Aegon Annual Report 2012

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44Business overview Results of operations the NetherlandsResults 2012 the Netherlands 1Higher underlying earnings before tax in the Netherlands were driven by improvedLife & Savings earnings and lower operating expenses following implemented costreduction initiatives in 2011. Aegon’s business in the Netherlands has alreadyrealized EUR 89 million of the targeted EUR 100 million reduction in operatingexpenses. Net income was impacted by a one-off charge of EUR 265 million relatedto the acceleration of product improvement for unit-linked insurance products.Net incomeNet income from Aegon’s businesses in the Netherlandsamounted to EUR 291 million and included a charge ofEUR 265 million before tax related to the acceleration of productimprovements for unit-linked insurance products. Realizedgains on investments totaled EUR 138 million for the year andwere mainly the result of asset liability management relatedtrading activity and selective de-risking. Results on fair valueitems amounted to a gain of EUR 164 million and impairmentsamounted to EUR 29 million.Underlying earnings before taxUnderlying earnings before tax from Aegon’s operations in theNetherlands increased 6% in 2012 to EUR 315 million as higherearnings in Life & Savings more than offset lower earnings inPension and Non-life. Recurring charges for Corporate Centerexpenses amounted to EUR 16 million.Underlying earnings before tax from Aegon’s Life & Savingsoperations in the Netherlands increased to EUR 262 million,up 42% compared to 2011. This increase was driven by costsavings, a higher contribution from Aegon’s growing mortgageportfolio on lower funding costs, the non-recurrence ofcertain expenses and a benefit in the fourth quarter resultingfrom updated mortality tables of EUR 24 million.Underlying earnings before tax from the Pension businessdeclined to EUR 66 million as the benefit of cost savingsand the wind up of several contracts were more thanoffset by lower interest income, the non-recurrence of anemployee benefit release in 2011 and a charge in 2012 ofEUR 17 million resulting from updated mortality tables.Non-life recorded an underlying loss before tax ofEUR 29 million in 2012 as a result of adverse claimexperience on disability and general insurance products.Losses on these products have led to the implementationof actions to improve future results with disability insuranceproducts already showing improvements in 2012.In 2012, the distribution businesses recorded an underlyingearnings before tax of EUR 16 million, an improvementcompared to 2011 due to cost savings and loweramortization of value of business acquired following animpairment in 2011.Commissions and expensesCommissions and expenses decreased by 7% in 2012 comparedto 2011 driven by lower operating expenses. Operatingexpenses decreased by 8%, to EUR 756 million, as realized costsavings and the non-recurrence of restructuring charges offsetinvestments in new distribution capabilities and recurring chargesfor Corporate Center expenses.Aegon is on track to reduce operating expenses by EUR 100million in comparison to the cost base for 2010, of which themajority has been achieved in 2012. Over the years, Aegon hasimplemented cost savings of EUR 89 million.ProductionNew life sales decreased by 3% in 2012 to EUR 246 million. Thedecline in Individual life sales to EUR 46 million, primarily drivenby a shrinking Dutch life insurance market, more than offset the16% increase in pension sales. Production of mortgages in 2012amounted to EUR 2.7 billion down from EUR 3.3 billion in 2011.Premium production for accident & health amounted toEUR 21 million, down from EUR 27 million in 2011. Sales inincome insurance products were negatively impacted by strongcompetition and price increases to maintain margins. Generalinsurance production amounted to EUR 30 million, up 11% forthe year, resulting from successful new distribution initiatives.Gross deposits declined to EUR 1,484 million, driven by strongcompetition on the Dutch savings market and a reduction of therate offered on savings accounts to protect margins.1 Throughout this report, Aegon the Netherlands refers to all Aegon companies operating in the Netherlands.
Annual Report 2012 45Results 2011 the NetherlandsAmounts in EUR millions 2011 2010 %Net underlying earnings 238 292 (18%)Tax on underlying earnings 60 93 (35%)Underlying earnings before tax by product segmentLife & Savings 185 186 (1%)Pensions 98 153 (36%)Non-life 6 33 (82%)Distribution 8 16 (50%)Share in underlying earnings before tax of associates 1 (3)-Underlying earnings before tax 298 385 (23%)Net fair value items 156 361 (57%)Gains / (losses) on investments 269 155 74%Impairment charges (15) (11) (36%)Other income / (charges) (164) 38Income before tax 544 928 (41%)Income tax (125) (217) 42%Net income 419 711 (41%)Life insurance gross premiums 3,213 3,185 1%Accident and health insurance premiums 216 201 7%General insurance premiums 452 451-Total gross premiums 3,881 3,837 1%Investment income 2,192 2,161 1%Fees and commission income 329 348 (5%)Total revenues 6,402 6,346 1%Commissions and expenses 1,122 1,058 6%of which operating expenses 823 748 10%-New life salesAmounts in EUR millions 2011 2010 %Life & Savings 81 83 (2%)Pensions 173 165 5%Total recurring plus 1/10 single 254 248 2%Amounts in EUR million 2011 2010 %New premium production accident and health insurance 27 26 4%New premium production general insurance 27 26 4%Gross deposits (on and off balance) 2011 2010 %Life & Savings 1,968 2,036 (3%)Pensions 80 346 (77%)Total gross deposits 2,048 2,382 (14%)
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336HeadquarterAegon N.V.Aegonplein
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www.aegon.com
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Aegon Annual Report 2012

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