2015 was a busy year in which change was a constant. In terms of our operating environment, population aging is taking place across the world and it's clear that the trend for governments and employers to retreat from providing retirement security is only accelerating.
By providing people with products and services that meet their needs, we, as a company, are increasingly filling that space. And that means that our role and responsibility in society and the economy is increasing.
In terms of our company, everyone working at Aegon can be proud of what we've achieved over the last 12 months. We've had many highlights, from successfully finalizing our preparations for Solvency II, to securing a number of exciting distribution agreements, so we're now able to help millions of new customers. The year was not, however, without its challenges.
From a financial perspective, I'm disappointed that our earnings didn't fully meet our expectations, but I'm confident that we've taken the right actions to ensure that we're stronger going forward. Above all, though, I'm very pleased with how we are executing our strategy in all our regions and markets. We are succeeding not only in our traditional businesses, but also with many of our innovative initiatives, such as Retiready, our UK online platform; Knab, our digital bank in the Netherlands; and by creating a single Transamerica customer experience in the US.
Aegon recently announced its Solvency II capital position. What does this regulation mean for Aegon and for the industry as a whole?
First and foremost, I'm pleased that our work to manage our capital and to allocate it prudently across the business enabled us to achieve a strong estimated Group solvency position of approximately 160% at year-end 2015. For Aegon and for companies in our sector, preparations for the new regulations, which came into effect on January 1, 2016, were a major, multi-year exercise, and involved hundreds of colleagues. There was a positive response from the investment community, but ultimately having a strong capital position is about our customers, because it means they can have confidence in our ability to make good on our promises.
Many of the changes at Aegon are focused on digitizing the company. Why is this so high on your agenda?
For a very simple reason: we need to continue the digital transformation of the company – from our back office to our front office – so that we're more agile, so that we're better able to connect with our millions of customers around the world, and so that we 're able to reduce expenses. That's why our strategy is all about accelerating the pace of change and ensuring each and every customer can connect with us in the way they choose. In the case of more complex products and services, this interaction with customers may also be by phone or in person, so that we can be the trusted source of information, guidance and advice that customers desire and demand. But with simpler products and services, ever more people prefer to use their phone, tablet or computer – just as they would for banking or shopping online. We want to be there for people and meet their needs.
Can Aegon therefore learn from the Facebook, Uber and LinkedIns of the world?
Absolutely. And that's precisely what we're doing. For me, the most important lesson is arguably cultural, as we need to continue changing the way we think and the way we work in order to get ahead. In the past, after having an idea, you had to go through a long and sometimes slow process: first, develop a written business case; then conduct a risk assessment; next, look at the different options; before then considering the resources required, developing IT systems and so on.
If you always follow that sort of process nowadays, your idea could be out of date long before you even started. Being innovative isn't about having a single big idea. It's about trial and error, and constantly trying new things; constantly asking the question: 'Is there a better way to do this?' The most successful social startups understand what their users want, and they understand the importance of creating a culture in which ideas and innovations flourish. Insurance is not an industry famed for embracing change, but I'm proud that at Aegon we've made great strides in creating that sort of positive, 'can-do' attitude.
Do you look elsewhere for inspiration?
Yes, as I believe it's very important to look beyond our industry for lessons. Take the travel industry. The days of travel agents essentially being an intermediary through which you could buy an airline ticket are long gone. The travel industry really has changed beyond all recognition in recent years, and it's no surprise that those who have survived and thrived are those who raised their game and today provide expert advice to their customers. Just as with travel, today people looking for a pension, insurance or other financial products have access to a huge amount of information through the Internet. But they need simple solutions and a trustworthy source of advice, and that is what we can provide for them.
Getting inspiration isn't just about observing, however. We have, for instance, set up a $135 million venture fund. And this wasn't for the sake of making a good investment alone. By investing in innovative start-ups that are relevant to our business, we can learn from them, and partner with them. On top of that, we've also created a Center of Excellence for Digital, which is helping us to draw on the huge pool of experience we have across the company, share best practices, and accelerate the pace of change.
One initiative I found particularly inspiring in 2015 from both a business and personal perspective was the inaugural Global Aegon Awards, as a single idea or initiative from a colleague or team can have a hugely positive impact across the company.
How do you personally stay in touch with customers' changing needs?
There's nothing more important to my role as CEO than to understand what our customers and potential customers want and need, so it's a real priority for me. I'm a regular visitor to our customer contact centers because there's no better way to understand customer needs than by listening to and learning from our customer service operators. It's also vital to have a great team around you, with people with experience from a range of different sectors. I really value my colleagues' insights, so I learn a lot about customers' changing needs indirectly too. Last but definitely not least, I'm also an Aegon customer. This means I don't only see things from a business perspective, but from a customer perspective too.
How important is it for Aegon to be a responsible business?
Extremely important, for two reasons. First, the communities we operate in expect us to contribute in a positive way, and our customers only want to do business with a company that does the right thing. Second, all of our employees, me included – and our future employees – want to work for a company that makes a positive contribution to society. Indeed, through our employee surveys, we know that colleagues are proud of how our products and services contribute to our customers' financial security, of our thought-leadership work on aging and retirement issues, and of the fact that we are a responsible investor. Our recent investment in a windfarm in Germany is a good example of our approach to responsible investment: it's much more than just a symbolic investment to protect the planet; it's also about generating the right returns.
Why put so much focus on thought leadership?
Our purpose is to help people achieve a lifetime of financial security, but you can only do that if they first understand how important it is. Through the Transamerica Center for Retirement Studies and Aegon's Center for Longevity and Retirement, we put effort and resources into research and raising awareness not only in our communities, but also among policymakers and the media. The fact that we were invited to the White House to share our perspective about retirement does, I believe, underline that our expertise in this area is recognized and respected. It's so important to get the message out there and help inform people about the need to act now so that they are prepared for their future – for instance, by starting to save in their 20s instead of their 30s. Having a roof over your head, having food to eat, and having security in retirement are all fundamental rights. But the latter is often forgotten about, and is not always at the top of people's priorities. We need to change that.
Looking to the future, can you paint a picture of how you see Aegon in five years' time?
The Aegon of 2020 will, I'm sure, be a more digital, more efficient, more sustainable, and most important of all, a more customer-centric organization. Some of the trends shaping our business today – such as increased regulation and the shift to individual responsibility – will continue to drive change in the future, and new trends will emerge. What won't change is our purpose, our values, and delivering on the promises we make to customers.