Financial Reporting Council’s UK Stewardship Code.

∎  In 2023 Aegon AM began the process of reclassifying the Aegon Global Sustainable Sovereign Bond Fund (GSSF) from article 8 to article 9 under the SFDR, thereby certifying that the fund has as its objective sustainable investment in line with the UN Sustainable Development Goals.

Establish processes to identify and assess ESG issues inherent in the portfolio and be aware of potential ESG-related consequences of the company’s transactions.

∎  Aegon worked with Ortec Finance in 2023 to perform a systematic climate risk assessment for the General and Separate Account assets of all business units within Aegon.

∎  In 2023, Aegon AM started our Top Emitter Engagement Program, through which we identified the top 20 corporate GHG emitters within the Aegon General Account to encourage them to set science-based net-zero targets.

∎  In 2023, Transamerica added new climate-related investments to its portfolio as part of its USD 2.5 billion commitment to invest in climate solutions. This included Commercial Property Assessed Clean Energy (C-PACE) asset-backed securities, which address the need to engage ordinary households and individuals in the transition to a more climate-conscious society. C-PACE is a financing structure in which building owners borrow money to finance projects related to energy efficiency, renewable energy, or energy storage, for example, or storm and seismic hardening.

2.  We will work together with our clients and business partners to raise awareness of ESG issues, manage risk and develop solutions.

Establish the company’s expectations and requirements on ESG issues.

∎  In 2023, Aegon’s sustainability approach set clear expectations and requirements for the company’s priority themes, climate change and promoting inclusion and diversity. The sustainability approach is guided by a robust governance structure ensuring alignment with Aegon’s sustainability goals across the business.

Integrate ESG issues into tender, and selection processes for suppliers.

∎  We integrate all applicable laws, regulations, and ethical business practices into our selection process for vendors and apply a risk-based approach to assess performance and compliance with these minimum standards and preferred behaviors.

∎  In 2023, we expanded the reach of our EcoVadis assessment program to drive alignment with our suppliers and maintained our requirement for suppliers to adhere to our Vendor Code of Conduct.

∎  In 2023, Aegon’s businesses around the world continued to work closely with their supplier base on topics related to sustainability. In the United Kingdom, Aegon increased the number of existing suppliers with whom it aims to work on sustainability issues from 46 to 50. This cohort now includes critical suppliers, high-spend suppliers, and high-risk facility suppliers.

∎  In 2023, Transamerica took action to expand and broaden its distribution network to serve more diverse customer groups. The approach included recruiting World Financial Group agents from diverse communities who can meet the needs of customer groups traditionally underserved by financial services, such as minorities.

∎  In 2023, Aegon UK became a signatory to the UK Stewardship Code, a voluntary set of guidelines aimed at raising the standard of stewardship practices used by asset owners, managers and service providers. During the year, the business also continued to encourage critical and local suppliers to become Living Wage Employers, meaning that they are accredited by the Living Wage Foundation for their commitment to pay employees in line with the current cost of living.

Support the inclusion of ESG issues in professional education, and ethical standards in the insurance industry.

∎  In Q4 2023, Aegon launched its Sustainability Academy, a global, company-wide initiative to increase awareness of sustainability and the company’s purpose and sustainability ambitions.

∎  In 2023, Aegon UK organized training for its procurement and supplier management teams through the Carbon Literacy Project. The training aimed to raise employees’ awareness of climate change and mitigation and adaptation strategies. Twenty-nine employees were accredited as being carbon literate through the program.

 484  |  Annual Report on Form 20-F 2023

Our commitments

PrinciplesOur GoalsOur progress (as of 2023)

3.  We will work together with governments, regulators and other key stakeholders to promote widespread action across society on ESG issues.

Advocate for issues and initiatives that benefit our customers, employees, wider society, and our businesses.

∎  Our Global Government & Public Affairs department works to support regulators and lawmakers by advocating worldwide for access to insurance and financial services, opportunities for flexible employment in old age, and government planning for citizens in an era of increasing longevity.

∎  In 2023, as a long-standing member of the Institutional Investors Group on Climate Change, Aegon AM also participated in the Net Zero Engagement Initiative. Launched in 2023, the initiative aims to build on and extend the reach of investor engagement beyond the Climate Action 100+ focus list, focusing on companies that are heavy users of fossil fuels.

∎  In 2023, Transamerica continued its partnership with Junior Achievement, a nationwide charitable organization dedicated to helping students of all backgrounds develop financial literacy and career readiness skills. Transamerica continued to present the organization’s experiential program, JA Finance Park, a Harvard-accredited financial literacy program that helps middle- and high-school students build financial skills for life.

∎  In Q1 2023, Aegon donated EUR 100,000 to UNICEF to support relief efforts following the earthquakes in Turkey and Syria.

∎  In Q1 2023, Aegon NL donated EUR 115,000 to “Geldfit” to aid those suffering from “poverty due to an energy crisis.”

∎  In Q2 2023, Aegon and Transamerica organized the company’s first-ever global Force for Good Week to assist people in local communities in living their best lives.

∎  In Q3 2023, Aegon collaborated with Aidsfonds to conduct a company-wide fundraiser in honor of the Amsterdam Canal Pride Parade.

Support prudential policy and regulatory and legal frameworks that enable risk reduction, innovation, and better management of ESG issues.

∎  We are active in many international projects that aim to fulfill this goal; for example, a working group of the Organisation for Economic Cooperation and Development (OECD) working group on the future of work, and the Living, Learning and Earning Longer initiative led by the World Economic Forum.

∎  In 2023, we continued preparations for the European Union’s Corporate Sustainability Reporting Directive (CSRD), which will apply to Aegon from the 2024 reporting year. Aegon’s 2023 DMA was guided by the European Sustainability Reporting Standards (ESRS) adopted by the European Commission in July 2023.

Convey dialogue and participate in research initiatives (inc. academia and scientific community) with business, and industry associations to better understand and manage ESG issues across industries and geographies.

∎  In 2023 we contributed to research by the Geneva Association (publication pending) on Climate Tech for Industrial Decarbonisation.

∎  To gain a better understanding of how longevity interacts with various aspects of people’s lives, Aegon undertook various research projects. One piece of research in 2023 was carried out by Glocalities for Aegon in five of our markets around the world and incorporates findings from an MIT AgeLab report in the United States.

Convey dialogues with governments and regulators to develop integrated risk management approaches, and risk transfer solutions.

∎  No relevant engagement in 2023.

Encourage media incentives and publish resources available to media to promote public awareness of ESG issues and sound risk management.

∎  We regularly publish research on financial planning, retirement, health, and insurance issues so society at large can effectively plan for longer, and more active retirement.

4.  We will demonstrate accountability and transparency in regularly disclosing publicly our progress in implementing the Principles.

Assess, measure, and monitor our progress in managing ESG issues, and proactively, and regularly disclose this information publicly.

∎  In 2023, building on our first DMA in 2022, Aegon conducted a second double materiality assessment to prepare for the European Union’s Corporate Sustainability Reporting Directive (CRSD). Aegon monitors our material sustainability topics through a set of metrics, and KPIs disclosed in our annual reports.

∎  Each year, we publicly publish our progress against the PSI principles.

Participate in relevant disclosure or reporting frameworks, and are open to dialogue with clients, regulators, rating agencies, and other stakeholders to gain a mutual understanding of the value of disclosure through the Principles.

∎  In 2023 we submitted our second Communication on Progress (COP) report for the UNGC.

∎  In 2023 we began preparations for our first public assessment against the Principles for Responsible Investment taking place in 2024.

∎  In 2023, we continued preparations for implementing the ESRS standards.

∎  We engage with rating agencies, regulators, investors, and other stakeholders on a regular basis. We publish our progress on ratings publicly.

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LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

Task Force on Climate-related

Financial Disclosures

Introduction

Climate change represents one of the biggest risks to society, the economy, and financial institutions. Mitigating climate change, including the reduction of greenhouse gas (GHG) emissions, and adapting to climate change are major global challenges.

The present disclosure builds on earlier disclosures made since 2017. It is made on behalf of Aegon Ltd., an international financial services group, as both an asset owner and an asset manager. Similar to previous years, it follows the Task Force

on Climate-related Financial Disclosures (TCFD)’s four-pillar framework to facilitate disclosure. It also details progress on targets Aegon has set in line with its Net-Zero Asset Owner Alliance (NZAOA) membership.

Aegon strives to continuously enhance its reporting and business practices and welcomes feedback from stakeholders on the appropriateness and relevance of this disclosure.

Governance

Aegon’s Board of Directors has ultimate oversight over climate-related risks and opportunities. Through its Nomination and Governance Committee, the Board of Directors is advised and kept appraised of business and regulatory developments regarding sustainability, including climate change. An update is provided at least once per year on Aegon’s sustainability approach, which includes climate change as a priority theme.

The CEO, supported by the Executive Committee, is responsible for annually approving the double materiality assessment process, including related climate considerations, and setting Aegon’s broader sustainability strategy via Aegon’s sustainability approach. The CEO and Executive Committee receive at least an annual update on progress made against the approach and the climate ambitions included therein. They are also responsible for approving any additional climate ambitions and targets that are set at the group level.

The Global Sustainability Board (GSB) advises the Executive Committee on Aegon’s strategic sustainability

approach, including climate change as a priority theme, and meets quarterly. The GSB is supported by the Corporate Sustainability Team. The GSB is a senior management committee, established in December 2021 to enhance overall governance and oversight of Aegon’s company-wide approach to sustainability. It monitors progress made on climate targets and ambitions on a quarterly basis and, if insufficient progress is made, the GSB can escalate this to the Executive Committee. The GSB is chaired by the CEO of the Americas and consists of senior-level representatives from across the company, including five members of the Executive Committee. The GSB is supported by local sustainability boards across Aegon’s business units.

From a risk perspective, the Group Risk & Capital Committee (GRCC) oversees Financial Risk Management’s climate scenarios that analyze the potential impacts of climate change on Aegon’s financial accounts. The Non-Financial Risk Committee (NFRC) oversees Risk Governance’s annual climate risk assessment that identifies possible physical and transition risks that could impact Aegon.

Strategy

At a company-wide level, Aegon identifies the key risks and opportunities related to climate change through its overarching risk processes and through engaging with its key stakeholders, including customers, employees, investors, suppliers, and other business partners. The findings of these stakeholder engagements are captured in Aegon’s double materiality assessment, which identifies the most material

sustainability topics (based on a double materiality lens), including climate change mitigation and adaptation, and the corresponding key risks and opportunities. Subsequently, Aegon prioritizes climate issues in its global sustainability approach. This approach prioritizes goals and targets with corresponding action plans and is then translated into

 486  |  Annual Report on Form 20-F 2023

Task Force on Climate-related Financial Disclosures

Aegon’s regular three-year strategy and financial planning process called the Budget and Medium-Term Plan (B/MTP).

Risks

Our strategic approach

The relevant timeframe for climate change developments stretches from the short-term – where society is already feeling the impacts of climate change – to the medium- and long-term horizon, with a dependency on GHG emission pathways. This creates the challenge of assessing the relevance of, in particular, the far-out developments to the generally shorter-term organizational strategy timeframe, which, in the case of Aegon, are closely linked to our three-year B/MTP cycle. Complicating factors for the assessment include differing potential climate change pathways, as well as data availability.

One of the ways we assess climate-related risks is by conducting a qualitative company-wide climate risk assessment (CRA) that categorizes risks into four occurrence timeframes: imminent, near future (1-5 years), middle future (5-10 years), and distant future (>10 years). Our CRA shows that climate risks are most relevant for our investment and operational risk categories and are expected to increasingly occur in the near- to middle-future. These risks have the potential for significant impact, such as asset devaluation or stranded assets in the case of investment risk; or mis-selling of products in the case of operational risk, with moderate possibilities for mitigation.

From an underwriting risk perspective, climate-related risks have been identified in possible changes to future rates of mortality and morbidity. Aegon’s insurance products can have exposures to both an increase or decrease in these rates. At the same time, climate change can also lead to an increase or decrease in these rates, and impacts from climate change can therefore have both positive or negative financial consequences for Aegon. It is possible to distinguish between short-term and long-term risks, where short-term risks are driven by large catastrophic events that cause many deaths, long-term risks can lead to gradual changes in average mortality and morbidity rates over time.

From a financial risk perspective, we quantitatively assess climate scenarios and their impacts on our investment portfolio using a 2050 timeframe, in line with the Paris Agreement. This is detailed in the following sections.

Approach to quantitative climate risk assessment

Aegon conducts an extensive and systematic quantitative climate risk assessment on an annual basis. The scope of this assessment covers our insurance business units1, encompassing both general account (GA) and separate account (SA) assets2.

To conduct the 2023 annual assessment, Aegon continued its collaboration with Ortec Finance, using the company’s Climate MAPS solution, a scenario-based tool. This assessment consists of different stages (listed in order of sequence):

∎Climate pathways development with scenarios differing in terms of policy and technology changes, physical risks, and pricing-in changes.

∎Macroeconomic modeling, where scenario assumptions drive macroeconomic changes per region, per sector (e.g. country Gross Domestic Product (“GDP”), inflation, and sector Gross Value Added (“GVA”)).

∎Financial modeling, wheremacroeconomic impacts are translated to financial variables and pricing dynamics are modeled. Climate MAPS translates climate-GDP/GVA and CPI shocks over time to 600+ financial and economic variables.

∎Apply mapping, where Aegon’s assets, encompassing both securities and funds, are mapped to asset benchmarks available in Climate MAPS. The end-model output is climate-adjusted risk-return metrics for Aegon’s asset portfolios up to 40 years ahead over the different climate pathways.

The first three stages above form part of Ortec Finance’s Climate MAPS solution with the final mapping stage conducted by Aegon.

Climate pathways

For our climate risk assessment, we consider four plausible climate pathways which are as follows:

∎An orderly Net Zero pathway (“Net Zero” / “NZ”);

∎A disorderly Net Zero pathway (“Net Zero Financial Crisis” / “NZFC”);

∎An orderly but limited transition (“Limited Action” / “LA”);

∎A failed transition pathway (“High Warming” / “HW”).

1

Aegon Asset management is out of the scope of analysis.

2

Reinsurance assets excluded.

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LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information

These pathways allow us to explore potential future climate policies, interventions, and the consequences of the world failing to mitigate change.These pathways are in line with industry standards set by the Intergovernmental Panel on Climate Change (IPCC) and the Network of Central Banks and Supervisors for Greening the Financial System (NGFS). This is demonstrated in the “Global temperature change (°C)” graph, where a comparison versus the IPCC scenarios is provided.

Net Zero

Net Zero

Financial Crisis

Limited ActionHigh Warming
Explores an orderly net zero transition (av. global warming of 1.5°C)Explores disruptive reaction from financial markets (avg. global warming of 1.5°C)Explores an orderly but limited transition (avg. global warming of 2.8°C)Explores severe physical climate risks (avg. global warming of 4.2°C)

∎ Early and smooth transition

∎ Market pricing-in dynamics occur smoothed out in the first 3 years

∎ Locked-in physical impacts

∎ Sudden disinvestments in 2025 to align portfolios to the Paris Agreement goals have disruptive effects on financial markets with sudden repricing followed by stranded assets and a sentiment shock

∎ Locked-in physical impacts

∎ Policymakers implemented limited NDCs and fall short of meeting the Paris Agreement goals

∎ High gradual physical & extreme weather impacts

∎ Markets price in physical risks of the coming 40 years over 2026-2030, and risks of 40-80 years over 2036-2040

∎ The world fails to meet the Paris Agreement goals and global warming reaches 4.2°C above pre-industrial levels by 2100

∎ Very severe gradual physical & extreme weather impacts

∎ Markets price in physical risks of the coming 40 years over 2026-2030, and risks of 40-80 years over 2036-2040

Proprietary Ortec scenario aligned to:Proprietary Ortec scenario aligned to:Proprietary Ortec scenario aligned to:Proprietary Ortec scenario aligned to:
Average temperature increase by 2100 of 1.5°CAverage temperature increase by 2100 of 1.5°CAverage temperature increase by 2100 of 2.8°CAverage temperature increase by 2100 of 4.2°C

~ ‘very low emissions’ IPCC scenario: SSP1-RCP1.9

~50% probability of limiting warming to 1.5°C

~ ‘very low emissions’ IPCC scenario: SSP1-RCP1.9

~50% probability of limiting warming to 1.5°C

~ ‘intermediate emissions’ IPCC scenario: SSP2-RCP4.5 Very likely 2.1°C – 3.5°C warming by 2100~ ‘high emissions’ IPCC scenario: SSP3-RCP7.0 Very likely 3.4°C – 5.6°C warming by 2100

Global temperature change (°C)

LOGO

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Macroeconomic modeling

The climate pathway assumptions drive macroeconomic changes per region and sector (e.g. GDP, inflation, and sector GVA). These changes/impacts are measured versus a climate-uninformed baseline outlook. As an example, in the “Cumulative US GDP impacts and contribution by year, risk driver, and pathway“ graph, the projected cumulative impact on US GDP is shown for each pathway, together with the risk driver contribution from transition risks (i.e. policy & technological changes) and physical risk (i.e. gradual impact and extreme weather events).

It illustrates firstly the greatest ultimate cumulative GDP impacts for the High Warming (HW) pathway and the Limited Action (LA) pathway. In these pathways we notice physical risks are particularly prominent with gradual physical risk impacts increasing significantly over time. In the Net Zero and Net Zero Financial Crisis (NZ & NZFC) pathways that follow, the ultimate cumulative GDP impacts are smaller having successfully transitioned to a net-zero world by 2050. Nevertheless, locked-in physical impacts still emerge in these pathways.

Cumulative US GDP impacts and contribution by year, risk driver, and pathway

Risk driver ∎ Extreme Weather  ∎ Gradual Physical  ∎ Transition  ∎ Sentiment Shock   LOGO   Total

LOGO

Financial modeling

The next step in the modeling involves employing financial modeling to translate the macroeconomic impacts to financial variables and capture pricing dynamics. In particular, Climate MAPS translates climate-GDP/GVA and CPI shocks over time to 600+ financial and economic variables. These variables have a high degree of granularity differing by country/sector/ year for each pathway.

As an example, in the graph “US equity impact by year and pathway”, the projected cumulative impact on US Equities is shown for each pathway. This figure illustrates, in the case of the High Warming (HW) and Limited Action (LA) pathway,

two pricing-in periods that cause meaningful negative equity impacts. In these periods, financial markets price in physical risks for the coming 40 years during 2026-2030, and risks of 40-80 years during 2036-2040. Moving to the Net Zero pathway, we see the pricing-in dynamics smoothed out in the first three years of the projection given the early and smooth transition to a net-zero world. In contrast, in the Net Zero Financial Crisis pathway, a severe negative impact is concentrated in 2025 when sudden disinvestments, to align portfolios to the Paris Agreement goals, have disruptive effects on financial markets, with sudden repricing followed by stranded assets and a sentiment shock.

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US equity impact by year and pathway

LOGO

Mapping to Aegon exposures

In this final stage, we apply mapping where Aegon’s assets, encompassing both securities and funds, are mapped to asset benchmarks available in Climate MAPS. The Climate MAPS solution has a large suite of asset benchmarks available with a high level of granularity by asset class, region, and rating thus facilitating a strong level of mapping versus Aegon’s actual asset portfolio.

In this step, we need to make assumptions about how the GA and SA asset portfolios evolve over time. In the results generated, we assume a constant portfolio asset allocation over time. Furthermore, we assume that the GA portfolio is modeled as a static portfolio, and that its value therefore rises and falls with investment returns but does not take account of other external dynamics; for example, new money inflows, claims outflows, etc.

It is worth noting that, for fixed income (FI) credit, the asset exposure is mapped to a combination of corporate bond benchmarks with specific credit ratings. Given we assume a constant asset allocation over time this implicitly assumes a regular rebalancing of the exposure, as defaults and migrations emerge, to maintain the initial credit rating split. An alternative modeling approach would be to assume less dynamic management of the FI assets where we buy and hold the securities.

Results of the quantitative climate risk assessment

Following the application of the mapping, the end-model output is climate-adjusted risk-return metrics for Aegon’s asset portfolios up to 40 years ahead over the different climate pathways.

An example of this output is shown in the graph “Return impact versus baseline (cumulative) by year and scenario”, which illustrates the 2023 results in respect of the overall GA asset portfolio. Results are shown as a return impact versus a climate-uninformed baseline outlook. The chart illustrates that the High Warming pathway has the greatest ultimate cumulative impact on the portfolio where the impacts develop more gradually but accelerate later following the significant physical risks of this path being priced in by the financial markets. In the case of the Limited Action pathway, we see a similar shape to the impacts, though they are less severe than the High Warming. The Net Zero pathways, in line with expectations, have a smaller ultimate cumulative impact versus High Warming and Limited Action. However, in the case of Net Zero Financial Crisis, significant return volatility is observed in the short term.

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Return impact versus baseline (cumulative) by year and scenario

LOGO

Return impact versus baseline (cumulative)

by year and scenario (sensitivity analysis)

LOGO

Return impact versus baseline (cumulative)

by year and scenario (sensitivity analysis) + 10% equity

LOGO

Return impact versus baseline (cumulative)

by year and scenario (analysis of change versus 2022)

LOGO

The projections in the graph “Return impact versus baseline (cumulative) by year and scenario” demonstrate good resilience in the value of the GA portfolio against key systemic climate risk drivers over a 40-year horizon. This is largely attributed to the high allocation of fixed income assets in the GA (in this analysis c. 87% of the GA exposure is mapped to Fixed Income asset class and within this c. 50% of the GA exposure is mapped to US corporate bonds), which serves to limit the cumulative climate-related impact on returns. The expected return from the fixed income asset class is forecasted to be less exposed than equities, real estate, or other asset classes to climate risks.

Despite the above assessment it is important to recognize the high degree of uncertainty with respect to outcomes projected above. Climate risk scenario modeling is a very challenging topic involving a significant number of assumptions and the need for modeling complex interactions. Furthermore, it is important to recognize the projected outcomes show only the median outcome under the modeled pathway, and not the uncertainty or variance underlying the point estimate.

In recognition of this and other modeling choices (e.g. assume constant rebalancing in management of Fixed Income portfolio) we show in graph “Return impact versus baseline (cumulative) by year and scenario (sensitivity analysis)” the results of a sensitivity analysis, whereby we assume that 10% of the mapped US corporate bond exposure is mapped to equity. As highlighted by the chart above, this results in a more onerous cumulative return impact on the GA of -13.1% in the High Warming pathway.

The graph “Return impact versus baseline (cumulative) by year and scenario (analysis of change versus 2022)” provides an analysis of change for the GA results comparing the 2023 climate pathways versus the 2022 equivalents, namely Disorderly Net Zero (dNZ) versus Net Zero Financial Crisis (NZFC), Orderly Net Zero (oNZ) versus Net Zero (NZ), and Failed Transition (FT) versus High Warming (HW). The graph illustrates broadly similar outcomes when comparing the 2023 pathways (solid lines) versus their 2022 equivalent (dashed lines). This result is not unexpected, with the assumptions underlying the 2022 and 2023 pathways being broadly similar.

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The results provide an initial directional signal; however, climate-related risks are dynamic in nature. Transition risks are expected to dominate in the near to medium term (particularly to 2030) if society is to achieve the net-zero objectives while physical risks may materialize at any time as global temperatures continue to rise. As a result, continuing to monitor developments in climate science, policy, technology, and consumer sentiment is critical for understanding and adapting to the future.

Opportunities

As an investor, Aegon has an important role to play in supporting the climate transition. In 2021, Aegon committed to transitioning its general account investment portfolio to net-zero GHG emissions by 2050 and joined the Net-Zero Asset Owner Alliance. Underpinned by its Responsible Investment Policy and as part of its broader net-zero ambitions, Transamerica has committed to investing USD 2.5 billion in climate solutions by 2025. To reach this goal, Transamerica has scaled up investments in economic activities that substantially contribute to climate change

Risk management

Identification and assessment

Aegon’s Enterprise Risk Management (ERM) framework is a comprehensive structure that encompasses various components such as risk appetite, risk tolerance, risk identification, risk assessment, risk response, risk reporting and monitoring, and risk control. Within this framework, sustainability, including climate risk, is explicitly integrated. Climate risk is recognized within the framework; however, it is not identified as a separate risk type but as a risk driver that impacts multiple risks across different aspects of Aegon’s operations, including financial risk, underwriting risk, and operational risk.

Measuring risks is crucial for effective risk management. However, compared to other risks, data availability for climate risk, given its evolving nature, remains a challenge. Accurate measurement requires a diverse range of data, including forward-looking climate models, historical weather data, information on physical geography, adaptive infrastructure, market responses, cross-correlations, and distributions.

mitigation (solutions substantially reducing greenhouse gases by avoiding emissions or sequestering carbon dioxide already in the atmosphere) and adaptation (activities that contribute to enhancing adaptive capacity, strengthening resilience, and reducing vulnerability to climate change). As part of its assessment of climate-related investment opportunities, Aegon reviews the assets’ alignment to at least one of the stated sectoral themes outlined by the NZAOA and, in the case of “green” or “sustainability” bonds, that the use of proceeds meets the eligibility criteria of leading standards and methodologies.

More broadly, Aegon has incorporated climate change in its strategy, through its sustainability approach goals and B/MTP. This includes its products and services, where different business units include climate considerations in their financial products in line with customer preferences. Examples of this include Aegon Asset Management’s Global Short Dated Climate Transition Fund and Aegon UK’s workplace default pension funds that have net-zero goals.

To enhance our understanding of climate risk, Group Risk undertakes an annual qualitative company-level climate risk assessment (CRA) across Aegon’s three risk categories as outlined in the table “Aegon risk categories”. The qualitative assessment aims to identify relevant climate risks for Aegon and gauge their severity and manageability. The company-wide assessment builds on local assessments by experts in the business units. Through a structured CRA template, the local experts provide their scores on identified climate risks in terms of likelihood, impact, mitigation, and speed of occurrence. They also provide information on current and planned management actions to mitigate the identified risks. These individual assessments are then analyzed, weighted, and aggregated to create the company-level CRA.

By following this defined assessment process, Aegon gains qualitative insights into the climate-related risks that it is exposed to. This information serves as input for strategic decision-making, risk management, and planning efforts at both global and local levels. It allows Aegon to proactively address climate risks and develop appropriate mitigation strategies to safeguard our assets and operations.

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Aegon risk categories

Aegon risk category

Climate risk impactClimate-risk related risks

Investment risk

Physical

1. Asset devaluation related to increases in frequency and severity of physical climate change-related events.

Transition

2. Asset devaluation related to the transition to a low-carbon (and other greenhouse gasses) intensity economy (from both (i) Orderly and (ii) Disorderly/Failed perspectives).

Underwriting risk

Physical

3. More frequent, temporary spikes in mortality and/or morbidity (and claims experience) related to increase in frequency and severity of physical climate change-related events.

Physical

4. Change in life expectancy trend (and claim experience) related to structural climate changes.

Operational risk

Physical

5. Business disruption risk due to damage to Aegon or 3rd party physical assets related to increased frequency and severity of climate change-related events.

Transition

6. Inability to act or – actual or perceived – lack of action to react to changes in the sustainability domain, including climate change.

8. People Risk: Material increase in difficulty to attract and retain (specialist) talent due to Aegon’s image/stance on sustainability/climate change.

9. Non-compliance with regulations.

10. Mis-selling of products/greenwashing risk.

High-level assessment findings of our group-level climate risk assessment are that:

1.

Investment risks potentially have a significant inherent impact, with medium mitigation possibilities.

2.

Mortality spikes related to physical climate events are likely but would have a small impact. Changes in life expectancy trends due to climate change are assessed as unlikely, with a small impact.

3.

Mis-selling of products / greenwashing risk is assessed as the most significant, short-term operational risk, which could have a significant inherent impact but with high mitigation possibilities if managed well.

Processes for managing climate-related risks

At Aegon, climate-related risks are managed through a comprehensive approach that includes qualitative and quantitative assessments and analysis, tracking of climate-related targets and commitments, compliance with applicable risk policy requirements, engagement with investee companies, and the implementation of investment criteria and exclusions.

One of the cornerstones of climate-related risk management is good-quality data. We prioritize the analysis of good-quality data to assess and mitigate climate-related risks across our investment portfolio. This includes tracking of key performance indicators related to climate targets and commitments, and pursuing alignment with international standards and best practices. Moreover, we actively engage with investee companies to encourage climate-conscious strategies and initiatives, fostering transparency and accountability within our investment ecosystem. We also consider climate-related risks as part of our investment decision making.

Further, Aegon applies a broad range of day-to-day processes, within a framework of applicable policies, to manage climate-related risks. Such processes include, but are not limited to:

∎Adapting investment strategies and exposures.

∎De-risking through net-zero commitments.

∎Scenario analysis and stress testing.

∎Claims analysis.

∎Product development and redesign.

∎Adapting pricing and underwriting.

∎Guardrails on marketing materials.

∎Use of greenwashing checklists.

∎Property insurance.

∎Leasing, not owning property.

∎Business continuity plans.

∎Third-party due diligence.

∎Tracking regulatory landscape, trends, and scientific developments.

∎Implementing new regulatory requirements.

∎Ensuring robust non-financial reporting processes and controls.

With these measures, we are dedicated to safeguarding our business against climate-related threats while promoting sustainable processes that align with our long-term financial objectives.

As Aegon is primarily a life insurance company, there is less exposure to the direct consequences of increasing frequency and severity of climate-related events. Any climate-related risks are expected to mostly materialize over time through shifts in the average mortality and morbidity rates. These developments are highly uncertain, and there has always been a continuous shift in mortality and morbidity rates, with underlying driving factors influencing these rates up and down. Historically we have largely seen on aggregate how mortality has decreased and people are living longer, mostly through the advancement of science, while behavioral

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changes such as obesity and drug addiction are examples of drivers that cause higher mortality. Climate change is likely to be an additional driver that can impact mortality both positively or negatively depending on the situation.

Aegon manages these risks by setting expectations for mortality and morbidity risks, based on historical experience and sets future improvements by combining historical data with expectations about the future. Climate change is a risk that has not manifested in the past to any notable degree and therefore requires an approach where more emphasis is put on future expectations. In 2023, we conducted our first high-level assessment of climate risk in our underwriting, referencing academic literature that translates IPCC scenarios to increases in mortality. Initial findings of the assessment indicate that the financial impact for Aegon is limited.

Integration of climate-related risk management into overall risk management

At Aegon, sustainability risk, and by extension climate risk, is not considered a separate risk type, but rather is a risk driver that impacts multiple risks. Sustainability is embedded in Aegon’s Enterprise Risk Management (ERM) framework and incorporated in relevant risk policies. In 2022, a comprehensive exercise was conducted to embed sustainability in the applicable risk policy documents. In 2023, refinements were made in the context of regular policy document updates.

As part of our risk management practices, we conduct an emerging risk assessment process. The findings from this process are used to inform strategic and financial planning, scenario analyses, watch lists, management discussions, and actions, as well as external and internal reporting.

The CRA serves multiple purposes here, including identifying relevant climate risks for the organization, gaining an understanding of their severity and manageability, and providing recommendations for necessary actions. The outcomes of the global CRA process are integrated into the broader ORSA processes.

To foster the appropriate management of climate risk within its overall risk management framework, Aegon is in the process of developing a global sustainability risk appetite. This risk appetite will be aligned with the organization’s overall risk appetite framework and take into account existing strategies, requirements, and commitments. As we gather more data and insights, the sustainability risk appetite will evolve and mature accordingly. Through these efforts, Aegon is committed to effectively integrating sustainability and climate risk considerations into our risk management processes, thereby ensuring the organization is well-prepared to navigate the challenges and opportunities presented by a dynamic and ever-changing world.

Active Ownership

Engagement with corporates

As an institutional investor, Aegon expects investee companies to work toward reducing their environmental impact and associated risks. Executed through our asset manager, we engage with the companies in which we invest to encourage better climate-related risk practices, including emissions measurement, disclosure, target setting, and reporting in line with the TCFD recommendations. Our engagements aim to stimulate structural and sectoral change by requesting the reduction of the carbon footprint and carbon intensity of an investee company as well as by motivating the company to increase the share of renewable energy it generates or purchases to mitigate negative impacts of climate change. We use a variety of approaches to engage with our investee companies, including bilateral and collaborative approaches.

Among investee companies in our general account, we aim to engage with at least the 20 largest corporate carbon emitters by absolute emissions by 2025. We directly engage with them and encourage them to set science-based targets. In terms of collaborative initiatives and investor-led campaigns, Aegon participated in CDP’s Non-Disclosure Campaign. The campaign promotes engagement with non-disclosing companies that have a significant environmental impact and encourages them to provide specified measurable data on emissions, water, and forests. We also joined CDP’s science-based targets campaign, an investor-led initiative that urges more than 1,000 high-impact companies to set 1.5°C aligned science-based emissions reduction targets. Additionally, we joined CDP’s new Green Finance Accelerator to reduce the information gap on sustainable finance taxonomies and adverse impacts.

Finally, as a member of the Dutch investor association, Eumedion, and the UK Investor Forum, we increasingly discuss board-level incentives linked to climate action plans with companies from different sectors and raise related expectations for transparency and disclosure in remuneration reports.

Engagement with policymakers

Aegon acknowledges the importance and necessity of government action in addressing climate change. Engagement with policymakers is critical to shaping our investment environment, and we work independently and in collaboration with industry groups to engage on key climate issues.

At the European level, Aegon supports the goals of the EU strategy for financing the transition to a sustainable economy and recognizes the important role financial actors play in the transition. Aegon has engaged with officials and contributed to consultations on the corresponding regulations on sustainable taxonomy and sustainability disclosures, the incorporation of sustainability risks into the Solvency

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II regulatory regime, and the development of standards for the reporting of non-financial information. Aegon has also continued to advocate for action to complete the Capital Markets Union to unlock capital from institutional and cross-border investors to fund sustainable transition projects in Europe.

In the United States, Aegon has engaged with policymakers at both the federal and state levels to advocate for appropriate climate-related regulation. Aegon has supported regulatory measures that appropriately differentiate between the climate exposures of life insurers and property-casualty

insurers. At both the federal and state levels, Aegon has supported TCFD-based disclosure standards that would provide uniform and consistent information to stakeholders, while reducing the potential for duplication and redundancy. Aegon expects that these efforts will support the transition to a more sustainable economy.

In Bermuda, Aegon has begun engaging with the Bermuda Money Authority on climate issues, including general support for potential disclosure of risks and opportunities in line with TCFD reporting.

Metrics and targets

Own operations

Aegon does not maintain energy- or resource-intensive processes as part of its direct business operations, and its operational carbon footprint is small relative to the scope of its investment activities. Nevertheless, we have set targets to reduce the carbon footprint of our operations related to greenhouse gas emissions from the natural gas and electricity used by our offices. The first phase of our targets covers the period up to December 31, 2024. The second phase of Aegon’s near-term emissions reduction plan will cover the period from 2025 to 2030, and the corresponding targets will be finalized in 2024.

By the end of 2023, Aegon had achieved a 68% reduction in its operational carbon footprint compared to the 2019 baseline, well ahead of the target of a 25% reduction by the end of 2024. The impact of less operational properties together with changing work patterns has had a significant

impact in reducing our overall facilities footprint. We will continue to monitor the first halfimpact of 2023. This first sethybrid working on our carbon footprint.

Own investments

Targets

In 2021, as part of standards comprises standards that will apply to all companies subjectits commitment to the CSRD. Sector-specific standards will followNet-Zero Asset Owner Alliance, Aegon set initial targets for its investments. Following the guidance in subsequent years. When adopting these technical standards, the European Commission needsNZAOA Target Setting Protocol, for 2025, Aegon intends to take into considerationreduce the technical adviceweighted average carbon intensity (WACI) of corporate fixed income and listed equity in its general account by 25% against a 2019 baseline.

In 2023, the WACI of our corporate fixed income and equity investments reduced by 37% compared to 2019. Since 2023, the WACI reduction target has also been included in executive remuneration to ensure that corporate action at a leadership level is aligned with our net-zero commitment.

Weighted average carbon intensity of corporate fixed income and listed equity.

Metric

  Unit        2023          2022        2019    Progress against 2019 baseline 
Weighted average carbon
intensity		  tCO2e/EURm revenue   338    428   534   (37%) 

1

Source: Aegon calculation. Values on December 31, 2023. Climate metrics calculated per Methodology section below. Climate change data availability may change over time and characteristics will vary. Certain information ©2024 Sustainalytics, MSCI ESG Research L.L.C. Reproduced with permission. Not for further distribution.

In June 2023, we also set an additional target for our direct real estate investments, committing to reducing the scope 1 and 2 carbon intensity of our directly-held real estate

investments by 25% (kgCO2e/m2) by 2025, against a 2019 baseline. At the end of 2023, the carbon intensity had fallen by 46% compared to 2019.

Carbon intensity of direct real estate investments

Metric

  Unit        2023         2022        2019    Progress against 2019 baseline 
Carbon intensity  kgCO2e/m2   0.08   n.m.   0.15   (46%) 

1

Source: below. Climate change data availability may change over time and characteristics will vary.

Complementing efforts to reduce GHG emissions in our general account portfolio, we leverage investments and engagement strategies as additional levers to meet our net-zero commitments and actively manage the positioning of our portfolio in relation to the climate transition. To that

end, Transamerica has committed to two intermediate targets by 2025, which further commit the company to investing USD 2.5 billion in opportunities that help mitigate climate change or adapt to the associated impacts and engaging with at least the top 20 corporate carbon emitters in the portfolio.

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Additional climate-related targets set on Aegon’s general account

Target

  Unit         2023         2022         2019    Progress against 2025 target 

Financing the transition

  USDm    1,850    n.m.    -    74% 

Engagements

  number    19    n.m.    -    95% 

1

Source: Aegon calculation. Values on December 31, 2023.

Disclosures

We also disclosed supplementary metrics on the carbon footprint of our investments for our global general account holdings. A breakdown of our general account by asset class can be found below.

Global general account by asset class

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Source: Aegon calculation. Values are as of December 31, 2023 and may not add up to 100% due to rounding.

Global general account – Corporate fixed income and listed equity

Metrics

  Unit   Corporate FI    Coverage 

Total carbon emissions

  tCO2e   2,036,000    90% 

Carbon footprint

  tCO2 e/EURm
invested		   82    90% 

Weighted average carbon intensity

  tCO2 e/EURm
revenue		   338    97% 

1

Source: Aegon calculation. Values on December 31, 2023. Climate metrics calculated per Methodology section below. The weighted average carbon intensity is extrapolated when underlying carbon data is not available. The availability of data for each indicator is expressed in a coverage ratio as disclosed above. Climate change data availability may change over time and characteristics will vary Certain information ©2024 Sustainalytics, MSCI ESG Research L.L.C. Reproduced with permission. Not for further distribution.

Corporate fixed income and listed equity results are dominated by holdings in the utilities, energy, and materials sectors where their contribution to the total carbon emissions and intensity of the European Financial Reporting Advisory Group (EFRAG), thataccount greatly outweighs their financial position. The graph “Active contribution by sector (in %)” indicates how Aegon’s sector exposures impact the weighted average carbon intensity and total carbon emissions, relative to their financial positions.

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Active contribution by sector

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Global general account - Sovereign fixed income

Metrics

  Unit      Sovereign FI       Coverage 

Including land use, land-use change, and forestry (LULUCF) emissions

      

Total carbon emissions

  tCO2 e   1,237,000    76% 

Carbon footprint

  tCO2 e/EURm invested   240    76% 

Weighted average carbon intensity

  tCO2 e/EURm invested   240      

Excluding LULUCF emissions

      

Total carbon emissions

  tCO2 e   1,411,000    76% 

Carbon footprint

  tCO2 e/EURm invested   270    76% 

Weighted average carbon intensity

  tCO2 e/EURm invested   270    76% 

Risk metric

      

Climate change resiliency

  ND GAIN rating   64    100% 

1

Source: Aegon calculation. Values on December 31, 2023. Climate metrics calculated per Methodology section below. WACI prepared in line with PPP-adjusted GDP as per PCAF. Climate change data availability may change over time and characteristics will vary.

In light of the a.s.r. transaction, the general account of Aegon’s Dutch business is no longer included in our sovereign fixed income holdings. The transaction has been tasked with providing technical adviceled to a significant shift in financial weightings and, in 2023, our largest sovereign holdings are now in US-issued bonds. The results are dominated by our US holdings, where their

contribution to the European Commission on sustainability reporting standards. EFRAG submittedfootprint and intensity of the account outweighs their financial position. The graph “Active contribution by region (in %)” provides an indicates how Aegon’s regional exposures impact the weighted average carbon intensity and total carbon emissions, relative to their financial positions.

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Active contribution by region

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Methodology

In July 2023, Aegon completed the transaction to combine its technical adviceDutch pension, life and non-life insurance, banking, and mortgage origination activities with a.s.r., which led to a restatement of its 2019 baseline figures to exclude the Dutch business but not an adjustment to the European Commissionambition of our targets.

Corporate fixed income and listed equity metrics were calculated following the Partnership for Carbon Accounting Financials (PCAF) guidelines and include scope 1 and 2 emissions. For sovereign assets, Aegon changed the methodology in 2023 to align with the PCAF guidelines to now reflect Purchase Power Parity (PPP) adjusted Gross Domestic Product (GDP). We also introduced a split for reporting sovereign assets: including and excluding the land use, land-use change, and forestry (LULUCF) emissions. The WACI was calculated in line with the TCFD’s recommendations.

The direct real estate metrics are calculated in line with PCAF guidelines and include scope 1 and 2 location-based emissions of those properties. Floorspace and carbon data are relatively challenging to obtain, so the target is set on November 22, 2022.properties with available floorspace and carbon data.

The amount for financing the transition investments is based on the IFRS book value of Transamerica’s general account, accounting for the use of proceeds specifically tied to climate change mitigation and/or climate change adaptation activities. The use of proceeds must align with at least one of the stated sectoral themes outlined by the NZAOA. For labeled “green” or “sustainability” bonds, standards such as Bloomberg, as well as third-party opinions, are typically used to confirm that the stated use of proceeds meets eligibility criteria. Regarding engagements, Aegon aims to engage with at least the top 20 corporate carbon emitters based on WACI.

For 2023, Aegon is no longer reporting on the Sustainalytics Carbon Risk Rating, due to a change in data contracts. Climate vulnerability for sovereign issues is measured using the Notre Dame Global Adaptation Initiative (ND-GAIN) Country Index. Target figures are set in line with Net-Zero Asset Owner Alliance guidance.

Next steps

Aegon will seek to continue to improve its climate change strategy, governance, approach to risk and opportunity measurement, and implementation in the coming years. In its technical advice, EFRAG has taken into consideration input received during a public consultation of an earlier draft of this technical advice (ESRS Exposure Drafts).2024, we will work toward setting new climate-related investment and operational targets toward 2030.

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EU Taxonomy 

The

EU Taxonomy is linked to the CSRD. While the EU Taxonomy currently only focuses on environmental objectives, the CSRD will set sustainability standards based on a broader sustainability perspective.

EU Taxonomy Regulation

The EU Taxonomy Regulation was adopted by the European Union in 2021 and is one of the cornerstones of the EU Action Plan on financing sustainable growth. The EU Taxonomy is a classification system to define environmentally sustainable economic activities, based on the following criteria:

criteria, as further elaborated on in the regulation and subsequent acts:

∎
a.

Substantially contributing to one of the six EU environmental objectives:

 1.

Climate change mitigation

 2.

Climate change adaptation

 3.

Sustainable use and protection of water and marine resources

 4.
Circular

Transition to a circular economy

 5.

Pollution prevention and control

 6.

Protection and restoration of biodiversity and ecosystems

∎
b.

Doing no significant harm to any of the other objectives, and

∎
c.

Meeting minimum safeguards, including the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.

safeguards.

For each of the six environmental objectives, delegated acts are being developedadopted at EU level. Thus far, one delegated act for two objectives, climate change adaptation and climate change mitigation, has been finalized and is in effect. This delegated act was amended in 2022 to include certain nuclear and

gas-related
activities in the EU Taxonomy. The delegated acts concerning the other four environmental objectives are expected to be published by the European Union in 2023. Accordingly, we will include the related EU Taxonomy disclosures in our Annual Report 2023.
Article 8 of the EU Taxonomy Regulation
level.

Article 8 of the EU Taxonomy Regulation requires companies to report how and to what extent their activities are associated with economic activities that qualify as environmentally sustainable. The requirements apply to companies that are obliged to publish

non-financial
information in accordance with the NFRD. The information should be included in the
non-financial
statement or consolidated
non-financial
statement information.
Article 8 of the EU Taxonomy Regulation aims to ensure that large public-interest entities (such as Aegon) report on these topics, so financial institutions and other stakeholders can use this information in return.

Disclosure of EU Taxonomy-eligible and Taxonomy-aligned economic activities and investments

The European Commission has adopted a phased approach to give companies more time to comply with the EU Taxonomy disclosure requirements. In the Annual Reportfirst two years of application, in 2021 and 2022, Aegon mustfinancial undertakings were required to disclose the proportionportion of Taxonomy-eligibletheir eligible economic activities and investments related to climate change mitigation and climate change adaptation only. When estimates and proxiesadaptation. Financial undertakings were granted a two-year phase-in period for reporting on alignment with the EU Taxonomy. Alignment disclosures are used, disclosures under Article 8mandatory for the 2023 reporting year. Aegon is therefore required in this year’s Annual Report to disclose the extent to which its activities are Taxonomy-aligned. The scope of the Taxonomy Regulation may not be classified as “mandatory”alignment disclosure is climate change mitigation and should be classified as “voluntary”.

climate change adaptation. In addition, Aegon is required to specify activities associated with nuclear and fossil gas. For the four additional environmental objectives, Aegon is required to include eligibility for the first time in this Annual Report.

To assess the eligibility of our investments, we often depend on the information provided by our investees. In many cases, this information is not yet available. Therefore, we have used alternative methods and estimates which we describe below under “Assumptions and data limitations”. These investments are included in the voluntary disclosures. Actual information to assess eligibility is only available for our underwriting activities and investments in mortgage loans and real estate. Therefore, these investments and activities form our mandatory disclosures. The distinction between “mandatory” and “voluntary” disclosures is explicitly mentioned in the EU Taxonomy tables below.
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    About Aegon    Governance and risk management    Financial information
Non-financial information







“Eligible” means that an economic activity is described in one of the delegated acts as mentioned above, irrespective of whether that economic activity meets any or all of the technical screening criteria laid down in those delegated acts to qualify as sustainable. “Alignment” means that an eligible economic activity meets the technical screening criteria to qualify as sustainable. Aegon N.V. needs to disclose

To assess the eligibility and alignment of its economic activities forinvestments, Aegon often relies on the first time ininformation reported by its investees. When estimates and proxies are used, the disclosures under article 8 of the Taxonomy Regulation may not be classified as “mandatory” and should be classified as “voluntary”. This year’s Annual Report 2023.

does not include voluntary EU Taxonomy information. The information presented in the EU Taxonomy tables is based on reported information.

Scope of assets and activities covered by the EU Taxonomy disclosures

Aegon’s EU Taxonomy performance indicators are split between underwriting activities and
on-balance
investments.

Investments

To calculate the proportion of Taxonomy-eligible and Taxonomy-aligned investments, the total of covered investments is used as the denominator, which includes general account investments, investments for accounts of policyholders, derivatives, cash and cash equivalents, and real estate for own use. The total covered assets in proportionExposures to the total balance sheet is 80% (EUR 321 billion out of EUR 403 billion). We also include incentral governments, central banks, and supranational issuers are excluded from the covered assets, on a voluntary basis, investments in companiesassets. Derivatives and investees that are not obliged to publish

non-financial
information unlessare also excluded from the data isnumerator of the mandatory EU Taxonomy disclosures and therefore do not availablecount in the alignment. This refers to assess Taxonomy-eligibility. Thissmall- and medium-sized companies, non-public interest companies based in the EU, and non-EU-based companies. The disclosure in the EU Taxonomy alignment table relating to the exposure to other counterparties includes investments in companies established outside the EU.
loans to individuals such as private loans and mortgages and other assets such as real estate as well as real estate for own use.

Own activities

The

In last year’s annual report, Aegon’s underwriting disclosure includesdisclosures included an assessment of all

non-life
business as prescribed by the EU Taxonomy.
Non-life
As Aegon the Netherlands was divested in 2023, there are no non-lifebusiness only relates to the EU Climate Change Adaptation objective, as these products can significantly contribute to the protection of policyholders for the negative impact of climate change but do not contribute to the Climate Change Mitigation objective.
We have onlyactivities that could be classified
non-life
activities as eligible, when there is a reference in the policy conditionsnor aligned. Therefore, this report does not include disclosures related to one or more of the climate-related perils as defined by the EU Taxonomy Climate Delegated Act (such as storm, flood, cold wave/ frost, or drought). We have assessed that this is applicable to our motor vehicle, other motor, and property insurance of Aegon the Netherlands. As a consequence, we have classified our medical expense, income protection, and worker’s compensation insurance products asunderwriting.

non-eligible.

The Taxonomy Regulation allows different methods to measure the total premium of eligible products. The total premium of eligible products can be calculated at

Annual Report on Form 20-F 2023  |  499 

line-of-business
LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information
level, product level, or coverage level. Aegon takes a product-level approach, which means that the total gross written premium of all eligible products is taken into account.

Assumptions and data limitations

To determine

For the 2023 disclosures on alignment and eligibility, of our investments in 2021Aegon uses reported information from the underlying investee companies to assess eligibility and 2022, we used publicly available sectoralignment percentages. This information (referred to as NACE codes),is primarily collected bythrough an external data vendorvendor. Where this data was not available we have assessed this as non-eligible and non-aligned. Where data was not available to map the investments in shares, debt securities, and part of our private loans to the EU Taxonomy. We have measured eligible investments for the full carrying amount. Insplit the alignment phase in 2023,between transitional and enabling activities we willleft this blank. To determine which investees are obliged to publish non-financial information, we also make use of actual information from the underlying companiesdata vendor. Where this data is not available, but we know the place of domicile, we have determined that investees outside the EU are not obliged to assesspublish non-financial information. When none of this information was available, we intentionally left it blank. These data limitations contribute to the alignment percentage, which will likely be lower than 100%low percentages of theexposures to financial and non-financial undertakings subject to and not subject to articles 19a and 29a of Directive 2013/34/EU. The investments in our EU Taxonomy disclosures include accrued interest and are valued according to its IFRS value for most investments.

Book Value.

Our mortgage and real estate portfolios are classified as 100% eligible in line with the EU Taxonomy. We do not expect all propertiesDue diligence procedures have been carried out to understand and assess whether these assets meet the screening criteria in 2023, whichfor alignment. This is in large partlargely based on the energy labelenergy-label information of the underlying properties. As a result, we expect thatIn cases where there is no data available, these assets are disclosed as non-aligned.

Assessing the actualeligibility and alignment of our mortgage and real estate portfolio in 2023 will also be lower than 100%.

The eligibility assessment of our investment funds is more difficult since we dependdue to the heavy reliance on external asset managers to provide relevant sustainability information on the underlying companies. Similar to 2021, we haveAegon uses a data limitation in 2022look-through approach for investment funds, which entails assessing the eligibility and alignment of ourthe underlying investments in these funds. As in previous years, Aegon has encountered significant data limitations for investment funds. For listed funds, reported data collected by an external data vendor is used. For unlisted funds, Aegon has performed its own due diligence. As a result we have classified these investments as
non-eligible.
of data limitations, the data coverage of the unlisted investment funds is insignificant. This mainly impacts the eligibilitydisclosure of investments for the account of policyholders.

For our 2022 disclosures,reporting on alignment and nuclear and fossil gas activities, Aegon uses the reporting templates as prescribed by the EU Taxonomy, whereby templates 2 and 3 are split between CAPEX and Turnover. For reporting on eligibility including all six additional environmental objectives, there is no prescribed format. As in previous years, the environmental objectives are combined and broken down into eligible and non-eligible investments relative to the assets covered. There are also data limitations in assessing eligibility, as not all investee companies report on eligibility for all six environmental objectives. Where data was not available, this was classified as non-eligible. We expect the eligibility and alignment percentages to increase over time as more data becomes available. However, due to the relative large amount of investments outside the EU, we do not make a distinction between the two climate objectives of climate change mitigation and climate change adaptation. For investments, the distinction becomes relevant in the alignment phase as the screening criteriaexpect these percentages will remain low for mitigation are different than those for adaptation. In thecoming years.

EU Taxonomy eligibility phase, these categories are very similar and the information needed to make a distinction is not yet available. As mentioned above,

non-life

EU Taxonomy eligibility1)

 Percentage of investments covered    Absolute amount (EUR million)  

Eligible investments (numerator)

 5%  13,905.63  

Non-eligible investments (numerator)

 95%  245,516.10  
   

Total investments covered (denominator)

 100%  259,421.73  

1

EU Taxonomy eligibility for six environmental objectives: climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, protection and restoration of biodiversity and ecosystems

activities are all related to climate change adaptation.

 500  |  Annual Report on Form 20-F 2023

EU Taxonomy 

EU Taxonomy alignment

EU Taxonomy alignment1)  

Percentage of

investments

covered

    

Absolute

value (EUR

million)

 

The weighted average value of all the investments of insurance or reinsurance undertakings that are directed at funding, or are associated with Taxonomy-aligned economic activities relative to the value of total assets covered by the KPI, with the following weights for investments in undertakings per below:

    

The weighted average value of all the investments of insurance or reinsurance undertakings that are directed at funding, or are associated with Taxonomy- aligned economic activities, with following weights for investments in undertakings per below:

    

Turnover-based:

  0.07% 

Turnover-based:

  180 

Capital expenditures-based:

  0.11% 

Capital expenditures-based:

  277 

The percentage of assets covered by the KPI relative to total investments of insurance or reinsurance undertakings (total AuM). Excluding investments in sovereign entities.

    

The monetary value of assets covered by the KPI. Excluding investments in sovereign entities.

    

Coverage ratio:

  96% 

Coverage:

  259,422 
Additional, complementary disclosures: breakdown of denominator of the KPI         
The percentage of derivatives relative to total assets covered by the KPI.  (0.38%) 

The value in monetary amounts of derivatives.

  (975) 

The proportion of exposures to financial and non-financial undertakings not subject to articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI:

    

Value of exposures to financial and non-financial undertakings not subject to articles 19a and 29a of Directive 2013/34/EU:

    

For non-financial undertakings:

  11.55% 

For non-financial undertakings:

  29,965 

For financial undertakings:

  6.12% 

For financial undertakings:

  15,879 

The proportion of exposures to financial and non-financial undertakings from non-EU countries not subject to articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI:

    

Value of exposures to financial and non-financial undertakings from non-EU countries not subject to articles 19a and 29a of Directive 2013/34/EU:

    

For non-financial undertakings:

  11.29% 

For non-financial undertakings:

  29,284 

For financial undertakings:

  5.51% 

For financial undertakings:

  14,282 

The proportion of exposures to financial and non-financial undertakings subject to articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI:

    

Value of exposures to financial and non-financial undertakings subject to articles 19a and 29a of Directive 2013/34/EU:

    

For non-financial undertakings:

  0.73% 

For non-financial undertakings:

  1,883 

For financial undertakings:

  0.75% 

For financial undertakings:

  1,945 

The proportion of exposures to other counterparties over total assets covered by the KPI:

  4.17% 

Value of exposures to other counterparties:

  10,815 

The proportion of the insurance or reinsurance undertaking’s investments other than investments held in respect of life insurance contracts where the investment risk is borne by the policy holders, that are directed at funding, or are associated with, Taxonomy-aligned economic activities:

  27.22% 

Value of insurance or reinsurance undertaking’s investments other than investments held in respect of life insurance contracts where the investment risk is borne by the policy holders, that are directed at funding, or are associated with, Taxonomy-aligned economic activities:

  70,627 

The value of all the investments that are funding economic activities that are not Taxonomy-eligible relative to the value of total assets covered by the KPI:

  94.64% 

Value of all the investments that are funding economic activities that are not Taxonomy-eligible:

  245,516 

The value of all the investments that are funding Taxonomy eligible economic activities, but not Taxonomy-aligned relative to the value of total assets covered by the KPI:

  5.18% 

Value of all the investments that are funding Taxonomy eligible economic activities, but not Taxonomy- aligned:

  13,448 
Additional, complementary disclosures: breakdown of numerator of the KPI         
The proportion of Taxonomy-aligned exposures to financial and non-financial undertakings subject to articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI:    Value of Taxonomy-aligned exposures to financial and non-financial undertakings subject to articles 19a and 29a of Directive 2013/34/EU:    

For non-financial undertakings:

    

For non-financial undertakings:

    

Turnover-based:

  0.07% 

Turnover-based:

  180 

Capital expenditures-based:

  0.11% 

Capital expenditures-based:

  277 

For financial undertakings:

    

For financial undertakings:

    

Turnover-based:

  0.00% 

Turnover-based:

  - 

Capital expenditures-based:

  0.00% 

Capital expenditures-based:

  0.06 

The proportion of the insurance or reinsurance undertaking’s investments other than investments held in respect of life insurance contracts where the investment risk is borne by the policy holders, that are directed at funding, or are associated with, Taxonomy-aligned:

    

Value of insurance or reinsurance undertaking’s investments other than investments held in respect of life insurance contracts where the investment risk is borne by the policy holders, that are directed at funding, or are associated with, Taxonomy-aligned:

    

Turnover-based:

  0.03% 

Turnover-based:

  78 

Capital expenditures-based:

  0.04% 

Capital expenditures-based:

  99 

The proportion of Taxonomy-aligned exposures to other counterparties over total assets covered by the KPI:

    

Value of Taxonomy-aligned exposures to other counterparties over total assets covered by the KPI:

    

Turnover-based:

  0.00% 

Turnover-based:

  - 

Capital expenditures-based:

  0.00% 

Capital expenditures-based:

  - 

1

EU Taxonomy alignment for two environmental objectives: climate change mitigation and climate change adaptation

414  |  Aegon Annual Report on Form 20-F 20222023  |  501 

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RegulationAbout Aegon  Governance and compliance
risk management  Financial information  Sustainability information
  
 

Taxonomy-aligned activities – provided‘do-not-significant-

harm’(DNSH) and social safeguards positive assessment:

  

Percentage of

investments covered

 

 

    

Percentage of

investments covered

 

 

(1) Climate change mitigation

   

Turnover:

  0.07%  Transitional activities: (Turnover)  0.00% 

CapEx:

  0.10%  Transitional activities: (CapEx)  0.01% 
  Enabling activities: (Turnover)  0.04% 
      Enabling activities: (CapEx)  0.05% 

(2) Climate change adaptation

   

Turnover:

  0%  Enabling activities: (Turnover)  0% 

CapEx:

  0%  Enabling activities: (CapEx)  0% 

Template 1: Nuclear and fossil gas related activities

          

Nuclear energy related activities:

   

 

The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle.

  Yes 

The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies.

  Yes 

The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades.

  Yes 

 

Fossil gas related activities:

 

 

The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels.

  Yes 

The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels.

  Yes 

The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels.

  Yes  

Template 2: Taxonomy-aligned economic

activities (denominator) - CAPEX

  CCM + CCA   
Climate change mitigation
(CCM)		 
 		  

Climate change adaptation

(CCA)

 

 

Economic activities:

  

Absolute
amount (EUR
million)		 
 
 		  

Percentage of
investments
covered		 
 
 		  

Absolute
amount (EUR
million)		 
 
 		  

Percentage of
investments
covered		 
 
 		  

Absolute
amount (EUR
million)		 
 
 		  

Percentage of
investments
covered		 
 
 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of CAPEX

  -   0%   -   0%   -   0.0% 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of CAPEX

  2.45   0%   2.45   0%   -   0.0% 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of CAPEX

  20.30   0.01%   20.30   0.01%   -   0.0% 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of CAPEX

  0.01   0%   0.01   0%   -   0.0% 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of CAPEX

  0.01   0%   0.01   0%   -   0.0% 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of CAPEX

  -   0%   -   0%   -   0.0% 

Amount and proportion of other Taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of CAPEX

  259,398.95   99.99%   259,390.32   99.99%   8.63   0.0% 

Total applicable KPI - CAPEX

  259,421.73   100.0%   259,413.09   100.00%   8.63   0.0% 

 502  |  Annual Report on Form 20-F 2023

EU Taxonomy eligibility
  EU Taxonomy underwriting
  
Eligibility based on actual information
 
    
(mandatory disclosure)
 
   
        
Absolute premium
        
(EUR million)
  
        % of non-life premium        

    
  Eligible
non-life
activities
  86  5%
Of which reinsured
  6  
  Taxonomy-non-eligible
  1,827  95%
  Total premium
non-life
  
1,913
   
  EU Taxonomy investment
  (on-balance)
  
  Eligibility based on actual information  
 
(mandatory disclosure)
  
Eligibility including estimates
  (mandatory and voluntary disclosure)  
   
Absolute value
(EUR million)
  
Percentage of
investments covered
  
Absolute value
(EUR million)
  
Percentage of
investments covered
  Eligible investments (numerator)
  44,217  13%  56,858  18%
Of which general account investments
  43,625    53,814  
Of which Investments for account of policyholders
  443    2,895  
Of which real estate for own use
  149    149  
  Non-eligible
investments (numerator)
  259,717  81%  247,076  77%
  Excluded from numerator only:
  11,155  3%  11,155  3%
exposures to derivatives
        
  Excluded from numerator only:
  5,622  2%  5,622  2%
exposures to undertakings that are not obliged to publish
non-financial
information pursuant to Article 19a or 29a of Directive 2013/34/EU and data is not available
        
     
  Total investments covered
  (denominator)
  
320,711

    
     
320,711

    
   
  Excluded from numerator and denominator: exposures to central governments, central banks and supranational issuers
  21,138    21,138  
     
  Total investments in scope
  
341,850
     
341,850
   
  Which includes:
        
Investments general account
  131,443    131,443  
Investments for account of policyholders
  199,102    199,102  
Derivatives
  11,155    11,155  
Real estate for own use
  149     149   
  1
The percentage of eligible investments of total investments in scope is 13% (44,217/341,749) and over total assets is 11% (44,217/402,682).
Note: When estimates and proxies are used, disclosures under Article 8 of the Taxonomy Regulation may not be classified as “mandatory” and should be classified as “voluntary”. Actual information to assess eligibility is currently only available for our investments in mortgage loans and real estate. Therefore, these investments form the mandatory disclosures.

EU Taxonomy 

  
 Aegon

Template 2: Taxonomy-aligned economic

activities (denominator) - turnover

  CCM + CCA   

Climate change mitigation

(CCM)

 

 

  

Climate change adaptation

(CCA)

 

 

Economic activities:

  

Absolute

amount (EUR

million)

 

 

 

  

Percentage of

investments

covered

 

 

 

  

Absolute

amount (EUR

million)

 

 

 

  

Percentage of

investments

covered

 

 

 

  

Absolute

amount (EUR

million)

 

 

 

  

Percentage of

investments

covered

 

 

 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of turnover

  -   0%   -   0%   -   0% 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of turnover

  -   0%   -   0%   -   0% 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of turnover

  17.04   0.01%   17.04   0.01%   -   0% 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of turnover

  0.02   0%   0.02   0%   -   0% 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of turnover

  0.01   0%   0.01   0%   -   0% 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of turnover

  -   0%   -   0%   -   0% 

Amount and proportion of other Taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of turnover

  259,404.66   99.99%   259,400.96   99.99%   3.70   0% 

Total applicable KPI - turnover

  259,421.73   100%   259,418.03   100%   3.70   0% 

Template 3: Taxonomy-aligned economic

activities (numerator) - CAPEX

  CCM + CCA   

Climate change mitigation

(CCM)

 

 

  

Climate change adaptation

(CCA)

 

 

Economic activities:

  

Absolute
amount (EUR
million)		 
 
 		  

Percentage of
investments
covered		 
 
 		  

Absolute
amount (EUR
million)		 
 
 		  

Percentage of
investments
covered		 
 
 		  

Absolute
amount (EUR
million)		 
 
 		  

Percentage of
investments
covered		 
 
 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of CAPEX

  -   0%   -   0%   -   0% 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of CAPEX

  2.45   1%   2.45   1%   -   0% 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of CAPEX

  20.30   7%   20.30   7%   -   0% 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of CAPEX

  -   0%   -   0%   -   0% 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of CAPEX

  -   0%   -   0%   -   0% 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of CAPEX

  -   0%   -   0%   -   0% 

Amount and proportion of other Taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the numerator of CAPEX

  254.30   92%   245.67   89%   8.63   3% 
Total amount and proportion of Taxonomy-aligned economic activities in the numerator of CAPEX  277.05   100%   268.42   97%   8.63   3% 

Annual Report on Form 20-F 20222023  |  415503  

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Non-financialSustainability information
  
 

Template 3: Taxonomy-aligned economic

activities (numerator) - turnover

  CCM + CCA   

Climate change mitigation

(CCM)

   

Climate change adaptation 

(CCA)

 
Economic activities:  Absolute
amount (EUR
million)		    Percentage of
investments
covered		   Absolute
 amount (EUR
million)		    Percentage of
investments
covered		   Absolute
 amount (EUR
million)		    Percentage of 
investments 
covered 		 

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of turnover

   -     0%     -     0%     -     0%  

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of turnover

   -     0%     -     0%     -     0%  

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of turnover

   14.66     8%     14.66     8%     -     0%  

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of turnover

   -     0%     -     0%     -     0%  

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of turnover

   0.01     0%     0.01     0%     -     0%  

Amount and proportion of Taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the numerator of turnover

   -     0%     -     0%     -     0%  

Amount and proportion of other Taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the numerator of turnover

   165.65     92%     161.95     90%     3.70     2%  
Total amount and proportion of Taxonomy-aligned economic activities in the numerator of turnover   180.31     100%     176.61     98%     3.70     2%  

 504  |  Annual Report on Form 20-F 2023

 

EU Taxonomy 

 
 

Template 4: Taxonomy-eligible but not taxonomy-

aligned economic activities

   CCM + CCA    

Climate change mitigation

(CCM)

 

 

   

Climate change adaptation 

(CCA)

 

 

Economic activities:  

Absolute

amount (EUR

million)

   

Percentage of

investments

covered

   

Absolute

amount (EUR

million)

   

Percentage of

investments

covered

   

Absolute

amount (EUR

million)

   

Percentage of 

investments 

covered 

 

Amount and proportion of Taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

   -     0%     -     0%     -     0%  

Amount and proportion of Taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

   -     0%     -     0%     -     0%  

Amount and proportion of Taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

   0.48     0%     0.48     0%     -     0%  

Amount and proportion of Taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

   16.86     0.13%     16.86     0.13%     -     0%  

Amount and proportion of Taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

   16.03     0.12%     16.03     0.12%     -     0%  

Amount and proportion of Taxonomy-eligible but not taxonomy-aligned economic activity referred to in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

   1.53     0%     1.53     0%     -     0%  

Amount and proportion of other Taxonomy-eligible but not taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI

   13,413.37     99.7%     13,413.37     99.7%     -     0%  
Total amount and proportion of Taxonomy eligible but not Taxonomy-aligned economic activities in the denominator of the applicable KPI   13,448.27     100%     13,448.27     100.00%     -     0%  

Template 5: Taxonomy non-eligible economic activities          
Economic activities:  

Absolute amount

(EUR million)

   

 Percentage of 

investments 

covered 

 

Amount and proportion of economic activity referred to in row 1 of Template 1 that is Taxonomy-non-eligible in accordance with Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

   -     0%  

Amount and proportion of economic activity referred to in row 2 of Template 1 that is Taxonomy-non-eligible in accordance with Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

   9.14     0.004%  

Amount and proportion of economic activity referred to in row 3 of Template 1 that is Taxonomy-non-eligible in accordance with Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

   2.80     0.001%  

Amount and proportion of economic activity referred to in row 4 of Template 1 that is Taxonomy-non-eligible in accordance with Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

   -     0%  

Amount and proportion of economic activity referred to in row 5 of Template 1 that is Taxonomy-non-eligible in accordance with Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

   -     0%  

Amount and proportion of economic activity referred to in row 6 of Template 1 that is Taxonomy-non-eligible in accordance with Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the denominator of the applicable KPI

   -     0%  

Amount and proportion of other Taxonomy-non-eligible economic activities not referred to in rows 1 to 6 above in the denominator of the applicable KPI

   245,504.16     99.995%  
Total amount and proportion of Taxonomy-non-eligible economic activities in the denominator of the applicable KPI   245,516.10     100%  

 
 
Breakdown
of eligible
investments
  
Eligibility per investment class covered
   
Eligibility
determined based
on actual
information
(part of mandatory    
disclosure)
   
Eligibility determined
based
on estimates
(part of voluntary
disclosure)
 
 
   
Eligible
(absolute value)
(EUR million)
   
Total value
 
of
 
investment
class covered
(EUR million)
   
Percentage
of investment
class covered
         
General account investments in scope:
          
Shares
   10    493    2%    No          Yes       
Debt securities
   8,065    52,279    15%    No          Yes       
Mortgage loans
   41,021    41,021    100%    Yes          No       
Private loans
   2,059    4,514    46%    No          Yes       
Policy loans
   0    2,043    0%    No          Yes       
Real estate
   2,604    2,604    100%    Yes          No       
Other
1
   55    6,331    1%    No          Yes       
Total eligible general account investments (numerator)
  
 
53,814
 
  
 
109,284
 
  
 
49%
 
          
Investments for account of policyholders in scope:
          
Shares
   1,661    11,751    14%    No          Yes       
Debt securities
   698    4,965    14%    No          Yes       
Unconsolidated
   90    171,717    0%    No          Yes       
investment funds
          
Real estate
   443    443    100%    Yes          No       
Other
1
   2    6,088    0%    No          Yes       
Total eligible investments for account of policyholders (numerator)
  
 
2,895
 
  
 
194,964
 
  
 
1%
 
          
Total eligible real estate assets for own use (numerator)
  
 
149
 
  
 
149
 
  
 
100%
 
  
 
Yes      
 
  
 
No      
 
1 
Mainly includes deposits with financial institutions and money market funds which do not qualify for eligibility.
416  |  Aegon Annual Report on Form 20-F 20222023  |  505 

Table of Contents
LOGO		 
RegulationAbout Aegon  Governance and compliance
risk management  Financial information  Sustainability information
  
 

Voluntary information

Introduction

In addition to metrics disclosed under the “Our material topics” section, Aegon also voluntarily discloses information relevant to our sustainability approach and sustainability benchmarks and ratings. The table below includes information that goes beyond specific reporting requirements

and is not linked to Aegon’s material topics that are identified through the DMA.

 

Extra metrics

         unit        2023         2022         % 

Responsible investment solutions by Aegon Asset Management

       

Responsible investment solutions (RIS)

       

Assets under management in Responsible Investment Solutions (RIS)1)

   EURb   133.6    120.2    11% 

Exclusions and ethical solutions2)

   EURb   109.9    103.9    6% 

Best-in-class ESG solutions3)

   EURb   15.9    9.4    70% 

Climate transition solutions4)

   EURb   1.2    n.m.    n.m. 

Sustainable solutions5)

   EURb   5.6    2.7    110% 

Impact investing solutions6)

   EURb   0.9    4.2    (77%) 

Engagement and voting

       

Number of engagements with investee companies7)

   nr   824    832    (1%) 

Proportion of engagements addressing environmental themes

   %   36%    24%    12pp 

Proportion of engagements addressing social themes

   %   19%    18%    1pp 

Proportion of engagements addressing governance themes

   %   34%    44%    (10pp) 

Proportion of engagements addressing general disclosure themes

   %   11%    14%    (3pp) 

Status of engagement with investee companies8)

       

Proportion of engagements at milestone one

   %   34%    23%    11pp 

Proportion of engagements at milestone two

   %   24%    21%    3pp 

Proportion of engagements at milestone three

   %   28%    27%    1pp 

Proportion of engagements at milestone four

   %   12%    12%    0pp 

Proportion of engagements where no further action is required

   %   2%    17%    (15pp) 

Number of shareholder meetings of invested companies at which votes cast9)

   nr   3,853    3,899    (1%) 

Lobbying

       

Political advocacy

       

Monetary value of political contributions10)

   EURm   0.17    0.24    (26.8%) 

Monetary value of political lobbying/advocacy11)

   EURm   0.8    0.9    (8.7%) 

Amount paid for membership to lobbying associations12)

   EURm   3.6    3.4    6.9% 

Donations and volunteering

       

Total cash donations13)

   EURm   7.6    9.1    (17%) 

Financial security and education

   EURm   1.4    0.9    54% 

Financial education and literacy

   EURm   1.4    0.9    54% 

Employability later in life

   EURm   -    0.3    (99%) 

Wellbeing and longevity

   EURm   5.7    6.5    (12%) 

Physical fitness

   EURm   0.1    0.2    (55%) 

Mental vitality

   EURm   1.1    1.1    4% 

Prevention of diseases

   EURm   1.1    1.1    (1%) 

Livable communities

   EURm   3.4    4.5    (23%) 

Cash donations: Other

   EURm   0.5    1.8    (75%) 

Proportion of cash donations to key themes

   %   94%    81%    13pp 

Financial security and education

   %   18%    10%    9pp 

Wellbeing and longevity

   %    76%    71%    5pp  

Number of organizations receiving donations

   nr   420    493    (15%) 

 506  |  Annual Report on Form 20-F 2023

Dutch Act on gender diversity at the top
On September 28, 2021, the Dutch Senate adopted the Act on Gender Diversity at the Top (the “Act”), which aims to improve the gender diversity on corporate boards of listed and large companies in the Netherlands. To comply with the Act, certain Dutch entities of Aegon are expected to set appropriate and ambitious target figures for gender diversity: (i) for the Board of Directors, (ii) of the Supervisory Board, and (iii) at the
sub-board
level. These targets are to be accompanied with a plan on how to achieve the targets. The Act came into force on January 1, 2022.
Gender diversity targets for large companies
The Act consists of two components: a gender-balanced Supervisory Board and appropriate and ambitious gender diversity targets, including mandatory reporting requirements. In practice, this means Aegon N.V. will be required to:
1.
Comply with a minimum quota of
one-third
women and
one-third
men on the Supervisory Board of Aegon N.V. The Act determines that the 30% gender balance is to be heeded for future appointments. The diversity quota applies to an initial appointment of a Supervisory Board member, but not to a reappointment if it occurs within eight years of the year of appointment. There is no obligation to make changes to the existing Board positions at this time.
2.
Set appropriate and ambitious targets for all Dutch subsidiaries that qualify as “large”
1
in the form of a target to promote gender diversity. These include gender diversity in (i) the Board of Directors, (ii) the Supervisory Boards, and (iii) the
“sub-board”
of these entities.
3.
Draw up a plan of action to achieve these objectives. In the plan of action, the company shall in any event explain the policy and measures by which a more balanced distribution will be achieved.
4.
Report in the Annual Report of Aegon N.V. (for the first time in the Annual Report 2022):
∎
Number of female and male in positions on the Board of Directors, the Supervisory Board and at the
sub-board
level
∎
Ambitious targets and the plans to realize these
∎
If a target has not been met, the reason why.
5.
Report to the Dutch Social and Economic Council (“Sociaal-Economische Raad” (SER)) annually, within 10 months after the close of the financial year, on the same matters as listed under item 4.
Target setting
In accordance with the requirements of the Act, the following targets have been adopted by the Aegon Executive Board.
Aegon N.V.:
∎
The ambition for the Executive Board of Aegon N.V. is a minimum of 33% of each gender by 2026 in the event the Executive Board is composed of three or more members.
∎
The Executive Board of Aegon N.V. is part of the larger Management Board. For the Management Board an ambition of 33% in 2026 applies irrespective of whether members are also members of the Executive Board.
Subsidiaries:
∎
The target for the Supervisory Board (if existing) for each subsidiary is a minimum of 33% of each gender.
∎
The target for the Board of Directors for each subsidiary is a minimum of 33% of each gender.
The Sub-board Level:
∎
The target for the composition of staff at
sub-board
level for all entities in scope of the Act is a minimum of 33% of each gender.
Actions to enhance gender balance
Key actions from our plan to enhance our position include:
1.
Conclude the “Glass ceiling” research with clear actions to address identified barriers:
∎
Include
non-financial
performance indicators for gender diversity in senior management remuneration.
∎
Actively manage staffing developments that create opportunities to further strengthen the gender ratio in senior management.
∎
Target 50% female succession candidates for senior management functions by end of 2023.
∎
Actively monitor gender diversity in promotions.
∎
Continue to support “Women in Finance” employee resource group in the Netherlands.
2.
Less directly, but also impactful, is strengthening inclusion and diversity practices throughout the organization:
∎
Appoint a Global Head of Inclusion and Diversity and create a company-wide inclusion and diversity strategy.
∎
Appoint Management Board members as executive sponsors of our inclusion and diversity focus areas (gender balance, disability, life stages, sexual orientation and race and ethnicity), making our intentions clear to our colleagues, the marketplace and the communities we serve.
∎
Conduct a maturity assessment and inclusion survey on our diversity journey so we have baseline data to track our progress and help us define impactful interventions.
∎
Embed inclusive leadership behavior as part of our Best Life Leadership Program to promote and harness diversity of thought and create a more inclusive workplace.
∎
Enhance our Speak Up culture to allow people to safely voice concerns and issues.
1 
This is the case if a company meets at least two of the following criteria on two consecutive balance sheet dates:
 
∎
the value of the assets exceeds EUR 20 million;
∎
the net turnover is more than EUR 40 million;
∎
the average number of employees is 250 or more

Voluntaory information 

   Aegon Annual Report on Form 20-F 2022  |  417
Table of Contents
    About Aegon    Governance and risk management    Financial information
Non-financial information
  
 





The table below provides an overview of the composition of the
Boards by gender by eligible entity as at December 31, 2022.



                                  



                                  



                                  



                                  



                                  



                                  



                                  



                                  



                                  



                                  



         
   
  
  
  
  
  
  
  
  
  
 


         
Board of Directors
 


 

  

  

  

  

  

  

  

  

 


         
Female
  0   1   1   1   1   1   0   0   1   1 


         
Male
  2   2   2   2   2   1   2   3   3   2 


         
Total female and male
 
 
2
 
 
 
3
 
 
 
3
 
 
 
3
 
 
 
3
 
 
 
2
 
 
 
2
 
 
 
3
 
 
 
4
 
 
 
3
 


         
% female (actual)
 
 
0%
 
 
 
33%
 
 
 
33%
 
 
 
33%
 
 
 
33%
 
 
 
50%
 
 
 
0%
 
 
 
0%
 
 
 
25%
 
 
 
33%
 


         
Supervisory Board
 


 

  

  

  

  

  

  

  

  

 


         
Female
  4   2   2   2   2   1   0   2   2   0 


         
Male
  5   2   2   2   2   2   0   1   1   0 


         
Total female and male
 
 
9
 
 
 
4
 
 
 
4
 
 
 
4
 
 
 
4
 
 
 
3
 
 
 
0
 
 
 
3
 
 
 
3
 
 
 
0
 


         
% female (actual)
 
 
44%
   
 
 
50%
   
 
 
50%
   
 
 
50%
   
 
 
50%
   
 
 
33%
   
 
 
0%
   
 
 
67%
   
 
 
67%
   
 
 
0%
   


         
   
  
  
  
  
  
  
  
  
  
 


         
Sub-Board
Level (Senior management)
1
 


 

  

  

  

  

  

  

  

  

 


         
Female
  49   9   n.a.   n.a.   n.a.   1   n.a.   3   2   21 


         
Male
  124   24   n.a.   n.a.   n.a.   3   n.a.   12   2   42 


         
Total female and male
 
 
173
 
 
 
33
 
 
 
n.a.
 
 
 
n.a.
 
 
 
n.a.
 
 
 
4
 
 
 
n.a.
 
 
 
15
 
 
 
4
 
 
 
63
 


         
% female (actual)
 
 
28%
   
 
 
27%
   
 
 
n.a.
 
 
 
n.a.
 
 
 
n.a.
 
 
 
25%
   
 
 
n.a.
 
 
 
20%
   
 
 
50%
   
 
 
33%
   


         
   
  
  
  
  
  
  
  
  
  
 

          
Total
 

  

  

  

  

  

  

  

  

  

 

          
Female
  53   12   3   3   3   3   0   5   5   22 

          
Male
  131   28   4   4   4   6   2   16   6   44 

          
Total female and male
 
 
184
 
 
 
40
 
 
 
7
 
 
 
7
 
 
 
7
 
 
 
9
 
 
 
2
 
 
 
21
 
 
 
11
 
 
 
66
 

          
% female (actual)
 
 
29%
   
 
 
30%
   
 
 
43%
   
 
 
43%
   
 
 
43%
   
 
 
33%
   
 
 
0%
   
 
 
24%
   
 
 
45%
   
 
 
33%
   
n.a. – not applicable
       unit        2023         2022         % 

Volunteering

       

Volunteering hours

   hours   20,634    16,318    26% 

Volunteering value14)

   EURm   1.5    1.1    34% 

Total investment

       

Total value community investment

   EURm   9.1    10.3    (11%) 

Total value community investment as proportion of net result

   %   4.6%    1.0%    3.5pp 

Management of relationships with suppliers

       

Total spend on goods and services15)

   EURb   1.3    1.7    (23%) 

Top 250 (“in-scope”) suppliers15)

       

Spend on goods and services - top 250 in-scope suppliers

   EURb   1.0    1.5    (33%) 

Proportion of total spend on goods and services with top 250 in-scope suppliers

   %   75%    87%    (12pp) 

Supplier ESG assessment16)

       

Number of in-scope suppliers assessed for ESG performance

   nr   106    97    9% 

Spend on goods and services with in-scope suppliers assessed for ESG performance

   EURb   0.8    1.1    (25%) 

Proportion of spend with in-scope suppliers assessed for ESG performance

   %   80%    72%    7.8pp 

Overall score of in-scope suppliers assessed for ESG performance

   1-100   59    58    2% 

Proportion of in-scope suppliers scoring 1-24 (insufficient)

   %   0%    0%    0.0pp 

Proportion of in-scope suppliers scoring 25-44 (partial)

   %   10%    14%    (4.0pp) 

Proportion of in-scope suppliers scoring 45-64 (good)

   %   56%    59%    (3.1pp) 

Proportion of in-scope suppliers scoring 65-84 (advanced)

   %   33%    27%    6.2pp 

Proportion of in-scope suppliers scoring 85-100 (outstanding)

   %   1%    0%    0.9pp 

Average time to pay an invoice

   days   30.5    n.m.    n.m.  

Number of legal proceedings currently outstanding for late payments

   nr   -    n.m.    n.m. 

Integration ESG in risk policies17)

       

Percentage risk management policies where ESG risk considerations have been integrated into the in-scope policies

   %    100%    n.m.    n.m. 

1 
We have defined
sub-board
level to be the senior management of the Dutch entities that are not already a member of the Supervisory Board or Executive Board of any of the entities in scope of the Act. For Aegon Investment Management B.V. we define
sub-board
level as the senior management of Aegon Asset Management. For Aegon Bank N.V., we define
sub-board
level as the senior management of KNAB. The definition of senior management is the same as our existing definition used for remuneration and reporting purposes. Aegon Levensverzekeringen N.V., Aegon Spaarkas N.V., Aegon Schadeverzekering N.V. and Aegon Hypotheken B.V. are legal entities. The operational activities fall under Aegon Nederland N.V. and therefore
sub-board
level is not applicable.
418  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
Our commitments
Our commitments
Aegon applies over-arching and sector-specific global sustainability frameworks and initiatives, both to align with and to report against its sustainability strategy, policies, and performance.
We understand that we cannot achieve our sustainability ambitions on our own. We are therefore contributing towards a number of over-arching international initiatives, including the United Nations Global Compact (UNGC), the UN Sustainable Development Goals (SDGs), and the Task Force on Climate-related Financial Disclosures (TCFD). These initiatives guide our internal practices and policies, and help shape our overall approach to sustainability. In addition,
Aegon has also signed up and committed to sector-specific initiatives, including
the
UNEP-FI’s
Principles for Sustainable Insurance (PSI), and the Dutch International Responsible Business Conduct (IRBC) Agreement. This section of the report provides an overview of key commitments and disclosures. A full list of our commitments is available on our website.
In addition, in 2022, Aegon became a company-wide signatory to the Principles for Responsible Investment (PRI), joining Aegon Asset Management. More information can be found in the “Sustainability” section (page 16).
United Nations Global Compact
In 2021, Aegon N.V. became a signatory of the United Nations Global Compact (UNGC), thereby committing to implement universal sustainability principles in the fields of human rights, labor, environment, and anti-corruption, as well as taking steps to support the UN goals; currently the SDGs. As a signatory, Aegon is committed to disclosing its progress annually via a
Communication on Progress (COP)
submission.
In addition to integrating the measurement of the outcomes under the UNGC Principles into our annual reporting cycle, we have detailed Aegon’s policies and procedures to support each Principle and of how we align and implement them. The following table summarizes Aegon’s progress towards implementing the principles in 2022.
  UNGC Principles
Policy and implementation
Resources / References
  Human Rights
1. Businesses should support and respect the protection of internationally proclaimed human rights; and
∎
  Our Statement on Human Rights commits the company to uphold international human rights standards.
∎
  Our
Statement on Human Rights
∎
  Consideration for human rights to provide safe and healthy working conditions to our employees is built into our Code of Conduct and our Statement on Inclusion and Diversity.
∎
  Our
Code of Conduct
∎
  Our
Statement on Inclusion and Diversity
∎
  Our Responsible Investment Policy includes alignment with our responsible business objectives (human rights is one of the policy’s topics) and relevant laws and governance standards.
∎
  Our
Responsible Investment Policy
∎
  We ask our suppliers to agree to comply with the UNGC principles.
∎
  Our
Vendor Code of Conduct
∎
  We committed to and/or partnered with initiatives that support the development of human rights, including the Universal Declaration of Human Rights.
∎
  Our approach to
human rights
∎
  We contribute to the public debate, interacting with all levels of government in the countries where we operate (when applicable) to express views on matters that affect our operations, employees, customers, and communities.
∎
  Our approach to
government and policy affairs
∎
  We support our most vulnerable communities in direct and tangible ways.
∎
  Our approach to
community investments
∎
  Our approach to
Inclusive insurance coverage
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Non-financial information







  UNGC Principles
Policy and implementation
Resources / References
2. make sure that they are not complicit in human rights abuses.
∎
  We carry out a biennial Human Rights Risk Assessment to identify, prevent, and mitigate adverse human rights impacts that may be linked to our operations.
∎
  Our approach to
human rights
∎
  Human rights risks are integrated in our Enterprise Risk Management (ERM) framework and subsequently in various internal control systems, particularly Aegon’s biennial Human Rights Risk Assessment.
∎
  Our
Statement on Human Rights
∎
  Our Responsible Investments’ exclusion list aims to prevent investments in companies and countries that we believe systematically breach human rights.
∎
  Our
Responsible Investment Policy
Labor
3. Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;
∎
  We incorporated both the Universal Declaration of Human Rights and the core labor and human rights standards of the International Labor Organization (ILO), including the recognition of the right to freedom of association and the right to collective bargaining into our employee policies, as well as Vendor Code of Conduct and Responsible Investment Policy.
∎
  Our
Statement on Human Rights
∎
  Our
Vendor Code of Conduct
∎
  Our
Responsible Investment Policy
∎
  In countries with the highest human rights risks, we suggest alternative employee representation where there is no independent trade union.
∎
  Our approach to
human rights
∎
  We include labor rights considerations in our Responsible Investment Policy, including those related to freedom of association, effective recognition of the right to collective bargaining, the elimination of all forms of discrimination with respect to employment, the elimination of all forms of forced labor, and the effective abolition of child labor.
∎
  Our
Responsible Investment Policy
4. the elimination of all forms of forced and compulsory labor;
∎
  We incorporated both the Universal Declaration of Human Rights and the core labor and human rights standards of the International Labor Organization (ILO) into our employee policies. We consider certain human rights fundamental and universal for our workforce.
∎
  Our
Statement on Human Rights
∎
  Our
Code of Conduct
∎
  Our
Statement on Inclusion and Diversity
∎
  Our responsible procurement practices assess the risks associated with our supply chain, our business and distribution partners, our outsourced arrangements, and our interactions with governmental agencies.
∎
  Our approach to
responsible procurement
∎
  Our
Vendor Code of Conduct
∎
  Our
Statement on Human Rights
5. the effective abolition of child labour; and
∎
  We incorporated the core labor and human rights standards of the International Labor Organization (ILO) into our employee policies. We also engage with our portfolio companies on issues related to human rights, including those related to forced and compulsory labor and abolition of child labor.
∎
  Our
Statement on Human Rights
∎
  Our
Responsible Investment Policy
∎
  In line with our Vendor Code of Conduct, we score our suppliers for sustainability performance through the EcoVadis rating platform, which also covers the topic of effective abolition of child labor.
∎
  Our
Vendor Code of Conduct
∎
  Our
Statement on Human Rights
∎
  Our approach to
responsible procurement
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Our commitments
UNGC Principles
Policy and implementation
Resources / References
6. the elimination of discrimination in respect of employment and occupation.
∎
  We incorporated the core labor and human rights standards of the International Labor Organization (ILO) into our employee policies. This includes embedding inclusion and diversity in Aegon’s Inclusion and Diversity Statement, in our ERM framework, and in Aegon’s Global Employee Survey to enable more targeted interventions and track our progress.
∎
  Our approach to
inclusion and diversity
∎
  Our
Statement on Inclusion and Diversity
∎
  Our
Statement on Human Rights
 ��
∎
  Aegon’s Speak Up
case-by-case
program and policy encourage employees to voice any concerns regarding potential misconduct and not tolerate reprisal for reporting in good faith an occurrence that they believe is unlawful, unethical, or otherwise improper conduct.
∎
  Our approach to
human rights
∎
  Aegon’s
Speak Up
program
∎
  Our recommended preventative or remedial measures for local management in the countries with the highest risk include enforcing a
zero-tolerance
approach to corruption and discrimination in the workplace.
∎
  Our approach to
human rights
Environment
7. Businesses should support a precautionary approach to environmental challenges;
∎
  Through our Responsible Investment policy, we expect and encourage investee companies to work toward reducing their environmental impact.
∎
  Our
Responsible Investment Policy
∎
  We have signed up to several international commitments
(Net-Zero
Asset Owner Alliance, CDP, Paris Pledge for Action) that guide our internal practices and policies, and help shape our overall approach to sustainability. We are a founding member of the United Nations Environment Program Finance Initiative’s Principles for Sustainable Insurance.
∎
  Our
sustainability commitments
∎
  Our approach to
climate change
∎
  Our disclosures against the Principles for Sustainable Insurance
∎
  In line with our Vendor Code of Conduct, we score our suppliers for sustainability performance through the EcoVadis rating platform, which also covers environmental topics.
∎
  Our
Vendor Code of Conduct
∎
  Our approach to
responsible procurement
8. Businesses undertake initiatives to promote greater environmental responsibility.
∎
  In line with our Responsible Investment Policy, through our investments, we encourage the development and diffusion of technologies that offer solutions to environmental issues, including those which reduce GHG emissions.
∎
  Our
Responsible Investment Policy
∎
  We score our suppliers for their environmental performance through the EcoVadis rating platform.
∎
  Our approach to
responsible procurement
9. Businesses encourage the development and diffusion of environmentally friendly technologies.
∎
  In line with our Responsible Investment Policy, through our (impact) investments, we encourage the development and diffusion of technologies that offer solutions to environmental issues, including those which reduce GHG emissions.
∎
  Our
Responsible Investment Policy
Anti-corruption
10. Businesses should work against corruption in all its forms, including extortion and bribery.
∎
  Our internal policies and Code of Conduct sets out rules, guidelines, and education programs that shape and govern the actions of all our employees. We report outcomes in our Annual Report.
∎
  Our
Code of Conduct
∎
  Our
Annual Reports
∎
  In line with our Vendor Code of Conduct, we score our suppliers for sustainability performance through the EcoVadis rating platform, which also covers the topic of anti-corruption.
∎
  Our approach to
responsible procurement
∎
  Our
Vendor Code of Conduct
∎
  Our Responsible Investment Policy expects the companies in which we invest to adhere to high ethical standards and operate free from corruption.
∎
  Our
Responsible Investment Policy
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Non-financial information







United Nations Sustainable Development Goals
In 2015, the United Nations adopted 17 Sustainable Development Goals (SDGs). These goals cover poverty reduction, education, gender equality, climate change, and health. Accompanying each of these goals is a series of targets and indicators.
At Aegon, we are committed to supporting the UN SDGs, both as a financial services provider and as an investor.
We recognize that sustainable development is in the long-term interest of business and the global economy, but that a sustainable future for people and the planet will not be attainable without cooperation between the public and private sectors.
In line with our two priority themes, climate change and inclusion and diversity, we have detailed our contributions to the SDGs relating to these two themes in the table below.
Sustainable

Development Goal
Aegon’s contribution to relevant SDG targets in 2022 (References
from AR2022)
Resources/
References
5. Gender equality
Achieve gender equality and empower all women and girls
5.1
End all forms of discrimination against all women and girls everywhere.
∎
  The theme of “Gender development” is explicitly implemented in Aegon’s biennial Human Rights Risk Assessment process. Consideration for gender equality is incorporated into numerous Aegon policies including the Code of Conduct and Aegon N.V. Responsible Investment Policy as a fundamental element of human rights.
page 409
5.5
Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic and public life.
∎
  In 2022, Aegon appointed a Global Head of Inclusion and Diversity. A specific area of attention is maintaining a healthy gender balance at the senior management level across Aegon’s business units. In the Netherlands specifically, Aegon is actively taking steps to increase female leadership participation, in line with the “Diversity at the top” Act, which took effect in January 2022.
page 15
5.c
Adopt and strengthen sound policies and enforceable legislation for the promotion of gender equality and the empowerment of all women and girls at all levels.
∎
  In the UK, Aegon Asset Management (Aegon AM) is working with AAI EmployAbility which supports businesses to access graduate and returner talent of all ages, skillsets and backgrounds. Aegon AM is an active participant in the Diversity Works program which specifically works to bring female talent from black, Asian and minority ethnicities into the workforce.
Aegon AM’s website on inclusion and diversity
7. Affordable and clean energy
Ensure access to affordable, reliable, sustainable and modern energy for all
7.3
By 2030, ensure universal access to affordable, reliable and modern energy services.
∎
  Aegon Hypotheken, Aegon’s mortgage business in the Netherlands, is taking steps toward an energy-neutral mortgage portfolio, through which it will only finance
zero-on-the-meter
homes by 2050. Its customers are able to finance up to 106% of the value of a home, 6% of which can be used toward sustainable improvements. They also receive personalized information through the MyAegon app to help make their homes more sustainable.
page 14
∎
  Cedar Rapids was named the home of Alliant Energy’s first community solar garden in Iowa. Transamerica and Aegon AM have committed in 2022 to purchase 60% of the garden’s solar blocks and become the anchor tenant for the project.
page 28
10. Reduced inequalities
Reduce inequality within and among countries
10.2
By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.
∎
  Wider progress on inclusion and diversity topics is monitored through Aegon’s Global Employee Survey. The third quarter edition of the survey showed positive increases for two key metrics: 78% of employees responded favorably to a set of questions on openness and inclusion, compared with 74% in the third quarter of 2021, while 76% answered favorably on the topic of diversity and equity, up from 72%.
page 15
∎
  For the fourth time, in 2022, Transamerica has been named to Seramount’s “100 Best Companies” list and the “Inclusion Index.”
Seramount’s 100 Best Companies list
∎
  Aegon AM has signed up to a collaboration with Black Professionals Scotland, who empowers Scotland-based black ethnic minority professionals and supports organizations in meeting their inclusion and diversity agenda.
Aegon AM’s website on inclusion and diversity
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Our commitments
Sustainable

Development Goal
Aegon’s contribution to relevant SDG targets in 2022 (References
from AR2022)
Resources/
References
10. Reduced inequalities
Reduce inequality within and among countries
10.3
Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies and practices and promoting appropriate legislation, policies and action in this regard.
As part of Aegon’s transformation journey, we adopted a company-wide strategy on inclusion and diversity in 2022; and our business units have signed up to our vision. Two fundamental elements of Aegon’s new inclusion and diversity strategy are:
page 15
∎
  Authentic action: the recognition that, as an organization, we are on a journey to improve. We need to turn good intentions into actions to create a positive difference for our people and communities.
∎
  Starting at the top: the members of Aegon’s senior leadership are expected to act as role models for inclusion and diversity, including by sharing their own inclusion stories and championing a specific area of diversity excellence among employees.
13. Climate action
Take urgent action to combat climate change and its impacts
13.2
Integrate climate change measures into national policies, strategies and planning.
∎
  In addition to our company-wide commitment to transitioning our general account investment portfolio to
net-zero
greenhouse gas (GHG) emissions by 2050, we committed to:
∎
  Investing USD 2.5 billion in activities to help mitigate climate change or to adapt to the associated impacts of climate change, by 2025.
page 13
∎
  Engage with at least the top 20 corporate carbon emitters in the portfolio by 2025.
page 13
∎
  In 2022, Aegon worked with Ortec Finance for a second consecutive year to conduct an extensive and systematic climate risk assessment for its general and separate account assets across all business units. The analysis investigated three plausible climate pathways (orderly, disorderly, and failed transitions) to explore potential future climate policies, interventions, and consequences of society’s failure to mitigate climate change.
page 14
∎
  We strive to work with partners who share our values and can demonstrate accountability in terms of their environmental stewardship and climate mitigation. In 2022, 50% of Aegon’s top 25 suppliers participated voluntarily in EcoVadis, a business sustainability ratings provider.
page 14
∎
  In 2022, the weighted average carbon intensity (WACI) of our own investment portfolio’s corporate income and listed equity assets reduced by 20% compared to our 2019 baseline.
page 13
∎
  In 2022, the carbon footprint of our operational activities decreased by 59% compared to our 2019 baseline.
page 13
∎
  Aegon evolved its Short Dated Investment Grade Bond Fund to focus on the transition to a
net-zero
global economy. The fund was renamed as the Aegon Global Short Dated Climate Transition Fund and is classified under Article 8 of the European Union’s Sustainable Finance Disclosure Regulation.
page 16
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UNEP-FI’s Principles for Sustainable Insurance
Aegon is one of the founding signatories of the UNEP FI’s Principles for Sustainable Insurance (PSI). The aim of the PSI is to make sure sustainability becomes “business as usual”.
The PSI comprises four basic principles. As a signatory, Aegon reports annually on the actions taken to implement the PSI’s four principles on its website. The following table summarizes actions taken towards implementing the principles in 2022.
  Principles
Our goals
Our progress (as of 2022)
1.  We will embed in our decision-making environmental, social and governance (ESG) issues relevant to the insurance business.
Streamline the company-wide sustainability governance.
∎
   In 2021, we established our Global Sustainability Board (GSB) to enhance governance and oversight of our sustainability approach. The GSB consists of relevant Management Board members, Local Sustainability Board Chairs, and senior management. Since its establishment, the GSB enabled to: identify priority sustainability themes; join the
Net-Zero
Asset Owner Alliance; establish internal working groups crucial to the operationalization of our sustainability strategic approaches such as the
Net-Zero
Working Group or the Active Management Working Group; and initiate the process to enhance our sustainability reporting.
∎
   As per our Executive Board’s Remuneration Policy, at least 50% of a member’s variable compensation must be determined by
non-financial
performance indicators, where at least one must be
ESG-related.
Integrate ESG issues into key stakeholder discussions, decision-making, risk management, underwriting, and capital adequacy decision-making processes.
∎
   In 2021, we initiated dialogues with key stakeholders and investors which highlighted climate change, and inclusion and diversity as key priority themes.
∎
   We performed our first double materiality assessment in 2022 and identified material topics which are linked to our policies and procedures, internal metrics, and KPIs. We will further enhance this process in the coming years in line with the new European Sustainability Reporting Standards (ESRS).
∎
   We became a UN PRI signatory in November 2022.
∎
   We signed up for the UN Global Compact and committed to the 10 Principles in November 2021.
∎
   ESG risks are covered by Aegon’s risk universe and the risk function regularly reports on ESG risks.
Develop products and services which reduce risk, have a positive impact on ESG issues, and encourage better risk management.
∎
   Aegon UK offers Workplace Default Funds to transition funds to more sustainable alternatives.
∎
   Transamerica offers Workplace ESG propositions in 401(k) and 403(b) plans.
∎
   Aegon NL offers sustainable mortgage solutions (customers are able to finance 106% of the value of a home, allowing for 6% to be used toward sustainable improvements).
∎
   Aegon Asset Management (Aegon AM) manages the Global sustainable equity fund, its flagship sustainability-themed product. It also manages the Euro ABS fund
(“best-in-class”
ESG solution ABS).
Establish processes to identify and assess ESG issues inherent in the portfolio and be aware of potential
ESG-related
consequences of the company’s transactions.
∎
   In January 2022, we updated our Responsible Investment Policy, to integrate some of the latest climate science.
∎
   Our business units provide a range of responsible investment solutions to pursue ESG objectives alongside financial returns.
∎
   We worked with Ortec Finance in 2021 and 2022 to perform an extensive, and systematic climate risk assessment for the general and separate account assets of all business units within Aegon.
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Our commitments
  Principles
Our goals
Our progress (as of 2022)
2.  We will work together with our clients and business partners to raise awareness of ESG issues, manage risk and develop solutions.
Establish the company’s expectations and requirements on ESG issues.
∎
   Aegon’s Responsible Investment Policy recognizes a broad range of recurring sustainability and ESG topics, varying from climate change to corporate governance.
∎
   We became a UN PRI signatory in November 2022.
∎
   Since 2020 we have worked with sustainability rating company EcoVadis to evaluate the ESG risks involved in our partnerships with our top 250 vendors (representing over 80% of Aegon’s total procurement spend).
Integrate ESG issues into tender, and selection processes for suppliers.
∎
   We integrate all applicable laws, regulations, and ethical business practices into our selection process for vendors and apply a risk-based approach to assess performance and compliance with these minimum standards and preferred behaviors.
∎
   In 2022, Aegon undertook the tendering process for the mandatory rotation of its auditor. The tender’s selection criteria emphasized the composition of the proposed supplier teams, supporting our ambition to help increase the diversity of our supply chains.
Support the inclusion of ESG issues in professional education, and ethical standards in the insurance industry.
∎
   We participated in a
UNEP-FI
endorsed industry-wide paper: Insuring A
Low-Carbon
Future: A practical guide for insurers
on managing climate-related risks and opportunities
(2019).
Advocate for issues and initiatives that benefit our customers, employees, wider society, and our businesses.
∎
   Our Global Government & Public Affairs department aims to support regulators and lawmakers. We advocate for people worldwide to have access to insurance and financial services, for people to be aware of opportunities for flexible employment in old age, and for governments to plan and provide for their citizens in an age of increasing longevity.
∎
   The new Dutch pension system will allow pensions to adapt more directly to economic developments, allowing for greater pension purchasing power, and in the United States, the SECURE 2.0 Act of 2022 will make saving for retirement easier and more effective for both employers and their employees. Aegon has long been a strong supporter of both legislative initiatives.
3.  We will work together with governments, regulators and other key stakeholders to promote widespread action across society on ESG issues.
Support prudential policy and regulatory and legal frameworks that enable risk reduction, innovation, and better management of ESG issues.
∎
   We participate in many international projects that aim to fulfill this goal; for example, an Organisation for Economic Cooperation and Development (OECD) working group on the future of work, and the Living, Learning and Earning Longer initiative led by the World Economic Forum (WEF).
Engage in dialogue and participate in research initiatives (incl. academia and scientific community) with business, and industry associations to better understand and manage ESG issues across industries and geographies.
∎
   Our Silver Starters program (developed jointly with the Leyden Academy on Vitality and Ageing) provides online entrepreneurship coaching to those over 50 years old, to promote lifelong learning, and healthy attitudes to aging.
Engage in dialogues with governments and regulators to develop integrated risk management approaches, and risk transfer solutions.
∎
   We became a founding member of the Global Coalition on Aging in 2010. The coalition seeks to raise awareness of aging issues among policymakers and the general public.
Encourage media incentives and publish resources available to media to promote public awareness of ESG issues and sound risk management.
∎
   We regularly publish research on financial planning, retirement, health, and insurance issues so that society can effectively plan for a longer and more active retirement.
4.  We will demonstrate accountability and transparency in regularly disclosing publicly our progress in implementing the Principles.
Assess, measure, and monitor our progress in managing ESG issues, and proactively, and regularly disclose this information publicly.
∎
   We monitor our progress towards our main sustainability topics: climate change and inclusion and diversity through a set of metrics, and KPIs disclosed in our annual reports.
•
   Each year, we publicly publish progress against the PSI principles.
Participate in relevant disclosure or reporting frameworks, and are open to dialog with clients, regulators, rating agencies, and other stakeholders to gain a mutual understanding of the value of disclosure through the Principles.
∎
   We apply the Integrated Reporting Framework.
∎
   We publish our Communication on Progress (COP) report for the UN Global Compact (UNGC) on a yearly basis.
∎
   We became a signatory of the Principle for Responsible Investment (PRI) in 2022.
∎
   We have started to evaluate and implement the draft ESRS standards in 2022.
∎
   We engage sustainability benchmarks, regulators, investors, and other stakeholders on a regular basis. We publish our progress toward ratings publicly.
∎
   Our Annual Report includes a dedicated section on Task Force on Climate-related Financial Disclosures (TCFD), which follows its four-pillar framework to facilitate disclosure.
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International Responsible Business Conduct Agreement in the insurance sector
In 2018, Aegon stated its intent to support the spirit and objectives of the Dutch International Responsible Business Conduct (IRBC) Agreement in the insurance sector (also known as the “covenant”). By doing so, Aegon will attempt to act, where possible, in accordance with the objectives and undertakings agreed in the covenant and will be receptive to commitment, cooperation, and knowledge-sharing during the implementation of the covenant. The covenant is a collaborative initiative of the Dutch government, non-governmental organizations, and Dutch insurers.
The objective of the covenant is to prevent, mitigate, and/or remediate adverse impacts on stakeholders and the environment that are caused or contributed to by Aegon’s investee companies. The covenant asks insurance companies to apply investment policies and practices in accordance with the processes and principles of the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.
Aegon N.V.’s Responsible Investment Policy draws heavily on the aforementioned global norms. To emphasize our commitment to these norms, Aegon became a signatory to the UN Global Compact (UNGC) in 2021. The Policy is instrumental to Aegon’s investment practices as executed by Aegon Asset Management (Aegon AM), the company’s global asset manager responsible for managing most of Aegon’s investments.
At the beginning of 2022, Aegon AM conducted a screening of its investments to identify investee companies that breach or run the risk of breaching aspects of its Responsible Investment Policy. Next to global norms, we considered companies’ supply chain oversight, biodiversity controversies,
access-to-medicine
programs, and labor rights controversies. Based on these screening results, Aegon AM identified over 64 companies. Throughout 2022, Aegon AM engaged with these companies and monitored their progress. Engagements focused on addressing the issue for which an investee company was identified. In addition to engagements related to these specific breaches of the Responsible Investment Policy, Aegon AM engaged with companies on various environmental, social and governance related topics. This included climate change, human and labor rights, and remuneration. More information on the active ownership approach and practices on behalf of Aegon and other clients is set out in the Responsible Investment Report, published by Aegon AM.
In 2022, Aegon continued its support for the covenant. Throughout the year various publications on topics such as human rights due diligence, gender equality, and access to remedy (which is one of the three pillars of the United Nations Guiding Principles) were made publicly available. Aegon supported an online seminar on the social impact of the energy transition, highlighting the risks of forced labor practices related to the manufacturing of solar panels and how to mitigate these risks. Publications and webinars, together with thematic frameworks, bring together relevant information, international legislation and regulations, and other support that insurers can use when managing their investments. With biodiversity being the IRBC Agreement’s focal theme for 2021 and 2022, Aegon AM contributed to a newly published thematic framework on biodiversity. In addition to contributing to this framework, Aegon AM and other signatories of this covenant continued the collaborative engagement efforts with three major listed food producers of meat and dairy products, on biodiversity loss. In addition to addressing deforestation related to the use of soy, we discussed the transition to alternative protein sources less dependent on soy, and the companies’ support and involvement in nature-inclusive farming and regenerative agricultural practices.
In the wake of the
COVID-19
pandemic, Aegon continued its efforts to address access to adequate health services and improved access to medicine. Using the lessons learned from the 2020
access-to-medicine
annual theme, we conducted
follow-up
engagements with several pharmaceuticals ahead of the proxy voting season. We expect more strategic considerations and related executive compensation practices around access to vaccines, medicines, diagnostics, and healthcare in general. These engagements were meant to deliver input for the companies’ consideration in future commitments, policy development, and the evaluation of their executive compensation policy.
As mitigating climate change is an important focal area for Aegon, we challenged investee companies to set ambitious science-based greenhouse gas (GHG) reduction targets and expect them to work towards those with ambitious decarbonization plans. To that end, we engaged with the companies on a regular basis and discussed progress towards their targets and the realization of the 2015 Paris Agreement. For more information on Aegon’s 2022 efforts to mitigate climate change, please see the TCFD section of this report.
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Table of Contents
Task Force on Climate-related Financial Disclosures
Task Force on Climate-related
Financial Disclosures
Climate change represents one of the biggest risks to society, the economy, and financial institutions. Mitigating climate change, including the reduction of greenhouse gas (GHG) emissions, is a major global challenge. Aegon believes that governments, companies, and investors have a responsibility to mitigate climate change and its impacts, and facilitate a transition to a climate-resilient economy.
The present disclosure builds on earlier disclosures made since 2017. It is made on behalf of Aegon N.V., an integrated diversified international financial services group, as both an asset owner and an asset manager.
Similar to previous years, it follows the Task Force on Climate-related Financial Disclosures (TCFD)’s four-pillar framework to facilitate disclosure. Aegon strives to continuously enhance its reporting and business practices and welcomes feedback from stakeholders on the appropriateness and relevance of this disclosure.
Governance
Set up by the Corporate Sustainability team, Aegon’s sustainability approach is overseen by the Global Sustainability Board (GSB). The GSB meets quarterly and advises the Management and Executive Boards on Aegon’s strategic sustainability agenda, including climate change. The Supervisory Board has ultimate oversight. Through its Nomination and Governance Committee, the Supervisory Board is advised and kept appraised of business and regulatory developments regarding sustainability. Further information of sustainability governance is provided in the “Sustainability” (page 17) and “Sustainability governance” sections (page 41).
The GSB is supported in its mission by Local Sustainability Boards that translate the global sustainability agenda into actions within local business units and provide market-relevant feedback.
With respect to climate change, the GSB is also supported by the
Net-Zero
Working Group (NZWG). The NZWG is tasked with undertaking the required analysis and coordination of actions on Aegon’s general account investments in support of our 2050
net-zero
commitment and obligations under the
Net-Zero
Asset Owner Alliance. It draws on staff-level representation from across the company to generate insight and recommendations for the GSB on potential management actions.
Additional climate oversight is provided by the Group Risk and Capital Committee (GRCC), which oversees the Financial Risk function’s climate scenarios that analyze the potential climate impacts on our accounts. There is also the
Non-Financial
Risk Committee (NFRC) which oversees the Operational Risk function’s annual climate risk assessment that identifies possible physical and transition risks that could impact Aegon.
Strategy
At Aegon, we have embedded sustainability as a central pillar within our company strategy. Aegon is committed to a responsible way of doing business and seeks to meet the increasing expectations of multiple stakeholders – investors, customers, employees, business partners, and the wider community. Through these engagements, Aegon has established two thematic sustainability priorities for its strategy: inclusion and diversity, and climate change. Both themes support our corporate purpose. The effects of climate change are already impacting our ability to live our best lives, therefore the need for action is urgent and universal. As such, we have committed to transitioning our general account investment portfolio to
net-zero
GHG emissions by 2050.
As an insurance company, Aegon can support the transition to a climate-resilient economy and a
net-zero
world using both sides of its balance sheet. We finance climate resilience through our investment activities while mitigating climate risk through integrating ESG into our risk management processes and the savings and protection solutions we provide.
Aegon collaborated with Ortec Finance for a second consecutive year to conduct an extensive and systematic climate risk assessment for its general and separate account assets across all business units. The analysis, which is in line with industry standards set by the Intergovernmental Panel on Climate Change (IPCC) and Network of Central Banks and Supervisors for Greening the Financial System (NGFS), evaluated three plausible climate pathways (Orderly, Disorderly and Failed transitions) to explore potential future climate policies, interventions, and consequences of the world failing to mitigate changes.
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    About Aegon    Governance and risk management    Financial information
Non-financial information







Overview of climate scenarios considered
OrderlyDisorderlyFailed Transition
Orderly
transition pathway
Disorderly
transition pathway
Business-as-usual
(only currently
Net-Zero
by
2050
Net-Zero
by
2050
committed transition efforts)
Smooth market
pricing-in
dynamics		Disruptive effects on financial marketsFails to meet
with sudden repricingthe Paris Agreement goals
CO
2
emissions ~
SSP1-RCP1.9
CO
2
emissions ~
SSP1-RCP1.9
CO
2
emissions ~
SSP3-RCP7.0
Locked-in
physical impacts of
Locked-in
physical impacts of		Dramatic physical impacts of
1.5
°
C
by 2100
1.5
°
C
by 2100
4.3
°
C
by 2100
The employed climate model considers both transition risks (i.e. policy and technological changes) and physical risks (i.e. gradual impact and extreme weather events) associated with climate change to produce a climate change adjusted economic and financial outlook. The model outcomes enable us to identify potential vulnerabilities in our portfolio in terms of asset type, geography, and sector, and aid in decision-making processes related to climate risk management.
The present model has adopted a more stringent
net-zero
emission target for 2050, as compared to the 2070 target assumed in the previous year’s analysis. Due to the slower-than-forecasted transition of the world towards a greener future, updated scenarios also project an accelerated rate of decarbonization in order to attain the
net-zero
targets. This has resulted in greater climate-induced impacts on the macroeconomy, as compared to the previous year, with the United States experiencing a more pronounced impact than the European Union. In addition to changes in model assumptions this year’s analysis reflects changes to the Aegon general account holdings over the year. The change in composition of Aegon’s general account holding has been influenced by different factors over the year, one of which includes reducing the Weighted Average Carbon Intensity (WACI) of the corporate fixed income and listed equity investments.
As shown by the “Climate impact on nominal investment return” chart, the 2022 outcomes show broadly comparable results for the transition scenarios (Orderly, Disorderly), with a more adverse impact in the event of a failed transition scenario (the latter attributable to the significant allocation of US assets in our portfolio). Notwithstanding the above changes, we continue to observe that the Aegon general account portfolio remains resilient to key systemic climate risk drivers across all modelled climate scenarios over a
40-year
horizon. This is largely attributed to the high allocation of fixed income assets, which serves to limit the cumulative climate-related impact on returns.
Short-term climate-induced GDP losses for EU & US
(in %)
Long-term climate-induced GDP losses for EU & US
(in %)
Climate impact on nominal investment return
(relative to baseline, in % cumulative)
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Task Force on Climate-related Financial Disclosures
The results provide an initial directional signal; however, climate-related risks are dynamic in nature. Transition risks are expected to dominate in the near to medium term if society is to achieve the
net-zero
objectives while physical risks will materialize at any time as global temperatures continue to rise. As a result, continuing to monitor developments in climate science, policy, technology, and consumer sentiment is critical for understanding and adapting to the future.
Risks
For our life insurance business, most of our liabilities are exposed to mortality and morbidity rates, both the current levels and the uncertainty around how these will develop relative to our assumptions over the coming decades. An important driver when assessing the value of our liabilities is how past trends in longevity are extrapolated into the future. Climate change plays a role in the development of future mortality and morbidity rates, just like other factors – including the continuing
COVID-19
pandemic, medical advancements, limits to human biology, and changes in lifestyle. The relationship between mortality and morbidity and climate change is complex, and the nature of the impact can also vary geographically. Furthermore, it is expected that climate change will have a relatively lower impact on longevity and health of the insured population compared with the general population, as this group is more affluent and is more likely to be able to better adapt to changing conditions. Taking all this into consideration, Aegon follows widely adopted industry methods where the extrapolation of future longevity is performed based on past experiences of mortality and morbidity rates, without separately modelling each of the underlying drivers such as climate change. With this approach the changing circumstances are gradually introduced into our assumptions.
In contrast, our investments are exposed to both physical and transition risks. While we expect the transition risks associated with policy and market actions intended to mitigate climate change to be most salient in the near term, the value of our holdings can reasonably be expected to be influenced by both these risks in the longer term. However, previous scenario analysis has shown that our relatively high allocation to fixed income, including government bonds, should limit our overall exposure.
For our property and casualty (P&C) business, we expect a more direct impact from climate change through, for example, higher claim frequencies arising from an increase in extreme weather events. However, prices for P&C insurance can be adjusted periodically. Prices are determined by closely monitoring past claim frequencies and adjusting the premiums over time while maintaining an adequate level of expected profitability.
Case Study: Aegon Global Short
Dated Climate Transition Fund
The Aegon Global Short Dated Climate Transition Fund is a simple, liquid, and transparent short-dated investment grade bond strategy. The fund marries both financial and climate related considerations with the aim to deliver a cash return of at least 1.25% gross of fees over rolling three-year periods and to deliver that with at least 30% lower carbon intensity than the broader credit market.
It embeds dedicated and proprietary climate transition research to direct investments to companies that have robust and credible plans to transition towards a low carbon economy and therefore are better aligned with investors’
net-zero
goals. More broadly, it adopts a
best-in-class
ESG approach to construct the portfolio with issuers who we have identified as having better ESG categories, with the lowest ESG risks.
Opportunities
As an investor, Aegon has an important role to play in supporting the climate transition. By making climate-smart investment choices, we can contribute to a cleaner, healthier environment and provide our clients with opportunities to reduce their own climate impacts. Climate change continues to be a focus of our investment strategy and is guided by our Responsible Investment Policy.
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    About Aegon    Governance and risk management    Financial information
Non-financial information







Risk management
Identification and management
This year, Aegon undertook its first “double materiality” assessment, which identified climate change as a material sustainability topic. For further detail, see the “Defining content” section (page 401).
Climate change is a long-term risk associated with high uncertainty regarding timing, scope, and severity of potential impacts. 2022 saw no material changes to the overall climate risk identification, assessment, and evaluation processes described in previous years’ disclosures.
As previously mentioned, Aegon collaborated with Ortec Finance for a second consecutive year to conduct an extensive and systematic climate risk assessment for its general and separate account across all business units. Aegon also performs regular operational assessments of its exposure to climate risk. The assessments use research and position papers from renowned institutions as input and are executed in cooperation with subject matter experts from Aegon’s risk, asset management, legal, compliance, and sustainability functions. In 2022, Aegon updated its group-level assessment, considering findings from local climate risk assessments executed by Aegon’s business units and developments captured in available United Nations’ Intergovernmental Panel on Climate Change (IPCC) reports. The risk assessment identifies the relevant risks for the company and assesses severity per risk in terms of likelihood and impact and its manageability in terms of the speed of materialization and the possibilities for mitigation. The assessment concludes with recommendations and considerations to be taken forward and is included as part of our Own Risk Solvency Assessment (ORSA).
Active ownership
Engagement with corporates
As an institutional investor, Aegon expects investee companies to work toward reducing their environmental impact. We engage with the companies we invest in both individually and collectively through networks to encourage better climate-related risk practices, including emissions measurement, disclosure, target setting, and reporting in line with TCFD recommendations.
Aegon and its business units are active members or participants in several collaborative initiatives targeting climate action, including but not limited to:
Net-Zero
Asset Owner Alliance,
Net-Zero
Asset Managers Initiative, Principles for Responsible Investment (PRI), the Institutional Investors Group on Climate Change (IIGCC), and Climate Action 100+ (CA100+).
For further details on Aegon’s active ownership activities, see the Responsible Investment report published by Aegon Asset Management.
Engagement with policymakers
Aegon acknowledges the importance and necessity of government action in addressing climate change. Engagement with policymakers is critical to shaping our investment environment, and we work independently and in collaboration with industry groups to engage on key climate issues.
At the European level, Aegon supports the goals of the EU strategy for financing the transition to a sustainable economy and recognizes the important role financial actors play in the transition. Aegon has engaged with officials and contributed to consultations on the corresponding regulations on sustainable taxonomy and sustainability disclosures, the incorporation of sustainability risks into the Solvency II regulatory regime, and the development of standards for the reporting of
non-financial
information. Aegon has also continued to advocate for action to complete the Capital Markets Union to unlock capital from institutional and cross-border investors to fund sustainable transition projects in Europe.
In the United States, Aegon has engaged with policymakers at both the federal and state levels to advocate for appropriate climate-related regulation. Aegon has supported regulatory measures that appropriately differentiate between the climate exposures of life insurers and property-casualty insurers. At both the federal and state levels, Aegon has supported TCFD-based disclosure standards that would provide uniform and consistent information to stakeholders, while reducing the potential for duplication and redundancy. Aegon expects that these efforts will support the transition to a more sustainable economy.
Metrics and targets
Own operations
In line with its
net-zero
commitment announced in November 2021, Aegon has set a supporting target to reduce the carbon footprint of its operational activities by 25% by 2025, compared to the 2019 baseline. The target includes the consumption of natural gas and electricity. In 2022, the carbon footprint of Aegon’s operational activities was 59% lower than in 2019. Through implementing our hybrid working policy and other initiatives, we will work towards achieving our target. Aegon will also look towards expanding the scope of measurement of our greenhouse gas emissions and explore setting further targets against these in the future.
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Task Force on Climate-related Financial Disclosures
Investments and holdings
Targets
In late 2021, as part of its commitment to the
Net-Zero
Asset Owner Alliance, Aegon set initial targets for its investments. Following the guidance in the Inaugural 2025 Target Setting Protocol, for 2025, Aegon intends to reduce the weighted average carbon intensity (WACI) of corporate fixed income
and listed equity in its general account by 25% against a 2019 baseline.
In 2022, the weighted average carbon intensity of our corporate fixed income and equity investments reduced by 20% compared to 2019. As of 2023, the WACI reduction target has been included in Executive remuneration.
Weighted Average Carbon Intensity of Corporate Fixed Income and Listed Equity*
       
        2019
   
        2022
   
        Change
 Weighted average carbon intensity
 tCO
2
e/EURm revenue		   490    390   (20%)
*
Source: Aegon calculation. Values as of 31 December 2022. Climate metrics calculated per Methodology section below. Climate change data availability may change over time and characteristics will vary. Certain information
©
2023 Sustainalytics, MSCI ESG Research L.L.C. Reproduced with permission. Not for further distribution.
In December 2022, Aegon introduced two additional short-term targets, which further commit the company to investing USD 2.5 billion in activities to help mitigate climate change or adapt to the associated impacts by 2025
and engaging with at least the top 20 corporate carbon emitters in the portfolio by 2025. We will report our progress against these targets as of the Annual Report 2023.
Global General Account – Corporate Fixed Income and Listed Equity
       
Corporate FI
   
    Coverage  
 Absolute footprint
 tCO
2
e		   2,640,000   89%  
 Relative intensity
 tCO
2
e/EURm invested		   84   89%  
 Weighted average carbon intensity
 tCO
2
e/EURm revenue		   390   96%  
 Carbon Risk Rating
 Sustainalytics rating   10.5   85%  
*
Source: Aegon calculation. Values as of December 31, 2022. Climate metrics calculated per Methodology section below. Relative intensity, Weighted average carbon intensity, and Carbon risk rating figures are extrapolated when underlying carbon data is not available. The availability of data for each indicator is expressed in a coverage ratio as disclosed above. Climate change data availability may change over time and characteristics will vary. Certain information
©
2023 Sustainalytics, MSCI ESG Research L.L.C. Reproduced with permission. Not for further distribution.
Disclosure
Since 2020, we have extended the scope of measurement and reporting of the carbon footprint of our investments to our global general account holdings.
Global general account by asset class
(in %)
Source: Aegon calculation. Values are as of December 31, 2022 and may not add up to 100% due to rounding.
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    About Aegon    Governance and risk management    Financial information
Non-financial information














Corporate fixed income and listed equity results are dominated by holdings in the utilities, energy, and materials sectors where their contribution to the footprint and intensity of the account greatly outweighs their financial position.
The chart below provides an indication of active weight by sector against both the absolute footprint and weighted average carbon intensity.
Active Contribution by Sector
(in %)
Global General Account – Sovereign Fixed Income
        
Sovereign FI
   
                    
   
        Coverage 
 Absolute footprint
  
tCO
2
e
   7,528,000        100% 
 Relative intensity
  
tCO
2
e/EURm invested
   510        100% 
 Weighted average carbon intensity
  
tCO
2
e/EURm GDP
   310        100% 
 Climate change resiliency
  ND GAIN rating   66        100% 
*
Source: Aegon calculation. Values as of 31 December 2022. Climate metrics calculated per Methodology section below. Climate change data availability may change over time and characteristics will vary.
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Task Force on Climate-related Financial Disclosures
While our largest sovereign holdings are in US and EU member state-issued bonds, the results are dominated by holdings from other countries, including emerging markets, where their contribution to the footprint and intensity
of the account greatly outweighs their financial position. The chart below provides an indication of active weight by region against both the absolute footprint and WACI.
Active contribution by region
(in %)
Methodology
Corporate fixed income and listed equity metrics were calculated following the Partnership for Carbon Accounting Financials (PCAF) guidelines and include Scope 1 and 2 emissions. For sovereign assets, Aegon follows a “whole economy” approach based on country-level emissions and GDP. The WACI was calculated in line with the TCFD’s recommendations. Carbon risk for corporate issuers is measured using the Sustainalytics Carbon Risk Rating, while climate vulnerability for sovereign issues is measured using the Notre Dame Global Adaptation Initiative
(ND-GAIN)
Country Index. Target figures are set in line with
Net-Zero
Asset Owner Alliance guidance.
Next steps
Aegon will seek to continue to improve its climate change strategy, governance, approach to risk and opportunity measurement, and implementation in the coming years, as is reflected in our Sustainability Roadmap 2025.
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About AegonGovernance and risk managementFinancial information
Non-financial information






Value created
Aegon strives to create long-term value for a broad range of stakeholders, including its customers, employees, business partners, and investors, as well as society at large. Our Value Creation Model (pages
18-19)
provides a high-level overview of the value we create, preserve or erode for each stakeholder group.
This section builds on Aegon’s Value Creation Model. It presents granular performance indicators related to our Model inputs, outputs, and outcomes with a specific focus on sustainability. These performance indicators are framed
around our five stakeholder groups, and are further defined by their contribution to the priority topics identified through Aegon’s double materiality assessment. Performance indicators that are not directly linked to our material topics, but are of relevance for a specific stakeholder group, including sustainability benchmarks, are also included in this section.
Many figures in the tables have been rounded off, as a result of which some totals may not add up precisely.
Year-on-year
changes have been calculated using unrounded numbers.
Customers
Delivering long-term value to customers is central to Aegon’s purpose of
Helping people live their best lives
and provides the foundation for the company’s strategy.
While we aim at increasing our customer base and delivering customer value in terms of claims, benefits, and plan withdrawals, our main focus stays on customer satisfaction.
              
Change
    
Material Topic
  
Performance Indicator
  
                2022
   
                2021
   
2021 to 2022
  
                2020
 
Number of customers (in millions)
                  
  
Total customers
1
   29.5    31.7   
(7%)
   30.4 
  
Americas
   10.8    11.8   
(8%)
   11.4 
Customer experience
  
The Netherlands
   2.7    2.7   
1%
   2.5 
  
United Kingdom
   4.1    3.9   
5%
   3.8 
  
International
   11.9    13.4   
(11%)
   12.6 
   
New customers
2
   3.8    3.8   
(1%)
   4.6 
Customer satisfaction
 
                  
  
Benchmarked Net Promoter
        
  
Score (NPS)
3
        
  
United States
   = Market Average    = Market Average   
¬
 
®
   n.m. 
  
The Netherlands
   < Market Average    < Market Average   
¬
 
®
   n.m. 
Customer experience
  
United Kingdom
   < Market Average    > Market Average   
¯
   n.m. 
  
Customer complaints
4
   79,892    86,075   
(7%)
   80,510 
  
Significant fines to address cases of
mis-selling
(in EUR millions)
5
   0.0    0.0   
-
   8.2 
   
Claims, benefits and retirement plan withdrawals (in EUR billions)
   60.0    61.9   
(3.1%)
   57.4 
n.a. – not applicable
n.m. – not measured
pp – percentage points
1 
Customers are those with individual, group or corporate policies. We also include those participating in pension plans controlled by trustees or who have white label products serviced by Aegon or Transamerica. There may be some duplications in markets where we operate under more than one brand. Customers of our joint ventures are included on a 100% basis. The customers of our joint venture in Brazil are reported in the category International. In previous years this was reported under Americas. The 2020 and 2021 numbers were restated to reflect this change. The decrease in the number of customers for the Americas from 2021 to 2022 mainly relates to customers with no balance value. In 2022, these customers are excluded from the total number, while for previous years they were included and not restated.
2 
New customers are those who acquired a product or service during the reporting period (and who were not previously customers of Aegon). There may be some duplications in markets where we operate under more than one brand. Customers of our joint ventures are included on a 100% basis.
3 
Customer satisfaction is measured in benchmarked Net Promoter Score
(SM)
(NPS
®
). On an annual basis, we measure the NPS in our core markets (the Netherlands, the United Kingdom, and the United States) and compare findings against peers in each local market. The peer groups are
re-assessed
each year to ensure a fair representation of the market. Our target is to ensure that customer satisfaction in each of our core markets remains at or above the average of our peers. See
“Non-financial
key performance indicators” on pages
405-406
for more details.
4 
Includes all written and verbal complaints from our customers.
5 
Includes any fines for
mis-selling
in excess of EUR 100,000.
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Value created
Employees
Employees are a key part of our success, and, at Aegon, we want them to share in that success. As our business progresses and grows, we are better able to provide fulfilling careers, advancement opportunities, and development.
Our value creation efforts for our employees focus on topics including inclusion and diversity, employee engagement, employee training and development, and good health and wellbeing.
              
Change
     
Material Topic
  
Performance Indicator
  
                2022
   
                2021
   
2021 to 2022
   
                2020
 
Workforce
                       
  
Number of employees
1
   19,087    22,271   
 
(14%)
 
   22,322 
  
Americas
   6,153    7,675   
 
(20%)
 
   7,960 
  
The Netherlands
   3,609    3,855   
 
(6%)
 
   3,930 
  
United Kingdom
   2,621    2,476   
 
6%
 
   2,307 
Talent management
  
International
   4,281    6,590   
 
(35%)
 
   6,598 
  
Asset Management
   1,464    1,675   
 
(13%)
 
   1,527 
  
Holding and other activities
   958    n.m.   
 
n.m.
 
   n.m. 
   
Number of direct employees
2
   14,747    15,837   
 
(7%)
 
   17,989 
Recruitment and retention
                    
  Number of new hires   2,547    1,884   
 
35%
 
   2,217 
  
Number of leavers
3
   2,491    2,039   
 
22%
 
   2,831 
  
Proportion voluntary leavers
   86%    86%   
 
0pp
 
   69% 
Talent management
  
Proportion involuntary leavers
3
   14%    14%   
 
(0pp)
 
   31% 
  Turnover rate   18%    15%   
 
3pp
 
   15% 
  
Voluntary
   16%    13%   
 
3pp
 
   10% 
   
Involuntary
3
   3%    2%   
 
1pp
 
   5% 
Employee engagement
                    
  
Global Employee Survey
4
        
  
Engagement
   70    68   
 
3%
 
   72 
  
Leadership
   61    57   
 
7%
 
   63 
Talent management
  
Inclusion
   78    74   
 
5%
 
   79 
  
Diversity
   76    72   
 
6%
 
   73 
  Participation rate   79%    77%   
 
2pp
 
   82% 
  
Training and development
        
  
Investment in training and career development (in EUR millions)
   10.9    9.5   
 
14%
 
   10.8 
   
Average investment in training and career development per employee (EUR)
   736    602   
 
22%
 
   486 
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Non-financial information






              
Change
     
Material Topic
  
Performance Indicator
  
                2022
   
            2021
   
2021 to 2022
   
                2020
 
Inclusion and diversity
                    
  
Global Employee Survey
4
        
  
Inclusion
   78    74   
 
5%
 
   79 
  
Diversity
   76    72   
 
6%
 
   73 
  
Gender
        
  Number of employees (women)   6,426    6,322   
 
2%
 
   n.m. 
  
Proportion of women employees
   48%    47%   
 
1pp
 
   50% 
  Number of women in senior management   177    169   
 
5%
 
   n.m. 
  
Proportion of women in senior management
5
   36%    34%   
 
2pp
 
   32% 
  Number of women in Supervisory Board   4    3   
 
33%
 
   n.m. 
  
Proportion of women in Supervisory Board
   44%    38%   
 
7pp
 
   38% 
Inclusion and diversity
  Number of women in Executive Board   0    0   
 
-
 
   n.m. 
  
Proportion of women in Executive Board
   0%    0%   
 
0pp
 
   0% 
  Number of women in Management Board   4    2   
 
100%
 
   n.m. 
  
Proportion of women in Management Board
6
   33%    20%   
 
13pp
 
   17% 
  
Work-related incidents and complaints
        
  
Number of work-related incidents and/or complaints (reported)
   84    n.m.   
 
n.m.
 
   n.m. 
  
Of which incidents of discrimination
   12    n.m.   
 
n.m.
 
   n.m. 
   
Number of work-related incidents
resulting in material fines, penalties, and compensation
   0    n.m.   
 
n.m.
 
   n.m. 
Health and safety
                       
Good health
and wellbeing
  
Number of days lost to employee
absence
7
   88,688    96,479   
 
(8.1%)
 
   93,464 
  
 
Employee absence rate
   2.3%    1.7%   
 
0.7pp
 
   1.7% 
           CONTINUED > 
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Value created
              
Change
    
Other information
  
Performance Indicator
  
                2022
   
                2021
   
2021 to 2022
  
                2020
 
  
Total employment costs
(in EUR billions)
   2.1    1.9   
10.2%
   2.0 
  
Salary costs (in EUR billions)
   1.3    1.3   
4.2%
   1.3 
Fair compensation and benefits
  
Ratio of CEO compensation to average compensation
8
   23:1    28:1   
i
   32:1 
   
Policy compliance (Global Remuneration Framework)
9
   95%    95%   
0pp
   95% 
Collective bargaining
  
Proportion of employees covered by collective bargaining / labor
agreements
10
   17.8%    17.3%   
0.5pp
   17.6% 
n.a. – not applicable
n.m. – not measured
pp – percentage points
1 
Number of employees on the last day of the reporting period, including all direct employees in Aegon, tied agents and employees in Aegon’s subsidiaries and joint ventures. In 2022 we added Holdings and other activities as a separate category. In previous years the employees under this category were recorded under The Netherlands and Americas.
2 
The definition of “Direct employees” has changed in 2022 compared to previous years. Based on the new definition, direct employees include employees from Aegon N.V. and its 100% subsidiaries only, and is therefore limited to entities over which Aegon has direct control. In previous years, the employees of joint ventures and associates were presented as part of Direct employees. The 2021 numbers have been restated to reflect the new definition. This impacts the following indicators: Number of direct employees, all indicators under Recruitment and retention, Average investment in training and career development per employee and Proportion of women employees. The 2020 figures were not updated for practical reasons. The number of direct employees is used as the denominator for metrics linked to the material topics Talent management, Inclusion and diversity, and Health and safety. Direct employees also includes our CEE businesses which have not been fully divested.
3 
Leavers refer to direct employees where termination date is within reporting period. Involuntary turnover rate refers to direct employees where the termination date is within reporting period and the reason for leaving is involuntary. The indicators relating to Recruitment and retention do not include transfers where employees continue paid employment outside Aegon. In this regard we have not included the divested businesses of Aegon Turkey and Aegon Hungary in these 2022 indicators. Therefore the difference between new hires and leavers does not reconcile with the decrease of direct employees from 2021 to 2022.
4 
Global Employee Survey is provided through the third-party service provider Culture Amp. All employees, including those in joint ventures, participate in the survey on a voluntary basis. New hires employed for under three months do not participate. In 2022, just as in previous years, three engagement surveys were conducted throughout the year (Q1, Q2 and Q3). The results and participation rate disclosed reflect the most recent survey conducted in the third quarter of each year.
5 
In this context, senior management includes our Management Board and extends up to two levels below the Management Board (depending on the number of employees in each business or country unit). Performance target was 32% for 2020 (achieved), 34% for 2021 (achieved) and 36% for 2022. The 2021 and 2022 target and performance data do not include employees in our Central & Eastern Europe businesses that are in the process of being divested.
6 
Includes the members of the Management Board and the Executive Board.
7 
Employee absence refers to time off from work as a result of illness or injury. It excludes permitted leave of absence such as holiday, study/training, maternity or paternity leave and compassionate leave.
8 
The ratio of CEO compensation to average compensation is based on IFRS remuneration expenses for both the CEO and Aegon’s employees in 2022. Please refer to the Remuneration Report 2022 (pages
57-76)
for more details.
9 
Policy compliance reflects business units’ compliance with specific requirements of those policies. Where there is not full compliance, this does not indicate a breach of the policy, but areas where units have requested time to further strengthen internal governance.
10 
All of Aegon’s employees in the Netherlands, other than senior management, are covered by the collective labor agreement of Aegon NL. Aegon, the unions and the Dutch Central Works Council are working closely together in a
co-creation
steering group which prepares new agreements and tracks the implementation thereof. The current collective labor agreement has a duration of two years, from July 1, 2022 up to and including June 30, 2024. Aegon has experienced no significant strike, work stoppage or labor dispute in recent years.
Aegon Annual Report on Form 20-F 2022  |  437
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About AegonGovernance and risk managementFinancial information
Non-financial information






Business partners
Our global network of partners and suppliers helps us operate a successful business that creates value for all stakeholders. We design our procurement processes to deliver excellent value for money for our business
functions while also contributing to a sustainable global supply chain by integrating best-practice environmental, social and governance (ESG) criteria into our supplier selection and management processes.
              
Change
     
Other information
  
Performance Indicator
  
                2022
   
                2021
   
2021 to 2022
   
                2020
 
  
Premiums and commissions
        
  
Premiums paid to reinsurers (in EUR billions)
   2.3    3.5   
 
(35%)
 
   2.7 
  
Commissions paid to brokers and other intermediaries (in EUR billions)
   2.4    2.6   
 
(8%)
 
   2.3 
  
Goods and services
        
  
Total spend on goods and services (in EUR billions)
   1.5    1.7   
 
(8%)
 
   1.6 
  
Spend on goods and services with top 250
(“in-scope”)
suppliers (in EUR billions)
1
   1.5    1.4   
 
6%
 
   1.3 
Responsible sourcing
  
Proportion of total spend on goods and services with top 250
(“in-scope”)
suppliers
1
   96.2%    85.5%   
 
10.7pp
 
   85.3% 
  
Supplier ESG assessment
        
  
Number of
“in-scope”
suppliers assessed for ESG performance
2
   97    81   
 
20%
 
   67 
  
Spend on goods and services with
“in-scope”
suppliers assessed for ESG performance (in EUR billions)
2
   1.1    0.8   
 
26%
 
   0.8 
  
Proportion of spend with
‘in-scope’
suppliers assessed for ESG performance
2
   72.4%    59.2%   
 
13.2pp
 
   56.4% 
  
Overall score of
“in-scope”
suppliers assessed for ESG performance
2
   57.8    n.m.   
 
n.m.
 
   n.m. 
  
Proportion of
“in-scope”
suppliers scoring
1-25
   0.0%    n.m.   
 
n.m.
 
   n.m. 
  
Proportion of
“in-scope”
suppliers scoring
26-50
   28.9%    n.m.   
 
n.m.
 
   n.m. 
  
Proportion of
“in-scope”
suppliers scoring
51-75
   60.8%    n.m.   
 
n.m.
 
   n.m. 
   
Proportion of
“in-scope”
suppliers scoring
76-100
   10.3%    n.m.   
 
n.m.
 
   n.m. 
n.a. – not applicable
n.m. – not measured
pp – percentage points
1 
Our
top-250
suppliers consistently represent at least 80% of our total supplier spend.
2 
Suppliers are assessed based on Ecovadis methodology with the objective to measure the quality of a company’s sustainability management system through its policies and actions. The allocation of suppliers in different scoring buckets is based on EcoVadis scoring methodology that takes into scope criteria around environmental care, labor and human rights, company ethics and sustainable procurement. The higher the score, the better the sustainability performance of the supplier. The spend data used to calculate the indicators for the supplier ESG assessment includes four quarters of data and covers the period October 1, 2021 to September 30, 2022.
438  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
Value created                    
Investors
Aegon seeks to provide a consistent and attractive return on investment to its investors around the world, based on a resilient
and sustainable business model.
             
Change
     
Material Topic
  
Performance Indicator
  
                2022
  
                2021
   
2021 to 2022
   
            2020
 
Corporate governance
1
                   
  
Supervisory Board
       
  Membership   9   8   
 
13%
 
   8 
  Average tenure (years)   4   4   
 
8%
 
   n.m. 
  Average age   64   63   
 
1%
 
   n.m. 
  
Executive Board
       
Business conduct and risk management
  Membership   2   2   
 
0%
 
   2 
  
 
Average tenure (years)
  
 
 
 
4
 
 
 
 
 
 
3
 
 
  
 
 
 
42%
 
 
  
 
 
 
n.m.
 
 
  Average age   60   58   
 
3%
 
   n.m. 
  
Management Board
       
  Membership   12   8   
 
50%
 
   10 
  Average tenure (years)   4   4   
 
5%
 
   n.m. 
   Average age   52   52   
 
1%
 
   n.m. 
Supervisory Board oversight
                   
  
Number of regular Supervisory Board meetings
   7   7   
 
0%
 
   n.m. 
  
Proportion regular Supervisory Board meetings fully attended
   100%   100%   
 
0pp
 
   n.m. 
  Number of Audit Committee meetings   6   5   
 
20%
 
   n.m. 
  
Proportion Audit Committee meetings fully attended
   100%   100%   
 
0pp
 
   n.m. 
  Number of Risk Committee meetings   6   4   
 
50%
 
   n.m. 
  
Proportion Risk Committee meetings fully attended
   100%   100%   
 
0pp
 
   n.m. 
Business conduct and risk management
  
Number of Remuneration Committee meetings
   6   6   
 
0%
 
   n.m. 
  
Proportion of Remuneration Committee meetings fully attended
   100%   100%   
 
0pp
 
   n.m. 
  
Number of Nomination and Governance Committee meetings
   6   6   
 
0%
 
   n.m. 
  
Proportion of Nomination and Governance Committee meetings fully attended
   100%     100%   
 
0pp
 
   n.m. 
  
Number of additional meetings / calls
2
   17   3   
 
467%
 
   n.m. 
   
Proportion of additional meetings / calls fully attended
   76%   100%   
 
(24pp)
 
   n.m. 
          CONTINUED > 
Aegon Annual Report on Form 20-F 2022  |  439
Table of Contents











About AegonGovernance and risk managementFinancial information
Non-financial information






            
Change
   
Material Topic
  
Performance Indicator
  
                2022 
  
                2021
  
2021 to 2022
  
                2020
Financial returns
 
               
  
Returns to investors
        
  
Returns to investors paid in the year (in EUR millions)
  631     509  
24%
  370
  
Dividend payments (in EUR millions)
3
  407     289  
41%
  123
Solid financial performance
  
Interest (payments to bondholders) (in EUR millions)
  223     220  
1%
  248
  
Dividend over the fiscal year per common share (EUR)
4
  0.23     0.17  
35%
  0.12
  
Share price (change)
  7.9%     35.8%  
(27.9pp)
  (20.0%)
   
Total shareholder return (TSR)
  11.6%     40.6%  
(29.0pp)
  (18.4%)
Sustainability (external recognition)
 
            
  
Sustainability benchmarks
5
        
  
MSCI ESG ratings assessment
  AA     AA  
¬
 
®
  AA
  
Sustainalytics ESG risk rating
  14.2 (low risk)     14.6 (low risk)  
h
  17.0 (low risk)
  
ISS ESG corporate rating
  C+ (Prime)     C+ (Prime)  
¬
 
®
  C (Prime)
  
CDP (Climate change) score
  C     C  
¬
 
®
  C
Responsible products, treating customers fairly
  
FTSE4Good index series constituent
  Index member     Index member  
¬
 
®
  Index member
  
Moody’s ESG overall score
  Robust     Robust  
¬
 
®
  Robust
  
S&P global corporate sustainability assessment (CSA) score
  55     51  
h
  43
  
EcoVadis scorecard
  Silver     n.m.  
n.m.
  n.m.
  
Refinitiv ESG score
  A     A-  
h
  B+
   
Bloomberg ESG disclosure score
  53.4     52.4  
h
  50.4
n.a. – not applicable
n.m. – not measured
pp – percentage points
1 
Aegon has a
two-tier
system of corporate governance, with an independent Supervisory Board and a separate Executive Board. The Executive Board (consisting of the CEO and CFO) is supported by a Management Board.
2 
Throughout the year several
sub-committee
and
ad-hoc
meetings were scheduled to discuss - amongst others - strategy-related topics and the audit tender process. The detailed breakdown of these meetings and attendance can be found in the Report of the Supervisory Board on pages
48-56.
3 
Dividend payments is based on the actual cash outflow relating to the paid dividend in the reporting year and is taking into account the cashflows relating to the share
buy-backs
to avoid dilution. It does not include the impact of other share
buy-backs.
4 
Aegon’s final dividend for 2022 is subject to approval by the company’s Annual General Meeting of Shareholders, due to take place in May 2023.
5 
Sustainability benchmark scoring reflects the most recent assessments made available for any given year. There is a lag time between Aegon’s annual reporting and the assessment of that by a benchmark. For example, a benchmark score presented under the 2022 reporting year will usually reflect Aegon’s 2021 (although sometimes 2020) annual reporting, according to Aegon’s place in the assessment cycle of any given benchmark (which can be variable). The 2022 benchmark scores reflect the position at the date of publication of the Aegon Annual Report on Form
20-F
2022.
©
2023 MSCI Inc. All rights reserved.
www.msci.com/our-solutions/esg-investing/esg-ratings-climate-search-tool
©
2023 Sustainalytics. All rights reserved. This information has been developed by Sustainalytics (
www.sustainalytics.com
). Such information and data are proprietary of Sustainalytics and/or its third party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an endorsement of any product or project, nor an investment advice and are not warranted to be complete, timely, accurate or suitable for a particular purpose. Their use is subject to conditions available at
www.sustainalytics.com/legal-disclaimers
©
2023 Institutional Shareholder Services Inc. All rights reserved.
www.issgovernance.com/esg/ratings/corporate-rating/
©
2023 CDP Europe AISBL
www.cdp.net/en
©
2023 FTSE Russell
www.ftserussell.com/products/indices/ftse4good
©
2023 MOODY’S CORPORATION, MOODY’S INVESTORS SERVICE, INC., MOODY’S ANALYTICS, INC., FOUR TWENTY SEVEN, INC.
(“FOUR TWENTY SEVEN”), VIGEO SAS (“V.E”) AND/OR THEIR LICENSORS AND AFFILIATES (COLLECTIVELY, “MOODY’S”). ALL RIGHTS RESERVED.
www.moodys.com/esg-solutions
©
2023 S&P Global Inc. All rights reserved.
www.spglobal.com/esg/csa/
©
EcoVadis 2023 - All rights reserved.
www.ecovadis.com/
©
2023 Refinitiv. All rights reserved. Refinitiv ESG Information is proprietary to Refinitiv Limited and/or its affiliates (“Refinitiv”). Score referenced on 27/02/2023.
www.refinitiv.com/en/sustainable-finance/esg-scores#t-terms-of-use
©
2023 Bloomberg Finance L.P. All rights reserved. Score referenced on February 28, 2023, and rounded from 53.36.
www.bloomberg.com/professional/solution/sustainable-finance/
440  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
Value created                    
Society
We strive to mitigate our impact on, and to create additional value as part of the wider society in which we operate. This includes business conduct and risk management,
cybersecurity, and reducing our environmental impact, with particular regard to climate change. Responsible investing is a key means to achieving societal ends through our investments.
             
Change
     
Material Topic
  
Performance Indicator
  
            2022
  
            2021
   
2021 to 2022
   
                2020
 
Responsible investment
                   
  
Responsible investment solutions (RIS)
       
  
Assets under management in RIS
(in EUR billions)
1
   120.2     177.7   
 
(32%)
 
   167.0 
  
Exclusions
2
   103.9   160.5   
 
(35%)
 
   157.6 
  
Best-in-class
3
   9.4   10.2   
 
(8%)
 
   3.3 
  
Sustainability-themed
4
   2.7   2.9   
 
(8%)
 
   2.4 
  
Impact investments
5
   4.2   4.1   
 
3%
 
   3.7 
  
Engagement and voting
6
       
Responsible investing
  
Number of engagements with investee companies
   832   596   
 
40%
 
   575 
  
Proportion engagements addressing environmental themes
   24%   31%   
 
(7pp)
 
   25% 
  
Proportion engagements addressing social themes
   18%   19%   
 
(1pp)
 
   21% 
  
Proportion engagements addressing governance themes
   44%   38%   
 
6pp
 
   53% 
  
Proportion engagements addressing general disclosure themes
   14%   11%   
 
3pp
 
   8% 
   
Number of shareholder meetings of invested companies where votes cast
7
   3,899   2,963   
 
32%
 
   2,511 
Climate change (investment footprint)
                   
  
Corporate Fixed Income + Listed Equity (CFI)
8
       
  
CFI absolute footprint (metric tons CO
2
e)
   2,640,000   4,886,000   
 
(46%)
 
   4,878,000 
  
CFI relative intensity (metric tons CO
2
e/EURm invested)
   84   110   
 
(24%)
 
   110 
  
CFI absolute footprint and relative intensity (coverage)
   89%   72%   
 
17pp
 
   77% 
Climate change
  
 
Weighted average carbon intensity (metric tons CO
2
e/EURm revenue)
   390   490   
 
(20%)
 
   470 
  
Weighted average carbon intensity (coverage)
   96%   97%   
 
(1pp)
 
   97% 
  
Carbon Risk Rating (Sustainalytics)
   10.5   9.9   
 
6%
 
   9.4 
   
Carbon Risk Rating (Sustainalytics) (coverage)
   85%   73%   
 
12pp
 
   63% 
          CONTINUED > 
Aegon Annual Report on Form 20-F 2022  |  441
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About AegonGovernance and risk managementFinancial information
Non-financial information






             
Change
     
Material Topic
  
Performance Indicator
  
                2022
  
                2021
   
2021 to 2022
   
2020
 
Climate change (investment footprint)
                   
  
Weighted average carbon intensity reduction target
       
  
Reduction of weighted average carbon intensity against 2019 baseline (%)
   (20%)   0%   
 
(20pp)
 
   n.m. 
  
Sovereign Fixed Income (SFI)
9
       
  
Absolute footprint (metric tons CO
2
e)
   7,528,000     15,088,000   
 
(50%)
 
   13,863,000 
Climate change
  
Relative intensity (metric tons CO
2
e/EURm invested)
   510   620   
 
(18%)
 
   500 
  
SFI absolute footprint and relative intensity (coverage)
   100%   100%   
 
0pp
 
   98% 
  
Weighted average carbon intensity (metric tons CO
2
e/EURm GDP)
   310   310   
 
0%
 
   330 
  
Weighted average carbon intensity (coverage)
   100%   100%   
 
0pp
 
   98% 
  Climate change resiliency (ND GAIN rating)   66   67   
 
(1%)
 
   67 
   
Climate change resiliency (coverage)
   100%   100%   
 
0pp
 
   98% 
Climate change (operational footprint)
                   
  
Greenhouse gas (GHG) emissions (metric tons CO
2
e)
10
       
  
Scope 1 (gas)
   4,170   5,557   
 
(25%)
 
   n.m. 
  
Scope 2 (electricity: location-based)
   12,828   16,366   
 
(22%)
 
   n.m. 
  
Scope 2 (electricity: market-based)
   480   203   
 
137%
 
   n.m. 
  
Scope 3 (air travel)
   6,433   2,101   
 
206%
 
   n.m. 
  
Total GHG emissions (location-based)
   23,432   24,024   
 
(2%)
 
   n.m. 
  
Total GHG emissions / EUR million revenue (location-based)
   0.9   1.0   
 
(2%)
 
   n.m. 
Climate change
  
Total GHG emissions / employee (location-based)
11
   1.6   1.5   
 
5%
 
   n.m. 
  Total GHG emissions (market-based)   11,084   7,861   
 
41%
 
   n.m. 
  
Total GHG emissions / EUR million revenue (market-based)
   0.4   0.3   
 
42%
 
   n.m. 
  
Total GHG emissions / employee (market-based)
11
   0.8   0.5   
 
51%
 
   n.m. 
  
Operational footprint reduction target
12
       
  
Total scope 1+2 (location-based) (metric tons CO
2
e)
   16,999   21,923   
 
(22%)
 
   n.m. 
  
Absolute reduction of scope 1+2 against baseline 2019 (metric tons CO
2
e)
   (24,798)   (19,874)   
 
25%
 
   n.m. 
   
Relative reduction of scope 1+2 against baseline 2019 (%)
   (59.3%)   (47.5%)   
 
(11.8pp)
 
   n.m. 
          CONTINUED > 
442  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
Value created                      
             
Change
     
Material Topic
  
Performance Indicator
  
                2022
  
                2021
   
2021 to 2022
   
2020
 
Climate change (operational footprint)
                   
  
Energy consumption (MWh)
       
  Fuel (gas)   20,238   27,288   
 
(26%)
 
   n.m. 
  Electricity (renewable)   33,090   49,283   
 
(33%)
 
   n.m. 
  
Green tariff / Renewable Energy Certificate (REC)
   33,065   49,259   
 
(33%)
 
   n.m. 
  
Self-generated
   25   24   
 
1%
 
   n.m. 
  
Electricity
(non-renewable)
   1,927   580   
 
232%
 
   n.m. 
  Electricity (total)   35,017   49,863   
 
(30%)
 
   n.m. 
  Total energy (fuel and electricity)   55,256   77,151   
 
(28%)
 
   n.m. 
Climate change
  
Renewable electricity
(% of total electricity)
   94%   99%   
 
(4pp)
 
   n.m. 
  
Renewable energy
(% of total energy)
   60%   64%   
 
(4pp)
 
   n.m. 
  
Air travel
13
       
  Total distance (million km)   47.6   16.3   
 
192%
 
   n.m. 
  
Economy (% total distance)
   81%   87%   
 
(6pp)
 
   n.m. 
  
Premium (% total distance)
   19%   13%   
 
6pp
 
   n.m. 
  
Route type <500km
(% total distance)
   6%   3%   
 
3pp
 
   n.m. 
   
Route type >500km
(% total distance)
   94%   97%   
 
(3pp)
 
   n.m. 
Compliance
                      
  
Policy compliance
14
       
  
Proportion employees completed training on Code of Conduct
   99%   98%   
 
1pp
 
   97% 
  
Proportion of compliance with Anti-bribery policy requirements
   87%   87%   
 
(0pp)
 
   89% 
  
Proportion of compliance with Conflict of interest policy requirements
   98%     98%   
 
0pp
 
   92% 
  
Proportion of compliance with Pricing and product development policy requirements
   98%   97%   
 
1pp
 
   93% 
  
Systematic Integrity Risk Assessment (SIRA)
15
       
Business conduct
and risk management
  Actions completed   73%   77%   
 
(4pp)
 
   76% 
  Actions completed and progressing within deadline   82%   81%   
 
1pp
 
   80% 
  
Fraudulent activity
       
  Incidents/attempts of fraud   594   889   
 
(33%)
 
   4,014 
  
Employees
   0.2%   0.1%   
 
0.1pp
 
   n.m. 
  
Intermediaries
   3%   21%   
 
(18pp)
 
   n.m. 
  
Third parties
   97%   79%   
 
18pp
 
   n.m. 
  Number of investigations completed   1,389   n.m.   
 
n.m.
 
   n.m. 
  
Employees
   0%   n.m.   
 
n.m.
 
   n.m. 
  
Intermediaries
   13%   n.m.   
 
n.m.
 
   n.m. 
   
Third parties
   87%   n.m.   
 
n.m.
 
   n.m. 
          CONTINUED > 
Aegon Annual Report on Form 20-F 2022  |  443
Table of Contents











About AegonGovernance and risk managementFinancial information
Non-financial information






             
Change
     
Material Topic
  
Performance Indicator
  
                2022
  
                2021
   
2021 to 2022
   
2020
 
Compliance
                      
  
Political advocacy
       
  
Monetary value of political contributions (in EUR million)
16
   0.2   n.m.   
 
n.m.
 
   n.m. 
Business conduct
and risk management
  
Monetary value of political lobbying / advocacy (in EUR million)
17
   0.9   n.m.   
 
n.m.
 
   n.m. 
   
Monetary value of membership of professional / advocacy associations (in EUR million)
18
   5.8   n.m.   
 
n.m.
 
   n.m. 
Information security
                   
  
Information security and phishing awareness
       
  
Number of employees enrolled in the annual Information security training
19
   15,608   n.m.   
 
n.m.
 
   n.m. 
  
Proportion of employees completed the annual Information security training
   95%     n.m.   
 
n.m.
 
   n.m. 
Cybersecurity
and data protection
  
Number of enterprise-wide phishing campaigns launched during the year
20
   4   n.m.   
 
n.m.
 
   n.m. 
  
Data privacy
       
  
Number of employees enrolled in specific training on data privacy
21
   11,905   n.m.   
 
n.m.
 
   n.m. 
   
Proportion of employees completed specific training on data privacy
   98%   n.m.   
 
n.m.
 
   n.m. 
          CONTINUED > 
444  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
Value created             
              
Change
     
Other information
  
Performance Indicator
  
                2022
   
                2021
   
    2021 to 2022
   
                2020
 
  
Total taxes borne by Aegon (in EUR millions)
22
   362    381   
 
(5%)
 
   319 
  
Corporate income tax
22
   32    (18)   
 
n.a.
 
   10 
  
Americas
   (3)    55   
 
n.a.
 
   (43) 
Responsible tax
  
The Netherlands
   3    (75)   
 
n.a.
 
   33 
  
United Kingdom
   0.4    (2)   
 
n.a.
 
   14 
  
Others
   32    3   
 
n.a.
 
   6 
   
Taxes collected on behalf of others
22
   2,585    2,409   
 
7%
 
   2,509 
  
Cash donations
        
  
Total cash donations
(in EUR millions)
23
   10.6    9.4   
 
13.2%
 
   9.5 
  
Financial security and education
   2.0    2.0   
 
0.4%
 
   3.0 
  
Financial education and literacy
   1.6    1.6   
 
1.4%
 
   2.7 
  
Employability later in life
   0.3    0.3   
 
(4.5%)
 
   0.3 
  
Wellbeing and longevity
   6.8    5.6   
 
22.0%
 
   5.7 
  
Physical fitness
   0.2    0.2   
 
(8.7%)
 
   0.2 
  
Mental vitality
   1.1    0.5   
 
92.4%
 
   0.9 
  
Prevention of diseases
   1.1    1.3   
 
(13.0%)
 
   1.7 
  
Livable communities
   4.5    3.6   
 
25.8%
 
   2.9 
  
Other cash donations
   1.8    1.8   
 
(0.2%)
 
   0.8 
Community
engagement/
investment
  
Proportion of cash donations to key themes
   83%    81%   
 
2pp
 
   92% 
  
 
Financial security and education
   18%    21%   
 
(2pp)
 
   32% 
  
 
Wellbeing and longevity
   65%    60%   
 
5pp
 
   60% 
  
Number of organizations receiving donations
   493    469   
 
5%
 
   481 
  
Volunteering
        
  
Volunteering hours
   16,911    6,806   
 
148%
 
   4,399 
  
Volunteering value
(in EUR millions)
24
   1.2    0.3   
 
309%
 
   0.2 
  
Total investment
        
  
Total value community investment
(in EUR millions)
   11.8    9.7   
 
22%
 
   9.7 
   
Total value community investment as proportion of net result
   0.5%    0.6%   
 
(0.1pp)
 
   17.6% 
n.a. – not applicable
n.m. – not measured
pp – percentage points
1 

Aegon AM has a Responsible Investment Framework that reflects the key elements of ourAegon’s Responsible Investment Policy, as well as key elements of similar policies put forward byof Aegon AM’s third-party clients. The framework is structured around ESG integration, Activeactive ownership and Solutions.solutions. The responsible investment solutions are based on fourfive categories: exclusion-based strategies,

best-in-class
strategies, sustainability-themed strategies1) exclusions and ethical strategies; 2) best-in-class ESG strategies; 3) climate transition strategies; 4) sustainable strategies; and 5) impact investments and comprises both general account assets managed by Aegon AM and assets managed on behalf of third-party clients. Joint ventures are excluded. Responsible investment products and services may vary regionally.
investing strategies.

2 

“Exclusions”Exclusions and ethical” reflects the portfolio that is subject to negative screening to avoid investments in certain sectors, companies, or practices based on specific criteria. The number has dropped compared to 2021 mainly because

non-listed
It also includes Aegon’s general account assets classes, including mortgages, real estate, private equity and structured assets and listed assets including US government bonds were excluded from the scope in 2022. The total amount for these asset classes in 2021 was EUR 41.3 billion.
managed by Aegon AM.

3 

“Best-in-class”

investments seek to outperform by emphasizing positive screening of issuers with better or improving ESG profiles relative to sector peers.

4 

“Sustainability-themed”Climate transition” investments include companies that are better prepared to manage climate risks

5

“Sustainable” investment focuses on issuers whose activities or practices are aligned with sustainability themes in an effort to generate competitive returns over the long term.

56 

“Impact investments” pursueinvesting” seeks financial returns alongside measurable positive social and/or environmental impact.

67 
With regards to engagement, through our investment exposure, and where appropriate, we look

Aegon AM aims to build a constructive dialoguedialog with the companies and bodies, either bilaterally or as part of an investor consortium, as weto promote responsible business practices. The scope is focused on assets managed on behalf of third-party clients, but engagements may also be linked to Aegon’s general account investments. Percentages may not sumadd up to 100 due to rounding. ThemesTopics are dividedgrouped according to the main issue.theme. At times, there ismay be more than one theme for an engagement. With regards

8

Status of engagement with investee companies is measured based on the milestones achieved. Milestone one: We have flagged our concerns and contacted the company. Milestone two: The company has responded (letter, email, phone call) and the dialog has started. Milestone three: The company has taken concrete steps to voting, forresolve our concerns, such as achievement of a commitment. Milestone four: The engagement goal has been fully achieved and verified. No further action required: In some cases, our assessment of the ESG issue at stake may change and we subsequently decide to no longer pursue the engagement.

9

For Aegon AM’s relevant investment strategies that incorporateinclude equities, we seekAegon AM aims to execute votesvote in alignmentline with ourits engagement objectives and clients’the best interests.interests of clients. The scope is general account assets managed by Aegon AM andfocused on assets managed on behalf of third-party clients.

7
clients, but investments may also be linked to Aegon’s general account investments. The increase in voted shareholder meetings compared to 2021 is due to a new voting strategy. Aegon AM implemented as of February 2022 a “vote all meetings” strategy.strategy from February 2022. Prior to thatthis, Aegon AM made a selection of investee companies.

10
Aegon Annual Report on Form 20-F 2022  |  445
Table of Contents
About AegonGovernance and risk managementFinancial information

Non-financial information











8 
The scope covers global general account assets only. The disclosures are based on Aegon calculations. Values are as of December 31. Relative intensity, weighted average carbon intensity and carbon risk rating are extrapolated in case carbon data is not available. The availability of data for each indicator is expressed in a coverage ratio as disclosed above. Climate change data availability may change over time and characteristics will vary. Certain information from
©
2023 Sustainalytics, MSCI ESG Research L.L.C. are reproduced with permission. Not for further distribution. For more information refer to the TCFD section in this report.
9 
The scope covers global general account assets only. The disclosures are based on Aegon calculations. Values are as of December 31. Relative intensity, weighted average carbon intensity and climate change resiliency are extrapolated in case carbon data is not available. The availability of data for each indicator is expressed in a coverage ratio as disclosed above. For 2022 the data coverage for SFI indicators is 100% and therefore no extrapolation is needed. Climate change data availability may change over time and characteristics will vary. For more information refer to the TCFD section in this report.
10
Operational GHG emissions are based on known energy consumption and air travel activity. Energy consumption data is extrapolated by floorspace for any sites missing consumption data. Further extrapolation is undertaken for employees working permanently from home by applying an average employee consumption of our office premises for each business unit. Prior to 2022, data collection was limited to our largest business units (Transamerica, Aegon NL, Aegon UK and Aegon AM), with extrapolation for remaining business units based on headcount for both energy consumption and air travel. Where possible, GHG emissions are calculated on the basis of locally-specific conversion factors. Scope 1 conversion factors for gas consumption are sourced from the UK Department for Environment, Food & Rural Affairs (Defra) using “100% mineral” for the US, and “5% biofuel blend” for the Netherlands, United Kingdom, Spain and Hungary. Scope 2 GHG emissions are expressed through both the GHG Protocol “location” and “market” based approaches, with location-based conversion factors for electricity consumption sourced from the US Environmental Protection Agency (eGRID regions), the European Environment Agency for the Netherlands, Spain and Hungary, and Defra for the UK. For the market-based approach, conversion factors are sourced from individual electricity suppliers, 94% of which is zero carbon through our purchase of renewable electricity in the form of “green tariff” supply contracts and renewable energy certificates (RECs). Conversion factors for air travel are sourced solely from Defra due to applicability for all countries.
11
The definition of “Direct employees” has changed in 2022 compared to previous years. Based on the new definition, direct employees include employees from Aegon N.V. and its 100% subsidiaries only, and is therefore limited to entities over which Aegon has direct control. In previous years, the employees of joint ventures and associates were presented as part of Direct employees. The 2021 figures have been restated to reflect the new definition. The 2020 figures were not updated for practical reasons.
12
Aegon has set a target to reduce the absolute carbon footprint of its operational activities (GHG Emissions Scope 1 and 2) by 25% by 2025, against a 2019 baseline of 41,797 metric tons CO
2
e. (using the location-based measurement). Hybrid working continues to facilitate a reduction in the overall emissions of property portfolio with initiatives such as closing our offices on Fridays in the UK and US locations. Our hybrid working model continues to mature with resulting benefits on the size and cost of our operational properties, and achieving our carbon reduction target. The indicator “Absolute reduction against baseline” includes GHG Emissions Scope 1 and 2 only. The 2021 figure incorrectly included air travel emissions, which has been restated as 19,874 (2021: 28,512). The 2021 figure for “Relative reduction of scope 1+2 against baseline 2019 (%)” has also been restated as 48% (2021: 54%).
13
Aegon will look towards expanding the measurement of its operational Scope 3 GHG emissions beyond air travel.
14
Policy compliance reflects business units’ compliance with specific requirements of those policies. Where there is not full compliance, this does not indicate a breach of the policy, but areas where units have requested time to further strengthen internal governance.
15
Aegon undertakes an annual systematic integrity risk assessment (SIRA). All regions provide insight into their local anti-fraud programs and indicate that controls with regard to internal, external, and intermediary fraud are properly designed and operating effectively. Aegon takes steps to address any gaps in performance.
16

Political contributions may include direct financial or

in-kind
support provided directly to political parties, their elected representatives, or persons seeking political office. It may also include indirect political contributions referring to those political contributions made through an intermediary organization such as a lobbyist or charity, or support givenmade to an organization such as a think tank or trade association that is linked to or supportingsupports particular political parties or causes. The contribution in 2022 consists of the contributions by Transamerica’s Political Action Committee (PAC), which is a committee acting independently from Aegon or Transamerica. The PAC receives voluntary donations from Transamerica employees and distributes the pooled donations according to the decision of the independent board of the PAC.

1711

Political lobbying / advocacy refers to the expenses paid for activities carried out towardswith governments, governmental institutions, and/or regulators in support of issues and initiatives that we thinkAegon thinks will benefit ourits customers, employees, wider society at large, and ourits businesses. The expenses paid in 2022 mainly reflect the cost of staffingpersonnel dedicated to lobbying or advocacy activities.

1812
A membership

Membership of professional / advocacy associationlobbying associations refers to an agreement by which someone joins a professional association or an advocacy association. Hereby aA professional association is defined here as a body of persons engaged in the same profession, usually formed usually, to maintain standards and represent the profession in discussions with other bodies or institutions. An advocacy association engages in advocacy foron behalf of the industry towardsprofession with other bodies, institutions, or policymakers, although advocacy may not be the only type of activity that the association undertakes.

1913
Direct employees and eligible contingent workers who are enrolled in Information security training at least annually which covers relevant Information security topics based on risk assessments, best practices and appropriate behaviors. Eligible contingent workers are contractors with an (Active Directory) Aegon or Transamerica account and selected for the training. The selection is performed at the discretion of each business unit.
20
Enterprise wide phishing campaigns are executed on a quarterly basis to all direct employees and all contingent workers with an
e-mail
account on the Aegon or Transamerica network. In addition, targeted campaigns are executed periodically with a subset of users based on a common risk profile (e.g., Human Resources).
21
Direct employees and eligible contingent workers who are enrolled in an annual data privacy training. The training modules are different per region to address specific local legislations. The focus in Europe is on GDPR. Eligible contingent workers are contractors with an (Active Directory) Aegon or Transamerica account and selected for the training. The selection is performed at the discretion of each business unit.
22
The information in the tax table includes the tax data of all entities over which Aegon has management control including the tax data of divested business until the date of closing. For corporate income tax, there is often no direct correlation between tax reported on earnings for any given year and amounts paid or received in tax. Part of the explanation for this is that certain
tax-deductible
items are not recognized in the company’s profit & loss statement but directly in equity. Additionally payments and refunds for prior years can impact the amounts paid or received in the current year. There is no 2022 US current tax liability due to current year losses, carry back of capital losses, and tax credits.
23

Cash donations refer to charitable donations to charities and other

non-profit
organizations, done in accordance with the Aegon N.V.Ltd. Charitable Donations Standards.

2414
Volunteering

The value of volunteering is calculated usingas the number of hours multiplied by the average hourly employee cost (basedsalary (= salary costs/total hours worked by direct employees). The total number of working days in the reported period includes all working days, excluding weekends and national holidays.

15

Our top 250 suppliers consistently represent at least 80% of our total supplier spend. The proportion of total spend on total employment costs).goods and services with the top 250 (“in-scope”) suppliers is based on actual invoice payments and does not take into account accruals. As a result, the denominator “Total spend on goods and services (in EUR billions)” could not be reconciled to the expenses in the financial statements.

16

Suppliers are assessed using the EcoVadis methodology, which aims to measure the quality of a company’s sustainability management system through its policies and actions. Suppliers are assigned to different scoring buckets based on the EcoVadis scoring methodology, which takes into account criteria relating to environmental protection, labor and human rights, business ethics, and sustainable procurement. The higher the score, the better the sustainability performance of the supplier. The scoring ranges were updated in 2023 and aligned with the EcoVadis methodology. Suppliers are now ranked over five buckets instead of four last year. The 2022 scores were adjusted for this change to make comparison possible. The spend data that is used to calculate the indicators for the supplier ESG assessment includes four quarters of data and covers the period October 1, 2022 to September 30, 2023.

17

Includes in-scope Financial, Underwriting and Operational risk management policies where ESG risk considerations have been integrated. In-scope policies are those policies where ESG integration was planned.

 

446  |  Aegon Annual Report on Form 20-F 20222023  |  507 

Table of Contents
LOGO		 
External recognition            
About Aegon  Governance and risk management  Financial information  Sustainability information
   
   

External recognition

At Aegon,

As part of our sustainability approach, we actively participate in high-profile sustainability performance ratings, indices, and benchmarks to provide independent recognition and transparency around the integration of sustainability considerations into our business operations. We also engage proactively with business information platforms incorporating assessments of sustainability performance, including BloombergFor the MSCI, Morningstar

Sustainalytics, and Refinitiv.

Improvement inISS ratings, our scoring overambition is to be among the course of 2022 shows, in part, the positive impacttop performance quartile of our current sustainability focus and related commitments. peers.

As these assessments are conducted throughout the year, we regularly update our latest scoring and peer positioning through the dedicated

“External recognition”
“Ratings” page on the Aegon website.website.

MSCI:
In its February 2023 update, Aegon N.V. continued to receive a rating of AA (on a scale of
AAA-CCC)
in the MSCI ESG Ratings assessment.
1
Sustainalytics:
In its January 2023 update, Aegon N.V. received an improved ESG Risk Rating of 14.2 and was assessed by Sustainalytics to be at “low risk” of experiencing material financial impacts from ESG factors. Aegon N.V.’s rating places it in the fifth percentile in the insurance industry assessed by Sustainalytics.
2
ISS:
As of February 2023, Aegon N.V. continued to receive an ESG Corporate Rating of C+ (Prime) from ISS, a provider of
end-to-end
responsible investment and governance solutions to the global financial community.
3
Aegon N.V. was also recognized as an industry peer group leader, being among the highest ranked by ISS for “Governance” as part of the ESG Corporate Rating.
3
FTSE4Good:
In June 2022, Aegon N.V. was
re-confirmed
as a constituent company in the FTSE4Good Index Series, designed to identify companies that demonstrate strong environmental, social, and governance practices measured against globally recognized standards.
4
Moody’s ESG Solutions:
In its January 2022 update, Aegon N.V. continued to receive an “ESG overall score” rating of “robust”.
5
CDP:
We participate in the annual CDP Climate Change disclosure, where we publish performance data, policies, and practices related to the impacts and opportunities related to climate change in the context of our business activities. We maintained a rating of “C” for our 2021 reporting year disclosure.
6
EcoVadis:
Aegon N.V. has completed its first assessment of sustainability performance with EcoVadis and in January 2023 was awarded a silver medal. Aegon N.V.’s award places it in the top 25% of companies assessed by EcoVadis.
7
 

LOGO

    unit   2023   2022   % 

Sustainability benchmarks1)

     

MSCI ESG rating2)

   AAA to CCC   AA (Leader)   AA (Leader)   Stable 

Morningstar Sustainalytics ESG Risk Rating3)

   0 to 100   15.3 (Low Risk)   14.2 (Low Risk)      (1.1 points) 

ISS ESG corporate rating4)

   A+ to D-   C+ (Prime)   C+ (Prime)   Stable 

S&P Global CSA score5)

   0 to 100   56 (Top Quartile)   55   1pp 

Moody’s overall ESG score6)

   0 to 100   57   59   (2pp) 

LSEG ESG score7)

   A+ to D-   A (88)   A (86)   2pp 

FTSE4Good index series constituent8)

   Index Member   Index Member   Index Member   Stable 

Bloomberg ESG Performance score9)

   0 to 10   5.6 (Leading)   4.2 (Leading)   1.4 points 

Bloomberg ESG Disclosure score9)

   0 to 100   56   53   3pp 

CDP (Climate change) score10)

   A to D-   C   C   Stable 

EcoVadis scorecard11)

   0 to 100    62 (Top Quartile)   61 (Top Quartile)   1pp 

1 

Sustainability benchmark scoring reflects the most recent assessments made available to Aegon for any given year. There is a lag time between Aegon’s annual reporting and the assessment of that by a benchmark (scores presented under the 2023 reporting year refer to Aegon’s 2022 financial year unless otherwise stated).

2

As of MSCI’s last report update of January 30 2024, Aegon received an MSCI ESG Rating of AA. The use by Aegon of any MSCI ESG research LLC or its affiliates (“MSCI”) data, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship, endorsement, recommendation, or promotion of Aegon by MSCI. MSCI services and data are the property of MSCI or its information providers, and are provided ‘as-is’ and without warranty. MSCI names and logos are trademarks or service marks of MSCI. ©

2023 2024 MSCI Inc. All rights reserved.
www.msci.com/our-solutions/esg-investing/esg-ratings-climate-search-tool

23 

In June 2023, Aegon received an ESG Risk Rating of 15.3 and was assessed by Morningstar Sustainalytics to be at low risk of experiencing material financial impacts from ESG factors. In no event the rating shall be construed as investment advice or expert opinion as defined by the applicable legislation. Risk categories defined by scoring, from ‘Negligible’ (0) to ‘Severe’ (>40). Copyright ©

2023 2024 Morningstar Sustainalytics. All rights reserved. This publication contains information has been developed by Sustainalytics (www.sustainalytics.com). Such information and data are proprietary of Sustainalytics and/or its third partythird-party suppliers (Third Party Data)(third-party data) and are provided for informational purposes only. They do not constitute an endorsement of any product or project, nor an investment advice and are not warranted to be complete, timely, accurate or suitable for a particular purpose. Their use is subject to conditions available at
www.sustainalytics.com/legal-disclaimers
https://www. sustainalytics.com/legal-disclaimers.

34 

©

2023 2024 Institutional Shareholder ServicesServices.

5

As of 2023 Aegon is placed at 78th percentile (i.e. top quartile) in the ‘INS Insurance’ industry group. © 2024 S&P Global Inc. All rights reserved.

www.issgovernance.com/esg/ratings/corporate-rating/

46 

Sector-Zone Average Score: 47 (compared to Aegon’s score of 57). ©

2024 Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their affiliates and licensors. All rights reserved.

7

Formerly reported as “Refinitiv ESG Score”. Aegon is ranked 4/348 Insurance Companies. Scoring refreshed weekly by LSEG and potentially subject to change (2023 score and rank referenced on 18/01/2024). © 2024 LSEG. All rights reserved. LSEG ESG Information is proprietary to LSEG Limited and/or its affiliates (“LSEG”).

8

As of June 2023 FTSE Russell

www.ftserussell.com/products/ certified Aegon as a constituent company in the FTSE4Good Index Series. © 2024 FTSE Russell https://www.lseg.com/en/ ftse-russell/indices/ftse4good

59 
©
2023 MOODY’S CORPORATION, MOODY’S INVESTORS SERVICE, INC., MOODY’S ANALYTICS, INC., FOUR TWENTY SEVEN, INC. (“FOUR TWENTY SEVEN”), VIGEO SAS (“V.E”) AND/OR THEIR LICENSORS AND AFFILIATES (COLLECTIVELY, “MOODY’S”)

Scoring refreshed periodically by Bloomberg and potentially subject to change (2023 and 2022 scores referenced on 19/01/2024). ALL RIGHTS RESERVED.

www.moodys.com/esg-solutions
© 2024 Bloomberg Finance L.P. All rights reserved.

610 

©

2023 2024 CDP Europe AISBL
www.cdp.net/en
Worldwide.

711 
©

While our performance has held steady, EcoVadis 2023have changed the scoring criteria for medal awards, requiring higher percentile rankings for each medal category (moving the qualifying ‘SIlver’ medal ranking up from 75th to 85th percentile). As a result, Aegon has been awarded a ‘Bronze’ medal following its latest re-assessment. © EcoVadis 2024 - All rights reserved.

www.ecovadis.com

 508  |  Annual Report on Form 20-F 2023

Disclaimer 

   Aegon Annual Report on Form 20-F 2022  |  447
Table of Contents
    About Aegon    Governance and risk management    Financial information
Non-financial information
  
 





Disclaimer

Disclaimer

Cautionary note regarding

non-IFRS
measures

This document includes the following

non-IFRS
financial measure:measures: operating result and addressable expenses. The reconciliation of operating result to the most comparable IFRS measure is presented in note 5 ‘Segment information’ of the consolidated financial statements. Operating result isThese non-IFRS measures, except for addressable expenses, are calculated by consolidating on a proportionate basis the revenues and expenses of Aegon’s joint ventures in Brazil, China, India,and associated companies (excluding a.s.r.). Operating result reflects Aegon’s result from underlying business operations and excludes components that relate to accounting mismatches that are dependent on market volatility or relate to events that are considered outside the Netherlands, Portugal and Spain and Aegon’s associates in France, the Netherlands and United Kingdom. The information on the following tables also includes the
non-IFRS
financial measure operating result after tax. This is the
after-tax
equivalentnormal course of operating result. The reconciliation of addressable expenses to operating expenses, the most comparable IFRS measure, is presented in Results of Operations.business. Operating expenses are all expenses associated with selling and administrative activities (excluding commissions). This includes certain expenses recorded in other charges for segment reporting, including restructuring charges. Addressable expenses are calculated by excluding the following items from operating expenses: direct variable acquisition expenses, restructuring expenses (including expenses related to the operational improvement plan), expenses in joint ventures and associates and expenses related to acquisitions and disposals. Addressable expenses are reported on a constant currency basis. Aegon believes that these
non-IFRS
measures, together with the IFRS 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.

Currency exchange rates

This document contains certain information about

Aegon’s results, financial condition and revenue generating investments presented in USD for the Americas and Asia, and in GBP for the United Kingdom, because those businesses operate and are managed primarily in those currencies. Certain comparative information presented on a constant currency basis eliminates the effects of changes in currency exchange rates. None of this information is a substitute for or superior to financial information about Aegon presented in EUR, which is the currency of Aegon’s primary financial statements.

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 may contain information about financial prospects, economic conditions and trends and involve risks and uncertainties. In addition, any statements that refer to our sustainability, environmental and social targets, commitments, goals, efforts and expectations and other events or circumstances that are partially dependent on future events are forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Aegon undertakes no obligation, and expressly disclaims any duty, 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 and adversely 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:

Unexpected delays, difficulties, and expenses in executing against Aegon’s environmental, climate, diversity and inclusion or other “ESG” targets, goals and commitments, and changes in laws or regulations affecting us, such as changes in data privacy, environmental, safety and health laws;
Changes in general economic and/or governmental conditions, particularly in Bermuda, the United States, the Netherlands and the United Kingdom;
¨
Unexpected delays, difficulties, and expenses in executing against our environmental, climate, diversity and inclusion or other “ESG” targets, goals and commitments outlined in this document, and changes in laws or regulations affecting us, such as changes in data privacy, environmental, safety and health laws;
¨
Changes in general economic and/or governmental conditions, particularly in the United States, the Netherlands and the United Kingdom;
¨
•		 Civil unrest,
(geo-)
political tensions, military action or other instability in a country or geographic region;
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;
The effects of declining creditworthiness of certain public sector securities and the resulting decline in the value of government exposure that Aegon holds;
The impact from volatility in credit, equity, and interest rates;
Changes in the performance of Aegon’s investment portfolio and decline in ratings of Aegon’s counterparties;

¨
 Changes in the performance of financial markets, including emerging markets, such as with regard to:Annual Report on Form 20-F 2023  |  509 

LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information
 
t
 The frequency and severity of defaults by issuers in Aegon’s fixed income investment portfolios;
 

t
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;
t
The effects of declining creditworthiness of certain public sector securities and the resulting decline in the value of government exposure that Aegon holds; and
t
The impact from volatility in credit, equity, and interest rates;
¨
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;

448  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
Disclaimer            
¨

•  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 applicable Bermuda solvency requirements, the European Union’s Solvency II requirements, and applicable equivalent solvency requirements and other regulations in other jurisdictions affecting the capital Aegon is required to maintain;

¨

•  Changes in the European Commissions’ or European regulator’s position on the equivalence of the supervisory regime for insurance and reinsurance undertakings in force in Bermuda;

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

¨

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

¨

•  Changes affecting inflation levels, particularly in the United States, the Netherlands and the United Kingdom;

¨

•  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, particularly 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;

¨

 

•  Third-party information used by us may prove to be inaccurate and change over time as methodologies and data availability and quality continue to evolve impacting our results and disclosures;

¨

•  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 doAegon does 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 complete, or obtain regulatory approval for, acquisitions and divestitures, integrate acquisitions, and realize anticipated results, and its ability to separate businesses as part of divestitures;

¨

•  Aegon’s failure to achieve anticipated levels of earnings or operational efficiencies, as well as other management initiatives related to cost savings, Cash Capital at Holding, gross financial leverage and free cash flow;

¨

•  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 unionMonetary Union in whole or in part, or further consequences of 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, or the interpretation thereof by regulators and courts, including as a result of comprehensive reform or shifts away from multilateral approaches to regulation of global or national operations, particularly regarding those laws and regulations related to ESG matters, 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;

 510  |  Annual Report on Form 20-F 2023

Disclaimer 

¨
• 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);
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;
¨
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; and
¨
•		 Changes in ESG standards and requirements, including assumptions, methodology and materiality, or a change by Aegon in applying such standards and requirements, voluntarily or otherwise, may affect Aegon’s ability to meet evolving standards and requirements, or Aegon’s ability to meet its sustainability and
ESG-related
goals, or related public expectations.expectations, which may also negatively affect Aegon’s reputation or the reputation of its board of directors or its management; and
Reliance on third-party information in certain of Aegon’s disclosures, which may change over time as methodologies and data availability and quality continue to evolve. These factors, as well as any inaccuracies in third-party information used by Aegon, including in estimates or assumptions, may cause results to differ materially and adversely from statements, estimates, and beliefs made by Aegon or third-parties. Moreover, Aegon’s disclosures based on any standards may change due to revisions in framework requirements, availability of information, changes in its business or applicable governmental policies, or other factors, some of which may be beyond Aegon’s control. Additionally, Aegon may provide information that is not necessarily material for SEC reporting purposes but that is informed by various ESG standards and frameworks (including standards for the measurement of underlying data), internal controls, and assumptions or third-party information that are still evolving and subject to change.
 

 

Annual Report on Form 20-F 2023  |  511 

LOGOAbout Aegon  Governance and risk management  Financial information  Sustainability information
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Table of Contents
    About Aegon    Governance and risk management    Financial information
Non-financial information
  
 





¨
We may also rely on third-party information in certain of our disclosures, which may change over time as methodologies and data availability and quality continue to evolve. These factors, as well as any inaccuracies in third-party information we use, including in estimates or assumptions, may cause results to differ materially and adversely from statements, estimates, and beliefs made by us or third-parties. Moreover, our disclosures based on any standards may change due to revisions in framework requirements, availability of information, changes in our business or applicable governmental policies, or other factors, some of which may be beyond our control. Additionally, we may provide information that is not necessarily material for SEC reporting purposes but that is informed by various ESG standards and frameworks (including standards for the measurement of underlying data), internal controls, and assumptions or third-party information that are still evolving and subject to change.
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.
450  |  Aegon Annual Report on Form 20-F 2022
Table of Contents
Contact            

Contact

Head office

Aegon N.V.

Ltd.

Aegonplein 50

2591 TV The Hague

The Netherlands

Telephone: +31 (0) 70 344 32 10

www.aegon.com

Investor relations

Telephone: +31 (0) 70 344 83 05

E-mail:

ir@aegon.com

Media relations

Telephone: +31 (0) 70 344 89 56

E-mail:

gcc@aegon.com

Agent for service in the United States of America

Andrew S. Williams

Telephone: +1 443 475 3243

E-mail:

Andrew.S.Williams@transamerica.com

Colophon
 
Consultancy and design DartGroup, Amsterdam (NL)APS Group, UK
Editing and production Aegon Corporate Communications (NL)
Typesetting DartGroup,DartDesign, Amsterdam (NL)

 

 512  |  Annual Report on Form 20-F 2023

Documents on display 

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Table of Contents
    About Aegon    Governance and risk management    Financial information
Non-financial information
  
 





Documents on display

Aegon’s SEC filings are available on the SEC’s website at http://www.sec.gov. The SEC’s website contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The information on that website is not part of this report.

Aegon also make available on the Investors section of Aegon’s website, free of charge, Aegon’s annual reports on Form

20-F
and the text of our reports on Form
6-K,
including any amendments to these reports, as well as certain other SEC filings, as soon as reasonably practicable after these reports are electronically filed with or furnished to the SEC. Aegon’s website address is www.aegon.com. The information on that website is not part of this report.

Aegon announce material financial information to Aegon’s investors using Aegon’s Investors website (aegon.com/investors/), SEC filings, press releases, public conference calls, and webcasts.

Aegon use these channels, as well as social media, to communicate with the users and the public about Aegon’s company, Aegon’s businesses, and other issues. It is possible that the information Aegon post on these channels could be deemed to be material information. Therefore, Aegon encourage investors, the media, and others interested in Aegon to review the information Aegon posts on the channels listed on Aegon’s Investors website. Information contained on Aegon’s website is not part of this annual report on Form

20-F
or any other filings Aegon makes with the SEC.

 

452  |  Aegon Annual Report on Form 20-F 20222023  |  513 

Table of Contents
LOGO		 
Index to Exhibits            
About Aegon  Governance and risk management  Financial information  Sustainability information
  
 

Exhibits

Index to Exhibits
1

1.1

 
ArticlesCompany’s Memorandum of Association. (1)Continuance

1.2

Bye-Laws

2.1

 Any instruments defining the rights of long-term debt holders. None of our instruments relating to long-term debt has total amount of securities authorized thereunder that exceed 10% of our consolidated total assets. Pursuant to the requirement of this item, we agree to furnish to the SEC upon request a copy of any instrument defining the rights of holders of long-term debt of us or of our subsidiaries for which consolidated or unconsolidated financial statements are required to be filed.

2.2

 
Description of securities. (2)

4.1

 
1983 Amended Merger Agreement. (3)(1)

4.2

 
Voting Rights Agreement. (4)(2)

4.3*

 
Transamerica 401(k) Retirement Savings Plan. (5)(3)

4.4***

 
Business Combination Agreement (BCA); Agreement between Aegon Europe Holding B.V. and Aegon N.V. and ASR Nederland N.V., dated October 26, 2022, relating to the combination of ASR Nederland N.V. and Aegon Nederland N.V.

8

 
List of Subsidiaries of Aegon N.V.Ltd. - Incorporation by reference to note 49Note 43 of this Annual Report.

12.1

 
Certification of the Chief Executive Officer pursuant to Rule 13A-14 or 15D-14 of the Securities Exchange Act of 1934.

12.2

 
Certification of the Chief Financial Officer pursuant to Rule 13A-14 or 15D-14 of the Securities Exchange Act of 1934.

13**

 
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

15

 
Consent of independent registered public accounting firm.

97

Extended clawback policy

101.INS

 XBRL Instance Document

101.SCH

 XBRL Taxonomy Schema Linkbase Document

101.CAL

 XBRL Taxonomy Calculation Linkbase Document

101.DEF

 XBRL Taxonomy Definition Linkbase Document

101.LAB

 XBRL Taxonomy Labels Linkbase Document

101.PRE

 XBRL Taxonomy Presentation Linkbase Document

104.

 Cover pagePage Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

(1)
(1) Incorporated by reference to Form 6K
(0001104659-13-046533)
filed with the SEC on June 4, 2013.
(2) Incorporated by reference to Exhibit 2.2 to Form
20-F
2021 filed with the SEC on March 21, 2022.
(3) 

Incorporated by reference to Exhibit 4.1 to Form

20-F
2013 filed with the SEC on March 21, 2014.

(2)
(4) 

Incorporated by reference to Exhibit 4.2 to Form

20-F
2013 filed with the SEC on March 21, 2014.

(3)
(5) 

Incorporated by reference to Exhibit 99.1 to Registration Statement on Form

S-8
(No.
(No. 333-238186)
filed with the SEC on May 12, 2020.

*
*

Indicates management contract or compensatory plan.

**

Furnished herewith.

***

Certain information in this agreement and its schedules has been omitted in accordance with the instructions as to Exhibits of Form

20-F,
but will be furnished supplementary to the SEC upon request.

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Signatures 

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    About Aegon    Governance and risk management    Financial information
Non-financial information
  
 





Signatures

The registrant hereby certifies that it meets all of the requirements for filing on Form

20-F
and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
Aegon N.V.
/s/ Matthew J. Rider

Aegon Ltd.
/s/ Matthew J. Rider

Matthew J. Rider
Chief Financial Officer
Date: April 3, 2024

 
Date: March 22, 2023
454  |  Aegon Annual Report on Form 20-F 20222023  |  515 

aegon.comLOGO