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Securities and Exchange Commission
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d/16 of
the Securities Exchange Act of 1934
May 2021
AEGON N.V.
Aegonplein 50
2591 TV THE HAGUE
The Netherlands
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Aegon’s condensed consolidated interim financial statements 1Q 2021, dated May 12, 2021, are included as appendix and incorporated herein by reference.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AEGON N.V. | ||||||
(Registrant) | ||||||
Date: May 12, 2021 | By | /s/ J.H.P.M. van Rossum | ||||
J.H.P.M. van Rossum | ||||||
Executive Vice President and Head of Corporate Financial Center |
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Condensed consolidated interim financial statements 1Q 2021 Results 1
2 | ||||
3 | ||||
4 | ||||
5 | ||||
6 | ||||
Notes to the Condensed consolidated interim financial statements | 7 |
Unaudited |
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2 Condensed consolidated interim financial statements 1Q 2021 Results
| ||||||||||||
EUR millions | Notes | 1Q 2021 | 1Q 2020 | |||||||||
Premium income | 4 | 3,958 | 4,846 | |||||||||
Investment income | 5 | 2,093 | 2,247 | |||||||||
Fee and commission income | 674 | 585 | ||||||||||
Other revenues | - | 1 | ||||||||||
Total revenues | 6,725 | 7,679 | ||||||||||
Income from reinsurance ceded | 920 | 930 | ||||||||||
Results from financial transactions | 6 | 1,886 | (29,037 | ) | ||||||||
Other income | 41 | 54 | ||||||||||
Total income | 9,573 | (20,373 | ) | |||||||||
Benefits and expenses | 7 | 9,066 | (22,119 | ) | ||||||||
Impairment charges / (reversals) | 8 | 13 | 94 | |||||||||
Interest charges and related fees | 84 | 118 | ||||||||||
Other charges | 5 | 86 | ||||||||||
Total charges | 9,167 | (21,820 | ) | |||||||||
Share in profit / (loss) of joint ventures | 67 | 65 | ||||||||||
Share in profit / (loss) of associates | (15 | ) | 2 | |||||||||
Income / (loss) before tax | 458 | 1,514 | ||||||||||
Income tax (expense) / benefit | 9 | (72 | ) | (243 | ) | |||||||
Net income / (loss) | 386 | 1,270 | ||||||||||
Net income / (loss) attributable to: | ||||||||||||
Owners of Aegon N.V. | 383 | 1,270 | ||||||||||
Non-controlling interests | 3 | - | ||||||||||
Earnings per share (EUR per share) | 13 | |||||||||||
Basic earnings per common share | 0.18 | 0.61 | ||||||||||
Basic earnings per common share B | - | 0.02 | ||||||||||
Diluted earnings per common share | 0.18 | 0.61 | ||||||||||
Diluted earnings per common share B | - | 0.02 |
Unaudited |
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Condensed consolidated interim financial statements 1Q 2021 Results 3
| ||||||||||||
EUR millions | Notes | 1Q 2021 | 1Q 2020 | |||||||||
Net result | 386 | 1,270 | ||||||||||
Other comprehensive income: | ||||||||||||
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 | 489 | 588 | ||||||||||
Income tax relating to items that will not be reclassified | (117 | ) | (109 | ) | ||||||||
Items that may be reclassified subsequently to profit or loss: | ||||||||||||
Gains / (losses) on revaluation of available-for-sale investments | (2,576 | ) | (1,509 | ) | ||||||||
Gains / (losses) transferred to the income statement on disposal and impairment of available-for-sale investments | (62 | ) | 19 | |||||||||
Changes in cash flow hedging reserve | (138 | ) | 667 | |||||||||
Movement in foreign currency translation and net foreign investment hedging reserve | 645 | 234 | ||||||||||
Equity movements of joint ventures | (2 | ) | 13 | |||||||||
Equity movements of associates | (3 | ) | 3 | |||||||||
Disposal of group assets | 6 | (9 | ) | |||||||||
Income tax relating to items that may be reclassified | 593 | 162 | ||||||||||
Other | 13 | 1 | ||||||||||
Total other comprehensive income / (loss) for the period | (1,152 | ) | 59 | |||||||||
Total comprehensive income / (loss) | (765 | ) | 1,329 | |||||||||
Total comprehensive income / (loss) attributable to: | ||||||||||||
Owners of Aegon N.V. | (772 | ) | 1,329 | |||||||||
Non-controlling interests | 7 | - |
Unaudited |
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4 Condensed consolidated interim financial statements 1Q 2021 Results
| ||||||||||||
| March 31, 2021 |
| | December 31, 2020 |
| |||||||
EUR millions | Notes | |||||||||||
Assets | ||||||||||||
Cash and cash equivalents | 7,247 | 8,372 | ||||||||||
Investments | 10 | 154,740 | 157,595 | |||||||||
Investments for account of policyholders | 11 | 233,761 | 224,172 | |||||||||
Derivatives | 11,465 | 13,986 | ||||||||||
Investments in joint ventures | 1,456 | 1,376 | ||||||||||
Investments in associates | 1,240 | 1,264 | ||||||||||
Reinsurance assets | 19,765 | 18,910 | ||||||||||
Deferred expenses | 9,927 | 8,799 | ||||||||||
Other assets and receivables | 9,623 | 9,009 | ||||||||||
Intangible assets | 1,457 | 1,386 | ||||||||||
Total assets | 450,681 | 444,868 | ||||||||||
Equity and liabilities | ||||||||||||
Shareholders’ equity | 22,035 | 22,815 | ||||||||||
Other equity instruments | 2,574 | 2,569 | ||||||||||
Issued capital and reserves attributable to owners of Aegon N.V. | 24,609 | 25,384 | ||||||||||
Non-controlling interests | 82 | 75 | ||||||||||
Group equity | 24,691 | 25,459 | ||||||||||
Subordinated borrowings | 2,143 | 2,085 | ||||||||||
Trust pass-through securities | 126 | 126 | ||||||||||
Insurance contracts | 121,404 | 122,146 | ||||||||||
Insurance contracts for account of policyholders | 140,537 | 135,441 | ||||||||||
Investment contracts | 22,201 | 21,075 | ||||||||||
Investment contracts for account of policyholders | 96,164 | 91,624 | ||||||||||
Derivatives | 14,004 | 14,617 | ||||||||||
Borrowings | 14 | 8,892 | 8,524 | |||||||||
Other liabilities | 20,519 | 23,771 | ||||||||||
Total liabilities | 425,990 | 419,410 | ||||||||||
Total equity and liabilities | 450,681 | 444,868 |
Unaudited |
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Condensed consolidated interim financial statements 1Q 2021 Results 5
1 For a breakdown of share capital please refer to note 13.
2 Issued capital and reserves attributable to owners of Aegon N.V.
Unaudited |
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6 Condensed consolidated interim financial statements 1Q 2021 Results
EUR millions | 1Q 2021 | 1Q 2020 | ||||||
Result before tax | 458 | 1,514 | ||||||
Results from financial transactions | (2,490 | ) | 28,991 | |||||
Amortization and depreciation | 274 | (64 | ) | |||||
Impairment losses | 11 | 90 | ||||||
Income from joint ventures | (67 | ) | (65 | ) | ||||
Income from associates | 15 | (2 | ) | |||||
Release of cash flow hedging reserve | (24 | ) | (30 | ) | ||||
Other | 3 | (25 | ) | |||||
Adjustments of non-cash items | (2,278 | ) | 28,896 | |||||
Insurance and investment liabilities | (1,387 | ) | 1,959 | |||||
Insurance and investment liabilities for account of policyholders | 2,287 | (33,363 | ) | |||||
Accrued expenses and other liabilities | (492 | ) | 926 | |||||
Accrued income and prepayments | (109 | ) | 405 | |||||
Changes in accruals | 298 | (30,072 | ) | |||||
Purchase of investments (other than money market investments) | (10,683 | ) | (12,437 | ) | ||||
Purchase of derivatives | (253 | ) | 822 | |||||
Disposal of investments (other than money market investments) | 12,091 | 8,193 | ||||||
Disposal of derivatives | (217 | ) | 1,926 | |||||
Net purchase of investments for account of policyholders | 2,398 | 2,237 | ||||||
Net change in cash collateral | (2,813 | ) | 4,461 | |||||
Net purchase of money market investments | (502 | ) | (3,746 | ) | ||||
Cash flow movements on operating items not reflected in income | 21 | 1,455 | ||||||
Tax received / (paid) | 37 | (25 | ) | |||||
Other | (8 | ) | (3 | ) | ||||
Net cash flows from operating activities | (1,473 | ) | 1,764 | |||||
Purchase of individual intangible assets (other than VOBA and future servicing rights) | (9 | ) | (9 | ) | ||||
Purchase of equipment and real estate for own use | (10 | ) | (9 | ) | ||||
Acquisition of subsidiaries, net of cash | - | (14 | ) | |||||
Acquisition joint ventures and associates | (9 | ) | (13 | ) | ||||
Disposal of equipment | - | 1 | ||||||
Disposal of subsidiaries, net of cash | 57 | (1 | ) | |||||
Disposal joint ventures and associates | - | 156 | ||||||
Dividend received from joint ventures and associates | 9 | 10 | ||||||
Net cash flows from investing activities | 38 | 122 | ||||||
Proceeds from TRUPS1, subordinated loans and borrowings | 680 | 733 | ||||||
Repayment of TRUPS1, subordinated loans and borrowings | (438 | ) | (1,382 | ) | ||||
Coupons on perpetual securities | (12 | ) | (13 | ) | ||||
Payment of Right-of-use Assets | (14 | ) | (15 | ) | ||||
Net cash flows from financing activities | 215 | (677 | ) | |||||
Net increase / (decrease) in cash and cash equivalents 2 | (1,220 | ) | 1,208 | |||||
Net cash and cash equivalents at the beginning of the reporting period | 8,372 | 12,263 | ||||||
Effects of changes in exchange rate | 57 | - | ||||||
Net cash and cash equivalents at the end of the reporting period | 7,209 | 13,472 |
1 Trust pass-through securities
2 Included in net increase / (decrease) in cash and cash equivalents are interest received EUR 1,451 million (2020: EUR 1,223 million) dividends received EUR 756 million (2020: EUR 806 million) and interest paid EUR 9 million (2020: EUR 76 million). All included in operating activities except for dividend received from joint ventures and associates EUR 9 million (2020: EUR 10 million).
Unaudited |
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Condensed consolidated interim financial statements 1Q 2021 Results 7
Notes to the Condensed consolidated interim financial statements
Amounts in EUR millions, unless otherwise stated
Aegon N.V., incorporated and domiciled in the Netherlands, is a public limited liability company organized under Dutch law and recorded in the Commercial Register of The Hague under number 27076669 and with its registered address at Aegonplein 50, 2591 TV, The Hague, the Netherlands. Aegon N.V. serves as the holding company for the Aegon Group and has listings of its common shares in Amsterdam and New York.
Aegon N.V. (or ‘the Company’) and its subsidiaries (collectively, ‘Aegon’ or ‘the Group’) have life insurance and pensions operations in more than 20 countries in the Americas, Europe and Asia and are also active in savings and asset management operations, accident and health insurance, general insurance and - to a limited extent - banking operations. Headquarters are located in The Hague, the Netherlands. The Group employs over 22,000 people worldwide.
1. Basis of presentation
The condensed consolidated interim financial statements as at, and for the three-month period ended, March 31, 2021 (‘first quarter 2021’ or ‘1Q 2021’), have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’, as adopted by the European Union (hereafter ‘IFRS-EU’). They do not include all of the information required for a full set of financial statements prepared in accordance with IFRS-EU and should therefore be read together with the 2020 consolidated financial statements of Aegon N.V. as included in Aegon’s Integrated Annual Report for 2020. Aegon’s Integrated Annual Report for 2020 is available on its website (aegon.com).
The condensed consolidated interim financial statements have been prepared in accordance with the historical cost convention as modified by the revaluation of investment properties and those financial instruments (including derivatives) and financial liabilities that have been measured at fair value. The condensed consolidated interim financial statements as at, and for the three-month period ended, March 31, 2021, were approved by the Supervisory Board on May 11, 2021.
The condensed consolidated interim financial statements are presented in euro (EUR) and all values are rounded to the nearest million unless otherwise stated. The consequence is that the rounded amounts may not add up to the rounded total in all cases.
The published figures in these condensed consolidated interim financial statements are unaudited.
2. Significant accounting policies
All accounting policies and methods of computation applied in the condensed consolidated interim financial statements are the same as those applied in the 2020 consolidated financial statements. New IFRS accounting standards and amendments that became effective per January 1, 2021 had no impact on Aegon’s financial position or condensed consolidated interim financial statements (refer to paragraph 2.1).
2.1. New IFRS accounting standards effective from 2021
In August 2020, the IASB issued the ‘Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)’. The Phase 2 amendments provide temporary reliefs which address issues that might affect financial reporting during the interest rate benchmark reform, including the effects of changes to contractual cash flows or hedging relationships arising from the replacement of an interest rate benchmark with an alternative benchmark rate. The Phase 2 amendments became effective in 2021 and have been endorsed by the European Union.
The Phase 2 amendments had no impact on Aegon’s financial position or condensed consolidated interim financial statements. Aegon continues to follow the developments of interest rate benchmark reform and intends to use the Phase 2 reliefs when applicable.
Unaudited |
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8 Condensed consolidated interim financial statements 1Q 2021 Results
2.2. Future adoption of new IFRS-EU accounting standards and amendments
For a complete overview of IFRS standards and amendments issued before January 1, 2021, which will be applied in future years and were not early adopted by the Group, please refer to Aegon’s Integrated Annual Report for 2020.
In February 2021, the IASB issued the following amendments:
t | Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2); and |
t | Definition of Accounting Estimates (Amendments to IAS 8). |
These amendments are effective for annual reporting periods beginning on or after January 1, 2023, with early application permitted and have not been endorsed by the European Union. Aegon is assessing the impact of these amendments.
In March 2021, the IASB issued the ‘Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)’. The amendment is effective for annual reporting periods beginning on or after April 1, 2021, with early application permitted and has not been endorsed by the European Union. Impact of this amendment is not expected to be significant.
2.3. Judgments and critical accounting estimates
Preparing the condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions, including the likelihood, timing or amount of future transactions or events, that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. These estimates are inherently subject to change and actual results could differ from those estimates.
Uncertainty resulting from COVID-19
During 1Q 2021 the COVID-19 pandemic continued to cause significant disruption to business, markets, and the industry. In 1Q 2021 Aegon’s operating result in the Americas was impacted by USD 166 million of adverse mortality in Life, of which USD 95 million of claims are directly attributable to COVID-19 as the cause of death. This was offset by 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. As soon as the impacts of the COVID-19 pandemic subside, Aegon expects the number of new Long-Term care claims to reverse. 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).
Actuarial and economic assumptions
Aegon the Netherlands has updated the indexation assumption for a specific pensions portfolio linked to Dutch industry pension funds after a sharp rise of the price inflation curve. Instead of a historical analysis, the substantiation of the updated indexation assumption will be based on a new forward-looking method that also takes into account the drivers (coverage ratio, asset mix, expected returns) for indexation pay-out by industry pension funds. The updated indexation assumption resulted in a lower market value liability of EUR 75 million. The release of the liability has been recorded as part of Benefits and expenses and in Other income for segment reporting purposes.
Sensitivities
Sensitivity on variable annuities and variable life insurance products in the United States
Sensitivities of Aegon’s variable annuities and variable life insurance products in the United States on expected long-term equity growth rate have not significantly changed compared to the sensitivities as reported in the Aegon’s 2020 Integrated Annual Report, except for sensitivities to mortality assumption and lapse rate.
A relative increase of 10% to the mortality assumption, dependent on product and characteristics of the block of business, would reduce net result by approximately EUR 181 million (December 31, 2020: EUR 124 million). A relative 20% increase in the lapse rate assumption would increase net result by approximately EUR 38 million (December 31, 2020: EUR 89 million).
Unaudited |
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Condensed consolidated interim financial statements 1Q 2021 Results 9
Sensitivity on liability adequacy test (LAT) in the Netherlands
At March 31, 2021 the liability adequacy test (LAT) of Aegon the Netherlands remains in a deficit position. The LAT assesses the adequacy of the insurance liabilities by comparing them to their fair value. Aegon the Netherlands adjusts the outcome of the LAT for certain unrealized gains in the bond portfolio and certain differences between the fair value and the book value of assets measured at amortized cost, mainly residential mortgages. Please also refer to Note 2.19f Liability adequacy testing of Aegon’s 2020 Integrated Annual Report for further details on the accounting policy.
The LAT deficit per March 31, 2021 in Aegon the Netherlands amounted to EUR 4.8 billion (December 31, 2020: EUR 7.0 billion), which was partially offset by the shadow loss recognition of EUR 3.5 billion (December 31, 2020: EUR 4.5 billion), resulting in a net deficit of EUR 1.3 billion (December 31, 2020: EUR 2.5 billion). The improvement of the LAT deficit amounting to EUR 1.2 billion is driven by market movements (mainly increased interest rates and tightening of credit spreads) and is recorded in the income statement for the first quarter 2021.
Sensitivities of Aegon the Netherlands on bond credit spread, mortgage spread and liquidity premium assumptions to assess the impact on the LAT test have not significantly changed compared to the sensitivities as reported in the 2020 Aegon’s Integrated Annual Report, except for sensitivities to interest rate. An increase of 100 bps in interest rate would result in a decrease in the LAT deficit of EUR 3.2 billion (December 31, 2020: EUR 3.9 billion). A decrease of 100 bps would result in an increase in the LAT deficit of approximately EUR 4.3 billion (2019: EUR 5.2 billion).
2.4. Other
Taxes
Taxes on income for the three-month period ended March 31, 2021, are calculated using the tax rate that is estimated to be applicable to earnings for the full year.
Exchange rates
Assets and liabilities of foreign operations are translated to the presentation currency at the closing rates on the reporting date. Income, expenses and capital transactions (such as dividends) are translated at average exchange rates or at the prevailing rates on the transaction date, if more appropriate. The following exchange rates (most important rates) are applied for the condensed consolidated interim financial statements:
Closing exchange rates |
USD | GBP | |||||||||||
March 31, 2021 | 1 | EUR | 1.1753 | 0.8519 | ||||||||
December 31, 2020 | 1 | EUR | 1.2236 | 0.8951 |
Weighted average exchange rates
USD | GBP | |||||||||||
Three months ended March 31, 2021 | 1 | EUR | 1.2046 | 0.8737 | ||||||||
Three months ended March 31, 2020 | 1 | EUR | 1.1026 | 0.8612 |
Unaudited |
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10 Condensed consolidated interim financial statements 1Q 2021 Results
3. Segment information
3.1. Change in name convention of performance measure
Aegon has changed the name convention of its primary performance measure to improve alignment with industry practice. As of 2021, Aegon will no longer refer to underlying earnings before tax for segment reporting purposes, instead Aegon will refer to Operating result. Furthermore, Aegon introduced a new grouping of non-operating result which is the sum of Fair value items, Realized gains / (losses) on investments, and Net impairments. Other income / charges remains a separate category outside of Aegon’s operating result.
3.2. Change in measurement of performance measure
In addition, Aegon has changed the measurement of its operating result from January 1, 2021. The following changes have been made:
1. | The running cost of the US macro hedge related to the variable annuity portfolio are recorded within Operating result instead of in Fair value items. Management views this as a better reflection of Aegon’s operating performance and will make Aegon’s operating result more relevant. |
2. | The periodic intangibles unlocking in the US Life and TLB business is recorded in Fair value items, instead of Operating result, to improve the insight in Aegon’s recurring operating result. |
3. | Results from run-off businesses in the US are part of Aegon’s operating result. The results of run-off businesses were previously recorded outside of Aegon’s operating result. Based on management actions executed in prior years the importance of run-off businesses has diminished and continuing to report this as a separate line item is considered no longer relevant. |
4. | Following the announcement to sell Aegon’s operations in CEE, results from these businesses, previously reported in operating result, are prospectively recorded within Other income / charges. |
For segment reporting purposes, the impact of these changes in measurement on 1Q 2020 was a decrease in Aegon’s consolidated operating result of EUR 8 million, as certain losses are no longer reported in Fair value items (EUR 5 million) and results of Run-off businesses are no longer separately reported (EUR 3 million loss). There is no impact on Aegon’s net result, shareholders’ equity, dividend per share, or any of the main schedules included in Aegon’s Condensed Consolidated Interim Financial Statements, in any of the reporting periods. Comparative numbers have been restated in Aegon’s segment reporting note, enabling a like for like comparison, with the exception of the reclassification of the results from Aegon’s operations in CEE to Other income / charges which is applied prospectively.
Unaudited |
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Condensed consolidated interim financial statements 1Q 2021 Results 11
3.3. Segment results
The following table presents Aegon’s segment results.
EUR millions | Americas | The Netherlands | United Kingdom | International | Asset management | Holdings and other activities | Eliminations | Segment total | Joint ventures and associates eliminations | Consolidated | ||||||||||||||||||||||||||||||
Three months ended March 31, 2021 | ||||||||||||||||||||||||||||||||||||||||
Operating result geographically | 163 | 184 | 39 | 28 | 75 | (58 | ) | (1 | ) | 431 | (43 | ) | 388 | |||||||||||||||||||||||||||
Fair value items | (52 | ) | 71 | (48 | ) | - | (2 | ) | 34 | 2 | 3 | 19 | 22 | |||||||||||||||||||||||||||
Realized gains / (losses) on investments | 21 | 9 | - | - | 2 | - | - | 31 | (3 | ) | 28 | |||||||||||||||||||||||||||||
Impairment charges | (4 | ) | 2 | - | - | - | 7 | - | 6 | - | 6 | |||||||||||||||||||||||||||||
Impairment reversals | 9 | 1 | - | - | - | - | - | 10 | - | 10 | ||||||||||||||||||||||||||||||
Non-operating items | (25 | ) | 82 | (48 | ) | - | (1 | ) | 41 | 2 | 50 | 16 | 66 | |||||||||||||||||||||||||||
Other income / (charges) | (7 | ) | 33 | (3 | ) | 15 | (2 | ) | (35 | ) | - | 1 | 3 | 4 | ||||||||||||||||||||||||||
Result before tax | 131 | 299 | (12 | ) | 43 | 72 | (52 | ) | 1 | 482 | (24 | ) | 458 | |||||||||||||||||||||||||||
Income tax (expense) / benefit | (8 | ) | (71 | ) | - | (7 | ) | (21 | ) | 10 | - | (96 | ) | 24 | (72 | ) | ||||||||||||||||||||||||
Net result | 123 | 228 | (11 | ) | 36 | 52 | (42 | ) | 1 | 386 | - | 386 | ||||||||||||||||||||||||||||
Inter-segment operating result after tax | (7 | ) | (22 | ) | (22 | ) | (8 | ) | 46 | 12 | ||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||||
Life insurance gross premiums | 1,691 | 392 | 1,143 | 340 | - | - | - | 3,566 | (255 | ) | 3,311 | |||||||||||||||||||||||||||||
Accident and health insurance | 315 | 142 | 3 | 119 | - | - | - | 579 | (33 | ) | 547 | |||||||||||||||||||||||||||||
Property & casualty insurance | - | 33 | - | 107 | - | - | - | 140 | (40 | ) | 100 | |||||||||||||||||||||||||||||
Total gross premiums | 2,006 | 568 | 1,146 | 566 | - | - | - | 4,285 | (327 | ) | 3,958 | |||||||||||||||||||||||||||||
Investment income | 705 | 501 | 819 | 88 | 2 | 59 | (64 | ) | 2,110 | (17 | ) | 2,093 | ||||||||||||||||||||||||||||
Fee and commission income | 473 | 72 | 51 | 14 | 213 | - | (44 | ) | 779 | (104 | ) | 674 | ||||||||||||||||||||||||||||
Other revenues | 2 | - | - | 1 | - | - | - | 3 | (3 | ) | - | |||||||||||||||||||||||||||||
Total revenues | 3,186 | 1,140 | 2,015 | 669 | 216 | 59 | (108 | ) | 7,177 | (451 | ) | 6,725 | ||||||||||||||||||||||||||||
Inter-segment revenues | - | 4 | - | - | 44 | 60 |
EUR millions | Americas | The Netherlands | United Kingdom | International | Asset management | Holdings and other activities | Eliminations | Segment total | Joint ventures and associates eliminations | Consolidated | ||||||||||||||||||||||||||||||
Three months ended March 31, 2020 | ||||||||||||||||||||||||||||||||||||||||
Operating result geographically | 129 | 154 | 44 | 49 | 38 | (58 | ) | 2 | 358 | 8 | 366 | |||||||||||||||||||||||||||||
Fair value items | (650 | ) | 1,931 | 145 | (6 | ) | (15 | ) | (28 | ) | - | 1,377 | (20 | ) | 1,357 | |||||||||||||||||||||||||
Realized gains / (losses) on investments | 11 | 3 | - | - | - | - | - | 14 | (4 | ) | 10 | |||||||||||||||||||||||||||||
Impairment charges | (40 | ) | (20 | ) | - | (2 | ) | - | (4 | ) | - | (66 | ) | - | (66 | ) | ||||||||||||||||||||||||
Impairment reversals | 8 | (1 | ) | - | - | - | - | - | 7 | - | 7 | |||||||||||||||||||||||||||||
Non-operating items | (672 | ) | 1,914 | 145 | (3 | ) | (15 | ) | (37 | ) | - | 1,333 | (24 | ) | 1,309 | |||||||||||||||||||||||||
Other income / (charges) | (109 | ) | (12 | ) | (62 | ) | 52 | - | (32 | ) | - | (162 | ) | 1 | (161 | ) | ||||||||||||||||||||||||
Result before tax | (652 | ) | 2,057 | 128 | 93 | 23 | (122 | ) | 2 | 1,529 | (15 | ) | 1,514 | |||||||||||||||||||||||||||
Income tax (expense) / benefit | 161 | (425 | ) | (5 | ) | (8 | ) | (7 | ) | 27 | - | (258 | ) | 15 | (243 | ) | ||||||||||||||||||||||||
Net result | (492 | ) | 1,632 | 122 | 85 | 16 | (95 | ) | 2 | 1,270 | - | 1,270 | ||||||||||||||||||||||||||||
Inter-segment operating result after tax | (11 | ) | (22 | ) | (22 | ) | (8 | ) | 47 | 17 | ||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||||
Life insurance gross premiums | 1,824 | 650 | 1,569 | 365 | - | 3 | (2 | ) | 4,409 | (269 | ) | 4,140 | ||||||||||||||||||||||||||||
Accident and health insurance | 362 | 137 | 7 | 124 | - | - | - | 630 | (26 | ) | 604 | |||||||||||||||||||||||||||||
Property & casualty insurance | - | 32 | - | 104 | - | - | - | 136 | (35 | ) | 102 | |||||||||||||||||||||||||||||
Total gross premiums | 2,185 | 820 | 1,576 | 593 | - | 3 | (2 | ) | 5,175 | (329 | ) | 4,846 | ||||||||||||||||||||||||||||
Investment income | 805 | 495 | 871 | 94 | 1 | 64 | (69 | ) | 2,262 | (15 | ) | 2,247 | ||||||||||||||||||||||||||||
Fee and commission income | 394 | 65 | 50 | 14 | 170 | - | (46 | ) | 647 | (62 | ) | 585 | ||||||||||||||||||||||||||||
Other revenues | 2 | - | - | - | - | 1 | - | 4 | (3 | ) | 1 | |||||||||||||||||||||||||||||
Total revenues | 3,387 | 1,380 | 2,497 | 701 | 172 | 68 | (116 | ) | 8,088 | (409 | ) | 7,679 | ||||||||||||||||||||||||||||
Inter-segment revenues | - | 4 | - | - | 46 | 67 |
Aegon’s segment information is prepared by consolidating on a proportionate basis Aegon’s joint ventures and associated companies.
Unaudited |
Table of Contents
12 Condensed consolidated interim financial statements 1Q 2021 Results
3.4. Investments
Amounts included in the tables on investments are presented on an IFRS basis, which means that investments in joint ventures and associates are not consolidated on a proportionate basis. Instead, these investments are included on a single line using the equity method of accounting.
March 31, 2021 | Americas | The Netherlands | United Kingdom | International | Asset Management | Holding and other activities | Eliminations | EUR Millions
Total | ||||||||||||||||||||||||
Investments | ||||||||||||||||||||||||||||||||
Shares | 476 | 1,387 | 27 | 74 | 8 | 41 | - | 2,013 | ||||||||||||||||||||||||
Debt securities | 57,976 | 27,924 | 1,200 | 7,804 | 51 | 1 | - | 94,956 | ||||||||||||||||||||||||
Loans | 10,999 | 35,233 | - | 110 | - | 40 | - | 46,382 | ||||||||||||||||||||||||
Other financial assets | 7,982 | 94 | 744 | 118 | 95 | 18 | - | 9,050 | ||||||||||||||||||||||||
Investments in real estate | 39 | 2,283 | - | 16 | - | - | - | 2,338 | ||||||||||||||||||||||||
Investments general account | 77,471 | 66,921 | 1,971 | 8,123 | 154 | 100 | - | 154,740 | ||||||||||||||||||||||||
Shares | - | 8,670 | 17,737 | 234 | - | - | (4 | ) | 26,638 | |||||||||||||||||||||||
Debt securities | - | 11,942 | 7,524 | 146 | - | - | - | 19,612 | ||||||||||||||||||||||||
Unconsolidated investment funds | 109,134 | 781 | 67,382 | 606 | - | - | - | 177,903 | ||||||||||||||||||||||||
Other financial assets | - | 3,883 | 5,228 | 2 | - | - | - | 9,113 | ||||||||||||||||||||||||
Investments in real estate | - | - | 496 | - | - | - | - | 496 | ||||||||||||||||||||||||
Investments for account of policyholders | 109,134 | 25,276 | 98,367 | 988 | - | - | (4 | ) | 233,761 | |||||||||||||||||||||||
Investments on balance sheet | 186,605 | 92,197 | 100,338 | 9,111 | 154 | 100 | (4 | ) | 388,501 | |||||||||||||||||||||||
Off balance sheet investments third parties | 224,194 | 6,370 | 127,977 | 2,037 | 191,542 | - | - | 552,120 | ||||||||||||||||||||||||
Total revenue generating investments | 410,800 | 98,567 | 228,315 | 11,147 | 191,696 | 100 | (4 | ) | 940,621 | |||||||||||||||||||||||
Investments | ||||||||||||||||||||||||||||||||
Available-for-sale | 63,200 | 26,584 | 1,398 | 7,987 | 75 | 27 | - | 99,271 | ||||||||||||||||||||||||
Loans | 10,999 | 35,233 | - | 110 | - | 40 | - | 46,382 | ||||||||||||||||||||||||
Financial assets at fair value through profit or loss | 112,367 | 28,097 | 98,445 | 997 | 79 | 32 | (4 | ) | 240,014 | |||||||||||||||||||||||
Investments in real estate | 39 | 2,283 | 496 | 16 | - | - | - | 2,833 | ||||||||||||||||||||||||
Total investments on balance sheet | 186,605 | 92,197 | 100,338 | 9,111 | 154 | 100 | (4 | ) | 388,501 | |||||||||||||||||||||||
Investments in joint ventures | - | 332 | - | 868 | 257 | - | - | 1,456 | ||||||||||||||||||||||||
Investments in associates | 58 | 982 | 8 | 31 | 153 | 21 | (14 | ) | 1,240 | |||||||||||||||||||||||
Other assets | 35,357 | 15,550 | 5,425 | 2,773 | 461 | 31,836 | (31,918 | ) | 59,484 | |||||||||||||||||||||||
Consolidated total assets | 222,020 | 109,061 | 105,772 | 12,782 | 1,025 | 31,957 | (31,936 | ) | 450,681 |
December 31, 2020 | Americas | The Netherlands | United Kingdom | International | Asset Management | Holding and other activities | Eliminations | EUR Millions
Total | ||||||||||||||||||||||||
Investments | ||||||||||||||||||||||||||||||||
Shares | 442 | 1,376 | 34 | 74 | 9 | 44 | - | 1,979 | ||||||||||||||||||||||||
Debt securities | 59,419 | 30,880 | 1,077 | 7,926 | 48 | 1 | - | 99,350 | ||||||||||||||||||||||||
Loans | 10,477 | 34,936 | - | 120 | - | 40 | - | 45,573 | ||||||||||||||||||||||||
Other financial assets | 7,056 | 91 | 883 | 102 | 152 | 23 | - | 8,308 | ||||||||||||||||||||||||
Investments in real estate | 37 | 2,331 | - | 16 | - | - | - | 2,385 | ||||||||||||||||||||||||
Investments general account | 77,431 | 69,615 | 1,994 | 8,238 | 208 | 108 | - | 157,595 | ||||||||||||||||||||||||
Shares | - | 8,227 | 16,877 | 187 | - | - | (3 | ) | 25,288 | |||||||||||||||||||||||
Debt securities | - | 12,150 | 7,579 | 156 | - | - | - | 19,885 | ||||||||||||||||||||||||
Unconsolidated investment funds | 104,374 | 706 | 63,084 | 613 | - | - | - | 168,777 | ||||||||||||||||||||||||
Other financial assets | - | 4,520 | 5,232 | 3 | - | - | - | 9,755 | ||||||||||||||||||||||||
Investments in real estate | - | - | 467 | - | - | - | - | 467 | ||||||||||||||||||||||||
Investments for account of policyholders | 104,374 | 25,603 | 93,240 | 959 | - | - | (3 | ) | 224,172 | |||||||||||||||||||||||
Investments on balance sheet | 181,805 | 95,218 | 95,234 | 9,197 | 208 | 108 | (3 | ) | 381,767 | |||||||||||||||||||||||
Off balance sheet investments third parties | 215,216 | 6,144 | 119,347 | 6,752 | 192,098 | - | (336 | ) | 539,220 | |||||||||||||||||||||||
Total revenue generating investments | 397,021 | 101,362 | 214,580 | 15,948 | 192,307 | 108 | (339 | ) | 920,987 | |||||||||||||||||||||||
Investments | ||||||||||||||||||||||||||||||||
Available-for-sale | 63,864 | 25,972 | 1,494 | 8,088 | 134 | 28 | - | 99,580 | ||||||||||||||||||||||||
Loans | 10,477 | 34,936 | - | 120 | - | 40 | - | 45,573 | ||||||||||||||||||||||||
Financial assets at fair value through profit or loss | 107,427 | 31,979 | 93,272 | 973 | 74 | 40 | (3 | ) | 233,762 | |||||||||||||||||||||||
Investments in real estate | 37 | 2,331 | 467 | 16 | - | - | - | 2,853 | ||||||||||||||||||||||||
Total investments on balance sheet | 181,805 | 95,218 | 95,234 | 9,197 | 208 | 108 | (3 | ) | 381,767 | |||||||||||||||||||||||
Investments in joint ventures | - | 327 | - | 846 | 204 | - | - | 1,376 | ||||||||||||||||||||||||
Investments in associates | 60 | 1,004 | 8 | 35 | 151 | 21 | (15 | ) | 1,264 | |||||||||||||||||||||||
Other assets | 35,010 | 19,467 | 3,740 | 2,405 | 545 | 32,695 | (33,400 | ) | 60,461 | |||||||||||||||||||||||
Consolidated total assets | 216,875 | 116,016 | 98,982 | 12,482 | 1,109 | 32,824 | (33,419 | ) | 444,868 |
Unaudited |
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Condensed consolidated interim financial statements 1Q 2021 Results 13
4. Premium income and premiums paid to reinsurers
EUR millions | 1Q 2021 | 1Q 2020 | ||||||
Premium income | ||||||||
Life insurance | 3,311 | 4,140 | ||||||
Non-life insurance | 647 | 705 | ||||||
Total premium income | 3,958 | 4,846 | ||||||
Accident and health insurance | 547 | 604 | ||||||
Property & casualty insurance | 100 | 102 | ||||||
Non-life Insurance premium income | 647 | 705 | ||||||
Premiums paid to reinsurers 1 | ||||||||
Life insurance | 497 | 554 | ||||||
Non-life insurance | 47 | 43 | ||||||
Total premiums paid to reinsurers | 545 | 597 | ||||||
Accident and health insurance | 40 | 36 | ||||||
Property & casualty insurance | 7 | 6 | ||||||
Non-life Insurance paid to reinsurers | 47 | 43 |
Premium income decreased by EUR 888 million in 1Q 2021 compared to 1Q 2020, mainly driven by a reduction of upgraded Life insurance policies to the retirement platform in the UK, reduced new business related to COVID-19, and impacts of foreign currency translation.
5. Investment income
EUR millions | 1Q 2021 | 1Q 2020 | ||||||
Interest income | 1,297 | 1,407 | ||||||
Dividend income | 772 | 807 | ||||||
Rental income | 24 | 32 | ||||||
Total investment income | 2,093 | 2,247 | ||||||
Investment income related to general account | 1,186 | 1,286 | ||||||
Investment income for account of policyholders | 907 | 961 | ||||||
Total | 2,093 | 2,247 |
Unaudited |
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14 Condensed consolidated interim financial statements 1Q 2021 Results
6. Results from financial transactions
EUR millions | 1Q 2021 | 1Q 2020 | ||||||
Net fair value change of general account financial investments at FVTPL other than derivatives | 54 | (199 | ) | |||||
Realized gains /(losses) on financial investments | 39 | 6 | ||||||
Gains /(losses) on investments in real estate | (43 | ) | 57 | |||||
Net fair value change of derivatives | (1,011 | ) | (1,139 | ) | ||||
Net fair value change on for account of policyholder financial assets at FVTPL | 2,710 | (27,759 | ) | |||||
Net fair value change on investments in real estate for account of policyholders | 3 | (19 | ) | |||||
Net foreign currency gains /(losses) | 135 | 9 | ||||||
Net fair value change on borrowings and other financial liabilities | - | 7 | ||||||
Total | 1,886 | (29,037 | ) |
Net fair value change on for account of policyholder financial assets at fair value through profit or loss increased in 1Q 2021 compared to 1Q 2020, mainly from favorable equity markets. Net fair value changes on for 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 7 Benefits and expenses.
7. Benefits and expenses
EUR millions | 1Q 2021 | 1Q 2020 | ||||||
Claims and benefits | 8,141 | (23,103 | ) | |||||
Employee expenses | 490 | 521 | ||||||
Administration expenses | 376 | 404 | ||||||
Deferred expenses | (146 | ) | (205 | ) | ||||
Amortization charges | 205 | 265 | ||||||
Total | 9,066 | (22,119 | ) | |||||
EUR millions | 1Q 2021 | 1Q 2020 | ||||||
Benefits and claims paid life | 6,263 | 1,514 | ||||||
Benefits and claims paid non-life | 347 | 414 | ||||||
Change in valuation of liabilities for insurance contracts | 769 | (18,089 | ) | |||||
Change in valuation of liabilities for investment contracts | (357 | ) | (8,155 | ) | ||||
Other | (2 | ) | 27 | |||||
Policyholder claims and benefits | 7,019 | (24,289 | ) | |||||
Premium paid to reinsurers | 545 | 597 | ||||||
Profit sharing and rebates | 2 | 3 | ||||||
Commissions | 576 | 587 | ||||||
Total | 8,141 | (23,103 | ) |
The lines “Change in valuation of liabilities for insurance contracts” and “Change in valuation of liabilities for investment contracts” reflect changes in technical provisions resulting from “Net fair value changes on for account of policyholder financial assets at fair value through profit or loss” included in note 6 Results from financial transactions of EUR 2,710 million positive for 1Q 2021 (1Q 2020: EUR 27,759 million negative). In addition, the line “Change in valuation of liabilities for insurance contracts” includes a decrease of technical provisions for life insurance contracts of EUR 1,083 million for 1Q 2021 (1Q 2020: increase of EUR 2,861 million).
Unaudited |
Table of Contents
Condensed consolidated interim financial statements 1Q 2021 Results 15
8. Impairment charges/(reversals)
EUR millions | 1Q 2021 | 1Q 2020 | ||||||
Impairment charges / (reversals) comprise: | ||||||||
Impairment charges / (reversals) on financial assets, excluding receivables | (6 | ) | 59 | |||||
Impairment charges / (reversals) on non-financial assets and receivables | 19 | 35 | ||||||
Total | 13 | 94 | ||||||
Impairment charges on financial assets, excluding receivables, from: | ||||||||
Shares | - | 4 | ||||||
Debt securities and money market instruments | 3 | 43 | ||||||
Loans | 10 | 19 | ||||||
Total | 13 | 66 | ||||||
Impairment reversals on financial assets, excluding receivables, from: | ||||||||
Shares | (8 | ) | - | |||||
Debt securities and money market instruments | (10 | ) | (7 | ) | ||||
Loans | (1 | ) | 1 | |||||
Total | (19 | ) | (7 | ) |
Impairment charges on non-financial assets and receivables in the first quarter of 2021 amount to EUR 19 million and are mainly related to a valuation allowance due to the ongoing rehabilitation process of a US reinsurer.
9. Income tax
The income tax charge for 1Q 2021 amounts to EUR 72 million which includes recurring beneficial impacts of tax-exempt income and US tax credits. Non-taxable income in 1Q 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.
Tax credits mainly include tax benefits from United States investments that provide affordable housing to individuals and families that meet median household income requirements.
Unaudited |
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16 Condensed consolidated interim financial statements 1Q 2021 Results
10. Investments
EUR millions | March 31, 2021 | December 31, 2020 | ||||||
Available-for-sale (AFS) | 99,271 | 99,580 | ||||||
Loans | 46,382 | 45,573 | ||||||
Financial assets at fair value through profit or loss (FVTPL) | 6,748 | 10,057 | ||||||
Financial assets, for general account, excluding derivatives | 152,402 | 155,210 | ||||||
Investments in real estate | 2,338 | 2,385 | ||||||
Total investments for general account, excluding derivatives | 154,740 | 157,595 |
Financial assets, for general account, excluding derivatives |
| |||||||||||||||
EUR millions | AFS | FVTPL | Loans | Total | ||||||||||||
Shares | 373 | 1,641 | - | 2,013 | ||||||||||||
Debt securities | 92,762 | 2,194 | - | 94,956 | ||||||||||||
Money market and other short-term investments | 5,249 | 122 | - | 5,371 | ||||||||||||
Mortgages loans | - | - | 40,050 | 40,050 | ||||||||||||
Private loans | - | - | 4,370 | 4,370 | ||||||||||||
Deposits with financial institutions | - | - | 81 | 81 | ||||||||||||
Policy loans | - | - | 1,860 | 1,860 | ||||||||||||
Receivables out of share lease agreements | - | - | - | - | ||||||||||||
Other | ||||||||||||||||
Other | 887 | 2,792 | 22 | 3,701 | ||||||||||||
March 31, 2021 | 99,271 | 6,749 | 46,382 | 152,402 | ||||||||||||
AFS | FVTPL | Loans | Total | |||||||||||||
Shares | 345 | 1,634 | - | 1,979 | ||||||||||||
Debt securities | 93,681 | 5,669 | - | 99,350 | ||||||||||||
Money market and other short-term investments | 4,558 | 109 | - | 4,667 | ||||||||||||
Mortgages loans | - | - | 39,298 | 39,298 | ||||||||||||
Private loans | - | - | 4,358 | 4,358 | ||||||||||||
Deposits with financial institutions | - | - | 92 | 92 | ||||||||||||
Policy loans | - | - | 1,801 | 1,801 | ||||||||||||
Receivables out of share lease agreements | - | - | - | - | ||||||||||||
Other | ||||||||||||||||
Other | 996 | 2,645 | 25 | 3,665 | ||||||||||||
December 31, 2020 | 99,580 | 10,057 | 45,573 | 155,210 |
Total investments for general account, excluding derivatives amount to EUR 154.7 billion (December 31, 2020: EUR 157.6 billion). The decrease is mainly due to increased interest rates in Americas and the Netherlands, partially offset by the positive impact of foreign currency translations.
Unaudited |
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Condensed consolidated interim financial statements 1Q 2021 Results 17
11. Investments for account of policyholders
EUR millions | March 31, 2021 | December 31, 2020 | ||||||
Shares | 26,638 | 25,288 | ||||||
Debt securities | 19,612 | 19,885 | ||||||
Money market and short-term investments | 1,643 | 1,051 | ||||||
Deposits with financial institutions | 3,587 | 4,185 | ||||||
Unconsolidated investment funds | 177,903 | 168,777 | ||||||
Other | 3,883 | 4,520 | ||||||
Total investments for account of policyholders at fair value through profit or loss, excluding derivatives | 233,266 | 223,705 | ||||||
Investment in real estate | 496 | 467 | ||||||
Total investments for account of policyholders | 233,761 | 224,172 |
Investments for account of policyholders amount to EUR 233.8 billion (December 31, 2020: EUR 224.2 billion). The increase is mainly due to the positive impact of foreign currency translations and positive market movements.
12. Fair value
The following tables provide an analysis of financial instruments recorded at fair value on a recurring basis by level of the fair value hierarchy:
Fair value hierarchy | ||||||||||||||||||||||||||||||||
EUR millions | March 31, 2021 | December 31, 2020 | ||||||||||||||||||||||||||||||
Level I | Level II | Level III | Total | Level I | Level II | Level III | Total | |||||||||||||||||||||||||
Financial assets carried at fair value | ||||||||||||||||||||||||||||||||
Available-for-sale investments | ||||||||||||||||||||||||||||||||
Shares | 93 | 86 | 193 | 373 | 90 | 82 | 173 | 345 | ||||||||||||||||||||||||
Debt securities | 25,692 | 66,418 | 652 | 92,762 | 28,300 | 64,914 | 467 | 93,681 | ||||||||||||||||||||||||
Money markets and other short-term instruments | 1,400 | 3,849 | - | 5,249 | 832 | 3,726 | - | 4,558 | ||||||||||||||||||||||||
Other investments at fair value | - | 299 | 588 | 887 | - | 415 | 581 | 996 | ||||||||||||||||||||||||
Total Available-for-sale investments | 27,185 | 70,652 | 1,434 | 99,271 | 29,222 | 69,136 | 1,221 | 99,580 | ||||||||||||||||||||||||
Fair value through profit or loss | ||||||||||||||||||||||||||||||||
Shares | 89 | 218 | 1,334 | 1,641 | 80 | 226 | 1,329 | 1,634 | ||||||||||||||||||||||||
Debt securities | 118 | 2,044 | 32 | 2,194 | 168 | 5,260 | 242 | 5,669 | ||||||||||||||||||||||||
Money markets and other short-term instruments | 18 | 104 | - | 122 | 17 | 93 | - | 109 | ||||||||||||||||||||||||
Other investments at fair value | 1 | 412 | 2,379 | 2,792 | 1 | 470 | 2,174 | 2,645 | ||||||||||||||||||||||||
Investments for account of policyholders 1 | 122,735 | 109,764 | 766 | 233,266 | 118,057 | 104,635 | 1,012 | 223,705 | ||||||||||||||||||||||||
Derivatives | 59 | 11,401 | 5 | 11,465 | 34 | 13,930 | 22 | 13,986 | ||||||||||||||||||||||||
Total Fair value through profit or loss | 123,020 | 123,943 | 4,516 | 251,479 | 118,356 | 124,613 | 4,779 | 247,748 | ||||||||||||||||||||||||
Total financial assets at fair value | 150,205 | 194,596 | 5,950 | 350,751 | 147,578 | 193,750 | 6,000 | 347,327 | ||||||||||||||||||||||||
Financial liabilities carried at fair value | ||||||||||||||||||||||||||||||||
Investment contracts for account of policyholders 2 | - | 63,511 | (108 | ) | 63,403 | - | 59,637 | (12 | ) | 59,625 | ||||||||||||||||||||||
Derivatives | 36 | 10,952 | 3,016 | 14,004 | 61 | 9,654 | 4,902 | 14,617 | ||||||||||||||||||||||||
Total financial liabilities at fair value | 36 | 74,463 | 2,908 | 77,407 | 61 | 69,291 | 4,890 | 74,242 |
1 The investments for account of policyholders included in the table above represents only those investments carried at fair value through profit or loss.
2 The investment contracts for account of policyholders included in the table above represents only those investment contracts carried at fair value.
3 Total borrowings on the statement of financial position contain borrowings carried at amortized cost that are not included in the above schedule.
Significant transfers between Level I, Level II and Level III
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.
Fair value transfers |
| |||||||||||
EUR millions | March 31, 2021 | December 31, 2020 | ||||||||||
Transfers Level I to Level II | Transfers Level II to Level I | Transfers Level I to Level II | Transfers Level II to | |||||||||
Financial assets carried at fair value | ||||||||||||
Available-for-sale investments | ||||||||||||
Debt securities | 106 | 131 | - | 46 | ||||||||
Total | 106 | 131 | - | 46 |
Transfers are identified based on transaction volume and frequency, which are indicative of an active market.
Unaudited |
Table of Contents
18 Condensed consolidated interim financial statements 1Q 2021 Results
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.
Roll forward of Level III financial instruments
| ||||||||||||||||||||||||||||||||||||||||||||
EUR millions | January 1, 2021 | Total gains / losses in income statement 1 | Total gains / losses in OCI 2 | Purchases | Sales | Settlements | Net exchange differences | Transfers from Level I and Level II | Transfers to Level I and Level II | March 31, 2021 | Total unrealized gains and losses for the period recorded in the P&L for instruments held at March 31, 2021 ³ | |||||||||||||||||||||||||||||||||
Financial assets carried at fair value available-for-sale investments | ||||||||||||||||||||||||||||||||||||||||||||
Shares | 173 | - | (2 | ) | 16 | - | - | 6 | - | - | 193 | - | ||||||||||||||||||||||||||||||||
Debt securities | 467 | (2 | ) | (10 | ) | 187 | (6 | ) | (6 | ) | 12 | 60 | (50 | ) | 652 | - | ||||||||||||||||||||||||||||
Other investments at fair value | 581 | (31 | ) | (1 | ) | 19 | (1 | ) | (2 | ) | 23 | - | - | 588 | - | |||||||||||||||||||||||||||||
1,221 | (33 | ) | (13 | ) | 222 | (7 | ) | (8 | ) | 41 | 60 | (50 | ) | 1,434 | - | |||||||||||||||||||||||||||||
Fair value through profit or loss | ||||||||||||||||||||||||||||||||||||||||||||
Shares | 1,329 | 65 | - | 23 | (84 | ) | - | 1 | - | - | 1,334 | 65 | ||||||||||||||||||||||||||||||||
Debt securities | 242 | - | - | 30 | (239 | ) | - | - | - | - | 32 | - | ||||||||||||||||||||||||||||||||
Other investments at fair value | 2,173 | 68 | - | 103 | (55 | ) | - | 89 | - | - | 2,379 | (3 | ) | |||||||||||||||||||||||||||||||
Investments for account of policyholders | 1,012 | (188 | ) | - | (125 | ) | 51 | - | 16 | - | - | 766 | (467 | ) | ||||||||||||||||||||||||||||||
Derivatives | 22 | (17 | ) | - | - | - | - | - | - | - | 5 | (17 | ) | |||||||||||||||||||||||||||||||
4,779 | (72 | ) | - | 31 | (328 | ) | - | 106 | - | - | 4,516 | (422 | ) | |||||||||||||||||||||||||||||||
Financial liabilities carried at fair value | ||||||||||||||||||||||||||||||||||||||||||||
Investment contracts for account of policyholders | (12 | ) | (80 | ) | - | (26 | ) | 9 | - | 1 | - | - | (108 | ) | 163 | |||||||||||||||||||||||||||||
Derivatives | 4,902 | (1,960 | ) | - | - | (3 | ) | - | 77 | - | - | 3,016 | 335 | |||||||||||||||||||||||||||||||
4,890 | (2,040 | ) | - | (26 | ) | 6 | - | 78 | - | - | 2,908 | 498 | ||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||
EUR millions | January 1, 2020 | Total gains / losses in income statement 1 | Total gains / losses in OCI 2 | Purchases | Sales | Settlements | Net exchange differences | Transfers from Level I and Level II | Transfers to Level I and Level II | December 31, 2020 | Total unrealized gains and losses for the period recorded in the P&L for instruments held at December 31, 2020 ³ | |||||||||||||||||||||||||||||||||
Financial assets carried at fair value available-for-sale investments | ||||||||||||||||||||||||||||||||||||||||||||
Shares | 157 | (27 | ) | 24 | 49 | (15 | ) | (1 | ) | (12 | ) | - | (2 | ) | 173 | - | ||||||||||||||||||||||||||||
Debt securities | 1,074 | 3 | (19 | ) | 155 | (11 | ) | (34 | ) | (32 | ) | 26 | (695 | ) | 467 | - | ||||||||||||||||||||||||||||
Other investments at fair value | 482 | (140 | ) | 28 | 302 | (19 | ) | (22 | ) | (50 | ) | - | - | 581 | - | |||||||||||||||||||||||||||||
1,712 | (163 | ) | 34 | 505 | (45 | ) | (56 | ) | (94 | ) | 26 | (697 | ) | 1,221 | - | |||||||||||||||||||||||||||||
Fair value through profit or loss | ||||||||||||||||||||||||||||||||||||||||||||
Shares | 1,401 | (132 | ) | - | 160 | (97 | ) | - | (3 | ) | - | - | 1,329 | (98 | ) | |||||||||||||||||||||||||||||
Debt securities | 4 | - | - | 276 | (37 | ) | - | - | - | - | 242 | - | ||||||||||||||||||||||||||||||||
Other investments at fair value | 2,049 | 122 | - | 432 | (250 | ) | - | (184 | ) | 16 | (13 | ) | 2,173 | (1 | ) | |||||||||||||||||||||||||||||
Investments for account of policyholders | �� | 1,805 | 3 | - | (168 | ) | (607 | ) | - | (20 | ) | - | - | 1,012 | 37 | |||||||||||||||||||||||||||||
Derivatives | 56 | (33 | ) | - | - | - | - | - | - | - | 22 | (32 | ) | |||||||||||||||||||||||||||||||
5,314 | (40 | ) | - | 700 | (991 | ) | - | (207 | ) | 16 | (13 | ) | 4,779 | (93 | ) | |||||||||||||||||||||||||||||
Financial liabilities carried at fair value | ||||||||||||||||||||||||||||||||||||||||||||
Investment contracts for account of policyholders | 197 | 9 | - | (200 | ) | (16 | ) | - | (3 | ) | - | - | (12 | ) | 7 | |||||||||||||||||||||||||||||
Derivatives | 3,081 | 2,073 | (9 | ) | - | (15 | ) | - | (228 | ) | - | - | 4,902 | 314 | ||||||||||||||||||||||||||||||
3,278 | 2,082 | (9 | ) | (200 | ) | (31 | ) | - | (231 | ) | - | - | 4,890 | 321 |
1 Includes impairments and movements related to fair value hedges. Gains and losses are recorded in the line item results from financial transactions of the income statement.
2 Total gains and losses are recorded in line items Gains/ (losses) on revaluation of available-for-sale investments and (Gains)/ losses transferred to the income statement on disposal and impairment of available-for-sale investment of the statement of other comprehensive income.
3 Total gains / (losses) for the period during which the financial instrument was in Level III.
Fair value information about financial instruments not measured at fair value
The following table presents the carrying values and estimated fair values of financial assets and liabilities, excluding financial instruments which are carried at fair value on a recurring basis.
Fair value information about financial instruments not measured at fair value |
| |||||||||||||||
Carrying amount | Total estimated fair value | Carrying amount | Total estimated fair value | |||||||||||||
EUR millions | March 31, 2021 | December 31, 2020 | ||||||||||||||
Assets | ||||||||||||||||
Mortgage loans - held at amortized cost | 40,050 | 44,030 | 39,298 | 43,258 | ||||||||||||
Private loans - held at amortized cost | 4,370 | 5,080 | 4,358 | 5,280 | ||||||||||||
Other loans - held at amortized cost | 1,963 | 1,963 | 1,917 | 1,917 | ||||||||||||
Liabilities | ||||||||||||||||
Subordinated borrowings - held at amortized cost | 2,143 | 2,359 | 2,085 | 2,351 | ||||||||||||
Trust pass-through securities - held at amortized cost | 126 | 139 | 126 | 142 | ||||||||||||
Borrowings – held at amortized cost | 8,892 | 9,331 | 8,524 | 9,165 | ||||||||||||
Investment contracts - held at amortized cost | 22,007 | 21,210 | 20,889 | 20,382 |
Financial instruments for which carrying value approximates fair value
Certain financial instruments that are not carried at fair value are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. These instruments include cash and cash equivalents, short-term receivables and accrued interest receivable, short-term liabilities, and accrued liabilities. These instruments are not included in the table above.
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Condensed consolidated interim financial statements 1Q 2021 Results 19
13. Share capital
EUR millions | March 31, 2021 | December 31, 2020 | ||||||
Share capital - par value | 320 | 320 | ||||||
Share premium | 7,160 | 7,160 | ||||||
Total share capital | 7,480 | 7,480 | ||||||
Share capital - par value | ||||||||
Balance at January 1 | 320 | 323 | ||||||
Dividend | - | - | ||||||
Shares withdrawn | - | (3 | ) | |||||
Balance | 320 | 320 |
Share premium | ||||||||
Balance at January 1 | 7,160 | 7,213 | ||||||
Share dividend | - | (54 | ) | |||||
Balance | 7,160 | 7,160 |
EUR millions | 1Q 2021 | 1Q 2020 | ||||||
Earnings per share (EUR per share) | ||||||||
Basic earnings per common share | 0.18 | 0.61 | ||||||
Basic earnings per common share B | - | 0.02 | ||||||
Diluted earnings per common share | 0.18 | 0.61 | ||||||
Diluted earnings per common share B | - | 0.02 | ||||||
Earnings per share calculation | ||||||||
Net income / (loss) attributable to owners of Aegon N.V. | 383 | 1,270 | ||||||
Coupons on other equity instruments | (9 | ) | (10 | ) | ||||
Earnings attributable to common shares and common shares B | 375 | 1,261 | ||||||
Earnings attributable to common shareholders | 372 | 1,252 | ||||||
Earnings attributable to common shareholders B | 3 | 9 | ||||||
Weighted average number of common shares outstanding (in millions) | 2,044 | 2,039 | ||||||
Weighted average number of common shares B outstanding (in millions) | 559 | 560 |
14. Borrowings
EUR millions | March 31, 2021 | December 31, 2020 | ||||||
Capital funding | 1,279 | 1,241 | ||||||
Operational funding | 7,613 | 7,283 | ||||||
Total borrowings | 8,892 | 8,524 |
During the first quarter of 2021, the operational funding increased by EUR 0.3 billion mainly due to the increase in Federal Home Loan Bank advances.
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20 Condensed consolidated interim financial statements 1Q 2021 Results
15. Financial risks
There have been no significant changes in sensitivities for equity market risk, bond credit spreads and liquidity premium per December 31, 2020 as reported in Aegon’s 2020 Integrated Annual Report. Aegon’s sensitivity to interest rate risk has changed per March 31, 2021. This is the net result of the effect of the implementation of an interest rate macro hedge in the United States and the effect from the improvement of the LAT deficit in the Netherlands.
The table below shows the updated sensitivity per March 31, 2021 of the effect of a parallel shift in the yield curves on net result and shareholders’ equity.
EUR millions | March 31, 2021 | December 31, 2020 | ||||||||||||||
Estimated approximate effects on net result | Estimated approximate effects on shareholders’ equity | Estimated approximate effects on net result | Estimated approximate effects on shareholders’ equity | |||||||||||||
Parallel movements of yield curve | ||||||||||||||||
Immediate movements of yield curve, but not permanently | ||||||||||||||||
Shift up 100 basis points | (45 | ) | (3,173 | ) | 187 | (2,316 | ) | |||||||||
Shift down 100 basis points | (92 | ) | 2,719 | (462 | ) | 2,064 |
16. Capital management and solvency
As at March 31, 2021, Aegon’s estimated capital position was:
Solvency II key figures | ||||||||
March 31, 20211) | December 31, 2020 | |||||||
Amounts in EUR millions | ||||||||
Group Own Funds | 18,810 | 18,582 | ||||||
Group SCR | 9,676 | 9,473 | ||||||
Group Solvency II ratio | 194 | % | 196 | % |
1 The Solvency II ratios are estimates, are not final until filed with the respective supervisory authority.
The table below provides the composition of Aegon’s Available Own Funds across Tiers:
March 31, 2021 Available Own Funds | December 31, 2020 Available Own Funds | |||||||
Tier 1 - unrestricted | 13,101 | 12,971 | ||||||
Tier 1 - restricted | 2,587 | 2,571 | ||||||
Tier 2 | 2,333 | 2,340 | ||||||
Tier 3 | 789 | 700 | ||||||
Total Available Own Funds | 18,810 | 18,582 |
The table below provides the reconciliation from shareholders’ equity to Solvency II Own Funds:
Reconciliation Shareholders’ Equity - Own Funds | ||||||||
EUR millions | March 31, 2021 | December 31, 2020 | ||||||
IFRS Shareholders’ Equity | 22,035 | 22,815 | ||||||
IFRS adjustments for Other Equity instruments and non controlling interests | 2,656 | 2,644 | ||||||
IFRS Group Equity | 24,691 | 25,459 | ||||||
Solvency II revaluations and reclassifications | (8,396 | ) | (9,418 | ) | ||||
Transferability restrictions 1 | (1,832 | ) | (1,766 | ) | ||||
Excess of Assets over Liabilities | 14,463 | 14,274 | ||||||
Availability adjustments | 4,438 | 4,416 | ||||||
Fungibility adjustments | (92 | ) | (108 | ) | ||||
Available Own Funds | 18,810 | 18,582 |
1 This includes the transferability restriction related to the RBC CAL conversion methodology.
The Solvency II revaluations and reclassification mainly stem from the difference in valuation and presentation between IFRS-EU and Solvency II frameworks. The decrease of Solvency II revaluation and reclassifications is mainly driven by increasing interest rates during 1Q 2021, leading to lower revaluation reserves in Aegon US.
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Condensed consolidated interim financial statements 1Q 2021 Results 21
17. Commitments and contingencies
There have been no material changes in commitments and contingencies as reported in Aegon’s 2020 Integrated Annual Report.
18. Acquisitions/Divestments
On February 28, 2021, Aegon 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, 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.
19. Post reporting date events
On April 7, 2021, Aegon has taken note of an announcement issued that day by Vienna Insurance Group AG Wiener Versicherung Gruppe (VIG). The announcement issued by VIG reads as follows: “Acquisition of the Aegon entities prevented by Hungary for the moment. Vienna Insurance Group AG Wiener Versicherung Gruppe received a decree yesterday afternoon in which the Hungarian Ministry of the Interior announced that the intended acquisition by a foreign investor of the Aegon companies in Hungary is denied. As part of the approval process, Vienna Insurance Group has been in constructive talks with the responsible Hungarian Minister of Finance since January 2021. The decree is in contradiction with the course of the talks to date. Vienna Insurance Group expects that this issue will be resolved positively in the near future.” Aegon will continue to work with VIG to close the transaction.
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22 Condensed consolidated interim financial statements 1Q 2021 Results
Disclaimers
Cautionary note regarding non-IFRS-EU measures
This document includes the following non-IFRS-EU financial measures: operating result, income tax and result before tax. These non-IFRS-EU measures are calculated by consolidating on a proportionate basis Aegon’s joint ventures and associated companies. The reconciliation of these measures to the most comparable IFRS-EU measure is provided in note 3 ‘Segment information’ of Aegon’s Condensed Consolidated Interim Financial Statements. Aegon believes that these non-IFRS-EU measures, together with the IFRS-EU information, provide meaningful supplemental information about the operating results of Aegon’s business including insight into the financial measures that senior management uses in managing the business.
Forward-looking statements
The statements contained in this document that are not historical facts are forward-looking statements as defined in the US Private Securities Litigation Reform Act of 1995. The following are words that identify such forward-looking statements: aim, believe, estimate, target, intend, may, expect, anticipate, predict, project, counting on, plan, continue, want, forecast, goal, should, would, could, is confident, will, and similar expressions as they relate to Aegon. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Aegon undertakes no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which merely reflect company expectations at the time of writing. Actual results may differ materially from expectations conveyed in forward-looking statements due to changes caused by various risks and uncertainties. Such risks and uncertainties include but are not limited to the following:
t | Changes in general economic and/or governmental conditions, particularly in the United States, the Netherlands and the United Kingdom; |
t | Changes in the performance of financial markets, including emerging markets, such as with regard to: |
– | The frequency and severity of defaults by issuers in Aegon’s fixed income investment portfolios; |
– | The effects of corporate bankruptcies and/or accounting restatements on the financial markets and the resulting decline in the value of equity and debt securities Aegon holds; and |
– | The effects of declining creditworthiness of certain public sector securities and the resulting decline in the value of government exposure that Aegon holds; |
t | Changes in the performance of Aegon’s investment portfolio and decline in ratings of Aegon’s counterparties; |
t | 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; |
t | 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; |
t | The effect of the European Union’s Solvency II requirements and other regulations in other jurisdictions affecting the capital Aegon is required to maintain; |
t | Changes affecting interest rate levels and continuing low or rapidly changing interest rate levels; |
t | Changes affecting currency exchange rates, in particular the EUR/USD and EUR/GBP exchange rates; |
t | 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; |
t | Increasing levels of competition in the United States, the Netherlands, the United Kingdom and emerging markets; |
t | 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; |
t | The frequency and severity of insured loss events; |
t | Changes affecting longevity, mortality, morbidity, persistence and other factors that may impact the profitability of Aegon’s insurance products; |
t | 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; |
t | Reinsurers to whom Aegon has ceded significant underwriting risks may fail to meet their obligations; |
t | 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; |
t | Customer responsiveness to both new products and distribution channels; |
t | As Aegon’s operations support complex transactions and are highly dependent on the proper functioning of information technology, operational risks such as system disruptions or failures, security or data privacy breaches, cyberattacks, human error, failure to safeguard personally identifiable information, changes in operational practices or inadequate controls including with respect to third parties with which we do business may disrupt Aegon’s business, damage its reputation and adversely affect its results of operations, financial condition and cash flows; |
t | The impact of acquisitions and divestitures, restructurings, product withdrawals and other unusual items, including Aegon’s ability to integrate acquisitions and to obtain the anticipated results and synergies from acquisitions; |
t | 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; |
t | Changes in the policies of central banks and/or governments; |
t | Litigation or regulatory action that could require Aegon to pay significant damages or change the way Aegon does business; |
t | Competitive, legal, regulatory, or tax changes that affect profitability, the distribution cost of or demand for Aegon’s products; |
t | Consequences of an actual or potential break-up of the European monetary union in whole or in part, or the exit of the United Kingdom from the European Union and potential consequences if other European Union countries leave the European Union; |
t | Changes in laws and regulations, particularly those affecting Aegon’s operations’ ability to hire and retain key personnel, taxation of Aegon companies, the products Aegon sells, and the attractiveness of certain products to its consumers; |
t | Regulatory changes relating to the pensions, investment, and insurance industries in the jurisdictions in which Aegon operates; |
t | Standard setting initiatives of supranational standard setting bodies such as the Financial Stability Board and the International Association of Insurance Supervisors or changes to such standards that may have an impact on regional (such as EU), national or US federal or state level financial regulation or the application thereof to Aegon, including the designation of Aegon by the Financial Stability Board as a Global Systemically Important Insurer (G-SII); and |
t | Changes in accounting regulations and policies or a change by Aegon in applying such regulations and policies, voluntarily or otherwise, which may affect Aegon’s reported results, shareholders’ equity or regulatory capital adequacy levels. |
This document contains information that qualifies, or may qualify, as inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation (596/2014). Further details of potential risks and uncertainties affecting Aegon are described in its filings with the Netherlands Authority for the Financial Markets and the US Securities and Exchange Commission, including the Annual Report. These forward-looking statements speak only as of the date of this document. Except as required by any applicable law or regulation, Aegon expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Aegon’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
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Condensed consolidated interim financial statements 1Q 2021 Results 23
Corporate and shareholder information
Headquarters
Aegon N.V.
P.O. Box 85
2501 CB The Hague
The Netherlands
+ 31 (0) 70 344 32 10
aegon.com
Group Corporate Communications & Investor Relations
Media relations
+ 31 (0) 70 344 8344
gcc@aegon.com
Investor relations
+ 31 (0) 70 344 83 05
or 877 548 96 68 - toll free, USA only
ir@aegon.com
Publication dates results | ||
August 12, 2021 | 2Q 2021 Results | |
November 11, 2021 | 3Q 2021 Results |
About Aegon
Aegon’s roots date back 175 years – to the first half of the nineteenth century. Since then, Aegon has grown into an international company, with businesses in the Americas, Europe and Asia. In the US, Aegon’s largest market, we operate under the Transamerica brand. Today, Aegon is one of the world’s leading financial services organizations, providing life insurance, pensions and asset management. Aegon has never lost sight of its purpose, to help people achieve a lifetime of financial security. More information: aegon.com.
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