Life insurance, savings and pensions is a long-term business. To be successful, we have to be profitable. But we also have to create consistent value for the societies in which we operate.
Long-term value creation
Our business creates value for our stakeholders and society. Because of the nature of this business, value created is often 'financial', but it may also be social, economic or environmental:
- Through our products and services, we offer customers protection. We pay claims and benefits, provide returns on savings and investments, and help build long-term financial security.
- For our employees, we offer training in new skills and opportunities for career development. We pay salaries and other social benefits, and provide a safe, fulfilling environment in which to work.
- For our business partners, we pay fees to brokers, financial advisors and other intermediaries1. We also invest in our joint ventures and partnerships. We pay reinsurers and suppliers for their goods and services.
- Our investors receive returns on their investments through regular dividends, share buy-backs and interest payments; they may also gain financially if our share price increases.
- For the wider community, we pay fair taxes, provide employment, and support local communities through donations and volunteering. We take a responsible approach to investment, and contribute to society's current debate on retirement, pensions and healthy aging.
Social and economic role of financial services
Our businesses make a significant social and economic contribution. Insurance, in particular, strengthens social stability by protecting people, property and assets. Financial companies are also significant long-term investors in the economy, funding public and private sectors, creating new jobs and driving business growth. More broadly, financial services allow individuals and businesses to take risks, as well as plan and invest for the future.
Our value creation model
To operate our businesses, we need resources. We need investment; we need customers; we need a workforce and business partners. These resources may be 'financial', 'human' or 'intellectual'. The chart below our value chain: how our business uses these resources (or 'capitals') to create long-term value for our stakeholders and the wider community.
Footnote
1 In markets where we no longer pay commissions because of local regulations, we 'enable' customer payments for financial advice to brokers and other intermediaries through the sale of our products and services.
Explanatory note
This chart is based on the International Integrated Reporting Council's IR framework. Each capital represents a store of value, which companies use and transform through their business activities. In this process, value may be created or depleted. For the purposes of this value chain, we have chosen the capitals most relevant to our business (financial, human and intellectual, and social and relationship).
In the chart above, the process is shown from the perspective of Aegon's business. Both natural and manufactured capital are also part of the IR framework.
Neither, however, is directly relevant to Aegon's core businesses (as a services company, we do not use natural or manufactured products in our business, though of course we may affect the value of both through our investments). For more information on the IR framework, see www.integratedreporting.com
Definitions
Financial capital represents the funds to which Aegon has access. This includes debt and equity finance.
Human and intellectual capital refers to individual knowledge, skills and capacities in Aegon's workforce, as well as the company's institutional knowledge, processes and expertise.
Social and relationship capital covers relationships both within and outside the company. These include relationships with customers, employees, suppliers and other business partners.
