Aegon Annual Report 2016
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Annual Report 2016 This page has been intentionally left blank. This pdf is interactive. The content is clickable so you can navigate through this document. 1 Table of contents Strategic information Financial statements of Aegon N.V. Introduction 3 Income statement of Aegon N.V. 304 CEO letter 4 Statement of financial position of Aegon N.V. 305 Composition of the Executive Board Notes to the financial statements 306 and the Management Board 6 Aegon’s strategy 9 Independent auditor’s report 319 Business overview History and development of Aegon 10 Other information Selected financial data 11 Profit appropriation 328 Business lines 14 Major shareholders 329 Results of operations 16 Worldwide 16 Americas 24 Other financial information Europe 40 Schedule I 332 Asia 70 Schedule II 333 Aegon Asset Management 80 Schedule III 335 Risk management 86 Schedule IV 337 Capital and liquidity management 92 Schedule V 338 In control statement 100 Regulation and Supervision 101 Additional information Compliance with regulations 340 Governance Risk factors 342 Report of the Supervisory Board 104 Property, plant and equipment 360 Members of the Supervisory Board 111 Employees and labor relations 360 Remuneration Report 113 Dividend policy 361 Corporate governance 120 The offer and listing 362 Differences between Dutch and US company laws 124 Memorandum and Articles of Association 363 Code of ethics 125 Material contracts 364 Controls and procedures 126 Exchange controls 364 Taxation 365 Principal accountant fees and services 372 Consolidated financial statements Purchases of equity securities by the issuer of Aegon N.V. and affiliated purchasers 373 Exchange rates 132 Quarterly results – unaudited 374 Consolidated income statement of Aegon N.V. 133 Glossary 375 Consolidated statement of comprehensive income Disclaimer 381 of Aegon N.V. 134 Contact 383 Consolidated statement of financial position of Aegon N.V. 135 Consolidated statement of changes in equity of Aegon N.V. 136 Consolidated cash flow statement of Aegon N.V. 139 Notes to the consolidated financial statements 140 Remuneration 296 Annual Report 2016 2 This page has been intentionally left blank. Annual Report 2016 Strategic information Introduction 3 Strategic information Introduction Introduction About this report Presentation of certain information This report serves as Aegon’s Annual Report for the year ended References to the ‘NYSE’ are to the New York Stock Exchange December 31, 2016. It presents the consolidated financial and references to the SEC are to the US Securities and Exchange statements of Aegon pages 133-302 and the stand-alone Commission. Aegon uses ‘EUR’ and ‘euro’ when referring to financial statements of Aegon N.V. pages 304-318, both the lawful currency of the member states of the European prepared in accordance with the International Financial Reporting Monetary Union; ‘USD’, and ‘US dollar’ when referring to Standards as adopted by the European Union (‘IFRS-EU’), and the lawful currency of the United States of America; ‘GBP', Part 9 of Book 2 of the Dutch Civil Code. ‘UK pound’ and ‘pound sterling’ when referring to the lawful currency of the United Kingdom; ‘CAD’ and ‘Canadian dollar’ Aegon N.V. is referred to in this document as ‘Aegon’, or when referring to the lawful currency of Canada, and ‘PLN’ ‘the Company’, and is together with its member companies when referring to the lawful currency of Poland. referred to as ‘Aegon Group’ or ‘the Group’. For such purposes, ‘member companies’ means, in relation to Aegon N.V., those companies required to be consolidated in accordance with the Netherlands legislative requirements relating to consolidated accounts. Annual Report 2016 CEO letter 4 Strategic information CEO letter CEO letter In 2016, we made further progress in transforming our company and in delivering on our targets, despite a challenging macro-economic environment. From the Brexit referendum in the UK to the presidential election Transforming our company in the US, 2016 was a year defined by a series of events that Meeting our purpose of helping people achieve a lifetime of had profound effects on the global economy. Uncertainty and financial security demands that we constantly evolve as instability led to considerable volatility on financial markets, a business so that we can continue to serve our customers’ interest rates decreased to historically low levels before rising changing needs. For this reason we, once again, invested later in the year, and the trend of governments retreating from significantly in developing innovative digital solutions – from providing retirement security continued. Against this backdrop, new apps and customer-friendly platforms that enable people Aegon’s work of bringing certainty in an uncertain world has to better understand their finances, to exploring the future of never been more important, and I’m proud of how we delivered the insurance industry through co-launching the Blockchain on our promises to our many millions of customers worldwide Initiative B3i. during the year – paying out over EUR 59 billion in claims, benefits and plan withdrawals. The environment in which we operate is changing fast, and over the course of the year we continued to demonstrate how we are Our financial performance adapting to the new landscape. In the UK, we divested our I am pleased that Aegon’s Solvency II ratio remained well within annuity book and acquired Cofunds and BlackRock’s defined our target range of 140 to 170 percent throughout the year contribution recordkeeping business. This successfully completed – despite the widespread economic volatility. The ratio on the transformation of our UK business from a largely traditional December 31, 2016, of 157 percent was above the midpoint of pension business into a market-leading, cost efficient and our target range, and this consistent performance throughout scalable platform business, with over 3 million customers and the year is a demonstration of our company’s diligent approach approximately 100 billion pounds of assets under administration. to managing risk and protecting our balance sheet. There is We also continued the very significant restructuring of our nonetheless potential for renewed volatility and uncertainty US business, which has brought all of Transamerica’s business around the calculation of this ratio, and we remain mindful and units together into a single, customer-facing company, and gives focused on such risks. our customers easier access to all our different products and services. 2016 was once again a year of strong sales – especially in terms of our fee businesses, in particular Asset Management – and I am By transforming Aegon’s US operations from distinct business therefore happy that we reached over EUR 100 billion of gross lines into one, functionally-organized business, we identified deposits for the very first time, which contributed to EUR 3 billion potential for cost savings. These savings constituted the bulk net deposits. This strong performance was above all a reflection of the group’s original 2018 expense savings target of of the need and relevance of our products and services, the EUR 200 million, announced in January 2016. Meeting these strength of our franchise, and the trust our loyal customers expense reductions was a key priority for our business throughout continue to place in us. the year as we continued to focus on becoming more efficient, more profitable, raising our returns, investing in new digital While we experienced some significant headwinds this year in solutions, and deploying our capital in the best way for our the form of market volatility and some adverse claims experience company and stakeholders. By accelerating the execution of – both of which had an impact on earnings – we are on track to our strategy, we were able to exceed our expense savings target deliver on our 2018 financial targets. Moreover, I am pleased for the year, achieving a total of EUR 110 million in run-rate that we successfully increased capital returns to our shareholders savings. As a result, this enabled us to announce that our group this year as part of our commitment to return EUR 2.1 billion 2018 run-rate expense savings target would rise to to shareholders in the period 2016-2018. EUR 350 million. Annual Report 2016 5 Strategic information CEO letter Our communities I would also like to thank our many shareholders around Although this Annual Report focusses primarily on Aegon’s the world. We value your continued interest, and are grateful financial performance, we also choose to publish an integrated for the trust you place in our company. Aegon achieved much annual review. This outlines our company’s wider impact on all over the last twelve months, and I am confident that by the communities on which we have an impact, and how Aegon successfully executing our strategy we will continue to become creates and shares value for stakeholders by letting customers, a more efficient and customer-centric organization. By doing so investors, business partners, local communities and employees we will be able to secure long-term, sustainable growth, and tell their story. thereby meet our commitments to all our valued stakeholders. Our employees and shareholders On behalf of Aegon’s Management Board, I would like to express my sincere thanks to over 29,000 colleagues for all that they do. 2016 was a year of significant change for our company, and it would have been impossible to continue to provide the very best service to our millions of customers around the world without Alex Wynaendts their extraordinary professionalism, ingenuity and dedication. Chief Executive Officer and Chairman of the Executive Board of Aegon N.V. Annual Report 2016 Composition of the Executive Board and the Management Board Composition of the Executive Board and the Management Board 6 Strategic information Composition of the Executive Board and the Management Board Composition of the Executive Board Alex Wynaendts (1960, Dutch) overseeing the Company’s international growth strategy.