Edgar Filing: AEGON NV

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

February 2018

AEGON N.V.

Aegonplein 50

2591 TV THE HAGUE

The Netherlands

Aegon’s condensed consolidated interim financial statements 4Q 2017, dated February 14, 2018, are included as appendix 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: February 15, 2018	By	/s/ J.H.P.M. van Rossum
		J.H.P.M. van Rossum
		Head of Corporate Financial Center

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“Condensed Consolidated Interim Financial Statements 4 Q 2 0 17 The Haque, February 15, 2018 EGON To help people achieve a lifetime of financial security Transform Tomorrow

Condensed Consolidated Interim Financial Statements 4Q 2017

Table of contents



Condensed consolidated income statement			2

Condensed consolidated statement of comprehensive income			3

Condensed consolidated statement of financial position			4

Condensed consolidated statement of changes in equity			5

Condensed consolidated cash flow statement			6

Notes to the Condensed consolidated interim financial statements			7


Unaudited


Condensed consolidated income statement

EUR millions	Notes	4Q 2017	4Q 2016		FY 2017		FY 2016

Premium income	4	6,044	6,118		22,826		23,453
Investment income	5	1,791	1,927		7,338		7,788
Fee and commission income		932	607		2,802		2,408
Other revenues		1	3		7		7
Total revenues		8,768	8,654		32,973		33,655
Income from reinsurance ceded	6	650	1,011		4,288		3,687
Results from financial transactions	7	6,070	429		20,108		15,949
Other income	8	189	2		540		66
Total income		15,677	10,097		57,910		53,357

Benefits and expenses	9	14,855	9,453		54,978		51,550
Impairment charges / (reversals)	10	36	41		42		95
Interest charges and related fees		121	89		435		347
Other charges	11	193	18		235		700
Total charges		15,205	9,601		55,689		52,693

Share in profit / (loss) of joint ventures		41	34		161		137
Share in profit / (loss) of associates		4	1		11		3
Income / (loss) before tax		517	531		2,393		805
Income tax (expense) / benefit	12	469	(61	)	(32	)	(219	)
Net income / (loss)		986	470		2,361		586

Net income / (loss) attributable to:
Owners of Aegon N.V.		986	470		2,361		586
Non-controlling interests

Earnings per share (EUR per share)	20
Basic earnings per common share		0.46	0.21		1.08		0.22
Basic earnings per common share B		0.01	0.01		0.03		0.01
Diluted earnings per common share		0.46	0.21		1.08		0.22
Diluted earnings per common share B		0.01	0.01		0.03		0.01


		Unaudited

Condensed Consolidated Interim Financial Statements 4Q 2017


Condensed consolidated statement of comprehensive income
EUR millions	4Q 2017			4Q 2016			FY 2017			FY 2016

Net income / (loss)		986			470			2,361			586

Other comprehensive income:
Items that will not be reclassified to profit or loss:
Changes in revaluation reserve real estate held for own use		2			6			8			8
Remeasurements of defined benefit plans		(34	)		912			224			(392	)
Income tax relating to items that will not be reclassified		(102	)		(250	)		(166	)		86

Items that may be reclassified subsequently to profit or loss:
Gains / (losses) on revaluation of available-for-sale investments		(397	)		(2,508	)		1,283			854
Gains / (losses) transferred to the income statement on disposal and impairment of available-for-sale investments		(93	)		(7	)		(1,330	)		(2,122	)
Changes in cash flow hedging reserve		(71	)		(782	)		(853	)		(54	)
Movement in foreign currency translation and net foreign investment hedging reserve		(305	)		988			(2,149	)		69
Equity movements of joint ventures		(8	)		1			(15	)		9
Equity movements of associates		1			-			(5	)		3
Disposal of group assets		7			-			7			-
Income tax relating to items that may be reclassified		768			1,089			951			225
Other		8			9			9			12
Total other comprehensive income / (loss) for the period		(224	)		(543	)		(2,038	)		(1,301	)
Total comprehensive income / (loss)		762			(73	)		323			(715	)

Total comprehensive income / (loss) attributable to:
Owners of Aegon N.V.		762			(81	)		327			(729	)
Non-controlling interests		-			8			(3	)		15


Unaudited


Condensed consolidated statement of financial position
		Dec. 31, 2017		Dec. 31, 2016
EUR millions	Notes

Assets
Cash and cash equivalents			10,768		11,347
Assets held for sale	26		5,249		8,705
Investments	13		137,172		156,813
Investments for account of policyholders	14		194,063		203,610
Derivatives	15		5,912		8,318
Investments in joint ventures			1,712		1,614
Investments in associates			308		270
Reinsurance assets	16		19,202		11,208
Deferred expenses	18		10,135		11,423
Other assets and receivables			10,137		10,805
Intangible assets	19		1,633		1,820
Total assets			396,291		425,935

Equity and liabilities
Shareholders’ equity			20,573		20,913
Other equity instruments			3,794		3,797
Issued capital and reserves attributable to owners of Aegon N.V.			24,366		24,710
Non-controlling interests			20		23
Group equity			24,386		24,734

Subordinated borrowings			764		767
Trust pass-through securities			133		156
Insurance contracts	21		110,818		119,569
Insurance contracts for account of policyholders	22		122,168		120,929
Investment contracts	23		16,943		19,572
Investment contracts for account of policyholders	24		74,434		84,774
Derivatives	15		7,130		8,878
Borrowings	25		13,635		13,153
Liabilities held for sale	26		5,003		8,816
Other liabilities			20,878		24,588
Total liabilities			371,904		401,201
Total equity and liabilities			396,291		425,935


		Unaudited

Condensed Consolidated Interim Financial Statements 4Q 2017


Condensed consolidated statement of changes in equity
EUR millions	Share capital ¹			Retained earnings			Revaluation reserves			Remeasurement of defined benefit plans			Other reserves			Other equity instruments			Issued capital and reserves ²			Non- controlling interests			Total

Year ended December 31, 2017

At beginning of year		8,193			7,812			5,381			(1,820	)		1,347			3,797			24,710			23			24,734

Net Income / (loss) recognized in the income statement		-			2,361			-			-			-			-			2,361			-			2,361

Other comprehensive income:
*Items that will not be reclassified to profit or loss:*
Changes in revaluation reserve real estate held for own use		-			-			8			-			-			-			8			-			8
Remeasurements of defined benefit plans		-			-			-			224			-			-			224			-			224
Income tax relating to items that will not be reclassified		-			-			9			(175	)		-			-			(166	)		-			(166	)

*Items that may be reclassified subsequently to profit or loss:*
Gains / (losses) on revaluation of available-for-sale investments		-			-			1,283			-			-			-			1,283			-			1,283
Gains / (losses) transferred to income statement on disposal and impairment of available-for-sale investments		-			-			(1,330	)		-			-			-			(1,330	)		-			(1,330	)
Changes in cash flow hedging reserve		-			-			(853	)		-			-			-			(853	)		-			(853	)
Movement in foreign currency translation and net foreign investment hedging reserves		-			-			(452	)		102			(1,800	)		-			(2,149	)		-			(2,149	)
Equity movements of joint ventures		-			-			-			-			(15	)		-			(15	)		-			(15	)
Equity movements of associates		-			-			-			-			(5	)		-			(5	)		-			(5	)
Disposal of group assets		-			-			-			-			7			-			7			-			7
Income tax relating to items that may be reclassified		-			-			874			-			76			-			951			-			951
Other		-			13			-			-			-			-			13			(3	)		9
Total other comprehensive income		-			13			(461	)		151			(1,737	)		-			(2,034	)		(3	)		(2,038	)

Total comprehensive income I (loss) for 2017		-			2,374			(461	)		151			(1,737	)		-			327			(3	)		323
Shares issued		3			-			-			-			-			-			3			-			3
Issuance and purchase of (treasury) shares		-			(105	)		-			-			-			-			(105	)		-			(105	)
Dividends paid on common shares		(142	)		(296	)		-			-			-			-			(439	)		-			(439	)
Dividend withholding tax reduction		-			2			-			-			-			-			2			-			2
Coupons on non-cumulative subordinated notes		-			(28	)		-			-			-			-			(28	)		-			(28	)
Coupons on perpetual securities		-			(103	)		-			-			-			-			(103	)		-			(103	)
Incentive plans		-			4			-			-			-			(4	)		(1	)		-			(1	)
At end of period		8,053			9,659			4,920			(1,669	)		(390	)		3,794			24,366			20			24,386

Year ended December 31, 2016

At beginning of year		8,387			8,075			6,471			(1,532	)		1,283			3,800			26,485			9			26,494

Net income / (loss) recognized in the income statement		-			586			-			-			-			-			586			-			586
Other comprehensive income:
*Items that will not be reclassified to profit or loss:*
Changes in revaluation reserve real estate held for own use		-			8			-			-			-			-			8			-			8

Remeasurements of defined benefit plans		-			-			-			(392	)		-			-			(392	)		-			(392	)
Income tax relating to items that will not be reclassified		-			-			(3	)		89			-			-			86			-			86
Items that may be reclassified subsequently to profit or loss:
Gains / (losses) on revaluation of available-for-sale investments		-			-			854			-			-			-			854			-			854
Gains / (losses) transferred to income statement on disposal and impairment of available-for-sale investments		-			-			(2,122	)		-			-			-			(2,122	)		-			(2,122	)

Changes in cash flow hedging reserve		-			-			(54	)		-			-			-			(54	)		-			(54	)
Movement in foreign currency translation and net foreign investment hedging reserves		-			-			(38	)		16			91			-			69			-			69
Equity movements of joint ventures		-			-			-			-			9			-			9			-			9
Equity movements of associates		-			-			-			-			3			-			3			-			3
Income tax relating to items that may be reclassified		-			-			264			-			(39	)		-			225			-			225
Other		-			(2	)		-			-			-			-			(2	)		14			12
Total other comprehensive income		-			(2	)		(1,090	)		(288	)		64			-			(1,315	)		14			(1,301	)
Total comprehensive Income I (loss) for 2016					584			(1,090	)		(288	)		64			-			(729	)		15			(715	)

Shares issued		1			-			-			-			-			-			1			-			1
Shares withdrawn		(10	)		(372	)		-			-			-			-			(382	)		-			(382	)
Issuance and purchase of (treasury) shares		-			(27	)		-			-			-			-			(27	)		-			(27	)
Dividends paid on common shares		(186	)		(304	)		-			-			-			-			(490	)		-			(490	)
Dividend withholding tax reduction		-			(2	)		-			-			-			-			(2	)		-			(2	)
Coupons on non-cumulative subordinated notes		-			(28	)		-			-			-			-			(28	)		-			(28	)
Coupons on perpetual securities		-			(105	)		-			-			-			-			(105	)		-			(105	)
Incentive plans		-			(9	)		-			-			-			(3	)		(12	)		-			(12	)
At end of period		8,193			7,812			5,381			(1,820	)		1,347			3,797			24,710			23			24,734

¹	For a breakdown of share capital please refer to note 20.

²	Issued capital and reserves attributable to owners of Aegon N.V.


Unaudited


Condensed consolidated cash flow statement
EUR millions	FY 2017			FY 2016

Cash flow from operating activities		554			3,319

Purchases and disposals of intangible assets		(34	)		(22	)
Purchases and disposals of equipment and other assets		(67	)		(66	)
Purchases and disposals of businesses and subsidiaries		(1,107	)		95
Purchases, disposals and dividends joint ventures and associates		10			(1,085	)
Cash flow from investing activities		(1,198	)		(1,078	)

Issuance of treasury shares		2			(623	)
Purchase of treasury shares		(266	)		-
Dividends paid		(294	)		(306	)
Issuances, repurchases and coupons of perpetuals		(138	)		(140	)
Issuances, repurchases and coupons of non-cumulative subordinated notes		(37	)		(38	)
Issuances and repayments of borrowings		1,252			641
Cash flow from financing activities		519			(465	)

Net increase I (decrease) in cash and cash equivalents		(125	)		1,776
Net cash and cash equivalents at January 1		11,347			9,593
Effects of changes in foreign exchange rates		(196	)		(23	)
Net cash and cash equivalents at end of period		11,026			11,346

Cash and cash equivalents		10,768			11,347
Cash and cash equivalents classified as Assets held for sale		259			-
Bank overdrafts classified as other liabilities		(2	)		(1	)
Net cash and cash equivalents		11,026			11,346


		Unaudited

Condensed Consolidated Interim Financial Statements 4Q 2017

Notes to the Condensed consolidated interim financial statements

Amounts in EUR millions, unless otherwise stated

Aegon N.V., incorporated and domiciled in the Netherlands, is a public limited liability company organized under Dutch law and recorded in the Commercial Register of The Hague under number 27076669 and with its registered address at Aegonplein 50, 2591 TV, The Hague, the Netherlands. Aegon N.V. serves as the holding company for the Aegon Group and has listings of its common shares in Amsterdam and New York.

Aegon N.V. (or ‘the Company’) and its subsidiaries (‘Aegon’ or ‘the Group’) have life insurance and pensions operations in more than 20 countries in the Americas, Europe and Asia and are also active in savings and asset management operations, accident and health insurance, general insurance and to a limited extent banking operations. Headquarters are located in The Hague, the Netherlands. The Group employs over 28,000 people worldwide.

1. Basis of presentation

The condensed consolidated interim financial statements as at and for the period ended, December 31, 2017, have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’, as adopted by the European Union (hereafter ‘IFRS’). They do not include all of the information required for a full set of financial statements prepared in accordance with IFRS and should therefore be read together with the 2016 consolidated financial statements of Aegon N.V. as included in Aegon’s Annual Report for 2016. Aegon’s Annual Report for 2016 is available on its website (aegon.com). Aegon’s 2017 consolidated financial statements will be published on March 23, 2018.

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. Certain amounts in prior periods may have been reclassified to conform to the current year presentation. These reclassifications had no effect on net income, shareholders’ equity or earnings per share. The condensed consolidated interim financial statements as at, and for the period ended December 31, 2017, were approved by the Supervisory Board on February 14, 2018.

The condensed consolidated interim financial statements are presented in euro (EUR) and all values are rounded to the nearest million unless otherwise stated. The consequence is that the rounded amounts may not add up to the rounded total in all cases.

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


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 2016 consolidated financial statements.

New IFRS accounting standards effective

The following standards, interpretations, amendments to standards and interpretations became effective in 2017 and have been endorsed by the European Union:

IAS 7 Amendment Disclosure initiative;

IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses; and

Annual improvements 2014-2016 Cycle.

None of these revised standards and interpretations are significantly impacting the financial position or the condensed consolidated interim financial statements.

For a complete overview of IFRS standards, published before January 1, 2017, that will be applied in future years, and were not early adopted by the Group, please refer to Aegon’s Annual Report for 2016.

Future adoption of IFRS accounting standards

In May 2017, the IASB has issued IFRS 17 Insurance Contracts. IFRS 17 will be mandatorily effective for annual reporting periods beginning on or after January 1, 2021. It aims to provide a more consistent accounting model for insurance contracts among entities issuing insurance contracts globally. IFRS 17, together with IFRS 9 Financial Instruments, will fundamentally change the accounting in IFRS financial statements of insurance companies. Aegon has started its implementation project on both standards. Aegon expects the impact of these standards to be significant.

The endorsement process of the European Union of the new standard has started in 2017. A final endorsement decision is not expected to be made in 2018.

In October 2017, the IASB has issued IFRS 16 Leases. This Standard was endorsed by the European Union in October 2017. IFRS 16 will be mandatorily effective for annual reporting periods beginning on or after January 1, 2019. Aegon is evaluating the impact that adoption of this Standard is expected to have on the Group’s financial statements.

Taxes

Taxes on income for the year ended December 31, 2017, are calculated using the tax rate that is estimated to be applicable to total annual earnings.

Judgments and critical accounting estimates

Preparing the condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions, including the likelihood, timing or amount of future transactions or events, that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from the estimates made.

In preparing the condensed consolidated interim financial statements, significant judgments made by management in applying the Group’s accounting policies and the key sources of estimating uncertainty were not significantly different than those that were applied to the consolidated financial statements as at, and for the year ended, December 31, 2016, other than mentioned in paragraph 3.1 Impact from 2017 assumption changes and model updates.


		Unaudited

Condensed Consolidated Interim Financial Statements 4Q 2017

Exchange rates

Assets and liabilities of foreign operations are translated to the presentation currency at the closing rates on the reporting 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
December 31, 2017	1	EUR		1.2008		0.8877
December 31, 2016	1	EUR		1.0548		0.8536

Weighted average exchange rates


			USD	GBP
Year ended December 31, 2017	1	EUR	1.1291	0.8758
Year ended December 31, 2016	1	EUR	1.1069	0.8187

3. Segment information

3.1 Income statement


EUR millions	Americas			The Netherlands			United Kingdom			Central & Eastern Europe			Spain & Portugal			Europe			Asia			Asset Management			Holding and other activities			Eliminations			Segment total			Joint ventures and associates eliminations			Consolidated
*Three months ended December 31, 2017*

Underlying earnings before tax		352			135			23			14			(6	)		167			12			37			(42	)		-			525			16			541
Fair value items		81			37			(17	)		-			-			20			(1	)		-			(14	)		-			85			(21	)		64
Realized gains / (losses) on investments		38			22			30			(1	)		-			51			2			-			-			-			91			-			91
Impairment charges		(26	)		(12	)		-			-			-			(12	)		(1	)		-			-			-			(39	)		-			(39	)
Impairment reversals		2			2			-			-			-			2			-			-			-			-			4			-			4
Other Income I (charges)		(266	)		206			(40	)		-			-			166			-			(47	)		16			-			(132	)		(4	)		(136	)
Run-off businesses		(8	)		-			-			-			-			-			-			-			-			-			(8	)		-			(8	)
Income I (loss) before tax		172			389			(4	)		14			(6	)		393			12			(10	)		(40	)					526			(9	)		517
Income tax (expense) / benefit		523			(55	)		(2	)		(2	)		-			(58	)		-			(11	)		5			-			460			9			469
Net Income I (loss)		695			334			(5	)		12			(5	)		335			12			(21	)		(35	)		-			986			-			986
Inter-segment underlying earnings		(20	)		(27	)		(19	)		(2	)		-			(49	)		2			48			19			-

Revenues
Life Insurance gross premiums		1,823			441			2,854			104			57			3,457			233			-			2			(2	)		5,512			(96	)		5,416
Accident and health insurance		485			28			8			-			-			36			21			-			-			-			542			(3	)		539
General insurance		-			35			-			53			29			117			-			-			-			-			117			(29	)		88
Total gross premiums		2,308			504			2,862			158			86			3,609			254			-			-			(2	)		6,170			(127	)		6,043
Investment income		765			524			432			12			9			978			61			1			69			(68	)		1,806			(15	)		1,791
Fee and commission Income		717			66			58			12			6			142			16			164			-			(50	)		989			(57	)		932
Other revenues		1			-			-			-			-			-			-			-			1			-			2			(1	)		1
Total revenues		3,791			1,094			3,352			182			101			4,730			331			165			72			(120	)		.8,968			(200	)		8,768
Inter-segment revenues		-			-			-			-			-			-			-			51			70


EUR millions	Americas			The Netherlands			United Kingdom			Central & Eastern Europe			Spain & Portugal			Europe			Asia			Asset Management			Holding and other activities			Eliminations			Segment total			Joint ventures and associates eliminations			Consolidated
*Three months ended December 31, 2016*

Underlying earnings before tax		388			134			23			14			3			174			13			35			(54	)		(3	)		554			17			571
Fair value items		(226	)		202			(31	)		-			(1	)		171			(11	)		-			53			-			(13	)		(22	)		(35	)
Realized gains / (losses) on investments		(18	)		47			4			-			1			52			2			-			-			-			36			(1	)		35
Impairment charges		(3	)		(8	)		-			(1	)		-			(9	)		-			(5	)		-			-			(17	)		-			(17	)
Impairment reversals		8			8			-			-			-			8			-			-			-			-			16			-			16
Other income I (charges)		(27	)		34			(20	)		(23	)		-			(9	)		-			(1	)		(1	)		-			(38	)		-			(38	)
Run-off businesses		(1	)		-			-			-			-			-			-			-			-			-			(1	)		-			(1	)
Income I (loss) before tax		121			418			(24	)		(10	)		3			387			5			28			(2	)		(3	)		536			(5	)		531
Income tax (expense) I benefit		35			(91	)		19			(8	)		(2	)		(81	)		(14	)		(10	)		4			-			(66	)		5			(61	)
Net Income / (loss)		157			326			(4	)		(18	)		1			306			(9	)		18			2			(3	)		470			-			470
Inter-segment underlying earnings		(53	)		(25	)		(17	)		(3	)		-			(45	)		18			60			20

Revenues
Life Insurance gross premiums		1,958			400			2,739			102			58			3,299			309			-			-			(21	)		5,546			(112	)		5,433
Accident and health Insurance		548			29			8			-			-			37			24			-			(4	)		-			605			(1	)		604
General insurance		-			36			-			44			23			103			-			-			1			(1	)		103			(23	)		80
Total gross premiums		2,506			465			2,746			147			81			3,439			333			-			(2	)		(22	)		6,254			(137	)		6,118
Investment Income		970			487			396			12			16			910			62			1			102			(101	)		1,944			(16	)		1,927
Fee and commission Income		408			88			30			9			4			131			15			157			-			(62	)		649			(42	)		607
Other revenues		2			-			-			-			1			1			-			-			1			-			4			(1	)		3
Total revenues		3,886			1,040			3,172			168			101			4,482			410			157			101			(185	)		8,851			(197	)		8,654
Inter-segment revenues		-			-			-			-			-			1			20			62			103


Unaudited


EUR millions	Americas			The Netherlands			United Kingdom			Central & Eastern Europe			Spain & Portugal			Europe			Asia			Asset Management			Holding and other activities			Eliminations			Segment total			Joint ventures and associates eliminations			Consolidated
*Year ended December 31, 2017*

Underlying earnings before tax geographically		1,381			520			116			67			4			707			49			136			(170	)		-			2,103			61			2,163
Fair value items		170			(112	)		(82	)		-			-			(194	)		-			-			24			-			-			(97	)		(97	)
Realized gains I (losses) on investments		157			184			62			1			-			248			4			3			-			-			413			(5	)		408
Impairment charges		(38	)		(27	)		-			(2	)		-			(29	)		(1	)		-			(3	)		-			(71	)		-			(71	)
Impairment reversals		22			10			-			-			-			10			-			-			-			-			32			-			32
Other income I (charges)		(353	)		296			40			-			-			336			(19	)		(49	)		16			-			(68	)		(4	)		(72	)
Run-off businesses		30			-			-			-			-			-			-			-			-			-			30			-			30
Income I (loss) before tax		1,369			872			137			66			4			1,078			33			90			(134	)		-			2,437			(44	)		2,393
Income tax (expense) I benefit		198			(162	)		(56	)		(9	)		(6	)		(233	)		(28	)		(42	)		29			-			(76	)		44			(32	)
Net Income / (loss)		1,567			710			81			57			(2	)		846			5			48			(105	)		-			2,361			-			2,361
Inter-segment underlying earnings		(78	)		(111	)		(87	)		(11	)		(1	)		(209	)		(1	)		214			73

Revenues
Life insurance gross premiums		7,437			1,857			9,603			411			208			12,079			983			-			7			(9	)		20,498			(546	)		19,952
Accident and health insurance		2,115			203			32			1			83			319			97			-			-			-			2,531			(20	)		2,511
General insurance		-			148			-			216			103			467			-			-			1			(1	)		466			(103	)		363
Total gross premiums		9,553			2,208			9,635			628			394			12,865			1,080			-			8			(10	)		23,496			(670	)		22,826
Investment income		3,368			2,172			1,517			49			37			3,774			246			4			295			(291	)		7,396			(58	)		7,338
Fee and commission income		1,919			326			235			43			17			621			63			609			-			(221	)		2,991			(189	)		2,802
Other revenues		5			-			-			-			3			3			1			-			4			-			13			(5	)		7
Total revenues		14,844			4,706			11,387			720			450			17,263			1,390			613			308			(522	)		33,895			(922	)		32,973
lnter-seqment revenues		-			(1	)		-			-			-			-			3			222			298


EUR millions	Americas			The Netherlands			United Kingdom			Central & Eastern Europe			Spain & Portugal			Europe			Asia			Asset Management			Holding and other activities			Eliminations			Segment total			Joint ventures and associates eliminations			Consolidated
*Year ended December 31, 2016*

Underlying earnings before tax geographically		1,249			534			59			55			8			655			21			149			(162	)		-			1,913			48			1,960
Fair value items		(521	)		(33	)		(7	)					(1	)		(41	)		(9	)		-			(74	)		-			(645	)		(72	)		(717	)
Realized gains I (losses) on investments		(13	)		189			153			-			(1	)		342			8			3			-			-			340			(6	)		334
Impairment charges		(72	)		(29	)		-			-			-			(27	)		(1	)		(5	)		(7	)		1			(113	)		-			(112	)
Impairment reversals		42			17			-			-			-			17			-			-			-			(1	)		58			-			58
Other income I (charges)		(100	)		44			(678	)		(23	)		-			(658	)		(5	)		(2	)		(6	)		-			(771	)		-			(771	)
Run-off businesses		54			-			-			-			-			-			-			-			-			-			54			-			54
Income I (loss) before tax		638			721			(474	)		34			6			288			14			145			(249	)		-			836			(31	)		805
Income tax (expense) I benefit		(80	)		(155	)		18			(15	)		(8	)		(161	)		(27	)		(48	)		65			-			(250	)		31			(219	)
Net Income I (loss)		558			566			(456	)		19			(2	)		127			(13	)		97			(183	)		-			586			-			586
Inter-segment underlying earnings		(194	)		(95	)		(87	)		(14	)		(1	)		(197	)		74			234			84

Revenues
Life insurance gross premiums		7,363			2,015			9,888			399			191			12,493			1,121			-			6			(84	)		20,898			(498	)		20,400
Accident and health insurance		2,204			210			36			1			73			320			104			-			(4	)		-			2,624			(15	)		2,609
General insurance		-			266						179			92			536						-			5			(5	)		536			(92	)		444
Total gross premiums		9,567			2,491			9,924			578			355			13,348			1,225			-			7			(89	)		24,058			(606	)		23,453
investment income		3,717			2,135			1,661			45			45			3,886			232			3			406			(403	)		7,841			(54	)		7,788
Fee and commission income		1,651			350			95			36			14			495			61			632			-			(242	)		2,596			(188	)		2,408
Other revenues		4			-			-			-			2			2						1			3						11			(4	)		7
Total revenues		14,940			4,976			11,680			659			416			17,732			1,517			636			416			(734	)		34,507			(852	)		33,655
Inter-segment revenues		-			3			-			-			-			3			79			243			409

Impact from 2017 assumption changes and model updates

In 2017, a charge of EUR 276 million (2016: EUR 118 million charge) has been recorded in other income/ (charges) in respect of assumption changes and model updates. The impact is mainly attributable to Aegon’s business in the Americas and the Netherlands. Assumption changes and model updates in the Americas led to a net negative impact of EUR 402 million and were mainly driven by a charge of EUR 303 million (USD 343 million) from the conversion of the largest block of universal life business to a new model, of which EUR 56 million (USD 63 million) was recorded in the fourth quarter. The model allows for modeling policyholder behavior and other assumptions on a policy by policy basis, whereas in the previous model this was done at a cohort level. A model change in fixed annuities discount rate, resulted in a charge of EUR 44 million (USD 50 million) and other assumption changes and model updates led to a charge of EUR 54 million (USD 61 million). In the Netherlands, assumption changes and model updates led to a gain of EUR 101 million, which mainly relates to the guarantee provision.

3.2 Performance measure

Aegon’s segment information is prepared by consolidating on a proportionate basis Aegon’s joint ventures and associated companies.

Performance measure

A non-IFRS performance measure of reporting segments utilized by the Company is underlying earnings before tax. Underlying earnings before tax reflects Aegon’s profit from underlying business operations and excludes components that relate to accounting mismatches that are dependent on market volatility, updates to best estimate actuarial and economic assumptions and model updates or events that are considered outside the normal course of business.


		Unaudited

Condensed Consolidated Interim Financial Statements 4Q 2017

Aegon believes that its non-lFRS performance measure, underlying earnings before tax, provides meaningful supplemental information about the underlying results of Aegon’s business, including insight into the financial measures that Aegon’s senior management uses in managing the business. Among other things, Aegon’s senior management is compensated based in part on Aegon’s results against targets using underlying earnings before tax. While many other insurers in Aegon’s peer group present substantially similar performance measures, the performance measures presented in this document may nevertheless differ from the performance measures presented by other insurers. There is no standardized meaning to these measures under IFRS or any other recognized set of accounting standards.

The reconciliation from underlying earnings before tax to income before tax, being the most comparable IFRS measure, is presented in the tables in this note.

The items that are excluded from underlying earnings before tax as described further below are: fair value items, realized gain or losses on investments, impairment charges/reversals, other income or charges, run-off businesses and share in earnings of joint ventures and associates.

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 before tax.

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.

Certain assets held by Aegon 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 before tax 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 7-10%, 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 and the total return annuities and guarantees on variable annuities. 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 before tax 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, VA Europe (included in United Kingdom) and Japan are excluded from underlying earnings before tax, and the long-term expected return for these guarantees is set at zero. In addition, fair value items include market related results on our loyalty bonus reserves in the United Kingdom. The value of these reserves are directly related to policyholder investments which value is directly impacted by movements in equity and bond markets.

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 before tax and reported under fair value items.


Unaudited

Realized gains or losses on investments

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

Impairment charges/reversals

Impairment charges include impairments on available-for-sale debt securities, shares including the effect of deferred policyholder acquisition costs, mortgage loans and other loan portfolios at amortized cost, joint ventures and associates. Impairment reversals include reversals on available-for-sale debt securities.

Other income or charges

Other income or charges includes: a) items which cannot be directly allocated to a specific line of business; b) the impact of actuarial and economic assumption and model updates used to support calculations of our liabilities for insurance and investment contracts sold to policyholders and related assets; and c) items that are outside the normal course of business, including restructuring charges. In the condensed consolidated interim financial statements, these restructuring charges are included in operating expenses. Actuarial assumption and model updates are recorded in Claims and Benefits in the IFRS income statement.

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. This line includes results related to the run-off of the institutional spread-based business, structured settlements blocks of business, bank-owned and corporate-owned life insurance (BOLl/COLl) business (until April 1, 2017, please refer to note 29 Acquisitions/ divestments for more information on the divestment of this business), and the remaining reinsurance business. Aegon has other blocks of business for which sales have been discontinued and of which the earnings are included in underlying earnings before tax.

Share in earnings of joint ventures and associates

Earnings from Aegon’s joint ventures in the Netherlands, Mexico, Spain, Portugal, China and Japan and Aegon’s associates in India, Brazil, the Netherlands, United Kingdom, Mexico and France are reported on an underlying earnings before tax basis.


		Unaudited

Condensed Consolidated Interim Financial Statements 4Q 2017

3.3 Investments

Amounts included in the tables on investments are presented on an IFRS basis. which means that investments in joint ventures and associates are not consolidated on a proportionate basis. Instead, these investments are included on a single line using the equity method of accounting.


December 31, 2017	Americas		The Netherlands		United Kingdom		Central & Eastern Europe		Spain & Portugal		Europe		Asia		Asset Management		Holdings and other activities		Eliminations			EUR millions Total EUR
Investments
Shares		567		859		5		54		5		924		1		2		57		-			1,551
Debt securities		54,535		21,411		1,779		712		646		24,548		5,252		9		-		-			84,344
Loans		8,831		30,557		-		275		54		30,886		6		-		13		-			39,736
Other financial assets		8,904		21		228		10		-		259		67		146		20		-			9.395
Investments In real estate		633		1,495		-		4		15		1,513		-		-		-		-			2,147
Investments general account		73,469		54,343		2,011		1,055		720		58,130		5,326		157		91		-			137,172
Shares		-		9,262		15,856		244		14		25.376		-		-		-		(6	)		25.370
Debt securities		3,116		13,370		8,125		216		9		21,720		-		-		-		-			24,836
Unconsolidated investment funds		99,426		276		33,476		873		81		34,706		-		-		-		-			134,132
Other financial assets		422		3,788		4,850		11		1		8,650		-		-		-		-			9,072
Investments In real estate		-		-		655		-		-		655		-		-		-		-			655
Investments for account of policyholders		102,964		26,697		62,961		1,343		105		91,105		-		-		-		(6	)		194,063
Investments on balance sheet		176,434		81,040		64,972		2,398		825		149,235		5,326		157		91		(6	)		331,236
Off balance sheet investments third parties		212,736		1,759		114,906		5,709		528		122,902		2,718		143,923		-		(981	)		481,297
Total revenue generating investments		389,170		82,799		179,878		8,107		1,353		272,137		8,043		144,079		91		(987	)		812,533
Investments
Available-for-sale		59,459		19,841		2,007		756		651		23,256		5,299		137		20		-			88,170
Loans		8,831		30,557				275		54		30,886		6		-		13		-			39,736
Financial assets at fair value through profit or loss		107,511		29,147		62,310		1,363		105		92,925		21		20		57		(6	)		200,528
Investments in real estate		633		1,495		655		4		15		2,168											2,801
Total investments on balance sheet		176,434		81,040		64,972		2,398		825		149,235		5,326		157		91		(6	)		331,236
Investments in joint ventures		6		1,008		-		-		480		1,488		118		99		1		-			1,712
Investments In associates		77		74		7		6		-		88		14		122		8		-			308
Other assets		35.728		15,221		8,352		383		189		24,131		2,347		242		29.836		(29.263	)		63,034
Consolidated total assets		212,245		97,343		73,331		2,787		1,494		174,941		7,805		620		29,936		(29,270	)		396,291


December 31, 2016	Americas		The Netherlands		United Kingdom		Central & Eastern Europe		Spain & Portugal		Europe		Asia		Asset Management		Holdings and other activities			Eliminations			EUR millions Total EUR
Investments
Shares		793		334		84		35		4		457		-		2		62			-			1,314
Debt securities		70,766		23,741		2,036		633		683		27,093		5,310		-		-			-			103,169
loans		10,820		28,627		-		303		45		28,975		18		-		-			-			39,812
Other financial assets		9.924		358		115		10		-		483		-		88		23			-			10,519
Investments in real estate		743		1,238		-		3		15		1,256		-		-		-			-			1,999
Investments general account		93,046		54,298		2,236		983		747		58,264		5,328		90		85			-			156,813
Shares		-		9,689		15,503		295		13		25,499		-		-		-			(7	)		25,492
Debt securities		4,779		15,434		9,847		235		10		25,526		-		-		-						30,305
Unconsolidated Investment funds		102,534		-		36,600		879		64		37,543		-		-		-			-			140,077
Other financial assets		27		2,862		4,150		9		1		7,022		-		-		-			-			7,049
Investments in real estate		-		-		686		-		-		686		-		-		-			-			686
Investments for account of policyholders		107,341		27,985		66,786		1,418		88		96,276		-		-		-			(7	)		203,610
Investments on balance sheet		200,387		82,283		69,021		2,401		834		154,540		5,328		90		85			(7	)		360,423
Off balance sheet investments third parties		240,072		952		5,333		3,154		507		9,946		2,734		130,889		-			(864	)		382,776
Total revenue generating investments		440,458		83,235		74,354		5,556		1,342		164,487		8,061		130,979		85			(871	)		743,200
investments
Avallable-for-sale		77,918		23,044		2,152		660		687		26,544		5,289		87		23			-			109,860
loans		10,820		28,627		-		303		45		28,975		18		-		-			-			39,812
Financial assets at fair value through profit or loss		110,906		29,374		66,183		1,436		88		97,080		21		4		62			(7	)		208,066
Investments in real estate		743		1,238		686		3		15		1,942				-		-			-			2,685
Total investments on balance sheet		200,387		82,283		69,021		2,401		834		154,540		5,328		90		85			(7	)·		360,423
Investments in joint ventures		7		877		-		-		495		1,373		134		99		-			-			1,614
Investments In associates		95		21		8		2		-		30		21		125		(1	)		-			270
Other assets		31,003		15,260		12,718		293		170		28,426		3,122		293		31,107			(30.338	)		63,627
Consolidated total assets		231,493		98,441		81,747		2,696		1,500		184,370		8,604		607		31,192			(30,345	)		425,935


Unaudited

4. Premium income and premiums paid to reinsurers



EUR millions	4Q 2017	4Q 2016		FY 2017	FY 2016

Premium income
Life insurance	5,417	5,433		19,952	20,400
Non-life insurance	627	684		2,874	3,053
Total premium income	6,044	6,118		22,826	23,453
Accident and health insurance	539	604		2,511	2,609
General insurance	88	80		363	444
Non-life Insurance premium income	627	684		2,874	3,053

Premiums paid to reinsurers ¹
Life insurance	839	821		3,214	2,932
Non-life insurance	46	52		217	244
Total premiums paid to reinsurers	885	874		3,431	3,176
Accident and health insurance	42	55		205	238
General insurance	4	(3	)	13	7
Non-life Insurance paid to reinsurers	46	52		217	244

¹	Premiums paid to reinsurers are recorded within Benefits and expenses in the income statement - refer to note 9 - Benefits and expenses.

Premium income Life insurance includes EUR 1.739 million for 4Q 2017 and EUR 5,139 million for FY 2017 (4Q 2016: EUR 1,692 million, FY 2016 EUR 5,255 million) of premiums related to insurance policies upgraded to the retirement platform in the UK.

5. Investment income



EUR millions	4Q 2017	4Q 2016	FY 2017	FY 2016
Interest income	1,429	1,573	6,052	6,479

Dividend income	337	321	1,164	1,180
Rental income	25	34	121	129
Total investment income	1,791	1,927	7,338	7,788

Investment income related to general account	1,274	1,407	5,394	5,737
Investment income for account of policyholders	517	520	1,944	2,051
Total	1,791	1,927	7,338	7,788

6. Income from reinsurance ceded

The income from reinsurance ceded for the full year of 2017 increased by EUR 601 million compared to the full year of 2016. This is mainly the result of the reinsurance transaction, related to the pay-out annuity and BOLI/COLI businesses in the Americas that took place in the second quarter of the year, partly offset by the reduction of income from reinsurance ceded in the UK, due to the Part VII transfers of annuity insurance policies to Rothesay Life and Legal & General, which were completed the second and third quarter respectively. Due to the transaction regarding the pay-out annuity and BOLI/COLI businesses in the Americas, the liabilities for insurance contracts increased by EUR 0.9 billion resulting from loss recognition and then were ceded to a reinsurance company. The loss recognition is reflected in the benefits and expenses line (within claims and benefits) and is offset by an equal increase in the income from reinsurance ceded. As a result there is a nil net impact in the income statement. For more details on the divestment of the pay-out annuity and BOLl/COLI businesses and the Part VII transfers of Rothesay Life and Legal & General refer to note 29 Acquisitions/divestments.


		Unaudited

Condensed Consolidated Interim Financial Statements 4Q 2017

7. Results from financial transactions



EUR millions	4Q 2017		4Q 2016		FY 2017		FY 2016

Net fair value change of general account financial investments at FVTPL other than derivatives	148		(21	)	232		(42	)
Realized gains /(Iosses) on financial investments	78		40		431		327
Gains /(Iosses) on investments in real estate	53		18		193		70
Net fair value change of derivatives	159		24		(1,301	)	435
Net fair value change on for account of policyholder financial assets at FVTPL	5,616		344		20,524		15,121
Net fair value change on investments in real estate for account of policyholders	13		1		38		(26	)
Net foreign currency gains /(Iosses)	(5	)	9		(20	)	41
Net fair value change on borrowings and other financial liabilities	6		13		10		21
Realized gains /(Iosses) on repurchased debt	1		-		1		1
Total	6,070		429		20,108		15,949

Net fair value change on for account of policyholder financial assets at FVTPL for full year of 2017 increased compared to the full year of 2016, mainly from favorable equity markets results which were partly offset by losses from interest rates movements. The increase of the net fair value change on for account of policyholder financial assets at FVTPL in 4Q 2017 compared to 4Q 2016 is mainly driven by stronger equity markets.

Net fair value change on for accounts of policyholder financial assets at FVTPL is offset by amounts in the Claims and benefits line reported in note 9 Benefits and expenses.

8. Other income

Other income for the full year 2017 of EUR 540 million mainly related to a book gain of EUR 231 million (USD 250 million) from the divestment of the pay-out annuity and the BOLl/COLI businesses in the Americas recorded in the second quarter and a book gain of EUR 208 million on the sale of the Unirobe Meeùs Groep on November 1st, 2017 by Aegon the Netherlands, recorded in the fourth quarter. Furthermore, a release of an expense reserve of EUR 82 million (GBP 71 million) was recorded in the second quarter that was embedded in the liabilities for insurance contracts following the completion of the Part VII transfer to Rothesay Life. In the third quarter EUR 17 million (GBP 14 million) related to the completion of the Part VII transfer of annuities reinsured to Legal & General in 2016 was included. For more details on the divestment of the pay-out annuity and the BOLl/COLI businesses, the sale of the Unirobe Meeùs Groep and the completion of the Part VII transfer to Rothesay Life and Legal & General refer to note 29 Acquisitions/divestments.

9. Benefits and expenses



EUR millions	4Q 2017		4Q 2016		FY 2017		FY 2016

Claims and benefits	14,043		8,504		51,714		48,128
Employee expenses	555		583		2,234		2,287
Administration expenses	370		342		1,424		1,273
Deferred expenses	(225	)	(288	)	(980	)	(1,203	)
Amortization charges	112		313		586		1,065
Total	14,855		9,453		54,978		51,550

The following table provides an analysis of “claims and benefits”:



EUR millions	4Q 2017		4Q 2016		FY 2017		FY 2016

Benefits and claims paid life	6,163		7,592		23,634		23,877
Benefits and claims paid non-life	453		478		1,903		2,052
Change in valuation of liabilities for insurance contracts	6,437		601		22,741		16,193
Change in valuation of liabilities for investment contracts	(534	)	(1,734	)	(2,644	)	(104	)
other	(9	)	(5	)	(34	)	(45	)

Policyholder claims and benefits	12,511		6,932		45,599		41,974
Premium paid to reinsurers	885		874		3,431		3,176
Profit sharing and rebates	5		10		23		49
Commissions	642		689		2,661		2,929
Total	14,043		8,504		51,714		48,128


Unaudited

The lines “change in valuation of liabilities for insurance contracts” and “change in valuation of liabilities for investment contracts” reflect changes in technical provisions resulting from net fair value changes on for account of policyholder financial assets at fair value through P&L included in Results from financial transactions (note 7) of EUR 5,616 million for 4Q 2017 and EUR 20,524 million for FY 2017 (4Q 2016: EUR 344 million, FY 2016: EUR 15,121 million). In addition, the line “change in valuation of liabilities for insurance contracts” includes an increase of technical provisions for life insurance contracts of EUR 508 million for 4Q 2017 and EUR 601 million for FY 2017 (4Q 2016: decrease of EUR 1,115 million, FY 2016: increase of EUR 2,349 million).

10. Impairment charges/(reversals)



EUR millions	4Q 2017		4Q 2016		FY 2017		FY 2016

Impairment charges / (reversals) comprise:
Impairment charges on financial assets, excluding receivables	41		18		74		117
Impairment reversals on financial assets, excluding receivables	(4	)	(16	)	(32	)	(58	)
Impairment charges / (reversals) on non-financial assets and receivables	(1	)	39		-		36
Total	36		41		42		95

Impairment charges on financial assets, excluding receivables, from:
Shares	1		-		2		1
Debt securities and money market instruments	6		6		17		53
Loans	33		2		50		23
Other	-		10		-		33
Investments in associates	1		-		4		7
Total	41		18		74		117

Impairment reversals on financial assets, excluding receivables, from:
Debt securities and money market instruments	(2	)	(12	)	(17	)	(42	)
Loans	(2	)	(3	)	(13	)	(14	)
Other	-		(1	)	(2	)	(2	)
Total	(4	)	(16	)	(32	)	(58	)

11. Other charges

Other charges in 2017 of EUR 235 million mainly relate to the loss of EUR 105 million (USD 119 million) regarding the divestment of a block of life reinsurance business to SCOR in the Americas in December 2017 and a charge of EUR 83 million (USD 100 million), regarding a provision in anticipation of a possible settlement in connection with a previously disclosed investigation by the US Securities and Exchange Commission (SEC), both recorded in the fourth quarter. In the third quarter an impairment of deferred transaction costs of EUR 36 million (GBP 32 million) was recorded as a result of the sale of Aegon Ireland plc, which is subject to customary regulatory approvals. For more details on the divestment of a block of US reinsurance run off business to SCOR and Aegon Ireland plc. refer to note 29 Acquisitions/divestments.


		Unaudited

Condensed Consolidated Interim Financial Statements 4Q 2017

12. Income tax (expense)/ benefit

Income tax in 2017 is impacted by a one-time benefit resulting from the US tax reform. In the Americas, the corporate income tax rate decreased from 35% to 21% as from January 1, 2018. A one-time benefit is driven by a reduction in net deferred tax liabilities as at December 31, 2017 and amounts to EUR 554 million (USD 626 million). Deferred tax liabilities are included in Other liabilities in the statement of financial position.

13. Investments



EUR millions	Dec. 31, 2017	Dec. 31, 2016

Available-for-sale (AFS)	88,170	109,860
Loans	39,736	39,812
Financial assets at fair value through profit or loss (FVTPL)	7,119	5,142
Financial assets, for general account, excluding derivatives	135,026	154,814
Investments in real estate	2,147	1,999
Total investments for general account, excluding derivatives	137,172	156,813



Financial assets, for general account, excluding derivatives
EUR millions	AFS	FVTPL	Loans	Total

Shares	490	1,062	-	1,551
Debt securities	80,200	4,144	-	84,344
Money market and other short-term investments	6,690	119	-	6,809
Mortgages loans	-	-	33,930	33,930
Private loans	-	-	3,642	3,642
Deposits with financial institutions	-	-	139	139
Policy loans	-	-	1,897	1,897
Other	791	1,795	127	2,713
December 31, 2017	88,170	7,119	39,736	135,026

	AFS	FVTPL	Loans	Total

Shares	824	490	-	1,314
Debt securities	101,054	2,115	-	103,169
Money market and other short-term investments	6,776	317	-	7,093
Mortgages loans	-	-	34,206	34,206
Private loans	-	-	3,166	3,166
Deposits with financial institutions	-	-	129	129
Policy loans	-	-	2,207	2,207
Other	1,206	2,219	104	3,529
December 31, 2016	109,860	5,142	39,812	154,814

The decrease of EUR 19.8 billion in financial assets, for general account, excluding derivatives compared to December 31, 2016 is mainly driven by the disposal of debt securities related to the divestments of the pay-out annuity and BOLl/COLI businesses and the block of life reinsurance to SCOR in the Americas. In addition, the balance is affected by foreign exchange rates translation adjustments.


Unaudited

14. Investments for account of policyholders



EUR millions	Dec. 31, 2017	Dec. 31, 2016
Shares	25,370	25,492
Debt securities	24,836	30,305
Money market and short-term investments	2,340	1,231
Deposits with financial institutions	2,946	2,951
Unconsolidated investment funds	134,132	140,077
Other	3,786	2,868
Total investments for account of policyholders at fair value through profit or loss, excluding derivatives	193,409	202,924
Investment in real estate	655	686
Total investments for account of policyholders	194,063	203,610

15. Derivatives

The movements in fair value of derivatives on both the asset and liability side of the condensed consolidated statement of financial position mainly result from changes in interest rates and other market movements during the period, as well as purchases, disposals and maturities. The divestment of the pay-out annuity and BOLI/COLI businesses in the Americas contributed to the decrease of derivative assets with EUR 259 million compared to December 31, 2016.

16. Reinsurance assets

Reinsurance assets increased by EUR 8.0 billion compared to December 31, 2016 mainly due to the reinsurance transaction, related to the pay-out annuity and BOLI/COLI businesses in the Americas that took place in the second quarter of the year. For more details on the divestment of these businesses refer to note 29 Acquisitions/divestments.


		Unaudited

Condensed Consolidated Interim Financial Statements 4Q 2017

17. Fair value

The following tables provide an analysis of financial instruments recorded at fair value on a recurring basis by level of the fair value hierarchy:


Fair value hierarchy

EUR millions	Level I		Level II		Level III		Total
As at December 31, 2017

Financial assets carried at fair value
Available-far-sale investments
Shares		51		151		288		490
Debt securities		26,338		52,415		1,447		80,200
Money markets and other short-term instruments		1,664		5,026		-		6,690
Other investments at fair value		-		208		583		791
Total Available-far-sale investments		28,053		57,800		2,318		88,170

Fair value through profit or loss
Shares		226		232		604		1,062
Debt securities		1,964		2,175		4		4,144
Money markets and other short-term instruments		17		102		-		119
Other investments at fair value		1		539		1,255		1,795
Investments for account of policyholders¹		115,323		76,302		1,784		193,409
Derivatives		68		5,787		57		5,912
Total Fair value through profit or loss		117,599		85,137		3,705		206,440
Total financial assets at fair value		145,652		142,937		6,022		294,610

Financial liabilities carried at fair value
Investment contracts for account of policyholders ²		-		36,950		219		37,169
Borrowings³		-		536		-		536
Derivatives		34		5,251		1,845		7,130
Total financial liabilities at fair value		34		42,738		2,064		44,835

As at December 31, 2016

Financial assets carried at fair value
Available-for-sale investments
Shares		119		312		393		824
Debt securities		29,386		69,702		1,966		101,054
Money markets and other short-term instruments		-		6,776		-		6,776
Other investments at fair value		-		453		754		1,206
Total Available-for-sale investments		29,504		77,243		3,112		109,860

Fair value through profit or loss
Shares		288		152		50		490
Debt securities		27		2,082		6		2,115
Money markets and other short-term instruments		-		317		-		317
Other investments at fair value		1		961		1,257		2,219
Investments for account of policyholders ¹		125,997		75,202		1,726		202,924
Derivatives		41		8,169		108		8,318
Total Fair value through profit or loss		126,355		86,883		3,146		216,384
Total financial assets at fair value		155,860		164,126		6,259		326,244

Financial liabilities carried at fair value
Investment contracts for account of policyholders ²		-		42,627		176		42,803
Borrowings ³		-		610		-		610
Derivatives		64		6,347		2,467		8,878
Total financial liabilities at fair value		64		49,584		2,643		52,290

¹ The investments for account of policyholders included in the table above represents only those investments carried at fair value through profit or loss.

² The investment contracts for account of policyholders included in the table above represents only those investment contracts carried at fair value.

³ Total borrowings on the statement of financial position contain borrowings carried at amortized cost that are not included in the above schedule.


Unaudited

Significant transfers between Level l, Level II and Level III

Aegon’s policy is to record transfers of assets and liabilities between Level l, Level II and Level III at their fair values as of the beginning of each reporting period.

The table below shows transfers between Level l and II for financial assets and financial liabilities recorded at fair value on a recurring basis during the year ended December 31, 2017.

Fair value transfers

EUR millions

FY 2017

FY 2016

Transfers
Level I to
Level II

Transfers
Level II to
Level I

Transfers
Level I to
Level II

Transfers
Level II to
Level I

Financial assets carried at fair value

Available-for-sale investments

Debt securities

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