Edgar Filing: AEGON NV

Form 6-K

Securities and Exchange Commission

Washington, D.C. 20549

Form 6-K

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d/16 of

the Securities Exchange Act of 1934

August 2012

AEGON N.V.

AEGONplein 50

2591 TV THE HAGUE

The Netherlands

AEGON’s condensed consolidated interim financial statements Q2 2012, is included as an exhibit and incorporated herein by reference.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		AEGON N.V.
		(Registrant)

Date: August 8, 2012	By	/s/ E. Lagendijk
		E. Lagendijk
		Executive Vice President and General Counsel

LOGO

CONDENSED CONSOLIDATED

INTERIM FINANCIAL STATEMENTS

Q2 2012

TABLE OF CONTENTS


Condensed consolidated income statement			p 2

Condensed consolidated statement of comprehensive income			p 3

Condensed consolidated statement of financial position			p 4

Condensed consolidated statement of changes in equity			p 5

Condensed consolidated cash flow statement			p 6

Notes to the condensed consolidated interim financial statements			p 7


Unaudited				Page 1

CONDENSED CONSOLIDATED INCOME STATEMENT


EUR millions (except per share data)	Notes		Q2 2012			Q2 2011			YTD 2012			YTD 2011
Premium income		4		4,597			4,501			10,448			10,778
Investment income		5		2,200			2,099			4,276			4,210
Fee and commission income				469			428			934			888
Other revenues				3			2			5			4

Total revenues				7,269			7,030			15,663			15,880
Income from reinsurance ceded		6		1,080			477			2,033			907
Results from financial transactions		7		(1,944	)		932			5,621			2,045
Other income		8		2			(3	)		2			34

Total income				6,407			8,436			23,319			18,866

Benefits and expenses		9		5,898			7,759			22,062			17,618
Impairment charges / (reversals)		10		52			106			98			170
Interest charges and related fees				126			117			258			228
Other charges		11		—			(7	)		18			21

Total charges				6,076			7,975			22,436			18,037

Share in net result of associates				7			12			18			17

Income before tax				338			473			901			846
Income tax (expense) / benefit				(84	)		(69	)		(126	)		(115	)

Net income				254			404			775			731

Net income attributable to:
Equity holders of AEGON N.V.				254			403			775			730
Non-controlling interests				—			1			—			1

Earnings and dividend per share (EUR per share)
Basic earnings per share ¹				0.08			(0.04	)		0.33			(0.09	)
Diluted earnings per share ¹				0.08			(0.04	)		0.33			(0.09	)
Dividend per common share ²				0.10			—			0.10			—

Earnings per common share calculation
Net income				254			403			775			730
Preferred dividend				(59	)		(59	)		(59	)		(59	)
Coupons on other equity instruments				(51	)		(43	)		(98	)		(87	)
Coupons and premium on convertible core capital securities				—			(375	)		—			(750	)

Earnings attributable to common shareholders				144			(74	)		618			(166	)

Weighted average number of common shares outstanding				1,886			1,880			1,883			1,823

¹	After deduction of preferred dividend, coupons on other equity instruments and coupons and premium on core capital securities.

²	Dividend per common share of EUR 0.10 reflects the 2012 interim dividend. The interim dividend will be paid in cash or stock at the election of the shareholder. The interim dividend will be payable as of September 14, 2012.


Unaudited				Page 2

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


EUR millions	Q2 2012			Q2 2011			YTD 2012			YTD 2011
Net income		254			404			775			731

Other comprehensive income:
Gains / (losses) on revaluation of available-for-sale investments		1,039			565			1,492			365
(Gains) / losses transferred to the income statement on disposal and impairment of available-for-sale investments		(150	)		(158	)		(184	)		(219	)
Changes in revaluation reserve real estate held for own use		3			1			3			—
Changes in cash flow hedging reserve		443			84			113			(3	)
Movement in foreign currency translation and net foreign investment hedging reserve		769			(295	)		464			(1,183	)
Equity movements of associates		2			1			19			(7	)
Aggregate tax effect of items recognized in other comprehensive income		(429	)		(156	)		(416	)		(56	)
Other		(7	)		(7	)		(5	)		(6	)

Other comprehensive income for the period		1,670			35			1,486			(1,109	)
Total comprehensive income		1,924			439			2,261			(378	)

Total comprehensive income attributable to:
Equity holders of AEGON N.V.		1,925			439			2,262			(378	)
Non-controlling interests		(1	)		—			(1	)		—


Unaudited				Page 3

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION


EUR millions	Notes		June 30, 2012		Dec. 31, 2011
ASSETS
Intangible assets		12		3,213		3,285
Investments		13		147,065		144,079
Investments for account of policyholders		14		151,633		142,529
Derivatives		15		20,072		15,504
Investments in associates				791		742
Reinsurance assets		16		12,661		11,517
Deferred expenses and rebates		17		11,879		11,633
Other assets and receivables				7,931		8,184
Cash and cash equivalents				8,737		8,104

Total assets				363,982		345,577

EQUITY AND LIABILITIES
Shareholders’ equity				23,018		21,000
Other equity instruments		19		5,002		4,720

Issued capital and reserves attributable to equity holders of AEGON N.V.				28,020		25,720
Non-controlling interests				13		14

Group equity				28,033		25,734

Trust pass-through securities				163		159
Subordinated borrowings		20		61		18
Insurance contracts				108,008		105,175
Insurance contracts for account of policyholders				78,037		73,425
Investment contracts				19,790		20,847
Investment contracts for account of policyholders				75,668		71,433
Derivatives		15		16,182		12,728
Borrowings		21		11,065		10,141
Other liabilities				26,975		25,917

Total liabilities				335,949		319,843

Total equity and liabilities				363,982		345,577


Unaudited				Page 4

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


EUR millions	Share capital¹		Retained earnings			Revaluation reserves			Other reserves			Convertible core capital securities			Other equity instruments		Issued capital and reserves²			Non- controlling interests			Total
Six months ended June 30, 2012

At beginning of year		9,097		9,403			3,464			(964	)		—			4,720		25,720			14			25,734

Net income recognized in the income statement		—		775			—			—			—			—		775			—			775
Other comprehensive income:
Gains / (losses) on revaluation of available-for-sale investments		—		—			1,492			—			—			—		1,492			—			1,492
(Gains) / losses transferred to income statement on disposal and impairment of available-for-sale investments		—		—			(184	)		—			—			—		(184	)		—			(184	)
Changes in revaluation reserve real estate held for own use		—		—			3			—			—			—		3			—			3
Changes in cash flow hedging reserve		—		—			113			—			—			—		113			—			113
Movement in foreign currency translation and net foreign investment hedging reserves		—		—			—			464			—			—		464			—			464
Equity movements of associates		—		—			—			19			—			—		19			—			19
Aggregate tax effect of items recognized in other comprehensive income		—		—			(398	)		(18	)		—			—		(416	)		—			(416	)
Transfer from / to other headings		—		(20	)		20			—			—			—		—			—			—
Other		—		(4	)		—			—			—			—		(4	)		(1	)		(5	)

Total other comprehensive income		—		(24	)		1,046			465			—			—		1,487			(1	)		1,486

Total comprehensive income/ (loss) for 2012		—		751			1,046			465			—			—		2,262			(1	)		2,261

Treasury shares		—		2			—			—			—			—		2			—			2
Dividends paid on common shares		—		(79	)		—			—			—			—		(79	)		—			(79	)
Preferred dividend		—		(59	)		—			—			—			—		(59	)		—			(59	)
Issuance of non-cumulative subordinated loans		—		—			—			—			—			271		271			—			271
Coupons on non-cumulative subordinated notes		—		(10	)		—			—			—			—		(10	)		—			(10	)
Cost of issuance of non-cumulative subordinated notes (net of tax)		—		(10	)		—			—			—			—		(10	)		—			(10	)
Coupons on perpetual securities		—		(88	)		—			—			—			—		(88	)		—			(88	)
Share options and incentive plans		—		—			—			—			—			11		11			—			11

At end of period		9,097		9,910			4,510			(499	)		—			5,002		28,020			13			28,033

Six months ended June 30, 2011

At beginning of year		8,184		9,529			958			(1,343	)		1,500			4,704		23,532			11			23,543

Net income recognized in the income statement		—		730			—			—			—			—		730			1			731
Other comprehensive income:
Gains / (losses) on revaluation of available-for-sale investments		—		—			365			—			—			—		365			—			365
(Gains) / losses transferred to income statement on disposal and impairment of available-for-sale investments		—		—			(219	)		—			—			—		(219	)		—			(219	)
Changes in revaluation reserve real estate held for own use		—		—			(3	)		—			—			—		(3	)		—			(3	)
Movement in foreign currency translation and net foreign investment hedging reserves		—		—			—			(1,183	)		—			—		(1,183	)		—			(1,183	)
Equity movements of associates		—		—			—			(7	)		—			—		(7	)		—			(7	)
Aggregate tax effect of items recognized in other comprehensive income		—		—			(112	)		56			—			—		(56	)		—			(56	)
Other		—		(5	)		—			—			—			—		(5	)		(1	)		(6	)

Total other comprehensive income		—		(5	)		31			(1,134	)		—			—		(1,108	)		(1	)		(1,109	)

Total comprehensive income / (loss) for 2011		—		725			31			(1,134	)		—			—		(378	)		—			(378	)
Shares issued		913		—			—			—			—			—		913			—			913
Cost of issuance of shares (net of tax)		—		(14	)		—			—			—			—		(14	)		—			(14	)
Preferred dividend		—		(59	)		—			—			—			—		(59	)		—			(59	)
Coupons on perpetual securities		—		(87	)		—			—			—			—		(87	)		—			(87	)
Repurchase of convertible core capital securities		—		—			—			—			(1,500	)		—		(1,500	)		—			(1,500	)
Coupons and premium on convertible core capital securities		—		(750	)		—			—			—			—		(750	)		—			(750	)
Share options and incentive plans		—		—			—			—			—			7		7			—			7

At end of period		9,097		9,344			989			(2,477	)		—			4,711		21,664			11			21,675

¹	For a breakdown of share capital please refer to note 18.

²	Issued capital and reserves attributable to equity holders of AEGON N.V.


Unaudited				Page 5

CONDENSED CONSOLIDATED CASH FLOW STATEMENT


EUR millions	YTD 2012			YTD 2011
Cash flow from operating activities		(228	)		(345	)

Purchases and disposals of intangible assets		(15	)		(7	)
Purchases and disposals of equipment and other assets		(28	)		(25	)
Purchases, disposals and dividends of subsidiaries and associates		(5	)		(7	)

Cash flow from investing activities		(48	)		(39	)

Issuance of share capital		—			913
Dividends paid		(138	)		(59	)
Issuances, repurchases and coupons of convertible core capital securities		—			(2,250	)
Issuances, repurchases and coupons of perpetuals		(117	)		(117	)
Issuances, repurchases and coupons of non cumulative subordinated notes		257			—
Issuances and repayments of borrowings		1,050			1,149

Cash flow from financing activities		1,052			(364	)

Net increase / (decrease) in cash and cash equivalents		776			(748	)

Net cash and cash equivalents at January 1		7,826			5,174
Effects of changes in foreign exchange rates		52			(46	)

Net cash and cash equivalents at end of period		8,654			4,380


	June 30, 2012			June 30, 2011
Cash and cash equivalents		8,737			4,450
Bank overdrafts		(83	)		(70	)

Net cash and cash equivalents		8,654			4,380


Unaudited				Page 6

Notes to the condensed consolidated interim financial statements

Amounts in EUR millions, unless otherwise stated

1. Basis of presentation

The condensed consolidated interim financial statements as at, and for the second quarter ended, June 30, 2012, have been prepared in accordance with IAS 34 ‘Interim financial reporting’ as adopted by the European Union (EU) as issued by the International Accounting Standards Board (IASB). They do not include all of the information required for a full set of financial statements prepared in accordance with International Financial Reporting Standards (IFRS) and should therefore be read together with the 2011 consolidated financial statements of AEGON N.V. as included in AEGON’s Annual Report for 2011. AEGON’s Annual Report for 2011 is available on its website (www.aegon.com).

The condensed consolidated interim financial statements have been prepared in accordance with the historical cost convention as modified by the revaluation of investment properties and those financial instruments (including derivatives) and financial liabilities that have been measured at fair value. The condensed consolidated interim financial statements as at, and for the second quarter ended, June 30, 2012, were approved by the Executive Board on August 8, 2012.

The published figures in these condensed consolidated interim financial statements are unaudited.

2. Significant accounting policies

All accounting policies and methods of computation applied in the condensed consolidated interim financial statements are the same as those applied in the 2011 consolidated financial statements, which were prepared in accordance with IFRS as issued by the International Accounting Standards Board as adopted by the European Union, except for the following accounting policy for compound instruments:

•

Non-cumulative subordinated notes, issued on February 7, 2012, are identified as a compound instrument due to the nature of this financial instrument. For these non-cumulative subordinated notes, issued in US dollars, AEGON has an unconditional right to avoid delivering cash or another financial asset to settle the coupon payments. The redemption of the principal is however not at the discretion of AEGON and therefore AEGON has a contractual obligation to settle the redemption in cash or another financial asset or through the exchange of financial assets and liabilities at potentially unfavorable conditions for AEGON. Compound instruments are separated into liability components and equity components. The liability component for the non-cumulative subordinated notes is equal to the present value of the redemption amount and subsequently carried at amortized cost using the effective interest rate method. The liability component is derecognized when the Group’s obligation under the contract expires, is discharged or is cancelled. The equity component is assigned the residual amount after deducting the liability component from the fair value of the instrument as a whole. The equity component in US dollars is translated into euro using the historical transaction exchange rates.

Incremental external costs that are directly attributable to the issuing or buying back of the non-cumulative subordinated notes are recognized in either equity or income statement proportionately to the equity component and liability component, net of tax.

Coupon payments and other distributions to holders of the non-cumulative subordinated notes are recognized directly in equity, net of tax. A liability for non-cumulative dividends payable is not recognized until the coupon has been declared and approved.


Unaudited				Page 7

The following standards, interpretations, amendments to standards and interpretations became effective in 2012:

•

Amendment to IFRS 1 First time adoption – Severe Hyperinflation and Removal of Fixed Dates for First Time Adopters;

•

Amendment to IFRS 7 Disclosures – Transfers of Financial Assets;

•

IAS 12 Income Taxes – Recovery of Tax Assets.

None of these new or revised standards and interpretations had a significant effect on the condensed consolidated interim financial statements for the period ended June 30, 2012.

Taxes on income for the first six months of 2012 are accrued using the tax rate that would be applicable to expected total annual earnings.

Critical accounting estimates

Certain amounts recorded in the condensed consolidated interim financial statements reflect estimates and assumptions made by management. Actual results may differ from the estimates made.

Exchange rates

Assets and liabilities are translated at the closing rates on the balance sheet date. Income, expenses and capital transactions (such as dividends) are translated at average exchange rates or at the prevailing rates on the transaction date, if more appropriate. The following exchange rates are applied for the condensed consolidated interim financial statements:

Closing exchange rates


			USD		GBP
June 30, 2012	1	EUR		1.2691		0.8091
December 31, 2011	1	EUR		1.2982		0.8353

Weighted average exchange rates


			USD		GBP
First six months 2012	1	EUR		1.2962		0.8217
First six months 2011	1	EUR		1.4025		0.8670


Unaudited				Page 8

3. Segment information

3.1 Income statement


EUR millions	Americas			The Netherlands			United Kingdom			New Markets			Holding and other activities			Eliminations			Segment Total			Associates eliminations			Consolidated
*Three months ended June 30, 2012*

Underlying earnings before tax geographically		339			71			25			64			(56	)		—			443			(1	)		442
Fair value items		(79	)		153			(1	)		(12	)		40			—			101			—			101
Realized gains / (losses) on investments		54			(6	)		34			3			—			—			85			—			85
Impairment charges		(57	)		(3	)		—			—			—			2			(58	)		—			(58	)
Impairment reversals		18			—			—			—			—			(2	)		16			—			16
Other income / (charges)		(1	)		(266	)		13			—			—			—			(254	)		—			(254	)
Run-off businesses		6			—			—			—			—			—			6			—			6

Income before tax		280			(51	)		71			55			(16	)		—			339			(1	)		338
Income tax (expense) / benefit		(65	)		23			(22	)		(18	)		(3	)		—			(85	)		1			(84	)

Net income		215			(28	)		49			37			(19	)		—			254			—			254

Inter-segment underlying earnings		(47	)		(21	)		(16	)		71			13

Revenues
Life insurance gross premiums		1,615			410			1,572			348			—			(16	)		3,929			(41	)		3,888
Accident and health insurance		456			43			—			42			1			(1	)		541			—			541
General insurance		—			134			—			34			—			—			168			—			168

Total gross premiums		2,071			587			1,572			424			1			(17	)		4,638			(41	)		4,597
Investment income		930			558			627			89			100			(101	)		2,203			(3	)		2,200
Fee and commission income		294			80			35			129			—			(69	)		469			—			469
Other revenues		1			—			—			—			2			—			3			—			3

Total revenues		3,296			1,225			2,234			642			103			(187	)		7,313			(44	)		7,269

Inter-segment revenues		9			—			—			78			100


EUR millions	Americas			The Netherlands			United Kingdom			New Markets			Holding and other activities			Eliminations			Segment Total			Associates eliminations			Consolidated
*Three months ended June 30, 2011*

Underlying earnings before tax geographically		314			74			10			70			(68	)		1			401			(4	)		397
Fair value items		(52	)		2			—			(3	)		30			—			(23	)		—			(23	)
Realized gains / (losses) on investments		50			142			11			1			—			—			204			—			204
Impairment charges		(69	)		(3	)		(40	)		(4	)		—			—			(116	)		1			(115	)
Impairment reversals		16			—			—			—			—			—			16			—			16
Other income / (charges)		(3	)		(11	)		1			(3	)		—			—			(16	)		—			(16	)
Run-off businesses		10			—			—			—			—			—			10			—			10

Income before tax		266			204			(18	)		61			(38	)		1			476			(3	)		473
Income tax (expense) / benefit		(36	)		(35	)		—			(15	)		14			—			(72	)		3			(69	)

Net income		230			169			(18	)		46			(24	)		1			404			—			404

Inter-segment underlying earnings		(39	)		(10	)		(17	)		61			5

Revenues
Life insurance gross premiums		1,455			483			1,648			347			—			(14	)		3,919			(69	)		3,850
Accident and health insurance		410			40			—			38			—			—			488			(1	)		487
General insurance		—			127			—			37			—			—			164			—			164

Total gross premiums		1,865			650			1,648			422			—			(14	)		4,571			(70	)		4,501
Investment income		879			549			609			80			83			(82	)		2,118			(19	)		2,099
Fee and commission income		253			79			36			118			—			(58	)		428			—			428
Other revenues		1			—			—			—			1			—			2			—			2

Total revenues		2,998			1,278			2,293			620			84			(154	)		7,119			(89	)		7,030

Inter-segment revenues		8			—			1			65			80

As of the first quarter of 2012, AEGON has revised its financial reporting to reflect changes in its organization. Businesses in Asia, which were previously managed by AEGON Americas, are included in the Asia line of business within the “New Markets” segment. For the full year 2011, the underlying earnings before tax generated by the Asian operations totaling EUR 37 million were previously reported under the “Americas” segment.


Unaudited				Page 9


EUR millions	Americas			The Netherlands			United Kingdom			New Markets			Holding and other activities			Eliminations			Segment Total			Associates eliminations			Consolidated
*Six months ended June 30, 2012*

Underlying earnings before tax geographically		631			150			54			152			(117	)		(2	)		868			(4	)		864
Fair value items		(15	)		195			(3	)		(5	)		85			—			257			—			257
Realized gains / (losses) on investments		63			28			34			5			—			—			130			—			130
Impairment charges		(93	)		(6	)		—			(4	)		(4	)		2			(105	)		—			(105	)
Impairment reversals		24			—			—			—			—			(2	)		22			—			22
Other income / (charges)		(2	)		(269	)		19			(18	)		(1	)		—			(271	)		—			(271	)
Run-off businesses		4			—			—			—			—			—			4			—			4

Income before tax		612			98			104			130			(37	)		(2	)		905			(4	)		901
Income tax (expense) / benefit		(118	)		15			(9	)		(45	)		27			—			(130	)		4			(126	)

Net income		494			113			95			85			(10	)		(2	)		775			—			775

Inter-segment underlying earnings		(93	)		(33	)		(32	)		142			16

Revenues
Life insurance gross premiums		3,196			2,182			2,987			756			—			(34	)		9,087			(134	)		8,953
Accident and health insurance		900			152			—			104			2			(2	)		1,156			—			1,156
General insurance		—			268			—			71			—			—			339			—			339

Total gross premiums		4,096			2,602			2,987			931			2			(36	)		10,582			(134	)		10,448
Investment income		1,820			1,110			1,189			175			189			(188	)		4,295			(19	)		4,276
Fee and commission income		579			166			66			257			—			(134	)		934			—			934
Other revenues		1			—			—			1			3			—			5			—			5

Total revenues		6,496			3,878			4,242			1,364			194			(358	)		15,816			(153	)		15,663

Inter-segment revenues		16			—			1			154			187


EUR millions	Americas			The Netherlands			United Kingdom			New Markets			Holding and other activities			Eliminations			Segment Total			Associates eliminations			Consolidated
*Six months ended June 30, 2011*

Underlying earnings before tax geographically		650			155			22			138			(150	)		—			815			(8	)		807
Fair value items		(64	)		(58	)		(1	)		(3	)		18			—			(108	)		—			(108	)
Realized gains / (losses) on investments		74			177			40			4			—			—			295			—			295
Impairment charges		(152	)		(6	)		(40	)		(6	)		—			—			(204	)		1			(203	)
Impairment reversals		41			1			—			—			—			—			42			—			42
Other income / (charges)		(3	)		(19	)		(5	)		8			—			—			(19	)		—			(19	)
Run-off businesses		32			—			—			—			—			—			32			—			32

Income before tax		578			250			16			141			(132	)		—			853			(7	)		846
Income tax (expense) / benefit		(92	)		(42	)		20			(46	)		38			—			(122	)		7			(115	)

Net income		486			208			36			95			(94	)		—			731			—			731

Inter-segment underlying earnings		(79	)		(20	)		(34	)		125			8

Revenues
Life insurance gross premiums		2,977			2,354			3,510			782			—			(25	)		9,598			(225	)		9,373
Accident and health insurance		823			149			—			97			—			—			1,069			(1	)		1,068
General insurance		—			259			—			78			—			—			337			—			337

Total gross premiums		3,800			2,762			3,510			957			—			(25	)		11,004			(226	)		10,778
Investment income		1,814			1,069			1,208			155			166			(163	)		4,249			(39	)		4,210
Fee and commission income		527			174			73			236			—			(122	)		888			—			888
Other revenues		1			—			—			1			2			—			4			—			4

Total revenues		6,142			4,005			4,791			1,349			168			(310	)		16,145			(265	)		15,880

Inter-segment revenues		14			1			1			135			159


Unaudited				Page 10

Non-IFRS measures

This report includes the non-IFRS financial measure: underlying earnings before tax. The reconciliation of this measure to the most comparable IFRS measure is presented in the tables in this note. This non-IFRS measure is calculated by consolidating on a proportionate basis the revenues and expenses of AEGON’s associated companies in Spain, India, Brazil and Mexico. AEGON believes that its non-IFRS measure provides meaningful information about the underlying operating results of AEGON’s business including insight into the financial measures that senior management uses in managing the business.

AEGON’s senior management is compensated based in part on AEGON’s results against targets using the non-IFRS measure presented here. While many other insurers in AEGON’s peer group present substantially similar non-IFRS measures, the non-IFRS measure presented in this document may nevertheless differ from the non-IFRS measures presented by other insurers. There is no standardized meaning to these measures under IFRS or any other recognized set of accounting standards and readers are cautioned to consider carefully the different ways in which AEGON and its peers present similar information before comparing them.

AEGON believes the non-IFRS measure shown herein, when read together with AEGON’s reported IFRS financial statements, provides meaningful supplemental information for the investing public to evaluate AEGON’s business after eliminating the impact of current IFRS accounting policies for financial instruments and insurance contracts, which embed a number of accounting policy alternatives that companies may select in presenting their results (i.e. companies can use different local GAAPs to measure the insurance contract liability) and that can make the comparability from period to period difficult.

Underlying earnings

Certain assets held by AEGON Americas, AEGON The Netherlands and AEGON UK are carried at fair value and managed on a total return basis, with no offsetting changes in the valuation of related liabilities. These include assets such as investments in hedge funds, private equities, real estate limited partnerships, convertible bonds and structured products. Underlying earnings exclude any over- or underperformance compared to management’s long-term expected return on assets.

Based on current holdings and asset returns, the long-term expected return on an annual basis is 8-10%, depending on asset class, including cash income and market value changes. The expected earnings from these asset classes are net of deferred policy acquisition costs (DPAC) where applicable.

In addition, certain products offered by AEGON Americas contain guarantees and are reported on a fair value basis, including the segregated funds offered by AEGON Canada and the total return annuities and guarantees on variable annuities of AEGON USA. The earnings on these products are impacted by movements in equity markets and risk-free interest rates. Short-term developments in the financial markets may therefore cause volatility in earnings. Included in underlying earnings is a long-term expected return on these products and excluded is any over- or underperformance compared to management’s expected return. The fair value movements of certain guarantees and the fair value change of derivatives that hedge certain risks on these guarantees of AEGON The Netherlands and Variable Annuities Europe (included in New Markets) are excluded from underlying earnings, and the long-term expected return for these guarantees is set at zero.

Holding and other activities include certain issued bonds that are held at fair value through profit or loss (FVTPL). The interest rate risk on these bonds is hedged using swaps. The fair value movement resulting from changes in AEGON’s credit spread used in the valuation of these bonds are excluded from underlying earnings and reported under fair value items.


Unaudited				Page 11

Fair value items

Fair value items include the over- or underperformance of investments and guarantees held at fair value for which the expected long-term return is included in underlying earnings. Changes to these long-term return assumptions are also included in the fair value items.

In addition, hedge ineffectiveness on hedge transactions, fair value changes on economic hedges without natural offset in earnings and for which no hedge accounting is applied and fair value movements on real estate are included under fair value items.

Realized gains or losses on investments

Includes realized gains and losses on available-for-sale investments, mortgage loans and loan portfolios.

Impairment charges / reversals

Includes impairments and reversals on available-for-sale debt securities and impairments on shares including the effect of deferred policyholder acquisition costs, mortgage loans and loan portfolios on amortized cost and associates respectively.

Other income or charges

Other income or charges is used to report any items which cannot be directly allocated to a specific line of business. Also items that are outside the normal course of business are reported under this heading.

Other charges include restructuring charges that are considered other charges for segment reporting purposes because they are outside the normal course of business. In the condensed consolidated income statement, these charges are included in operating expenses.

Run-off businesses

Includes underlying results of business units where management has decided to exit the market and to run off the existing block of business. Currently, this line includes the run-off of the institutional spread-based business, structured settlements blocks of business, Bank-Owned and Corporate-Owned Life Insurance (BOLI/COLI) business and life reinsurance business in the United States. AEGON has other blocks of business for which sales have been discontinued and of which the earnings are included in underlying earnings.

Share in earnings of associates

Earnings from AEGON’s associates in insurance companies in Spain, India, Brazil and Mexico are reported on an underlying earnings basis. Other associates are included on a net income basis.


Unaudited				Page 12

3.2 Investments geographically


					amounts in million EUR (unless otherwise stated)
Americas USD		United Kingdom GBP		At June 30, 2012	Americas		The Netherlands		United Kingdom		New Markets		Holding & other activities		Eliminations			Total EUR
				Investments
	1,688		39	Shares		1,330		411		49		69		6		(2	)		1,863
	84,231		8,395	Debt securities		66,371		17,888		10,375		4,271		—		—			98,905
	12,481		6	Loans		9,834		19,648		7		692		—		—			30,181
	15,338		20	Other financial assets		12,086		311		25		37		802		—			13,261
	1,101		—	Investments in real estate		867		1,988		—		—		—		—			2,855

	114,839		8,460	Investments general account		90,488		40,246		10,456		5,069		808		(2	)		147,065
	—		22,075	Shares		—		7,950		27,283		3,575		—		(5	)		38,803
	—		9,692	Debt securities		—		16,412		11,979		390		—		—			28,781
	84,548		7,654	Separate accounts and investment funds		66,621		—		9,460		1,160		—		—			77,241
	—		2,845	Other financial assets		—		463		3,516		1,710		—		—			5,689
	—		905	Investments in real estate		—		—		1,119		—		—		—			1,119

	84,548		43,171	Investments for account of policyholders		66,621		24,825		53,357		6,835		—		(5	)		151,633
	199,387		51,631	Investments on balance sheet		157,109		65,071		63,813		11,904		808		(7	)		298,698
	125,587		—	Off balance sheet investments third parties		98,958		—		—		54,332		—		—			153,290

	324,974		51,631	Total revenue generating investments		256,067		65,071		63,813		66,236		808		(7	)		451,988

				Investments
	95,384		8,399	Available-for-sale		75,159		18,369		10,381		4,115		25		—			108,049
	12,481		6	Loans		9,834		19,648		7		692		—		—			30,181
	—		—	Held-to-maturity		—		—		—		172		—		—			172
	90,421		42,321	Financial assets at fair value through profit or loss		71,249		25,066		52,306		6,925		783		(7	)		156,322
	1,101		905	Investments in real estate		867		1,988		1,119		—		—		—			3,974

	199,387		51,631	Total investments on balance sheet		157,109		65,071		63,813		11,904		808		(7	)		298,698

	115		7	Investments in associates		91		51		9		635		5		—			791
	33,867		6,076	Other assets		26,686		25,216		7,509		3,915		37,985		(36,818	)		64,493

	233,369		57,714	Consolidated total assets		183,886		90,338		71,331		16,454		38,798		(36,825	)		363,982


					amounts in million EUR (unless otherwise stated)
Americas USD		United Kingdom GBP		At December 31, 2011	Americas		The Netherlands		United Kingdom		New Markets		Holding & other activities		Eliminations			Total EUR
				Investments
	1,570		45	Shares		1,209		505		54		60		11		(2	)		1,837
	84,192		8,261	Debt securities		64,853		17,640		9,890		4,036		—		—			96,419
	13,319		7	Loans		10,260		18,825		8		643		—		—			29,736
	16,196		—	Other financial assets		12,476		40		—		43		744		—			13,303
	1,006		—	Investments in real estate		775		2,009		—		—		—		—			2,784

	116,283		8,313	Investments general account		89,573		39,019		9,952		4,782		755		(2	)		144,079
	—		21,755	Shares		—		7,608		26,045		3,459		—		(4	)		37,108
	—		10,003	Debt securities		—		15,124		11,975		277		—		—			27,376
	80,137		7,095	Separate accounts and investment funds		61,729		—		8,495		1,060		—		—			71,284
	—		2,940	Other financial assets		—		491		3,519		1,619		—		—			5,629
	—		946	Investments in real estate		—		—		1,132		—		—		—			1,132

	80,137		42,739	Investments for account of policyholders		61,729		23,223		51,166		6,415		—		(4	)		142,529
	196,420		51,052	Investments on balance sheet		151,302		62,242		61,118		11,197		755		(6	)		286,608
	119,371		—	Off balance sheet investments third parties		91,951		—		—		44,959		—		—			136,910

	315,791		51,052	Total revenue generating investments		243,253		62,242		61,118		56,156		755		(6	)		423,518

				Investments
	96,145		8,266	Available-for-sale		74,060		18,016		9,896		3,861		27		—			105,860
	13,319		7	Loans		10,260		18,825		8		643		—		—			29,736
	—		—	Held-to-maturity		—		—		—		168		—		—			168
	85,950		41,833	Financial assets at fair value through profit or loss		66,207		23,392		50,082		6,525		728		(6	)		146,928
	1,006		946	Investments in real estate		775		2,009		1,132		—		—		—			3,916

	196,420		51,052	Total investments on balance sheet		151,302		62,242		61,118		11,197		755		(6	)		286,608

	100		7	Investments in associates		77		52		9		600		4		—			742
	33,562		5,919	Other assets		25,852		19,403		7,086		3,789		35,878		(33,781	)		58,227

	230,082		56,978	Consolidated total assets		177,231		81,697		68,213		15,586		36,637		(33,787	)		345,577


Unaudited				Page 13

4. Premium income and premium to reinsurers


EUR millions	Q2 2012		Q2 2011		YTD 2012		YTD 2011
Gross
Life		3,888		3,850		8,953		9,373
Non-Life		709		651		1,495		1,405

Total		4,597		4,501		10,448		10,778

Reinsurance
Life		805		380		1,630		742
Non-Life		105		87		205		168

Total		910		467		1,835		910

Reinsurance premiums increased compared to 2011 mainly as a result of the increased external reinsurance life premiums following the divestment of the life reinsurance business, Transamerica Reinsurance, to SCOR, completed on August 9, 2011. Premiums paid to reinsurers are reported as part of Claims and benefits (note 9).

5. Investment income


EUR millions	Q2 2012		Q2 2011		YTD 2012		YTD 2011
Interest income		1,927		1,785		3,739		3,622
Dividend income		234		273		459		501
Rental income		39		41		78		87

Total investment income		2,200		2,099		4,276		4,210

Investment income related to general account		1,514		1,432		2,973		2,903
Investment income for account of policyholders		686		667		1,303		1,307

Total		2,200		2,099		4,276		4,210

6. Income from reinsurance ceded

The increase in Income from reinsurance ceded is mainly the result of the increased income from external reinsurance following the divestment of the life reinsurance business, Transamerica Reinsurance, to SCOR, completed on August 9, 2011.

7. Results from financial transactions


EUR millions	Q2 2012			Q2 2011			YTD 2012			YTD 2011
Net fair value change of general account financial investments at FVTPL other than derivatives		(17	)		30			246			157
Realized gains and (losses) on financial investments		191			277			246			381
Gains and (losses) on investments in real estate		(31	)		(15	)		(56	)		(26	)
Net fair value change of derivatives		263			(78	)		393			(601	)
Net fair value change on for account of policyholder financial assets at FVTPL		(2,368	)		728			4,799			2,138
Net fair value change on investments in real estate for account of policyholders		(11	)		5			(19	)		11
Net foreign currency gains and (losses)		5			(1	)		12			(9	)
Net fair value change on borrowings and other financial liabilities		18			(18	)		(6	)		(10	)
Realized gains and (losses) on repurchased debt		6			4			6			4

Total		(1,944	)		932			5,621			2,045

Net fair value changes on for account of policyholder financial assets at fair value through profit and loss are offset by amounts in Claims and benefits reported in the Benefits and expenses line (note 9).


Unaudited				Page 14

8. Other income

Other income for the six months ended June 30, 2011 mainly relates to a benefit related to a settlement of legal claims.

9. Benefits and expenses


EUR millions	Q2 2012			Q2 2011			YTD 2012			YTD 2011
Claims and benefits		5,056			6,945			20,550			16,013
Employee expenses		529			517			1,033			1,054
Administration expenses		272			313			534			597
Deferred expenses		(370	)		(371	)		(737	)		(758	)
Amortization charges		411			355			682			712

Total		5,898			7,759			22,062			17,618

Claims and benefits reflects the claims and benefits paid to policyholders, including claims and benefits in excess of account value for products for which deposit accounting is applied and the change in valuation of liabilities for insurance and investment contracts. In addition, Claims and benefits includes commissions and expenses, as well as premium paid to reinsurers. Claims and benefits fluctuates mainly as a result of changes in technical provisions resulting from fair value changes on for account of policyholder financial assets included in Results from financial transactions (note 7).

In Q2 2012, AEGON increased the technical provisions related to unit-linked insurance policies with EUR 265 million. This addition to the technical provisions is included in Claims and benefits. Refer to note 22 Commitments and contingencies for more details.

10. Impairment charges / (reversals)


EUR millions	Q2 2012			Q2 2011			YTD 2012			YTD 2011
Impairment charges / (reversals) comprise:
Impairment charges on financial assets, excluding receivables ¹		66			121			116			209
Impairment reversals on financial assets, excluding receivables ¹		(16	)		(16	)		(22	)		(42	)
Impairment charges / (reversals) on non-financial assets and receivables		2			1			4			3

Total		52			106			98			170

Impairment charges on financial assets, excluding receivables, from:
Shares		—			1			4			3
Debt securities and money market instruments		55			115			86			185
Loans		11			6			25			15
Other		—			(1	)		1			6

Total		66			121			116			209

Impairment reversals on financial assets, excluding receivables, from:
Debt securities and money market instruments		(16	)		(14	)		(17	)		(38	)
Loans		—			(2	)		(5	)		(4	)

Total		(16	)		(16	)		(22	)		(42	)

¹	Impairment charges / (reversals) on financial assets, excluding receivables, are excluded from underlying earnings before tax for segment reporting (refer to note 3).


Unaudited				Page 15

11. Other charges

Other charges for the six months ended June 30, 2012 and 2011, consist mainly of the annual bank tax charge in Hungary.

12. Intangible assets


EUR millions	June 30, 2012		Dec. 31, 2011
Goodwill		758		753
VOBA		1,997		2,086
Future servicing rights		401		397
Software		46		36
Other		11		13

Total intangible assets		3,213		3,285

The increase in goodwill is attributable to foreign currency effects. The decrease in value of business acquired (VOBA) is mainly attributable to regular amortization and the impact of shadow accounting partly offset by foreign currency effects.

13. Investments


EUR millions	June 30, 2012		Dec. 31, 2011
Available-for-sale (AFS)		108,049		105,860
Loans		30,181		29,736
Held-to-maturity (HTM)		172		168
Financial assets at fair value through profit or loss (FVTPL)		5,808		5,531

Financial assets, excluding derivatives		144,210		141,295
Investments in real estate		2,855		2,784

Total investments for general account		147,065		144,079

Total financial assets, excluding derivatives

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