THE HAGUE, February 25, 2010 /PRNewswire-FirstCall/ -- - Strong Increase in Underlying Earnings and Net Income - Underlying Earnings Before Tax of EUR 427 Million - Net Income of EUR 393 Million, due to Improved Earnings, Realized Gains on Investments and Lower Impairments - Impairments of EUR 209 million, the Lowest Level in Six Quarters - Cost Reduction Measures of EUR 250 Million Realized in 2009, Exceeding Target of EUR 150 Million - Robust sales demonstrating solid franchise - New Life Sales of EUR 549 Million, Driven by Strong Sales in Most Businesses - Net Deposits, Excluding Institutional Guaranteed Products, of EUR 1.5 Billion, due to Strong Sales of Pensions and Retail Mutual Funds - Profitable Sales With Value of New Business of EUR 216 Million and an Internal Rate of Return of 17.6% - Continued Strong Capital Position - EUR 0.8 Billion in Capital Freed-Up in Q4, Totaling EUR 3.3 Billion in 2009 - Excess Capital of EUR 3.7 Billion by end December - Insurance Group Directive a) Capital Surplus of EUR 6.7 Billion, Equivalent to Solvency Ratio of 204% - No Dividend on Common Shares Statement of Alex Wynaendts, CEO "Clearly, the steps we have taken over the past year have delivered solid results - a return to profit, reduced expenses, and continued customer confidence, resulting in increased sales in all country units. AEGON today is in a stronger financial position, which enabled us to repay one-third of the capital we obtained from the Dutch government. Given the uncertain environment, we believe that it continues to be prudent to maintain a substantial capital buffer, as reflected in our strong capital position. Although impairments improved during the quarter, they remained at elevated levels for the year, which led to lower cash flows from our operating units. Consequently, AEGON will not declare a dividend to common shareholders. Looking ahead, we are confident that our strategy will continue to reinforce AEGON's strong position in the gradually improving economic environment." KEY PERFORMANCE INDICATORS amounts in EUR Notes Q4 Q3 % Q4 2008 % FY 2009 FY 2008 % millions 2009 2009 Underlying earnings before tax 1 427 351 22 (181) - 1,160 1,573 (26) Net income 2 393 145 171 (1,182) - 204 (1,082) - New life sales 3 549 484 13 598 (8) 2,045 2,631 (22) Gross deposits excluding Institutional Guaranteed Products 4 5,932 5,978 (1) 5,970 (1) 23,628 22,371 6 Value of new business (VNB) 216 169 28 233 (7) 767 837 (8) Return on equity 5 8.9% 8.4% 6 (8.7%) - 5.9% 6.6% (11) For footnotes see page 23. Supplements: AEGON's Q4 2009 Financial Supplement and Condensed Consolidated Interim Financial Statements are available on http://www.aegon.com/ STRATEGIC HIGHLIGHTS AEGON continued to deliver on its strategic priorities: - To reallocate capital toward business with higher growth and return prospects - To improve growth and returns from existing businesses - To reduce financial markets risk - To manage AEGON as an international company. Portfolio review AEGON continues to assess its businesses to ensure they meet requirements in terms of earnings growth, cash flow and return on capital. As part of this review, AEGON sold its funeral insurance business in the Netherlands in January 2010 for EUR 212 million. The sale will have a positive effect on AEGON's excess capital position and is expected to result in a modest book gain in the first half of 2010. Cost measures During 2009, AEGON realized cost reduction measures of EUR 250 million, significantly above the company's target for the year of EUR 150 million. Excluding the impact of restructuring charges, increased employee benefit expenses in the United States and currency movements, operating costs decreased in 2009 by 5% on a comparable basis. AEGON's total workforce, excluding agent employees, declined by 7% during the year to just over 25,000 employees. The decline was due mainly to restructuring in the United States and the United Kingdom, as well as the sale of real estate brokerage activities in the Netherlands and the sale of the company's life insurance operations in Taiwan. Capital & risk management Capital preservation During the fourth quarter of 2009, a further EUR 0.8 billion of capital was released from AEGON's businesses, bringing the total for 2009 as a whole to EUR 3.3 billion. Excess capital - Excess capital above S&P AA capital adequacy requirements amounted to EUR 3.7 billion at the end of the fourth quarter 2009, down from EUR 4.8 billion at the end of third quarter of 2009. The decline was due primarily to repayment of one-third of the EUR 3 billion in core capital provided by the Dutch State at the end of 2008. The repayment, including interest and premium for repayment, totaled EUR 1.15 billion. - De-risking and capital efficiency measures added EUR 0.8 billion to excess capital but were offset by other items, mainly related to higher regulatory and rating agency capital requirements for longevity and default provisioning. Statutory earnings of EUR 0.3 billion were partly offset by impairments of EUR 0.2 billion. - Under current uncertain circumstances, AEGON aims to maintain a substantial capital buffer. Core capital - At year-end 2009, core capital, excluding the revaluation reserves, amounted to EUR 15.9 billion or 75% of the total capital base, well above AEGON's self-imposed minimum target of 70%6,7. - Core capital, including the revaluation reserves, totaled EUR 14.2 billion, comprising EUR 12.2 billion in shareholders' equity and a further EUR 2 billion in convertible core capital securities. - Shareholders' equity per common share of EUR 5.88. - The revaluation reserves amounted to a negative EUR 1.7 billion, a marginal improvement from the third quarter of 2009 as the positive effects of tightening credit spreads were almost entirely offset by the impact of rising risk-free interest rates and realized gains. - At the end of December 31, 2009, the Insurance Group Directive (IGD) capital surplus totaled EUR 6.7 billion, equivalent to a solvency ratio of 204%. Improved risk profile As announced in February last year, AEGON is running off its institutional spread-based business in the United States. The run-off will significantly reduce AEGON's exposure to credit risk and help lessen overall sensitivity to fluctuations in financial markets. During the course of 2009, as planned, account balances of this business were reduced by USD 11.5 billion to USD 21.3 billion. During 2010, these balances are expected to be reduced by a further USD 8.5 billion. In order to fund these outflows, assets from the institutional spread-based business have been transferred internally to other businesses in the United States in exchange for cash. As a result, the institutional spread-based business realized a negative spread on these assets which adversely impacted underlying earnings. Dividend AEGON's dividend policy remains unchanged and is based on its capital position and cash flows. Although the capital position is strong, cash flows were impacted by higher than average impairments in 2009. Therefore, AEGON will not declare a dividend to common shareholders over the fiscal year 2009. Manage AEGON as an international company At the end of the fourth quarter, AEGON launched a variable annuity product in the Netherlands, part of a broader effort to use existing knowledge and expertise in the United States to expand the company's variable annuities business in Europe and Japan. Currently, variable annuity products are being sold in the United Kingdom, the Netherlands and France. In addition, toward the end of 2009, AEGON's joint venture with Sony Life launched its first variable annuity product in the Japanese market. The product is beingdistributed through Sony Life's Lifeplanner channel and several banks, including megabank Sumitomo Mitsui Banking Corp. Sales will be reported starting in the first quarter of 2010. New reporting structure From the first quarter of 2010, AEGON will adjust its segment reporting structure to reflect recent structural changes in its organization. Comparable full year 2008 and quarterly 2009 numbers will be published on April 12, 2010. The day after, on April 13, AEGON will host a meeting in London to provide a further explanation to analysts and investors. FINANCIAL HIGHLIGHTS FINANCIAL OVERVIEW EUR millions Q4 Q3 % Q4 2008 % FY 2009 FY 2008 % 2009 2009 Underlying earnings before tax by line of business Life and protection 267 280 (5) 121 121 1,052 911 15 Individual savings and retirement products 78 79 (1) (433) - (94) (146) 36 Pensions and asset management 105 29 - 179 (41) 259 508 (49) Institutional products (5) 5 - 100 - 118 405 (71) Life reinsurance 16 15 7 (114) - 21 (63) - Distribution (9) (1) - (19) 53 (3) 1 - General insurance 18 7 157 (3) - 36 45 (20) Interest charges and other (48) (69) 30 (17) (182) (252) (112) (125) Share in net results of associates 5 6 (17) 5 - 23 24 (4) Underlying earnings before tax 427 351 22 (181) - 1,160 1,573 (26) Over/(under) performance of fair value items (174) (58) (200) (770) 77 (460) (1,619) 72 Operating earnings before tax 253 293 (14) (951) - 700 (46) - Operating earnings before tax by line of business Life and protection 250 289 (13) 104 140 988 795 24 Individual savings and retirement products (36) (61) 41 (902) 96 (315) (922) 66 Pensions and asset management 79 69 14 224 (65) 48 251 (81) Institutional products (20) 37 - (54) 63 161 8 - Life reinsurance 40 43 (7) (319) - 203 (361) - Distribution (9) (1) - (19) 53 (3) 1 - General insurance 18 7 157 (3) - 36 45 (20) Interest charges and other (74) (96) 23 13 - (441) 113 - Share in net results of associates 5 6 (17) 5 - 23 24 (4) Operating earnings before tax 253 293 (14) (951) - 700 (46) - Gains/(losses) on investments 324 (100) - 136 138 432 35 - Impairment charges (209) (285) 27 (501) 58 (1,273) (1,038) (23) Other income/(charges) 5 48 (90) 38 (87) (323) (12) - Income before tax 373 (44) - (1,278) - (464) (1,061) 56 Income tax 20 189 (89) 96 (79) 668 (21) - Net income 393 145 171 (1,182) - 204 (1,082) - Net underlying earnings 373 309 21 (69) - 1,025 1,234 (17) Net operating earnings 278 272 2 (623) - 718 69 - Underlying earnings geographically Americas 304 289 5 (234) - 805 1,073 (25) The Netherlands 95 102 (7) 75 27 398 378 5 United Kingdom 34 (13) - 13 162 48 141 (66) Other countries 42 42 - (17) - 161 93 73 Holding and other (48) (69) 30 (18) (167) (252) (112) (125) Underlying earnings before tax 427 351 22 (181) - 1,160 1,573 (26) Operating earnings geographically Americas 201 213 (6) (1,167) - 775 (587) - The Netherlands 52 141 (63) 227 (77) 151 213 (29) United Kingdom 34 (6) - (6) - 54 122 (56) Other countries 40 41 (2) (17) - 161 93 73 Holding and other (74) (96) 23 12 - (441) 113 - Operating earnings before tax 253 293 (14) (951) - 700 (46) - Commissions and expenses 1,388 1,473 (6) 1,863 (25) 5,983 6,109 (2) of which operating expenses 830 776 7 928 (11) 3,262 3,272 - OPERATIONAL HIGHLIGHTS Underlying earnings before tax AEGON's underlying earnings before tax amounted to EUR 427 million for the fourth quarter. Financial markets had a positive effect particularly compared with the same quarter last year, when the company's earnings were severely impacted by the turmoil in world financial markets. In the Americas, underlying earnings totaled USD 446 million compared with a loss of USD 412 million a year earlier. The improvement was due mainly to the recovery in financial markets, which had a positive effect on both technical results and fee income. These more than offset lower investment income as a result of increased cash balances in relation to the run-off of AEGON's institutional spread-based business in the United States. Underlying earnings in the Netherlands increased to EUR 95 million, up from EUR 75 million in the fourth quarter last year. This increase was mainly the result of improved technical results including several provision releases. Investment income was lower, primarily because the fourth quarter of 2008 included substantial non-recurring dividend income. In the United Kingdom, underlying earnings amounted to GBP 30 million, a sharp increase from the fourth quarter of 2008, as significantly higher fee income from improved equity and bond markets offset lower earnings from life and protection and losses from distribution companies. Underlying earnings from Other Countries totaled EUR 42 million in the fourth quarter, driven mainly by further growth in Central & Eastern Europe and Spain. Earnings for the same quarter last year included a sizeable one-time charge in Taiwan. AEGON's Taiwanese life insurance operations were sold during 2009 and its results are no longer included in the company's income statements. Excluding Taiwan, underlying earnings before tax increased 24%. Expenses for the holding company amounted to EUR 48 million in the fourth quarter of 2009, compared with EUR 17 million last year, primarily a result of higher funding costs. Fair value items Fair value items include the over- or underperformance on certain assets held at fair value through profit or loss. In the fourth quarter, these showed an underperformance of EUR 174 million, a significant improvement compared with an underperformance of EUR 770 million in the fourth quarter of 2008. In the Americas, the underperformance of EUR 103 million was primarily attributable to losses on a macro equity hedge and negative revaluation of real estate related assets. Underperformance of fair value items in the Netherlands of EUR 43 million was due mainly to the impact of movements in the fair value of guarantees and related hedges. In addition, the further narrowing of AEGON's own credit spread resulted in a loss of EUR 26 million for the holding company. Gains on investments Gains on investments amounted to EUR 324 million in the fourth quarter, a result primarily of trading in AEGON's bond portfolios. In the Netherlands, investment gains were mainly the result of adjustments in the bond portfolio, in part driven by asset and liability management. Impairment charges Impairment charges decreased sharply compared with the fourth quarter of 2008 to EUR 209 million, the lowest level in six quarters, though they remained above AEGON's long-term average expectations. Impairments on US housing related assets totaled EUR 92 million, while the remainder was related mostly to hybrid securities issued by Irish and UK banks. Income tax Income tax in the fourth quarter amounted to EUR 20 million and included a tax benefit of EUR 20 million related to cross border intercompany reinsurance transactions between Ireland and the United States. Tax gains related to these internal transactions totaled EUR 419 million in 2009, and are a partial reversal of the EUR 490 million in tax charges incurred during 2008. Net income AEGON's net income increased to EUR 393 million compared with a loss in the fourth quarter of 2008. The improvement was the result of higher underlying earnings, as well as a significant improvement in the performance of fair value items, gains on investments, a sharp decline in the level of impairments and taxes. Commissions & expenses Total commissions and expenses declined by 25% compared with Q4 2008 to EUR 1.4 billion, a result primarily of accelerated amortization of deferred policy acquisition costs in the Americas in the fourth quarter of 2008 related to last year's lower equity markets. Operating expenses decreased by 11% to EUR 830 million as a result of significant cost savings and weakening of the US dollar. SALES EUR millions Q4 2009 Q3 2009 % Q4 % FY 2009 FY % 2008 2008 New life sales Life single premiums 2,161 1,732 25 2,327 (7) 7,422 10,532 (30) Life recurring premiums annualized 333 311 7 366 (9) 1,303 1,578 (17) Total recurring plus 1/10 single 549 484 13 598 (8) 2,045 2,631 (22) New premium production accident and health insurance 126 125 1 161 (22) 561 614 (9) New premium production general insurance 21 12 75 17 24 56 68 (18) Gross deposits (on and off balance) by line of business Fixed annuities 387 434 (11) 1,676 (77) 3,377 4,057 (17) Variable annuities 699 693 1 590 18 3,055 2,636 16 Saving deposits 1,017 978 4 590 72 3,032 2,473 23 Retail mutual funds 855 949 (10) 501 71 3,117 2,698 16 Pensions and asset management 2,973 2,924 2 2,613 14 11,045 10,505 5 Institutional guaranteed products 598 764 (22) 5,963 (90) 4,325 18,380 (76) Life reinsurance 1 - - - - 2 2 - Total gross deposits 6,530 6,742 (3) 11,933 (45) 27,953 40,751 (31) Total gross deposits excl. institutional guaranteed products 5,932 5,978 (1) 5,970 (1) 23,628 22,371 6 Net deposits (on and off balance) by line of business Fixed annuities (226) (225) - 593 - 382 71 - Variable annuities 12 149 (92) (114) - 651 (441) - Saving deposits 454 440 3 (535) - 870 (699) - Retail mutual funds 304 255 19 (182) - 484 590 (18) Pensions and asset management 997 1,373 (27) 257 - 3,122 1,769 76 Institutional guaranteed products (7,153) (3,473) (106) 1,679 - (14,412) 2,185 - Life reinsurance (11) (12) 8 (19) 42 (51) (61) 16 Total net deposits (5,623) (1,493) - 1,679 - (8,954) 3,414 - Total net deposits excl. institutional guaranteed products 1,530 1,980 (23) - - 5,458 1,229 - REVENUE GENERATING INVESTMENTS Dec. 31, Sept. 30, 2009 2009 % Revenue generating investments (total) 361,018 354,033 2 Investments general account 134,205 132,617 1 Investments for account of policyholders 125,845 119,647 5 Off balance sheet investments third parties 100,968 101,769 (1) New life sales New life sales totaled EUR 549 million, up 13% compared with the third quarter. Most businesses reported increased sales for the quarter. In the Netherlands and the United Kingdom, sales increased primarily as a result of a rise in demand for AEGON's pension products. In Spain and Asia, sales increased as AEGON's businesses continued to expand, while in Central & Eastern Europe sales were unchanged from the third quarter. Deposits Gross deposits, excluding institutional guaranteed products, totaled EUR 5.9 billion in the fourth quarter. Pension deposits, saving deposits and variable annuities were all strong. However, as anticipated, fixed annuity deposits were lower, and will continue to be managed toward a lower level. Net deposits, excluding institutional guaranteed products, remained strong at EUR 1.5 billion. Value of new business Value of new business showed a substantial improvement across almost all countries compared with the third quarter and amounted to EUR 216 million. In the Americas, the increase was due mainly to higher margins for variable annuities and life reinsurance, while in the Netherlands higher spreads on mortgages was the main driver. Higher sales volumes were the main reason for an increase in value of new business in Spain. Revenue-generating investments Revenue-generating investments rose to EUR 361 billion at the end of December 2009, up 2% from the third quarter. The increase was mainly the result of a further rise in equity markets and a stronger US dollar at the end of the fourth quarter of 2009. APPENDIX I -- Americas --The Netherlands --United Kingdom --Other Countries FINANCIAL OVERVIEW, Q4 2009 GEOGRAPHICALLY amounts in million EUR (unless otherwise stated) United Americas Kingdom USD GBP Underlying earnings before tax by line of business 269 10 Life and protection 136 - Individual savings and retirement products 22 28 Pensions and asset management (2) - Institutional products 22 - Life reinsurance - (8) Distribution - - General insurance - - Interest charges and other (1) - Share in net results of associates 446 30 Underlying earnings before tax (143) - Over/(under) performance of fair value items 303 30 Operating earnings before tax Operating earnings before tax by line of business 266 10 Life and protection (25) - Individual savings and retirement products 23 28 Pensions and asset management (22) - Institutional products 62 - Life reinsurance - (8) Distribution - - General insurance - - Interest charges and other (1) - Share in net results of associates 303 30 Operating earnings before tax 74 30 Gains/(losses) on investments (231) (49) Impairment charges - 8 Other income/(charges) 146 19 Income before tax 120 (4) Income tax 266 15 Net income 403 30 Net underlying earnings 345 30 Net operating earnings (continued) amounts in million EUR (unless otherwise stated) Holding, other The United Other activities & Total Americas Netherlands Kingdom countries eliminations EUR Underlying earnings before tax by line of business Life and 178 62 12 15 - 267 protection Individual 101 (27) - 4 - 78 savings and retirement products Pensions and 15 53 32 5 - 105 asset management Institutional (5) - - - - (5) products Life reinsurance 16 - - - - 16 Distribution - 1 (10) - - (9) General - 8 - 10 - 18 insurance Interest charges - - - - (48) (48) and other Share in net (1) (2) - 8 - 5 results of associates Underlying 304 95 34 42 (48) 427 earnings before tax Over/(under) (103) (43) - (2) (26) (174) performance of fair value items Operating 201 52 34 40 (74) 253 earnings before tax Operating earnings before tax by line of business Life and 177 46 12 15 - 250 protection Individual (11) (27) - 2 - (36) savings and retirement products Pensions and 16 26 32 5 - 79 asset management Institutional (20) - - - - (20) products Life reinsurance 40 - - - - 40 Distribution - 1 (10) - - (9) General - 8 - 10 - 18 insurance Interest charges - - - - (74) (74) and other Share in net (1) (2) - 8 - 5 results of associates Operating 201 52 34 40 (74) 253 earnings before tax Gains/(losses) 54 190 33 (1) 48 324 on investments Impairment (145) 7 (54) (17) - (209) charges Other - - 8 (4) 1 5 income/(charges) Income before 110 249 21 18 (25) 373 tax Income tax 71 (45) (5) - (1) 20 Net income 181 204 16 18 (26) 393 Net underlying 275 73 33 33 (41) 373 earnings Net operating 232 41 34 31 (60) 278 earnings FINANCIAL OVERVIEW, FY 2009 YEAR-TO-DATE GEOGRAPHICALLY amounts in million EUR (unless otherwise stated) United Americas Kingdom USD GBP Underlying earnings before tax by line of business 967 38 Life and protection (84) - Individual savings and retirement products 59 21 Pensions and asset management 166 - Institutional products 29 - Life reinsurance - (16) Distribution - - General insurance - - Interest charges and other (5) - Share in net results of associates 1,132 43 Underlying earnings before tax (42) 5 Over/(under) performance of fair value items 1,090 48 Operating earnings before tax Operating earnings before tax by line of business 933 38 Life and protection (394) - Individual savings and retirement products 45 26 Pensions and asset management 226 - Institutional products 285 - Life reinsurance - (16) Distribution - - General insurance - - Interest charges and other (5) - Share in net results of associates 1,090 48 Operating earnings before tax 8 90 Gains/(losses) on investments (1,337) (163) Impairment charges (4) 59 Other income/(charges) (243) 34 Income before tax 940 (29) Income tax 697 5 Net income 1,048 56 Net underlying earnings 1,055 59 Net operating earnings (continued) amounts in million EUR (unless otherwise stated) Holding, other The United Other activities & Total Americas Netherlands Kingdom countries eliminations EUR Underlying earnings before tax by line of business Life and 687 262 43 60 - 1,052 protection Individual (59) (54) - 19 - (94) savings and retirement products Pensions and 42 174 24 19 - 259 asset management Institutional 118 - - - - 118 products Life reinsurance 21 - - - - 21 Distribution - 16 (19) - - (3) General - 1 - 35 - 36 insurance Interest charges - - - - (252) (252) and other Share in net (4) (1) - 28 - 23 results of associates Underlying 805 398 48 161 (252) 1,160 earnings before tax Over/(under) (30) (247) 6 - (189) (460) performance of fair value items Operating 775 151 54 161 (441) 700 earnings before tax Operating earnings before tax by line of business Life and 663 222 43 60 - 988 protection Individual (280) (54) - 19 - (315) savings and retirement products Pensions and 32 (33) 30 19 - 48 asset management Institutional 161 - - - - 161 products Life reinsurance 203 - - - - 203 Distribution - 16 (19) - - (3) General - 1 - 35 - 36 insurance Interest charges - - - - (441) (441) and other Share in net (4) (1) - 28 - 23 results of associates Operating 775 151 54 161 (441) 700 earnings before tax Gains/(losses) 6 224 101 7 94 432 on investments Impairment (951) (111) (183) (23) (5) (1,273) charges Other (3) - 66 (387) 1 (323) income/(charges) Income before (173) 264 38 (242) (351) (464) tax Income tax 669 (23) (33) (43) 98 668 Net income 496 241 5 (285) (253) 204 Net underlying 745 299 62 112 (193) 1,025 earnings Net operating 750 114 67 112 (325) 718 earnings AMERICAS - Underlying earnings before tax increase to USD 446 million - New life sales up 3% from previous quarter to USD 208 million - Net deposits excluding IGP* total USD 1.4 billion, driven by strong pension sales - Value of new business rises to USD 128 million as a result of higher margins Underlying earnings before tax Underlying earnings before tax for the fourth quarter of 2009 amounted to USD 446 million. - Earnings from Life & Protection were strong in the fourth quarter and totaled USD 269 million. - Individual Savings & Retirement earnings amounted to USD 136 million. Within variable annuities, a write-down of intangible assets related to the Merrill Lynch Life company acquisition of USD 22 million was offset by a positive unlocking of deferred policy acquisition costs. - Pensions & Asset Management earnings were in line with the same quarter last year as higher fees from higher asset balances were offset by increased employee benefit plan expenses. - Institutional guaranteed products spreads declined significantly due to an accumulation of cash necessary to run-off the business as well as the amortization of unrealized losses on assets transferred to other portfolios in exchange for cash. - Earnings from Life Reinsurance totaled USD 22 million. Net reserve strengthening was partly offset by favorable mortality experience during the quarter. Net income Net income amounted to USD 266 million, a strong improvement from the loss in Q4 2008. The improvement was the result of higher underlying earnings, the improved performance of fair value items, gains on investments and substantially lower impairment charges. The underperformance of fair value items of USD 143 million was attributable to macro equity hedge losses (USD 72 million), negative revaluations of real estate related assets partly offset by strong private equity and hedge fund returns (USD 36 million), and fair value annuity losses (USD 35 million) driven by a tightening in credit spreads and policyholder behavior assumption changes. *IGP= institutional guaranteed products Gains on investments totaled USD 74 million, primarily the result of profits realized by trading in the bond portfolio. Impairments, though still above AEGON's long-term expectations, continued to trend down from the high levels experienced during the second half of 2008. During the fourth quarter, impairments amounted to USD 231 million. Net income included a tax gain of USD 42 million related to cross border intercompany reinsurance treaties. Tax gains from these internal transactions totaled USD 590 million in 2009 and are a partial reversal of tax charges of USD 718 million during 2008. Commissions and expenses Total commissions and expenses decreased 21% to USD 1.1 billion. The fourth quarter last year included substantial accelerated deferred policy acquisition costs amortization following lower equity markets. Operating expenses increased 4% to USD 549 million as significant expense reductions were more than offset by an increase in employee benefit plan expenses. Sales and deposits Total new life sales increased 3% compared with Q3 2009. New premium production for accident and health products increased 3% compared with Q3 2009 as new initiatives more than offset the run-off of the automotive credit business in the United States. Total gross deposits, excluding IGP*, increased 13% compared with Q3 2009. As a result of active management of the fixed annuity book, deposits declined to USD 648 million in Q4 2009, while variable annuity deposits continued to develop favorably and amounted to USD 965 million. Mutual fund deposits increased by 18% to USD 862 million as a result of improved market conditions. Pension deposits increased 22% in the quarter to USD 3.3 billion. Net pension deposits remained very strong at USD 1.6 billion for the fourth quarter. Value of new business Value of new business improved to USD 128 million due primarily to higher margins in the variable annuity and life reinsurance businesses. The internal rate of return increased to 14.7%, mainly as a result of improved margins on variable annuities. Revenue-generating investments Revenue-generating investments declined by 1% in the fourth quarter to USD 307 billion at the end of December 2009 as outflows related to the run-off of the institutional spread-based business were partly offset by strong net inflows from pension and retail businesses. AMERICAS - EARNINGS USD millions Q4 2009 Q3 2009 % Q4 2008 % FY 2009 FY 2008 % Underlying earnings before tax by line of business Life 189 193 (2) 159 19 653 769 (15) Accident and health 80 67 19 68 18 314 363 (13) Life and protection 269 260 3 227 19 967 1,132 (15) Fixed annuities 103 62 66 86 20 311 368 (15) Variable annuities 45 50 (10) (709) - (356) (587) 39 Retail mutual funds (12) (8) (50) - - (39) 8 - Individual savings and retirement products 136 104 31 (623) - (84) (211) 60 Pensions and asset management 22 10 120 23 (4) 59 150 (61) Institutional guaranteed products (17) 1 - 127 - 119 544 (78) BOLI/COLI 15 9 67 4 - 47 50 (6) Institutional products (2) 10 - 131 - 166 594 (72) Life reinsurance 22 20 10 (170) - 29 (93) - Share in net results of associates (1) (1) - - - (5) 1 - Underlying earnings before tax 446 403 11 (412) - 1,132 1,573 (28) Over/(under) performance of fair value items (143) (97) (47) (1,330) 89 (42) (2,434) 98 Operating earnings before tax 303 306 (1) (1,742) - 1,090 (861) - Operating earnings before tax by line of business Life 187 197 (5) 70 167 636 593 7 Accident and health 79 66 20 43 84 297 321 (7) Life and protection 266 263 1 113 135 933 914 2 Fixed annuities 106 87 22 (110) - 315 (68) - Variable annuities (119) (164) 27 (1,185) 90 (670) (1,289) 48 Retail mutual funds (12) (8) (50) - - (39) 8 - Individual savings and retirement products (25) (85) 71 (1,295) 98 (394) (1,349) 71 Pensions and asset management 23 10 130 (11) - 45 91 (51) Institutional guaranteed products (36) 47 - (76) 53 185 (15) - BOLI/COLI 14 9 56 (8) - 41 26 58 Institutional products (22) 56 - (84) 74 226 11 - Life reinsurance 62 63 (2) (465) - 285 (529) - Share in net results of associates (1) (1) - - - (5) 1 - Operating earnings before tax 303 306 (1) (1,742) - 1,090 (861) - Gains/(losses) on investments 74 (98) - (10) - 8 (103) - Impairment charges (231) (287) 20 (499) 54 (1,337) (1,138) (17) Other income/(charges) - (5) - (1) - (4) 6 - Income before 146 (84) - (2,252) - (243) (2,096) 88 tax Income tax 120 316 (62) 393 (69) 940 74 - Net income 266 232 15 (1,859) - 697 (2,022) - Net underlying earnings 403 359 12 (279) - 1,048 1,143 (8) Net operating earnings 345 295 17 (1,136) - 1,055 (491) - - Commissions and expenses 1,141 1,295 (12) 1,451 (21) 5,009 4,961 1 of which operating expenses 549 539 2 527 4 2,227 2,167 3 For the amounts in euro see the Financial Supplement. AMERICAS - SALES USD millions Q4 2009 Q3 2009 % Q4 2008 % FY 2009 FY 2008 % New life sales Life single premiums 184 193 (5) 262 (30) 606 931 (35) Life recurring premiums annualized 189 183 3 179 6 715 852 (16) Total recurring plus 1/10 single 208 202 3 205 1 776 945 (18) Life 149 152 (2) 138 8 566 669 (15) BOLI/COLI 1 1 - 15 (93) 4 36 (89) Life reinsurance 58 49 18 52 12 206 240 (14) Total recurring plus 1/10 single 208 202 3 205 1 776 945 (18) New premium production accident and health insurance 184 178 3 205 (10) 758 870 (13) Gross deposits (on and off balance) by line of business Fixed annuities 648 691 (6) 2,328 (72) 4,751 5,947 (20) Variable annuities 965 912 6 747 29 3,728 3,680 1 Retail mutual funds 862 732 18 396 118 2,414 2,813 (14) Pensions and asset management 3,394 2,841 19 2,771 22 12,027 12,987 (7) Institutional guaranteed products 972 1,158 (16) 8,075 (88) 6,085 26,945 (77) Life reinsurance - 1 - 1 - 2 4 (50) Total gross deposits 6,841 6,335 8 14,318 (52) 29,007 52,376 (45) Total gross deposits excl. institutional guaranteed products 5,869 5,177 13 6,243 (6) 22,922 25,431 (10) Net deposits (on and off balance) by line of business Fixed annuities (296) (278) (6) 896 - 538 103 - Variable annuities (51) 153 - (150) 66 415 (811) - Retail mutual funds 383 236 62 (219) - 467 778 (40) Pensions and asset management 1,361 839 62 24 - 3,584 2,660 35 Institutional guaranteed products (10,320) (4,906) (110) 2,433 - (20,280) 3,203 - Life reinsurance (17) (17) - (25) 32 (72) (89) 19 Total net deposits (8,940) (3,973) (125) 2,959 - (15,348) 5,844 - Total net deposits excl. institutional guaranteed products 1,380 933 48 526 162 4,932 2,641 87 REVENUE GENERATING INVESTMENTS Dec. 31, Sept. 30, 2009 2009 % Revenue 307,375 310,483 (1) generating investments (total) Investments 123,560 125,712 (2) general account Investments for 71,915 68,927 4 account of policyholders Off balance 111,900 115,844 (3) sheet investments third parties For the amounts in euro see the Financial Supplement. THE NETHERLANDS - Underlying earnings increase 27% to EUR 95 million - Net income improves 65% to EUR 204 million - Strong demand for pensions leads to new life sales of EUR 93 million - Value of new business rises to EUR 66 million on higher margins and volumes Underlying earnings before tax Underlying earnings before tax amounted to EUR 95 million. Several separate provision releases totaling EUR 36 million more than offset charges of EUR 22 million related to a reorganization of the sales operations and EUR 9 million for the deposit guarantee scheme in the Netherlands following the failures of two banks, Icesave and DSB. - Earnings from Life & Protection increased to EUR 62 million. Life results improved mainly as a result of higher investment income, higher earnings from mortgages and lower costs, partly offset by charges related to a reorganization of the sales operations. Earnings also included several releases of provisions. - For Savings, improved margins were more than offset by charges related to a reorganization of the sales operations and the failures of Icesave and DSB, which led to an underlying loss of EUR 27 million. - Pensions & Asset Management earnings declined compared with last year to EUR 53 million. Q4 2008 included a one-off dividend of EUR 75 million and exceptional technical results of EUR 37 million. Current quarter results included a release of provisions. - Earnings from Distribution amounted to EUR 1 million. Lower volumes in the Dutch insurance market continue to have repercussions for the earnings of this business. - General insurance earnings increased to EUR 8 million and included a charge related to the reorganization of the Dutch sales operations. Net income Net income increased by two-thirds compared with Q4 2008 to EUR 204 million. The improvement was a result of higher underlying earnings, lower impairment charges and increased gains on investments partly offset by an underperformance on fair value items. Gains on investments totaled EUR 190 million, mainly the result of adjustments in the bond portfolio, in part driven by asset and liability management. Fair value items underperformed by EUR 43 million mainly because of the impact of fair value movements of guarantees and related hedges. Impairments amounted to a positive EUR 7 million as a result of the recovery of previously impaired securities. Commissions and expenses Commissions and expenses decreased by 15% compared with Q4 2008 to EUR 321 million. As a result of significant cost savings, operating costs declined by 13% to EUR 258 million. Sales and deposits As a result of improved service and customer satisfaction, evidenced by recent surveys, demand for AEGON's group pension products increased. This resulted in pension sales of EUR 72 million. Meanwhile, life sales rose to EUR 21 million as a result of an increase in recurring premium production related to mortgages. In total, new life sales amounted to EUR 93 million. Value of new business Higher volumes and margins in the mortgage business resulted in an increase in the value of new business to EUR 66 million. The internal rate of return for AEGON's Dutch activities continues to be high at 14.9%, driven mainly by the mortgage business. Revenue-generating investments Revenue-generating investments rose to EUR 70.9 billion at the end of December 2009, up 2% compared with the previous quarter, primarily the result of continued net inflows. THE NETHERLANDS - EARNINGS EUR millions Q4 Q3 % Q4 % FY FY % 2009 2009 2008 2009 2008 Underlying earnings before tax by line of business Life 61 61 - (34) - 234 43 - Accident and health 1 9 (89) (3) - 28 23 22 Life and protection 62 70 (11) (37) - 262 66 - Saving products (27) (8) - (20) (35) (54) (14) - Individual savings and retirement products (27) (8) - (20) (35) (54) (14) - Pensions and asset management 53 38 39 169 (69) 174 308 (44) Distribution 1 3 (67) (22) - 16 3 - General insurance 8 (2) - (15) - 1 8 (88) Share in net results of associates (2) 1 - - - (1) 7 - Underlying earnings before tax 95 102 (7) 75 27 398 378 5 Over/(under) performance of fair value items (43) 39 - 152 - (247) (165) (50) Operating earnings before tax 52 141 (63) 227 (77) 151 213 (29) Operating earnings before tax by line of business Life 45 67 (33) 29 55 194 75 159 Accident and health 1 9 (89) (3) - 28 23 22 Life and protection 46 76 (39) 26 77 222 98 127 Saving products (27) (8) - (20) (35) (54) (14) - Individual savings and retirement products (27) (8) - (20) (35) (54) (14) - Pensions and asset management 26 71 (63) 258 (90) (33) 111 - Distribution 1 3 (67) (22) - 16 3 - General insurance 8 (2) - (15) - 1 8 (88) Share in net results of associates (2) 1 - - - (1) 7 - Operating earnings before tax 52 141 (63) 227 (77) 151 213 (29) Gains/(losses) on investments 190 (34) - 84 126 224 20 - Impairment charges 7 (12) - (68) - (111) (138) 20 Income before tax 249 95 162 243 2 264 95 178 Income tax (45) (21) (114) (119) 62 (23) (1) - Net income 204 74 176 124 65 241 94 156 Net underlying earnings 73 78 (6) 80 (9) 299 326 (8) Net operating earnings 41 106 (61) 129 (68) 114 139 (18) Commissions and expenses 321 279 15 376 (15) 1,181 1,269 (7) of which operating expenses 258 206 25 297 (13) 873 934 (7) THE NETHERLANDS - SALES EUR millions Q4 Q3 % Q4 % FY FY % 2009 2009 2008 2009 2008 New life sales Life single premiums 638 329 94 225 184 1,503 1,324 14 Life recurring premiums annualized 29 20 45 18 61 89 86 3 Total recurring plus 1/10 single 93 52 79 41 127 239 219 9 Life 21 19 11 20 5 82 97 (15) Pensions 72 33 118 21 - 157 122 29 Total recurring plus 1/10 single 93 52 79 41 127 239 219 9 New premium production accident and health insurance 4 3 33 4 - 17 15 13 New premium production general insurance 7 6 17 7 - 26 28 (7) Gross deposits (on and off balance) by line of business Saving deposits 1,017 978 4 590 72 3,032 2,473 23 Pensions and asset management 166 173 (4) 83 100 412 228 81 Total gross deposits 1,183 1,151 3 673 76 3,444 2,701 28 Net deposits (on and off balance) by line of business Saving deposits 454 440 3 (535) - 870 (699) - Pensions and asset management (123) 210 - 14 - (99) (38) (161) Total net deposits 331 650 (49) (521) - 771 (737) - REVENUE GENERATING INVESTMENTS Dec. Sept. 31, 30, 2009 2009 % Revenue generating 70,861 69,656 2 investments (total) Investments general 36,144 35,496 2 account Investments for account 21,749 21,044 3 of policyholders Off balance sheet 12,968 13,116 (1) investments third parties UNITED KINGDOM - Underlying earnings before tax increase to GBP 30 million - New life sales up 9% compared with Q3 2009 to GBP 237 million - Higher sales lead to value of new business of GBP 32 million, up 10% compared with Q3 2009 Underlying earnings before tax Underlying earnings before tax increased to GBP 30 million in the fourth quarter, mainly as a result of a strong recovery in financial markets and business growth. - Earnings from Life & Protection amounted to GBP 10 million. Earnings in the fourth quarter last year had included a one-off benefit. - Pensions & Asset Management earnings increased to GBP 28 million, due to a strong recovery in financial markets. - Distribution recorded a loss of GBP 8 million as a result of lower income due to adverse market conditions and costs associated with adapting the business to the new environment. Net income Net income amounted to GBP 15 million in Q4 2009 as the result of higher underlying earnings, an improved performance of fair value items and gains on investments, partly offset by an increase in impairments. Gains on investments totaled GBP 30 million, mainly from bond trading. Impairments increased in the fourth quarter to GBP 49 million, mostly related to hybrid securities issued by Irish and UK banks. Commissions and expenses Total commissions and expenses were up 8% compared with Q4 2008 to GBP 186 million, mainly as a result of a lower deferral of expenses and the release of employee benefit reserves in the fourth quarter last year. Operating expenses decreased by 1%, as cost savings measures led to lower expenses. Sales and deposits New life sales increased by 9% compared with Q3 2009 to GBP 237 million. Sales of group and individual pensions increased, though annuity production was lower, as planned following repricing. Gross deposits declined to GBP 270 million, compared with a very strong third quarter. Value of new business Value of new business increased compared with Q3 2009, in line with higher pension sales, to GBP 32 million. The internal rate of return on new business remained stable at 13.5%. Revenue-generating investments As a result of a further recovery in financial markets and net inflows, revenue-generating investments increased to GBP 55.8 billion at the end of December 2009. UNITED KINGDOM - EARNINGS GBP millions Notes Q4 Q3 % Q4 % FY FY % 2009 2009 2008 2009 2008 Underlying earnings before tax by line of business Life 10 10 - 18 (44) 38 46 (17) Life and protection 10 10 - 18 (44) 38 46 (17) Pensions and asset management 28 (18) - (8) - 21 68 (69) Distribution (8) (3) (167) 3 - (16) (1) - Underlying earnings before tax 30 (11) - 13 131 43 113 (62) Over/(under) performance of fair value items - 6 - (15) - 5 (15) - Operating earnings before tax 30 (5) - (2) - 48 98 (51) Operating earnings before tax by line of business Life 10 10 - 18 (44) 38 46 (17) Life and protection 10 10 - 18 (44) 38 46 (17) Pensions and asset management 28 (12) - (23) - 26 53 (51) Distribution (8) (3) (167) 3 - (16) (1) - Operating earnings before tax 30 (5) - (2) - 48 98 (51) Gains/(losses) on investments 30 26 15 (16) - 90 (17) - Impairment charges (49) (70) 30 2 - (163) (18) - Other income/(charges) 8 8 43 (81) 28 (71) 59 (14) - Income before tax 19 (6) - 12 58 34 49 (31) Income tax attributable to policyholder return (8) (43) 81 (28) 71 (59) 14 - Income before income tax on shareholders return 11 (49) - (16) - (25) 63 - Income tax on shareholders return 4 16 (75) 8 (50) 30 1 - Net income 15 (33) - (8) - 5 64 (92) Net underlying earnings 30 (5) - 17 76 56 104 (46) Net operating earnings 30 (1) - 2 - 59 89 (34) Commissions and expenses 186 167 11 173 8 687 662 4 of which operating expenses 113 109 4 114 (1) 428 414 3 For the amounts in euro see the Financial Supplement. UNITED KINGDOM - SALES GBP millions Notes Q4 Q3 % Q4 % FY FY % 2009 2009 2008 2009 2008 New life sales 9 Life single premiums 1,171 1,066 10 1,548 (24) 4,571 6,470 (29) Life recurring premiums annualized 120 111 8 134 (10) 486 575 (15) Total recurring plus 1/10 single 237 218 9 289 (18) 943 1,222 (23) Life 31 40 (23) 66 (53) 183 251 (27) Pensions 206 178 16 223 (8) 760 971 (22) Total recurring plus 1/10 single 237 218 9 289 (18) 943 1,222 (23) Gross deposits (on and off balance) by line of business Pensions and asset management 270 491 (45) 152 78 1,076 542 99 Total gross deposits 270 491 (45) 152 78 1,076 542 99 Net deposits (on and off balance) by line of business Pensions and asset management 98 402 (76) 11 - 269 (322) - Total net deposits 98 402 (76) 11 - 269 (322) - REVENUE GENERATING INVESTMENTS Dec. Sept. 31, 30, 2009 2009 % Revenue generating 55,774 54,224 3 investments (total) Investments general 7,031 6,779 4 account Investments for 45,975 44,795 3 account of policyholders Off balance sheet 2,768 2,650 4 investments third parties For the amounts in euro see the Financial Supplement. OTHER COUNTRIES - Underlying earnings before tax increase to EUR 42 million - New life sales increase 39% to EUR 57 million compared with Q3 2009, primarily driven by higher sales in Spain - Value of new business rises to EUR 30 million, due mainly to growth in sales Underlying earnings before tax Underlying earnings before tax totaled EUR 42 million, driven mainly by further growth in Central & Eastern Europe (CEE) and Spain. Earnings for the same quarter last year had included a sizeable one-off charge associated with the company's Taiwanese operations. The sale of these operations was completed in August 2009, and results are no longer included in AEGON's earnings. - Earnings from Life & Protection increased to EUR 15 million, mainly as a result of growth in CEE - particularly in Slovakia and the Czech Republic - as well as improved results from AEGON's joint ventures in Spain. Results last year were impacted by an accelerated amortization of deferred acquisition costs in Taiwan of EUR 43 million. - Individual Savings & Retirement earnings improved to EUR 4 million as AEGON's Chinese asset management joint venture increased its asset balances on the back of a strong recovery in the Chinese equity market. - Earnings from Pensions & Asset Management rose to EUR 5 million as a result of higher asset balances and cost efficiencies in CEE. - General Insurance earnings remained high at EUR 10 million, while the fourth quarter last year had included a reserve release of EUR 2 million. Net income Net income from Other Countries increased to EUR 18 million as a result of higher underlying earnings, lower losses on investments and lower impairments. Net income for the fourth quarter last year had included an equity impairment in Taiwan of EUR 45 million. Commissions and expenses Commissions and expenses, excluding Taiwan, were unchanged compared with the fourth quarter last year. Operating expenses, also excluding Taiwan, were also stable, despite continued growth in the business. Sales and deposits As a result of strong growth in both single and recurring premium production, total new life sales increased 39% from the third quarter to EUR 57 million. - In Spain, new life sales increased to EUR 30 million as a result of the introduction of new products and successful sales campaigns. Sales for the partnership with regional savings bank CAM, which are not consolidated in the company's accounts, amounted to EUR 26 million on a 100% basis; - In CEE, new life sales remained unchanged at EUR 21 million, while new premium production for non-life increased to EUR 14 million as a result of a greater focus on sales of household insurance; - In Asia, new life sales in China increased to EUR 6 million, as a result of higher recurring premium production in most distribution channels. AEGON's joint venture in India, which is not consolidated, recorded new life sales for the quarter of EUR 7 million on a 100% basis. Gross deposits decreased compared with the third quarter to EUR 591 million primarily as a result of the introduction of new retail mutual funds in China resulted in high inflows during the third quarter. Value of new business Value of new business increased 43% compared with the previous quarter to EUR 30 million, mainly as a result of improved sales in both Spain and Hungary. The internal rate of return remained at a high level. Revenue-generating investments Revenue-generating investments increased 6% during the quarter to EUR 12.3 billion at the end of December 2009. The increase was due mainly to market appreciation and net inflows. OTHER COUNTRIES - EARNINGS EUR millions Q4 Q3 % Q4 % FY FY % 2009 2009 2008 2009 2008 Underlying earnings before tax by line of business Life 15 19 (21) (41) - 58 11 - Accident and health - - - 1 - 2 5 (60) Life and protection 15 19 (21) (40) - 60 16 - Variable annuities (1) (1) - - - - (1) - Saving products - - - - - 1 - - Retail mutual funds 5 5 - 3 67 18 13 38 Individual savings and retirement products 4 4 - 3 33 19 12 58 Pensions and asset management 5 4 25 2 150 19 12 58 General insurance 10 9 11 12 (17) 35 37 (5) Share in net results of associates 8 6 33 6 33 28 16 75 Underlying earnings before tax 42 42 - (17) - 161 93 73 Over/(under) performance of fair value items (2) (1) (100) - - - - - Operating earnings before tax 40 41 (2) (17) - 161 93 73 Operating earnings before tax by line of business Life 15 19 (21) (41) - 58 11 - Accident and health - - - 1 - 2 5 (60) Life and protection 15 19 (21) (40) - 60 16 - Variable annuities (3) (2) (50) - - - (1) - Saving products - - - - - 1 - - Retail mutual funds 5 5 - 3 67 18 13 38 Individual savings and retirement products 2 3 (33) 3 (33) 19 12 58 Pensions and asset management 5 4 25 2 150 19 12 58 General insurance 10 9 11 12 (17) 35 37 (5) Share in net results of associates 8 6 33 6 33 28 16 75 Operating earnings before tax 40 41 (2) (17) - 161 93 73 Gains/(losses) on investments (1) 2 - (10) 90 7 (10) - Impairment charges (17) (1) - (49) 65 (23) (68) 66 Other income/(charges) (4) 2 - 1 - (387) 1 - Income before tax 18 44 (59) (75) - (242) 16 - Income tax - (13) - 9 - (43) (25) (72) Net income 18 31 (42) (66) - (285) (9) - Net underlying earnings 33 32 3 (10) - 112 64 75 Net operating earnings 31 31 - (10) - 112 64 75 Commissions and expenses 88 81 9 175 (50) 340 494 (31) of which operating expenses 54 47 15 66 (18) 195 211 (8) OTHER COUNTRIES - SALES EUR millions Q4 Q3 % Q4 % FY FY % 2009 2009 2008 2009 2008 New life sales Life single premiums 103 44 134 69 49 353 445 (21) Life recurring premiums annualized 47 37 27 52 (10) 160 189 (15) Total recurring plus 1/10 single 57 41 39 58 (2) 195 233 (16) Life 57 41 39 58 (2) 195 232 (16) Saving products - - - - - - 1 - Total recurring plus 1/10 single 57 41 39 58 (2) 195 233 (16) New premium production accident and health insurance 1 1 - 2 (50) 5 6 (17) New premium production general insurance 14 6 133 10 40 30 40 (25) Gross deposits (on and off balance) Variable annuities 64 65 (2) 10 - 406 126 - Retail mutual funds 271 433 (37) 173 57 1,402 779 80 Pensions and asset management 256 238 8 211 21 878 737 19 Total gross deposits 591 736 (20) 394 50 2,686 1,642 64 Net deposits (on and off balance) Variable annuities 56 44 27 5 - 356 113 - Retail mutual funds 33 80 (59) (56) - 152 59 158 Pensions and asset management 85 127 (33) 141 (40) 372 397 (6) Total net deposits 174 251 (31) 90 93 880 569 55 REVENUE GENERATING INVESTMENTS Dec. Sept. 31, 30, 2009 2009 % Revenue generating 12,327 11,667 6 investments (total) Investments general 2,706 2,765 (2) account Investments for account 2,413 2,275 6 of policyholders Off balance sheet 7,208 6,627 9 investments third parties APPENDIX II --Tables NET UNDERLYING EARNINGS GEOGRAPHICALLY EUR millions Notes Q4 Q3 % Q4 2008 % FY FY 2008 % 2009 2009 2009 1 Americas 275 255 8 (155) - 745 780 (4) The Netherlands 73 78 (6) 80 (9) 299 326 (8) United Kingdom 33 (6) - 19 74 62 131 (53) Other countries 33 32 3 (10) - 112 64 75 Holding and other (41) (50) 18 (3) - (193) (67) (188) Net underlying earnings 373 309 21 (69) - 1,025 1,234 (17) OVER/UNDER PERFORMANCE OF FAIR VALUE ITEMS EUR millions Operating earnings before tax 253 293 (14) (951) - 700 (46) - (Over)/under performance of fair value items - Americas 103 76 36 933 (89) 30 1,660 (98) (Over)/under performance of fair value items - The Netherlands 43 (39) - (152) - 247 165 50 (Over)/under performance of fair value items - United Kingdom - (7) - 19 - (6) 19 - (Over)/under performance of fair value items - Other countries 2 1 100 - - - - - (Over)/under performance of fair value items - Holding and other 26 27 (4) (30) - 189 (225) - Underlying earnings before tax 427 351 22 (181) - 1,160 1,573 (26) Net underlying earnings 373 309 21 (69) - 1,025 1,234 (17) AMERICAS - OVER/UNDER PERFORMANCE OF FAIR VALUE ITEMS USD millions Over/(under) performance of fair value items by line of business Life and protection (3) 3 - (114) 97 (34) (218) 84 Individual savings and retirement products (161) (189) 15 (672) 76 (310) (1,138) 73 Pensions and asset management 1 - - (34) - (14) (59) 76 Institutional products (20) 46 - (215) 91 60 (583) - Life reinsurance 40 43 (7) (295) - 256 (436) - Total over/(under) performance of fair value items (143) (97) (47) (1,330) 89 (42) (2,434) 98 Total over/(under) performance of fair value items in EUR (103) (76) (36) (933) 89 (30) (1,660) 98 THE NETHERLANDS - OVER/UNDER PERFORMANCE OF FAIR VALUE ITEMS EUR millions Over/(under) performance of fair value items by line of business Life and protection (16) 6 - 63 - (40) 32 - Pensions and asset management (27) 33 - 89 - (207) (197) (5) Total over/(under) performance of fair value items (43) 39 - 152 - (247) (165) (50) UNITED KINGDOM - OVER/UNDER PERFORMANCE OF FAIR VALUE ITEMS GBP millions Over/(under) performance of fair value items by line of business Pensions and asset management - 6 - (15) - 5 (15) - Total over/(under) performance of fair value items - 6 - (15) - 5 (15) - OTHER COUNTRIES - OVER/UNDER PERFORMANCE OF FAIR VALUE ITEMS EUR millions Over/(under) performance of fair value items by line of business Variable annuities (2) (1) (100) - - - - - Total over/(under) performance of fair value items (2) (1) (100) - - - - - SALES EUR millions Q4 2009 Q3 2009 % Q4 % FY 2009 FY % 2008 2008 New life sales 549 484 13 598 (8) 2,045 2,631 (22) Gross deposits (on and off balance) 6,530 6,742 (3) 11,933 (45) 27,953 40,751 (31) New life sales Life single premiums 2,161 1,732 25 2,327 (7) 7,422 10,532 (30) Life recurring premiums annualized 333 311 7 366 (9) 1,303 1,578 (17) Total recurring plus 1/10 single 549 484 13 598 (8) 2,045 2,631 (22) Life 211 212 - 265 (20) 885 1,101 (20) Saving products - - - - - - 1 - Pensions 299 238 26 283 6 1,011 1,341 (25) BOLI/COLI 1 - - 11 (91) 3 25 (88) Life reinsurance 38 34 12 39 (3) 146 163 (10) Total recurring plus 1/10 single 549 484 13 598 (8) 2,045 2,631 (22) New premium production accident and health insurance 126 125 1 161 (22) 561 614 (9) New premium production general insurance 21 12 75 17 24 56 68 (18) Gross deposits (on and off balance) Fixed annuities 387 434 (11) 1,676 (77) 3,377 4,057 (17) Variable annuities 699 693 1 590 18 3,055 2,636 16 Saving products 1,017 978 4 590 72 3,032 2,473 23 Retail mutual funds 855 949 (10) 501 71 3,117 2,698 16 Pensions and asset management 2,973 2,924 2 2,613 14 11,045 10,505 5 Institutional guaranteed products 598 764 (22) 5,963 (90) 4,325 18,380 (76) Life reinsurance 1 - - - - 2 2 - Total gross deposits 6,530 6,742 (3) 11,933 (45) 27,953 40,751 (31) Total gross deposits excl. institutional guaranteed products 5,932 5,978 (1) 5,970 (1) 23,628 22,371 6 Net deposits (on and off balance) by line of business Fixed annuities (226) (225) - 593 - 382 71 - Variable annuities 12 149 (92) (114) - 651 (441) - Saving deposits 454 440 3 (535) - 870 (699) - Retail mutual funds 304 255 19 (182) - 484 590 (18) Pensions and asset management 997 1,373 (27) 257 - 3,122 1,769 76 Institutional guaranteed products(7,153) (3,473) (106) 1,679 - (14,412) 2,185 - Life reinsurance (11) (12) 8 (19) 42 (51) (61) 16 Total net deposits (5,623) (1,493) - 1,679 - (8,954) 3,414 - Total net deposits excl. institutional guaranteed products 1,530 1,980 (23) - - 5,458 1,229 - EMPLOYEE NUMBERS At At Dec. Dec. 31, 31, 2009 2008 Number of employees 28,382 31,425 Agents 3,292 4,446 Number of employees 25,090 26,979 excl. agents VALUE OF NEW BUSINESS AND IRR VNB VNB VNB VNB VNB EUR Q4 Q3 2009 % Q4 % FY FY 2008 % millions, 2009 2008 2009 after tax Americas 85 63 35 124 (31) 293 412 (29) The 66 51 29 13 - 184 43 - Netherlands United 35 34 3 60 (42) 170 234 (27) Kingdom Other 30 21 43 35 (14) 120 148 (19) Countries Total 216 169 28 233 (7) 767 837 (8) IRR % IRR% IRR% EUR Q4 Q3 2009 Q4 millions, 2009 2008 after tax Americas 14.7 12.1 12.4 The 14.9 21.8 10.8 Netherlands United 13.5 13.4 14.0 Kingdom Other 36.2 37.6 37.2 Countries Total 17.6 18.5 16.5 MODELED NEW BUSINESS, APE AND DEPOSITS Premium business Premium business APE APE EUR Notes Q4 Q3 2009 % Q4 % FY FY 2008 % millions 2009 2008 2009 10 Americas 235 251 (6) 279 (16) 997 1,097 (9) The 120 87 38 75 60 328 300 9 Netherlands United 250 247 1 341 (27) 1,070 1,514 (29) Kingdom Other 79 60 32 113 (30) 357 409 (13) Countries Total 684 645 6 809 (15) 2,753 3,321 (17) Deposit business Deposit business Deposits Deposits EUR Q4 Q3 2009 % Q4 % FY FY 2008 % millions 2009 2008 2009 Americas 3,022 4,367 (31) 8,718 (65) 17,753 30,151 (41) Other 108 95 14 23 - 525 98 - Countries Total 3,130 4,462 (30) 8,742 (64) 18,278 30,249 (40) VNB/PVNBP SUMMARY Premium business Premium business VNB PVNBP VNB/ VNB/ APE VNB PVNBP VNB/ VNB/ APE PVNBP PVNBP EUR Notes Q4 % % FY % % millions 2009 2009 11 Americas 44 1,195 3.7 18.7 142 4,690 3.0 14.2 The 66 1,210 5.4 55.1 184 2,763 6.7 56.0 Netherlands United 35 1,650 2.1 13.8 170 6,938 2.5 15.9 Kingdom Other 26 556 4.6 32.4 115 2,690 4.3 32.2 Countries Total 170 4,611 3.7 24.9 611 17,080 3.6 22.2 Deposit business Deposit business VNB PVNBP VNB/ VNB/ VNB PVNBP VNB/ VNB/ PVNBP Deposits PVNBP Deposits EUR Notes Q4 % % FY % % millions 2009 2009 11 Americas 41 3,736 1.1 1.4 151 23,589 0.6 0.9 Other 5 307 1.5 4.2 5 1,230 0.4 0.9 Countries Total 46 4,043 1.1 1.5 156 24,819 0.6 0.9 Notes: 1) 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 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 these assets. Based on current holdings and asset class returns, the long-term expected return on an annual basis is 8-10%, depending on the asset class, including cash income and market value changes. The expected earnings from these asset classes are net of 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 any over- or underperformance compared to management's expected return is excluded from underlying earnings. 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 Other countries) are excluded from underlying earnings. The Holding includes certain issued bonds that are held at fair value through profit or loss. The interest rate risk on these bonds is hedged using swaps. The change in AEGON's credit spread resulted in a loss of EUR 26 mln in Q4 2009 on the fair value movement on these bonds. 2) Net income refers to net income attributable to equity holders of AEGON N.V. 3) New life sales is defined as new recurring premiums + 1/10 of single premiums. 4) Deposits on and off balance sheet. In the previous quarters of 2009 gross saving deposits of AEGON The Netherlands were overstated by EUR 130 million, EUR 192 million and EUR 817 million in Q1, Q2 and Q3, respectively. Net deposits were not impacted. Comparative figures have been restated. 5) Return on equity is calculated by dividing the net underlying earnings after cost of leverage by the average shareholders' equity excluding the preferred shares and the revaluation reserve. 6) Capital securities that are denominated in foreign currencies are, for purposes of calculating the capital base ratio, revalued to the period-end exchange rate. 7) All ratios exclude AEGON's revaluation reserve. 8) Included in other non-operating income/(charges) are charges made to policyholders with respect to income tax. 9) There is an equal and opposite tax charge which is reported in the line Income tax attributable to policyholder return. Includes production on investment contracts without a discretionary participation feature of which the proceeds are not recognized as revenues but are directly added to our investment contract liabilities. 10) APE = recurring premium + 1/10 single premium. 11) PVNBP: Present Value New Business Premium. a) a) The calculation of the IGD (Insurance Group Directive) capital surplus and ratio are based on Solvency I capital requirements on IFRS for entities within the EU (Pillar I for AEGON UK), and local regulatory solvency measurements for non-EU entities. Specifically, required capital for the life insurance companies in the US is calculated as two times the upper end of the Company Action Level range (200%) as applied by the National Association of Insurance Commissioners in the US. The calculation of the IGD ratio excludes the available and required capital of the UK With-Profit funds. In the UK solvency surplus calculation the local regulator only allows the available capital number of the With-Profits funds included in overall local available capital to be equal to the amount of With-Profits funds' required capital. b) The results in this release are unaudited. Currencies Income statement items: average rate 1 EUR = USD 1.4071 (2008:USD 1.4660) Income statement items: average rate 1 EUR = GBP 0.8903 (2008:GBP 0.7961) Balance sheet items: closing rate 1 EUR = USD 1.4406 (2008: USD 1.3917) Balance sheet items: closing rate 1 EUR = GBP 0.8881 (2008: GBP 0.9525) ADDITIONAL INFORMATION Press conference 9:00 am CET Audio webcast on http://www.aegon.com/ Analyst & investor presentation / conference call 15:00 am CET Audio webcast on http://www.aegon.com/ Call-in numbers (listen only): USA: +1-480-629-9822 UK: +44-208-515-2301 NL: +31-20-796-5332 Supplements AEGON's Q4 2009 Financial Supplement and Condensed Consolidated Interim Financial Statements are available on http://www.aegon.com/. Record date AGM The record date for attending and voting at the Annual General Meeting of Shareholders of AEGON N.V. is March 30, 2010. The agenda will be available on AEGON's website from March 29, 2010. About AEGON As an international life insurance, pension and investment company based in The Hague, AEGON has businesses in over twenty markets in the Americas, Europe and Asia. AEGON companies employ approximately 28,000 people and have more than 40 million customers across the globe. Full year Full year Key figures - EUR 2009 2008 Underlying earnings before tax 1.2 billion 1.6 billion New life sales 2.0 billion 2.6 billion Gross deposits (excl. inst. guar. prod.) 23.6 billion 22.4 billion Revenue generating investments (end of period) 361 billion 332 billion Cautionary note regarding non-GAAP measures This press release includes certain non-GAAP financial measures: net operating earnings, operating earnings before tax, underlying earnings before tax, net underlying earnings and value of new business. The reconciliation of underlying earnings before tax and operating earnings before tax to the most comparable IFRS measures is provided on pages 7 and 8. A reconciliation of (net) underlying earnings to operating earnings before tax is provided on page 23. Value of new business is not based on IFRS, which are used to report AEGON's quarterly statements and should not be viewed as a substitute for IFRS financial measures. AEGON believes that these non-GAAP measures, together with the IFRS information, provide a meaningful measure for the investment community to evaluate AEGON's business relative to the businesses of our peers. Local currencies and constant currency exchange rates This press release contains certain information about our results and financial condition in USD for the Americas and GBP for the United Kingdom, because those businesses operate and are managed primarily in those currencies. Certain comparative information presented on a constant currency basis eliminates the effects of changes in currency exchange rates. None of this information is a substitute for or superior to financial information about us presented in EUR, which is the currency of our primary financial statements. Forward-looking statements The statements contained in this press release that are not historical facts are forward-looking statements as defined in the US Private Securities Litigation Reform Act of 1995. The following are words that identify such forward-looking statements: aim, believe, estimate, target, intend, may, expect, anticipate, predict, project, counting on, plan, continue, want, forecast, goal, should, would, is confident, will, and similar expressions as they relate to our company. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. We undertake no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which merely reflect company expectations at the time of writing. Actual results may differ materially from expectations conveyed in forward-looking statements due to changes caused by various risks and uncertainties. Such risks and uncertainties include but are not limited to the following: - Changes in general economic conditions, particularly in the United States, the Netherlands and the United Kingdom; - Changes in the performance of financial markets, including emerging markets, such as with regard to: - The frequency and severity of defaults by issuers in our fixed income investment portfolios; and - The effects of corporate bankruptcies and/or accounting restatements on the financial markets and the resulting decline in the value of equity and debt securities we hold; - The frequency and severity of insured loss events; - Changes affecting mortality, morbidity and other factors that may impact the profitability of our insurance products; - Changes affecting interest rate levels and continuing low or rapidly changing interest rate levels; - Changes affecting currency exchange rates, in particular the EUR/USD and EUR/GBP exchange rates; - Increasing levels of competition in the United States, the Netherlands, the United Kingdom and emerging markets; - Changes in laws and regulations, particularly those affecting our operations, the products we sell, and the attractiveness of certain products to our consumers; - Regulatory changes relating to the insurance industry in the jurisdictions in which we operate; - Acts of God, acts of terrorism, acts of war and pandemics; - Effects of deliberations of the European Commission regarding the aid we received from the Dutch State in December 2008; - Changes in the policies of central banks and/or governments; - Lowering of one or more of our debt ratings issued by recognized rating organizations and the adverse impact such action may have on our ability to raise capital and on our liquidity and financial condition; - Lowering of one or more of insurer financial strength ratings of our insurance subsidiaries and the adverse impact such action may have on the premium writings, policy retention, profitability of its insurance subsidiaries and liquidity; - Litigation or regulatory action that could require us to pay significant damages or change the way we do business; - Customer responsiveness to both new products and distribution channels; - Competitive, legal, regulatory, or tax changes that affect the distribution cost of or demand for our products; - The impact of acquisitions and divestitures, restructurings, product withdrawals and other unusual items, including our ability to integrate acquisitions and to obtain the anticipated results and synergies from acquisitions; - Our failure to achieve anticipated levels of earnings or operational efficiencies as well as other cost saving initiatives; and - The impact our adoption of the International Financial Reporting Standards may have on our reported financial results and financial condition. Further details of potential risks and uncertainties affecting the company are described in the company's filings with Euronext Amsterdam and the US Securities and Exchange Commission, including the Annual Report on Form 20-F. These forward-looking statements speak only as of the date of this document. Except as required by any applicable law or regulation, the company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Contact information Media relations: Greg Tucker +31(0)70-344-8956 Investor relations: Gerbrand Nijman +31-(0)70-344-8305 877-548-9668 - toll free USA only http://www.aegon.com/ DATASOURCE: AEGON N.V. CONTACT: Contact information: Media relations: Greg Tucker, +31(0)70-344-8956, . Investor relations: Gerbrand Nijman, +31-(0)70-344-8305, 877-548-9668 - toll free USA only,

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