AEGOF Aegon Ltd (PK)

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

May 2020

AEGON N.V.

Aegonplein 50

2591 TV THE HAGUE

The Netherlands

Aegon’s 2019 Solvency and Financial Condition Report, dated May 15, 2020, are included as appendix and incorporated herein by reference.

Table of contents

		Solvency and Financial Condition Report 2019

3     Introduction Scope of the report

Scope of the report

This report is Aegon N.V.’s Group Solvency and Financial Condition Report (SFCR) for the year 2019 and is designed to inform Aegon N.V.’s stakeholders about the Group’s:

The valuation differences between the scope of Aegon Group used for the consolidated financial statements based on IFRS-EU and the scope of Aegon Group for the consolidated data determined in accordance with Article 335 of the Solvency II Delegated Regulation, are discussed in more detail in section D. Valuation for solvency purposes.

Basis of presentation

This report is prepared in accordance with the requirements of Solvency II Directive and Delegated Regulation, in particular article 256 of the Solvency II Directive, articles 290-298 and articles 359 – 371 of the Delegated Regulation, and relevant EIOPA Guidelines, in particular ‘Guidelines on reporting and public disclosure’ (EIOPA-BoS-15/109) as issued by the European Insurance and Occupational Pensions Authority (EIOPA).

Aegon N.V. is referred to in this document as ‘Aegon’, or ‘the Company’, and is together with its member companies referred to as ‘Aegon Group’ or ‘the Group’. For such purposes ‘member companies’ means, in relation to Aegon, those companies required to be consolidated in accordance with Solvency II requirements.

Aegon is required to submit the Quantitative Reporting Templates (‘QRTs’) to its supervisor Dutch Central Bank (‘DNB’). A subset of these QRTs, which are required to be publicly disclosed and which provide quantitative information in accordance with Solvency II as at 31 December 2019, are available on Aegon’s website.

The figures reflecting monetary amounts in the SFCR are presented in euro (unless stated otherwise). Aegon discloses monetary amounts in millions of units. All values are rounded to the nearest million unless otherwise stated. The rounded amounts may therefore not add up to the rounded total in all cases. All ratios and variances are calculated using the underlying amount rather than the rounded amount.

In cases in which IFRS figures are disclosed, the figures are prepared in accordance with the International Financial Reporting Standards as adopted by the European Union (IFRS-EU).

Under Solvency II, Aegon uses a combination of method 1 (Accounting Consolidation) and method 2 (Deduction & Aggregation) for the calculation of the Solvency II Group Solvency ratio. The Solvency II consolidated data (the data included in accordance with method 1) does not include the entities that are included in the Group Solvency calculation in accordance with method 2 (US Life insurance entities, Bermuda, Japan, Mexico and Brazil). Furthermore, joint ventures are partially consolidated under Solvency II, whereas joint ventures are not consolidated under IFRS. As part of method 1 under Solvency II, Other Financial Sector (OFS) entities are included as related undertakings based on local sectoral rules, whereas, when OFS are controlled entities, such are consolidated under IFRS.

The consolidation under Solvency II is set out in more detail in section D. Valuation for solvency purposes and E. Capital management; both are sections of this SFCR report.

The 2019 SFCR of Aegon Group has been prepared and disclosed under the responsibility of Aegon’s Executive Board. This document was approved on May 15, 2020 by the Executive Board.

		Solvency and Financial Condition Report 2019

4     Introduction Summary

Summary

The 2019 Solvency Financial Condition Report provides Aegon’s stakeholders insight in:

A. Business and performance

Aegon is an international financial services group. We provide life insurance, pensions and asset management. Its listed holding company, Aegon N.V., is a public limited liability company with its corporate seat and head office in the Netherlands. Aegon employs over 23,000 people worldwide. Aegon’s common shares are listed on stock exchanges in Amsterdam (Euronext) and New York (NYSE).

Aegon has the following operating segments: the Americas, which includes the United States, Mexico and Brazil; the Netherlands; the United Kingdom; Southern and Eastern Europe; Asia; Aegon Asset Management and Holdings.

Aegon has changed the grouping of the operating segments included in the performance measure as of 2019. Previously, the operating segments ‘Spain and Portugal’ and ‘Central and Eastern Europe’ were disclosed separately in the segment information whilst as of 2019 these are disclosed combined under the operating segment ‘Southern and Eastern Europe’.

As of January 1, 2020, a new reportable segment, Aegon International has been established to bring together our activities in Southern and Eastern Europe (SEE), and all our Asian businesses to focus on growth.

Aegon’s business model focuses on the following items:

For more information on Aegon’s strategy, please see the Integrated Annual Report 2019 of Aegon Group.

In 2019, Aegon continued its realignment for growth, launched new propositions, further improved customer service, and made important executive management appointments to guide us into our next phase of development. We set ambitious financial 3-year targets. Milestone moments included:

		Solvency and Financial Condition Report 2019

5     Introduction Summary

Net income amounted to EUR 1,528 million in 2019, as underlying earnings before tax of EUR 1,973 million, gains on investments and gains from run-off businesses were partly offset by fair value losses, other charges, net impairments and income taxes. The effective tax rate amounted to 18%, mainly as a result of tax exempt income items and the use of tax credits in the United States and in the United Kingdom the own employee pension plan moving into surplus.

Aegon’s underlying earnings before tax decreased to EUR 1,973 million in 2019 (EUR 2,074 million in 2018). This was mainly driven by the Americas as a result of lower fee revenues in Variable Annuities, the negative impacts from lower rates and developments in portfolios on intangibles in the Life business, and investments in the US businesses to support growth. The other main contributor to the decrease in underlying earnings before tax was Holdings and other activities, primarily due to more interest expenses being recorded via the income statement instead of directly through equity. Europe was the main offsetting reporting segment, with a 4% increase of underlying earnings before tax in 2019 compared with 2018, as a result of growth in the Netherlands and the United Kingdom, more than offsetting the lower earnings from Southern and Eastern Europe due to the divestments of Aegon’s businesses in the Czech Republic and Slovakia.

Investment income increased to EUR 7.5 billion in 2019 compared to EUR 7.0 billion in 2018. The increase is mainly driven by higher dividend income in 2019. Interest income is the largest contributor (EUR 5.8 billion), followed by dividend income (EUR 1.6 billion), from the subsidiaries.

Premium income amounted to EUR 18.1 billion, down by 6% from 2018 (EUR 19.3 billion). This decrease was mainly driven by a reduction of upgraded Life insurance policies to the retirement platform in the UK, which represents EUR 1.8 billion (2018: EUR 3.4 billion) of total premium income Life insurance.

Commissions and expenses decreased by 1% compared with 2018 to EUR 6.2 billion in 2019. Operating expenses which are part of commissions and expenses, increased by 4% compared with 2018 to EUR 3.9 billion in 2019. This increase primarily reflects lower restructuring expenses being more than offset by investments to support growth and customer experiences in addition to higher IFRS 9/17 implementation expenses.

		Solvency and Financial Condition Report 2019

6     Introduction Summary

Total policyholder claims and benefits amounted to EUR 56.8 billion in 2019 compared to EUR 10.6 billion in 2018. The increase of EUR 46.2 billion is mainly attributable to changes in the valuation of liabilities of insurance contracts and investment contracts. The changes in valuation of liabilities for insurance contracts and investment contracts reflect changes in technical provisions resulting from net fair value changes on financial assets for account of policyholders included in results from financial transactions of EUR 33.2 billion positive (2018: EUR 11.3 billion negative). In addition, the change in valuation of liabilities for insurance contracts includes an increase in technical provisions for life insurance contracts of EUR 2.4 billion (2018: increase of EUR 1.4 billion).

Total claims and benefits paid amounted to EUR 20.5 billion (2018: EUR 21.3 billion) and is comprised of claims and benefits paid for Aegon’s life business amounting to EUR 18.8 billion (2018: EUR 19.7 billion) and claims and benefits paid for Aegon’s non-life business amounting to EUR 1.6 billion (2018: EUR 1.7 billion).

Results from financial transactions amounted to EUR 35.8 billion positive in 2019 compared to EUR 11.7 billion negative in 2018. The main contributor is the net fair value change on for account of policyholder financial assets of EUR 33.2 billion positive in 2019 and is mainly driven by favorable equity markets and decreasing interest rates.

Full details on the Aegon’s business and performance are described in section A. Business and performance.

B. System of governance

General governance

Aegon is incorporated and established in the Netherlands and therefore must comply with Dutch law, such as the provisions of Book 2 of the Dutch Civil Code. In addition, Aegon is subject to the Dutch Corporate Governance Code.

Aegon is governed by three main corporate bodies: the Executive Board, the Supervisory Board, and the General Meeting of Shareholders. The Executive Board is assisted in its work by the Management Board, which provides vital support and expertise in safeguarding Aegon’s strategic goals. There were no material changes in the system of governance during the reporting period.

Aegon’s Executive Board is charged with the overall management of the Company, and is therefore responsible for achieving Aegon’s aims and developing the strategy and its associated risk profile, in addition to overseeing any relevant sustainability issues and the development of Aegon’s earnings.

Aegon’s Articles of Association determine that for certain decisions the Executive Board must seek prior approval from the Supervisory Board and/or the approval of the General Meeting of Shareholders. In addition, the Supervisory Board may also subject other Executive Board decisions to its prior approval.

Aegon’s Management Board is comprised of the members of the Executive Board, the Chief Executive Officers (CEOs) of the Americas, the Netherlands, United Kingdom, Aegon International, Asset Management and the following global functions: Group Chief Risk Officer, Group General Counsel, Global Head of HR and the Global Chief Technology Officer.

Aegon’s Supervisory Board oversees the management of the Executive Board, in addition to the Company’s business and corporate strategy. The Supervisory Board members, comprising six members as per December 31, 2019, are appointed by the shareholders at the General Meeting of Shareholders. Aegon aims for the Supervisory Board to be well-balanced in terms of professional background, geography and gender. The Supervisory Board has the following committees:

These committees are exclusively comprised of Supervisory Board members and deal with specific issues related to Aegon’s financial accounts, risk management, executive remuneration and appointments.

		Solvency and Financial Condition Report 2019

7     Introduction Summary

In addition to the corporate bodies, described above, Aegon has in place a number of key functions, as required under Solvency II. These key functions are described below, in the section ‘control environment’.

For the composition of and changes in the Supervisory Board, Executive Board and Management Board, refer to section B. System of governance.

Risk management

Aegon’s risk management framework is designed and applied to identify and manage potential events and risks that may affect Aegon. This is established in the Enterprise Risk Management (ERM) framework, which aims to identify and manage individual and aggregate risks within Aegon’s risk tolerance in order to provide reasonable assurance regarding the achievement of Aegon’s objectives. The ERM framework applies to all material businesses of Aegon for which it has operational control. Aegon’s businesses are required to either adopt the Group level ERM framework directly, or tailor it to local needs, while meeting the requirements of the Group level ERM framework. Aegon’s ERM framework is based on a well-defined risk governance structure. In addition to the Supervisory, Management and Executive Boards, the risk governance structure includes the following committees:

Control environment

Aegon’s Solvency II control system consists, as required, of appropriate administrative and accounting procedures, an internal control framework, appropriate reporting arrangements and a compliance function. Furthermore, Aegon’s control environment consists of a risk management function, an actuarial function and an internal audit function. The internal control system serves to facilitate compliance with applicable laws, regulation and administrative processes, and it provides for an adequate control environment including appropriate control activities for key processes. The actuarial function has end-to-end accountability for the adequacy and reliability of reported technical provisions, including policy setting and monitoring of compliance regarding actuarial risk tolerances. Aegon’s internal audit function is independent and objective from operational functions, including in performing its duties in evaluating the effectiveness of Aegon’s internal control system.

Full details on the Aegon’s system of governance are described in section B. System of governance.

C. Risk profile

As an insurance group, Aegon accepts and manages risk for the benefit of its customers and other stakeholders. Aegon’s risk management and control systems are designed to ensure that these risks are managed effectively and efficiently in a way that is aligned with the Company’s strategy. The targeted risk profile is determined by customer needs, Aegon’s competence to manage the risk, Aegon’s preference for this risk, and whether there is sufficient capacity to take the risk. Aegon currently targets a balance between financial market, credit risks and underwriting risks. The targeted risk profile is set at Aegon Group level and developed in more detail within the subsidiaries where business is written. Aegon’s risk strategy provides direction for the targeted Aegon risk profile while supporting Aegon’s business strategy. Aegon is exposed to a range of underwriting, market, credit, liquidity and operational risks.

Material movements in Aegon’s risk profile during 2019 mainly include the following:

		Solvency and Financial Condition Report 2019

8     Introduction Summary

The following table provides a quantitative representation of the key risks of the AC (Accounting Consolidation) part of Aegon Group on the basis of the Solvency II framework, split between risks determined using the SF (Standard Formula) and IM (Internal Model) and the D&A (Deduction & Aggregation) and OFS (Other Financial Sector) SCR as one amount:

Aegon Group’s Partial Internal Model (PIM) SCR (net - after diversification) amounted to EUR 9,173 million on December 31, 2019, which was an increase of EUR 824 million compared to the SCR on December 31, 2018 of EUR 8,349 million. This net SCR increase was mainly driven by the following movements in gross SCR risks:

Full details on Aegon’s risk profile are described in section C. Risk profile.

Since January 2020, the Coronavirus disease (COVID-19) outbreak is causing significant disruption to society, impacting Aegon, its employees, suppliers and customers worldwide. Financial markets have been severely impacted by significant decreases in interest rates, equity markets and commodity prices, and by credit spreads widening. Governments and central banks worldwide are responding to this crisis with aid packages and further quantitative easing. At the date of this report the depth and length of this crisis is unknown.

The Company is continuously monitoring the market and economic turbulence that has arisen as a consequence of the COVID-19 outbreak, and its impact on Aegon. The most significant risks Aegon faces are related to financial markets (particularly credit, equity and interest rates), and underwriting risks (particularly related to mortality, morbidity and policyholder behavior). Section C. Risk profile include elaborate descriptions and related financial market and underwriting sensitivities.

		Solvency and Financial Condition Report 2019

9     Introduction Summary

As per March 31, 2020, the capital positions of the Group, and in each of our main units remain in or above the bottom-end of their respective target ranges. The Solvency II ratio of Aegon increased from 201% as per December 31, 2019 to 208% as per March 31, 2020, as the negative impact of market movements, predominantly affecting the capital position in the United States, was more than offset by the benefit of a higher EIOPA volatility adjustment in the Netherlands and by normalized capital generation. The Solvency II capital ratio as per March 31, 2020, reflects Aegon’s interpretation of Solvency II requirements and are not final until filed with the regulators. The Solvency II capital calculation is subject to supervisory review on an ongoing basis.

On April 3, 2020 Aegon announced that it will comply with the call of DNB to postpone paying dividends following the statements published by the European Insurance and Occupational Pensions Authority and DNB, our principal regulator, urging insurers to temporarily postpone all dividend distributions. As a result of this, Aegon did forego its 2019 final dividend.

Aegon continues to monitor claim activity, including mortality and morbidity claims, and policyholder behavior. At the date of this report it is too early to tell what the impact of the COVID-19 crisis is on Aegon’s underwriting results and Aegon’s long term underwriting and economic assumptions, if any. Based on the specific market movements as result of the COVID-19 crisis, in section C. Risk profile, updated sensitivities as per March 31, 2020, have been included for the longevity risk, financial market risks and other material risks.

Aegon has invoked its business continuity plans to help ensure the safety and well-being of its staff, as well as its capability to support its customers and maintain its business operations, while maintaining our financial and operational resilience.

D. Valuation for solvency purposes

Aegon values its Solvency II balance sheet items on a basis that reflects their economic value. Where the IFRS-EU fair value is consistent with Solvency II requirements, Aegon follows IFRS-EU for valuing assets and liabilities.

The reconciliation of Excess of Assets over Liabilities (Solvency II basis) and Shareholders’ Equity (IFRS-EU basis) can be summarized as follows:

Full details on the reconciliation between Aegon’s economic balance sheet based on Solvency II and consolidated financial statements based on IFRS-EU are described in section D. Valuation for solvency purposes.

E. Capital management

Aegon’s target Solvency II capital ratio is between 150% - 200%. At December 31, 2019, the Solvency II ratio of 201% was in excess of this target range.

In the following tables the Solvency II key figures for Aegon are presented as at December 31, 2019:

Aegon uses a combination of Accounting Consolidation (method 1) and Deduction & Aggregation (method 2) for the calculation of the Solvency II Group Solvency ratio. In addition, Aegon uses a Partial Internal Model (PIM) to calculate the solvency position of Aegon Levensverzekering N.V., Scottish Equitable Plc, Aegon Spaarkas N.V. and Aegon N.V. (which is a mixed financial holding company). Other entities included via the Accounting Consolidation method, excluding Other Financial Sector entities, use the Solvency II Standard Formula approach. The capital requirements of Other Financial Sector entities are based on relevant sectoral capital requirements. Aegon Bank is excluded from the Group Solvency II ratio, as required by the Group Solvency II supervisor, DNB.

		Solvency and Financial Condition Report 2019

10     Introduction Summary

In Aegon’s Non-EEA regions, (re)insurance entities domiciled in third countries deemed (provisional) equivalent (US life insurance entities, Bermuda, Japan, Mexico and Brazil), the capital requirement is based on local capital requirements.

Aegon’s internal model was approved by the College of Supervisors as part of the Internal Model Application Process. Aegon is of the opinion a (partial) internal model is a better representation of the actual risk, since this contains Company specific modelling and sensitivities as opposed to industry-wide approximations included in the Standard Formula methodology.

Aegon applies a method to allocate centrally issued subordinated debt between the AC and D&A parts of the group on an available Own Funds basis. The Solvency II contribution of the Aegon Americas insurance and reinsurance entities (US regulated entities) under Deduction & Aggregation (D&A) involves converting 150% Risk-Based Capital Company Action Level into Solvency Required Capital (SCR) and reducing own funds by a 100% RBC Company Action Level requirement to reflect transferability restrictions. The methodology is subject to annual review.

Aegon Group Own Funds amounted to EUR 18,470 million on December 31, 2019 (2018: EUR 17,602 million). The increase of EUR 868 million in Own Funds since December 31, 2018, is mostly driven by the positive expected return on Aegon’s inforce insurance portfolio, positive return from equity markets and the impact of declining interest rates on assets and hedges. This increase was partly offset by the negative market impact primarily from the EIOPA VA narrowing from 24 bps to 7 bps, negative impact from model and assumption changes, and the payment of external dividend. Furthermore, the lowering of the UFR from 4.05% to 3.90% led to a decrease in Own Funds as well.

The Solvency II capital ratios of the Group and Aegon the Netherlands do not include any contingent liability potentially arising from unit-linked products sold, issued or advised on by Aegon in the Netherlands in the past, as any potential liability cannot be reliably quantified at this point.

The Group solvency capital requirement includes the benefit from the LAC-DT. The LAC-DT is calculated after diversification and it lowered the net PIM SCR by EUR 782 million (2018: EUR 756 million). The LAC-DT benefit mainly stemmed from Aegon the Netherlands. The increase in the LAC-DT is mainly driven by the increase of the other SCR components, partly offset by the LAC-DT factor change in the Netherlands from 75% to 65% as a consequence of the lower interest rates.

Aegon applies the matching adjustment in Aegon UK, which has a positive impact to the Group own funds of EUR 37 million as of December 31, 2019 (2018: EUR 32 million) and an impact of EUR (58) million (2018: EUR (46) million) on the Group solvency capital requirement. The matching adjustment methodology has been approved by the UK regulator.

In addition, Aegon applies a volatility adjustment in Aegon the Netherlands, Aegon UK and Aegon Spain, which has a positive impact to the Group own funds of EUR 408 million (2018: EUR 1,284 million) and a reduction of the Group solvency capital requirement of EUR 904 million (2018: EUR 930 million).

Aegon Spain used to apply a transitional arrangement related to its technical provisions and used to apply the Solvency II matching adjustment. At the instruction of the Spanish Insurance Regulator (DGSFP), Aegon Spain no longer applies the matching adjustment and the transitional arrangements. As a consequence of this, the Solvency II ratio of Aegon Spain dropped below the 100% and Aegon Group contributed a capital injection into Aegon Spain to restore the Solvency II position.

The combined positive impact of the matching adjustment and the volatility adjustment on the Group Solvency II ratio is 23% (2018: 37%).

During 2019, the Aegon Group and all of the EEA (re)insurance entities within the Aegon Group that are subject to Solvency II capital requirements on a solo-level continued to comply with the MCR and SCR requirements, except for Aegon España, S.A.U. de Seguros y Reaseguros, that experienced a significant breach of its Solvency Capital Requirement upon the withdrawal of the approval of the DGSFP to apply the matching adjustment and for the application of a transitional arrangement with respect to its technical provisions.

Full details on Aegon’s available and eligible own funds are described in section E.1 Own funds, and Aegon’s PIM SCR is described in section E.2.1 Solvency capital requirement.

		Solvency and Financial Condition Report 2019

11     Business and performance Business

A. Business and performance

A.1 Business

A.1.1 Overview

Aegon is an integrated, diversified financial services group that offers innovative and effective savings and protection solutions for customers worldwide. The legal predecessors of Aegon were founded in the 19th century. We now serve more than 20 countries, with 29.9 million customers and EUR 898 billion of revenue-generating investments. Our holding company, Aegon N.V., is headquartered in The Hague, the Netherlands, and through its subsidiaries and joint ventures it employs over 23,000 people worldwide.

Aegon’s common shares are listed on stock exchanges in Amsterdam (Euronext) and New York (NYSE). Aegon’s main operating units are separate legal entities that operate under the laws of their respective countries. These legal entities are directly or indirectly held by three intermediate holding companies incorporated under Dutch law: Aegon Europe Holding B.V., the holding company for all European activities; Aegon International B.V., which serves as a holding company for the Aegon Group companies of all non-European countries; and Aegon Asset Management Holding B.V., the holding company for a number of its asset management entities.

Aegon’s financial results are impacted by a number of external factors, including demographic trends, market conditions and regulation. Furthermore, the business is affected by corporate actions taken by the Group, including acquisitions, disposals and other actions in order to achieve Aegon’s strategy. The key significant business events or other events that have occurred over the reporting period that have had a material impact on Aegon are mentioned in the summary of section A on page 4 and 5.

A.1.2 Regulators and auditor

The supervisory authority responsible for Solvency II group supervision on the Aegon Group and for supplementary group supervision in accordance with the EU Financial Conglomerates Directive (FCD) is:

De Nederlandsche Bank (DNB), the Dutch Central Bank

Address: Spaklerweg 4, 1096 BA Amsterdam

Telephone: +31(0)20 524 91 11

Aegon’s external auditor is PricewaterhouseCoopers Accountants N.V. The external auditor’s mandate does not cover an audit on the information disclosed in this SFCR. Their contact details are:

PricewaterhouseCoopers Accountants N.V.

Address: Thomas R. Malthusstraat 5, 1066 JR, Amsterdam

Telephone: +31 (0)88 792 00 20

		Solvency and Financial Condition Report 2019

12     Business and performance Business

A.1.3 Holders of qualifying holdings

A qualifying holding means a direct or indirect holding in Aegon N.V. which represents 10% or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of Aegon N.V.. Only Vereniging Aegon qualifies based on this definition.

Vereniging Aegon, is a Dutch association located in The Hague, the Netherlands, with a special purpose to protect the broader interests of Aegon N.V. and its stakeholders. On December 31, 2019 Vereniging Aegon, Aegon’s largest shareholder, held a total of 288,702,769 common shares and 559,712,240 common shares B.

Under the terms of the 1983 Merger Agreement as amended in May 2013, Vereniging Aegon has the option to acquire additional common shares B. Vereniging Aegon may exercise its call option to keep or restore its total stake to 32.6% of the voting rights, irrespective of the circumstances that caused the total shareholding to be or become lower than 32.6%. In the absence of a ‘Special Cause’ Vereniging Aegon may cast one vote for every common share it holds and one vote only for every 40 common shares B it holds. As ‘Special Cause’ qualifies the acquisition of a 15% interest in Aegon N.V., a tender offer for Aegon N.V. shares or a proposed business combination by any person or group of persons, whether individually or as a group, other than in a transaction approved by the Executive Board and the Supervisory Board. If, in its sole discretion, Vereniging Aegon determines that a Special Cause has occurred, Vereniging Aegon will notify the General Meeting of Shareholders and retain its right to exercise the full voting power of one vote per common share B for a limited period of six months. Accordingly, at December 31, 2019, the voting power of Vereniging Aegon under normal circumstances amounted to approximately 14.75%, based on the number of outstanding and voting shares (excluding issued common shares held in treasury by Aegon N.V.). In the event of a Special Cause, Vereniging Aegon’s voting rights will increase, currently to 32.6%, for up to six months.

A.1.4 Aegon’s Group structure

We have four main reporting segments: Americas, Europe, Asia and Asset Management. Of these, the Americas is by far the largest, accounting for nearly 60% of our annual earnings. Our holding company, Aegon N.V., is headquartered in The Hague, the Netherlands. Aegon Asset Management manages assets on behalf of third parties and Aegon’s own businesses, covering all major asset classes, including fixed income, equity and real estate. Our reporting segments include businesses, associates and joint ventures in:

China, Hong Kong and Japan).

As of January 1, 2020, a new reportable segment, Aegon International has been established to bring together our activities in Southern and Eastern Europe (SEE), and all our Asian businesses to focus on growth.

Our businesses operate locally through two main brands: Aegon (mainly in Europe and Asia) and Transamerica (mainly in the US).

For more information on Aegon’s governance structure, please see section B.1.1. Corporate Governance.

A.1.5 List of material related undertakings

The principal undertakings of the parent company Aegon N.V. are listed by geographical segment. All are wholly owned, directly or indirectly, unless stated otherwise, and are involved in insurance or reinsurance business, pensions, asset management or services related to these activities. The voting power in these undertakings held by Aegon is equal to the shareholdings unless otherwise specified.

For information on the material differences between the scope of the group used for the consolidated financial statements and the scope for the consolidated data used for the Group Solvency calculation, see section D, Valuation of Solvency Purposes, and section E.1.4, Difference between Solvency II own funds and IFRS-EU shareholders’ equity.

		Solvency and Financial Condition Report 2019

13     Business and performance Business

Americas

Europe

The Netherlands

Southern and Eastern Europe

United Kingdom

Asia

		Solvency and Financial Condition Report 2019

14     Business and performance Business

Asset Management

For a complete list of related undertakings, please refer to QRT S.32.01.22 - Undertakings in scope of the group. A list of Aegon’s branches is provided below:

		Solvency and Financial Condition Report 2019

15     Business and performance Business

A.1.6 Material lines of business and material geographical areas

Below is an overview, region by region, of Aegon’s different business units and the material lines of business that they provide.

Americas

Life

Aegon Americas offers a comprehensive portfolio of protection solutions to customers in a broad range of market segments. Products offered include term life, universal life, variable universal life, index universal life and whole life insurance.

Accident & health

Aegon Americas offers supplemental health insurance and long-term care insurance.

Mutual funds and ETFs (Exchange-traded funds)

Mutual funds are professionally managed investment vehicles comprised of pooled money invested by numerous and different individuals or institutions. Such funds are invested in various underlying security types such as stocks, bonds, money market instruments and other securities.

ETFs are a pooled investment vehicle for individual and institutional investors that combine some of the features of a mutual fund with the flexibility of allowing investors to trade throughout the day on an exchange.

Variable annuities

Variable annuities allow the policyholder to accumulate assets for retirement on a tax-deferred basis and to participate in equity or bond market performance. Additional insurance guarantees, also referred to as riders, can be added to variable annuities, including guaranteed minimum death benefits (GMDBs) and guaranteed living benefits (GLBs).

Fixed annuities

Fixed annuities allow the policyholder to accumulate assets for retirement on a tax-deferred basis through periodic interest crediting and principal protection.

Retirement plans and IRAs

Comprehensive and customized retirement plan services are offered to employers across the entire spectrum of defined benefit, defined contribution and non-qualified deferred compensation, and multiple employer plans (MEPs). Services are also offered to individuals rolling over funds from other qualified retirement funds or Individual Retirement Accounts (IRAs).

Stable value solutions

Stable Value Solutions are Synthetic Guaranteed Investment Contracts (GICs) which are offered primarily to tax-qualified institutional entities such as 401(k) plans and other retirement plans. A synthetic GIC ‘wrapper’ is offered around fixed-income invested assets, which are owned by the plan and managed by the plan or a third-party money manager hired by the plan. A synthetic GIC is typically issued with an evergreen maturity and may be terminated under certain conditions. Such a contract helps to reduce fluctuations in the value of the wrapped assets and provides book value withdrawals for plan participants, while ensuring that investment fund conditions are met.

Latin America

Aegon’s businesses in Latin America are comprised of a 50% interest in Mongeral Aegon Seguros e Previdência S.A., a Brazilian independent life insurer, and a joint venture with Administradora Akaan S.A. de C.V., which created and operates Akaan Transamerica in Mexico.

In 2019, Transamerica made the strategic decision to wind down the joint venture in Mexico as the business had not performed according to expectations. The wind down of the joint venture is expected to be completed in 2020.

		Solvency and Financial Condition Report 2019

16     Business and performance Business

Europe

The Netherlands

Within the organization structure, Aegon is aiming for less complexity with two mergers in 2019. Aegon PPI B.V. merged into CAPPITAL Premiepensioeninstelling B.V. as per January 1, 2019 (subsequently changed its name into Aegon Cappital B.V.) and OPTAS Pensioenen N.V. has been legally merged into Aegon Levensverzekering N.V. as per April 1, 2019. In addition, Robijn Participaties B.V. was acquired through Salus Holding B.V., a private limited liability company incorporated by Aegon Nederland N.V. in 2018. Robijn Participaties B.V. has been merged into Salus Holding B.V. as per January 2, 2019, which owns the Robidus brand.

Life

Products with mortality, morbidity, and longevity risks, including traditional and universal life, in addition to pension products (Defined Benefit and Defined Contribution plans), endowment, term, whole life insurance products and annuity products.

As per March 2020, the sale of the new individual life policies in the Netherlands will stop; this includes term life and individual annuities.

Non-life

General insurance, consisting mainly of automotive, liability, disability, household insurance, and fire protection.

Banking

In 2019, Aegon Bank N.V. announced to integrate the Aegon Bank and Knab operations under the Knab brand. By integrating both operations and rationalizing product offerings costs will be reduced, operations will be more efficient and governance unified and simplified. The coming period will be used to migrate the Aegon bank label products and customers towards the Knab label. Aegon Bank N.V. will continue to reinforce the Aegon Netherlands wide pension offering with its banking (savings, bank savings and investments) products, but under the Knab brand.

Services Business

Services business consist of offering mortgage loans, Aegon Cappital (PPI), Knab Advies & Bemiddeling, TKP, Stap, Robidus and Nedasco.

With the integration of the Aegon Bank and Knab, the strategic choice was made to phase out the non-bank (i.e. adviser and broker) activities in Knab Advies en Bemiddeling N.V. (KAB), and therewith stop the online advice and comparison of car-insurance and home-related insurances, as well as the mortgage broker business, effective from October 1, 2019. The KAB entity will be liquidated as soon as the remaining activities are sold to third parties or transferred to other Aegon entities.

Southern and Eastern Europe

At the start of 2019, Aegon had operations in the Southern and Eastern European (SEE) countries of the Czech Republic, Hungary, Poland, Portugal, Romania, Slovakia, Spain and Turkey.

Aegon first entered the Spanish insurance market in 1980. This was followed in 1992 by the purchase of a majority stake in Hungary’s former state-owned insurance company, Állami Biztosító. To strengthen its presence, Aegon further expanded in Central & Eastern Europe in the early 2000s.

Aegon’s activities in Spain have developed largely through distribution partnerships with Spanish banks. Aegon Spain Holding B.V. (hereafter referred to as Aegon Spain) operates in Spain through Aegon España S.A.U. de Seguros y Reaseguros. In 2013, Aegon Spain entered into a long-term partnership with Banco Santander S.A., offering both life and general insurance products through the bank’s branch network, both in Spain and Portugal. Similarly, Aegon Spain also entered into a long-term partnership with Liberbank, S.A., offering life and pension products in Spain.

In line with its strategic objective to optimize its portfolio and capital allocation across its businesses, Aegon sold its subsidiaries in the Czech Republic and Slovakia on January 8, 2019. It also expanded its partnership with Banco Santander in Spain and Portugal on the back of the acquisition of Banco Popular by Banco Santander.

		Solvency and Financial Condition Report 2019

17     Business and performance Business

United Kingdom

Aegon UK is organized into Digital Solutions and Existing Business:

Asia

High-net-worth businesses

TLB’s main products consist of USD denominated Universal Life and USD denominated Term Life Insurance solutions for the high-net- worth market segment. Universal Life products are TLB’s key products to meet the needs of high-net-worth individuals, supporting estate planning by providing life protection, while also helping to preserve and accumulate wealth. In addition to the Universal Life products, Term Life products are also offered with financial protection at a guaranteed level rate for up to thirty years.

Aegon Insights

Aegon Insights primarily worked with local insurers to develop marketing, distribution and administration solutions tailored to the needs of specific markets and customers. Revenue is primarily generated through reinsurance arrangements and fee income from marketing services, product distribution and administration. With changes in consumer preferences, Aegon made the strategic decision in 2017 to discontinue Aegon Insights’ new business while continuing to provide services to existing customers.

Strategic partnerships

In China and India, Aegon provides a broad range of life insurance products including unit-linked, universal life, and traditional life products. Aegon also offers variable annuities in Japan through Aegon Sony Life (till January 2020).

Aegon Asset Management

Aegon Asset Management has three distinct business lines.

		Solvency and Financial Condition Report 2019

18     Business and performance Business

A.1.7 Results of operations

The following table includes our operating results for the year ended December 31, 2019, including certain comparative discussion on our operating results for the year ended December 31, 2018. The information on the following tables also includes the non-IFRS-EU financial measure net underlying earnings. This is the after-tax equivalent of underlying earnings before tax.

The reconciliation from underlying earnings before tax to income before tax, being the most comparable IFRS-EU measure, is presented in the table. Aegon believes that these non-IFRS-EU measures provides meaningful supplemental information about the underlying operating results of Aegon’s businesses, including insight into the financial measures that senior management uses in managing the businesses.

		Solvency and Financial Condition Report 2019

19     Business and performance Business

		Solvency and Financial Condition Report 2019

20     Business and performance Business

Net income

Net income amounted to EUR 1,528 million in 2019, as underlying earnings before tax of EUR 1,973 million were partly offset by fair value losses, other charges, net impairments and income taxes. These items in turn offset gains on investments and gains from run-off businesses. The effective tax rate amounted to 18%, mainly as a result of tax exempt income items and the use of tax credits in the United States and in the United Kingdom the own employee pension plan moving into surplus.

Underlying earnings before tax

Aegon’s underlying earnings before tax decreased compared with 2018 to EUR 1,973 million in 2019. This was mainly driven by the Americas as a result of lower fee revenues in Variable Annuities, the negative impacts from lower rates and portfolios on intangibles in the Life business, and investments in the US businesses to support growth. The other main contributor to the decrease in underlying earnings before tax was Holdings and other activities, primarily due to more interest expenses being recorded via the income statement instead of directly through equity. Europe was the main offsetting reporting segment, with a 4% increase of underlying earnings before tax in 2019 compared with 2018.

Fair value items

The loss from fair value items amounted to EUR 226 million in 2019. Fair value losses in Europe were the main driver, totaling EUR 490 million in 2019. This was primarily related to the Netherlands, where the liability adequacy test (LAT) showed a shortfall during 2019 which in turn was partly offset by gains on derivatives and the guarantee provision. The United Kingdom also recorded fair value losses, mainly because of hedging results. Fair value gains in the Americas amounted to EUR 272 million in 2019, and mainly related to positive real estate revaluations and favorable equity markets leading to gains on the macro hedge, net of reserve movements. Losses on fair value items in Asia and at the Holding totaled EUR 8 million in 2019.

Realized gains on investments

Realized gains on investments amounted to EUR 405 million in 2019, driven by Europe and the Americas. In Europe these related largely to optimization of the investment portfolio in the Netherlands. In the Americas, the realized gains on investments were driven by bond calls and prepayments, mortgage loan gains, and normal trading activity.

Impairment charges

Net impairments of EUR 22 million in 2019 mainly related to the impairments of corporate bonds resulting from bankruptcy filings in the United States and the impairment of consumer loans in the Netherlands. These were partly offset by recoveries for structured assets in the Americas, all of which were originally impaired between 2008 and 2013.

Other income/charges

Other charges amounted to EUR 281 million in 2019. The Americas recorded Other charges of EUR 156 million in 2019 mainly due to unfavorable impacts from model and assumption changes. Furthermore, Other charges were recorded in relation to the operations administration partnerships with TCS and LTCG, as well as following the decision to exit the Akaan Transamerica joint venture in Mexico. For Europe, the Other charges totaled EUR 5 million. The main negative elements were unfavorable impacts from model and assumption changes and restructuring charges, both in the Netherlands and the United Kingdom. The main positive items were a provision release in the Netherlands following the change in pension scheme for own employees and a gain resulting from the sale of Aegon’s Czech and Slovak operations. For the Holdings, Other charges amounted to EUR 95 million and resulted primarily from IFRS 9 / 17 implementation expenses. The Other charges for Asset Management and Asia totaled EUR 25 million.

		Solvency and Financial Condition Report 2019

21     Business and performance Business

Run-off businesses

The results of run-off businesses increased compared with 2018 to a gain of EUR 23 million in 2019, driven mainly by higher income from the retained individual life reinsurance business.

Income tax

The effective tax rate amounted to 18%, mainly as a result of regular tax exempt income items and the use of tax credits in the United States, and the one-time benefits from the own employee pension plan moving into surplus. The effective tax rate on underlying earnings before tax amounted to 16%.

Commissions and expenses

Commissions and expenses decreased by 1% compared with 2018 to EUR 6.6 billion in 2019. Operating expenses increased by 4% compared with 2018 to EUR 3.9 billion in 2019. This increase primarily reflects lower restructuring expenses being more than offset by investments to support growth and customer experience in addition to higher IFRS 9 /17 implementation expenses.

Production

Compared with 2018, gross deposits were up by 19% to EUR 144.7 billion in 2019, driven by higher Asset Management deposits, driven by Aegon’s Chinese joint venture Aegon Industrial Fund Management Company (AIFMC). Net outflows during 2019 amounted to EUR 25.1 billion and were primarily due to outflows in the Americas in the Retirement Plan business following contract discontinuances and higher participant withdrawals. Europe exhibited net outflows resulting from the United Kingdom, more than offsetting net inflows in the Netherlands. Asset Management also recorded net inflows, primarily driven by the strategic partnership AIFMC. New life sales improved by 5% compared with 2018 to EUR 861 million in 2019, mainly driven by Europe, primarily as a result of a buy-out deal and a purchase of additional yearly pension increases by an existing customer, both in the Netherlands. New premium production for accident & health and property & casual insurance decreased by 16% in 2019 compared with 2018 to EUR 359 million in 2018, mainly driven by the previously announced strategic decision to exit the travel insurance, affinity and stop loss insurance segments in the United States.

A.1.8 Related party transactions

This section provides information about the material transactions during the reporting period with Aegon’s shareholders, with persons who exercise a significant influence on Aegon, i.e. members of the Executive, Management or Supervisory board. The second part of this section provides information on relevant operations and transactions within the Group.

Referring to section A.1.3 Holders of qualifying holdings, Aegon’s largest and only material holder of qualifying holdings is Vereniging Aegon. All other qualifying holdings in Aegon are less than 10% and are considered not to have significant influence over the management of the company. The transactions with Vereniging Aegon during the financial years 2019 and 2018 were:

Material transactions with persons who exercise a significant influence on the undertaking

The transactions during 2019 that classify as being transactions with members of the Executive, Management and Supervisory Board consist of transactions related to the remuneration (fixed compensation/conditional variable compensation) of the members of the Executive and Management Board and the remuneration of active and retired members of the Supervisory Board.

Executive Board

Through 2019, the Executive Board consisted of Mr. Wynaendts and Mr. Rider. The total IFRS-EU remuneration expenses in 2019, consisting of the fixed compensation, conditional variable compensation awards, pension contributions and other benefits, for Mr. Wynaendts was EUR 3.8 million and for Mr. Rider EUR 2.0 million. At the reporting date, Mr. Wynaendts and Mr. Rider had no loans with Aegon. No other outstanding balances such as guarantees or advanced payments exist.

		Solvency and Financial Condition Report 2019

22     Business and performance Business

Management Board

The total IFRS-EU remuneration expenses for the members of the Management Board (including Executive Board members) in relation to the 2019 performance year was EUR 26.4 million, consisting of EUR 14.5 million in fixed compensation, EUR 6.8 million in variable compensation awards for the 2019 performance year, EUR 3.9 million in pension contributions and 1.2 million in other benefits.

Supervisory Board

The total IFRS-EU remuneration expenses for active and retired members of the Supervisory Board amounted to EUR 865 thousand (excluding 21% VAT) in 2019. Members of the Supervisory Board were entitled to the following in 2019:

Each of these fees is a fixed amount. Members of Aegon’s Supervisory Board do not receive any performance or equity-related compensation, and do not accrue pension rights with the Company. These measures are designed to ensure the independence of Supervisory Board members and to strengthen the overall effectiveness of Aegon’s corporate governance. There are no outstanding balances such as loans, guarantees or advanced payments.

Relevant operations and transactions within the Group

Aegon facilitates intra-group transactions (IGTs) to support intra group efficiencies, including optimizing economies of scale, processes, liquidity and capital management. Due to the nature of these activities, there is interaction with business units and affiliates within the Group, resulting in a diverse set of IGTs. These include intercompany loans, derivatives, guarantees, internal reinsurance and capital injections. Aegon’s IGT Policy establishes definitions, governance, reporting and monitoring of IGTs ensuring a consistent standard of IGT usage across the Aegon Group for new and existing IGTs. All IGTs are further covered by the Aegon Global Transfer Pricing policy in order to ensure compliance with the internationally accepted at arm’s length principle, which dictates that related entities transact with each other as if they are third parties.

Loans

Aegon utilizes intercompany loans for operational liquidity and capital purposes. Within the Group, the following material uncollateralized intra-group loans are granted:

Derivatives

Aegon Derivatives N.V., a 100% pass-through vehicle, centralizes and mitigates counterparty risk related to the use of OTC derivatives across the Aegon Group in one entity. Primarily European entities (except the UK domiciled entities), make use of Aegon Derivatives N.V. In addition, foreign exchange derivatives are centrally managed within Aegon N.V. ensuring netting advantages. As of December 31, 2019, the net (credit) exposure on the abovementioned internal arrangements was limited as most of these are supported by collateral arrangements.

		Solvency and Financial Condition Report 2019

23     Business and performance Underwriting performance

Guarantees

Aegon N.V. and its subsidiaries provide guarantees for performance under contracts for certain aspects of the business transacted within the group. The agreements include, but are not limited to, letters of credit, (re)insurance contracts, maintenance of liquidity, capital and net worth maintenance agreements. The performance of the various entities under the terms of the agreements are regularly assessed to ensure that the entity has sufficient resources on a best estimate basis to meet the obligations guaranteed under the agreement. As a result, there is minimum exposure for these guarantees to the group.

Internal reinsurance

Subsidiaries of Aegon N.V. enter into reinsurance agreements in the normal course of business to (among other reasons), pool risks, improve group diversification, facilitate higher group risk retention for smaller units and efficiently manage capital. All transactions are executed with the arm’s length principle and in accordance with the Aegon Global Transfer Pricing Framework. In many cases, the reinsurance is supported by trusts, funds withheld and/or letters of credit. Any exposure above these amounts are assessed based on Aegon N.V.’s IGT policy to ensure the exposure is within policy limits. As of December 31, 2019, there are no exposures greater than the policy levels set for affiliated reinsurance.

Capital injections

Capital injections are done to strengthen the capital position of the legal entities making the request, if deemed necessary, and are typically provided by the centrally-managed Dutch holding companies.

A.2 Underwriting performance

Premium income

Aegon Americas’ total premium income for the year 2019 amounted to EUR 8.5 billion (2018: EUR 8.4 billion) and is comprised of recurring premiums for an amount of EUR 6.9 billion (2018: EUR 6.6 billion) and single premiums for an amount of EUR 0.2 billion (2018: EUR 0.2 billion). The main lines of businesses contributing to Aegon Americas’ total premium income are Life for EUR 7.1 billion (2018: EUR 6.8 billion) and Non-life (Accident & Health) for EUR 1.4 billion (2018: EUR 1.6 billion). The decrease in Non-life premiums is mainly from product exits in the US.

Total premium income of Aegon the Netherlands amounted to EUR 2.1 billion (2018: EUR 2.0 billion) of which EUR 0.8 billion relates to recurring premiums and EUR 0.9 billion to single premiums. Premium income in Aegon the Netherlands relates to the Life EUR 1.8 billion (2018: EUR 1.6 billion), and the Non-life segment with EUR 0.4 billion (2018: EUR 0.4 billion). The increase in the life segment relates mostly to a buy-out deal.

Total premium income of Aegon UK amounted to EUR 6.3 billion (2018: EUR 7.5 billion) of which EUR 2.2 billion (2018: EUR 2.2 billion) related to recurring premiums and EUR 4.1 billion (2018: EUR 5.3 billion) to single premiums. The decrease in single premium income compared to 2018 is driven by a reduction of upgraded Life insurance policies to the platform in Aegon UK. Most of Aegon UK’s premium income relates to the Life business (2019: EUR 6.3 billion, 2018: EUR 7.5 billion).

		Solvency and Financial Condition Report 2019

24     Business and performance Investment performance

Commissions and expenses

In 2019, commissions and expenses in Aegon Americas decreased by 4% compared with 2018 to EUR 3.8 billion (2018: EUR 3.9 billion), reflecting lower restructuring expenses associated with the operations administration partnerships, and lower employee expenses. This was partly offset by expenses for modernization initiatives focused on digital and architectural capabilities as well as contractual increases in fees from the operations administration partnerships.

Commissions and expenses in Aegon the Netherlands increased by 7% compared with 2018 (2018: EUR 826 million) to EUR 883 million in 2019. Operating expenses in Aegon the Netherlands were up by 15% compared with 2018 to EUR 809 million (2018: EUR 703 million) in 2019, mainly due to the impact of the acquisition of Robidus.

Commissions and expenses in Aegon UK remained stable compared with 2018 at EUR 706 million (2018: EUR 704 million) in 2019. Operating expenses in Aegon UK increased by 2% compared with 2018 (2018: EUR 521 million) to EUR 531 million in 2019, mainly due to investments in the Aegon platform to further increase its functionality and ease of use.

Policyholder claims and benefits

Total policyholder claims and benefits amounted to EUR 56.8 billion in 2019 compared to EUR 10.6 billion in 2018. The increase of EUR 46.2 billion is mainly attributable to changes in the valuation of liabilities of insurance contracts and investment contracts. The changes in valuation of liabilities for insurance contracts and investment contracts reflect movements in technical provisions resulting from net fair value changes on financial assets for account of policyholders included in results from financial transactions of EUR 33.2 billion positive (2018: EUR 11.3 billion negative). In addition, the change in valuation of liabilities for insurance contracts includes an increase in technical provisions for life insurance contracts of EUR 2.4 billion (2018: increase of EUR 1.4 billion).

Total claims and benefits paid amounted to EUR 20.5 billion (2018: EUR 21.3 billion) and is comprised of claims and benefits paid for Aegon’s life business amounting to EUR 18.8 billion (2018: EUR 19.7 billion) and claims and benefits paid for Aegon’s non-life business amounting to EUR 1.6 billion (2018: EUR 1.7 billion).

Of the total policyholder claims and benefits of EUR 56.8 billion (2018: EUR 10.6 billion), EUR 27.3 billion (2018: EUR 4.6 billion) relates to Aegon Americas, EUR 9.0 billion (2018: EUR 2.3 billion) to Aegon the Netherlands and EUR 19.2 billion (2018: EUR 2.5 billion) to Aegon UK.

A.3 Investment performance

The following sections will provide more detail about Aegon’s investment income in general and by asset class (section A.3.1) and its investment related results and impairments (section A.3.2). Section A.3.3 provides information about Aegon’s gains and losses of investments recognized directly in equity. Finally, the last section A.3.4 provides information about Aegon’s investments in securitizations.

A.3.1 Investment income

Aegon Americas is the largest contributor to the investment income with EUR 3,166 million (2018: EUR 3,121 million) followed by Aegon the Netherlands with EUR 2,224 million (2018: EUR 2,265 million), and Aegon UK with EUR 1,830 million (2018: EUR 1,346 million).

		Solvency and Financial Condition Report 2019

25     Business and performance Investment performance

Investment income by asset class

For interest-bearing assets, interest is recognized as it accrues and is calculated using the effective interest rate method. Fees and commissions that are an integral part of the effective yield of the financial assets or liabilities are recognized as an adjustment to the effective interest rate of the instrument. Investment income includes the interest income and dividend income on financial assets carried at fair value through profit or loss. Investment income also includes rental income due.

Most of Aegon’s investment income relates to debt securities and money market instruments, namely EUR 3,959 million (2018: EUR 3,899 million), which represents 53% (2018: 55%) of total investment income. The expenses related to debt securities and money market instruments mainly consisted of transaction costs. As the transaction costs are included in the fair value at the date of recognition, these are not separately disclosed.

A.3.2 Investment related results and impairments