Annual Report 2014 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. 286 Letter of the CEO 4 Statement of financial position of Aegon N.V. 287 Composition of the Executive Board Notes to the financial statements 288 and the Management Board 6 Aegon’s strategy 8 Independent auditor’s report 301 Business overview History and development of Aegon 12 Other information Selected financial data 13 Proposal for profit appropriation 310 Business lines 16 Major shareholders 311 Results of operations 17 Worldwide 17 Americas 25 Other financial information Netherlands 44 Schedule I 314 United Kingdom 54 Schedule II 315 New Markets 63 Schedule III 317 Risk management 84 Schedule IV 319 Capital and liquidity management 87 Schedule V 320 In control statement 91 Additional information Governance Regulation and supervision 323 Report of the Supervisory Board 92 Risk factors 325 Members of the Supervisory Board 98 Property, plants and equipment 341 Remuneration Report 100 Employees and labor relations 342 Corporate governance 107 Dividend policy 342 Differences between Dutch and US company laws 112 The offer and listing 343 Code of ethics 113 Memorandum and Articles of Association 344 Controls and procedures 114 Material contracts 346 Exchange controls 346 Taxation 346 Consolidated financial statements Principal accountant fees and services 353 Exchange rates 120 Purchases of equity securities by the issuer Consolidated income statement of Aegon N.V. 122 and affiliated purchasers 354 Consolidated statement of comprehensive income Quarterly results – unaudited 355 of Aegon N.V. 123 Glossary 356 Consolidated statement of financial position of Aegon N.V. 124 Disclaimer 361 Consolidated statement of changes in equity of Aegon N.V. 125 Contact 363 Consolidated cash flow statement of Aegon N.V. 128 Notes to the consolidated financial statements 129 Remuneration 277 2 This page has been intentionally left blank. Annual Report 2014 Strategic information This pdf is interactive. The content is clickable so you can navigate through this document. 3 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, 2014. It presents the consolidated financial and references to the ‘SEC’ are to the Securities and Exchange statements of Aegon (pages 122-283) and the financial Commission. Aegon uses ‘EUR’ and ‘euro’ when referring to statements of Aegon N.V. (pages 286-300), both prepared in the lawful currency of the member states of the European accordance with the International Financial Reporting Standards Monetary Union; ‘USD’, and ‘US dollar’ when referring to the (IFRS), as adopted by the European Union, and Part 9 of Book 2 lawful currency of the United States of America; ‘GBP’, ‘UK of the Dutch Civil Code. pound’ and ‘pound sterling’ when referring to the lawful currency of the United Kingdom; ‘CAD’ and ‘Canadian dollar’ when Aegon N.V. is referred to in this document as ‘Aegon’, or referring to the lawful currency of Canada; ‘CNY’ when referring ‘the Company’, and is together with its member companies to the lawful currency of the People’s Republic of China; ‘CZK’ referred to as ‘Aegon Group’ or ‘the Group’. For such purposes, when referring to the lawful currency of Czech Republic, ‘HUF’ ‘member companies’ means, in relation to Aegon N.V., those when referring to the lawful currency of Hungary; ‘PLN’ when companies required to be consolidated in accordance with referring to the lawful currency of Poland; ‘RON’ when referring the legislative requirements of the Netherlands relating to to the lawful currency of Romania; ‘TRY’ when referring to the consolidated accounts. lawful currency of Turkey, and ‘UAH’ when referring to the lawful currency of Ukraine. 4 Strategic information Letter of the CEO Letter of the CEO Aegon’s strong operating performance in 2014 was underpinned by the progress we made to better understand and connect with our customers, together with our continued drive to be a leader in our chosen markets. Our work as a company is inspired by our purpose to help people take responsibility for their financial future, and I am proud of how the hard work, creativity and professionalism of Aegon’s 28,000 employees are enabling us to become a truly customer-centric company. A further increase in deposits this year is a clear demonstration Investing in Aegon’s digital presence and reach has been of not only retaining the trust of existing customers, but also central to our continued work to enhance customer loyalty. earning the trust of many new customers. Furthermore, 2014 saw a range of new and improved online platforms, revenue-generating assets increased significantly, exceeding products and services that enabled us to strengthen and deepen EUR 500 billion for the first time in Aegon’s history. These our relationship with customers. The external awards that many achievements did not mean, however, that the year was without of these received is recognition of the progress we have made its challenges. Changes to our assumptions and updates to our in serving customers in the way they wish to be served – actuarial models had a negative impact on underlying earnings, something particularly important given the speed at which as did continued market volatility, and in particular, low interest customer behavior is evolving and the emergence of new rates. Yet while these factors had an effect, they did not distract entrants in the market. us from continuing to successfully execute our strategy and generate strong financial results. An important development in delivering operational excellence was the creation of Transamerica’s new ‘Investments & Aegon’s ambition is to become a leader in its chosen markets, Retirement’ division. This new division will enable us to and to this end we focus on four strategic priorities: optimize become more efficient, and more effective in serving customers’ portfolio; enhance customer loyalty; operational excellence; needs throughout the entire customer life cycle, up to and and empower employees. The effective optimization of Aegon’s including retirement. portfolio in 2014 resulted in a number of significant positive developments. The extension of our successful relationship Aegon’s employees are our best source of ideas and our most with Banco Santander in Spain led to a further distribution important resource to connect with customers. Empowering agreement with the bank in Portugal. We sold our stake in colleagues to enable them to fulfill their roles to the very best La Mondiale Participations in France and announced the sale of their abilities – such as through additional training and new of Aegon’s Canadian life insurance business, as neither met resources – is therefore every bit as important as investment in our strategic objective of becoming a market leader. Later in other parts of the Company. Over the last 12 months, we have the year, Aegon’s growing asset management business and also continued to focus on fostering a culture in which trust, La Banque Postale entered into exclusive talks to form a responsibility and innovation are actively encouraged, and new asset management strategic alliance in France, and we ensuring our common purpose is fully understood and acted upon. announced a new joint venture partner, Tsinghua Tongfang, for our life insurance company in China. Annual Report 2014 5 Aegon always aims to adhere to the highest standards of in which it operates. While we can expect a number of continued corporate governance and transparency, and to report in an headwinds – such as low interest rates – the withdrawal of open and transparent way. For this reason, in addition to the governments and employers from providing retirement security information presented in this report, we are also pleased to means that the underlying demand for the pensions, life produce a separate integrated report, available on Aegon.com. insurance and asset management products and services that we This contains further information about our social, economic offer is only set to rise. By continuing to execute our strategy, we and environmental performance and impacts, together with can be confident that we will not only continue to help millions how we create value for our stakeholders. of people across the world secure their financial future, but also deliver excellent value to shareholders. Preparation for the introduction of Solvency II, which will come into effect on January 1, 2016, was a key priority for 2014. Thank you for your interest in Aegon. The new regulations will change capital requirements and remain a key priority of our activities throughout 2015. On behalf of the Management Board, I would like to express my thanks and appreciation to everyone at Aegon for their individual and collective contributions to the results presented in this report. Furthermore, I would also like to express my gratitude and commitment to our many shareholders whose confidence and support enables us to deliver on our promises. Alex Wynaendts As we look to the future, Aegon is well positioned to take Chief Executive Officer and Chairman of the Executive Board of advantage of the many opportunities that exist in the markets Aegon N.V. 6 Strategic information Composition of the Executive Board and the Management Board Composition of the Executive Board and the Management Board Alex Wynaendts (1960, Dutch) Adrian Grace (1963, British) Chief Executive Officer Chief Executive Officer of Aegon UK Chairman of the Executive Board Member of the Management Board Chairman of the Management Board Adrian Grace began his career with Leeds Permanent Building Alex Wynaendts began his career in 1984 with ABN AMRO Bank, Society in 1979, before joining Mercantile Credit in 1984. working in Amsterdam and London in the Dutch bank’s capital In 2001, Mr.