Aegon reports on embedded value 2003

Total embedded value Aegon Group rose 8% to EUR 17 billion in 2003 despite stronger euro, an increase of 25% at constant currency rates


Value of New Business amounted to EUR 436 million.


At year-end 2003, the total embedded value of Aegon N.V. amounted to EUR 17 billion, an increase of 8% compared to 2002. The embedded value of life insurance business remained level with the prior year at EUR 22 billion. The embedded value life insurance benefited from the performance of the in-force book (EUR 1.5 billion) and higher than expected investment returns (EUR 1.2 billion), which were more than offset by adverse currency translation (EUR 2.8 billion). On constant currency exchange rates, total embedded value and embedded value life insurance rose by 25% and 13% respectively in 2003.


As per 2003, the embedded value and the value of new business of the life operations of Hungary, Spain and Taiwan are also included in the analysis. These countries were included at book value under Dutch Accounting Principles (DAP) in 2002. The 2002 embedded values have been adjusted to reflect the inclusion of these countries.


The value of new business, reflecting the present value of the projected net profits arising from the sale of new business in 2003, amounted EUR 436 million (EUR 563 million in 2002).


Jos Streppel, CFO, said: "We are pleased to report that all country units showed an increase in embedded value life insurance measured in local currencies. The stronger euro has adversely impacted the reported embedded value and the value of new business at Group level. We are happy with the contribution of the Taiwanese activities to the value of new business."


The total embedded value includes the embedded value of the life insurance business, other activities and holding companies. The value of the holding companies, largely debt and capital securities, amounted to EUR (6.5) billion (EUR (7.8) billion in 2002). The other activities are included at book value based on DAP and amounted to EUR 1.4 billion (EUR 1.3 billion in 2002).


Embedded value life insurance has been reviewed by Tillinghast with regard to the reasonableness of methodology, assumptions, models and results. As a result of this review, Tillinghast considers that the methodology adopted, the assumptions used and the results shown in certain tables in Aegon's 2003 embedded value report have been properly prepared in accordance with the Aegon Principles and are reasonable. In giving this opinion, Tillinghast has relied on the values placed on the 'other activities' by Aegon (for more details please refer to chapter 6 of of Aegon's embedded value report).


Aegon expects that, in all material respects, the EVLI produced under the new European Embedded Value principles will be consistent with that under Aegon Principles.


For detailed information on embedded value life insurance and total embedded value please refer to the report attached to this press release.