Embedded value 2002

At year-end 2002, the total embedded value of Aegon N.V. was calculated at EUR 16 billion (USD 16 billion). The total embedded value includes the embedded value of the life insurance business, other activities and holding companies.

The embedded value of life insurance business was calculated at EUR 22 billion (USD 23 billion). This outcome represents the present value of the projected net profits of Aegon’s existing life operations and the capital base. The capital base is partly financed through debt, which is represented in the value of the holding companies. The value of the holding companies, largely debt and capital securities, amounted to EUR –7.8 billion (USD –8.2 billion). The other activities are included at book value based on Dutch Accounting Principles (DAP) and amounted to EUR 1.5 billion (USD 1.6 billion). The value of new business sold in 2002 was EUR 563 million (USD 533 million), reflecting the present value of the projected net profits arising from the sale of new business in 2002.


The embedded value report is published for the first time today and will be disclosed once per year. Because embedded value is based on certain assumptions, the report contains a range of values and sensitivities, which can provide additional insight for investors and the financial community when used in conjunction with the periodic earnings and production reporting.


Donald J. Shepard, CEO and Chairman of the Executive Board, said: “We  believe that embedded value can provide a meaningful measure for investors and the financial community to gain additional insight into Aegon, as it is a tool we use in managing our life operations. The information we are disclosing is extensive and in line with our continued commitment to provide a high level of disclosure. Despite the deteriorated financial markets and weakened US dollar, the figures as presented today support our view that our company is in a strong position.”


Embedded value is not based on DAP, which are used to prepare and report Aegon’s financial statements and should not be viewed as a substitute for DAP financial measures. In the report the embedded value life insurance and the total embedded value are reconciled to shareholders’ equity of EUR 14.2 billion (USD 14.9 billion) as presented in Aegon’s annual accounts over the year 2002.


Embedded value life insurance has been calculated based on Aegon’s principles and independently reviewed by Tillinghast-Towers Perrin with regard to the reasonableness of methodology, assumptions and models.  


For detailed information on embedded value life insurance and total embedded value please refer to the report (see related documents on the right).