Growing the Value Agency Distribution Tim Stonehocker Executive Vice President Agency Distribution A&I Conference November 2007
Key Messages Focus on recruiting and distribution expansion Continue to leverage our expertise in new markets Commitment to product innovation and unique programs that attract and retain distribution Use technology to create efficiencies and streamline processes, both internally and in the field Retail life sales surpass industry growth rate 2 A&I Conference November 2007
Business Units AEGON Americas Life & Protection Individual Savings & Retirement Pensions & Asset Management Institutional Reinsurance AEGON Direct Marketing Services Transamerica Capital Management Diversified Investment Advisors Extraordinary Markets Transamerica Reinsurance Long Term Care Transamerica Fund Advisors Transamerica Investment Management AEGON Institutional Markets Monumental Life Transamerica Retirement Management Transamerica Insurance & Invest Group Transamerica Retirement Services World Financial Group Transamerica Worksite Marketing 3 A&I Conference November 2007
Approach to the Retail Life Marketplace Affluent Market Business Unit TIIG International Characteristics High net worth clients served through offices in Hong Kong, Singapore and Dubai Producer Penetration 25% TIIG Domestic General Agency approach with majority of business from former Transamerica branch system >50% of top GA s Middle Income Market AEGON Owned Broker Dealers / Marketing Organizations World Financial Group, InterSecurities and Transamerica Financial Advisors 80% Life 30% Annuity Middle Market Brokerage Transamerica Worksite Marketing igroup, Life Investors Financial Group, Alliance Marketing 30% to 90% Voluntary benefit specialists and enrollment firms 75% Lower Income Market Monumental Home service business 100% We capture the majority of the business of our producers 4 A&I Conference November 2007
Product Solutions Annuities Life Insurance Mutual Funds College Planning Business Solutions Retirement Strategies Continued progress maintaining a leadership role in product innovation is critical 5 A&I Conference November 2007
Current Producer Environment The number of agents in direct channels has declined to fewer than 170,000 from a high of 253,000 in 1975 At current recruiting levels, this will decline to less than 150,000 by the end of this decade More than half of independent agents are age 54 or older and heading toward retirement "Lost Rather Than Stolen: Producers rank financial factors as the leading motivator to switch carriers, but product leadership, career opportunity, or more autonomy are mentioned nearly as often as financial reasons. However, many producers also lost to the competition rather than being enticed away. The effect of corporate staff reductions is being felt by producers who feel that they are being starved in terms of availability and quality of services companies provide compared with years past. The result is that producers are just as likely to be pushed to another company as they are to be pulled away. RECRUITING AND RETAINING DISTRIBUTION IS OUR STRENGTH Statistics and quote from "New game, New Rules, New Reality The Economics of Growing Distribution, by Lucian J. Lombardi, ASA VP and Director, Distribution and Strategic Research, LIMRA International and Daniel C. Inveen Manager, Business Consulting Group, Moss Adams LLP. 6 A&I Conference November 2007
Areas for Growth in Distribution World Financial Group (WFG) Transamerica Insurance and Investment Group (TIIG) New Business Development 7 A&I Conference November 2007
WFG Has Experienced Strong Agent Growth 16,685 17,075 18,029 10,356 11,081 12,016 12,286 13,026 14,042 14,616 15,359 1Q 2005 2Q 2005 3Q 2005 4Q 2005 1Q 2006 2Q 2006 3Q 2006 4Q 2006 1Q 2007 2Q 2007 3Q 2007 WFG s agent force has increased 74% since 1 st Quarter 2005 Numbers represent active life and NASD registered agents 8 A&I Conference November 2007
WFG Sales Growth Driven by Agent Growth In USD mln 25 20 15 10 5 80 60 40 20 22% 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 9 Months 9 Months 2006 2006 2006 2006 2007 2007 2007 2006 2007 Sales in the first nine months of 2007 have increased 22% over 2006 9 A&I Conference November 2007
WFG - China USD 8 million of Premium 2,729 Applications Taking our proven building blocks of success on agent recruiting to China 720 Agents Licensed 2,644 Agents Recruited Leveraging our expertise cross border All numbers presented represent progress since entering the Chinese market through September 2007 10 A&I Conference November 2007
TIIG Supporting Our Distribution Channels Agency Channels include Brokerage General Agencies (BGA), Institutional Agents and Direct Marketers Value high level of service and support, especially in new business Main market is high net worth and large case Active agent force of 126,000 11 A&I Conference November 2007
Higher Margin TIIG Sales In USD millions 80 200 57% 60 150 56 40 100 20 50 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2006 2006 2006 2006 2007 2007 2007 9 Months 9 Months 2006 2007 Higher margin sales in 2007 have replaced STOLI sales in 2006 12 A&I Conference November 2007
Leveraging Our Expertise In New Markets Transamerica has had a Hong Kong presence since 1930 s 35 New Market Sales (in USD millions) Leverage Transamerica s brand in the Pacific Rim to achieve strong presence in affluent market segments Grow Hong Kong and Singapore distribution relationships and increase market share 30 25 20 15 Implement new institutional 10 relationship opportunities from existing accounts 5 Opening Dubai office by year end 2007 0 1999 2000 2001 2002 2003 2004 2005 2006 Strategy brings higher margin business and a less competitive environment 13 A&I Conference November 2007
Business Development Acting as an entry point for distribution, the Business Development Group looks to create and nurture profitable long term relationships At any given time the group is reviewing between 20-30 new opportunities Of these, approximately 4-5 will make it into production The first initiative is completing their first full year of production and is currently producing approximately USD 10 million of life insurance premium The latest opportunity was a joint business venture with Madison National Life Resources committed to finding new distribution groups 14 A&I Conference November 2007
On the Technology Front Program NOVUS is a new way of doing business for our agents and clients Straight through processing and electronic delivery of information More cost efficient than paper Essential to be an industry leader, or to even compete, in the near future Statements Policy Info Delivery Prospectus Education FNA Illustration CRMApplication Delivery Archiving Personal, one-stop shop, web based tool tailored to meet the individual needs of both clients and agents 15 A&I Conference November 2007
Conclusions Increase production by maintaining focus on recruiting and distribution development Continue to leverage our expertise into new markets Commitment to product innovation and unique programs that attract and retain distribution Use technology to create efficiencies and streamline processes both internally and in the field Well positioned for continued growth 16 A&I Conference November 2007
AEGON Investor Relations P.O. Box 85 2501 CB The Hague The Netherlands p : +31 70 344 8305 f : +31 70 344 8445 e : gca-ir@aegon.com
Cautionary Note regarding forward-looking Statements Cautionary note regarding forward-looking statements The statements contained in this presentation that are not historical facts are forward-looking statements as defined in the US Private Securities Litigation Reform Act of 1995. The following are words that identify such forward-looking statements: believe, estimate, target, intend, may, expect, anticipate, predict, project, counting on, plan, continue, want, forecast, should, would, is confident, will, and similar expressions as they relate to our company. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. We undertake no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which merely reflect company expectations at the time of writing. Actual results may differ materially from expectations conveyed in forwardlooking statements due to changes caused by various risks and uncertainties. Such risks and uncertainties include but are not limited to the following: Changes in general economic conditions, particularly in the United States, the Netherlands and the United Kingdom; Changes in the performance of financial markets, including emerging markets, such as with regard to: - The frequency and severity of defaults by issuers in our fixed income investment portfolios; and - The effects of corporate bankruptcies and/or accounting restatements on the financial markets and the resulting decline in the value of equity and debt securities we hold; The frequency and severity of insured loss events; Changes affecting mortality, morbidity and other factors that may impact the profitability of our insurance products; Changes affecting interest rate levels and continuing low or rapidly changing interest rate levels; Changes affecting currency exchange rates, in particular the EUR/USD and EUR/GBP exchange rates; Increasing levels of competition in the United States, the Netherlands, the United Kingdom and emerging markets; Changes in laws and regulations, particularly those affecting our operations, the products we sell, and the attractiveness of certain products to our consumers; Regulatory changes relating to the insurance industry in the jurisdictions in which we operate; Acts of God, acts of terrorism, acts of war and pandemics; Changes in the policies of central banks and/or governments; Litigation or regulatory action that could require us to pay significant damages or change the way we do business; Customer responsiveness to both new products and distribution channels; Competitive, legal, regulatory, or tax changes that affect the distribution cost of or demand for our products; Our failure to achieve anticipated levels of earnings or operational efficiencies as well as other cost saving initiatives; and The impact our adoption of the International Financial Reporting Standards may have on our reported financial results and financial condition. Cautionary note regarding Regulation G (non-gaap measure) This presentation includes non-gaap financial measures: net operating earnings, operating earnings before tax, value of new business and embedded value. Value of new business and embedded value are not based on IFRS, which are used to prepare and report AEGON s financial statements and should not be viewed as a substitute for IFRS financial measures. AEGON believes the non-gaap measures shown herein, together with GAAP information, provides a meaningful measure for the investment community to evaluate AEGON s business relative to the businesses of our peers. 18 A&I Conference November 2007