AEGON and the financial community
As one of the world’s largest financial services companies, AEGON has many trusted relationships within the global investment community. These relationships play an important role in helping AEGON manage its businesses effectively and profitably.
AEGON has shareholders and bondholders in countries around the world. AEGON’s investor relations program seeks to provide the Group’s investors with the clear, transparent, accurate and timely information they require to make sound investment decisions.
During 2007, AEGON made significant progress both in implementing its corporate strategy and in improving communication with shareholders and the broader financial community:
- AEGON returned a total of EUR 1.9 billion to shareholders through repurchases of 99.77 million shares and increased dividends;
- AEGON increased investment in its core businesses, strengthened its distribution networks and expanded its international presence;
- AEGON raised its 2010 value of new business target to EUR 1.25 billion;
- AEGON enhanced the transparency of its financial communications by launching a new measure of operating earnings and a new lines of business reporting format, as well as publishing a quarterly financial supplement and introducing new accounting rules in the Netherlands;
- AEGON introduced underlying earnings to provide additional information on the expected long-term performance of certain investment classes.
Clear, transparent, accurate and timely information
AEGON is committed to ensuring that all shareholders, bondholders and other investors in the company have the information they need to make the right investment decisions.
The Group’s new lines of business format for operating earnings more closely reflects the way AEGON’s businesses are managed within the Group’s country units.
As part of this format, the following lines of business were established:
- Life and protection
- Individual savings and retirement products
- Pensions and asset management
- Institutional products
- Reinsurance
- Distribution
- General insurance
In July, AEGON announced that it was changing the accounting principles the Group uses to value guarantees on certain products in the Netherlands. The change was aimed at increasing the transparency of AEGON’s financial results and enhancing the ability of investors, analysts and other interested parties to assess the economic performance of the Group’s Dutch businesses. Alongside this change, AEGON also began publication of ‘underlying earnings’, an additional measure of operating profit, designed effectively to exclude the impact of excess volatility on earnings from certain of the Group’s fair-value financial investments.
In addition to its regular quarterly disclosures, AEGON believes that a balanced assessment of its underlying economic performance can be made using the financial measures the Group publishes regularly, in particular:
- Value of new business
- Embedded value
As part of efforts to improve financial disclosure, AEGON publishes details of its value of new business, along with its internal rate of return, each quarter. In addition, the Group also provides additional information on its country unit operations in its quarterly financial supplement.
As a measure of business performance, embedded value is an indicator in the insurance industry. AEGON supports and endorses the European Embedded Value Principles. These principles, introduced in 2004, provide a sound and responsible common method for calculating embedded value, enabling investors to compare the relative performance of Europe’s leading insurance companies.
AEGON regularly calculates and publishes its embedded value life insurance, EVLI, as well as a figure for total embedded value. EVLI is also used internally for performance assessment and business planning. Like other insurance companies, AEGON focuses its embedded value calculations on life insurance because of the long-term nature of this business. Non-life business, which tends to be shorter term, is included in the Group’s total embedded value calculation, published every year.
Equal access to information
AEGON strives to ensure equal access to all relevant financial and non-financial information. As such, the Group actively maintains contact with the financial community, largely through its Investor Relations staff in the Netherlands and the United States. AEGON regularly organizes investor road shows in the United States, Europe and Asia. The Group also issues regular press releases and hosts web-cast presentations to ensure all investors and shareholders are fully informed of the latest developments. Regulary, AEGON also organizes Analyst & Investor conferences.
In addition, AEGON encourages shareholders, bondholders and other potential investors to learn more about the Group’s businesses, its strategy for long-term growth and its expansion into new markets and emerging countries around the world.
Shareholding structure
AEGON has an international shareholder base, a reflection of the international spread of the Group’s businesses. Approximately 86% of AEGON’s common shares are held by institutional investors (including Vereniging AEGON), with the remaining 14% in the hands of retail shareholders. Based on information publicly available as of December 31, 2007, only one shareholder holds more than 5% of the Group’s outstanding shares: Vereniging AEGON, an association set up to safeguard the long-term interests of all AEGON stakeholders (for further information on Vereniging AEGON, please use this link). To AEGON’s knowledge there are no other parties holding a capital/voting interest in AEGON N.V. in excess of the thresholds established under Dutch securities law.
A strong capital base
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AEGON COMMON SHARES ARE INCLUDED IN A NUMBER OF THE MAJOR EQUITY MARKET INDICES, AMONGST OTHERS, IN THE FOLLOWING KEY INDICES: |
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LISTINGS |
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Amsterdam : Euronext Amsterdam London : London Stock Exchange New York : New York Stock Exchange Tokyo : Tokyo Stock Exchange |
AEGON’s common shares are listed on four stock exchanges: Amsterdam, London, New York and Tokyo. These listings give AEGON access to global capital markets, a vital part of the Group’s overall corporate and financial management strategies.
In addition, AEGON is active on world debt markets, using its strong credit ratings to issue debt instruments in various currencies. These issues are part of broader efforts aimed at strengthening the Group’s capital base and reducing its overall funding costs.
In 2007, AEGON completed a number of transactions designed to ensure more efficient management of the Group’s capital and reserve requirements:
- In January, AEGON announced a 30-year, USD 1.54 billion AXXX financing transaction with HSBC Bank USA;
- Also in January, AEGON UK completed a private value-inforce securitization, adding approximately GBP 90 million to the Group’s total core capital;
- In May, AEGON closed an offering of USD 550 million worth of 30-year securities on behalf of its wholly owned US subsidiary LIICA Holdings LLC;
- In September, AEGON issued a USD 1.05 billion issuance of a 7.25% perpetual capital security.
Share repurchases
Due to its strong capital position, AEGON was able to initiate a share repurchase program in August 2007, as part of the Group’s capital management strategy. By mid-November, AEGON had completed this program, repurchasing a total of 74.6 million common shares for a total consideration of EUR 1 billion. In addition, AEGON repurchased 25.2 million shares as part of the Group’s policy of repurchasing stock dividends distributed during the year to neutralize their dilution effect. Another 8 million common shares were repurchased in order to hedge granted option rights. A resolution proposing these shares to be cancelled will be presented to the Annual General Meeting (AGM) on April 23, 2008. In 2007, AEGON’s AGM approved the cancellation of 11.6 million shares bought in 2006 as part of repurchased stock dividend.
Dividend policy
AEGON recognizes the importance of a clear, stable and coherent dividend policy, supported by the Group’s strong cash flows and capital position.
AEGON’s total dividend for the year is composed of two parts:
- An interim dividend, announced at the same time as the Group publishes its second quarter results in August;
- A final dividend, proposed at the same time as the Group publishes its fourth quarter results in March and voted on at the Annual General Meeting, usually in April.
Payment of the interim and final dividend is made either in cash or stock. Stock dividends are generally paid from AEGON’s paid-in surplus fund, tax free in the Netherlands, or, from the Group’s net income. If necessary, AEGON management may alter the relative attractiveness of a cash versus a stock dividend.
For dividend payments in shares, AEGON uses a stock fraction, based on the average share price over a period of five trading days. There is no trading in dividend rights on either the Amsterdam or any other stock exchange. In 2007, AEGON declared an interim dividend of EUR 0.30 per common share.
Shareholders who elected to receive their interim dividend in AEGON shares were entitled to one new common share for every 47 common shares they already held. The value of the stock dividend was 5.6% lower than the cash dividend. The final dividend for the year, as proposed to the General Meeting of Shareholders, will be EUR 0.32 per common share. In total, AEGON’s 2007 dividend of EUR 0.62 per share represents an increase of 13% compared with the previous year.
AEGON’s objective is to continue increasing dividend payments to shareholders, subject to the development of the Group’s cash flows and capital position.
Share price developments
In 2007, AEGON’s share price fell by 16.3%, from EUR 14.44 on December 31, 2006, to EUR 12.09 on December 31, 2007. Including the dividends paid during 2007, the total return for holders of AEGON common shares amounted to minus 12.7%, down from plus 8.7% in 2006. This compares1 with total returns for the DJ Stoxx 600 Insurance Index, a leading industry benchmark, of minus 9% in 2007 (+20.7% in 2006). The total return on AEGON’s New York-listed shares came to minus 3.5% in 2007, down from plus 20% the previous year. This compares with shareholder returns from the S&P 500 Insurance Index of minus 6.3% (+10.9% in 2006).
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Share price information In EUR |
2007 |
2006 |
2005 |
2004 |
2003 |
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Price - high |
16.06 |
15.56 |
14.25 |
12.98 |
13.47 |
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Price - low |
11.46 |
12.17 |
9.63 |
8.24 |
5.87 |
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Price - year-end |
12.09 |
14.44 |
13.75 |
10.03 |
11.73 |
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Price/earnings ratio 2 |
8.22 |
7.72 |
11.00 |
8.22 |
- Source: Bloomberg. Calculations assume reinvestment of AEGON’s dividend payment in either the stock or the market.
- 2004 - 2006 based on adjusted data.
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Share price information In USD |
2007 |
2006 |
2005 |
2004 |
2003 |
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Price - high |
21.90 |
18.97 |
16.78 |
16.12 |
14.80 |
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Price - low |
16.75 |
15.24 |
12.19 |
10.41 |
6.76 |
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Price - year-end |
17.53 |
18.95 |
16.32 |
13.71 |
14.80 |
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Investor Relations AEGON N.V. Bezuidenhoutseweg 273 |