AEGON’s CEO Alex Wynaendts stated: “AEGON’s capital position and cash flows continue to be strong despite the ongoing turbulence in financial markets.
Interim dividend
The 2008 interim dividend amounts to EUR 0.30. The interim dividend will be paid in cash or stock at the election of the shareholder. The value of the stock dividend will be approximately equal to the cash dividend. AEGON intends to neutralize the dilutive effect of the stock dividend.

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Strong capital position with excess capital of over EUR 0.8 billion
Solid underlying earnings in turbulent financial markets, down 2% at constant currency
Continued growth of life sales and deposits results in 2% increase in VNB at constant currency
US credit impairments of EUR 57 million pre-tax reflect the high quality of AEGON’s investment portfolio
Interim dividend unchanged at EUR 0.30 per share

Chairman's statement
AEGON’s CEO Alex Wynaendts stated: “AEGON’s capital position and cash flows continue to be strong despite the ongoing turbulence in financial markets. In this environment, AEGON’s businesses performed well with solid underlying earnings and growth in both sales and deposits. We are pleased by the continued confidence of our customers. In the US, we achieved especially strong fixed annuities deposits, a six-fold increase over the comparable period. In the Netherlands new life sales were up significantly and our business in the United Kingdom achieved strong sales growth across most lines of business. These developments led to a further increase in AEGON’s value of new business and continued profitable growth. Clearly, the weakening of the dollar and British pound had a considerable impact on our reported results. Net income was affected by losses on investments as well as an increase in credit impairments, which are trending towards our long-term pricing assumptions. The recently completed EUR 315 million securitization of a block of AEGON’s UK business has increased our capital efficiency, one of our key strategic priorities. Also as part of our growth strategy, we continued our expansion in the emerging markets of Central and Eastern Europe and Asia. We remain confident in AEGON’s position and in our ability to grow our business profitably while achieving greater capital efficiency.”

Strategic developments
‘Unlocking the global potential’
In June 2008, AEGON introduced additional financial performance targets, alongside the Group’s value of new business (VNB) target, as part of an ambitious strategy to ensure sustainable profitable growth in the coming years:

Grow VNB to EUR 1.25 billion by 2010.
Average net underlying earnings growth of at least 10% per annum to 2012 from a 2007 base of EUR 2,033 million (at 2007 constant currency).
Return on equity of at least 14% by 2010 and at least 15% by 2012 compared with 12% in 2007.
In order to achieve these targets AEGON has set out three strategic priorities:

to reallocate capital toward businesses with higher growth and return prospects,
to improve growth and returns from existing businesses, and
to manage AEGON as an international Group.
It is AEGON’s ambition to be a global leader, helping customers around the world secure their financial futures and ensuring sustainable profitable growth.

AEGON is executing its strategy and has launched several initiatives that underpin the Group’s commitment to achieve its targets:

In July, AEGON released EUR 315 million of capital through an innovative securitization. The securitization supports each of the Group’s three strategic priorities. This transaction added EUR 315 million of core capital and enhanced the Group’s financial flexibility. The transaction also improved the return on capital deployed in the United Kingdom. To have executed this deal in the current difficult market conditions is clear evidence of continued trust in AEGON’s capital position.
AEGON merged its pension fund management company PTE AEGON with BRE Bank’s PTE Skarbiec-Emerytura, positioning AEGON as Poland’s fifth largest pension fund manager with a market share of approximately 6%.
AEGON strengthened its position in the rapidly developing pension market in Central & Eastern Europe (CEE) with the merger of the AEGON Hungary Pension Fund with UNIQA and Public Service Pension Fund. As a result of the merger, AEGON is now the second largest pension provider in Hungary.
In early July, AEGON finalized its acquisition of Turkish life and pension company Ankara Emeklilik. Turkey has a low life insurance penetration and the country’s private pensions market has significant growth potential.
Following the pension fund mergers in Poland and Hungary, AEGON has now 2 million pension fund members in the CEE region. It is AEGON’s ambition to have 2.3 million pension fund members in CEE by 2010.

The joint venture with Caja de Ahorros de Santander y Cantabria in Spain began operations during the quarter.
In July, AEGON began selling life insurance policies in India with its partner Religare.
AEGON established a new asset management joint venture in China, AEGON Industrial Fund Management Company. AEGON IFMC is a Chinese mutual fund manager with approximately EUR 3 billion in assets under management.

Value of new business


VNB increased 2% at constant currency, driven by strong growth in the Americas and the United Kingdom. However, due to the weakening of the US dollar and the British pound, the reported VNB declined to EUR 212 million.
AEGON’s internal rate of return remained fairly stable at 18% as the Group continued to focus on writing profitable new business.


Return on equity
AEGON has been able to make progress on its return on equity target, by increasing its RoE from 12.0% for the full year 2007 to 12.2% in the first half of 2008.

Underlying earnings growth
At constant currency, AEGON was able to grow underlying earnings by 9% in the first half of 2008.

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