AEGON N.V. (NYSE:AEG) Q4 2017 Earnings Conference Call - Final Transcript

Feb 15, 2018 • 08:30 am ET

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AEGON N.V. (NYSE:AEG) Q4 2017 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, and welcome to the Aegon Q3 2017 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Willem van den Berg, Head of Investor Relations. Please go ahead.

Executive
Willem van den Berg

Thank you. Good morning, everyone, and thank you for joining this conference call on Aegon's fourth quarter 2017 results. We would appreciate it if you take a moment to review our disclaimer on forward-looking statements, which you can find at the back of the presentation.

Our CEO, Alex Wynaendts, will first provide an overview of our key strategic achievements for 2017. And he will then hand it over to our CFO, Matt Rider, who will walk you through our fourth quarter 2017 results. As always, we will leave plenty of time to address all of your questions.

I'll now hand it over to Alex.

Executive
Alex Wynaendts

Good morning, everyone. Thank you all for your continued interest in Aegon and for joining us for today's earning call.

I'm pleased that this was a good quarter both financially and strategically and one that concludes a very strong year for Aegon. And let me begin by providing you with an overview of the most important strategic achievements we have realized since our last earnings call. We have made significant progress with improving our Solvency II ratio to 201% while at the same time greatly enhancing the quality of our capital. We announced a partnership with Tata Consultancy Services in the US to outsource the administration of our life and annuity businesses. This will lead to considerable cost savings. Also in the US, we exceeded our target to reduce capital allocated to our runoff business by $1 billion, and this one year ahead of our 2018 target. Throughout the year, we continued to make significant progress on our strategic priority to transform our business through our continued digitization efforts. And finally, I would like to highlight our strong sales for the quarter. I will take you through these achievements in more detail before concluding with the progress we are making towards our 2018 financial targets.

Let's begin by taking a closer look at the improvements we made in our Solvency II ratio on the next slide. I'm on Slide 3 now. I'm very pleased with the progress we made during 2017 to improve our Solvency II ratio to 201%, which is at the top end of our capital management target zone. This was achieved through working closely across the group and with our regulators on a number of important items. And these included successfully recapitalization, our Dutch unit, back to dividend-paying status by injecting EUR1 billion from the holding.

We were able to fund this capital contribution internally, including through divestments. In the Netherlands, we divested UMG, an insurance brokerage firm. And in the US, we divested our BOLI/COLI and payout annuity runoff businesses. This enabled us to make a onetime special remittance to the holding in the fourth quarter. We also reached an agreement with our