AEGON N.V. Semi-annual update. CREDIT OPINION 4 July Update

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1 CREDIT OPINION AEGON N.V. Semi-annual update Update Summary Rating Rationale The credit profile of Aegon N.V. (rated for senior debt) reflects the aggregate credit strength of its various operating companies as well as its geographically diversified sources of cash flows. RATINGS AEGON N.V. Domicile Netherlands Long Term Rating Type LT Issuer Rating Outlook Stable Please see the ratings section at the end of this report for more information. The ratings and outlook shown reflect information as of the publication date. Contacts Dominic Simpson VP-Sr Credit Officer Nicolò Squercina Associate Analyst Giovanni Meloni Analyst Antonello Aquino Associate Managing Director CLIENT SERVICES Americas Asia Pacific Japan EMEA Aegon N.V. is the Netherlands-based holding company of the Aegon insurance group. Aegon primarily offers life insurance and pension products and its main operations are based in the US, comprising three primary insurance entities which all carry an A1 Insurance Financial Strength Rating ( IFSR ). The group has also significant and well established operations in the Netherlands (Aegon Levensverzekering N.V.). Aegon's third largest operation is located in the UK (Aegon UK) and the group is present in over 20 other countries worldwide. The G-20 Financial Stability Board (FSB) has designated Aegon as one of the nine global systemically important insurers. On 20 December 2017, we affirmed Aegon N.V.'s ratings and changed the outlook to stable from negative to reflect the good level of geographic diversification that the group has maintained over the past two years and that we expect the group to maintain. Aegon N.V. managed to gradually offset the earnings lost following the sale of its UK annuity business in 2016 by growing its UK platform business through a series of acquisitions. Credit Profile of Significant Subsidiaries Aegon USA Moody's A1 insurance financial strength (IFS) rating (stable outlook) of three operating life insurance companies in the Aegon USA Life Group (Aegon USA - i.e., Transamerica Life Insurance Company, Transamerica Premier Life Insurance Company, and Transamerica Financial Life Insurance Company) - is based on the group's leading position in the U.S. life insurance and asset accumulation markets, strong business line and distribution diversification. Aegon USA continues to make progress in increasing profitability and leveraging its market positions to grow its life insurance and retirement businesses in its core business lines while investing in programs to improve its back office operations (i.e. an administrative services agreement with Tata Consultancy Services) and its worksite businesses and exit or de-emphasize non-core, and/or underperforming businesses (i.e. institutional life insurance and payout annuities). Aegon USA's strengths are mitigated by lower than expected profitability for its rating level, precipitated by volatility in long-term care and life insurance results, and the interest rate, equity, and hedging risks of its variable annuity (VA) liabilities. Separately, the company s level premium term life ( XXX ), no-lapse universal life insurance ( AXXX ), and variable

2 annuity businesses extensively use captives, which weaken the quality of reserves, asset quality, and regulatory capital on a consolidated basis. Please refer to Aegon USA Life Group (Cons) credit opinion for more details on the credit profile of Aegon's US operations. Aegon The Netherlands Aegon Levensverzekering N.V. enjoys a strong brand recognition and one of the leading positions in the Dutch life insurance market. The company is particularly strong in group pensions insurance and is now the no.2 pension administrator but is also developing its banking business. However, the Dutch market remains highly competitive and the company has been focusing on improving customer service while reducing costs. Underlying earnings before tax ( 520 million, in 2017) have remained broadly stable in the last three years. Life insurance sales tend to decline (minus 11% in 2017) but gross deposits continuously grow, reaching 8.1 billion in 2017 (2016: 6.7 billion), reflecting the growth of Aegon's online bank, named Knab, launched in The insurer undertook pro-active hedging on equity and interest-rate risk in the early 2000s and consequently the earnings' sensitivity to changes in interest rates and equity markets is low compared to many Dutch peers. Nevertheless investment guarantees embedded in many of the products continue to leave the company's profitability somewhat exposed to adverse market movements in times of sharp market volatility and of low interest rates. Aegon Netherlands Solvency II ratio significantly increased during 2017 to 199% from 134% at YE16, benefiting from a EUR 1 billion injection, model changes, derisking and the divestment of UMG. The business is to resume regular remittances to the group holding company in 1H18. Aegon UK Aegon is present in the UK life and pensions market and has become the leader in the UK platform segment, following the acquisition of BlackRock s UK defined contribution business and more importantly the acquisition of Cofunds, which significantly increased the scale of Aegon s platform business to over 100 billion of assets from around 9 billion as of Q Pensions are the largest business in terms of sales, although diversification has been achieved with Cofunds the majority of whose assets are in ISAs and GIAs. The company sold its annuities business in 2016 and is now focusing on selected business lines (At Retirement and Workplace savings), as well as progressively migrating during 2018 the rest of its business to its own pension administration and investment platform. Aegon s UK profitability will largely depend on the level of assets under administration that it retains on its platform and the fees it charges its customers amid continued negative pressure on margins in the competitive UK platform market. Nonetheless, Aegon UK reported good retention following the acquisition of Cofunds and favorable equity markets supported the growth in assets under administration in Hence, Aegon UK is gradually replacing the earnings lost from the sale of the annuity business and we expect the company to continue to grow its earnings as the synergies from acquisitions gradually materialize, although these will partly be offset by pressures on margins. Aegon UK's Solvency II ratio increased during 2017 to 176% from 156% at YE16 with capital generation, the completion of the Part VII transfers related to the divestment of the majority of the UK annuity book and model changes more than offsetting remittances to the Group. The business is to resume regular remittances to the group holding company in 1H18. Credit Strengths» Strongly focused strategy on wealth accumulation, life insurance and pension products» Diversified business portfolio, with top tier positions in the US, in the Netherlands and in the UK platform segment» Broad product offering and strong customer service capabilities This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on for the most updated credit rating action information and rating history. 2

3 » Good liquidity and ALM management Credit Challenges» To maintain its competitive position and improve profitability, particularly in the UK, and to a lesser extent in the Netherlands, following the shift in focus in new business» Modest profitability of Aegon US which includes managing its exposure to equity market volatility and the performance of its legacy LTC business» Interpreting the proposed new SEC investment advice standard, and the rationalization of products and distribution channels in the US» Relatively high total leverage and more broadly relatively high reliance on structured transactions such as the use of captives in the US and the funding of mortgages through RMBS in the Netherlands The outlook is stable, reflecting the stable outlook on its main operations (US operations) and our expectation that Aegon will be able to maintain a good level of geographic diversification. What Could Change the Rating - UP Senior debt ratings could be upgraded in the event of:» Improvement in the credit profile of the US insurance operations, as evidenced by an upgrade of their insurance financial strength ratings» Consolidated total leverage below 30% and earnings coverage consistently above 8x What Could Change the Rating - DOWN Senior debt ratings could be downgraded in the event of:» Reduced geographic diversification (i.e. increased reliance on the US business) that would lead to a reduction in the notching differential between the IFSR of Aegon USA's entities and the senior debt rating of Aegon N.V.» Weakening of the credit profile of Aegon USA, as evidenced by a downgrade of its ratings» Weakening in the credit profile of the Dutch operations» Consolidated group financial leverage above 40% and earnings coverage consistently below 4x 3

4 Key Indicators Exhibit 1 AEGON N.V. [1][2] As Report ed (Euro Millions) Total Assets 396, , , , ,767 24,386 24,734 26,494 28,129 22,626 2, (663) 1, ,584 50,213 34,868 43,883 45,012 Goodwill & Intangibles % Shareholders' Equity 52.3% 58.0% 52.4% 47.4% 61.5% Financial Leverage 37.0% 36.2% 28.2% 27.4% 31.1% Total Leverage 44.3% 43.8% 37.5% 37.4% 44.1% 5.7x 2.3x (0.8x) 3.6x 2.5x Total Shareholders' Equity Net income (loss) attributable to common shareholders' Total Revenue Moody's Adjust ed Rat ios Earnings Coverage (1 yr.) [1] Information based on IFRS financial statements as of Fiscal YE December 31 [2] Certain items may have been relabeled and/or reclassified for global consistency Source: Company Reports, Moody's Investors Service Structural Considerations Aegon N.V.'s senior debt rating is two notches lower than the A1 IFSR of the US operating companies, which is one notch narrower than Moody s standard practice, which reflects the geographical diversity of the group. However the group's somewhat dependence on earnings from the US operations and predominant focus on life and retirement business compares less favourably to more diversified groups with a similar notching level. Capital Structure and Liquidity Aegon's consolidated shareholders' equity reduced to 24.4 billion in 2017 (2016: 24.7 billion) with net income more than offset by a weakening of the US Dollar, dividends paid to shareholders, and a reduction in revaluation reserves net of deferred tax liabilities. At the same time, total capital was fairly stable at 38.9 billion at 31 December 2017 (YE2016: 38.8 billion). As of 31 December 2017, 12.4 billion of debt was outstanding, of which 1.3 billion (11%) was recourse operational debt, 6.5 billion (52%) was senior debt or commercial paper and 4.6 billion (37%) was subordinated debt. As of year-end 2017, Aegon also had 5.9 billion of outstanding non-recourse debt (e.g., funding of mortgages through RMBS) that we include neither in financial debt, nor in operational debt in our calculations. The majority of the group's borrowings is traditionally either directly attributable to or guaranteed by Aegon N.V., but since 2016, senior debt includes borrowings to the Federal Home Loan Bank (FHLB), issued by some Aegon s subsidiaries in the US - such borrowings increased during 2017 by 1.3 billion to 4.2 billion. We view Aegon N.V.'s financial flexibility in line with a single A score. In 2017 financial leverage (excluding operational debts) increased slightly to around 37% (2016: c.36%), driven by the increase in FHLB borrowings which Aegon uses primarily to purchase long-term assets and increase the duration of its assets in its US life subsidiaries. New debt issued in 2017 also included 500 million of a 1-year senior debt in August. In April 2018, Aegon issued $800 million dated subordinated Tier 2 notes to refinance $525 million and 200 million of grandfathered Tier 2 and Tier 1 securities respectively, and it will also redeem 500 million of senior debt in August. On a pro-forma YE17 basis, these transactions would slightly reduce Aegon's adjusted financial leverage by around 1% pt. Nonetheless, in our financial leverage ratio, financial debt includes pension deficit which amounted to 3.7 billion at year-end 2017, while Aegon holds some assets backing these pension liabilities; if we take into consideration these assets, pension deficit significantly improves and financial leverage decreases by around 5 percentage points. Total leverage, which includes recourse operational debt and does not incorporate equity credit for hybrid securities increased slightly to 44.3% in 2017 (2016: 43.8%), driven by the increase in financial leverage. However, the group has further repaid part of its outstanding recourse debt, which reduced to 1.3 billion in 2017 compared to 1.5 billion in The difference between the total 4

5 leverage and the financial leverage now mostly reflects the use of structured transactions to reduce new business strain and optimize capital in its US operations. Aegon's financial flexibility remains nonetheless constrained by a relatively low though improved earnings coverage (2.7x (YE16: 2.3x) on a 5-year average basis), mostly driven by a weak profitability. However, coverage improved significantly in 2017 to 5.7x (YE16: 2.3x) with the Group's consolidated return on capital improving to around 6% (YE16: c.1%). The group reported net income of 2,230 million in 2017, up from 453 million in 2016, benefiting from improved underlying earnings, an effective tax rate of only 3% as a result of a benefit related to lower marginal tax rates in the new US tax law, and a significantly lower one-off charges. Liquidity Profile Moody's Prime-2 rating of Aegon N.V. and Aegon Funding Company LLC 2.5 billion commercial paper programs are based on the group's current ratings (long-term senior debt ), and the availability of alternative sources of liquidity to assist the repayment of outstanding obligations. Aegon N.V. guarantees any notes issued under the program by its subsidiary Aegon Funding Company. Total drawings under Aegon N.V.'s programs were 72 million as of 31 December At the same time, the amount of liquid assets at the holding Aegon N.V. (i.e., cash and equivalents) were 1,068 million at year-end 2017 (excluding collateral received from counterparties and liquidity managed on behalf of affiliated investment funds) and the group held a total balance of 1.4 billion (YE16: 1.5 billion) in excess cash as of year-end 2017 in the centrally managed holding companies, with remittances from the units ( 1.8 billion) more than off-set by holding expenses ( 0.3 billion), capital returns to shareholders ( 0.6 billion), and capital injections to units ( 1.1 billion, including 1 billion to increase the Solvency II ratio of Aegon the Netherlands). Aegon is targeting to maintain a cash buffer at the holding between 1.0 and 1.5 billion. Aegon's liquidity profile has been enhanced in recent years by the continued issue of perpetual capital securities to refinance maturing and callable debt. In Moody's view, these issues have reduced the level of refinancing risk in the Aegon group. On aggregate, around 1 billion of debts are maturing between 2018 and In addition, Aegon maintains a number of banking relationships in the form of bilateral and syndicated committed credit facilities. The main arrangements include a 2 billion syndicated revolving credit facility maturing in 2023 and a $2.6 billion LOC facility maturing in No drawdowns had been made on this syndicated revolving credit facility as of 31 December Ratings Exhibit 2 Category AEGON N.V. Senior Unsecured Senior Unsecured MTN Commercial Paper LT Issuer Rating Subordinate Junior Subordinate Moody's Rating STA (P) P-2 Baa1 (hyb) Baa1 (hyb) AEGON FUNDING COMPANY LLC BACKED Senior Unsecured BACKED Commercial Paper STA P-2 COMMONWEALTH GENERAL CORPORATION BACKED Senior Unsecured STA Source: Moody's Investors Service 5

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7 CLIENT SERVICES 7 Americas Asia Pacific Japan EMEA