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"ifrs-full:PurchaseOfPropertyPlantAndEquipmentClassifiedAsInvestingActivities", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18003": { "value": "72000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:PurchaseOfPropertyPlantAndEquipmentClassifiedAsInvestingActivities", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18006": { "value": "34000000", "decimals": -6, "dimensions": { "concept": "agn:AcquisitionOfSubsidiariesNetOfCash", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18008": { "value": "29000000", "decimals": -6, "dimensions": { "concept": "agn:AcquisitionOfSubsidiariesNetOfCash", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18011": { "value": "253000000", 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"agn:DividendReceivedFromJointVenturesAndAssociates", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18041": { "value": "0", "decimals": -6, "dimensions": { "concept": "ifrs-full:OtherInflowsOutflowsOfCashClassifiedAsInvestingActivities", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18043": { "value": "-1000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:OtherInflowsOutflowsOfCashClassifiedAsInvestingActivities", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18047": { "value": "-1996000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashFlowsFromUsedInInvestingActivities", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18049": { "value": "733000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashFlowsFromUsedInInvestingActivities", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18052": { "value": "1072000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:PaymentsToAcquireOrRedeemEntitysShares", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18054": { "value": "597000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:PaymentsToAcquireOrRedeemEntitysShares", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18059": { "value": "2670000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:ProceedsFromBorrowingsClassifiedAsFinancingActivities", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18061": { "value": "3569000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:ProceedsFromBorrowingsClassifiedAsFinancingActivities", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18064": { "value": "0", "decimals": -6, "dimensions": { "concept": "agn:RepaymentOfPerpetuals", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18066": { "value": "429000000", "decimals": -6, "dimensions": { "concept": "agn:RepaymentOfPerpetuals", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18071": { "value": "4230000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:RepaymentsOfBorrowingsClassifiedAsFinancingActivities", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18073": { "value": "4086000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:RepaymentsOfBorrowingsClassifiedAsFinancingActivities", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18076": { "value": "494000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:DividendsPaidClassifiedAsFinancingActivities", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18078": { "value": "167000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:DividendsPaidClassifiedAsFinancingActivities", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18081": { "value": "65000000", "decimals": -6, "dimensions": { "concept": "agn:CouponsOnPerpetualSecuritiesClassifiedAsFinancingActivities", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18083": { "value": "48000000", "decimals": -6, "dimensions": { "concept": "agn:CouponsOnPerpetualSecuritiesClassifiedAsFinancingActivities", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18086": { "value": "39000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:PaymentsOfLeaseLiabilitiesClassifiedAsFinancingActivities", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18088": { "value": "49000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:PaymentsOfLeaseLiabilitiesClassifiedAsFinancingActivities", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18091": { "value": "-11000000", "decimals": -6, "dimensions": { "concept": "agn:ChangeInOwnershipNonControllingInterests", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": 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"scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18104": { "value": "-1834000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashFlowsFromUsedInFinancingActivities", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18108": { "value": "-4373000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:IncreaseDecreaseInCashAndCashEquivalentsBeforeEffectOfExchangeRateChanges", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18110": { "value": "1570000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:IncreaseDecreaseInCashAndCashEquivalentsBeforeEffectOfExchangeRateChanges", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18113": { "value": "8486000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalentsIfDifferentFromStatementOfFinancialPosition", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18115": { "value": "6861000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalentsIfDifferentFromStatementOfFinancialPosition", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2022-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18118": { "value": "-38000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:EffectOfExchangeRateChangesOnCashAndCashEquivalents", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18120": { "value": "55000000", "decimals": -6, "dimensions": { "concept": "ifrs-full:EffectOfExchangeRateChangesOnCashAndCashEquivalents", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18124": { "value": 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"2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18141": { "value": "310000000", "decimals": -6, "dimensions": { "concept": "agn:DividendReceivedFromJointVenturesAndAssociates", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18142": { "value": "137000000", "decimals": -6, "dimensions": { "concept": "agn:DividendReceivedFromJointVenturesAndAssociates", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR" } }, "f18167": { "value": "1 General information
On September 29,2023 it was resolved to convert Aegon N.V. into Aegon S.A. via a cross border conversion. On September 30,
2023 the cross border conversion into Aegon S.A. was effectuated and subsequently Aegon S.A. was converted into Aegon
Ltd, a Bermuda limited company, and effectuated the change of its legal seat to Bermuda. From October 1, 2023 the Bermuda
Monetary Authority has been Aegon's group supervisor.
Aegon Ltd. is an exempted company with liability limited by shares organized under the laws of Bermuda and registered with the
Bermuda Registrar of Companies under number 202302830 and recorded in the Commercial Register of The Hague registered
under number 27076669 and with its registered address at Canon\u2019s Court, 22 Victoria Street, Hamilton HM 12, Bermuda.
Aegon Ltd. has its headquarters in the Netherlands at Aegonplein 50, 2591 TV, The Hague. As Aegon Ltd. currently qualifies
as Non-Resident Company under Dutch law, certain Dutch law provisions remain applicable to it, including certain provisions
of title 9 Book 2 of the Dutch Civil Code regarding the preparation and publication of its annual accounts.
Aegon Ltd. serves as the holding company for the Aegon Group and has listings of its common shares on Euronext Amsterdam
and on NYSE.
Aegon Ltd. (or \"the Company\") and its subsidiaries (\"Aegon\" or \"the Group\") have life insurance and pensions operations and
are also active in savings and asset management operations, accident and health insurance and general insurance. Fully
owned businesses by Aegon include the United States, the United Kingdom and asset management, and Aegon also operates
partnerships in Spain & Portugal, China, and Brazil, and a strategic partnership in the Netherlands. The Group employs around
15,700 people worldwide (2022: around 15,500)
Please note that the designation is uniformly Aegon Ltd. even if it was Aegon N.V. before October 1, 2023.", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f18170": { "value": "On September 29,2023 it was resolved to convert Aegon N.V. into Aegon S.A. via a cross border conversion. On September 30,
2023 the cross border conversion into Aegon S.A. was effectuated and subsequently Aegon S.A. was converted into Aegon
Ltd, a Bermuda limited company, and effectuated the change of its legal seat to Bermuda.", "dimensions": { "concept": "ifrs-full:ExplanationOfChangeInNameOfReportingEntityOrOtherMeansOfIdentificationFromEndOfPrecedingReportingPeriod", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f18175": { "value": "Bermuda", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f18176": { "value": "Bermuda", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f18177": { "value": "Bermuda", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f18180": { "value": "Aegon Ltd. ", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f18181": { "value": "liability limited by shares", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f18184": { "value": "Canon\u2019s Court, 22 Victoria Street, Hamilton HM 12, Bermuda. ", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f18189": { "value": "Aegon Ltd. ", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f18190": { "value": "Aegon Ltd. ", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f18193": { "value": "life insurance and pensions operations and are also active in savings and asset management operations, accident and health insurance and general insurance. ", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f18202": { "value": "2 Material accounting policy information
2.1 Basis of presentation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code.
Additional disclosures have been included in the consolidated financial statements in relation to the initial adoption of IFRS
9 and IFRS 17, that became effective on January 1, 2023.
The consolidated financial statements have been prepared in accordance with historical cost convention as modified by the
revaluation of investment properties and those financial instruments (including derivatives) and financial liabilities that have
been measured at fair value, except for the following items, which are measured on an alternative basis at each reporting date:
Item
Measurement basis
Insurance and reinsurance contracts
Fulfilment cash flows plus the CSM
Net defined benefit liability / (asset)
Fair value of plan assets less the present value of the defined benefit obligations
Other impaired non-financial assets
Higher of fair value less costs of disposal and value in use
Financial instruments held to collect financial cash flows
Amortized cost
The consolidated financial statements are presented in euros and all values are rounded to the nearest million unless
otherwise stated. The consequence is that the rounded amounts may not add up to the rounded total in all cases. All ratios
and variances are calculated using the underlying amount rather than the rounded amount. The preparation of financial
statements in conformity with EU-IFRS requires management to make estimates and assumptions affecting the reported
amounts of assets and liabilities from the date of the financial statements and the reported amounts of revenues and expenses
for the reporting period. Those estimates are inherently subject to change and actual results could differ from those estimates.
Included among the material (or potentially material) reported amounts and disclosures that require extensive use of estimates
are: insurance and reinsurance contracts as stated in the table above, fair value of certain invested assets and derivatives,
purchased intangible assets, goodwill, pension plans, income taxes and the potential effects of resolving litigation matters.
\n
\n
\n\n
\n
\n
\n\n
\n
\n
Aegon applies fair value hedge accounting for portfolio hedges of interest rate risk (macro hedging) under the European Union
(EU) \"carve out\" of EU-IFRS. Details are provided in note 2.14.2. (g) Derivatives and hedge accounting and note 20 Derivatives.
Aegon does not use the optional exemption provided under EU-IFRS to group together specific insurance contracts that were
issued more than 12 months apart.
The consolidated financial statements of Aegon Ltd. were approved by the Board on April 3, 2024. The financial statements will
be presented to the Annual General Meeting of Shareholders on April 4, 2024. In accordance with Bermuda law, the annual
accounts are not adopted by the General Meeting however pursuant to our Bye-Laws are discussed with the General Meeting
each Annual General Meeting.
2.1.1 Adoption of new EU-IFRS accounting standards and amendments effective in 2023
The accounting policies and methods of computation applied in the consolidated financial statements are the same as those
applied in the 2022 consolidated financial statements, except for the following IFRS standards and amendments that became
effective for Aegon from January 1, 2023 and have been endorsed by the European Union:
\u2022 IFRS 17 Insurance contracts
\u2022
Initial Application of IFRS 17 and IFRS 9 \u2013 Comparative information (Amendments to IFRS 17)
\u2022 IFRS 9 Financial instruments
\u2022
Prepayment Features with Negative Compensation (Amendments to IFRS 9)
\u2022
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
\u2022
Definition of Accounting Estimates (Amendments to IAS 8)
\u2022
Deferred tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
The amendments to IAS 12 have been introduced in response to the OECD\u2019s Base Erosion and Profit Shifting (BEPS) Pillar Two
rules and include:
\u2022
A mandatory temporary exception to the recognition and disclosure of deferred taxes arising from the jurisdictional
implementation of the Pillar Two model rules; and
\u2022
Disclosure requirements for affected entities to help users of the financial statements better understand an entity\u2019s exposure
to Pillar Two income taxes arising from that legislation, particularly before its effective date. The mandatory temporary
exception \u2013 the use of which is required to be disclosed \u2013 applies immediately.
The remaining disclosure requirements apply for annual reporting periods beginning on or after 1 January 2023, but not for any
interim periods ending on or before 31 December 2023.
Aegon is within the scope of the OECD Pillar Two model rules. Pillar Two legislation was enacted in the Netherlands, the
jurisdiction in which Aegon Ltd. as Ultimate Parent Entity is tax resident, and will come into effect from 31 December 2023.
Aegon has applied the mandatory exception to recognizing and disclosing information about deferred tax assets and liabilities
related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023. Based on performed analysis,
applying both the temporary safe harbors and detailed calculations, Aegon has determined that the impact, if any, of Pillar Two
is currently expected to be non-material. Therefore, the consolidated financial statements do not include information required
by paragraphs 88A-88D of IAS 12.
The adoption of IFRS 17 and IFRS 9, which replaced IFRS 4 and IAS 39 respectively, have had a significant impact on the
financial position of Aegon and the consolidated financial statements. Based on the amendment to IFRS 17, Aegon has decided
to apply the overlay approach upon initial application of IFRS 9 and IFRS 17. This has allowed it to restate the 2022 comparative
period for both new standards.
IFRS 9 also significantly amended the credit risk disclosures required by IFRS 7 \"Financial Instruments: Disclosures\". The
consequential amendments to IFRS 7 disclosures have also been applied to the comparative period.
The impact of the adoption of the amendments to other standards, listed above, was immaterial.
2.1.2 Effects of initial adoption of IFRS 9 and IFRS 17
The effects of adopting IFRS 9 and IFRS 17 on the consolidated financial statements on January 1, 2022 are presented in the
statement of changes in equity. The adjustments made to the statement of financial position on transition date of January 1,
2022, and on initial application date January 1, 2023 of IFRS 9 and IFRS 17 are presented below.
The transition to IFRS 9 and IFRS 17 changes Aegon\u2019s balance sheet significantly. The main changes are:
\u2022
Deferred policy acquisition cost (DPAC) and Value of Business Acquired (VOBA) are no longer recognized as separate assets;
\u2022
Residential mortgages related to the insurance entities in the Netherlands are measured at fair value through P&L instead of
at amortized cost;
\u2022
Insurance liabilities are measured at fulfillment value which represents the present value of future cashflow to fulfil insurance
contracts, including a risk adjustment for non-financial risk. Interest rate movements impacting the fulfillment value flow
through P&L or OCI, depending on the accounting policy choice. Aegon Americas applies the OCI option for certain groups of
contracts, whereas Aegon UK applies the P&L option. These choices are aligned with the measurement of the related assets
to ensure an accounting match for market movements on assets and liabilities; and
\u2022
On top of the fulfillment value, a contractual service margin (CSM), reflecting unearned profits, is added to the insurance
liabilities.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
December 31,
Adoption of IFRS 9
\u00a0
Opening balance sheet reconciliation
2022
and IFRS 17
January 1, 2023
Cash and cash equivalents
3,407
(5)
3,402
Assets held for sale
88,902
(462)
88,440
Investments
76,825
177,934
254,759
Investments for account of policyholders
180,006
(180,006)
-
Derivatives
2,760
11
2,771
Investments in joint ventures
1,443
(13)
1,430
Investments in associates
165
-
165
Reinsurance contract assets
21,184
(4,245)
16,939
Insurance contract assets
-
36
36
Deferred tax assets
1,827
606
2,433
Deferred expenses
12,886
(12,434)
452
Other assets and receivables
10,291
(1,051)
9,240
Intangible assets
1,240
(820)
420
Total assets
400,936
(20,449)
380,487
Shareholders' equity
11,440
(2,625)
8,815
Other equity instruments
1,943
-
1,943
Issued capital and reserves attributable to owners of Aegon Ltd.
13,383
(2,625)
10,758
Non-controlling interests
176
-
176
Group equity
13,559
(2,624)
10,935
Subordinated borrowings
2,295
-
2,295
Trust pass-through securities
118
-
118
Reinsurance contract liabilities
-
270
270
Insurance contracts for account of policyholders
100,409
(100,409)
-
Insurance contract liabilities
87,309
88,811
176,120
Investments contracts
10,658
(10,658)
-
Investment contracts for account of policyholders
80,555
(80,555)
-
Investment contract liabilities with discretionary participating features
-
21,055
21,055
Investment contracts without discretionary participating features
-
65,227
65,227
Derivatives
6,094
(919)
5,175
Borrowings
4,051
-
4,051
Liabilities held for sale / disposal groups
84,119
(160)
83,959
Other liabilities
11,766
(483)
11,283
Total liabilities
387,376
(17,823)
369,553
Total equity and liabilities
400,936
(20,449)
380,487
Due to these transition adjustments and the different measurement of insurance contracts and financial instruments during
2022, total assets from January 1, 2023, were lower by EUR 20,449 million, total liabilities were lower by 17,823 million and
shareholders\u2019 equity was lower by EUR 2,625 million than the amounts presented in the last annual financial statements for
December 31, 2022.
On implementation of IFRS 9 and IFRS 17 the comparative balance of shareholders' equity is restated due to the combination
of opening balance sheet adjustments (decrease of EUR 12,795 million) of the transition date, and the cumulative differences
in equity movements of 2022 arising from the application of IFRS 9 and 17 in the amount of EUR 10,170 million increase,
of which 8,853 million is an adjustment to the change in the revaluation reserve. The remaining impact of EUR 1,318 million
is largely attributable to the changes in CSM balance and different measurement of insurance liabilities.
The decrease of EUR 12,434 million on Deferred expenses from January 1, 2023 (2022: EUR 10,076 million decrease)
attributable to the elimination of deferred acquisition costs, which are no longer recognized under IFRS 17 as separate assets,
but form part of the fulfillment cash-flows used in the measurement of insurance contracts.
The change in the measurement basis of insurance contracts (as described under note 2.1.3) resulted in a decrease
of EUR 11,598 million in the carrying amount of insurance liabilities (Insurance contract liabilities and Insurance contracts for
account of policyholders combined) from January 1, 2023 (2022: EUR 16,321 million increase), and also impacted reinsurance
assets resulting in a lower carrying amount by EUR 4,245 million (2022: EUR 330 million increase) and investment contracts,
which decreased by EUR 4,931 (2022: EUR 6,602 million decrease).
The impacts of transition from IAS 39 to IFRS 9 on the carrying amounts of financial instruments including investments,
derivative assets and liabilities, investment contracts without discretionary participating features, other financial assets and
liabilities are detailed in note 2.1.4.
The carrying amount of assets held for sale on January 1, 2023 was lower by EUR 462 million compared to the balance
presented in the latest annual financial statements of December 31, 2022. Regarding liabilities held for sale, the carrying
amount on January 1, 2023 was lower by EUR 160 million compared to the figures previously reported. Note 45 includes
details on the impacts of IFRS 9 and 17 on the measurement of the disposal group.
The book value of intangible assets decreased by EUR 820 million from January 1, 2023 (2022: EUR 748 million) due to the
derecognition of value of business acquired on transition, as it will not be recognized as a separate asset under IFRS 17.
\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
December 31,
Adoption of IFRS 9
\u00a0
Opening balance sheet reconciliation
2021
and IFRS 17
January 1, 2022
Cash and cash equivalents
6,889
(28)
6,861
Investments
158,463
251,614
410,077
Investments for account of policyholders
250,953
(250,953)
-
Derivatives
8,827
16
8,843
Investments in joint ventures
1,743
(28)
1,715
Investments in associates
1,289
-
1,289
Reinsurance contract assets
20,992
330
21,322
Insurance contract assets
-
110
110
Deferred tax assets
131
1,870
2,001
Deferred expenses
10,503
(10,076)
428
Other assets and receivables
7,761
(963)
6,798
Intangible assets
1,333
(748)
585
Total assets
468,884
(8,856)
460,029
Shareholders' equity
24,282
(12,795)
11,487
Other equity instruments
2,363
-
2,363
Issued capital and reserves attributable to owners of Aegon Ltd.
26,645
(12,795)
13,850
Non-controlling interests
196
-
196
Group equity
26,841
(12,795)
14,046
Subordinated borrowings
2,194
-
2,194
Trust pass-through securities
126
-
126
Reinsurance contract liabilities
-
471
471
Insurance contracts for account of policyholders
149,323
(149,323)
-
Insurance contract liabilities
124,422
165,644
290,066
Investments contracts
21,767
(21,767)
-
Investment contracts for account of policyholders
104,592
(104,592)
-
Investment contract liabilities with discretionary participating features
-
27,392
27,392
Investment contracts without discretionary participating features
-
92,364
92,364
Derivatives
10,639
(3,501)
7,138
Borrowings
9,661
-
9,661
Other liabilities
19,321
(2,749)
16,572
Total liabilities
442,044
3,939
445,983
Total equity and liabilities
468,884
(8,856)
460,029
\n
As the result of restatement of the opening balance sheet on transition date January 1, 2022 the carrying amount of total
assets decreased by EUR 8,856 million while total liabilities increased by EUR 3,939 million and as such shareholders\u2019 equity
decreased by EUR 12,795 million. The main component of this change was the net decrease of other comprehensive income
by EUR 9,022 million due to the establishment of a revaluation reserve for interest rate movements on insurance liabilities
under IFRS 17, and the reclassification of revaluation reserves on financial assets from other comprehensive income
to retained earnings. The total decrease of retained earnings in amount of EUR 3,707 million also includes the establishment
of CSM on insurance contracts, partly offset by other remeasurements arising from lower fulfillment cashflows under IFRS
17 compared to IFRS 4.
The impact of restated adjustments due to the adoption of IFRS 9 and IFRS 17 on earnings per share is reflected in the
table below.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Impact of adoption of new accounting standards on the consolidated
YE 2022 (as
Adoption of IFRS 9
\u00a0
income statement
previously reported)
and IFRS 17
YE 2022 (restated)
Earnings per share (EUR per share)
\u00a0 \u00a0 \u00a0
Basic earnings per common share
(1.27)
0.75
(0.52)
Basic earnings per common share B
(0.03)
0.02
(0.01)
Diluted earnings per common share
(1.27)
0.75
(0.52)
Diluted earnings per common share B
(0.03)
0.02
(0.01)
Earnings per common share calculation
\u00a0 \u00a0 \u00a0
Net result / (loss) attributable to owners
(2,533)
1,514
(1,019)
Coupons on perpetual securities
(36)
-
(36)
Net result / (loss) attributable to owners for basic earnings per share
\u00a0 \u00a0 \u00a0
calculation
(2,569)
1,514
(1,055)
Weighted average number of common shares outstanding (in million)
2,010
-
2,010
Weighted average number of common shares B outstanding (in million)
536
-
536
\n
2.1.3 IFRS 17 Insurance Contracts
Aegon has adopted IFRS 17 \u2013 Insurance Contracts, including any consequential amendments to other standards, with a date
of initial application of January 1, 2023 and a transition date of January 1, 2022.
Aegon does not use the optional exemption provided under EU-IFRS to group together specific insurance contracts that were
issued more than 12 months apart.
a) Changes compared to previous accounting policies
Under IFRS 4, Aegon largely continued to report under the accounting policies that were applied prior to the adoption of EU-
IFRS. This meant that, in general, the Group applied non-uniform accounting policies for insurance assets and liabilities
as allowed under Dutch Accounting Policies. Specific measurement methodologies differed between Aegon\u2019s operations,
reflecting local regulatory requirements and local practices for specific product features. Under IFRS 17, consistent accounting
policies are applied to all insurance contracts and investment contracts with discretionary participation features, regardless
of the jurisdiction in which the contracts have been issued.
Under Aegon\u2019s previous accounting policies, some minimum guarantees were separated from the host insurance contracts and
classified as derivatives. The Group also elected to apply the accounting option under IFRS 4 to measure certain closely related
minimum guarantees at fair value. Under IFRS 17, Aegon has not identified any embedded derivatives that require separation.
All minimum guarantees are measured together with the host contract, in accordance with the requirements of IFRS 17.
Policy loans, value of business acquired, and insurance payables and receivables, which were previously accounted for
as separate assets, are now included in the measurement of the insurance liabilities.
Measurement
IFRS 17 establishes principles for the accounting for insurance contracts, reinsurance contracts, and investment contracts
with discretionary participation features. It introduces a model that measures groups of contracts based on Aegon\u2019s estimate
of the present value of the future cash flows that will arise as these contracts are fulfilled, and which includes an explicit risk
adjustment for non-financial risk and a contractual service margin (CSM) reflecting unearned profits. Contrary to previous
accounting, IFRS 17 requires estimates to be current, unbiased and probability-weighted, incorporating all available information
in a way that is consistent with observable market data.
IFRS 17 prescribes modifications to the general measurement model for contracts with direct participating features (the
\"variable fee approach\") and for reinsurance contracts held. The standard also provides an option to simplify the measurement
of certain short-term contracts (the \"premium allocation approach\"), which is primarily applied by Aegon to non-life insurance
contracts and related reinsurance contracts held. The measurement of these contracts is similar to the previous treatment
under IFRS 4, albeit that when measuring liabilities for incurred claims, Aegon now discounts cash flows expected to occur
more than one year after the claim\u2019s date and includes an explicit risk adjustment for non-financial risk.
Acquisition costs
Previously, under IFRS 4, all acquisition costs were recognized and presented as separate assets (Deferred Policy Acquisition
Costs or \"DPAC\") until these costs were included in profit or loss. Under IFRS 17, only insurance acquisition cash flows that
arise before the recognition of the related insurance contracts are included within the insurance liability as a separate asset.
These assets, which are subject to recoverability testing, are derecognized and included in the carrying amount of the related
portfolio of contracts on initial recognition.
For some (but not all) groups of contracts for which the premium allocation approach is applied, Aegon has opted to expense
acquisition costs when incurred.
Aegon allocates acquisition costs to either product or business lines (where applicable) based on a study, a series of studies
or a thoroughly defined rational for their allocation methodologies.
Revenue and expenses
Under IFRS 4, the revenues reported in the income statement included gross insurance premiums when due, or for products
where deposit accounting was required, surrender fees and other charges. Under IFRS 17, the insurance revenue in each
reporting period reflects the consideration to which Aegon expects to be entitled in exchange for the services provided
in that period.
The actual claims and expenses incurred in providing the service are presented in the income statement as insurance
service expenses.
Insurance finance income and expenses, disaggregated between profit or loss and other comprehensive income (OCI) for
certain groups of contracts, are now presented separately from insurance revenue and insurance service expenses.
Income and expenses from reinsurance contracts, other than insurance finance expenses, are presented as a single
net amount in the income statement. Previously, amounts recovered from reinsurers and reinsurance expenses were
presented separately.
b) Transition
Changes in accounting policies resulting from the adoption of IFRS 17 were applied retrospectively, to the extent practicable.
Aegon considered the full retrospective approach to be impracticable when its application required hindsight, for example
in setting historical assumptions, or if the required historical input data could not be made available within reasonable efforts.
The latter was, for example, concluded when information was no longer available electronically and incorporating it into the IFRS
17 reporting process was expected to cause high costs and efforts.
If the retrospective application of IFRS 17 to a group of contracts was impracticable, either the modified retrospective approach
or the fair value approach was applied. The modified retrospective approach may only be applied if there is reasonable
and supportable information available to do so. For groups of contracts that in principle were eligible for both the modified
retrospective and the fair value approach, the most appropriate transition method was elected based on a mix of operational
and financial considerations.
Notwithstanding the foregoing, Aegon applied the fair value approach to some groups of contracts with direct participating
features, to which it could have applied IFRS 17 fully retrospectively. These were groups of contracts for which Aegon had
mitigated financial risk prior to transition using derivatives, other financial instruments classified as fair value through profit
or loss, and reinsurance contracts, and to which risk mitigation has been applied prospectively from the transition date.
Fair Value Approach
Under the fair value approach, the carrying amount of a group of insurance contracts at transition is determined in accordance
with IFRS 13 Fair Value Measurement but with the exclusion of the guidance on demand features. The difference between the
fair value and the fulfillment cash flows at the transaction date is recognized as contractual service margin.
In estimating the fair value of insurance contracts for the transition to IFRS 17, Aegon applied a methodology whereby the
estimated future cash flows were adjusted for known differences between the IFRS 17 and market valuation methodologies
(such as the inclusion of investment expenses for all product types) and the risk adjustment was recalculated at a higher
confidence level to reflect the additional compensation that a market participant would require for financial risk and the
remaining contractual services that need to be provided. Where possible, the results were compared to market-observable
transactions, such as recent reinsurance transactions entered into by Aegon and sales transactions of insurance portfolios and
businesses.
For contracts that transitioned to IFRS 17 under the fair value approach, the following assessments were generally performed
at original contract inception date, with a limited number of products being assessed at the transition date:
\u2022
Assessment whether an insurance contract met the definition of an insurance contract with direct participating features;
\u2022
Assessment whether an investment contract met the definition of an investment contract with discretionary participating
features; and
\u2022
Identification of discretionary cash flows for insurance contracts without direct participating features.
The grouping of contracts to which the fair value approach is applied has been performed at the transition date. The contracts
were grouped together in portfolios in accordance with IFRS 9 and IFRS 17 (as per January 1, 2023). None of the contracts
were identified as being onerous at transition. The identified groups of contracts were not further segmented into cohorts
based on issue date.
The discount rates at which interest is accrued to the contractual service margin and at which changes in non-financial
assumptions are recognized for groups of contracts without direct participating features have also been set at the
transition date.
Modified Retrospective Approach
The objective of a modified retrospective approach is to reach the closest outcome to the full retrospective approach using
reasonable and supportable information that can be obtained without undue cost or effort. Aegon applied the modified
retrospective approach to groups of contracts for which the fair value approach was not the preferred transition approach,
by working back from the transition date to the date on initial recognition to gather the necessary information. Only where the
information could not be made available without undue effort were modifications applied as allowed under IFRS 17.
For all contracts that transitioned to IFRS 17 under the modified retrospective approach, sufficient information was available
to perform the contract classifications at the original contract inception date.
The grouping of contracts was performed at the original contract inception date, or if there was a lack of reasonable and
supportable information, at the transition date. Contracts were grouped into cohorts not exceeding 12 months.
None of the contracts to which the modified retrospective approach was applied were identified as being onerous
at initial inception.
Modifications applied to contracts without direct participating features
To determine the contractual service margin at transition for groups of contracts without direct participating features, Aegon
first estimated the contractual service margin at the original inception date. The contractual service margin at inception was
then rolled forward to the transition date by deducting the estimated amount that would have been released for services
provided prior to transition.
In order to attribute past calendar-year cash flows (including acquisition cash flows) to issue year cohorts, appropriate
allocation keys were set by cash flow type based on the information available. Examples include accumulated premiums
in force and (first year) account values.
The calculation of the fulfillment cash flows at inception and the subsequent accretion of interest to the contractual service
margin of a group of contracts required the use of historical discount rates. In principle, Aegon determines IFRS 17 discount
rates using a hybrid approach based on risk-free rates plus an illiquidity premium based on expected asset returns. Where the
necessary asset portfolio data was not or no longer available, an appropriate observable yield curve plus a spread adjustment
was applied to approximate historical discount rates. For cohorts that exceed 12 months, weighted-average historical discount
rates were applied. The weighting was based on sales volumes, or where not available, on the expected coverage units
at inception.
The modified retrospective calculations were based on the assumption that Aegon had not previously prepared interim
financial statements, unless sufficient information existed to roll the contractual service margin forward with Aegon\u2019s historical
reporting frequency.
Modifications applied to contracts with direct participating features
To determine the contractual service margin at transition for a group of insurance contracts with direct participating features,
Aegon first estimated the total contractual service margin for all services to be provided for that group of contracts. It then
deducted the estimated amount that would have been released for services provided prior to the transition date.
The total contractual service margin for all services to be provided was estimated by taking the fair value of the underlying
items at the transition date minus the fulfillment cash flows at that date and adjusting it for:
\u2022
Amounts charged to policyholders prior to the transition date;
\u2022
Excess claims and expenses paid in this period, including acquisition costs; and
\u2022
The estimated change in the risk adjustment for non-financial risk caused by the release of risk before the transition date.
Calendar year cash flows were attributed to issue years using allocation keys that were appropriate for the cash flow types,
based on available information (for example, account value, and for excess claims paid, the net amount at risk). In estimating the
change in the risk adjustment for non-financial risk prior to the transition date, the projected risk adjustment pattern for newly
issued cohorts of similar products were deemed an appropriate proxy for previous years.
The amount released for services provided prior to transition was determined by multiplying the adjusted total contractual
service margin by the ratio of the coverage units served prior to transition and the total coverage units expected to be provided
over the lifetime of the group of contracts.
Other Comprehensive Income
Under IFRS 17, Aegon has elected to disaggregate the insurance finance income or expenses between profit or loss and OCI
for certain groups of contracts without direct participating features that are issued in the Americas and Asia. The balance
recognized in OCI has been determined retrospectively where possible, or alternatively, has been set to nil at the transition
date. The latter applies, for example, to the fixed deferred annuities, indexed universal life and other life insurance products with
indirect participating features issued in the Americas.
Aegon also no longer applies shadow accounting which, ignoring the impact of any reclassifications of investments discussed
below, has had a positive impact on the carrying amount of revaluation reserves presented in OCI.
2.1.4 IFRS 9 Financial instruments
Aegon has adopted IFRS 9 as issued by the IASB in July 2014, with a date of initial application of January 1, 2023 and
a transition date of January 1, 2022. Aegon did not early adopt IFRS 9 in previous periods.
Aegon has elected to continue to apply the hedge accounting requirements for macro fair value hedges of IAS 39 on adoption
of IFRS 9. As such, fair value hedge accounting for portfolio hedges of interest rate risk (macro hedging) under the EU \"carve
out\" of IFRS is applied.
a) Changes compared to previous accounting policies
The adoption of IFRS 9 resulted in changes in Aegon\u2019s accounting policies for recognition, classification and measurement
of financial assets and financial liabilities, impairment of financial assets and hedge accounting.
Classification and Measurement
Under IAS 39, financial assets were classified as \"Available-For-Sale\" (AFS), \"Loans and Receivables\" (L&R) or as held at \"Fair
Value Through Profit or Loss\" (FVPL). The following financial assets were measured at FVPL: financial assets held for trading,
financial assets managed on a fair value basis and financial assets containing an embedded derivative that is not closely
related and that cannot be reliably bifurcated. In addition, in certain instances Aegon designated financial assets to this
category when by doing so a potential accounting mismatch in the financial statements is eliminated or significantly reduced.
Under IFRS 9, classification and measurement differ for debt instruments and equity instruments.
Debt instruments are those instruments that meet the definition of a financial liability from the issuer\u2019s perspective, such as
mortgage loans, private loans, and government and corporate bonds. Aegon classifies its debt instruments into one of the
following three IFRS 9 measurement categories, based on its business model for managing the asset, the asset\u2019s cash flow
characteristics, and Aegon\u2019s intent to designate the asset at FVPL to eliminate or significantly reduce an accounting mismatch
or recognition inconsistency:
\u2022
Amortized cost (\"AC\"): Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest (\"SPPI\"), and that are not designated at FVPL, are measured at amortized cost. The carrying
amount of these assets is adjusted by any Expected Credit Loss (\"ECL\") allowance recognized.
\u2022
Fair value through other comprehensive income (\"FVOCI\"): Financial assets that are held for collection of contractual cash
flows and for selling the assets, where the assets\u2019 cash flows represent solely payments of principal and interest, and that are
not designated at FVPL, are measured at FVOCI.
\u2022
Fair value through profit or loss (\"FVPL\"): Assets that do not meet the criteria for amortized cost or FVOCI are measured
mandatorily at fair value through profit or loss.
Equity instruments are instruments that meet the definition of equity from the issuer\u2019s perspective, such as basic ordinary
shares. On initial recognition, IFRS 9 allows Aegon to make an irrevocable election to present changes in the fair value of equity
investment in OCI or profit or loss. In both cases, the equity instruments are not subject to impairment under Expected
Credit Loss model.
Financial liabilities are to be classified as subsequently measured at amortized cost, except financial liabilities measured
at fair value through profit or loss, financial liabilities arising from the transfer of financial assets which did not qualify for
derecognition, and financial guarantee contracts and loan commitments.
Impairment allowance
The IAS 39 impairment methodology was based on an \"incurred loss\" model, which means that an allowance was determined
when an instrument was deemed credit impaired. The allowance for instruments that are credit impaired will generally align
with the Stage 3 category of IFRS 9. However, within the expected loss framework of IFRS 9 the entire portfolio of financial
instruments will be assigned an impairment allowance through the additions of the 12-month ECL category (stage 1) and the
Lifetime ECL Non-credit-impaired (Stage 2), generally leading to increases in the overall allowances.
Hedge accounting
Aegon has elected to adopt the new hedge accounting model in IFRS 9. This requires the Group to ensure that hedging
relationships are aligned with its risk management objectives and strategy and to apply a more qualitative and forward-looking
approach to assessing hedge effectiveness.
Aegon has elected to continue to apply hedge accounting requirements for macro fair value hedges of IAS 39 on adoption
of IFRS 9. As such, fair value hedge accounting for portfolio hedges of interest rate risk (macro hedging) under the EU \"carve
out\" of IFRS is applied.
b) IFRS 9 Transition
Any adjustments to the carrying amounts of financial assets and liabilities at the date of transition were recognized in the
opening retained earnings and other reserves of the initial recognition period, January 1, 2022.
Classification and Measurement
On transition to IFRS 9, Aegon performed a detailed analysis of its business models for managing financial assets and analysis
of their cash flow characteristics. Furthermore some AC and FVOCI financial assets have been designated as FVPL to reduce
the accounting mismatch between assets and liabilities.
The transition to IFRS 9 impacted the classification and measurement of financial assets.
The measurement category and the carrying amount of financial assets and liabilities in accordance with IAS 39 and IFRS 9 at
January 1, 2022 and January 1, 2023 are detailed in the table below by type of instrument, together with a reconciliation of the
carrying amounts of financial instruments, from their previous measurement category in accordance with IAS 39 to their new
measurement categories upon transition:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0 \u00a0 \u00a0
Remea-
Remea-
\u00a0 \u00a0
Reconciliation of financial instruments,
IAS 39
IAS 39
Reclassifi-
surement
surement
IFRS 9
IFRS 9
January 1, 2023
category
amount
cation
- ECL
- Other
category
3)
amount
Financial assets
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Shares
FVPL
15,698
(193)
-
-
FVPL (d)
15,505
Shares
AFS
\u00a0
348
-
-
FVPL (m)
348
Shares
\u00a0
195
(186)
-
-
FVOCI (d)
10
Debt securities
AFS
53,093
(1,486)
-
-
FVOCI
51,607
Debt securities
FVPL
6,248
(5,449)
-
-
FVPL (m)
799
Debt securities
\u00a0 \u00a0
6,935
-
-
FVPL (d)
6,935
Money market and other short-term
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investments
AFS
5,514
(2,938)
-
-
FVOCI
2,576
Money market and other short-term
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investments
FVPL
1,362
1,514
-
-
FVPL (m)
2,876
Money market and other short-term
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investments
\u00a0 \u00a0
1,429
-
-
FVPL (d)
1,429
Loans
L&R
12,511
(2,095)
(12)
4
AC
10,408
Deposits with financial institutions
L&R
45
-
-
-
AC
45
Deposits with financial institutions
FVPL
2,360
-
-
-
FVPL (d)
2,360
Unconsolidated investment funds
FVPL
154,741
-
-
-
FVPL (d)
154,741
Other investments
FVPL
3,722
(3,190)
-
-
FVPL (d)
532
Other investments
AFS
\u00a0
4,056
\u00a0 \u00a0
FVPL (m)
4,056
Other investments
\u00a0
840
(810)
-
-
FVOCI
31
IAS 39 / IFRS 9 Investments
1)
\u00a0
256,328
(2,065)
(12)
4
\u00a0
254,257
Cash and cash equivalents
L&R
3,407
(4)
-
-
AC
3,402
Other financial assets and receivables
2)
L&R
9,722
(1,050)
-
-
AC
8,671
Derivatives
FVPL
2,760
11
-
-
FVPL (m)
2,771
Total financial assets
\u00a0
272,217
(3,108)
(12)
4
\u00a0
269,102
Financial liabilities:
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Investment contracts
AC
10,485
(888)
-
-
AC
9,597
Investment contracts
FVPL
55,254
376
-
-
FVPL (d)
55,631
Investment contracts without discretionary
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
participating features
\u00a0
65,739
(512)
\u00a0 \u00a0 \u00a0
65,227
Long-term borrowings and group loans
AC
4,051
-
-
-
AC
4,051
Derivatives
FVPL
6,094
(919)
-
-
FVPL (m)
5,175
Other liabilities
AC
10,785
(507)
-
-
AC
10,278
Total financial liabilities
\u00a0
86,668
(1,938)
-
-
\u00a0
84,730
\n
1
Investments and other assets include financial assets and non-financial assets as well. Investments under IAS 39 comprises EUR 256,328 million financial
assets as detailed in the table and EUR 502 million investments in real estates on December 31, 2023. Investments under IFRS 9 comprises EUR 254,257 million
financial assets as detailed in the table and EUR 502 million investments in real estates on January 1, 2023.
2
Other assets and receivables under IAS 39 contains EUR 9,722 million other financial assets and receivables and EUR 482 million own used real estates and
right of use assets on December 31, 2022. Other assets and receivables under IFRS 9 contains EUR 8,671 million other financial assets and receivables and
EUR 482 million own used real estates and right of use assets on January 1, 2023
3
m: mandatorily; d: designated
\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0 \u00a0 \u00a0
Remea-
Remea-
\u00a0 \u00a0
Reconciliation of financial instruments,
IAS 39
IAS 39
Reclassifi-
surement
surement
IFRS 9
IFRS 9
January 1, 2022
category
amount
cation
- ECL
- Other
category
3)
amount
Financial assets:
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Shares
FVPL
31,203
(1,660)
-
-
FVPL (d)
29,543
Shares
AFS
\u00a0
1,912
\u00a0 \u00a0
FVPL (m)
1,912
Shares
\u00a0
350
(279)
-
-
FVOCI (d)
72
Debt securities
AFS
93,899
(22,925)
-
-
FVOCI
70,974
Debt securities
FVPL
23,117
(22,387)
-
-
FVPL (m)
730
Debt securities
\u00a0 \u00a0
45,312
-
-
FVPL (d)
45,312
Money market and other short-term
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investments
AFS
4,790
(2,289)
-
-
FVOCI
2,501
Money market and other short-term
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investments
FVPL
1,602
694
-
-
FVPL (m)
2,296
Money market and other short-term
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investments
\u00a0 \u00a0
1,624
-
-
FVPL (d)
1,624
Loans
L&R
47,402
(21,971)
(150)
110
AC
25,392
Loans
\u00a0 \u00a0
20,106
-
2,594
FVPL (d)
22,700
Deposits with financial institutions
L&R
52
-
-
-
AC
52
Deposits with financial institutions
FVPL
4,105
-
-
-
FVPL (d)
4,105
Unconsolidated investment funds
FVPL
191,950
-
-
-
FVPL (d)
191,950
Other investments
FVPL
6,893
(2,800)
-
-
FVPL (d)
4,093
Other investments
\u00a0 \u00a0
3,572
\u00a0 \u00a0
FVPL (m)
3,572
Other investments
AFS
844
(800)
-
-
FVOCI
44
IAS 39 / IFRS 9 Investments
1)
\u00a0
406,210
(1,891)
(150)
2,704
\u00a0
406,871
Cash and cash equivalents
L&R
6,889
(28)
-
-
AC
6,861
Other financial assets and receivables
2)
L&R
6,988
(963)
-
-
AC
6,025
Derivatives
FVPL
8,827
16
-
-
FVPL (m)
8,843
Total financial assets
\u00a0
428,913
(2,868)
(150)
2,704
\u00a0
428,599
Financial liabilities:
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Investment contracts
AC
21,573
(899)
-
-
AC
20,674
Investment contracts
FVPL
71,242
448
-
-
FVPL (d)
71,690
Investment contracts without discretionary
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
participating features
\u00a0
92,815
(451)
-
-
\u00a0
92,364
Long-term borrowings and group loans
AC
9,661
-
-
-
AC
9,661
Derivatives
FVPL
10,639
(3,501)
-
-
FVPL (m)
7,138
Other liabilities
AC
12,916
(1,033)
-
-
AC
11,883
Total financial liabilities
\u00a0
126,030
(4,985)
-
-
\u00a0
121,046
\n
1
Investments and other assets include financial assets and non-financial assets as well. Investments under IAS 39 comprises EUR 406,210 million financial
assets as detailed in the table and EUR 3,206 million investments in real estates on December 31, 2023. Investments under IFRS 9 comprises EUR 406,871
million financial assets as detailed in the table and EUR 3,206 million investments in real estates on January 1, 2023.
2
Other assets and receivables under IAS 39 contains EUR 6,988 million other financial assets and receivables and EUR 654 million own used real estates and
right of use assets on December 31, 2022. Other assets and receivables under IFRS 9 contains EUR 6,025 million other financial assets and receivables and
EUR 654 million own used real estates and right of use assets on January 1, 2023.
3
m: mandatorily; d: designated
The reclassification and remeasurement impacts from January 1, 2023 do not include the Netherlands, which is separately
disclosed in note 45. Discontinued operations.
From January 1, 2023, EUR 3,108 million (January 1, 2022: EUR 2,868 million) has been reclassified out of financial assets, and
EUR 1,938 million (January 1, 2022: EUR 4,985 million) has been reclassified out of financial liabilities which moved in scope
of IFRS 17 and classified and measured as (re)insurance contracts from January 1, 2022. These reclassifications are mainly
related to policy loans and previously bifurcated embedded derivatives.
Remeasurement impacts included the reversal of impairments of financial assets recognized under IAS 39 in amount
of EUR 4 million (January 1, 2022: EUR 110 million) and the recognition of expected credit losses of EUR 12 million (January 1,
2022: EUR 150 million) in line with the impairment requirements of IFRS 9.
On January 1, 2022, an additional remeasurement gain of EUR 2,594 was the result of the designation of loans and receivables
in the Netherlands (previously measured at amortized cost) to measurement at fair value through profit or loss. The
corresponding difference in measurement on January 1, 2023 is presented in note 45. Discontinued operations.
Impairment of financial assets
The following table reconciles the prior period\u2019s closing impairment allowance measured in accordance with the IAS
39 incurred loss model to the new impairment allowance measured in accordance with the IFRS 9 expected loss model
on January 1, 2022, and January 1, 2023.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Loss allowance under
\u00a0 \u00a0 \u00a0
\u00a0
IAS 39 / Provision
\u00a0 \u00a0 \u00a0
Impairment / ECL reconciliation
under IAS 37
Reclassifications
Remeasurements
ECL under IFRS 9
Measurement category
\u00a0 \u00a0 \u00a0 \u00a0
Loans and receivables (IAS 39) to Financial assets at
\u00a0 \u00a0 \u00a0 \u00a0
amortized cost (IFRS 9)
(9)
2
(4)
(12)
Available for sale financial instruments (IAS 39) to
\u00a0 \u00a0 \u00a0 \u00a0
Financial assets at FVOCI (IFRS 9)
(374)
187
(89)
(276)
Total on January 1, 2023
(383)
189
(93)
(287)
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Loss allowance under
\u00a0 \u00a0 \u00a0
\u00a0
IAS 39 / Provision
\u00a0 \u00a0 \u00a0
Impairment / ECL reconciliation
under IAS 37
Reclassifications
Remeasurements
ECL under IFRS 9
Measurement category
\u00a0 \u00a0 \u00a0 \u00a0
Loans and receivables (IAS 39) to Financial assets at
\u00a0 \u00a0 \u00a0 \u00a0
amortized cost (IFRS 9)
(125)
6
(31)
(150)
Available for sale financial instruments (IAS 39) to
\u00a0 \u00a0 \u00a0 \u00a0
Financial assets at FVOCI (IFRS 9)
(376)
190
(33)
(219)
Total on January 1, 2022
(501)
196
(63)
(369)
\n
2.1.5 Future adoption of new EU-IFRS accounting standards and amendments
The following standards and amendments to existing standards, published prior to January 1, 2024, were not early adopted by
the Group, but will be applied in future years:
\u2022
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (issued on 15 August 2023)
\u2022
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance
Arrangements (Issued on 25 May 2023)
\u2022
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (Issued on
23 January 2020)
\u2022
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current - Deferral
of effective date (Issued on 15 July 2020)
\u2022
Amendments to IAS 1 Presentation of Financial Statements: Non-current liabilities with covenants (Issued on 31 October 2022)
\u2022
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (issued on 22 September 2022)
Amendments to IAS 21 have an effective date of January 1, 2025, the others became effective on January 1, 2024. The
amentments to IAS 1 and IFRS 16 have also been endorsed by the EU by December 31, 2023. These future amendments are
not expected to have a material impact on the financial statements of Aegon.
2.2 Basis of consolidation
Subsidiaries
The consolidated financial statements include the financial information of Aegon Ltd. and its subsidiaries. Subsidiaries
(including consolidated structured entities) are entities over which Aegon has control. Aegon controls an entity when Aegon
is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. The assessment of control is based on the substance of the relationship between the Group
and the entity and, among other things, considers existing and potential voting rights that are substantive. For a right to be
substantive, the holder must have the practical ability to exercise that right.
The subsidiary\u2019s assets, liabilities and contingent liabilities are measured at fair value on the acquisition date and are
subsequently accounted for in accordance with the Group\u2019s accounting policies, which is consistent with EU-IFRS. Intra-group
transactions, including Aegon Ltd. shares held by subsidiaries, which are recognized as treasury shares in equity, are eliminated.
Intra-group losses may indicate an impairment that requires recognition in the consolidated financial statements. Non-
controlling interests are initially stated at their share in the fair value of the net assets on the acquisition date and subsequently
adjusted for the non-controlling share in changes in the subsidiary\u2019s equity.
The excess of the consideration paid to acquire the interest and the fair value of any interest already owned over the
Group\u2019s share in the net fair value of assets, liabilities and contingent liabilities acquired is recognized as goodwill. Negative
goodwill is recognized directly in the income statement. If the fair value of the assets, liabilities and contingent liabilities
acquired in the business combination has been determined provisionally, adjustments to these values resulting from the
emergence of new evidence within 12 months after the acquisition date are made against goodwill. Aegon recognized
contingent considerations either as provision or as financial liability depending on the characteristics. Any contingent
consideration payable is recognized at fair value at the acquisition date. If the contingent consideration is classified as equity,
it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the
contingent consideration are recognized in the income statement.
The identifiable assets, liabilities and contingent liabilities are stated at fair value when control is obtained.
Subsidiaries are deconsolidated when control ceases to exist. Any difference between the net proceeds plus the fair value
of any retained interest and the carrying amount of the subsidiary including non-controlling interests is recognized in the
income statement.
Transactions with non-controlling interests
Transactions with non-controlling interests are accounted for as transactions with owners. Therefore, disposals to non-
controlling interests and acquisitions from non-controlling interests not resulting in losing or gaining control of the subsidiary
are recorded in equity. Any difference between consideration paid or received and the proportionate share in net assets
is accounted for in equity attributable to shareholders of Aegon Ltd.
Investment funds
Investment funds managed by the Group in which the Group holds an interest are consolidated in the financial statements if the
Group has power over that investment fund and it is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee. In assessing control, all interests held
by the Group in the fund are considered, regardless of whether the financial risk related to the investment is borne by the Group
or by the policyholders (unless a direct link between the policyholder and the fund can be assumed).
In determining whether Aegon has power over an investment fund all facts and circumstances are considered, including the
following:
\u2022
Control structure of the asset manager (i.e. whether an Aegon subsidiary);
\u2022
The investment constraints posed by investment mandate;
\u2022
Legal rights held by the policyholder to the separate assets in the investment vehicle (e.g. policyholders could have the voting
rights related to these investments);
\u2022
The governance structure, such as an independent Board of Directors, representing the policyholders, which has substantive
rights (e.g. to elect or remove the asset manager); and
\u2022
Rights held by other parties (e.g. voting rights of policyholders that are substantive or not).
Exposure or rights to variability of returns can be the result of, for example:
\u2022
General account investment of Aegon;
\u2022
Aegon's investments held for policyholder;
\u2022
Guarantees provided by Aegon on return of policyholders in specific investment vehicles;
\u2022
Fees dependent on fund value (including, but not limited to, asset management fees); and
\u2022
Fees dependent on performance of the fund (including, but not limited to, performance fees).
Investment funds where Aegon acts as an agent are not consolidated due to lack of control of the funds. In particular, for some
separate accounts, the independent Board of Directors has substantive rights and therefore Aegon does not have power over
these separate accounts but acts as an agent.
For limited partnerships, the assessment takes into account Aegon\u2019s legal position (i.e. limited partner or general partner) and
any substantive removal rights held by other parties. Professional judgment is applied concerning the substantiveness of the
removal rights and the magnitude of the exposure to variable returns, leading to the conclusion that Aegon controls some, but
not all, of the limited partnerships in which it participates.
Upon consolidation of an investment fund, a liability is recognized to the extent that the Group is legally obliged to buy back
participations held by third parties. The liability is presented in the consolidated financial statements as investment contracts
for account of policyholders. Where no repurchase obligation exists, the participations held by third parties are presented
as non-controlling interests in equity. The assets allocated to participations held by third parties or by the Group on behalf
of policyholders are presented in the consolidated financial statements as investments for account of policyholders.
Equity instruments issued by the Group that are held by investment funds are eliminated on consolidation. However, the
elimination is reflected in equity and not in the measurement of the related financial liabilities toward policyholders or other
third parties.
Structured entities
A structured entity is defined in IFRS 12 as \u201cAn entity that has been designed so that voting rights are not the dominant factor
in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities
are directed by means of contractual arrangements.\u201d In these instances the tests and indicators to assess control provided
by IFRS 10 have more focus on the purpose and design of the investee (with relation to the relevant activities that most
significantly affect the structured entity) and the exposure to variable returns, which for structured entities lies in interests
through for example derivatives, and will not be focused on entities that are controlled by voting rights.
Structured entities that are consolidated include certain mortgage backed securitization deals, where Aegon was involved
in the design of the structured entities and also has the ability to use its power to affect the amount of the investee\u2019s returns.
Other factors that contribute to the conclusion that consolidation of these entities is required includes consideration
of whether Aegon fully services the investees and can therefore influence the defaults of the mortgage portfolios and the fact
that in these cases the majority of risks are maintained by Aegon.
Structured entities that are not consolidated include general account investments in non-affiliated structured entities that are
used for investment purposes.
Non-current assets held for sale and disposal groups
Disposal groups are classified as held for sale if they are available for immediate sale in their present condition, subject only
to the customary sales terms of such assets and disposal groups and their sale is considered highly probable. Management
must be committed to the sale, which is expected to occur within one year from the date of classification as held for sale.
Upon classification as held for sale, the carrying amount of the disposal group (or group of assets) is compared to their fair
value less cost to sell. If the fair value less cost to sell is lower than the carrying value, this expected loss is recognized through
a reduction of the carrying value of any goodwill related to the disposal group or the carrying value of certain other non-current,
non-financial assets to the extent that the carrying value of those assets exceeds their fair value. Any excess of the expected
loss over the reduction of the carrying amount of these relevant assets is not recognized upon classification as held for sale
but is recognized as part of the result on disposal if and when a divestment transaction occurs.
Classification into or out of held for sale does not result in restating comparative amounts in the statement of financial position.
Discontinued operations
To qualify as a discontinued operation, Aegon requires a disposal group to be presented as a separate line of business
or geographical segment. When Aegon classifies its component comprising of a cash generating unit or multiple cash
generating units as a disposal group, it presents the performance of this component as discontinued operation in the
statement of comprehensive income and makes separate disclosures with the analysis of the net result from discontinued
operations, and cash-flow information. Aegon re-presents comparative information in the statement of comprehensive income
and disclosures to reflect the prior years\u2019 net result attributable to the operations discontinued until the end of the latest period.
2.3 Foreign exchange translation
a. Translation of foreign currency transactions
The Group\u2019s consolidated financial statements are presented in euros. Items included in the financial statements of individual
group companies are recorded in their respective functional currency which is the currency of the primary economic
environment in which each entity operates. Transactions in foreign currencies are initially recorded at the exchange rate
prevailing at the date of the transaction.
At the reporting date, monetary assets and monetary liabilities in foreign currencies are translated to the functional currency
at the closing rate of exchange prevailing on that date, except for own equity instruments in foreign currencies which are
translated using historical exchange rates. Non-monetary items carried at cost are translated using the exchange rate
at the date of the transaction, while assets carried at fair value are translated at the exchange rate when the fair value
was determined.
Exchange differences on monetary items are recognized in the income statement when they arise, except when they are
deferred in other comprehensive income as a result of a qualifying cash flow or net investment hedge. Exchange differences
on non-monetary items carried at fair value are recognized in other comprehensive income or the income statement,
consistently with other gains and losses on these items.
Insurance contracts and investment contracts with discretionary participating features are monetary items. Exchange
differences on changes in the carrying amount of groups of insurance contracts are recognized in the income statement,
unless they relate to changes in the carrying amount of the groups of insurance contracts included in other comprehensive
income, in which case that are included in other comprehensive income.
b. Translation of foreign currency operations
On consolidation, the financial statements of group entities with a foreign functional currency are translated to euro, the
currency in which the consolidated financial statements are presented. Assets and liabilities are translated at the closing
rates on the reporting date. Income, expenses and capital transactions (such as dividends) are translated at average exchange
rates or at the prevailing rates on the transaction date, if more appropriate. Goodwill and fair value adjustments arising on the
acquisition of a foreign entity are translated at the closing rates on the reporting date.
The resulting exchange differences are recognized in the \"foreign currency translation reserve\", which is part of shareholders\u2019
equity. On disposal of a foreign entity the related cumulative exchange differences included in the reserve are recognized in the
income statement.
2.4 Segment reporting
Reporting segments and segment measures are explained and disclosed in note 5 Segment information.
2.5 Offsetting of assets and liabilities
Financial assets and liabilities are offset in the statement of financial position when the Group has a legally enforceable right
to offset and has the intention to settle the asset and liability on a net basis or simultaneously. The legally enforceable right
must not be contingent on future events and must be enforceable in the normal course of business and in the event of default,
insolvency, or bankruptcy of the Company or the counterpart.
2.6 Insurance contracts
a) Scope
Insurance contracts are contracts under which the Group accepts a significant risk \u2013 other than a financial risk \u2013 from
a policyholder by agreeing to compensate the beneficiary on the occurrence of an uncertain future event by which he or she
will be adversely affected. Significant insurance risk is determined on a present-value basis, where at least one scenario with
commercial substance can be identified in which the Group has to pay significant additional benefits to the policyholder or his
or her beneficiaries.
Contracts that do not meet the definition of insurance contracts are accounted for as financial instruments or as service
contracts, depending on the nature of the agreement.
Insurance contracts include products that provide policyholders with the option to take out insurance coverage
at predetermined prices, provided this option is shown to have commercial substance.
b) Combining a set or series of insurance contracts
Aegon accounts for a set or series of insurance contracts together as if they were issued as one contract, where this reflects
the substance of the transaction. This may, for example, be the case if the insurance contracts are negotiated as a package with
a single commercial objective and the measurement of the contracts is highly interrelated.
c) Separating components from insurance contracts
At inception, the following components are separated from an insurance contract and accounted for as if they were standalone
financial instruments:
\u2022
Embedded derivatives whose economic characteristics and risks are not closely related to those of the host contract, and
whose terms would not meet the definition of an insurance contract as a standalone instrument; and
\u2022
Investment components (i.e. amounts that an insurance contract requires Aegon to repay to a policyholder, even if the insured
event does not occur) that are distinct. In other words, investment components that:
\u2022
Do not meet the definition of an investment contract with discretionary participation features;
\u2022
Are not highly interrelated with the insurance component; and
\u2022
For which contracts with equivalent terms are sold, or could be sold, separately in the same market or jurisdiction.
Promises to transfer to a policyholder distinct goods or services other than insurance contract services, are also separated
from the host contract and accounted for as a service contract.
Aegon has not identified any components of the insurance contracts recognized at the balance sheet date that require
separation when publishing these financial statements.
d) Level of aggregation
Insurance contracts are grouped together for measurement and income recognition purposes. The groups are established
at initial recognition and are not reassessed subsequently.
Portfolios
Aegon classifies contracts as belonging to one portfolio, when they are subject to similar risks and are managed together.
When identifying similar risks, Aegon considers all insurance and financial risks that are transferred from the policyholder
to the Group. This does not include lapse risk or expense risk, as these are not risks that a policyholder transfers to an insurer.
Generally, contracts in the same product line are included within the same portfolio if they are managed together, and contracts
in different product lines with dissimilar risks are included in different portfolios.
To be grouped together, contracts must be managed together from the perspective of either the management of Aegon
Ltd. or the management of its operating segments. Information that is used to assess how risks are managed includes
Aegon\u2019s internal management reporting, as well as asset-liability management and asset allocation strategies.
Groups
Contracts within a portfolio are segregated into:
\u2022
Groups of insurance contracts that are onerous at initial recognition.
\u2022
Groups of insurance contracts that are not onerous at initial recognition, subdivided into:
\u2022
Groups of insurance contracts that have no significant possibility of becoming onerous subsequently; and
\u2022
A group of remaining contracts in the portfolio, if any.
Aegon uses two approaches to identify groups of contracts. The first approach consists of a bottom-up assessment, in which
contracts are grouped together on a contract-by-contract basis by considering the expected profitability of each contract.
Alternatively, the grouping assessment can be completed at a higher level of aggregation if, based on reasonable and
supportable information, Aegon concludes that a set of contracts will, by definition, all be in the same group.
Both approaches involve qualitative factors, quantitative factors, or a combination of both, for example product pricing,
assumption setting reviews, key performance indicators (such as market-consistent value of the new business and expected
loss ratios) and asset liability management and hedging strategies.
In assessing whether a profitable group of contracts could subsequently become onerous, Aegon considers the size of the
estimated profit at inception and its sensitivity to changes in the underlying assumptions. Typically, Aegon would expect that
any insurance contract could become lossmaking if the insured event occurs. Nonetheless, there may be indicators based
on which Aegon concludes that a group of contracts has no significant possibility of subsequently becoming onerous. For
example, there may be pricing information demonstrating that products are sold at very favorable premiums due to specific
market conditions (e.g. niche markets) or a product may contain embedded guarantees that are strongly out of the money.
If contracts within a portfolio would fall into different groups only because law or regulation specifically constrains
Aegon\u2019s practical ability to set a different price or level of benefits for policyholders with different characteristics, the contracts
are included in the same group.
Cohorts
Aegon follows a quarterly reporting frequency on a locked-in period-to-date basis, as opposed to a year-to-date basis, and
therefore groups contracts into quarterly cohorts. New contracts issued in the same quarter and belonging to the same
group will be measured together. After the quarter end, the cohort is closed, and the cohort will be treated as \"in force\" in the
subsequent quarterly reporting periods.
e) Recognition
A group of insurance contracts is recognized from the earliest of the following dates: the beginning of the coverage period, the
date when the first payment from a policyholder in the group of insurance contracts becomes due, and the date when the group
of insurance contracts becomes onerous.
f) Insurance acquisition cashflows
Insurance acquisition cash flows arise from selling, underwriting and starting a group of insurance contracts. They comprise
not only the incremental costs of originating insurance contracts but also other (in)direct costs and include cash flows relating
to both successful and unsuccessful acquisition efforts.
Insurance acquisition cash flows must be directly attributable to a portfolio of contracts. At initial recognition, Aegon allocates
them to groups of contracts as follows:
\u2022
Insurance acquisition cash flows that can be directly attributable to a specific group of insurance contracts (e.g. acquisition
commissions) are allocated to that group, as well as to groups that are expected to include the renewals of those contracts.
\u2022
Insurance acquisition cash flows that are directly attributable to a portfolio of insurance contracts, other than those in
described in the above bullet, are allocated to the groups of contracts in the portfolio on a systematic and rational basis.
g) Insurance contract types
For presentation and analysis purposes, Aegon distinguishes between life and non-life insurance contracts. Life insurance
contracts comprise insurance contracts for which the primary insured risk is life contingent, as well as long term care
insurance products in the Americas. Non-life insurance contracts include fire insurance, motor insurance, general liability
insurance, and disability and sickness insurance.
For measurement and income recognition purposes, Aegon distinguishes between insurance contracts with and without direct
participating features. Contracts are classified at the initial recognition date and not subsequently reassessed. Aegon\u2019s non-life
business consists entirely of insurance contracts without direct participating features, while Aegon\u2019s life insurance business
includes both types of insurance contracts.
While the initial measurement of both types of insurance contracts is the same, the subsequent accounting differs. The Variable
Fee Approach is applied to life insurance contracts with direct participating features. Other life and non-life insurance contracts
are accounted for under the General Measurement Model, unless Aegon has elected to apply the Premium Allocation Approach
to groups of these contracts.
Insurance contracts with direct participating features
Insurance contracts with direct participating features are defined as life insurance contracts for which, at inception:
\u2022
The contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;
\u2022
Aegon expects to pay to the policyholder an amount equal to a substantial share of the fair value returns on the underlying
items, and
\u2022
Aegon expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in
fair value of the underlying items.
Insurance contracts with direct participating features provide both insurance services and investment-related services. They
are viewed as creating an obligation to pay policyholders an amount that is equal to the fair value of the underlying items,
less a variable fee for future services. The variable fee reflects the unrealized gain or loss that Aegon expects to make on the
contract. It comprises Aegon\u2019s share in the fair value of the underlying items less the fulfillment cash flows that do not vary
based on the returns on underlying items, such as expense cash flows and the cost of financial guarantees.
A pool of underlying items can comprise any items, for example a reference portfolio of assets, a pool of funds, the net assets
of an Aegon group company or a specified subset of the net assets of the entity. In determining whether the pool has been
clearly identified to the policyholder, Aegon considers all contractual terms and conditions as well as other policyholder
communications. Aegon does not need to hold the identified pool of underlying items for a product to qualify as an insurance
contract with direct participating features, nor does the existence of Aegon\u2019s discretion to vary the amounts paid to the
policyholder preclude qualification. However, the link between policyholder benefits and underlying items must be enforceable
and Aegon must not have the ability to change the underlying items with retrospective effect.
Once the presence of a clearly identified pool of underlying items has been established, Aegon uses a methodology for product
classification that builds on a two-step approach with an initial assessment based on product characteristics, followed by a
quantitative assessment where the former is not conclusive.
\u2022
The initial assessment based on product characteristics is performed using multiple qualitative indicators. For example,
Aegon considers whether a contract includes substantial contractual profit-sharing rates and the degree to which these can
subsequently be reset. It also considers the extent to which asset management fees and other charges are commensurate
with the services provided and in line with market terms, and whether a product guarantees a minimum return on investment.
\u2022
If the qualitative step is not conclusive on its own, the product undergoes quantitative analysis. Different calculation methods
are used, depending on the product characteristics and the market conditions at the inception of the contract.
\u2022
The policyholder\u2019s share in the fair value returns is assessed by comparing the expected total return on the underlying
items, net of the asset management fees, with the expected payments to the policyholder that are based on those
underlying items. Variable fees and charges that cover multiple services are split into an insurance component and
investment management component, with only the latter being deducted from total returns. As a critical judgment, the
threshold for a substantial share of the fair value returns is in the range of 50% (or higher).
\u2022
The assessment of the variability in policyholder benefits often requires the use of probability-weighted models, factoring
all scenarios where returns are impacted by the allocation of clearly identifiable assets, variable fees and guarantees. The
determination of one scenario where there is no variability does not automatically disqualify a product for the variable fee
approach but is assessed together with the scenarios in which the guarantee is not in-the-money at the expected
termination date of the contract.
Examples of insurance contracts with direct participating features include unit-linked contracts issued by Aegon UK, and
variable annuities issued in the Americas.
Insurance contracts without direct participating features
A product is considered to provide an investment-return service if, and only if, the following apply:
\u2022
The contract contains a non-distinct investment component or the policyholder has a right to withdraw an amount under the
policy;
\u2022
Aegon expects that this amount will include an investment return; and
\u2022
Aegon expects to perform investment activity to generate that investment return.
Insurance contracts without direct participating features include all non-life insurance products issued by Aegon, as well
as term insurance, fixed annuities, long term care insurance contracts, and US-style universal life products issued in the
Americas and Asia.
h) Initial measurement
On initial recognition, Aegon measures a group of contracts at a risk-adjusted, current and probability-weighted estimate of the
present value of the future cash flows (\"fulfillment cash flows\") plus or minus the unearned profit on the group of contracts
(\"contractual service margin\").
Fulfilment cash flows
The fulfillment cash flows comprise:
\u2022
Estimates of future cash flows that are within the contract boundary;
\u2022
An adjustment to reflect time value of money and the financial risks related to future cash flows, to the extent that the
financial risks are not included in the estimates of future cash flows and
\u2022
A risk adjustment for non-financial risk.
The fulfillment cash flows reflect Aegon\u2019s view of the current condition at the reporting date, consistent with observable market
prices and considering all contractual terms and conditions with commercial substance that are within the contract boundary.
Future changes in legislation that would change or discharge a present obligation or create new obligations under existing
contracts, are only considered when the legislation is substantively enacted.
The methods used to calculate the fulfillment cash flows and the process to estimate the inputs to those methods are
discussed in note 29.3.
Contract boundary
Cash flows are within the boundary of an insurance contract if they arise from rights and obligations that exist during the
period in which Aegon can either compel the policyholder to pay premiums or has a substantive obligation to provide insurance
contract services to the policyholder.
A substantive obligation to provide insurance contract services ends when:
\u2022
Aegon has the practical ability to reassess the risks of a particular policyholder, and as a result, can set a price or level of
benefits that fully reflects those risks; or
\u2022
Both of the following apply:
\u2022
Aegon has the practical ability to reassess the risks of the portfolio that contains the contract and can set a price or level of
benefits that fully reflects the risks of that portfolio; and
\u2022
The pricing of the premiums up to the date when the risks are reassessed, does not take into account any risks that relate to
periods after the reassessment date.
In determining whether a contract can be repriced, all insurance and financial risks that are transferred from the policyholder
to Aegon are considered. Risks that result from the contract itself, such as expense risk or lapse risk, are ignored. If Aegon
provides investment-related services to insurance policyholders, the ability to reprice the fees or charges for these services
to prevailing rates is also considered in setting the contract boundary.
In some jurisdictions, regulatory requirements limit Aegon\u2019s ability to fully reprice contracts on renewal and are therefore
relevant when setting the contract boundary. Regulatory price caps that apply equally to existing and new policyholders do not
extend the contract boundary, because they do not result in a valuable policyholder renewal option.
Some contracts that have a long contract boundary based on long-term guaranteed benefits, also include policyholder options
that can be repriced. For example, the contract may allow the policyholder to take out additional insurance coverage at current
market rates at the time of uptake. While the policyholder option can be repriced, Aegon cannot reprice or reassess the benefits
of the entire policy. Therefore, the policyholder option is considered within the long contract boundary of the host contract,
provided it can reasonably be expected to be utilized.
Contract boundaries are based on current facts and circumstances and may therefore change over time.
Contractual service margin
The contractual service margin represents the unearned profit Aegon will recognize as it provides insurance contract services
in the future. On initial recognition of a group of non-onerous insurance contracts, it is measured at an amount that ensures that
no income arises from:
\u2022
The initial recognition of the fulfillment cash flows;
\u2022
Any cash flows arising from the contracts in the group at that date; and
\u2022
The derecognition of any asset for insurance acquisition cash flows and any other asset or liability previously recognized for
cash flows related to the group of contracts.
For onerous insurance contracts, the calculation above results in a loss that is recognized in the income statement immediately
and for which a corresponding loss component is established as part of the insurance liabilities. More information on the loss
component is provided in section j) of this note.
i) Subsequent measurement
The carrying amount of a group of insurance contracts at the end of each reporting period is the sum of the liability for
remaining coverage and the liability for incurred claims. The liability for remaining coverage comprises the fulfillment cash
flows related to future service allocated to that group and the contractual service margin of the group. The liability for incurred
claims comprises the fulfillment cash flows related to past service allocated to the group. Cash flows that remain subject
to insurance risk after the occurrence of the insured event are included in the liability for remaining coverage.
The fulfillment cash flows are remeasured at each reporting date to reflect current estimates. The measurement of the
contractual service margin differs for contracts with and without direct participating features and is described below.
Some changes in the contractual service margin are offset by changes in the fulfillment cash flows, resulting in no change
in the total carrying amount of the liability for remaining coverage. To the extent that changes in the contractual service margin
and changes in the fulfillment cash flows do not offset, income or expenses are recognized.
Insurance contracts without direct participating features (general measurement model)
For a group of insurance contracts without direct participating features, the carrying amount of the contractual service margin
at the end of each reporting period is the carrying amount at the start of the period, adjusted for:
\u2022
The effect of any new contracts added to the group;
\u2022
Interest accreted on the carrying amount of the contractual service margin during the period;
\u2022
Changes in the fulfillment cash flows that relate to future services, except to the extent that:
\u2022
Such increases in the fulfillment cash flows exceed the carrying amount of the contractual service margin, giving rise to a
loss, or
\u2022
Such decreases in the fulfillment cash flows are allocated to the loss component.
\u2022
The effect of any currency exchange differences on the contractual service margin; and
\u2022
The amount recognized as insurance revenue because of the insurance contract services provided in the period.
Interest accretion
Aegon accretes interest to the contractual service margin based on either the one-year forward rate or one-year spot-rate,
derived from the discount rate curve used to estimate the present value of future cash flows that do not vary based on the
returns on any underlying items on initial recognition of the group of contracts.
The amount of interest is calculated on a time-weighted basis, allowing for the timing of the movements in the contractual
service margin over the reporting period.
Changes in fulfillment cash flows relating to future services
Changes in the fulfillment cash flows that relate to future services comprise:
\u2022
Experience adjustments arising from premiums received in the period that relate to future services and related cash flows,
measured at the discount rates determined on initial recognition;
\u2022
Changes in estimates of the present value of future cash flows in the liability for remaining coverage (other than those that
relate to the effects of the time value of the money and changes in financial risks), measured at the discount rates determined
on initial recognition;
\u2022
Differences between any non-distinct investment component expected to become payable in the period and the actual
non-distinct investment component that becomes payable in the period;
\u2022
Differences between any loan to a policyholder expected to become repayable in the period and the actual loan to a
policyholder that becomes repayable in the period; and
\u2022
Changes in the risk adjustment for non-financial risk that relate to future services.
The change in fulfillment cash flows that relates to future service is calculated using discount rates derived from the discount
rate curve used to determine the contractual service margin on initial recognition of the group of contracts.
Changes in discretionary cash flows are regarded as relating to future services, and accordingly, adjust the contractual
service margin.
Changes in the contractual service margin recognized as insurance revenue
Part of the contractual service margin of a group of contracts is recognized as insurance revenue in each period to reflect
the insurance contract services provided under the group of insurance contracts in that period. The amount of revenue
is determined by allocating the contractual service margin remaining at the end of the reporting period equally to each
coverage unit provided in the reporting period and expected to be provided in the future.
More information on the coverage units is provided in note 29.3.2.1.
The numbers of coverage units in a group of contracts is determined by considering, for each contract, the quantity of the
benefits provided and its expected coverage period. If a contract provides coverage for more than one insured event or if
it provides additional investment-return services, the coverage unit reflects all material benefits.
The coverage period is defined as the period during which Aegon provides insurance coverage and/or investment services.
The expected coverage period takes account of the expected survivorship of contracts and so considers expected lapses
and deaths.
Aegon has defined coverage units that differ per product type to best reflect a product\u2019s characteristics and the nature of the
services provided to the policyholder. Insurance services are typically depicted by a metric that is based on the maximum
amount that a policyholder would receive if the insured event were to occur, such as the total benefits amount or the death
benefit amount. For investment-type services, coverage units are based on the total return that Aegon expects to provide the
policyholder over the lifetime of the contract.
Aegon applies the following formula to determine the amount of contractual service margin to release in each reporting period:
Proportion of CSM released as insurance revenue =
A
[A + B]
Where:
A = coverage units provided in the period
B = present value of coverage units to be provided in the future
The coverage units provided in the period are determined as an average of the coverage units at the beginning and end of the
quarterly reporting period. Future coverage units are discounted using rates locked-in at the initial recognition of the group
of contracts.
Insurance contracts with direct participating features (variable fee approach)
For the measurement of direct participating contracts, Aegon adjusts the fulfillment cash flows for changes in the obligation
to pay policyholders an amount equal to the fair value of the underlying items. These changes do not relate to future services
and are recognized in the profit or loss.
Aegon adjusts the carrying amount of the contractual service margin for each group of contracts to equal the carrying amount
at the start of the reporting period adjusted for:
\u2022
The effect of any new contracts added to the group of contracts;
\u2022
The change in the amount of Aegon\u2019s share of the fair value of the underlying items and changes in fulfillment cash flows
relating to future services, except to the extent that:
\u2022
For groups of contracts, there is a policy of excluding from the contractual service margin changes in the impact of financial
risk on its share of the underlying items (\"risk mitigation\");
\u2022
The decrease in the amount of the group of contracts share of the fair value of the underlying items, or an increase in the
fulfillment cash flows relating to future services, exceeds the carrying amount of the contractual service margin, giving rise
to a loss in the income statement; or
\u2022
The increase in the amount of the group of contracts share of the fair value of the underlying items, or a decrease in the
fulfillment cash flows relating to future services, is allocated to a loss component, reversing losses previously recognized in
the income statement;
\u2022
The effect of any currency exchange differences on the contractual service margin; and
\u2022
The amount recognized as insurance revenue because of the insurance contract services provided in the period.
Changes in fulfillment cash flows relating to future services
Changes in Aegon\u2019s share in the fair value of the underlying items, by definition, relates to future service and therefore adjusted
the contractual service margin.
In addition to the fulfillment cash flows movements that have been defined in the general measurement model as relating
to future services, the variable fee approach requires changes in fulfillment cash flows to be booked to the contractual service
margin if they are the result of a change in the effect of the time value of money or financial risks not arising from the underlying
items. Examples include the interest accrued to projected fixed benefits and expense cash flows, and the change in the value
of financial guarantees.
Changes in the contractual service margin recognized as insurance revenue
The policy on the recognition of revenue for insurance contracts with direct participating features is the same as under
the general measurement model, except that references to \u201cinvestment-return services\u201d should be read as \u201cinvestment-
related services\u201d.
Risk mitigation
For certain groups of contracts, Aegon has a documented risk management objective and strategy for mitigating financial
risk arising from insurance contracts with participating features, using derivatives, reinsurance contracts held and other FVPL
financial instruments. Risk mitigation involves the hedging of one or a combination of financial risks (e.g. interest rate, financial
instrument price, currency exchange rate, index of prices or rates, inflation rate) and can cover multiple groups of contracts
in different portfolios.
For these contracts, Aegon does not recognize the entire change in the amount of Aegon\u2019s share of the fair value of the
underlying items and changes in fulfillment cash flows relating to future services in the contractual service margin. Instead,
the change in the hedged position is recognized as part of insurance finance expense in the income statement or in other
comprehensive income.
Prior to the reporting period, Aegon demonstrates that an economic offset exists between the insurance contracts and the risk
mitigating items (i.e. the values of both are generally expected to move in opposite directions because they respond in a similar
way to the changes in the risk being mitigated), and demonstrates this is not dominated by credit risk. If these conditions cease
to be met, risk mitigation accounting is discontinued. In this instance, any amounts previously recognized as insurance finance
expense in the income statement or in other comprehensive income, are not adjusted.
j) Loss component
A group of insurance contracts can be onerous at inception, namely when the fulfillment cash flows allocated to the contract,
any previously recognized insurance acquisition cash flows and any cash flows arising from the contract at the date of initial
recognition in total are a net outflow. It can also become onerous at subsequent measurement due to unfavorable changes
relating to future service in the fulfillment cash flows arising from changes in estimates of future cash flows and the risk
adjustment for non-financial risk allocated to the contractual service margin, or for contracts with direct participating features,
due to a decrease in the amount of Aegon\u2019s share of fair value of the underlying items.
When a group of insurance contracts becomes onerous, a loss component of the liability for remaining coverage for that group
is established. Except for changes in non-financial assumptions that are fully allocated to a loss component, all subsequent
changes in the fulfillment cash flows of the liability for remaining coverage are allocated on a systematic basis between the
loss component and the remaining liability for remaining coverage. No revenue is recognized for services allocated to the loss
component, as Aegon has never received compensation from the policyholder for these.
Additional unfavorable changes in the fulfillment cash flows that exceed the contractual service margin are recognized in the
income statement immediately. Favorable changes in the fulfillment cash flows are recognized in the income statement to the
extent that they reverse the loss component, after which the contractual service margin is re-established.
k) Premium allocation approach
Aegon applies the premium allocation approach to certain groups of predominantly non-life insurance contracts. These groups
of contracts mostly include products with a coverage period of one year or less. The premium allocation approach is only
applied to contracts with a longer coverage period if the Group expects that the resulting measurement would not differ
materially from the result of applying the general measurement model.
Level of aggregation
Contracts to which the premium allocation approach is applied are grouped together using the same principles as described in
paragraph (c) above, with the following modifications:
\u2022
Contracts to the premium allocation approach is applied, are assumed not to be onerous at inception, unless facts and
circumstances indicate otherwise.
\u2022
Contracts to which the premium allocation approach are grouped together in annual cohorts, which is more aligned with the
nature of the products.
Acquisition costs
Insurance acquisition cashflows that relate to some (but not all) groups of contracts to which Aegon applies the premium
allocation approach are expensed when incurred, provided the coverage period does not exceed 12 months.
Initial recognition and measurement
On initial recognition, Aegon measures the carrying amount of the liability for remaining coverage as premiums received
at initial recognition, if any, plus or minus any amounts arising from the derecognition of other assets or liabilities previously
recognized for cash flows related to the group of contracts.
Subsequent measurement, including loss component
The carrying amount of a group of insurance contracts at the end of each reporting period is the sum of the liability for
remaining coverage and the liability for incurred claims.
The liability for remaining coverage is increased by any premiums received in the period and decreased by the amount
recognized as insurance revenue for insurance contract service provided and any non-distinct investment component paid
or transferred to the liability for incurred claims. Given the time between providing each part of the coverage and the related
premium, Aegon has chosen not to adjust the liability for remaining coverage to reflect the time-value of money and the effect
of financial risk.
If at any time during the coverage period facts and circumstances indicate that a group of insurance contracts is onerous,
Aegon calculates the difference between the carrying amount of the liability for remaining coverage and the fulfillment cash
flow that relate to the remaining coverage of the group. In case this difference is negative, Aegon recognizes a loss in the
income statement and increases the liability for remaining coverage.
Aegon recognizes the liability for incurred claims of a group of insurance contracts at the amount of the fulfillment cash flows
relating to incurred claims. The fulfillment cash flows are discounted at current rates unless the cash flows are expected to be
paid in one year or less from the date the claims are incurred.
l) Derecognition and contract modification
Aegon derecognizes a contract when it is extinguished (i.e. when the specified obligations in the contract expire or are
discharged or cancelled).
On the derecognition of a contract from within a group of contracts:
\u2022
The fulfillment cash flows allocated to the group are adjusted to eliminate those that relate to the rights and obligations
derecognized;
\u2022
The contractual service margin of the group is adjusted for the change in the fulfillment cash flows, except where such
changes are allocated to a loss component; and
\u2022
The number of coverage units for the expected remaining insurance contract services is adjusted to reflect the coverage
units derecognized from the group.
If a contract is derecognized because it is transferred to a third party, then the contractual service margin is also adjusted for
the premium charged by the third party, unless the group is onerous.
A contract is also derecognized if its terms are modified in a such way that would have changed the accounting for the contract
significantly had the new terms always existed, in which case a new contract based on the modified terms is recognized. In this
instance, the contractual service margin of the group is adjusted for the premium that would have been charged had the Group
entered into a contract with the new contract\u2019s terms at the date of modification, less any additional premium charged for
the modification. The new contract recognized is measured assuming that, at the end of modification, the issuer received the
premium that it would have charged less any additional premium charged for the modification.
If a contract modification does not result in derecognition, Aegon treats the changes in cash flows caused by the modification
as changes in estimates of fulfillment cash flows.
m) Insurance contracts acquired in a portfolio transfer or business combination
Insurance contracts acquired in a business combination or portfolio transfer after the transition to IFRS 17 (January 1, 2022)
are accounted for in accordance with Aegon\u2019s accounting policy on insurance contracts, with the exception that both the
inception date and the initial recognition date should be taken to refer to the acquisition date of the contracts.
When determining the initial measurement of a transferred portfolio, the consideration paid or received for the insurance
contracts is taken as a proxy for the premiums paid. For insurance contracts acquired in a business combination, the fair value
of the contracts is used as a proxy instead.
If a group of contracts acquired in a portfolio transfer is onerous, the loss is recognized in profit or loss at the acquisition
date. If an onerous group of contracts is acquired in a business combination, the loss first adjusts the amount of goodwill and
is recognized in profit or loss to the extent that the loss exceeds the amount of goodwill.
At the acquisition date, Aegon recognizes a separate asset for insurance acquisition cash flows at fair value for the rights to
obtain:
\u2022
future renewals of contracts recognized at the acquisition date; and
\u2022
other future insurance contracts without paying again insurance acquisition cash flows that the acquiree has already paid.
2.7 Reinsurance contracts
Reinsurance contracts held are contracts entered into by Aegon in order to receive compensation for claims arising from one
or more insurance contracts issued by the Group. Reinsurance contracts that do not transfer insurance risk are accounted for
as financial instruments or as service contracts, depending on the nature of the agreement.
Aegon is not relieved of its legal liabilities when entering into reinsurance transactions. Therefore, the liabilities relating to the
underlying insurance contracts will continue to be reported on the consolidated statement of financial position during the
contractual term of the underlying contracts.
To the extent possible, the accounting model applied to reinsurance contracts held is consistent with that of the underlying
insurance contracts. Differences will arise when underlying contracts have direct participating features, as the variable
fee approach cannot be applied to reinsurance contracts held. Furthermore, reinsurance contracts with a coverage period
exceeding 12 months may not be eligible for the premium allocation approach.
a) Separating components from insurance contracts
Similarly to the analysis for insurance contracts (see note 2.6), Aegon has assessed that its reinsurance contracts held do not
include components that need to be separated for accounting purposes.
b) Level of aggregation
Reinsurance contracts are grouped for measurement and income recognition purposes, based on the similarity of risk, the
manner in which the contracts are managed, the expected profitability of the contracts at inception, and the period in which the
contracts are issued.
The process for dividing reinsurance contracts into groups is similar to that used for insurance contracts (note 2.6), except
that references to \"onerous contracts\" should be replaced with a reference to \"contracts on which there is a net gain on initial
recognition\".
When grouping reinsurance contracts, Aegon considers the type of reinsurance cover received (e.g. yearly renewable term, stop
loss, or coinsurance).
A group of reinsurance contracts can comprise a single contract, for example when the contracts are managed on an individual
treaty basis.
c) Reinsurance contracts measured under the general measurement model
The Group applies the accounting policies disclosed in note 2.6 for insurance contracts without direct participating features
to measure a group of reinsurance contracts held, albeit with the following modifications:
Recognition
Aegon recognizes reinsurance contracts held at the earlier of the following:
\u2022
The beginning of the coverage period; or
\u2022
The date that an onerous group of underlying insurance contracts is recognized, if Aegon entered into the related reinsurance
contract held at or before that date.
Notwithstanding the foregoing, Aegon delays the recognition of a group of reinsurance contracts held that provide
proportionate coverage (e.g. coinsurance, modified coinsurance and yearly renewable treaties) until the date that any
underlying insurance contract is initially recognized, if that date is later than the beginning of the coverage period of the group
of reinsurance contracts held.
Initial measurement
Aegon estimates the present value of the future cash flows of the group of reinsurance contracts held, using assumptions
that are consistent with those used to measure the underlying insurance contracts. The estimate includes an adjustment for
the risk of non-performance by the reinsurer, which is based on Aegon\u2019s credit exposure, net of collateral, and the perceived
counterparty default risk. More information on the methods used to calculate the fulfillment cash flows and the process
to estimate the inputs to those methods is provided in notes 2.6 and 29.
The risk adjustment for non-financial risk is the amount of risk transferred by the Group to the reinsurer.
On initial recognition, the contractual service margin of a group of reinsurance contracts held represents a net cost or a net
gain on purchasing reinsurance. It is measured as the equal and opposite amount of the total of the fulfillment cash flows, any
derecognized assets for cash flows occurring before the recognition of the group, any cash flows arising from the contracts
in the group at that date, and any income recognized in profit or loss for the recovery of losses recorded on initial recognition
of onerous underlying contracts.
If the net cost on purchasing reinsurance coverage relates to insured events that occurred before the purchase of the group
of reinsurance contracts, it is immediately expensed in the income statement.
Contract boundary
Cash flows are within the contract boundary of a reinsurance contract held if they arise from substantive rights and obligations
that exist during the period in which Aegon is either compelled to pay amounts to the reinsurer or in which it has a substantive
right to receive services from that reinsurer. A substantive right to receive services from a reinsurer ends when the reinsurer
has the right to terminate coverage or when he has the practical ability to reassess the risks transferred by Aegon and can set
a price or level of benefits that fully reflects those reassessed risks.
For treaties with open attaching periods, the cessions within the termination window (typically 90 days) are treated as a
separate contract for accounting purposes. Cessions that take place after the termination window are treated as a
new contract.
Contractual service margin
On initial recognition, the contractual service margin of a group of reinsurance contracts held represents a net cost or a net
gain on purchasing reinsurance. It is measured as the equal and opposite amount of the total of the fulfillment cash flows, any
derecognized assets for cash flows occurring before the recognition of the group, any cash flows arising from the contracts
in the group at that date, and any income recognized in profit or loss for the recovery of losses recorded on initial recognition
of onerous underlying contracts.
If the net cost on purchasing reinsurance coverage relates to insured events that occurred before the purchase of the group
of reinsurance contracts, it is immediately expensed in the income statement.
Subsequent measurement
The carrying amount of a group of reinsurance contracts held at each reporting date is the sum of the asset for remaining
coverage and the asset for incurred claims. The asset for remaining coverage comprises: (i) the fulfillment cash flows that
relate to services that will be received under the contracts in future periods; plus (ii) any remaining contractual service margin
at that date. The asset for incurred claims comprises the fulfillment cash flows that relate to services received in the current
and past period.
The fulfillment cash flows are remeasured at each reporting date to reflect current estimates.
The carrying amount of the contractual service margin at the end of each period is the carrying amount at the start of the
period, adjusted for:
\u2022
The contractual service margin of any new contracts that are added to the group in the period;
\u2022
Interest accreted on the carrying amount of the contractual service margin during the period;
\u2022
Income recognized in profit or loss in the reporting period to coincide with the initial recognition of an onerous group of
underlying insurance contracts or on addition of onerous contracts to that group;
\u2022
Reversals of a loss-recovery component to the extent those reversals are not changes in the fulfillment cash flows of the
group of reinsurance contracts held;
\u2022
Changes in fulfillment cash flows, measured at discount rates at initial recognition, to the extent that the change relates to
future services, except for the extent that:
\u2022
The change results from a change in fulfillment cash flows allocated to a group of underlying insurance contracts that does
not adjust the contractual service margin of the group of underlying contracts;
\u2022
The change results from the remeasurement of the liability for remaining coverage of an onerous group of underlying
contracts to which the premium allocation approach is applied;
\u2022
The effect of any currency exchange differences on the contractual service margin; and
\u2022
The amount recognized in the profit or loss because of the services received in the period.
The rate at which interest in accreted to the contractual service margin is determined at the initial inception date of the
group of reinsurance contracts, in the same way as the interest accretion rates for insurance contracts without direct
participating features.
Some changes in the contractual service margin are offset by changes in the fulfillment cash flows, resulting in no change
in the total carrying amount of the asset for remaining coverage. To the extent that changes in the contractual service margin
and changes in the fulfillment cash flows do not offset, income and expenses are recognized.
Changes in the fulfillment cash flows that result from changes in the risk of non-performance by the issuer do not relate
to future service and are recognized in the income statement immediately.
Loss recovery component
Aegon establishes a loss recovery component for a group of reinsurance contracts, when a change in the fulfillment cash flows
that relates to future services does not adjust the contractual service margin. It reflects the income recognized in the income
statement to offsets the reinsured loss reported on the underlying insurance contracts.
The adjusted amount, and resulting income, is determined by multiplying:
\u2022
The loss recognized on the group of underlying insurance contracts; and
\u2022
The recovery percentage, which is the percentage of claims on the group of underlying insurance contracts that Aegon
expects to recover from the reinsurance contracts held.
The calculation of the recovery percentage is based on discounted claims and recovery amounts, using current discount rates.
No allowance is made for reinsurance non-performance risk, and any risk adjustment for non-financial risks is excluded from
the calculation.
If an onerous group of insurance contracts is only partially reinsured, systematic and rational allocation methods are used
to determine the portion of subsequent movements in the loss component that relates to insurance contracts covered by the
group of reinsurance contracts held.
d) Reinsurance contracts held measured under the premium allocation approach
Aegon applies the premium allocation approach to a group of reinsurance contracts held, if the approach is also applied to the
underlying insurance contracts and:
\u2022
The coverage period of each reinsurance contract in the group is one year or less; or
\u2022
Aegon reasonably expects the resulting measurement will not differ materially from the results when applying the general
measurement model.
If a loss recovery component is created for a group of reinsurance contracts measured under the premium allocation approach,
Aegon adjusts the carrying amount of the asset for remaining coverage instead of adjusting the contractual service margin.
Please see note 2.6(k) for a description of the accounting policies concerning the premium allocation approach.
e) Derecognition and contract modification
Aegon applies the same accounting policies for derecognition and contract modifications to reinsurance contract held as to
insurance contracts. Please see note 2.6(l).
2.8 Insurance revenue
Aegon recognizes insurance revenue as it provides services under groups of insurance contracts and under groups
of contracts with discretionary participating features.
The total insurance revenue recognized over the duration of a group of contracts is equal to the amount of premiums received,
adjusted for a financing effect and excluding any non-distinct investment components. For contracts with direct participating
features, it includes the variable fees that Aegon expects to receive. Reinstatement premiums are included in insurance
revenue, when reinstatement is not mandatory under the terms of the contract but at the discretion of the policyholder.
Ceding commissions paid by Aegon on inward reinsurance are deducted from insurance revenue, unless they are contingent
on future claims.
The revenue recognized in the period represents the total of the changes in the liability for remaining coverage that relate to
services for which the Group expects to receive compensation and includes:
\u2022
The release of contractual service margin for services provided in the period;
\u2022
Changes in the risk adjustments for non-financial risk that do not relate to future service, excluding amounts allocated to the
loss component;
\u2022
The claims and other insurance service expenses expected to be incurred in the period, excluding amounts allocated to the
loss component;
\u2022
Other amounts, such as experience adjustments for premium receipts that do not relate to future service and income tax that
is specifically chargeable to the policyholder.
In addition, the insurance revenue recognized in the period includes an allocation of the portion of the premiums that are related
to recovering insurance acquisition cash flows. The allocation is based on the passage of time, without interest accumulation.
The same amount is also recognized as insurance service expenses (see note 2.9).
For insurance contracts to which the premium allocation approach is applied, insurance revenue is equal to the total premiums
that are expected to be received for the services provided, excluding any non-distinct investment component and adjusted
to reflect the time value of money and the effect of financial risk, where applicable. Revenues are allocated to the periods
of insurance contract services based on the passage of time.
2.9 Insurance service expenses
Insurance service expenses arise as Aegon provides coverage and other services under issued insurance contracts and
investment contracts with discretionary participating features. It comprises
\u2022
The incurred claims, excluding repayments of non-distinct investment components, and other incurred insurance service
expenses;
\u2022
Adjustments to the liabilities for incurred claims that do not arise from the effects of the time value of money, financial risk
and changes therein;
\u2022
Amortization of insurance acquisition cash flows;
\u2022
Losses on onerous contracts and the reversals of such losses; and
\u2022
Impairment losses on assets for insurance acquisition cash flows and reversals of such impairment losses.
2.10 Net income / (expenses) on reinsurance held
With the exception of reinsurance finance income, all other income and expenses from a group of reinsurance contracts are
presented as a single amount.
Aegon recognizes an allocation of reinsurance premiums paid in profit or loss as it receives services under groups
of reinsurance contracts. For contracts not measured under the premium allocation approach (PAA), the allocation
of reinsurance premiums paid relating to services received for each period represents the total of the changes in the asset for
remaining coverage that relate to services for which Aegon expects to pay consideration.
For contracts measured under the PAA, the allocation of reinsurance premiums paid for each period is the amount of expected
premium payments for receiving services in that period.
2.11 Insurance finance expenses
Insurance finance expenses comprise the change in the carrying amount of the group of insurance contracts or reinsurance
contracts arising from the effect of the time value of money and changes in the time value of money, as well as the effect
of financial risk and changes in financial risk. It also includes the changes in the measurement of group of insurance contracts
that are caused by changes in the value of underlying items (excluding additions and withdrawals).
For groups of contracts with direct participating features, insurance finance expenses exclude any changes that adjust the
contractual service margin (See note 2.6). If a group of contracts with direct participating features becomes onerous due
to changes in the time value of money or financial risk, the loss is recognized as insurance service expense rather than
insurance finance expenses.
a) Defining financial risk
Financial risk can relate to one or more of a
\u2022 specified interest rate,
\u2022 financial instrument price,
\u2022
commodity price, currency exchange rate,
\u2022
index of prices or rates,
\u2022
credit rating or credit index, or
\u2022
other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract.
As an example of variables not specific to a party to the contract, assumptions about inflation are considered to relate
to financial risk, to the extent that they are based on an index of prices or on prices of assets with inflation-linked returns.
Assumptions about inflation that are based on Aegon\u2019s own expectations of specific price changes, do not relate to financial
risk and are considered to be actuarial assumptions.
For contracts with discretionary participating features, Aegon uses the basis on which, at inception, it expected to determine its
commitment under the contract to distinguish between the effect of changes in assumptions that relate to financial risk on that
commitment and the effect of discretionary changes to that commitment (which adjust the contractual service margin).
Aegon considers, per portfolio, whether the risk adjustment for financial risks should be disaggregated in an insurance service
component and an insurance finance component, taking into account the extent to which the carrying amount of the is affected
by changes in interest rate and other financial risks. At the current reporting date, the changes in the risk adjustment for non-
financial risk are fully attributed to insurance services.
b) Disaggregation of insurance finance expenses
Insurance finance expenses for the period are included in profit or loss, unless Aegon has chosen to apply the option
to disaggregate these expenses between profit or loss and other comprehensive income. This option is set by insurance
portfolio and applied consistently for all underlying groups of contracts. In assessing the appropriate accounting policy for
a portfolio of insurance contracts, Aegon considers the investments and other assets that it holds for each portfolio and how
it accounts for those assets.
Aegon disaggregates insurance finance expenses for insurance contracts without direct participating features issued in the
United States, insurance contracts issued in Asia that are internally reinsured in the United States and certain life insurance
products in Spain.
The amount of insurance finance expenses included in profit or loss is determined by a systematic allocation of the expected
total insurance finance income and expenses over the duration of the group of contracts, using the following rates:
\u2022
Discount rates determined at the date of initial recognition of the group of contracts;
\u2022
A rate that allocates the remaining revised expected finance income or expenses over the remaining duration of the group of
contracts at a constant rate (expected yield approach); or
\u2022
For contracts that use a crediting rate to determine amounts due to the policyholders using an allocation that is based on the
amounts credited in the period and expected to be credited in future periods (projected crediting rate approach).
The expected yield approach and projected crediting rate approach are applied to designated groups of contracts for which
changes in financial assumptions have a substantial effect on the amounts paid by the policyholder (\"indirect participating
products\"). Indirect participating products include variable annuity products that do not qualify for the variable fee approach due
to minimum guarantees. US-style universal life contracts are not classified as indirect participating products because Aegon
considers policyholder benefits to be insufficiently impacted by changes in financial assumptions.
In the United States, Aegon has elected to apply the projected crediting rate approach to indexed universal life and fixed indexed
annuities. Other indirect participating contracts, such as variable universal life and fixed annuities, are accounted for under the
expected yield approach.
2.12 Reinsurance finance income
Finance income related to reinsurance contracts held is presented separately in the income statement and OCI. They are not
netted with the finance expenses related to insurance contracts issued.
2.13 Investment contracts
Contracts issued by the Group that do not transfer significant insurance risk but do transfer financial risk from the policyholder
to the Group are accounted for as investment contracts. Investment contract liabilities are recognized when the contract
is entered into and are derecognized when the contract expires, is discharged or is cancelled.
a. Investment contracts with discretionary participation features
Some investment contracts have participation features whereby the policyholder has the right to receive potentially significant
additional benefits which are based on the performance of a specified pool of investment contracts, specific investments held
by the Group or on the issuer\u2019s net result. If the Group has discretion over the amount or timing of the distribution of the returns
to policyholders, the investment contract liability is measured based on the accounting principles that apply to insurance
contracts with similar features.
Some unitized investment contracts provide policyholders with the option to switch between funds with and without
discretionary participation features. The entire contract is accounted for as an investment contract with discretionary
participation features if there is evidence of actual switching resulting in discretionary participation benefits that are
a significant part of the total contractual benefits.
Recognition and measurement
The accounting for investment contracts with discretionary participating features is the same as insurance contracts, with the
following exceptions:
\u2022
The date of initial recognition is the date that Aegon becomes party to the contract;
\u2022
Cash flows are within the contract boundary if they result from a substantive obligation of the entity to deliver cash at a
present or future date. Aegon has no substantive obligation to deliver cash if it has the practical ability to set a price for the
promise to deliver the cash that fully reflects the amount of cash promised and related risks; and
\u2022
The contractual service margin is recognized over the duration of the group of contracts in a systematic way that reflects the
transfer of investment services under the contract.
b. Investment contracts without discretionary participation features
At inception, investment contracts without discretionary participation features are carried at amortized cost.
Investment contracts without discretionary participation features are carried at amortized cost based on the expected cash
flows and using the effective interest rate method. The expected future cash flows are re-estimated at each reporting date
and the carrying amount of the financial liability is recalculated as the present value of estimated future cash flows using
the financial liability\u2019s original effective interest rate. Any adjustment is immediately recognized in the income statement. For
these investment contracts deposit accounting is applied, meaning that deposits are not reflected as premium income, but are
recognized as part of the financial liability.
The consolidated financial statements provide information on the fair value of all financial liabilities, including those carried
at amortized cost. As these contracts are not quoted in active markets, their value is determined by using valuation techniques,
such as discounted cash flow methods and stochastic modeling. For investment contracts without discretionary participation
features that can be cancelled by the policyholder, the fair value cannot be less than the surrender value.
2.14 Financial assets and liabilities
2.14.1 Initial recognition and measurement
Financial assets and financial liabilities are recognized when Aegon becomes a party to the contractual provisions of the
instrument and are classified for accounting purposes depending on the characteristics and the business model under which
they were purchased.
At initial recognition, Aegon measures a financial asset at its fair value plus or minus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are incremental and directly attributable to the acquisition or issue
of the financial asset or financial liability, such as fees and commissions. Immediately after initial recognition, an expected
credit loss allowance (ECL) is recognized for financial assets measured at amortized cost and investments in debt instruments
measured at fair value through other comprehensive income (FVOCI), as described in note 4.2.6 (Expected credit losses), which
results in an accounting loss being recognized in profit or loss when an asset is newly originated.
When the fair value of financial assets and liabilities differs from the transaction price on initial recognition, Aegon recognizes
the difference as follows:
\u2022
When the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e. a Level 1 input) or
based on a valuation technique that uses only data from observable markets, the difference is recognized as a gain or loss.
\u2022
In all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is determined
individually. It is either amortized over the life of the instrument, deferred until the instrument\u2019s fair value can be determined
using market observable inputs, or realized through settlement.
2.14.2 Classification and subsequent measurement of financial assets
Under IFRS 9, Aegon classifies its financial assets in the following measurement categories:
\u2022
Fair value through profit or loss (\"FVPL\");
\u2022
Fair value through other comprehensive income (\"FVOCI\"); or
\u2022 Amortized cost (\"AC\").
Aegon has classified the majority of its mortgage, consumer and private loan portfolios as measured at amortized cost, given
that the cash flows on these contracts represent solely payment of principal and interest, and they fit the business model hold-
to-collect. Similarly, the majority of debt instruments held by most Aegon\u2019s insurance entities are classified as FVOCI because
they fit the business model of hold-to-collect and sell, and their cash flows represent solely payment of principal and interest.
However, the majority of financial assets within Aegon\u2019s European insurance entities are designated on FVPL to minimize
accounting mismatches. For a detailed breakdown of asset classes in measurement categories see note 19.1 Financial assets,
excluding derivatives.
(a) Equity instruments
Equity instruments are instruments that meet the definition of equity from the issuer\u2019s perspective; that is, instruments that
do not contain a contractual obligation to pay and that evidence a residual interest in the issuer\u2019s net assets. Examples of equity
instruments include basic ordinary shares.
Under IFRS 9, equity investments do not qualify for amortized cost or FVOCI treatment because they would fail the contractual
cash flow characteristics assessment (cash flows are typically declared dividends at the discretion of the issuer, instead
of interest). Thus, equity investments would generally only qualify for FVPL treatment and not be subject to impairment under
the Expected Credit Loss model.
However, IFRS 9 allows the entity to make an irrevocable election at initial recognition to present changes in the fair
value of equity investment in OCI rather than profit or loss. The equity investments designated as FVOCI are not subject
to impairment under the Expected Credit Loss model.
When equity investments measured at FVOCI are disposed, the unrealized gains or losses, including the OCI resulting from
foreign currency translation, will stay as a part of the equity and cannot be \u201crecycled\u201d into profit and loss. If applicable, dividends
should be recognized in profit or loss with or without such election.
Gains and losses on equity investments at FVPL are included in the \u2018Results from financial transactions\u2019 line in the consolidated
income statement.
(b) Debt instruments
Debt instruments are those instruments that meet the definition of a financial liability from the issuer\u2019s perspective, such
as mortgage loans, private loans, and government and corporate bonds.
Classification and subsequent measurement of debt instruments depend on:
\u2022
Aegon\u2019s business model for managing the asset;
\u2022
The cash flow characteristics of the asset; and
\u2022
The designation at FVPL to eliminate or significantly reduce an accounting mismatch or recognition inconsistency.
Based on these factors, Aegon classifies its debt instruments into one of the following three measurement categories:
\u2022
Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest (\"SPPI\"), and that are not designated at FVPL, are measured at amortized cost. The carrying
amount of these assets is adjusted by any expected credit loss allowance recognized (see note 4.2.6 Expected credit losses).
Interest revenue from these financial assets is included in \"Interest revenue on financial instruments calculated using the
effective interest rate method\".
\u2022
Fair value through other comprehensive income (\"FVOCI\"): Financial assets that are held for collection of contractual cash
flows and for selling the assets, where the assets\u2019 cash flows represent solely payments of principal and interest, and that are
not designated at FVPL, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the
recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses on the instrument\u2019s
amortized cost which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss
previously recognized in OCI is reclassified from equity to profit or loss and recognized in \"Net Investment result\". Interest
revenue from these financial assets is included in \"Interest revenue on financial instruments calculated using the effective
interest rate method\".
\u2022
Fair value through profit or loss (\"FVPL\"): Assets that do not meet the criteria for amortized cost or FVOCI are measured
mandatorily at fair value through profit or loss.
The Group has designated certain debt instruments as measured at FVPL because they relate to insurance contracts that
are measured in a way that incorporates current information and all related insurance finance income and expenses are
recognized in profit or loss, by which designation the Group eliminates accounting mismatches.
A gain or loss on a debt investment that is subsequently measured at FVPL and is not part of a hedging relationship
is recognized in profit or loss and presented in the profit or loss statement within \"Net trading income\" in the period in which
it arises, unless it arises from debt instruments that were designated at fair value or which are not held for trading, in which case
they are presented separately in \"Net investment result\". Interest revenue from these financial assets is included in \"Interest
revenue from financial instruments measured at FV\".
Business model
The Group determines its business model at the level that best reflects how it manages groups of financial assets to achieve
its business objective. The Group\u2019s business model is not assessed on an instrument-by-instrument basis, but at a higher level
of aggregated portfolios and is based on observable factors, such as:
\u2022
How the performance of the business model and the financial assets held within that business model are evaluated and
reported to the Group\u2019s senior management;
\u2022
The risks that affect the performance of the business model and the financial assets held within it. In particular, the way those
risks are managed;
\u2022
How the Group management is compensated, i.e. whether the compensation is based on the fair value of the assets managed
or on the contractual cash flows collected;
\u2022
The expected frequency, value and timing of sales are also important aspects of the Group\u2019s assessment.
The business model assessment is based on reasonably expected scenarios without taking \"worst case\" or \"stress case\"
scenarios into account. If cash flows after initial recognition are realized in a way that is different from the Group\u2019s original
expectations, the Group does not change the classification of the remaining financial assets held in that business model but
incorporates such information when assessing newly originated or newly purchased financial assets going forward.
Sales in themselves do not determine the business model and therefore cannot be considered in isolation. An entity must
consider information about sales within the context of the reasons for those sales and the conditions that existed at that time
as compared to current conditions.
Solely payment of principal and interest (\"SPPI\")
Where the business model is to hold assets to collect contractual cash flows or to collect contractual cash flows and cash
flows from the sale of the asset, Aegon assesses whether the financial instruments\u2019 cash flows represent solely payments
of principal and interest (the \"SPPI test\"). In making this assessment, Aegon considers whether the contractual cash flows
are consistent with a basic lending arrangement i.e. interest includes only consideration for the time value of money, credit
risk, other basic lending risks and a profit margin that is consistent with a basic lending arrangement. Where the contractual
terms introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related financial asset
is classified and measured at fair value through profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are
solely payment of principal and interest. Aegon reclassifies debt investments when and only when its business model for
managing those assets changes. The reclassification takes place from the start of the first reporting period following the
change. Such changes are expected to be very infrequent and none occurred during the period.
(c) Amortized cost and effective interest rate
The amortized cost of a debt instrument is the amount at which it is measured at initial recognition plus accrued interest minus
principal repayments, plus or minus the cumulative amortization of any difference between the book value at initial recognition
and the nominal amount and minus any allowance for impairment. The effective interest rate method is a method of calculating
the amortized cost and of allocating the interest revenue or expense over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash payments or receipts through the expected life of the debt instrument,
or when appropriate, a shorter period to the net carrying amount of the instrument. When calculating the effective interest
rate, all contractual terms are considered. Possible future credit losses are not taken into account. Charges and interest paid
or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other
premiums or discounts are included in the calculation.
For purchased or originated credit-impaired (\"POCI\") financial assets \u2013 assets that are credit-impaired (see definition in note
4.2.6 Expected credit losses) at initial recognition \u2013 Aegon calculates the credit-adjusted effective interest rate, which
is calculated based on the amortized cost of the financial asset instead of its gross carrying amount and incorporates the
impact of expected credit losses in estimated future cash flows.
For assets determined to be POCI, the general impairment model would not apply. Instead, impairment is determined based
on lifetime expected credit loss (ECL) since the losses are reflected in the fair value at initial recognition. No separate loss
allowance is recognized.
The effective interest rate for interest recognition throughout the life of the asset is a credit-adjusted effective interest rate
(EIR) since lifetime ECL is already reflected in the estimated cash flows when calculating the effective interest rate on initial
recognition. On a regular basis, the Group assesses the estimate of cash flows made at acquisition of the POCI instrument. The
assessment is performed by recalculating the gross carrying amount of the asset as the present value of the estimated future
cash flows, discounted using the initial credit-adjusted effective interest rate. As a result of this assessment, in an instance
where the payments received by the Group exceed or fall short of the initial cash flow estimate booked at acquisition, the gain
is recorded directly in the P&L as impairment (losses) / reversals.
(d) Interest revenue
Interest revenue is calculated by applying the effective interest rate to the gross carrying amount of financial assets, except for:
\u2022
POCI financial assets, for which the original credit-adjusted effective interest rate is applied to the amortized cost of the
financial asset.
\u2022
Financial assets that are not POCI but have subsequently become credit-impaired (or \"Stage 3\"), for which interest revenue is
calculated by applying the effective interest rate to their amortized cost (i.e. net of the expected credit loss provision). For the
definition of \"Stage 3\", see note 4.2.6 Expected credit losses.
IFRS 9 resulted in changes to IAS 1 for the presentation of Interest revenue for instruments calculated using the effective
interest rate method. The revised presentation requires it be shown as a separate line item in the consolidated income
statement. Interest revenue calculated using the effective interest rate relates to all financial assets, which are measured
at amortized cost or FVOCI. Interest revenue on financial assets and financial liabilities that are measured at fair value through
profit or loss are presented as \"Interest revenue on financial instruments measured at FVPL\".
The new interest presentation was applied together with the other requirements of IFRS 9.
(e) Modification of financial assets
Aegon sometimes renegotiates or otherwise modifies the contractual cash flows of financial assets. When this happens,
Aegon assesses whether or not the new terms are substantially different to the original terms. Aegon does this by considering,
among other things, the following qualitative and quantitative factors:
\u2022
If the borrower is in financial difficulty, whether the modification merely reduces the contractual cash flows to amounts the
borrower is expected to be able to pay.
\u2022
Whether any substantial new terms are introduced, such as a profit share/equity-based return that substantially affects the
risk profile of the loan or equity conversion option.
\u2022
Significant extension of the loan term when the borrower is not in financial difficulty.
\u2022
Significant change in the interest rate.
\u2022
Change in the currency the loan is denominated in.
\u2022
Insertion of collateral, other security or credit enhancements that significantly affect the credit risk associated with the loan.
\u2022
Change in seniority or subordination.
\u2022
Any change in SPPI assessment of the asset.
\u2022
Significant change in the present value of the instrument.
If the terms are substantially different, Aegon derecognizes the original financial asset and recognizes a \"new\" asset at fair
value and recalculates a new effective interest rate for the asset. The date of renegotiation is consequently considered
to be the date of initial recognition for impairment calculation purposes, including for the purpose of determining whether
a significant increase in credit risk has occurred. However, Aegon also assesses whether the new financial asset recognized
is deemed to be credit-impaired at initial recognition, especially in circumstances where the renegotiation was driven by the
debtor being unable to make the originally agreed payments. Differences in the carrying amount are also recognized in profit
or loss as a gain or loss on derecognition (Results from financial transactions).
If the terms are not substantially different, the renegotiation or modification does not result in derecognition, and Aegon
recalculates the gross carrying amount based on the revised cash flows of the financial asset and recognizes a modification
gain or loss in profit or loss as result from financial transactions. The new gross carrying amount is recalculated by discounting
the modified cash flows at the original effective interest rate (or credit-adjusted effective interest rate for purchased
or originated credit-impaired financial assets).
The impact of modifications of financial assets on the expected credit loss calculation is discussed in note 4.2.6 Expected
credit losses.
(f) Derecognition other than a modification of financial assets
A financial asset is derecognized when
\u2022
the contractual rights to the asset\u2019s cash flows expire; and
\u2022
when Aegon retains the right to receive cash flows from the asset or has an obligation to pay received cash flows in full
without delay to a third party; and
\u2022
either has transferred the asset and substantially all the risks and rewards of ownership, or has neither transferred nor
retained all the risks and rewards but has transferred control of the asset.
Financial assets of which Aegon has neither transferred nor retained significantly all the risk and rewards are recognized to the
extent of Aegon\u2019s continuing involvement. If significantly all risks are retained, the assets are not derecognized.
On derecognition, the difference between the disposal proceeds and the carrying amount is recognized in the income
statement within results from financial transactions.
(g) Derivatives and hedge accounting
Definition of derivatives
Derivatives are financial instruments classified as held for trading assets of which the value changes in response to an
underlying variable, which require little or no net initial investment and are settled at a future date.
Measurement of derivatives
Derivatives are initially recognized at fair value on the date on which the derivative contract is entered into and are
subsequently remeasured at fair value. All derivatives are carried as assets when fair value is positive and as liabilities when
fair value is negative.
Net fair value changes of derivatives are recognized in the income statement as result from financial transactions, unless
the derivative has been designated as a hedging instrument in a cash flow hedge or a hedge of a net investment in a foreign
operation. Fair value movements of fair value hedge instruments are offset by the fair value movements of the hedged item, and
the resulting hedge ineffectiveness, if any, is included in result from financial transactions.
Embedded derivatives and hybrid contracts
Certain derivatives are embedded in hybrid contracts, such as the conversion option in a convertible bond. If the hybrid
contract contains a host that is a financial asset, then the Group assesses the entire contract for classification and
measurement purposes. Otherwise, the embedded derivatives are treated as separate derivatives when:
\u2022
Their economic characteristics and risks are not closely related to those of the host contract;
\u2022
A separate instrument with the same terms would meet the definition of a derivative; and
\u2022
The hybrid contract is not measured at fair value through profit or loss.
These embedded derivatives are separately accounted for at fair value, with changes in fair value recognized in the income
statement as result from financial transactions, unless the Group chooses to designate the hybrid contracts at fair value
through profit or loss.
Hedge accounting
The method of recognizing the resulting fair value gain or loss depends on whether the derivative is designated and qualifies as
a hedging instrument and if so, the nature of the item being hedged. Aegon designates certain derivatives as either:
\u2022
Hedges of the fair value of recognized assets or liabilities or firm commitments (fair value hedges);
\u2022
Hedges of highly probable future cash flows attributable to a recognized asset or liability (cash flow hedges); or
\u2022
Hedges of a net investment in a foreign operation (net investment hedges).
Aegon documents, at the inception of the hedge, the relationship between hedged items and hedging instruments, as well
as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions
are highly effective in offsetting changes in fair values or cash flows of hedged items.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income
statement, together with changes in the fair value of the hedged assets or liabilities that are attributable to the hedged risk
as result from financial transactions.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of hedged items for
which the effective interest method is used is amortized to profit or loss over the period to maturity and recorded as \"Interest
revenue on financial instruments calculated using the effective interest method\".
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges
is recognized in OCI. The gain or loss relating to the ineffective portion is recognized immediately in the P&L as result from
financial transactions.
Amounts accumulated in equity are recycled to the P&L in the periods when the hedged item affects profit or loss. They are
recorded in the income or expense lines in which the revenue or expense associated with the hedged item is reported.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognized in the periods when the hedged item
effects profit or loss. When a forecast transaction is no longer expected to occur (e.g. the recognized hedged assets is disposed
of), the cumulative gains or losses previously recognized in OCI is immediately reclassified to the P&L.
Aegon designates and accounts for cash flow hedges when effectiveness requirements are achieved. The following cash flow
hedge type relationships are currently utilized by Aegon:
\u2022
An interest rate swap that converts a floating rate asset to a fixed rate asset (e.g. combining Treasury Inflation Protected
Securities asset and inflation swap to synthetically create fixed rate treasury asset).
\u2022
A cross currency interest rate swap that converts a foreign denominated floating rate asset to a USD fixed rate asset.
\u2022
A cross currency interest rate swap that converts a foreign denominated fixed rate asset to a USD fixed rate asset.
\u2022
A forward starting interest rate swap to hedge the forecasted purchases of fixed rate assets.
Net investment hedge
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the
hedging instrument relating to the effective portion of the hedge is recognized directly in OCI; the gains or losses relating to the
ineffective portion is recognized immediately in the P&L. Gains and losses accumulated in equity are included in the P&L when
the foreign operation is disposed of as part of the gain or loss of the disposal.
Additional details on derivatives is disclosed in note 20 \u2018Derivatives\u2019.
2.14.3 Impairment of financial assets
Aegon assesses on a forward-looking basis the expected credit losses (\"ECL\") associated with its debt instrument assets
carried at amortized cost and FVOCI. Aegon recognizes a loss allowance for such losses at each reporting date. The
measurement of ECL reflects:
\u2022
An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
\u2022
The time value of money; and
\u2022
Reasonable and supportable information that is available without undue cost or effort at the reporting date about past events,
current conditions and forecasts of future economic conditions.
Note 4.2.6 Expected credit losses provides more detail of how the expected credit loss allowance is measured.
2.14.4 Financial liabilities
(a) Classification and subsequent measurement
In both the current and prior period, financial liabilities are classified as subsequently measured at amortized cost, except for:
\u2022
Financial liabilities measured at fair value through profit or loss: this classification is applied to derivatives, financial liabilities
held for trading and other financial liabilities designated as such at initial recognition. This is because these liabilities, as well
as the related assets, are managed and their performance evaluated on a fair value basis. Gains or losses on financial
liabilities designated at FVPL are presented partially in other comprehensive income (the amount of change in the fair value of
the financial liability that is attributable to changes in the credit risk of that liability, which is determined as the amount that is
not attributable to changes in market conditions that give rise to market risk) and partially in profit or loss (the remaining
amount of change in the fair value of the liability). This is unless such a presentation would create, or enlarge an accounting
mismatch, in which case the gains and losses attributable to changes in the credit risk of the liability are also presented in
profit or loss;
\u2022
Financial liabilities arising from the transfer of financial assets which did not qualify for derecognition, whereby a financial
liability is recognized for the consideration received for the transfer. In subsequent periods, Aegon recognizes any expense
incurred on the financial liability; and
\u2022
Financial guarantee contracts and loan commitments.
The following sections provide more detail on the most significant classes of financial liabilities held by Aegon, their substance
and their accounting treatment.
Trust pass-through securities and (subordinated) borrowings
A financial instrument issued by the Group is classified as a liability if the contractual obligation must be settled in cash
or another financial asset or through the exchange of financial assets and liabilities at potentially unfavorable conditions for the
Group. Trust pass-through securities and (subordinated) borrowings are initially recognized at their fair value including directly
attributable transaction costs and are subsequently carried at amortized cost using the effective interest rate method, with
the exception of specific borrowings that are designated as fair value through profit or loss to eliminate, or significantly reduce,
an accounting mismatch, or specific borrowings which are carried at fair value through profit or loss as they are managed and
evaluated on a fair value basis.
Interest expense on trust pass-through securities and other borrowings carried at amortized cost is recognized in profit or loss
as \"interest charges\" using the effective interest method.
The liability is derecognized when the Group\u2019s obligation under the contract expires, is discharged or is cancelled. Subordinated
borrowings include the liability component of non-cumulative subordinated notes. These notes are identified as a compound
instrument due to the nature of this financial instrument. Compound instruments are separated into equity components and
liability components. The liability component for the non-cumulative subordinated notes is related to the redemption amount.
Investment contracts without discretionary participation features
Investment contracts without discretionary participation features are financial liabilities carried at amortized cost
or designated at fair value through profit or loss. For more information on the accounting treatment of these contracts, see note
2.13 Investment contracts.
Savings deposits
Savings deposits are stated at amortized cost (net of accrued interest). Accrued interest is recognized in the consolidated
statement of financial position under \"other liabilities and accruals\". Interest expenses of savings deposits are presented
in the statement of comprehensive income as \"interest expense\" under other net investment result. The balances are largely
repayable on demand. The initial valuation of this item reasonably approximates fair value.
Derivatives
To the extent that derivatives have a negative fair value at the end of the reporting period these are classified as financial
liabilities at fair value through profit or loss. Interest incomes and expenses of derivatives are presented in the statement
of comprehensive income as \"interest expense\" or \"Interest revenue on financial instruments measured at FVPL\".
Financial guarantee contracts and loan commitments
Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for
a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument.
Such financial guarantees are given to banks, financial institutions and others on behalf of customers to secure loans,
overdrafts and other banking facilities.
Financial guarantee contracts are initially measured at fair value and subsequently measured at the higher of:
\u2022
The amount of the loss allowance (calculated as described in note 4.2.6); and
\u2022
The premium received on initial recognition less income recognized in accordance with the principles of IFRS 15.
Loan commitments provided by Aegon are measured as the amount of the loss allowance (calculated as described in note
4.2.6 Expected credit losses). Aegon has not provided any commitment to provide loans at a below-market interest rate, or that
can be settled net in cash or by delivering or issuing another financial instrument.
For loan commitments and financial guarantee contracts, the loss allowance is recognized as a provision. However, for
contracts that include both a loan and an undrawn commitment and Aegon cannot separately identify the expected credit
losses on the undrawn commitment component from those on the loan component, the expected credit losses on the undrawn
commitment are recognized together with the loss allowance for the loan. To the extent that the combined expected credit
losses exceed the gross carrying amount of the loan, the expected credit losses are recognized as a provision.
(b) Derecognition
Financial liabilities are derecognized when they are extinguished (i.e. when the obligation specified in the contract is discharged,
cancelled or expires).
The exchange between Aegon and its original lenders of debt instruments with substantially different terms, as well
as substantial modifications of the terms of existing financial liabilities, are accounted for as an extinguishment of the original
financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present
value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original
effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original
financial liability. In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes
in the type of interest rate, new conversion features attached to the instrument and change in covenants are also taken
into consideration. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any
costs or fees incurred are recognized as part of the gain or loss on the extinguishment. If the exchange or modification is not
accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortized
over the remaining term of the modified liability.
2.15 Fee and commission income
Fees and commissions from investment management services and mutual funds are performed on an ongoing basis evenly
throughout the year and are accounted for monthly (1/12 of the contractual agreement). Performance fees may be charged
to policyholders in the event of outperformance in the investments compared to predefined benchmark levels. They are
accounted for only when specified hurdles for generating performance fees are achieved i.e. when the full performance
obligation is met.
Aegon acts also as an insurance broker selling insurance contracts of other insurance companies to policyholders and
receiving direct sales commission as well as commissions over time when the same policyholders renew their contracts. These
commissions are recognized only when received as policyholders\u2019 renewals are not certain enough to be recorded upfront.
2.16 Intangible assets
The Group does not recognize as intangible assets those costs that are directly incurred in fulfilling the insurance contracts and
they comprise (both direct costs and an allocation of fixed and variable overheads).
(a) Goodwill
Goodwill is recognized as an intangible asset for interests in subsidiaries and is measured as the positive difference between
the acquisition cost and the Group\u2019s interest in the net fair value of the entity\u2019s identifiable assets, liabilities and contingent
liabilities. Subsequently, goodwill is carried at cost less accumulated impairment charges. It is derecognized when the interest
in the subsidiary is disposed.
(b) Future servicing rights
On the acquisition of a portfolio of investment contracts without discretionary participation features under which Aegon will
render investment management services, the present value of future servicing rights is recognized as an intangible asset.
Future servicing rights can also be recognized on the sale of a loan portfolio or the acquisition of insurance agency activities.
The present value of the future servicing rights is amortized over the servicing period and is subject to impairment testing. It is
derecognized when the related contracts are settled or disposed.
Where applicable, Aegon recognizes other intangibles on the acquisition of a business combination such as those related
to customer relationships. This can include customer contracts, distribution agreements and client portfolios. For these
intangibles the present value of future cash flows are recognized and amortized in the period when future economic benefits
arise from these intangibles. These intangible assets are also presented under future servicing rights.
(c) Software and other intangible assets
Software and other intangible assets are recognized to the extent that the assets can be identified, are controlled by the Group,
are expected to provide future economic benefits and can be measured reliably. The Group does not recognize internally
generated intangible assets arising from research or internally generated goodwill, brands, customer lists and similar items.
Software and other intangible assets are carried at cost less accumulated depreciation and impairment losses. Depreciation
of the asset is over its useful life as the future economic benefits emerge and is recognized in the income statement as an
expense. The depreciation period and pattern are reviewed at each reporting date, with any changes recognized in the
income statement.
An intangible asset is derecognized when it is disposed of or when no future economic benefits are expected from its use
or disposal.
2.17 Investment properties
Investments in real estate include property held to earn rentals or for capital appreciation, or both. Investments in real
estate are presented as \"Investments\". Property that is occupied by the Group and that is not intended to be sold in the near
future is classified as real estate held for own use and is presented in \"Other assets and receivables\".
All property is initially recognized at cost. Such cost includes the cost of replacing part of the real estate and borrowing cost for
long-term construction projects if recognition criteria are met. Subsequently, investments in real estate are measured at fair
value with the changes in fair value recognized in the income statement. Real estate held for own use is carried at its
revalued amount, which is the fair value at the date of revaluation less subsequent accumulated depreciation and
impairment losses. Depreciation is calculated on a straight line basis over the useful life of a building. Land is not depreciated.
Revaluation of real estate for own use is recognized in other comprehensive income and accumulated in revaluation reserve
in equity. On revaluation the accumulated depreciation is eliminated against the gross carrying amount of the asset and the net
amount is restated to the revalued amount.
On disposal of an asset, the difference between the net proceeds received and the carrying amount is recognized in the
income statement. Any remaining surplus attributable to real estate in own use in the revaluation reserve is transferred
to retained earnings.
2.18 Investments in joint arrangements
In general, joint arrangements are contractual agreements whereby the Group undertakes, with other parties, an economic
activity that is subject to joint control. Joint control exists when it is contractually agreed to share control over an economic
activity. Joint control exists only when decisions about the relevant activities require the unanimous consent of the parties
sharing control.
Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights
and obligations each investor has rather than the legal structure of the joint arrangement. Aegon has assessed the nature of its
joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method.
Under the equity method of accounting, interests in joint ventures are initially recognized at cost, which includes positive
goodwill arising on acquisition. Negative goodwill is recognized in the income statement on the acquisition date. If joint ventures
are obtained in successive share purchases, each significant transaction is accounted for separately.
The carrying amount is subsequently adjusted to reflect the change in the Group\u2019s share in the net assets of the joint venture
and is subject to impairment testing. The net assets are determined based on the Group\u2019s accounting policies. Any gains and
losses recorded in other comprehensive income by the joint venture are recognized in other comprehensive income and
reflected in other reserves in shareholders\u2019 equity, while the share in the joint ventures net result is recognized as a separate
line item in the consolidated income statement. The Group\u2019s share in losses is recognized until the investment in the joint
ventures' equity and any other long-term interest that are part of the net investment are reduced to nil, unless guarantees exist.
Gains and losses on transactions between the Group and the joint ventures are eliminated to the extent of the Group\u2019s interest
in the entity, with the exception of losses that are evidence of impairment which are recognized immediately. Own equity
instruments of Aegon Ltd. that are held by the joint venture are not eliminated.
On disposal of an interest in a joint venture, the difference between the net proceeds and the carrying amount is recognized
in the income statement and gains and losses previously recorded directly in the revaluation reserve are reversed and recorded
through the income statement.
The Group\u2019s interests in some joint arrangements are underlying items of participating contracts. The Group has elected
to measure these investments at FVPL because it manages them on a fair value basis.
2.19 Investments in associates
The Group\u2019s interests in some associates are underlying items of participating contracts. The Group has elected to measure
these investments at FVPL because it manages them on a fair value basis.
Entities over which the Group has significant influence through power to participate in financial and operating policy decisions,
but which do not meet the definition of a subsidiary, are accounted for using the equity method. Interests held by venture
capital entities, mutual funds and investment funds that qualify as an associate are accounted for as an investment held at fair
value through profit or loss. Interests held by the Group in venture capital entities, mutual funds and investment funds that are
managed on a fair value basis, are also accounted for as investments held at fair value through profit or loss.
2.20 Deferred expenses
Deferred transaction costs
Deferred transaction costs relate to investment contracts without discretionary participation features under which Aegon
will render investment management services. Incremental costs that are directly attributable to securing these investment
management contracts are recognized as an asset if they can be identified separately and measured reliably and if it
is probable that they will be recovered.
For contracts involving both the origination of a financial liability and the provision of investment management services, only
the transaction costs allocated to the servicing component are deferred. The other transaction costs are included in the
carrying amount of the financial liability.
The deferred transaction costs are amortized in line with fee income, unless there is evidence that another method better
represents the provision of services under the contract. The amortization is recognized in the income statement. Deferred
transaction costs are subject to impairment testing at least annually.
Deferred transaction costs are derecognized when the related contracts are settled or disposed.
2.21 Other assets and receivables
Other assets include trade and other receivables, prepaid expenses, equipment and real estate held for own use. Trade and
other receivables are initially recognized at fair value and are subsequently measured at amortized cost. Equipment is initially
carried at cost, depreciated on a straight line basis over its useful life to its residual value and is subject to impairment testing.
2.22 Cash and cash equivalents
Cash comprises cash at banks and in-hand. Cash equivalents are short-term, highly liquid investments generally with original
maturities of three months or less that are readily convertible to known cash amounts, are subject to insignificant risks
of changes in value and are held for the purpose of meeting short-term cash requirements. Money market investments that are
held for investment purposes (backing insurance liabilities, investment liabilities or equity based on asset liability management
considerations) are not included in cash and cash equivalents but are presented as investments or investments for account
of policyholders.
2.23 Impairment of assets
An asset is impaired if the carrying amount exceeds the amount that would be recovered through its use or sale. For tangible
and intangible assets, if not held at fair value through profit or loss, the recoverable amount of the asset is estimated when there
are indications that the asset may be impaired.
Assets are tested individually for impairment when there are indications that the asset may be impaired. For goodwill and
intangible assets with an undefined life, an impairment test is performed at least once a year or more frequently as a result
of an event or change in circumstances that would indicate an impairment charge may be necessary. The impairment loss
is calculated as the difference between the carrying and the recoverable amount of the asset, which is the higher of an
asset\u2019s value in use and its fair value less cost of disposal. The value in use represents the discounted future net cash flows
from the continuing use and ultimate disposal of the asset and reflects its known inherent risks and uncertainties. The valuation
utilizes the best available information, including assumptions and projections considered reasonable and supportable
by management. The assumptions used in the valuation involve significant judgments and estimates. See note 24 Intangible
assets for more details.
2.24 Equity
Financial instruments that are issued by the Group are classified as equity if they represent a residual interest in the assets
of the Group after deducting all of its liabilities and the Group has an unconditional right to avoid delivering cash or another
financial asset to settle its contractual obligation. In addition to common shares, the Group has issued perpetual securities.
Perpetual securities have no final maturity date, repayment is at the discretion of Aegon and for junior perpetual capital
securities, Aegon has the option to defer coupon payments at its discretion. The perpetual capital securities are classified
as equity rather than debt, are measured at par and those that are denominated in US dollars are translated into euro using
historical exchange rates. Treasury shares are deducted from Group equity.
Non-cumulative subordinated notes were identified as a compound instrument due to the nature of this financial instrument.
For these non-cumulative subordinated notes, Aegon had an unconditional right to avoid delivering cash or another financial
asset to settle the coupon payments. The redemption of the principal was however not at the discretion of Aegon and therefore
Aegon had a contractual obligation to settle the redemption in cash or another financial asset or through the exchange
of financial assets and liabilities at potentially unfavorable conditions for Aegon. Compound instruments were separated
into liability components and equity components. The liability component for the non-cumulative subordinated notes was
equal to the present value of the redemption amount and carried at amortized cost using the effective interest rate method.
The unwinding of the discount of this component was recognized in the income statement. At initial recognition the equity
component was assigned the residual amount after deducting the liability component from the fair value of the instrument as a
whole. The equity component in US dollars was translated into euro using historical exchange rates. Incremental external costs
that are directly attributable to the issuing or buying back of own equity instruments are recognized in equity, net of tax. For
compound instruments incremental external costs that were directly attributable to the issuing or buying back of the compound
instruments were recognized proportionate to the equity component and liability component, net of tax. The Group recognizes
the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where
it originally recognized the past transactions or events that generated the distributable profits. A liability for non-cumulative
dividends payable is not recognized until the dividends have been declared and approved.
When the Group reacquires its own equity instrument and includes the share as an underlying item of direct participating
contracts, the Group may elect not to deduct the reacquired instrument from equity and instead account for the reacquired
instrument as if it were a financial asset and measure it at FVPL. This election is irrevocable and is made on an instrument-by-
instrument basis.
2.25 Trust pass-through securities and (subordinated) borrowings
A financial instrument issued by the Group is classified as a liability if the contractual obligation must be settled in cash
or another financial asset or through the exchange of financial assets and liabilities at potentially unfavorable conditions
for the Group.
Trust pass-through securities and (subordinated) borrowings are initially recognized at their fair value including directly
attributable transaction costs and are subsequently carried at amortized cost using the effective interest rate method, with
the exception of specific borrowings that are designated at fair value through profit or loss to eliminate, or significantly reduce,
an accounting mismatch, or specific borrowings which are carried at fair value through profit or loss as they are managed
and evaluated on a fair value basis. The liability is derecognized when the Group\u2019s obligation under the contract expires,
is discharged, or is cancelled.
Subordinated borrowings include the liability component of non-cumulative subordinated notes. These notes are identified
as a compound instrument due to the nature of this financial instrument. Compound instruments are separated into equity
components and liability components. The liability component for the non-cumulative subordinated notes is related to the
redemption amount. For further information on the accounting policy of the non-cumulative subordinated notes, see note
2.24 Equity.
2.26 Provisions
A provision is recognized for present legal or constructive obligations arising from past events, when it is probable that
it will result in an outflow of economic benefits and the amount can be reliably estimated. Management exercises judgment
in evaluating the probability that a loss will be incurred.
The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the
reporting date, considering all its inherent risks and uncertainties, as well as the time value of money. The estimate of the
amount of a loss requires management judgment in the selection of a proper calculation model and the specific assumptions
related to the particular exposure. The unwinding of the effect of discounting is recorded in the income statement as an
interest expense.
2.27 Assets and liabilities relating to employee benefits
(a) Short-term employee benefits
A liability is recognized for the undiscounted amount of short-term employee benefits expected to be settled within one year
after the end of the period in which the service was rendered. Accumulating short-term absences are recognized over the
period in which the service is provided. Benefits that are not service-related are recognized when the event that gives rise
to the obligation occurs.
(b) Post-employment benefits
The Group has issued defined contribution plans and defined benefit plans. A plan is classified as a defined contribution plan
when the Group has no further obligation than the payment of a fixed contribution. All other plans are classified as defined
benefit plans.
Defined contribution plans
The contribution payable to a defined contribution plan for services provided is recognized as an expense in the income
statement. An asset is recognized to the extent that the contribution paid exceeds the amount due for services provided.
Defined benefit plans
Measurement
The defined benefit obligation is based on the terms and conditions of the plan applicable on the reporting date. In measuring
the defined benefit obligation the Group uses the projected unit credit method and actuarial assumptions that represent the
management's best estimates. The benefits are discounted using an interest rate based on the market yield for high-quality
corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity that
approximate the terms of the related pension liability. Actuarial assumptions used in the measurement of the liability include
the discount rate, estimated future salary increases, mortality rates and price inflation. To the extent that actual experience
deviates from these assumptions, the valuation of defined benefit plans and the level of pension expenses recognized in the
future may be affected. Plan improvements (either vested or unvested) are recognized in the income statement at the date
when the plan improvement occurs.
Plan assets are qualifying insurance policies and assets held by long-term employee benefit funds that can only be used to pay
the employee benefits under the plan and are not available to the Group\u2019s creditors. They are measured at fair value and are
deducted from the defined benefit obligation in determining the amount recognized on the statement of financial position. For
reimbursements by associated third parties of some or all of the expenditure required to settle a defined benefit obligation,
a reimbursement asset is recognized on the basis of the present value of the related obligation, subject to any reduction
required if the reimbursement is not recoverable in full.
Profit or loss recognition
The cost of the defined benefit plans are determined at the beginning of the year and comprise the following components:
\u2022
Current year service cost which is recognized in profit or loss; and
\u2022
Net interest on the net defined benefit liability (asset) which is recognized in profit or loss.
Remeasurements of the net defined benefit liability (asset) which is recognized in other comprehensive income are revisited
quarterly and are not allowed to be reclassified to profit or loss in a subsequent period.
Deducted from current year service cost are discretionary employee contributions and employee contributions that are linked
to service (those which are independent of the number of years of service). Net interest on the net defined benefit liability
(asset) is determined by multiplying the net defined benefit liability (asset) by the applicable discount rate. Net interest on the
net defined benefit liability (asset) comprises interest income on plan assets and interest cost on the defined benefit obligation.
Whereby interest income on plan assets is a component of the return on plan assets and is determined by multiplying the
fair value of the plan assets by the applicable discount rate. The difference between the interest income on plan assets and
the actual return on plan assets is included in the remeasurement of the net defined benefit liability (asset). Any movements
during the period related to reimbursement assets, will be partly recognized in the income statement (interest cost on the
reimbursement right) and partly through other comprehensive income for the difference between the actual return and the
interest cost.
(c) Share-based payments
The Group has issued share-based plans that entitle selected employees to receive Aegon Ltd. common shares, subject
to pre-defined conditions such as the grant price of the shares and (business and personal) performance criteria. The number
of shares that will vest may partly depend on Aegon\u2019s relative total shareholder return in comparison with a peer group.
The expenses recognized for these plans are based on the fair value on the grant date of the shares. The fair value is measured
at the market price of Aegon Ltd. common shares, adjusted to take into account the non-vesting and market conditions upon
which the shares were granted. For example, where the employee is not entitled to receive dividends during the vesting
period, this factor is taken into account when estimating the fair value of the shares granted. For the determination of factors
such as expected dividends, market observable data has been considered. In addition, where the relative total shareholder
return is included in the performance criteria, this factor represents a market condition and hence is taken into account when
estimating the fair value of the shares granted.
The cost for long-term incentive plans are recognized in the income statement, together with a corresponding increase
in shareholders\u2019 equity, as the services are rendered. During this period the cumulative expense recognized at the reporting
date reflects management\u2019s best estimate of the number of shares expected to vest ultimately.
The withholding of shares to fund the payment to the tax authorities in respect of the employee\u2019s withholding tax obligation
associated with the share-based payment is accounted for as a deduction from equity for the shares withheld, except to the
extent that the payment exceeds the fair value at the net settlement date of the equity instruments withheld.
2.28 Deferred gains
Initial fees and front-end loadings paid by policyholders and other clients for future investment management services related
to investment contracts without discretionary participation features are deferred and recognized as revenue when the related
services are rendered.
2.29 Taxation
The income tax charge on the result for the year comprises current and deferred tax. Current tax is calculated taking into
account items that are non-taxable or disallowed, using rates that have been enacted or substantively enacted by the reporting
date and any adjustments to tax payable relating to previous years.
Current tax receivables and payables for current and prior periods reflect the best estimate of the tax amount expected to be
paid or received and includes provisions for uncertain income tax positions, if any.
Deferred tax assets and liabilities are recognized, using the liability method, for temporary differences arising between the
carrying value and tax value of an item on the balance sheet and for unused tax losses and credits carried forward. Deferred tax
assets and liabilities are measured using tax rates applicable that have been enacted or substantively enacted at the balance
sheet date and are expected to apply when the deferred tax asset is realized, or the deferred tax liability is settled.
Deferred tax assets are recognized for deductible temporary differences and unused tax losses and credits carried forward
to the extent that the realization of the related tax benefit through future taxable profits is probable. The recognition of the
deferred tax assets is based on Aegon\u2019s mid-term projections including sensitivities and tax planning and is reassessed
periodically. Deferred tax liabilities relating to investments in subsidiaries, associates and joint ventures are not recognized
if the Group is able to control the timing of the reversal of the temporary difference and it is probable that the difference will not
be reversed in the foreseeable future.
Tax assets and liabilities are presented separately in the consolidated balance sheet except where there is a legally
enforceable right to offset the tax assets against tax liabilities within the same tax jurisdiction and the intention to settle such
balances on a net basis.
Tax assets and liabilities are recognized in relation to the underlying transaction either in profit and loss, other comprehensive
income or directly in equity.
2.30 Contingent assets and liabilities
Contingent assets are disclosed in the notes if the inflow of economic benefits is probable, but not virtually certain. When the
inflow of economic benefits becomes virtually certain, the asset is no longer contingent and its recognition is appropriate.
A provision is recognized for present legal or constructive obligations arising from past events, when it is probable that it will
result in an outflow of economic benefits and the amount can be reliably estimated. If the outflow of economic benefits is not
probable, a contingent liability is disclosed, unless the possibility of an outflow of economic benefits is remote.
2.31 Leases
As a lessee
The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset
is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made
at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove
the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the
earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-
of-use assets are determined on the same basis as those of real estate and equipment. In addition, the right-of-use asset
is periodically reduced by impairment losses (using the same rate to measure the lease liability), if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group\u2019s incremental
borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. The lease liability is measured
at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments
arising from a change in an index or rate, if there is a change in the Group\u2019s estimate of the amount expected to be payable
under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension
or termination option. The Group presents right-of-use assets that do not meet the definition of investment property in \"Other
assets and receivables\" and lease liabilities in \"Other liabilities\" in the statement of financial position.
Short-term leases and leases of low-value assets The Group has elected not to recognize right-of-use assets and lease
liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets, including small
office equipment. The Group recognizes the lease payments associated with these leases as an expense on a straight-line
basis over the lease term.
As a lessor
Where the Group is the lessor under an operating lease, the assets subject to the operating lease arrangement are presented
in the statement of financial position according to the nature of the asset. Income from these leases is recognized in the
income statement on a straight line basis over the lease term, unless another systematic basis is more representative of the
time pattern in which use benefit derived from the leased asset is diminished.
2.32 Other operating expenses
With the exception of expenses made to acquire insurance contracts and investment contracts with discretionary participating
features, all expenses are incurred as the related activities are performed.
2.33 Events after the reporting period
The financial statements are adjusted to reflect events that occurred between the reporting date and the date when the
financial statements are authorized for issue, provided they give evidence of conditions that existed at the reporting date.
Events that are indicative of conditions that arose after the reporting date are disclosed, but do not result in an adjustment
of the financial statements themselves. ", "dimensions": { "concept": "ifrs-full:DisclosureOfMaterialAccountingPolicyInformationExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f18205": { "value": "2.1 Basis of presentation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code.
Additional disclosures have been included in the consolidated financial statements in relation to the initial adoption of IFRS
9 and IFRS 17, that became effective on January 1, 2023.
The consolidated financial statements have been prepared in accordance with historical cost convention as modified by the
revaluation of investment properties and those financial instruments (including derivatives) and financial liabilities that have
been measured at fair value, except for the following items, which are measured on an alternative basis at each reporting date:
Item
Measurement basis
Insurance and reinsurance contracts
Fulfilment cash flows plus the CSM
Net defined benefit liability / (asset)
Fair value of plan assets less the present value of the defined benefit obligations
Other impaired non-financial assets
Higher of fair value less costs of disposal and value in use
Financial instruments held to collect financial cash flows
Amortized cost
The consolidated financial statements are presented in euros and all values are rounded to the nearest million unless
otherwise stated. The consequence is that the rounded amounts may not add up to the rounded total in all cases. All ratios
and variances are calculated using the underlying amount rather than the rounded amount. The preparation of financial
statements in conformity with EU-IFRS requires management to make estimates and assumptions affecting the reported
amounts of assets and liabilities from the date of the financial statements and the reported amounts of revenues and expenses
for the reporting period. Those estimates are inherently subject to change and actual results could differ from those estimates.
Included among the material (or potentially material) reported amounts and disclosures that require extensive use of estimates
are: insurance and reinsurance contracts as stated in the table above, fair value of certain invested assets and derivatives,
purchased intangible assets, goodwill, pension plans, income taxes and the potential effects of resolving litigation matters.
\n
\n
\n\n
\n
\n
\n\n
\n
\n
Aegon applies fair value hedge accounting for portfolio hedges of interest rate risk (macro hedging) under the European Union
(EU) \"carve out\" of EU-IFRS. Details are provided in note 2.14.2. (g) Derivatives and hedge accounting and note 20 Derivatives.
Aegon does not use the optional exemption provided under EU-IFRS to group together specific insurance contracts that were
issued more than 12 months apart.
The consolidated financial statements of Aegon Ltd. were approved by the Board on April 3, 2024. The financial statements will
be presented to the Annual General Meeting of Shareholders on April 4, 2024. In accordance with Bermuda law, the annual
accounts are not adopted by the General Meeting however pursuant to our Bye-Laws are discussed with the General Meeting
each Annual General Meeting.
2.1.1 Adoption of new EU-IFRS accounting standards and amendments effective in 2023
The accounting policies and methods of computation applied in the consolidated financial statements are the same as those
applied in the 2022 consolidated financial statements, except for the following IFRS standards and amendments that became
effective for Aegon from January 1, 2023 and have been endorsed by the European Union:
\u2022 IFRS 17 Insurance contracts
\u2022
Initial Application of IFRS 17 and IFRS 9 \u2013 Comparative information (Amendments to IFRS 17)
\u2022 IFRS 9 Financial instruments
\u2022
Prepayment Features with Negative Compensation (Amendments to IFRS 9)
\u2022
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
\u2022
Definition of Accounting Estimates (Amendments to IAS 8)
\u2022
Deferred tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
The amendments to IAS 12 have been introduced in response to the OECD\u2019s Base Erosion and Profit Shifting (BEPS) Pillar Two
rules and include:
\u2022
A mandatory temporary exception to the recognition and disclosure of deferred taxes arising from the jurisdictional
implementation of the Pillar Two model rules; and
\u2022
Disclosure requirements for affected entities to help users of the financial statements better understand an entity\u2019s exposure
to Pillar Two income taxes arising from that legislation, particularly before its effective date. The mandatory temporary
exception \u2013 the use of which is required to be disclosed \u2013 applies immediately.
The remaining disclosure requirements apply for annual reporting periods beginning on or after 1 January 2023, but not for any
interim periods ending on or before 31 December 2023.
Aegon is within the scope of the OECD Pillar Two model rules. Pillar Two legislation was enacted in the Netherlands, the
jurisdiction in which Aegon Ltd. as Ultimate Parent Entity is tax resident, and will come into effect from 31 December 2023.
Aegon has applied the mandatory exception to recognizing and disclosing information about deferred tax assets and liabilities
related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023. Based on performed analysis,
applying both the temporary safe harbors and detailed calculations, Aegon has determined that the impact, if any, of Pillar Two
is currently expected to be non-material. Therefore, the consolidated financial statements do not include information required
by paragraphs 88A-88D of IAS 12.
The adoption of IFRS 17 and IFRS 9, which replaced IFRS 4 and IAS 39 respectively, have had a significant impact on the
financial position of Aegon and the consolidated financial statements. Based on the amendment to IFRS 17, Aegon has decided
to apply the overlay approach upon initial application of IFRS 9 and IFRS 17. This has allowed it to restate the 2022 comparative
period for both new standards.
IFRS 9 also significantly amended the credit risk disclosures required by IFRS 7 \"Financial Instruments: Disclosures\". The
consequential amendments to IFRS 7 disclosures have also been applied to the comparative period.
The impact of the adoption of the amendments to other standards, listed above, was immaterial.
2.1.2 Effects of initial adoption of IFRS 9 and IFRS 17
The effects of adopting IFRS 9 and IFRS 17 on the consolidated financial statements on January 1, 2022 are presented in the
statement of changes in equity. The adjustments made to the statement of financial position on transition date of January 1,
2022, and on initial application date January 1, 2023 of IFRS 9 and IFRS 17 are presented below.
The transition to IFRS 9 and IFRS 17 changes Aegon\u2019s balance sheet significantly. The main changes are:
\u2022
Deferred policy acquisition cost (DPAC) and Value of Business Acquired (VOBA) are no longer recognized as separate assets;
\u2022
Residential mortgages related to the insurance entities in the Netherlands are measured at fair value through P&L instead of
at amortized cost;
\u2022
Insurance liabilities are measured at fulfillment value which represents the present value of future cashflow to fulfil insurance
contracts, including a risk adjustment for non-financial risk. Interest rate movements impacting the fulfillment value flow
through P&L or OCI, depending on the accounting policy choice. Aegon Americas applies the OCI option for certain groups of
contracts, whereas Aegon UK applies the P&L option. These choices are aligned with the measurement of the related assets
to ensure an accounting match for market movements on assets and liabilities; and
\u2022
On top of the fulfillment value, a contractual service margin (CSM), reflecting unearned profits, is added to the insurance
liabilities.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
December 31,
Adoption of IFRS 9
\u00a0
Opening balance sheet reconciliation
2022
and IFRS 17
January 1, 2023
Cash and cash equivalents
3,407
(5)
3,402
Assets held for sale
88,902
(462)
88,440
Investments
76,825
177,934
254,759
Investments for account of policyholders
180,006
(180,006)
-
Derivatives
2,760
11
2,771
Investments in joint ventures
1,443
(13)
1,430
Investments in associates
165
-
165
Reinsurance contract assets
21,184
(4,245)
16,939
Insurance contract assets
-
36
36
Deferred tax assets
1,827
606
2,433
Deferred expenses
12,886
(12,434)
452
Other assets and receivables
10,291
(1,051)
9,240
Intangible assets
1,240
(820)
420
Total assets
400,936
(20,449)
380,487
Shareholders' equity
11,440
(2,625)
8,815
Other equity instruments
1,943
-
1,943
Issued capital and reserves attributable to owners of Aegon Ltd.
13,383
(2,625)
10,758
Non-controlling interests
176
-
176
Group equity
13,559
(2,624)
10,935
Subordinated borrowings
2,295
-
2,295
Trust pass-through securities
118
-
118
Reinsurance contract liabilities
-
270
270
Insurance contracts for account of policyholders
100,409
(100,409)
-
Insurance contract liabilities
87,309
88,811
176,120
Investments contracts
10,658
(10,658)
-
Investment contracts for account of policyholders
80,555
(80,555)
-
Investment contract liabilities with discretionary participating features
-
21,055
21,055
Investment contracts without discretionary participating features
-
65,227
65,227
Derivatives
6,094
(919)
5,175
Borrowings
4,051
-
4,051
Liabilities held for sale / disposal groups
84,119
(160)
83,959
Other liabilities
11,766
(483)
11,283
Total liabilities
387,376
(17,823)
369,553
Total equity and liabilities
400,936
(20,449)
380,487
Due to these transition adjustments and the different measurement of insurance contracts and financial instruments during
2022, total assets from January 1, 2023, were lower by EUR 20,449 million, total liabilities were lower by 17,823 million and
shareholders\u2019 equity was lower by EUR 2,625 million than the amounts presented in the last annual financial statements for
December 31, 2022.
On implementation of IFRS 9 and IFRS 17 the comparative balance of shareholders' equity is restated due to the combination
of opening balance sheet adjustments (decrease of EUR 12,795 million) of the transition date, and the cumulative differences
in equity movements of 2022 arising from the application of IFRS 9 and 17 in the amount of EUR 10,170 million increase,
of which 8,853 million is an adjustment to the change in the revaluation reserve. The remaining impact of EUR 1,318 million
is largely attributable to the changes in CSM balance and different measurement of insurance liabilities.
The decrease of EUR 12,434 million on Deferred expenses from January 1, 2023 (2022: EUR 10,076 million decrease)
attributable to the elimination of deferred acquisition costs, which are no longer recognized under IFRS 17 as separate assets,
but form part of the fulfillment cash-flows used in the measurement of insurance contracts.
The change in the measurement basis of insurance contracts (as described under note 2.1.3) resulted in a decrease
of EUR 11,598 million in the carrying amount of insurance liabilities (Insurance contract liabilities and Insurance contracts for
account of policyholders combined) from January 1, 2023 (2022: EUR 16,321 million increase), and also impacted reinsurance
assets resulting in a lower carrying amount by EUR 4,245 million (2022: EUR 330 million increase) and investment contracts,
which decreased by EUR 4,931 (2022: EUR 6,602 million decrease).
The impacts of transition from IAS 39 to IFRS 9 on the carrying amounts of financial instruments including investments,
derivative assets and liabilities, investment contracts without discretionary participating features, other financial assets and
liabilities are detailed in note 2.1.4.
The carrying amount of assets held for sale on January 1, 2023 was lower by EUR 462 million compared to the balance
presented in the latest annual financial statements of December 31, 2022. Regarding liabilities held for sale, the carrying
amount on January 1, 2023 was lower by EUR 160 million compared to the figures previously reported. Note 45 includes
details on the impacts of IFRS 9 and 17 on the measurement of the disposal group.
The book value of intangible assets decreased by EUR 820 million from January 1, 2023 (2022: EUR 748 million) due to the
derecognition of value of business acquired on transition, as it will not be recognized as a separate asset under IFRS 17.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
December 31,
Adoption of IFRS 9
\u00a0
Opening balance sheet reconciliation
2021
and IFRS 17
January 1, 2022
Cash and cash equivalents
6,889
(28)
6,861
Investments
158,463
251,614
410,077
Investments for account of policyholders
250,953
(250,953)
-
Derivatives
8,827
16
8,843
Investments in joint ventures
1,743
(28)
1,715
Investments in associates
1,289
-
1,289
Reinsurance contract assets
20,992
330
21,322
Insurance contract assets
-
110
110
Deferred tax assets
131
1,870
2,001
Deferred expenses
10,503
(10,076)
428
Other assets and receivables
7,761
(963)
6,798
Intangible assets
1,333
(748)
585
Total assets
468,884
(8,856)
460,029
Shareholders' equity
24,282
(12,795)
11,487
Other equity instruments
2,363
-
2,363
Issued capital and reserves attributable to owners of Aegon Ltd.
26,645
(12,795)
13,850
Non-controlling interests
196
-
196
Group equity
26,841
(12,795)
14,046
Subordinated borrowings
2,194
-
2,194
Trust pass-through securities
126
-
126
Reinsurance contract liabilities
-
471
471
Insurance contracts for account of policyholders
149,323
(149,323)
-
Insurance contract liabilities
124,422
165,644
290,066
Investments contracts
21,767
(21,767)
-
Investment contracts for account of policyholders
104,592
(104,592)
-
Investment contract liabilities with discretionary participating features
-
27,392
27,392
Investment contracts without discretionary participating features
-
92,364
92,364
Derivatives
10,639
(3,501)
7,138
Borrowings
9,661
-
9,661
Other liabilities
19,321
(2,749)
16,572
Total liabilities
442,044
3,939
445,983
Total equity and liabilities
468,884
(8,856)
460,029
\n
As the result of restatement of the opening balance sheet on transition date January 1, 2022 the carrying amount of total
assets decreased by EUR 8,856 million while total liabilities increased by EUR 3,939 million and as such shareholders\u2019 equity
decreased by EUR 12,795 million. The main component of this change was the net decrease of other comprehensive income
by EUR 9,022 million due to the establishment of a revaluation reserve for interest rate movements on insurance liabilities
under IFRS 17, and the reclassification of revaluation reserves on financial assets from other comprehensive income
to retained earnings. The total decrease of retained earnings in amount of EUR 3,707 million also includes the establishment
of CSM on insurance contracts, partly offset by other remeasurements arising from lower fulfillment cashflows under IFRS
17 compared to IFRS 4.
The impact of restated adjustments due to the adoption of IFRS 9 and IFRS 17 on earnings per share is reflected in the
table below.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Impact of adoption of new accounting standards on the consolidated
YE 2022 (as
Adoption of IFRS 9
\u00a0
income statement
previously reported)
and IFRS 17
YE 2022 (restated)
Earnings per share (EUR per share)
\u00a0 \u00a0 \u00a0
Basic earnings per common share
(1.27)
0.75
(0.52)
Basic earnings per common share B
(0.03)
0.02
(0.01)
Diluted earnings per common share
(1.27)
0.75
(0.52)
Diluted earnings per common share B
(0.03)
0.02
(0.01)
Earnings per common share calculation
\u00a0 \u00a0 \u00a0
Net result / (loss) attributable to owners
(2,533)
1,514
(1,019)
Coupons on perpetual securities
(36)
-
(36)
Net result / (loss) attributable to owners for basic earnings per share
\u00a0 \u00a0 \u00a0
calculation
(2,569)
1,514
(1,055)
Weighted average number of common shares outstanding (in million)
2,010
-
2,010
Weighted average number of common shares B outstanding (in million)
536
-
536
\n
2.1.3 IFRS 17 Insurance Contracts
Aegon has adopted IFRS 17 \u2013 Insurance Contracts, including any consequential amendments to other standards, with a date
of initial application of January 1, 2023 and a transition date of January 1, 2022.
Aegon does not use the optional exemption provided under EU-IFRS to group together specific insurance contracts that were
issued more than 12 months apart.
a) Changes compared to previous accounting policies
Under IFRS 4, Aegon largely continued to report under the accounting policies that were applied prior to the adoption of EU-
IFRS. This meant that, in general, the Group applied non-uniform accounting policies for insurance assets and liabilities
as allowed under Dutch Accounting Policies. Specific measurement methodologies differed between Aegon\u2019s operations,
reflecting local regulatory requirements and local practices for specific product features. Under IFRS 17, consistent accounting
policies are applied to all insurance contracts and investment contracts with discretionary participation features, regardless
of the jurisdiction in which the contracts have been issued.
Under Aegon\u2019s previous accounting policies, some minimum guarantees were separated from the host insurance contracts and
classified as derivatives. The Group also elected to apply the accounting option under IFRS 4 to measure certain closely related
minimum guarantees at fair value. Under IFRS 17, Aegon has not identified any embedded derivatives that require separation.
All minimum guarantees are measured together with the host contract, in accordance with the requirements of IFRS 17.
Policy loans, value of business acquired, and insurance payables and receivables, which were previously accounted for
as separate assets, are now included in the measurement of the insurance liabilities.
Measurement
IFRS 17 establishes principles for the accounting for insurance contracts, reinsurance contracts, and investment contracts
with discretionary participation features. It introduces a model that measures groups of contracts based on Aegon\u2019s estimate
of the present value of the future cash flows that will arise as these contracts are fulfilled, and which includes an explicit risk
adjustment for non-financial risk and a contractual service margin (CSM) reflecting unearned profits. Contrary to previous
accounting, IFRS 17 requires estimates to be current, unbiased and probability-weighted, incorporating all available information
in a way that is consistent with observable market data.
IFRS 17 prescribes modifications to the general measurement model for contracts with direct participating features (the
\"variable fee approach\") and for reinsurance contracts held. The standard also provides an option to simplify the measurement
of certain short-term contracts (the \"premium allocation approach\"), which is primarily applied by Aegon to non-life insurance
contracts and related reinsurance contracts held. The measurement of these contracts is similar to the previous treatment
under IFRS 4, albeit that when measuring liabilities for incurred claims, Aegon now discounts cash flows expected to occur
more than one year after the claim\u2019s date and includes an explicit risk adjustment for non-financial risk.
Acquisition costs
Previously, under IFRS 4, all acquisition costs were recognized and presented as separate assets (Deferred Policy Acquisition
Costs or \"DPAC\") until these costs were included in profit or loss. Under IFRS 17, only insurance acquisition cash flows that
arise before the recognition of the related insurance contracts are included within the insurance liability as a separate asset.
These assets, which are subject to recoverability testing, are derecognized and included in the carrying amount of the related
portfolio of contracts on initial recognition.
For some (but not all) groups of contracts for which the premium allocation approach is applied, Aegon has opted to expense
acquisition costs when incurred.
Aegon allocates acquisition costs to either product or business lines (where applicable) based on a study, a series of studies
or a thoroughly defined rational for their allocation methodologies.
Revenue and expenses
Under IFRS 4, the revenues reported in the income statement included gross insurance premiums when due, or for products
where deposit accounting was required, surrender fees and other charges. Under IFRS 17, the insurance revenue in each
reporting period reflects the consideration to which Aegon expects to be entitled in exchange for the services provided
in that period.
The actual claims and expenses incurred in providing the service are presented in the income statement as insurance
service expenses.
Insurance finance income and expenses, disaggregated between profit or loss and other comprehensive income (OCI) for
certain groups of contracts, are now presented separately from insurance revenue and insurance service expenses.
Income and expenses from reinsurance contracts, other than insurance finance expenses, are presented as a single
net amount in the income statement. Previously, amounts recovered from reinsurers and reinsurance expenses were
presented separately.
b) Transition
Changes in accounting policies resulting from the adoption of IFRS 17 were applied retrospectively, to the extent practicable.
Aegon considered the full retrospective approach to be impracticable when its application required hindsight, for example
in setting historical assumptions, or if the required historical input data could not be made available within reasonable efforts.
The latter was, for example, concluded when information was no longer available electronically and incorporating it into the IFRS
17 reporting process was expected to cause high costs and efforts.
If the retrospective application of IFRS 17 to a group of contracts was impracticable, either the modified retrospective approach
or the fair value approach was applied. The modified retrospective approach may only be applied if there is reasonable
and supportable information available to do so. For groups of contracts that in principle were eligible for both the modified
retrospective and the fair value approach, the most appropriate transition method was elected based on a mix of operational
and financial considerations.
Notwithstanding the foregoing, Aegon applied the fair value approach to some groups of contracts with direct participating
features, to which it could have applied IFRS 17 fully retrospectively. These were groups of contracts for which Aegon had
mitigated financial risk prior to transition using derivatives, other financial instruments classified as fair value through profit
or loss, and reinsurance contracts, and to which risk mitigation has been applied prospectively from the transition date.
Fair Value Approach
Under the fair value approach, the carrying amount of a group of insurance contracts at transition is determined in accordance
with IFRS 13 Fair Value Measurement but with the exclusion of the guidance on demand features. The difference between the
fair value and the fulfillment cash flows at the transaction date is recognized as contractual service margin.
In estimating the fair value of insurance contracts for the transition to IFRS 17, Aegon applied a methodology whereby the
estimated future cash flows were adjusted for known differences between the IFRS 17 and market valuation methodologies
(such as the inclusion of investment expenses for all product types) and the risk adjustment was recalculated at a higher
confidence level to reflect the additional compensation that a market participant would require for financial risk and the
remaining contractual services that need to be provided. Where possible, the results were compared to market-observable
transactions, such as recent reinsurance transactions entered into by Aegon and sales transactions of insurance portfolios and
businesses.
For contracts that transitioned to IFRS 17 under the fair value approach, the following assessments were generally performed
at original contract inception date, with a limited number of products being assessed at the transition date:
\u2022
Assessment whether an insurance contract met the definition of an insurance contract with direct participating features;
\u2022
Assessment whether an investment contract met the definition of an investment contract with discretionary participating
features; and
\u2022
Identification of discretionary cash flows for insurance contracts without direct participating features.
The grouping of contracts to which the fair value approach is applied has been performed at the transition date. The contracts
were grouped together in portfolios in accordance with IFRS 9 and IFRS 17 (as per January 1, 2023). None of the contracts
were identified as being onerous at transition. The identified groups of contracts were not further segmented into cohorts
based on issue date.
The discount rates at which interest is accrued to the contractual service margin and at which changes in non-financial
assumptions are recognized for groups of contracts without direct participating features have also been set at the
transition date.
Modified Retrospective Approach
The objective of a modified retrospective approach is to reach the closest outcome to the full retrospective approach using
reasonable and supportable information that can be obtained without undue cost or effort. Aegon applied the modified
retrospective approach to groups of contracts for which the fair value approach was not the preferred transition approach,
by working back from the transition date to the date on initial recognition to gather the necessary information. Only where the
information could not be made available without undue effort were modifications applied as allowed under IFRS 17.
For all contracts that transitioned to IFRS 17 under the modified retrospective approach, sufficient information was available
to perform the contract classifications at the original contract inception date.
The grouping of contracts was performed at the original contract inception date, or if there was a lack of reasonable and
supportable information, at the transition date. Contracts were grouped into cohorts not exceeding 12 months.
None of the contracts to which the modified retrospective approach was applied were identified as being onerous
at initial inception.
Modifications applied to contracts without direct participating features
To determine the contractual service margin at transition for groups of contracts without direct participating features, Aegon
first estimated the contractual service margin at the original inception date. The contractual service margin at inception was
then rolled forward to the transition date by deducting the estimated amount that would have been released for services
provided prior to transition.
In order to attribute past calendar-year cash flows (including acquisition cash flows) to issue year cohorts, appropriate
allocation keys were set by cash flow type based on the information available. Examples include accumulated premiums
in force and (first year) account values.
The calculation of the fulfillment cash flows at inception and the subsequent accretion of interest to the contractual service
margin of a group of contracts required the use of historical discount rates. In principle, Aegon determines IFRS 17 discount
rates using a hybrid approach based on risk-free rates plus an illiquidity premium based on expected asset returns. Where the
necessary asset portfolio data was not or no longer available, an appropriate observable yield curve plus a spread adjustment
was applied to approximate historical discount rates. For cohorts that exceed 12 months, weighted-average historical discount
rates were applied. The weighting was based on sales volumes, or where not available, on the expected coverage units
at inception.
The modified retrospective calculations were based on the assumption that Aegon had not previously prepared interim
financial statements, unless sufficient information existed to roll the contractual service margin forward with Aegon\u2019s historical
reporting frequency.
Modifications applied to contracts with direct participating features
To determine the contractual service margin at transition for a group of insurance contracts with direct participating features,
Aegon first estimated the total contractual service margin for all services to be provided for that group of contracts. It then
deducted the estimated amount that would have been released for services provided prior to the transition date.
The total contractual service margin for all services to be provided was estimated by taking the fair value of the underlying
items at the transition date minus the fulfillment cash flows at that date and adjusting it for:
\u2022
Amounts charged to policyholders prior to the transition date;
\u2022
Excess claims and expenses paid in this period, including acquisition costs; and
\u2022
The estimated change in the risk adjustment for non-financial risk caused by the release of risk before the transition date.
Calendar year cash flows were attributed to issue years using allocation keys that were appropriate for the cash flow types,
based on available information (for example, account value, and for excess claims paid, the net amount at risk). In estimating the
change in the risk adjustment for non-financial risk prior to the transition date, the projected risk adjustment pattern for newly
issued cohorts of similar products were deemed an appropriate proxy for previous years.
The amount released for services provided prior to transition was determined by multiplying the adjusted total contractual
service margin by the ratio of the coverage units served prior to transition and the total coverage units expected to be provided
over the lifetime of the group of contracts.
Other Comprehensive Income
Under IFRS 17, Aegon has elected to disaggregate the insurance finance income or expenses between profit or loss and OCI
for certain groups of contracts without direct participating features that are issued in the Americas and Asia. The balance
recognized in OCI has been determined retrospectively where possible, or alternatively, has been set to nil at the transition
date. The latter applies, for example, to the fixed deferred annuities, indexed universal life and other life insurance products with
indirect participating features issued in the Americas.
Aegon also no longer applies shadow accounting which, ignoring the impact of any reclassifications of investments discussed
below, has had a positive impact on the carrying amount of revaluation reserves presented in OCI.
2.1.4 IFRS 9 Financial instruments
Aegon has adopted IFRS 9 as issued by the IASB in July 2014, with a date of initial application of January 1, 2023 and
a transition date of January 1, 2022. Aegon did not early adopt IFRS 9 in previous periods.
Aegon has elected to continue to apply the hedge accounting requirements for macro fair value hedges of IAS 39 on adoption
of IFRS 9. As such, fair value hedge accounting for portfolio hedges of interest rate risk (macro hedging) under the EU \"carve
out\" of IFRS is applied.
a) Changes compared to previous accounting policies
The adoption of IFRS 9 resulted in changes in Aegon\u2019s accounting policies for recognition, classification and measurement
of financial assets and financial liabilities, impairment of financial assets and hedge accounting.
Classification and Measurement
Under IAS 39, financial assets were classified as \"Available-For-Sale\" (AFS), \"Loans and Receivables\" (L&R) or as held at \"Fair
Value Through Profit or Loss\" (FVPL). The following financial assets were measured at FVPL: financial assets held for trading,
financial assets managed on a fair value basis and financial assets containing an embedded derivative that is not closely
related and that cannot be reliably bifurcated. In addition, in certain instances Aegon designated financial assets to this
category when by doing so a potential accounting mismatch in the financial statements is eliminated or significantly reduced.
Under IFRS 9, classification and measurement differ for debt instruments and equity instruments.
Debt instruments are those instruments that meet the definition of a financial liability from the issuer\u2019s perspective, such as
mortgage loans, private loans, and government and corporate bonds. Aegon classifies its debt instruments into one of the
following three IFRS 9 measurement categories, based on its business model for managing the asset, the asset\u2019s cash flow
characteristics, and Aegon\u2019s intent to designate the asset at FVPL to eliminate or significantly reduce an accounting mismatch
or recognition inconsistency:
\u2022
Amortized cost (\"AC\"): Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest (\"SPPI\"), and that are not designated at FVPL, are measured at amortized cost. The carrying
amount of these assets is adjusted by any Expected Credit Loss (\"ECL\") allowance recognized.
\u2022
Fair value through other comprehensive income (\"FVOCI\"): Financial assets that are held for collection of contractual cash
flows and for selling the assets, where the assets\u2019 cash flows represent solely payments of principal and interest, and that are
not designated at FVPL, are measured at FVOCI.
\u2022
Fair value through profit or loss (\"FVPL\"): Assets that do not meet the criteria for amortized cost or FVOCI are measured
mandatorily at fair value through profit or loss.
Equity instruments are instruments that meet the definition of equity from the issuer\u2019s perspective, such as basic ordinary
shares. On initial recognition, IFRS 9 allows Aegon to make an irrevocable election to present changes in the fair value of equity
investment in OCI or profit or loss. In both cases, the equity instruments are not subject to impairment under Expected
Credit Loss model.
Financial liabilities are to be classified as subsequently measured at amortized cost, except financial liabilities measured
at fair value through profit or loss, financial liabilities arising from the transfer of financial assets which did not qualify for
derecognition, and financial guarantee contracts and loan commitments.
Impairment allowance
The IAS 39 impairment methodology was based on an \"incurred loss\" model, which means that an allowance was determined
when an instrument was deemed credit impaired. The allowance for instruments that are credit impaired will generally align
with the Stage 3 category of IFRS 9. However, within the expected loss framework of IFRS 9 the entire portfolio of financial
instruments will be assigned an impairment allowance through the additions of the 12-month ECL category (stage 1) and the
Lifetime ECL Non-credit-impaired (Stage 2), generally leading to increases in the overall allowances.
Hedge accounting
Aegon has elected to adopt the new hedge accounting model in IFRS 9. This requires the Group to ensure that hedging
relationships are aligned with its risk management objectives and strategy and to apply a more qualitative and forward-looking
approach to assessing hedge effectiveness.
Aegon has elected to continue to apply hedge accounting requirements for macro fair value hedges of IAS 39 on adoption
of IFRS 9. As such, fair value hedge accounting for portfolio hedges of interest rate risk (macro hedging) under the EU \"carve
out\" of IFRS is applied.
b) IFRS 9 Transition
Any adjustments to the carrying amounts of financial assets and liabilities at the date of transition were recognized in the
opening retained earnings and other reserves of the initial recognition period, January 1, 2022.
Classification and Measurement
On transition to IFRS 9, Aegon performed a detailed analysis of its business models for managing financial assets and analysis
of their cash flow characteristics. Furthermore some AC and FVOCI financial assets have been designated as FVPL to reduce
the accounting mismatch between assets and liabilities.
The transition to IFRS 9 impacted the classification and measurement of financial assets.
The measurement category and the carrying amount of financial assets and liabilities in accordance with IAS 39 and IFRS 9 at
January 1, 2022 and January 1, 2023 are detailed in the table below by type of instrument, together with a reconciliation of the
carrying amounts of financial instruments, from their previous measurement category in accordance with IAS 39 to their new
measurement categories upon transition:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0 \u00a0 \u00a0
Remea-
Remea-
\u00a0 \u00a0
Reconciliation of financial instruments,
IAS 39
IAS 39
Reclassifi-
surement
surement
IFRS 9
IFRS 9
January 1, 2023
category
amount
cation
- ECL
- Other
category
3)
amount
Financial assets
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Shares
FVPL
15,698
(193)
-
-
FVPL (d)
15,505
Shares
AFS
\u00a0
348
-
-
FVPL (m)
348
Shares
\u00a0
195
(186)
-
-
FVOCI (d)
10
Debt securities
AFS
53,093
(1,486)
-
-
FVOCI
51,607
Debt securities
FVPL
6,248
(5,449)
-
-
FVPL (m)
799
Debt securities
\u00a0 \u00a0
6,935
-
-
FVPL (d)
6,935
Money market and other short-term
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investments
AFS
5,514
(2,938)
-
-
FVOCI
2,576
Money market and other short-term
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investments
FVPL
1,362
1,514
-
-
FVPL (m)
2,876
Money market and other short-term
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investments
\u00a0 \u00a0
1,429
-
-
FVPL (d)
1,429
Loans
L&R
12,511
(2,095)
(12)
4
AC
10,408
Deposits with financial institutions
L&R
45
-
-
-
AC
45
Deposits with financial institutions
FVPL
2,360
-
-
-
FVPL (d)
2,360
Unconsolidated investment funds
FVPL
154,741
-
-
-
FVPL (d)
154,741
Other investments
FVPL
3,722
(3,190)
-
-
FVPL (d)
532
Other investments
AFS
\u00a0
4,056
\u00a0 \u00a0
FVPL (m)
4,056
Other investments
\u00a0
840
(810)
-
-
FVOCI
31
IAS 39 / IFRS 9 Investments
1)
\u00a0
256,328
(2,065)
(12)
4
\u00a0
254,257
Cash and cash equivalents
L&R
3,407
(4)
-
-
AC
3,402
Other financial assets and receivables
2)
L&R
9,722
(1,050)
-
-
AC
8,671
Derivatives
FVPL
2,760
11
-
-
FVPL (m)
2,771
Total financial assets
\u00a0
272,217
(3,108)
(12)
4
\u00a0
269,102
Financial liabilities:
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Investment contracts
AC
10,485
(888)
-
-
AC
9,597
Investment contracts
FVPL
55,254
376
-
-
FVPL (d)
55,631
Investment contracts without discretionary
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
participating features
\u00a0
65,739
(512)
\u00a0 \u00a0 \u00a0
65,227
Long-term borrowings and group loans
AC
4,051
-
-
-
AC
4,051
Derivatives
FVPL
6,094
(919)
-
-
FVPL (m)
5,175
Other liabilities
AC
10,785
(507)
-
-
AC
10,278
Total financial liabilities
\u00a0
86,668
(1,938)
-
-
\u00a0
84,730
\n
1
Investments and other assets include financial assets and non-financial assets as well. Investments under IAS 39 comprises EUR 256,328 million financial
assets as detailed in the table and EUR 502 million investments in real estates on December 31, 2023. Investments under IFRS 9 comprises EUR 254,257 million
financial assets as detailed in the table and EUR 502 million investments in real estates on January 1, 2023.
2
Other assets and receivables under IAS 39 contains EUR 9,722 million other financial assets and receivables and EUR 482 million own used real estates and
right of use assets on December 31, 2022. Other assets and receivables under IFRS 9 contains EUR 8,671 million other financial assets and receivables and
EUR 482 million own used real estates and right of use assets on January 1, 2023
3
m: mandatorily; d: designated
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0 \u00a0 \u00a0
Remea-
Remea-
\u00a0 \u00a0
Reconciliation of financial instruments,
IAS 39
IAS 39
Reclassifi-
surement
surement
IFRS 9
IFRS 9
January 1, 2022
category
amount
cation
- ECL
- Other
category
3)
amount
Financial assets:
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Shares
FVPL
31,203
(1,660)
-
-
FVPL (d)
29,543
Shares
AFS
\u00a0
1,912
\u00a0 \u00a0
FVPL (m)
1,912
Shares
\u00a0
350
(279)
-
-
FVOCI (d)
72
Debt securities
AFS
93,899
(22,925)
-
-
FVOCI
70,974
Debt securities
FVPL
23,117
(22,387)
-
-
FVPL (m)
730
Debt securities
\u00a0 \u00a0
45,312
-
-
FVPL (d)
45,312
Money market and other short-term
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investments
AFS
4,790
(2,289)
-
-
FVOCI
2,501
Money market and other short-term
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investments
FVPL
1,602
694
-
-
FVPL (m)
2,296
Money market and other short-term
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investments
\u00a0 \u00a0
1,624
-
-
FVPL (d)
1,624
Loans
L&R
47,402
(21,971)
(150)
110
AC
25,392
Loans
\u00a0 \u00a0
20,106
-
2,594
FVPL (d)
22,700
Deposits with financial institutions
L&R
52
-
-
-
AC
52
Deposits with financial institutions
FVPL
4,105
-
-
-
FVPL (d)
4,105
Unconsolidated investment funds
FVPL
191,950
-
-
-
FVPL (d)
191,950
Other investments
FVPL
6,893
(2,800)
-
-
FVPL (d)
4,093
Other investments
\u00a0 \u00a0
3,572
\u00a0 \u00a0
FVPL (m)
3,572
Other investments
AFS
844
(800)
-
-
FVOCI
44
IAS 39 / IFRS 9 Investments
1)
\u00a0
406,210
(1,891)
(150)
2,704
\u00a0
406,871
Cash and cash equivalents
L&R
6,889
(28)
-
-
AC
6,861
Other financial assets and receivables
2)
L&R
6,988
(963)
-
-
AC
6,025
Derivatives
FVPL
8,827
16
-
-
FVPL (m)
8,843
Total financial assets
\u00a0
428,913
(2,868)
(150)
2,704
\u00a0
428,599
Financial liabilities:
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Investment contracts
AC
21,573
(899)
-
-
AC
20,674
Investment contracts
FVPL
71,242
448
-
-
FVPL (d)
71,690
Investment contracts without discretionary
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
participating features
\u00a0
92,815
(451)
-
-
\u00a0
92,364
Long-term borrowings and group loans
AC
9,661
-
-
-
AC
9,661
Derivatives
FVPL
10,639
(3,501)
-
-
FVPL (m)
7,138
Other liabilities
AC
12,916
(1,033)
-
-
AC
11,883
Total financial liabilities
\u00a0
126,030
(4,985)
-
-
\u00a0
121,046
\n
1
Investments and other assets include financial assets and non-financial assets as well. Investments under IAS 39 comprises EUR 406,210 million financial
assets as detailed in the table and EUR 3,206 million investments in real estates on December 31, 2023. Investments under IFRS 9 comprises EUR 406,871
million financial assets as detailed in the table and EUR 3,206 million investments in real estates on January 1, 2023.
2
Other assets and receivables under IAS 39 contains EUR 6,988 million other financial assets and receivables and EUR 654 million own used real estates and
right of use assets on December 31, 2022. Other assets and receivables under IFRS 9 contains EUR 6,025 million other financial assets and receivables and
EUR 654 million own used real estates and right of use assets on January 1, 2023.
3
m: mandatorily; d: designated
The reclassification and remeasurement impacts from January 1, 2023 do not include the Netherlands, which is separately
disclosed in note 45. Discontinued operations.
From January 1, 2023, EUR 3,108 million (January 1, 2022: EUR 2,868 million) has been reclassified out of financial assets, and
EUR 1,938 million (January 1, 2022: EUR 4,985 million) has been reclassified out of financial liabilities which moved in scope
of IFRS 17 and classified and measured as (re)insurance contracts from January 1, 2022. These reclassifications are mainly
related to policy loans and previously bifurcated embedded derivatives.
Remeasurement impacts included the reversal of impairments of financial assets recognized under IAS 39 in amount
of EUR 4 million (January 1, 2022: EUR 110 million) and the recognition of expected credit losses of EUR 12 million (January 1,
2022: EUR 150 million) in line with the impairment requirements of IFRS 9.
On January 1, 2022, an additional remeasurement gain of EUR 2,594 was the result of the designation of loans and receivables
in the Netherlands (previously measured at amortized cost) to measurement at fair value through profit or loss. The
corresponding difference in measurement on January 1, 2023 is presented in note 45. Discontinued operations.
Impairment of financial assets
The following table reconciles the prior period\u2019s closing impairment allowance measured in accordance with the IAS
39 incurred loss model to the new impairment allowance measured in accordance with the IFRS 9 expected loss model
on January 1, 2022, and January 1, 2023.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Loss allowance under
\u00a0 \u00a0 \u00a0
\u00a0
IAS 39 / Provision
\u00a0 \u00a0 \u00a0
Impairment / ECL reconciliation
under IAS 37
Reclassifications
Remeasurements
ECL under IFRS 9
Measurement category
\u00a0 \u00a0 \u00a0 \u00a0
Loans and receivables (IAS 39) to Financial assets at
\u00a0 \u00a0 \u00a0 \u00a0
amortized cost (IFRS 9)
(9)
2
(4)
(12)
Available for sale financial instruments (IAS 39) to
\u00a0 \u00a0 \u00a0 \u00a0
Financial assets at FVOCI (IFRS 9)
(374)
187
(89)
(276)
Total on January 1, 2023
(383)
189
(93)
(287)
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Loss allowance under
\u00a0 \u00a0 \u00a0
\u00a0
IAS 39 / Provision
\u00a0 \u00a0 \u00a0
Impairment / ECL reconciliation
under IAS 37
Reclassifications
Remeasurements
ECL under IFRS 9
Measurement category
\u00a0 \u00a0 \u00a0 \u00a0
Loans and receivables (IAS 39) to Financial assets at
\u00a0 \u00a0 \u00a0 \u00a0
amortized cost (IFRS 9)
(125)
6
(31)
(150)
Available for sale financial instruments (IAS 39) to
\u00a0 \u00a0 \u00a0 \u00a0
Financial assets at FVOCI (IFRS 9)
(376)
190
(33)
(219)
Total on January 1, 2022
(501)
196
(63)
(369)
\n
2.1.5 Future adoption of new EU-IFRS accounting standards and amendments
The following standards and amendments to existing standards, published prior to January 1, 2024, were not early adopted by
the Group, but will be applied in future years:
\u2022
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (issued on 15 August 2023)
\u2022
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance
Arrangements (Issued on 25 May 2023)
\u2022
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (Issued on
23 January 2020)
\u2022
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current - Deferral
of effective date (Issued on 15 July 2020)
\u2022
Amendments to IAS 1 Presentation of Financial Statements: Non-current liabilities with covenants (Issued on 31 October 2022)
\u2022
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (issued on 22 September 2022)
Amendments to IAS 21 have an effective date of January 1, 2025, the others became effective on January 1, 2024. The
amentments to IAS 1 and IFRS 16 have also been endorsed by the EU by December 31, 2023. These future amendments are
not expected to have a material impact on the financial statements of Aegon. ", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f18208": { "value": "The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code. ", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f18268": { "value": "The consolidated financial statements of Aegon Ltd. were approved by the Board on April 3, 2024. The financial statements will
be presented to the Annual General Meeting of Shareholders on April 4, 2024. In accordance with Bermuda law, the annual
accounts are not adopted by the General Meeting however pursuant to our Bye-Laws are discussed with the General Meeting
each Annual General Meeting.", "dimensions": { "concept": "ifrs-full:DisclosureOfAuthorisationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f20955": { "value": "2.2 Basis of consolidation
Subsidiaries
The consolidated financial statements include the financial information of Aegon Ltd. and its subsidiaries. Subsidiaries
(including consolidated structured entities) are entities over which Aegon has control. Aegon controls an entity when Aegon
is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. The assessment of control is based on the substance of the relationship between the Group
and the entity and, among other things, considers existing and potential voting rights that are substantive. For a right to be
substantive, the holder must have the practical ability to exercise that right.
The subsidiary\u2019s assets, liabilities and contingent liabilities are measured at fair value on the acquisition date and are
subsequently accounted for in accordance with the Group\u2019s accounting policies, which is consistent with EU-IFRS. Intra-group
transactions, including Aegon Ltd. shares held by subsidiaries, which are recognized as treasury shares in equity, are eliminated.
Intra-group losses may indicate an impairment that requires recognition in the consolidated financial statements. Non-
controlling interests are initially stated at their share in the fair value of the net assets on the acquisition date and subsequently
adjusted for the non-controlling share in changes in the subsidiary\u2019s equity.
The excess of the consideration paid to acquire the interest and the fair value of any interest already owned over the
Group\u2019s share in the net fair value of assets, liabilities and contingent liabilities acquired is recognized as goodwill. Negative
goodwill is recognized directly in the income statement. If the fair value of the assets, liabilities and contingent liabilities
acquired in the business combination has been determined provisionally, adjustments to these values resulting from the
emergence of new evidence within 12 months after the acquisition date are made against goodwill. Aegon recognized
contingent considerations either as provision or as financial liability depending on the characteristics. Any contingent
consideration payable is recognized at fair value at the acquisition date. If the contingent consideration is classified as equity,
it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the
contingent consideration are recognized in the income statement.
The identifiable assets, liabilities and contingent liabilities are stated at fair value when control is obtained.
Subsidiaries are deconsolidated when control ceases to exist. Any difference between the net proceeds plus the fair value
of any retained interest and the carrying amount of the subsidiary including non-controlling interests is recognized in the
income statement.
Transactions with non-controlling interests
Transactions with non-controlling interests are accounted for as transactions with owners. Therefore, disposals to non-
controlling interests and acquisitions from non-controlling interests not resulting in losing or gaining control of the subsidiary
are recorded in equity. Any difference between consideration paid or received and the proportionate share in net assets
is accounted for in equity attributable to shareholders of Aegon Ltd.
Investment funds
Investment funds managed by the Group in which the Group holds an interest are consolidated in the financial statements if the
Group has power over that investment fund and it is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee. In assessing control, all interests held
by the Group in the fund are considered, regardless of whether the financial risk related to the investment is borne by the Group
or by the policyholders (unless a direct link between the policyholder and the fund can be assumed).
In determining whether Aegon has power over an investment fund all facts and circumstances are considered, including the
following:
\u2022
Control structure of the asset manager (i.e. whether an Aegon subsidiary);
\u2022
The investment constraints posed by investment mandate;
\u2022
Legal rights held by the policyholder to the separate assets in the investment vehicle (e.g. policyholders could have the voting
rights related to these investments);
\u2022
The governance structure, such as an independent Board of Directors, representing the policyholders, which has substantive
rights (e.g. to elect or remove the asset manager); and
\u2022
Rights held by other parties (e.g. voting rights of policyholders that are substantive or not).
Exposure or rights to variability of returns can be the result of, for example:
\u2022
General account investment of Aegon;
\u2022
Aegon's investments held for policyholder;
\u2022
Guarantees provided by Aegon on return of policyholders in specific investment vehicles;
\u2022
Fees dependent on fund value (including, but not limited to, asset management fees); and
\u2022
Fees dependent on performance of the fund (including, but not limited to, performance fees).
Investment funds where Aegon acts as an agent are not consolidated due to lack of control of the funds. In particular, for some
separate accounts, the independent Board of Directors has substantive rights and therefore Aegon does not have power over
these separate accounts but acts as an agent.
For limited partnerships, the assessment takes into account Aegon\u2019s legal position (i.e. limited partner or general partner) and
any substantive removal rights held by other parties. Professional judgment is applied concerning the substantiveness of the
removal rights and the magnitude of the exposure to variable returns, leading to the conclusion that Aegon controls some, but
not all, of the limited partnerships in which it participates.
Upon consolidation of an investment fund, a liability is recognized to the extent that the Group is legally obliged to buy back
participations held by third parties. The liability is presented in the consolidated financial statements as investment contracts
for account of policyholders. Where no repurchase obligation exists, the participations held by third parties are presented
as non-controlling interests in equity. The assets allocated to participations held by third parties or by the Group on behalf
of policyholders are presented in the consolidated financial statements as investments for account of policyholders.
Equity instruments issued by the Group that are held by investment funds are eliminated on consolidation. However, the
elimination is reflected in equity and not in the measurement of the related financial liabilities toward policyholders or other
third parties.
Structured entities
A structured entity is defined in IFRS 12 as \u201cAn entity that has been designed so that voting rights are not the dominant factor
in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities
are directed by means of contractual arrangements.\u201d In these instances the tests and indicators to assess control provided
by IFRS 10 have more focus on the purpose and design of the investee (with relation to the relevant activities that most
significantly affect the structured entity) and the exposure to variable returns, which for structured entities lies in interests
through for example derivatives, and will not be focused on entities that are controlled by voting rights.
Structured entities that are consolidated include certain mortgage backed securitization deals, where Aegon was involved
in the design of the structured entities and also has the ability to use its power to affect the amount of the investee\u2019s returns.
Other factors that contribute to the conclusion that consolidation of these entities is required includes consideration
of whether Aegon fully services the investees and can therefore influence the defaults of the mortgage portfolios and the fact
that in these cases the majority of risks are maintained by Aegon.
Structured entities that are not consolidated include general account investments in non-affiliated structured entities that are
used for investment purposes.
Non-current assets held for sale and disposal groups
Disposal groups are classified as held for sale if they are available for immediate sale in their present condition, subject only
to the customary sales terms of such assets and disposal groups and their sale is considered highly probable. Management
must be committed to the sale, which is expected to occur within one year from the date of classification as held for sale.
Upon classification as held for sale, the carrying amount of the disposal group (or group of assets) is compared to their fair
value less cost to sell. If the fair value less cost to sell is lower than the carrying value, this expected loss is recognized through
a reduction of the carrying value of any goodwill related to the disposal group or the carrying value of certain other non-current,
non-financial assets to the extent that the carrying value of those assets exceeds their fair value. Any excess of the expected
loss over the reduction of the carrying amount of these relevant assets is not recognized upon classification as held for sale
but is recognized as part of the result on disposal if and when a divestment transaction occurs.
Classification into or out of held for sale does not result in restating comparative amounts in the statement of financial position.
Discontinued operations
To qualify as a discontinued operation, Aegon requires a disposal group to be presented as a separate line of business
or geographical segment. When Aegon classifies its component comprising of a cash generating unit or multiple cash
generating units as a disposal group, it presents the performance of this component as discontinued operation in the
statement of comprehensive income and makes separate disclosures with the analysis of the net result from discontinued
operations, and cash-flow information. Aegon re-presents comparative information in the statement of comprehensive income
and disclosures to reflect the prior years\u2019 net result attributable to the operations discontinued until the end of the latest period.", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f20958": { "value": "Subsidiaries
The consolidated financial statements include the financial information of Aegon Ltd. and its subsidiaries. Subsidiaries
(including consolidated structured entities) are entities over which Aegon has control. Aegon controls an entity when Aegon
is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. The assessment of control is based on the substance of the relationship between the Group
and the entity and, among other things, considers existing and potential voting rights that are substantive. For a right to be
substantive, the holder must have the practical ability to exercise that right.
The subsidiary\u2019s assets, liabilities and contingent liabilities are measured at fair value on the acquisition date and are
subsequently accounted for in accordance with the Group\u2019s accounting policies, which is consistent with EU-IFRS. Intra-group
transactions, including Aegon Ltd. shares held by subsidiaries, which are recognized as treasury shares in equity, are eliminated.
Intra-group losses may indicate an impairment that requires recognition in the consolidated financial statements. Non-
controlling interests are initially stated at their share in the fair value of the net assets on the acquisition date and subsequently
adjusted for the non-controlling share in changes in the subsidiary\u2019s equity.
The excess of the consideration paid to acquire the interest and the fair value of any interest already owned over the
Group\u2019s share in the net fair value of assets, liabilities and contingent liabilities acquired is recognized as goodwill. Negative
goodwill is recognized directly in the income statement. If the fair value of the assets, liabilities and contingent liabilities
acquired in the business combination has been determined provisionally, adjustments to these values resulting from the
emergence of new evidence within 12 months after the acquisition date are made against goodwill. Aegon recognized
contingent considerations either as provision or as financial liability depending on the characteristics. Any contingent
consideration payable is recognized at fair value at the acquisition date. If the contingent consideration is classified as equity,
it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the
contingent consideration are recognized in the income statement.
The identifiable assets, liabilities and contingent liabilities are stated at fair value when control is obtained.
Subsidiaries are deconsolidated when control ceases to exist. Any difference between the net proceeds plus the fair value
of any retained interest and the carrying amount of the subsidiary including non-controlling interests is recognized in the
income statement.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f21010": { "value": "Transactions with non-controlling interests
Transactions with non-controlling interests are accounted for as transactions with owners. Therefore, disposals to non-
controlling interests and acquisitions from non-controlling interests not resulting in losing or gaining control of the subsidiary
are recorded in equity. Any difference between consideration paid or received and the proportionate share in net assets
is accounted for in equity attributable to shareholders of Aegon Ltd.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f21102": { "value": "Non-current assets held for sale and disposal groups
Disposal groups are classified as held for sale if they are available for immediate sale in their present condition, subject only
to the customary sales terms of such assets and disposal groups and their sale is considered highly probable. Management
must be committed to the sale, which is expected to occur within one year from the date of classification as held for sale.
Upon classification as held for sale, the carrying amount of the disposal group (or group of assets) is compared to their fair
value less cost to sell. If the fair value less cost to sell is lower than the carrying value, this expected loss is recognized through
a reduction of the carrying value of any goodwill related to the disposal group or the carrying value of certain other non-current,
non-financial assets to the extent that the carrying value of those assets exceeds their fair value. Any excess of the expected
loss over the reduction of the carrying amount of these relevant assets is not recognized upon classification as held for sale
but is recognized as part of the result on disposal if and when a divestment transaction occurs.
Classification into or out of held for sale does not result in restating comparative amounts in the statement of financial position.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f21103": { "value": "Non-current assets held for sale and disposal groups
Disposal groups are classified as held for sale if they are available for immediate sale in their present condition, subject only
to the customary sales terms of such assets and disposal groups and their sale is considered highly probable. Management
must be committed to the sale, which is expected to occur within one year from the date of classification as held for sale.
Upon classification as held for sale, the carrying amount of the disposal group (or group of assets) is compared to their fair
value less cost to sell. If the fair value less cost to sell is lower than the carrying value, this expected loss is recognized through
a reduction of the carrying value of any goodwill related to the disposal group or the carrying value of certain other non-current,
non-financial assets to the extent that the carrying value of those assets exceeds their fair value. Any excess of the expected
loss over the reduction of the carrying amount of these relevant assets is not recognized upon classification as held for sale
but is recognized as part of the result on disposal if and when a divestment transaction occurs.
Classification into or out of held for sale does not result in restating comparative amounts in the statement of financial position.
Discontinued operations
To qualify as a discontinued operation, Aegon requires a disposal group to be presented as a separate line of business
or geographical segment. When Aegon classifies its component comprising of a cash generating unit or multiple cash
generating units as a disposal group, it presents the performance of this component as discontinued operation in the
statement of comprehensive income and makes separate disclosures with the analysis of the net result from discontinued
operations, and cash-flow information. Aegon re-presents comparative information in the statement of comprehensive income
and disclosures to reflect the prior years\u2019 net result attributable to the operations discontinued until the end of the latest period.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f21118": { "value": "Discontinued operations
To qualify as a discontinued operation, Aegon requires a disposal group to be presented as a separate line of business
or geographical segment. When Aegon classifies its component comprising of a cash generating unit or multiple cash
generating units as a disposal group, it presents the performance of this component as discontinued operation in the
statement of comprehensive income and makes separate disclosures with the analysis of the net result from discontinued
operations, and cash-flow information. Aegon re-presents comparative information in the statement of comprehensive income
and disclosures to reflect the prior years\u2019 net result attributable to the operations discontinued until the end of the latest period.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f21148": { "value": "2.3 Foreign exchange translation
a. Translation of foreign currency transactions
The Group\u2019s consolidated financial statements are presented in euros. Items included in the financial statements of individual
group companies are recorded in their respective functional currency which is the currency of the primary economic
environment in which each entity operates. Transactions in foreign currencies are initially recorded at the exchange rate
prevailing at the date of the transaction.
At the reporting date, monetary assets and monetary liabilities in foreign currencies are translated to the functional currency
at the closing rate of exchange prevailing on that date, except for own equity instruments in foreign currencies which are
translated using historical exchange rates. Non-monetary items carried at cost are translated using the exchange rate
at the date of the transaction, while assets carried at fair value are translated at the exchange rate when the fair value
was determined.
Exchange differences on monetary items are recognized in the income statement when they arise, except when they are
deferred in other comprehensive income as a result of a qualifying cash flow or net investment hedge. Exchange differences
on non-monetary items carried at fair value are recognized in other comprehensive income or the income statement,
consistently with other gains and losses on these items.
Insurance contracts and investment contracts with discretionary participating features are monetary items. Exchange
differences on changes in the carrying amount of groups of insurance contracts are recognized in the income statement,
unless they relate to changes in the carrying amount of the groups of insurance contracts included in other comprehensive
income, in which case that are included in other comprehensive income.
b. Translation of foreign currency operations
On consolidation, the financial statements of group entities with a foreign functional currency are translated to euro, the
currency in which the consolidated financial statements are presented. Assets and liabilities are translated at the closing
rates on the reporting date. Income, expenses and capital transactions (such as dividends) are translated at average exchange
rates or at the prevailing rates on the transaction date, if more appropriate. Goodwill and fair value adjustments arising on the
acquisition of a foreign entity are translated at the closing rates on the reporting date.
The resulting exchange differences are recognized in the \"foreign currency translation reserve\", which is part of shareholders\u2019
equity. On disposal of a foreign entity the related cumulative exchange differences included in the reserve are recognized in the
income statement.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f21179": { "value": "2.4 Segment reporting Reporting segments and segment measures are explained and disclosed in note 5 Segment information.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f21183": { "value": "2.5 Offsetting of assets and liabilities
Financial assets and liabilities are offset in the statement of financial position when the Group has a legally enforceable right
to offset and has the intention to settle the asset and liability on a net basis or simultaneously. The legally enforceable right
must not be contingent on future events and must be enforceable in the normal course of business and in the event of default,
insolvency, or bankruptcy of the Company or the counterpart.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForOffsettingOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f21191": { "value": "2.6 Insurance contracts
a) Scope
Insurance contracts are contracts under which the Group accepts a significant risk \u2013 other than a financial risk \u2013 from
a policyholder by agreeing to compensate the beneficiary on the occurrence of an uncertain future event by which he or she
will be adversely affected. Significant insurance risk is determined on a present-value basis, where at least one scenario with
commercial substance can be identified in which the Group has to pay significant additional benefits to the policyholder or his
or her beneficiaries.
Contracts that do not meet the definition of insurance contracts are accounted for as financial instruments or as service
contracts, depending on the nature of the agreement.
Insurance contracts include products that provide policyholders with the option to take out insurance coverage
at predetermined prices, provided this option is shown to have commercial substance.
b) Combining a set or series of insurance contracts
Aegon accounts for a set or series of insurance contracts together as if they were issued as one contract, where this reflects
the substance of the transaction. This may, for example, be the case if the insurance contracts are negotiated as a package with
a single commercial objective and the measurement of the contracts is highly interrelated.
c) Separating components from insurance contracts
At inception, the following components are separated from an insurance contract and accounted for as if they were standalone
financial instruments:
\u2022
Embedded derivatives whose economic characteristics and risks are not closely related to those of the host contract, and
whose terms would not meet the definition of an insurance contract as a standalone instrument; and
\u2022
Investment components (i.e. amounts that an insurance contract requires Aegon to repay to a policyholder, even if the insured
event does not occur) that are distinct. In other words, investment components that:
\u2022
Do not meet the definition of an investment contract with discretionary participation features;
\u2022
Are not highly interrelated with the insurance component; and
\u2022
For which contracts with equivalent terms are sold, or could be sold, separately in the same market or jurisdiction.
Promises to transfer to a policyholder distinct goods or services other than insurance contract services, are also separated
from the host contract and accounted for as a service contract.
Aegon has not identified any components of the insurance contracts recognized at the balance sheet date that require
separation when publishing these financial statements.
d) Level of aggregation
Insurance contracts are grouped together for measurement and income recognition purposes. The groups are established
at initial recognition and are not reassessed subsequently.
Portfolios
Aegon classifies contracts as belonging to one portfolio, when they are subject to similar risks and are managed together.
When identifying similar risks, Aegon considers all insurance and financial risks that are transferred from the policyholder
to the Group. This does not include lapse risk or expense risk, as these are not risks that a policyholder transfers to an insurer.
Generally, contracts in the same product line are included within the same portfolio if they are managed together, and contracts
in different product lines with dissimilar risks are included in different portfolios.
To be grouped together, contracts must be managed together from the perspective of either the management of Aegon
Ltd. or the management of its operating segments. Information that is used to assess how risks are managed includes
Aegon\u2019s internal management reporting, as well as asset-liability management and asset allocation strategies.
Groups
Contracts within a portfolio are segregated into:
\u2022
Groups of insurance contracts that are onerous at initial recognition.
\u2022
Groups of insurance contracts that are not onerous at initial recognition, subdivided into:
\u2022
Groups of insurance contracts that have no significant possibility of becoming onerous subsequently; and
\u2022
A group of remaining contracts in the portfolio, if any.
Aegon uses two approaches to identify groups of contracts. The first approach consists of a bottom-up assessment, in which
contracts are grouped together on a contract-by-contract basis by considering the expected profitability of each contract.
Alternatively, the grouping assessment can be completed at a higher level of aggregation if, based on reasonable and
supportable information, Aegon concludes that a set of contracts will, by definition, all be in the same group.
Both approaches involve qualitative factors, quantitative factors, or a combination of both, for example product pricing,
assumption setting reviews, key performance indicators (such as market-consistent value of the new business and expected
loss ratios) and asset liability management and hedging strategies.
In assessing whether a profitable group of contracts could subsequently become onerous, Aegon considers the size of the
estimated profit at inception and its sensitivity to changes in the underlying assumptions. Typically, Aegon would expect that
any insurance contract could become lossmaking if the insured event occurs. Nonetheless, there may be indicators based
on which Aegon concludes that a group of contracts has no significant possibility of subsequently becoming onerous. For
example, there may be pricing information demonstrating that products are sold at very favorable premiums due to specific
market conditions (e.g. niche markets) or a product may contain embedded guarantees that are strongly out of the money.
If contracts within a portfolio would fall into different groups only because law or regulation specifically constrains
Aegon\u2019s practical ability to set a different price or level of benefits for policyholders with different characteristics, the contracts
are included in the same group.
Cohorts
Aegon follows a quarterly reporting frequency on a locked-in period-to-date basis, as opposed to a year-to-date basis, and
therefore groups contracts into quarterly cohorts. New contracts issued in the same quarter and belonging to the same
group will be measured together. After the quarter end, the cohort is closed, and the cohort will be treated as \"in force\" in the
subsequent quarterly reporting periods.
e) Recognition
A group of insurance contracts is recognized from the earliest of the following dates: the beginning of the coverage period, the
date when the first payment from a policyholder in the group of insurance contracts becomes due, and the date when the group
of insurance contracts becomes onerous.
f) Insurance acquisition cashflows
Insurance acquisition cash flows arise from selling, underwriting and starting a group of insurance contracts. They comprise
not only the incremental costs of originating insurance contracts but also other (in)direct costs and include cash flows relating
to both successful and unsuccessful acquisition efforts.
Insurance acquisition cash flows must be directly attributable to a portfolio of contracts. At initial recognition, Aegon allocates
them to groups of contracts as follows:
\u2022
Insurance acquisition cash flows that can be directly attributable to a specific group of insurance contracts (e.g. acquisition
commissions) are allocated to that group, as well as to groups that are expected to include the renewals of those contracts.
\u2022
Insurance acquisition cash flows that are directly attributable to a portfolio of insurance contracts, other than those in
described in the above bullet, are allocated to the groups of contracts in the portfolio on a systematic and rational basis.
g) Insurance contract types
For presentation and analysis purposes, Aegon distinguishes between life and non-life insurance contracts. Life insurance
contracts comprise insurance contracts for which the primary insured risk is life contingent, as well as long term care
insurance products in the Americas. Non-life insurance contracts include fire insurance, motor insurance, general liability
insurance, and disability and sickness insurance.
For measurement and income recognition purposes, Aegon distinguishes between insurance contracts with and without direct
participating features. Contracts are classified at the initial recognition date and not subsequently reassessed. Aegon\u2019s non-life
business consists entirely of insurance contracts without direct participating features, while Aegon\u2019s life insurance business
includes both types of insurance contracts.
While the initial measurement of both types of insurance contracts is the same, the subsequent accounting differs. The Variable
Fee Approach is applied to life insurance contracts with direct participating features. Other life and non-life insurance contracts
are accounted for under the General Measurement Model, unless Aegon has elected to apply the Premium Allocation Approach
to groups of these contracts.
Insurance contracts with direct participating features
Insurance contracts with direct participating features are defined as life insurance contracts for which, at inception:
\u2022
The contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;
\u2022
Aegon expects to pay to the policyholder an amount equal to a substantial share of the fair value returns on the underlying
items, and
\u2022
Aegon expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in
fair value of the underlying items.
Insurance contracts with direct participating features provide both insurance services and investment-related services. They
are viewed as creating an obligation to pay policyholders an amount that is equal to the fair value of the underlying items,
less a variable fee for future services. The variable fee reflects the unrealized gain or loss that Aegon expects to make on the
contract. It comprises Aegon\u2019s share in the fair value of the underlying items less the fulfillment cash flows that do not vary
based on the returns on underlying items, such as expense cash flows and the cost of financial guarantees.
A pool of underlying items can comprise any items, for example a reference portfolio of assets, a pool of funds, the net assets
of an Aegon group company or a specified subset of the net assets of the entity. In determining whether the pool has been
clearly identified to the policyholder, Aegon considers all contractual terms and conditions as well as other policyholder
communications. Aegon does not need to hold the identified pool of underlying items for a product to qualify as an insurance
contract with direct participating features, nor does the existence of Aegon\u2019s discretion to vary the amounts paid to the
policyholder preclude qualification. However, the link between policyholder benefits and underlying items must be enforceable
and Aegon must not have the ability to change the underlying items with retrospective effect.
Once the presence of a clearly identified pool of underlying items has been established, Aegon uses a methodology for product
classification that builds on a two-step approach with an initial assessment based on product characteristics, followed by a
quantitative assessment where the former is not conclusive.
\u2022
The initial assessment based on product characteristics is performed using multiple qualitative indicators. For example,
Aegon considers whether a contract includes substantial contractual profit-sharing rates and the degree to which these can
subsequently be reset. It also considers the extent to which asset management fees and other charges are commensurate
with the services provided and in line with market terms, and whether a product guarantees a minimum return on investment.
\u2022
If the qualitative step is not conclusive on its own, the product undergoes quantitative analysis. Different calculation methods
are used, depending on the product characteristics and the market conditions at the inception of the contract.
\u2022
The policyholder\u2019s share in the fair value returns is assessed by comparing the expected total return on the underlying
items, net of the asset management fees, with the expected payments to the policyholder that are based on those
underlying items. Variable fees and charges that cover multiple services are split into an insurance component and
investment management component, with only the latter being deducted from total returns. As a critical judgment, the
threshold for a substantial share of the fair value returns is in the range of 50% (or higher).
\u2022
The assessment of the variability in policyholder benefits often requires the use of probability-weighted models, factoring
all scenarios where returns are impacted by the allocation of clearly identifiable assets, variable fees and guarantees. The
determination of one scenario where there is no variability does not automatically disqualify a product for the variable fee
approach but is assessed together with the scenarios in which the guarantee is not in-the-money at the expected
termination date of the contract.
Examples of insurance contracts with direct participating features include unit-linked contracts issued by Aegon UK, and
variable annuities issued in the Americas.
Insurance contracts without direct participating features
A product is considered to provide an investment-return service if, and only if, the following apply:
\u2022
The contract contains a non-distinct investment component or the policyholder has a right to withdraw an amount under the
policy;
\u2022
Aegon expects that this amount will include an investment return; and
\u2022
Aegon expects to perform investment activity to generate that investment return.
Insurance contracts without direct participating features include all non-life insurance products issued by Aegon, as well
as term insurance, fixed annuities, long term care insurance contracts, and US-style universal life products issued in the
Americas and Asia.
h) Initial measurement
On initial recognition, Aegon measures a group of contracts at a risk-adjusted, current and probability-weighted estimate of the
present value of the future cash flows (\"fulfillment cash flows\") plus or minus the unearned profit on the group of contracts
(\"contractual service margin\").
Fulfilment cash flows
The fulfillment cash flows comprise:
\u2022
Estimates of future cash flows that are within the contract boundary;
\u2022
An adjustment to reflect time value of money and the financial risks related to future cash flows, to the extent that the
financial risks are not included in the estimates of future cash flows and
\u2022
A risk adjustment for non-financial risk.
The fulfillment cash flows reflect Aegon\u2019s view of the current condition at the reporting date, consistent with observable market
prices and considering all contractual terms and conditions with commercial substance that are within the contract boundary.
Future changes in legislation that would change or discharge a present obligation or create new obligations under existing
contracts, are only considered when the legislation is substantively enacted.
The methods used to calculate the fulfillment cash flows and the process to estimate the inputs to those methods are
discussed in note 29.3.
Contract boundary
Cash flows are within the boundary of an insurance contract if they arise from rights and obligations that exist during the
period in which Aegon can either compel the policyholder to pay premiums or has a substantive obligation to provide insurance
contract services to the policyholder.
A substantive obligation to provide insurance contract services ends when:
\u2022
Aegon has the practical ability to reassess the risks of a particular policyholder, and as a result, can set a price or level of
benefits that fully reflects those risks; or
\u2022
Both of the following apply:
\u2022
Aegon has the practical ability to reassess the risks of the portfolio that contains the contract and can set a price or level of
benefits that fully reflects the risks of that portfolio; and
\u2022
The pricing of the premiums up to the date when the risks are reassessed, does not take into account any risks that relate to
periods after the reassessment date.
In determining whether a contract can be repriced, all insurance and financial risks that are transferred from the policyholder
to Aegon are considered. Risks that result from the contract itself, such as expense risk or lapse risk, are ignored. If Aegon
provides investment-related services to insurance policyholders, the ability to reprice the fees or charges for these services
to prevailing rates is also considered in setting the contract boundary.
In some jurisdictions, regulatory requirements limit Aegon\u2019s ability to fully reprice contracts on renewal and are therefore
relevant when setting the contract boundary. Regulatory price caps that apply equally to existing and new policyholders do not
extend the contract boundary, because they do not result in a valuable policyholder renewal option.
Some contracts that have a long contract boundary based on long-term guaranteed benefits, also include policyholder options
that can be repriced. For example, the contract may allow the policyholder to take out additional insurance coverage at current
market rates at the time of uptake. While the policyholder option can be repriced, Aegon cannot reprice or reassess the benefits
of the entire policy. Therefore, the policyholder option is considered within the long contract boundary of the host contract,
provided it can reasonably be expected to be utilized.
Contract boundaries are based on current facts and circumstances and may therefore change over time.
Contractual service margin
The contractual service margin represents the unearned profit Aegon will recognize as it provides insurance contract services
in the future. On initial recognition of a group of non-onerous insurance contracts, it is measured at an amount that ensures that
no income arises from:
\u2022
The initial recognition of the fulfillment cash flows;
\u2022
Any cash flows arising from the contracts in the group at that date; and
\u2022
The derecognition of any asset for insurance acquisition cash flows and any other asset or liability previously recognized for
cash flows related to the group of contracts.
For onerous insurance contracts, the calculation above results in a loss that is recognized in the income statement immediately
and for which a corresponding loss component is established as part of the insurance liabilities. More information on the loss
component is provided in section j) of this note.
i) Subsequent measurement
The carrying amount of a group of insurance contracts at the end of each reporting period is the sum of the liability for
remaining coverage and the liability for incurred claims. The liability for remaining coverage comprises the fulfillment cash
flows related to future service allocated to that group and the contractual service margin of the group. The liability for incurred
claims comprises the fulfillment cash flows related to past service allocated to the group. Cash flows that remain subject
to insurance risk after the occurrence of the insured event are included in the liability for remaining coverage.
The fulfillment cash flows are remeasured at each reporting date to reflect current estimates. The measurement of the
contractual service margin differs for contracts with and without direct participating features and is described below.
Some changes in the contractual service margin are offset by changes in the fulfillment cash flows, resulting in no change
in the total carrying amount of the liability for remaining coverage. To the extent that changes in the contractual service margin
and changes in the fulfillment cash flows do not offset, income or expenses are recognized.
Insurance contracts without direct participating features (general measurement model)
For a group of insurance contracts without direct participating features, the carrying amount of the contractual service margin
at the end of each reporting period is the carrying amount at the start of the period, adjusted for:
\u2022
The effect of any new contracts added to the group;
\u2022
Interest accreted on the carrying amount of the contractual service margin during the period;
\u2022
Changes in the fulfillment cash flows that relate to future services, except to the extent that:
\u2022
Such increases in the fulfillment cash flows exceed the carrying amount of the contractual service margin, giving rise to a
loss, or
\u2022
Such decreases in the fulfillment cash flows are allocated to the loss component.
\u2022
The effect of any currency exchange differences on the contractual service margin; and
\u2022
The amount recognized as insurance revenue because of the insurance contract services provided in the period.
Interest accretion
Aegon accretes interest to the contractual service margin based on either the one-year forward rate or one-year spot-rate,
derived from the discount rate curve used to estimate the present value of future cash flows that do not vary based on the
returns on any underlying items on initial recognition of the group of contracts.
The amount of interest is calculated on a time-weighted basis, allowing for the timing of the movements in the contractual
service margin over the reporting period.
Changes in fulfillment cash flows relating to future services
Changes in the fulfillment cash flows that relate to future services comprise:
\u2022
Experience adjustments arising from premiums received in the period that relate to future services and related cash flows,
measured at the discount rates determined on initial recognition;
\u2022
Changes in estimates of the present value of future cash flows in the liability for remaining coverage (other than those that
relate to the effects of the time value of the money and changes in financial risks), measured at the discount rates determined
on initial recognition;
\u2022
Differences between any non-distinct investment component expected to become payable in the period and the actual
non-distinct investment component that becomes payable in the period;
\u2022
Differences between any loan to a policyholder expected to become repayable in the period and the actual loan to a
policyholder that becomes repayable in the period; and
\u2022
Changes in the risk adjustment for non-financial risk that relate to future services.
The change in fulfillment cash flows that relates to future service is calculated using discount rates derived from the discount
rate curve used to determine the contractual service margin on initial recognition of the group of contracts.
Changes in discretionary cash flows are regarded as relating to future services, and accordingly, adjust the contractual
service margin.
Changes in the contractual service margin recognized as insurance revenue
Part of the contractual service margin of a group of contracts is recognized as insurance revenue in each period to reflect
the insurance contract services provided under the group of insurance contracts in that period. The amount of revenue
is determined by allocating the contractual service margin remaining at the end of the reporting period equally to each
coverage unit provided in the reporting period and expected to be provided in the future.
More information on the coverage units is provided in note 29.3.2.1.
The numbers of coverage units in a group of contracts is determined by considering, for each contract, the quantity of the
benefits provided and its expected coverage period. If a contract provides coverage for more than one insured event or if
it provides additional investment-return services, the coverage unit reflects all material benefits.
The coverage period is defined as the period during which Aegon provides insurance coverage and/or investment services.
The expected coverage period takes account of the expected survivorship of contracts and so considers expected lapses
and deaths.
Aegon has defined coverage units that differ per product type to best reflect a product\u2019s characteristics and the nature of the
services provided to the policyholder. Insurance services are typically depicted by a metric that is based on the maximum
amount that a policyholder would receive if the insured event were to occur, such as the total benefits amount or the death
benefit amount. For investment-type services, coverage units are based on the total return that Aegon expects to provide the
policyholder over the lifetime of the contract.
Aegon applies the following formula to determine the amount of contractual service margin to release in each reporting period:
Proportion of CSM released as insurance revenue =
A
[A + B]
Where:
A = coverage units provided in the period
B = present value of coverage units to be provided in the future
The coverage units provided in the period are determined as an average of the coverage units at the beginning and end of the
quarterly reporting period. Future coverage units are discounted using rates locked-in at the initial recognition of the group
of contracts.
Insurance contracts with direct participating features (variable fee approach)
For the measurement of direct participating contracts, Aegon adjusts the fulfillment cash flows for changes in the obligation
to pay policyholders an amount equal to the fair value of the underlying items. These changes do not relate to future services
and are recognized in the profit or loss.
Aegon adjusts the carrying amount of the contractual service margin for each group of contracts to equal the carrying amount
at the start of the reporting period adjusted for:
\u2022
The effect of any new contracts added to the group of contracts;
\u2022
The change in the amount of Aegon\u2019s share of the fair value of the underlying items and changes in fulfillment cash flows
relating to future services, except to the extent that:
\u2022
For groups of contracts, there is a policy of excluding from the contractual service margin changes in the impact of financial
risk on its share of the underlying items (\"risk mitigation\");
\u2022
The decrease in the amount of the group of contracts share of the fair value of the underlying items, or an increase in the
fulfillment cash flows relating to future services, exceeds the carrying amount of the contractual service margin, giving rise
to a loss in the income statement; or
\u2022
The increase in the amount of the group of contracts share of the fair value of the underlying items, or a decrease in the
fulfillment cash flows relating to future services, is allocated to a loss component, reversing losses previously recognized in
the income statement;
\u2022
The effect of any currency exchange differences on the contractual service margin; and
\u2022
The amount recognized as insurance revenue because of the insurance contract services provided in the period.
Changes in fulfillment cash flows relating to future services
Changes in Aegon\u2019s share in the fair value of the underlying items, by definition, relates to future service and therefore adjusted
the contractual service margin.
In addition to the fulfillment cash flows movements that have been defined in the general measurement model as relating
to future services, the variable fee approach requires changes in fulfillment cash flows to be booked to the contractual service
margin if they are the result of a change in the effect of the time value of money or financial risks not arising from the underlying
items. Examples include the interest accrued to projected fixed benefits and expense cash flows, and the change in the value
of financial guarantees.
Changes in the contractual service margin recognized as insurance revenue
The policy on the recognition of revenue for insurance contracts with direct participating features is the same as under
the general measurement model, except that references to \u201cinvestment-return services\u201d should be read as \u201cinvestment-
related services\u201d.
Risk mitigation
For certain groups of contracts, Aegon has a documented risk management objective and strategy for mitigating financial
risk arising from insurance contracts with participating features, using derivatives, reinsurance contracts held and other FVPL
financial instruments. Risk mitigation involves the hedging of one or a combination of financial risks (e.g. interest rate, financial
instrument price, currency exchange rate, index of prices or rates, inflation rate) and can cover multiple groups of contracts
in different portfolios.
For these contracts, Aegon does not recognize the entire change in the amount of Aegon\u2019s share of the fair value of the
underlying items and changes in fulfillment cash flows relating to future services in the contractual service margin. Instead,
the change in the hedged position is recognized as part of insurance finance expense in the income statement or in other
comprehensive income.
Prior to the reporting period, Aegon demonstrates that an economic offset exists between the insurance contracts and the risk
mitigating items (i.e. the values of both are generally expected to move in opposite directions because they respond in a similar
way to the changes in the risk being mitigated), and demonstrates this is not dominated by credit risk. If these conditions cease
to be met, risk mitigation accounting is discontinued. In this instance, any amounts previously recognized as insurance finance
expense in the income statement or in other comprehensive income, are not adjusted.
j) Loss component
A group of insurance contracts can be onerous at inception, namely when the fulfillment cash flows allocated to the contract,
any previously recognized insurance acquisition cash flows and any cash flows arising from the contract at the date of initial
recognition in total are a net outflow. It can also become onerous at subsequent measurement due to unfavorable changes
relating to future service in the fulfillment cash flows arising from changes in estimates of future cash flows and the risk
adjustment for non-financial risk allocated to the contractual service margin, or for contracts with direct participating features,
due to a decrease in the amount of Aegon\u2019s share of fair value of the underlying items.
When a group of insurance contracts becomes onerous, a loss component of the liability for remaining coverage for that group
is established. Except for changes in non-financial assumptions that are fully allocated to a loss component, all subsequent
changes in the fulfillment cash flows of the liability for remaining coverage are allocated on a systematic basis between the
loss component and the remaining liability for remaining coverage. No revenue is recognized for services allocated to the loss
component, as Aegon has never received compensation from the policyholder for these.
Additional unfavorable changes in the fulfillment cash flows that exceed the contractual service margin are recognized in the
income statement immediately. Favorable changes in the fulfillment cash flows are recognized in the income statement to the
extent that they reverse the loss component, after which the contractual service margin is re-established.
k) Premium allocation approach
Aegon applies the premium allocation approach to certain groups of predominantly non-life insurance contracts. These groups
of contracts mostly include products with a coverage period of one year or less. The premium allocation approach is only
applied to contracts with a longer coverage period if the Group expects that the resulting measurement would not differ
materially from the result of applying the general measurement model.
Level of aggregation
Contracts to which the premium allocation approach is applied are grouped together using the same principles as described in
paragraph (c) above, with the following modifications:
\u2022
Contracts to the premium allocation approach is applied, are assumed not to be onerous at inception, unless facts and
circumstances indicate otherwise.
\u2022
Contracts to which the premium allocation approach are grouped together in annual cohorts, which is more aligned with the
nature of the products.
Acquisition costs
Insurance acquisition cashflows that relate to some (but not all) groups of contracts to which Aegon applies the premium
allocation approach are expensed when incurred, provided the coverage period does not exceed 12 months.
Initial recognition and measurement
On initial recognition, Aegon measures the carrying amount of the liability for remaining coverage as premiums received
at initial recognition, if any, plus or minus any amounts arising from the derecognition of other assets or liabilities previously
recognized for cash flows related to the group of contracts.
Subsequent measurement, including loss component
The carrying amount of a group of insurance contracts at the end of each reporting period is the sum of the liability for
remaining coverage and the liability for incurred claims.
The liability for remaining coverage is increased by any premiums received in the period and decreased by the amount
recognized as insurance revenue for insurance contract service provided and any non-distinct investment component paid
or transferred to the liability for incurred claims. Given the time between providing each part of the coverage and the related
premium, Aegon has chosen not to adjust the liability for remaining coverage to reflect the time-value of money and the effect
of financial risk.
If at any time during the coverage period facts and circumstances indicate that a group of insurance contracts is onerous,
Aegon calculates the difference between the carrying amount of the liability for remaining coverage and the fulfillment cash
flow that relate to the remaining coverage of the group. In case this difference is negative, Aegon recognizes a loss in the
income statement and increases the liability for remaining coverage.
Aegon recognizes the liability for incurred claims of a group of insurance contracts at the amount of the fulfillment cash flows
relating to incurred claims. The fulfillment cash flows are discounted at current rates unless the cash flows are expected to be
paid in one year or less from the date the claims are incurred.
l) Derecognition and contract modification
Aegon derecognizes a contract when it is extinguished (i.e. when the specified obligations in the contract expire or are
discharged or cancelled).
On the derecognition of a contract from within a group of contracts:
\u2022
The fulfillment cash flows allocated to the group are adjusted to eliminate those that relate to the rights and obligations
derecognized;
\u2022
The contractual service margin of the group is adjusted for the change in the fulfillment cash flows, except where such
changes are allocated to a loss component; and
\u2022
The number of coverage units for the expected remaining insurance contract services is adjusted to reflect the coverage
units derecognized from the group.
If a contract is derecognized because it is transferred to a third party, then the contractual service margin is also adjusted for
the premium charged by the third party, unless the group is onerous.
A contract is also derecognized if its terms are modified in a such way that would have changed the accounting for the contract
significantly had the new terms always existed, in which case a new contract based on the modified terms is recognized. In this
instance, the contractual service margin of the group is adjusted for the premium that would have been charged had the Group
entered into a contract with the new contract\u2019s terms at the date of modification, less any additional premium charged for
the modification. The new contract recognized is measured assuming that, at the end of modification, the issuer received the
premium that it would have charged less any additional premium charged for the modification.
If a contract modification does not result in derecognition, Aegon treats the changes in cash flows caused by the modification
as changes in estimates of fulfillment cash flows.
m) Insurance contracts acquired in a portfolio transfer or business combination
Insurance contracts acquired in a business combination or portfolio transfer after the transition to IFRS 17 (January 1, 2022)
are accounted for in accordance with Aegon\u2019s accounting policy on insurance contracts, with the exception that both the
inception date and the initial recognition date should be taken to refer to the acquisition date of the contracts.
When determining the initial measurement of a transferred portfolio, the consideration paid or received for the insurance
contracts is taken as a proxy for the premiums paid. For insurance contracts acquired in a business combination, the fair value
of the contracts is used as a proxy instead.
If a group of contracts acquired in a portfolio transfer is onerous, the loss is recognized in profit or loss at the acquisition
date. If an onerous group of contracts is acquired in a business combination, the loss first adjusts the amount of goodwill and
is recognized in profit or loss to the extent that the loss exceeds the amount of goodwill.
At the acquisition date, Aegon recognizes a separate asset for insurance acquisition cash flows at fair value for the rights to
obtain:
\u2022
future renewals of contracts recognized at the acquisition date; and
\u2022
other future insurance contracts without paying again insurance acquisition cash flows that the acquiree has already paid.2.8 Insurance revenue
Aegon recognizes insurance revenue as it provides services under groups of insurance contracts and under groups
of contracts with discretionary participating features.
The total insurance revenue recognized over the duration of a group of contracts is equal to the amount of premiums received,
adjusted for a financing effect and excluding any non-distinct investment components. For contracts with direct participating
features, it includes the variable fees that Aegon expects to receive. Reinstatement premiums are included in insurance
revenue, when reinstatement is not mandatory under the terms of the contract but at the discretion of the policyholder.
Ceding commissions paid by Aegon on inward reinsurance are deducted from insurance revenue, unless they are contingent
on future claims.
The revenue recognized in the period represents the total of the changes in the liability for remaining coverage that relate to
services for which the Group expects to receive compensation and includes:
\u2022
The release of contractual service margin for services provided in the period;
\u2022
Changes in the risk adjustments for non-financial risk that do not relate to future service, excluding amounts allocated to the
loss component;
\u2022
The claims and other insurance service expenses expected to be incurred in the period, excluding amounts allocated to the
loss component;
\u2022
Other amounts, such as experience adjustments for premium receipts that do not relate to future service and income tax that
is specifically chargeable to the policyholder.
In addition, the insurance revenue recognized in the period includes an allocation of the portion of the premiums that are related
to recovering insurance acquisition cash flows. The allocation is based on the passage of time, without interest accumulation.
The same amount is also recognized as insurance service expenses (see note 2.9).
For insurance contracts to which the premium allocation approach is applied, insurance revenue is equal to the total premiums
that are expected to be received for the services provided, excluding any non-distinct investment component and adjusted
to reflect the time value of money and the effect of financial risk, where applicable. Revenues are allocated to the periods
of insurance contract services based on the passage of time.
2.9 Insurance service expenses
Insurance service expenses arise as Aegon provides coverage and other services under issued insurance contracts and
investment contracts with discretionary participating features. It comprises
\u2022
The incurred claims, excluding repayments of non-distinct investment components, and other incurred insurance service
expenses;
\u2022
Adjustments to the liabilities for incurred claims that do not arise from the effects of the time value of money, financial risk
and changes therein;
\u2022
Amortization of insurance acquisition cash flows;
\u2022
Losses on onerous contracts and the reversals of such losses; and
\u2022
Impairment losses on assets for insurance acquisition cash flows and reversals of such impairment losses. 2.11 Insurance finance expenses
Insurance finance expenses comprise the change in the carrying amount of the group of insurance contracts or reinsurance
contracts arising from the effect of the time value of money and changes in the time value of money, as well as the effect
of financial risk and changes in financial risk. It also includes the changes in the measurement of group of insurance contracts
that are caused by changes in the value of underlying items (excluding additions and withdrawals).
For groups of contracts with direct participating features, insurance finance expenses exclude any changes that adjust the
contractual service margin (See note 2.6). If a group of contracts with direct participating features becomes onerous due
to changes in the time value of money or financial risk, the loss is recognized as insurance service expense rather than
insurance finance expenses.
a) Defining financial risk
Financial risk can relate to one or more of a
\u2022 specified interest rate,
\u2022 financial instrument price,
\u2022
commodity price, currency exchange rate,
\u2022
index of prices or rates,
\u2022
credit rating or credit index, or
\u2022
other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract.
As an example of variables not specific to a party to the contract, assumptions about inflation are considered to relate
to financial risk, to the extent that they are based on an index of prices or on prices of assets with inflation-linked returns.
Assumptions about inflation that are based on Aegon\u2019s own expectations of specific price changes, do not relate to financial
risk and are considered to be actuarial assumptions.
For contracts with discretionary participating features, Aegon uses the basis on which, at inception, it expected to determine its
commitment under the contract to distinguish between the effect of changes in assumptions that relate to financial risk on that
commitment and the effect of discretionary changes to that commitment (which adjust the contractual service margin).
Aegon considers, per portfolio, whether the risk adjustment for financial risks should be disaggregated in an insurance service
component and an insurance finance component, taking into account the extent to which the carrying amount of the is affected
by changes in interest rate and other financial risks. At the current reporting date, the changes in the risk adjustment for non-
financial risk are fully attributed to insurance services.
b) Disaggregation of insurance finance expenses
Insurance finance expenses for the period are included in profit or loss, unless Aegon has chosen to apply the option
to disaggregate these expenses between profit or loss and other comprehensive income. This option is set by insurance
portfolio and applied consistently for all underlying groups of contracts. In assessing the appropriate accounting policy for
a portfolio of insurance contracts, Aegon considers the investments and other assets that it holds for each portfolio and how
it accounts for those assets.
Aegon disaggregates insurance finance expenses for insurance contracts without direct participating features issued in the
United States, insurance contracts issued in Asia that are internally reinsured in the United States and certain life insurance
products in Spain.
The amount of insurance finance expenses included in profit or loss is determined by a systematic allocation of the expected
total insurance finance income and expenses over the duration of the group of contracts, using the following rates:
\u2022
Discount rates determined at the date of initial recognition of the group of contracts;
\u2022
A rate that allocates the remaining revised expected finance income or expenses over the remaining duration of the group of
contracts at a constant rate (expected yield approach); or
\u2022
For contracts that use a crediting rate to determine amounts due to the policyholders using an allocation that is based on the
amounts credited in the period and expected to be credited in future periods (projected crediting rate approach).
The expected yield approach and projected crediting rate approach are applied to designated groups of contracts for which
changes in financial assumptions have a substantial effect on the amounts paid by the policyholder (\"indirect participating
products\"). Indirect participating products include variable annuity products that do not qualify for the variable fee approach due
to minimum guarantees. US-style universal life contracts are not classified as indirect participating products because Aegon
considers policyholder benefits to be insufficiently impacted by changes in financial assumptions.
In the United States, Aegon has elected to apply the projected crediting rate approach to indexed universal life and fixed indexed
annuities. Other indirect participating contracts, such as variable universal life and fixed annuities, are accounted for under the
expected yield approach.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInsuranceContracts", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f21843": { "value": "2.7 Reinsurance contracts
Reinsurance contracts held are contracts entered into by Aegon in order to receive compensation for claims arising from one
or more insurance contracts issued by the Group. Reinsurance contracts that do not transfer insurance risk are accounted for
as financial instruments or as service contracts, depending on the nature of the agreement.
Aegon is not relieved of its legal liabilities when entering into reinsurance transactions. Therefore, the liabilities relating to the
underlying insurance contracts will continue to be reported on the consolidated statement of financial position during the
contractual term of the underlying contracts.
To the extent possible, the accounting model applied to reinsurance contracts held is consistent with that of the underlying
insurance contracts. Differences will arise when underlying contracts have direct participating features, as the variable
fee approach cannot be applied to reinsurance contracts held. Furthermore, reinsurance contracts with a coverage period
exceeding 12 months may not be eligible for the premium allocation approach.
a) Separating components from insurance contracts
Similarly to the analysis for insurance contracts (see note 2.6), Aegon has assessed that its reinsurance contracts held do not
include components that need to be separated for accounting purposes.
b) Level of aggregation
Reinsurance contracts are grouped for measurement and income recognition purposes, based on the similarity of risk, the
manner in which the contracts are managed, the expected profitability of the contracts at inception, and the period in which the
contracts are issued.
The process for dividing reinsurance contracts into groups is similar to that used for insurance contracts (note 2.6), except
that references to \"onerous contracts\" should be replaced with a reference to \"contracts on which there is a net gain on initial
recognition\".
When grouping reinsurance contracts, Aegon considers the type of reinsurance cover received (e.g. yearly renewable term, stop
loss, or coinsurance).
A group of reinsurance contracts can comprise a single contract, for example when the contracts are managed on an individual
treaty basis.
c) Reinsurance contracts measured under the general measurement model
The Group applies the accounting policies disclosed in note 2.6 for insurance contracts without direct participating features
to measure a group of reinsurance contracts held, albeit with the following modifications:
Recognition
Aegon recognizes reinsurance contracts held at the earlier of the following:
\u2022
The beginning of the coverage period; or
\u2022
The date that an onerous group of underlying insurance contracts is recognized, if Aegon entered into the related reinsurance
contract held at or before that date.
Notwithstanding the foregoing, Aegon delays the recognition of a group of reinsurance contracts held that provide
proportionate coverage (e.g. coinsurance, modified coinsurance and yearly renewable treaties) until the date that any
underlying insurance contract is initially recognized, if that date is later than the beginning of the coverage period of the group
of reinsurance contracts held.
Initial measurement
Aegon estimates the present value of the future cash flows of the group of reinsurance contracts held, using assumptions
that are consistent with those used to measure the underlying insurance contracts. The estimate includes an adjustment for
the risk of non-performance by the reinsurer, which is based on Aegon\u2019s credit exposure, net of collateral, and the perceived
counterparty default risk. More information on the methods used to calculate the fulfillment cash flows and the process
to estimate the inputs to those methods is provided in notes 2.6 and 29.
The risk adjustment for non-financial risk is the amount of risk transferred by the Group to the reinsurer.
On initial recognition, the contractual service margin of a group of reinsurance contracts held represents a net cost or a net
gain on purchasing reinsurance. It is measured as the equal and opposite amount of the total of the fulfillment cash flows, any
derecognized assets for cash flows occurring before the recognition of the group, any cash flows arising from the contracts
in the group at that date, and any income recognized in profit or loss for the recovery of losses recorded on initial recognition
of onerous underlying contracts.
If the net cost on purchasing reinsurance coverage relates to insured events that occurred before the purchase of the group
of reinsurance contracts, it is immediately expensed in the income statement.
Contract boundary
Cash flows are within the contract boundary of a reinsurance contract held if they arise from substantive rights and obligations
that exist during the period in which Aegon is either compelled to pay amounts to the reinsurer or in which it has a substantive
right to receive services from that reinsurer. A substantive right to receive services from a reinsurer ends when the reinsurer
has the right to terminate coverage or when he has the practical ability to reassess the risks transferred by Aegon and can set
a price or level of benefits that fully reflects those reassessed risks.
For treaties with open attaching periods, the cessions within the termination window (typically 90 days) are treated as a
separate contract for accounting purposes. Cessions that take place after the termination window are treated as a
new contract.
Contractual service margin
On initial recognition, the contractual service margin of a group of reinsurance contracts held represents a net cost or a net
gain on purchasing reinsurance. It is measured as the equal and opposite amount of the total of the fulfillment cash flows, any
derecognized assets for cash flows occurring before the recognition of the group, any cash flows arising from the contracts
in the group at that date, and any income recognized in profit or loss for the recovery of losses recorded on initial recognition
of onerous underlying contracts.
If the net cost on purchasing reinsurance coverage relates to insured events that occurred before the purchase of the group
of reinsurance contracts, it is immediately expensed in the income statement.
Subsequent measurement
The carrying amount of a group of reinsurance contracts held at each reporting date is the sum of the asset for remaining
coverage and the asset for incurred claims. The asset for remaining coverage comprises: (i) the fulfillment cash flows that
relate to services that will be received under the contracts in future periods; plus (ii) any remaining contractual service margin
at that date. The asset for incurred claims comprises the fulfillment cash flows that relate to services received in the current
and past period.
The fulfillment cash flows are remeasured at each reporting date to reflect current estimates.
The carrying amount of the contractual service margin at the end of each period is the carrying amount at the start of the
period, adjusted for:
\u2022
The contractual service margin of any new contracts that are added to the group in the period;
\u2022
Interest accreted on the carrying amount of the contractual service margin during the period;
\u2022
Income recognized in profit or loss in the reporting period to coincide with the initial recognition of an onerous group of
underlying insurance contracts or on addition of onerous contracts to that group;
\u2022
Reversals of a loss-recovery component to the extent those reversals are not changes in the fulfillment cash flows of the
group of reinsurance contracts held;
\u2022
Changes in fulfillment cash flows, measured at discount rates at initial recognition, to the extent that the change relates to
future services, except for the extent that:
\u2022
The change results from a change in fulfillment cash flows allocated to a group of underlying insurance contracts that does
not adjust the contractual service margin of the group of underlying contracts;
\u2022
The change results from the remeasurement of the liability for remaining coverage of an onerous group of underlying
contracts to which the premium allocation approach is applied;
\u2022
The effect of any currency exchange differences on the contractual service margin; and
\u2022
The amount recognized in the profit or loss because of the services received in the period.
The rate at which interest in accreted to the contractual service margin is determined at the initial inception date of the
group of reinsurance contracts, in the same way as the interest accretion rates for insurance contracts without direct
participating features.
Some changes in the contractual service margin are offset by changes in the fulfillment cash flows, resulting in no change
in the total carrying amount of the asset for remaining coverage. To the extent that changes in the contractual service margin
and changes in the fulfillment cash flows do not offset, income and expenses are recognized.
Changes in the fulfillment cash flows that result from changes in the risk of non-performance by the issuer do not relate
to future service and are recognized in the income statement immediately.
Loss recovery component
Aegon establishes a loss recovery component for a group of reinsurance contracts, when a change in the fulfillment cash flows
that relates to future services does not adjust the contractual service margin. It reflects the income recognized in the income
statement to offsets the reinsured loss reported on the underlying insurance contracts.
The adjusted amount, and resulting income, is determined by multiplying:
\u2022
The loss recognized on the group of underlying insurance contracts; and
\u2022
The recovery percentage, which is the percentage of claims on the group of underlying insurance contracts that Aegon
expects to recover from the reinsurance contracts held.
The calculation of the recovery percentage is based on discounted claims and recovery amounts, using current discount rates.
No allowance is made for reinsurance non-performance risk, and any risk adjustment for non-financial risks is excluded from
the calculation.
If an onerous group of insurance contracts is only partially reinsured, systematic and rational allocation methods are used
to determine the portion of subsequent movements in the loss component that relates to insurance contracts covered by the
group of reinsurance contracts held.
d) Reinsurance contracts held measured under the premium allocation approach
Aegon applies the premium allocation approach to a group of reinsurance contracts held, if the approach is also applied to the
underlying insurance contracts and:
\u2022
The coverage period of each reinsurance contract in the group is one year or less; or
\u2022
Aegon reasonably expects the resulting measurement will not differ materially from the results when applying the general
measurement model.
If a loss recovery component is created for a group of reinsurance contracts measured under the premium allocation approach,
Aegon adjusts the carrying amount of the asset for remaining coverage instead of adjusting the contractual service margin.
Please see note 2.6(k) for a description of the accounting policies concerning the premium allocation approach.
e) Derecognition and contract modification
Aegon applies the same accounting policies for derecognition and contract modifications to reinsurance contract held as to
insurance contracts. Please see note 2.6(l).2.10 Net income / (expenses) on reinsurance held
With the exception of reinsurance finance income, all other income and expenses from a group of reinsurance contracts are
presented as a single amount.
Aegon recognizes an allocation of reinsurance premiums paid in profit or loss as it receives services under groups
of reinsurance contracts. For contracts not measured under the premium allocation approach (PAA), the allocation
of reinsurance premiums paid relating to services received for each period represents the total of the changes in the asset for
remaining coverage that relate to services for which Aegon expects to pay consideration.
For contracts measured under the PAA, the allocation of reinsurance premiums paid for each period is the amount of expected
premium payments for receiving services in that period.2.12 Reinsurance finance income
Finance income related to reinsurance contracts held is presented separately in the income statement and OCI. They are not
netted with the finance expenses related to insurance contracts issued.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForReinsuranceExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22219": { "value": "2.13 Investment contracts
Contracts issued by the Group that do not transfer significant insurance risk but do transfer financial risk from the policyholder
to the Group are accounted for as investment contracts. Investment contract liabilities are recognized when the contract
is entered into and are derecognized when the contract expires, is discharged or is cancelled.
a. Investment contracts with discretionary participation features
Some investment contracts have participation features whereby the policyholder has the right to receive potentially significant
additional benefits which are based on the performance of a specified pool of investment contracts, specific investments held
by the Group or on the issuer\u2019s net result. If the Group has discretion over the amount or timing of the distribution of the returns
to policyholders, the investment contract liability is measured based on the accounting principles that apply to insurance
contracts with similar features.
Some unitized investment contracts provide policyholders with the option to switch between funds with and without
discretionary participation features. The entire contract is accounted for as an investment contract with discretionary
participation features if there is evidence of actual switching resulting in discretionary participation benefits that are
a significant part of the total contractual benefits.
Recognition and measurement
The accounting for investment contracts with discretionary participating features is the same as insurance contracts, with the
following exceptions:
\u2022
The date of initial recognition is the date that Aegon becomes party to the contract;
\u2022
Cash flows are within the contract boundary if they result from a substantive obligation of the entity to deliver cash at a
present or future date. Aegon has no substantive obligation to deliver cash if it has the practical ability to set a price for the
promise to deliver the cash that fully reflects the amount of cash promised and related risks; and
\u2022
The contractual service margin is recognized over the duration of the group of contracts in a systematic way that reflects the
transfer of investment services under the contract.
b. Investment contracts without discretionary participation features
At inception, investment contracts without discretionary participation features are carried at amortized cost.
Investment contracts without discretionary participation features are carried at amortized cost based on the expected cash
flows and using the effective interest rate method. The expected future cash flows are re-estimated at each reporting date
and the carrying amount of the financial liability is recalculated as the present value of estimated future cash flows using
the financial liability\u2019s original effective interest rate. Any adjustment is immediately recognized in the income statement. For
these investment contracts deposit accounting is applied, meaning that deposits are not reflected as premium income, but are
recognized as part of the financial liability.
The consolidated financial statements provide information on the fair value of all financial liabilities, including those carried
at amortized cost. As these contracts are not quoted in active markets, their value is determined by using valuation techniques,
such as discounted cash flow methods and stochastic modeling. For investment contracts without discretionary participation
features that can be cancelled by the policyholder, the fair value cannot be less than the surrender value.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22284": { "value": "2.14 Financial assets and liabilities
2.14.1 Initial recognition and measurement
Financial assets and financial liabilities are recognized when Aegon becomes a party to the contractual provisions of the
instrument and are classified for accounting purposes depending on the characteristics and the business model under which
they were purchased.
At initial recognition, Aegon measures a financial asset at its fair value plus or minus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are incremental and directly attributable to the acquisition or issue
of the financial asset or financial liability, such as fees and commissions. Immediately after initial recognition, an expected
credit loss allowance (ECL) is recognized for financial assets measured at amortized cost and investments in debt instruments
measured at fair value through other comprehensive income (FVOCI), as described in note 4.2.6 (Expected credit losses), which
results in an accounting loss being recognized in profit or loss when an asset is newly originated.
When the fair value of financial assets and liabilities differs from the transaction price on initial recognition, Aegon recognizes
the difference as follows:
\u2022
When the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e. a Level 1 input) or
based on a valuation technique that uses only data from observable markets, the difference is recognized as a gain or loss.
\u2022
In all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is determined
individually. It is either amortized over the life of the instrument, deferred until the instrument\u2019s fair value can be determined
using market observable inputs, or realized through settlement.2.14.4 Financial liabilities
(a) Classification and subsequent measurement
In both the current and prior period, financial liabilities are classified as subsequently measured at amortized cost, except for:
\u2022
Financial liabilities measured at fair value through profit or loss: this classification is applied to derivatives, financial liabilities
held for trading and other financial liabilities designated as such at initial recognition. This is because these liabilities, as well
as the related assets, are managed and their performance evaluated on a fair value basis. Gains or losses on financial
liabilities designated at FVPL are presented partially in other comprehensive income (the amount of change in the fair value of
the financial liability that is attributable to changes in the credit risk of that liability, which is determined as the amount that is
not attributable to changes in market conditions that give rise to market risk) and partially in profit or loss (the remaining
amount of change in the fair value of the liability). This is unless such a presentation would create, or enlarge an accounting
mismatch, in which case the gains and losses attributable to changes in the credit risk of the liability are also presented in
profit or loss;
\u2022
Financial liabilities arising from the transfer of financial assets which did not qualify for derecognition, whereby a financial
liability is recognized for the consideration received for the transfer. In subsequent periods, Aegon recognizes any expense
incurred on the financial liability; and
\u2022
Financial guarantee contracts and loan commitments.
The following sections provide more detail on the most significant classes of financial liabilities held by Aegon, their substance
and their accounting treatment.
Trust pass-through securities and (subordinated) borrowings
A financial instrument issued by the Group is classified as a liability if the contractual obligation must be settled in cash
or another financial asset or through the exchange of financial assets and liabilities at potentially unfavorable conditions for the
Group. Trust pass-through securities and (subordinated) borrowings are initially recognized at their fair value including directly
attributable transaction costs and are subsequently carried at amortized cost using the effective interest rate method, with
the exception of specific borrowings that are designated as fair value through profit or loss to eliminate, or significantly reduce,
an accounting mismatch, or specific borrowings which are carried at fair value through profit or loss as they are managed and
evaluated on a fair value basis.
Interest expense on trust pass-through securities and other borrowings carried at amortized cost is recognized in profit or loss
as \"interest charges\" using the effective interest method.
The liability is derecognized when the Group\u2019s obligation under the contract expires, is discharged or is cancelled. Subordinated
borrowings include the liability component of non-cumulative subordinated notes. These notes are identified as a compound
instrument due to the nature of this financial instrument. Compound instruments are separated into equity components and
liability components. The liability component for the non-cumulative subordinated notes is related to the redemption amount.
Investment contracts without discretionary participation features
Investment contracts without discretionary participation features are financial liabilities carried at amortized cost
or designated at fair value through profit or loss. For more information on the accounting treatment of these contracts, see note
2.13 Investment contracts.
Savings deposits
Savings deposits are stated at amortized cost (net of accrued interest). Accrued interest is recognized in the consolidated
statement of financial position under \"other liabilities and accruals\". Interest expenses of savings deposits are presented
in the statement of comprehensive income as \"interest expense\" under other net investment result. The balances are largely
repayable on demand. The initial valuation of this item reasonably approximates fair value.
Derivatives
To the extent that derivatives have a negative fair value at the end of the reporting period these are classified as financial
liabilities at fair value through profit or loss. Interest incomes and expenses of derivatives are presented in the statement
of comprehensive income as \"interest expense\" or \"Interest revenue on financial instruments measured at FVPL\".
Financial guarantee contracts and loan commitments
Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for
a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument.
Such financial guarantees are given to banks, financial institutions and others on behalf of customers to secure loans,
overdrafts and other banking facilities.
Financial guarantee contracts are initially measured at fair value and subsequently measured at the higher of:
\u2022
The amount of the loss allowance (calculated as described in note 4.2.6); and
\u2022
The premium received on initial recognition less income recognized in accordance with the principles of IFRS 15.
Loan commitments provided by Aegon are measured as the amount of the loss allowance (calculated as described in note
4.2.6 Expected credit losses). Aegon has not provided any commitment to provide loans at a below-market interest rate, or that
can be settled net in cash or by delivering or issuing another financial instrument.
For loan commitments and financial guarantee contracts, the loss allowance is recognized as a provision. However, for
contracts that include both a loan and an undrawn commitment and Aegon cannot separately identify the expected credit
losses on the undrawn commitment component from those on the loan component, the expected credit losses on the undrawn
commitment are recognized together with the loss allowance for the loan. To the extent that the combined expected credit
losses exceed the gross carrying amount of the loan, the expected credit losses are recognized as a provision.
(b) Derecognition
Financial liabilities are derecognized when they are extinguished (i.e. when the obligation specified in the contract is discharged,
cancelled or expires).
The exchange between Aegon and its original lenders of debt instruments with substantially different terms, as well
as substantial modifications of the terms of existing financial liabilities, are accounted for as an extinguishment of the original
financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present
value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original
effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original
financial liability. In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes
in the type of interest rate, new conversion features attached to the instrument and change in covenants are also taken
into consideration. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any
costs or fees incurred are recognized as part of the gain or loss on the extinguishment. If the exchange or modification is not
accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortized
over the remaining term of the modified liability.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22285": { "value": "2.14 Financial assets and liabilities
2.14.1 Initial recognition and measurement
Financial assets and financial liabilities are recognized when Aegon becomes a party to the contractual provisions of the
instrument and are classified for accounting purposes depending on the characteristics and the business model under which
they were purchased.
At initial recognition, Aegon measures a financial asset at its fair value plus or minus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are incremental and directly attributable to the acquisition or issue
of the financial asset or financial liability, such as fees and commissions. Immediately after initial recognition, an expected
credit loss allowance (ECL) is recognized for financial assets measured at amortized cost and investments in debt instruments
measured at fair value through other comprehensive income (FVOCI), as described in note 4.2.6 (Expected credit losses), which
results in an accounting loss being recognized in profit or loss when an asset is newly originated.
When the fair value of financial assets and liabilities differs from the transaction price on initial recognition, Aegon recognizes
the difference as follows:
\u2022
When the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e. a Level 1 input) or
based on a valuation technique that uses only data from observable markets, the difference is recognized as a gain or loss.
\u2022
In all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is determined
individually. It is either amortized over the life of the instrument, deferred until the instrument\u2019s fair value can be determined
using market observable inputs, or realized through settlement.
2.14.2 Classification and subsequent measurement of financial assets
Under IFRS 9, Aegon classifies its financial assets in the following measurement categories:
\u2022
Fair value through profit or loss (\"FVPL\");
\u2022
Fair value through other comprehensive income (\"FVOCI\"); or
\u2022 Amortized cost (\"AC\").
Aegon has classified the majority of its mortgage, consumer and private loan portfolios as measured at amortized cost, given
that the cash flows on these contracts represent solely payment of principal and interest, and they fit the business model hold-
to-collect. Similarly, the majority of debt instruments held by most Aegon\u2019s insurance entities are classified as FVOCI because
they fit the business model of hold-to-collect and sell, and their cash flows represent solely payment of principal and interest.
However, the majority of financial assets within Aegon\u2019s European insurance entities are designated on FVPL to minimize
accounting mismatches. For a detailed breakdown of asset classes in measurement categories see note 19.1 Financial assets,
excluding derivatives.
(a) Equity instruments
Equity instruments are instruments that meet the definition of equity from the issuer\u2019s perspective; that is, instruments that
do not contain a contractual obligation to pay and that evidence a residual interest in the issuer\u2019s net assets. Examples of equity
instruments include basic ordinary shares.
Under IFRS 9, equity investments do not qualify for amortized cost or FVOCI treatment because they would fail the contractual
cash flow characteristics assessment (cash flows are typically declared dividends at the discretion of the issuer, instead
of interest). Thus, equity investments would generally only qualify for FVPL treatment and not be subject to impairment under
the Expected Credit Loss model.
However, IFRS 9 allows the entity to make an irrevocable election at initial recognition to present changes in the fair
value of equity investment in OCI rather than profit or loss. The equity investments designated as FVOCI are not subject
to impairment under the Expected Credit Loss model.
When equity investments measured at FVOCI are disposed, the unrealized gains or losses, including the OCI resulting from
foreign currency translation, will stay as a part of the equity and cannot be \u201crecycled\u201d into profit and loss. If applicable, dividends
should be recognized in profit or loss with or without such election.
Gains and losses on equity investments at FVPL are included in the \u2018Results from financial transactions\u2019 line in the consolidated
income statement.
(b) Debt instruments
Debt instruments are those instruments that meet the definition of a financial liability from the issuer\u2019s perspective, such
as mortgage loans, private loans, and government and corporate bonds.
Classification and subsequent measurement of debt instruments depend on:
\u2022
Aegon\u2019s business model for managing the asset;
\u2022
The cash flow characteristics of the asset; and
\u2022
The designation at FVPL to eliminate or significantly reduce an accounting mismatch or recognition inconsistency.
Based on these factors, Aegon classifies its debt instruments into one of the following three measurement categories:
\u2022
Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest (\"SPPI\"), and that are not designated at FVPL, are measured at amortized cost. The carrying
amount of these assets is adjusted by any expected credit loss allowance recognized (see note 4.2.6 Expected credit losses).
Interest revenue from these financial assets is included in \"Interest revenue on financial instruments calculated using the
effective interest rate method\".
\u2022
Fair value through other comprehensive income (\"FVOCI\"): Financial assets that are held for collection of contractual cash
flows and for selling the assets, where the assets\u2019 cash flows represent solely payments of principal and interest, and that are
not designated at FVPL, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the
recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses on the instrument\u2019s
amortized cost which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss
previously recognized in OCI is reclassified from equity to profit or loss and recognized in \"Net Investment result\". Interest
revenue from these financial assets is included in \"Interest revenue on financial instruments calculated using the effective
interest rate method\".
\u2022
Fair value through profit or loss (\"FVPL\"): Assets that do not meet the criteria for amortized cost or FVOCI are measured
mandatorily at fair value through profit or loss.
The Group has designated certain debt instruments as measured at FVPL because they relate to insurance contracts that
are measured in a way that incorporates current information and all related insurance finance income and expenses are
recognized in profit or loss, by which designation the Group eliminates accounting mismatches.
A gain or loss on a debt investment that is subsequently measured at FVPL and is not part of a hedging relationship
is recognized in profit or loss and presented in the profit or loss statement within \"Net trading income\" in the period in which
it arises, unless it arises from debt instruments that were designated at fair value or which are not held for trading, in which case
they are presented separately in \"Net investment result\". Interest revenue from these financial assets is included in \"Interest
revenue from financial instruments measured at FV\".
Business model
The Group determines its business model at the level that best reflects how it manages groups of financial assets to achieve
its business objective. The Group\u2019s business model is not assessed on an instrument-by-instrument basis, but at a higher level
of aggregated portfolios and is based on observable factors, such as:
\u2022
How the performance of the business model and the financial assets held within that business model are evaluated and
reported to the Group\u2019s senior management;
\u2022
The risks that affect the performance of the business model and the financial assets held within it. In particular, the way those
risks are managed;
\u2022
How the Group management is compensated, i.e. whether the compensation is based on the fair value of the assets managed
or on the contractual cash flows collected;
\u2022
The expected frequency, value and timing of sales are also important aspects of the Group\u2019s assessment.
The business model assessment is based on reasonably expected scenarios without taking \"worst case\" or \"stress case\"
scenarios into account. If cash flows after initial recognition are realized in a way that is different from the Group\u2019s original
expectations, the Group does not change the classification of the remaining financial assets held in that business model but
incorporates such information when assessing newly originated or newly purchased financial assets going forward.
Sales in themselves do not determine the business model and therefore cannot be considered in isolation. An entity must
consider information about sales within the context of the reasons for those sales and the conditions that existed at that time
as compared to current conditions.
Solely payment of principal and interest (\"SPPI\")
Where the business model is to hold assets to collect contractual cash flows or to collect contractual cash flows and cash
flows from the sale of the asset, Aegon assesses whether the financial instruments\u2019 cash flows represent solely payments
of principal and interest (the \"SPPI test\"). In making this assessment, Aegon considers whether the contractual cash flows
are consistent with a basic lending arrangement i.e. interest includes only consideration for the time value of money, credit
risk, other basic lending risks and a profit margin that is consistent with a basic lending arrangement. Where the contractual
terms introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related financial asset
is classified and measured at fair value through profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are
solely payment of principal and interest. Aegon reclassifies debt investments when and only when its business model for
managing those assets changes. The reclassification takes place from the start of the first reporting period following the
change. Such changes are expected to be very infrequent and none occurred during the period.
(c) Amortized cost and effective interest rate
The amortized cost of a debt instrument is the amount at which it is measured at initial recognition plus accrued interest minus
principal repayments, plus or minus the cumulative amortization of any difference between the book value at initial recognition
and the nominal amount and minus any allowance for impairment. The effective interest rate method is a method of calculating
the amortized cost and of allocating the interest revenue or expense over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash payments or receipts through the expected life of the debt instrument,
or when appropriate, a shorter period to the net carrying amount of the instrument. When calculating the effective interest
rate, all contractual terms are considered. Possible future credit losses are not taken into account. Charges and interest paid
or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other
premiums or discounts are included in the calculation.
For purchased or originated credit-impaired (\"POCI\") financial assets \u2013 assets that are credit-impaired (see definition in note
4.2.6 Expected credit losses) at initial recognition \u2013 Aegon calculates the credit-adjusted effective interest rate, which
is calculated based on the amortized cost of the financial asset instead of its gross carrying amount and incorporates the
impact of expected credit losses in estimated future cash flows.
For assets determined to be POCI, the general impairment model would not apply. Instead, impairment is determined based
on lifetime expected credit loss (ECL) since the losses are reflected in the fair value at initial recognition. No separate loss
allowance is recognized.
The effective interest rate for interest recognition throughout the life of the asset is a credit-adjusted effective interest rate
(EIR) since lifetime ECL is already reflected in the estimated cash flows when calculating the effective interest rate on initial
recognition. On a regular basis, the Group assesses the estimate of cash flows made at acquisition of the POCI instrument. The
assessment is performed by recalculating the gross carrying amount of the asset as the present value of the estimated future
cash flows, discounted using the initial credit-adjusted effective interest rate. As a result of this assessment, in an instance
where the payments received by the Group exceed or fall short of the initial cash flow estimate booked at acquisition, the gain
is recorded directly in the P&L as impairment (losses) / reversals.
(d) Interest revenue
Interest revenue is calculated by applying the effective interest rate to the gross carrying amount of financial assets, except for:
\u2022
POCI financial assets, for which the original credit-adjusted effective interest rate is applied to the amortized cost of the
financial asset.
\u2022
Financial assets that are not POCI but have subsequently become credit-impaired (or \"Stage 3\"), for which interest revenue is
calculated by applying the effective interest rate to their amortized cost (i.e. net of the expected credit loss provision). For the
definition of \"Stage 3\", see note 4.2.6 Expected credit losses.
IFRS 9 resulted in changes to IAS 1 for the presentation of Interest revenue for instruments calculated using the effective
interest rate method. The revised presentation requires it be shown as a separate line item in the consolidated income
statement. Interest revenue calculated using the effective interest rate relates to all financial assets, which are measured
at amortized cost or FVOCI. Interest revenue on financial assets and financial liabilities that are measured at fair value through
profit or loss are presented as \"Interest revenue on financial instruments measured at FVPL\".
The new interest presentation was applied together with the other requirements of IFRS 9.
(e) Modification of financial assets
Aegon sometimes renegotiates or otherwise modifies the contractual cash flows of financial assets. When this happens,
Aegon assesses whether or not the new terms are substantially different to the original terms. Aegon does this by considering,
among other things, the following qualitative and quantitative factors:
\u2022
If the borrower is in financial difficulty, whether the modification merely reduces the contractual cash flows to amounts the
borrower is expected to be able to pay.
\u2022
Whether any substantial new terms are introduced, such as a profit share/equity-based return that substantially affects the
risk profile of the loan or equity conversion option.
\u2022
Significant extension of the loan term when the borrower is not in financial difficulty.
\u2022
Significant change in the interest rate.
\u2022
Change in the currency the loan is denominated in.
\u2022
Insertion of collateral, other security or credit enhancements that significantly affect the credit risk associated with the loan.
\u2022
Change in seniority or subordination.
\u2022
Any change in SPPI assessment of the asset.
\u2022
Significant change in the present value of the instrument.
If the terms are substantially different, Aegon derecognizes the original financial asset and recognizes a \"new\" asset at fair
value and recalculates a new effective interest rate for the asset. The date of renegotiation is consequently considered
to be the date of initial recognition for impairment calculation purposes, including for the purpose of determining whether
a significant increase in credit risk has occurred. However, Aegon also assesses whether the new financial asset recognized
is deemed to be credit-impaired at initial recognition, especially in circumstances where the renegotiation was driven by the
debtor being unable to make the originally agreed payments. Differences in the carrying amount are also recognized in profit
or loss as a gain or loss on derecognition (Results from financial transactions).
If the terms are not substantially different, the renegotiation or modification does not result in derecognition, and Aegon
recalculates the gross carrying amount based on the revised cash flows of the financial asset and recognizes a modification
gain or loss in profit or loss as result from financial transactions. The new gross carrying amount is recalculated by discounting
the modified cash flows at the original effective interest rate (or credit-adjusted effective interest rate for purchased
or originated credit-impaired financial assets).
The impact of modifications of financial assets on the expected credit loss calculation is discussed in note 4.2.6 Expected
credit losses.
(f) Derecognition other than a modification of financial assets
A financial asset is derecognized when
\u2022
the contractual rights to the asset\u2019s cash flows expire; and
\u2022
when Aegon retains the right to receive cash flows from the asset or has an obligation to pay received cash flows in full
without delay to a third party; and
\u2022
either has transferred the asset and substantially all the risks and rewards of ownership, or has neither transferred nor
retained all the risks and rewards but has transferred control of the asset.
Financial assets of which Aegon has neither transferred nor retained significantly all the risk and rewards are recognized to the
extent of Aegon\u2019s continuing involvement. If significantly all risks are retained, the assets are not derecognized.
On derecognition, the difference between the disposal proceeds and the carrying amount is recognized in the income
statement within results from financial transactions.
(g) Derivatives and hedge accounting
Definition of derivatives
Derivatives are financial instruments classified as held for trading assets of which the value changes in response to an
underlying variable, which require little or no net initial investment and are settled at a future date.
Measurement of derivatives
Derivatives are initially recognized at fair value on the date on which the derivative contract is entered into and are
subsequently remeasured at fair value. All derivatives are carried as assets when fair value is positive and as liabilities when
fair value is negative.
Net fair value changes of derivatives are recognized in the income statement as result from financial transactions, unless
the derivative has been designated as a hedging instrument in a cash flow hedge or a hedge of a net investment in a foreign
operation. Fair value movements of fair value hedge instruments are offset by the fair value movements of the hedged item, and
the resulting hedge ineffectiveness, if any, is included in result from financial transactions.
Embedded derivatives and hybrid contracts
Certain derivatives are embedded in hybrid contracts, such as the conversion option in a convertible bond. If the hybrid
contract contains a host that is a financial asset, then the Group assesses the entire contract for classification and
measurement purposes. Otherwise, the embedded derivatives are treated as separate derivatives when:
\u2022
Their economic characteristics and risks are not closely related to those of the host contract;
\u2022
A separate instrument with the same terms would meet the definition of a derivative; and
\u2022
The hybrid contract is not measured at fair value through profit or loss.
These embedded derivatives are separately accounted for at fair value, with changes in fair value recognized in the income
statement as result from financial transactions, unless the Group chooses to designate the hybrid contracts at fair value
through profit or loss.
Hedge accounting
The method of recognizing the resulting fair value gain or loss depends on whether the derivative is designated and qualifies as
a hedging instrument and if so, the nature of the item being hedged. Aegon designates certain derivatives as either:
\u2022
Hedges of the fair value of recognized assets or liabilities or firm commitments (fair value hedges);
\u2022
Hedges of highly probable future cash flows attributable to a recognized asset or liability (cash flow hedges); or
\u2022
Hedges of a net investment in a foreign operation (net investment hedges).
Aegon documents, at the inception of the hedge, the relationship between hedged items and hedging instruments, as well
as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions
are highly effective in offsetting changes in fair values or cash flows of hedged items.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income
statement, together with changes in the fair value of the hedged assets or liabilities that are attributable to the hedged risk
as result from financial transactions.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of hedged items for
which the effective interest method is used is amortized to profit or loss over the period to maturity and recorded as \"Interest
revenue on financial instruments calculated using the effective interest method\".
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges
is recognized in OCI. The gain or loss relating to the ineffective portion is recognized immediately in the P&L as result from
financial transactions.
Amounts accumulated in equity are recycled to the P&L in the periods when the hedged item affects profit or loss. They are
recorded in the income or expense lines in which the revenue or expense associated with the hedged item is reported.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognized in the periods when the hedged item
effects profit or loss. When a forecast transaction is no longer expected to occur (e.g. the recognized hedged assets is disposed
of), the cumulative gains or losses previously recognized in OCI is immediately reclassified to the P&L.
Aegon designates and accounts for cash flow hedges when effectiveness requirements are achieved. The following cash flow
hedge type relationships are currently utilized by Aegon:
\u2022
An interest rate swap that converts a floating rate asset to a fixed rate asset (e.g. combining Treasury Inflation Protected
Securities asset and inflation swap to synthetically create fixed rate treasury asset).
\u2022
A cross currency interest rate swap that converts a foreign denominated floating rate asset to a USD fixed rate asset.
\u2022
A cross currency interest rate swap that converts a foreign denominated fixed rate asset to a USD fixed rate asset.
\u2022
A forward starting interest rate swap to hedge the forecasted purchases of fixed rate assets.
Net investment hedge
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the
hedging instrument relating to the effective portion of the hedge is recognized directly in OCI; the gains or losses relating to the
ineffective portion is recognized immediately in the P&L. Gains and losses accumulated in equity are included in the P&L when
the foreign operation is disposed of as part of the gain or loss of the disposal.
Additional details on derivatives is disclosed in note 20 \u2018Derivatives\u2019.
2.14.3 Impairment of financial assets
Aegon assesses on a forward-looking basis the expected credit losses (\"ECL\") associated with its debt instrument assets
carried at amortized cost and FVOCI. Aegon recognizes a loss allowance for such losses at each reporting date. The
measurement of ECL reflects:
\u2022
An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
\u2022
The time value of money; and
\u2022
Reasonable and supportable information that is available without undue cost or effort at the reporting date about past events,
current conditions and forecasts of future economic conditions.
Note 4.2.6 Expected credit losses provides more detail of how the expected credit loss allowance is measured.
2.14.4 Financial liabilities
(a) Classification and subsequent measurement
In both the current and prior period, financial liabilities are classified as subsequently measured at amortized cost, except for:
\u2022
Financial liabilities measured at fair value through profit or loss: this classification is applied to derivatives, financial liabilities
held for trading and other financial liabilities designated as such at initial recognition. This is because these liabilities, as well
as the related assets, are managed and their performance evaluated on a fair value basis. Gains or losses on financial
liabilities designated at FVPL are presented partially in other comprehensive income (the amount of change in the fair value of
the financial liability that is attributable to changes in the credit risk of that liability, which is determined as the amount that is
not attributable to changes in market conditions that give rise to market risk) and partially in profit or loss (the remaining
amount of change in the fair value of the liability). This is unless such a presentation would create, or enlarge an accounting
mismatch, in which case the gains and losses attributable to changes in the credit risk of the liability are also presented in
profit or loss;
\u2022
Financial liabilities arising from the transfer of financial assets which did not qualify for derecognition, whereby a financial
liability is recognized for the consideration received for the transfer. In subsequent periods, Aegon recognizes any expense
incurred on the financial liability; and
\u2022
Financial guarantee contracts and loan commitments.
The following sections provide more detail on the most significant classes of financial liabilities held by Aegon, their substance
and their accounting treatment.
Trust pass-through securities and (subordinated) borrowings
A financial instrument issued by the Group is classified as a liability if the contractual obligation must be settled in cash
or another financial asset or through the exchange of financial assets and liabilities at potentially unfavorable conditions for the
Group. Trust pass-through securities and (subordinated) borrowings are initially recognized at their fair value including directly
attributable transaction costs and are subsequently carried at amortized cost using the effective interest rate method, with
the exception of specific borrowings that are designated as fair value through profit or loss to eliminate, or significantly reduce,
an accounting mismatch, or specific borrowings which are carried at fair value through profit or loss as they are managed and
evaluated on a fair value basis.
Interest expense on trust pass-through securities and other borrowings carried at amortized cost is recognized in profit or loss
as \"interest charges\" using the effective interest method.
The liability is derecognized when the Group\u2019s obligation under the contract expires, is discharged or is cancelled. Subordinated
borrowings include the liability component of non-cumulative subordinated notes. These notes are identified as a compound
instrument due to the nature of this financial instrument. Compound instruments are separated into equity components and
liability components. The liability component for the non-cumulative subordinated notes is related to the redemption amount.
Investment contracts without discretionary participation features
Investment contracts without discretionary participation features are financial liabilities carried at amortized cost
or designated at fair value through profit or loss. For more information on the accounting treatment of these contracts, see note
2.13 Investment contracts.
Savings deposits
Savings deposits are stated at amortized cost (net of accrued interest). Accrued interest is recognized in the consolidated
statement of financial position under \"other liabilities and accruals\". Interest expenses of savings deposits are presented
in the statement of comprehensive income as \"interest expense\" under other net investment result. The balances are largely
repayable on demand. The initial valuation of this item reasonably approximates fair value.
Derivatives
To the extent that derivatives have a negative fair value at the end of the reporting period these are classified as financial
liabilities at fair value through profit or loss. Interest incomes and expenses of derivatives are presented in the statement
of comprehensive income as \"interest expense\" or \"Interest revenue on financial instruments measured at FVPL\".
Financial guarantee contracts and loan commitments
Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for
a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument.
Such financial guarantees are given to banks, financial institutions and others on behalf of customers to secure loans,
overdrafts and other banking facilities.
Financial guarantee contracts are initially measured at fair value and subsequently measured at the higher of:
\u2022
The amount of the loss allowance (calculated as described in note 4.2.6); and
\u2022
The premium received on initial recognition less income recognized in accordance with the principles of IFRS 15.
Loan commitments provided by Aegon are measured as the amount of the loss allowance (calculated as described in note
4.2.6 Expected credit losses). Aegon has not provided any commitment to provide loans at a below-market interest rate, or that
can be settled net in cash or by delivering or issuing another financial instrument.
For loan commitments and financial guarantee contracts, the loss allowance is recognized as a provision. However, for
contracts that include both a loan and an undrawn commitment and Aegon cannot separately identify the expected credit
losses on the undrawn commitment component from those on the loan component, the expected credit losses on the undrawn
commitment are recognized together with the loss allowance for the loan. To the extent that the combined expected credit
losses exceed the gross carrying amount of the loan, the expected credit losses are recognized as a provision.
(b) Derecognition
Financial liabilities are derecognized when they are extinguished (i.e. when the obligation specified in the contract is discharged,
cancelled or expires).
The exchange between Aegon and its original lenders of debt instruments with substantially different terms, as well
as substantial modifications of the terms of existing financial liabilities, are accounted for as an extinguishment of the original
financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present
value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original
effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original
financial liability. In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes
in the type of interest rate, new conversion features attached to the instrument and change in covenants are also taken
into consideration. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any
costs or fees incurred are recognized as part of the gain or loss on the extinguishment. If the exchange or modification is not
accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortized
over the remaining term of the modified liability.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22286": { "value": "2.14 Financial assets and liabilities
2.14.1 Initial recognition and measurement
Financial assets and financial liabilities are recognized when Aegon becomes a party to the contractual provisions of the
instrument and are classified for accounting purposes depending on the characteristics and the business model under which
they were purchased.
At initial recognition, Aegon measures a financial asset at its fair value plus or minus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are incremental and directly attributable to the acquisition or issue
of the financial asset or financial liability, such as fees and commissions. Immediately after initial recognition, an expected
credit loss allowance (ECL) is recognized for financial assets measured at amortized cost and investments in debt instruments
measured at fair value through other comprehensive income (FVOCI), as described in note 4.2.6 (Expected credit losses), which
results in an accounting loss being recognized in profit or loss when an asset is newly originated.
When the fair value of financial assets and liabilities differs from the transaction price on initial recognition, Aegon recognizes
the difference as follows:
\u2022
When the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e. a Level 1 input) or
based on a valuation technique that uses only data from observable markets, the difference is recognized as a gain or loss.
\u2022
In all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is determined
individually. It is either amortized over the life of the instrument, deferred until the instrument\u2019s fair value can be determined
using market observable inputs, or realized through settlement.
2.14.2 Classification and subsequent measurement of financial assets
Under IFRS 9, Aegon classifies its financial assets in the following measurement categories:
\u2022
Fair value through profit or loss (\"FVPL\");
\u2022
Fair value through other comprehensive income (\"FVOCI\"); or
\u2022 Amortized cost (\"AC\").
Aegon has classified the majority of its mortgage, consumer and private loan portfolios as measured at amortized cost, given
that the cash flows on these contracts represent solely payment of principal and interest, and they fit the business model hold-
to-collect. Similarly, the majority of debt instruments held by most Aegon\u2019s insurance entities are classified as FVOCI because
they fit the business model of hold-to-collect and sell, and their cash flows represent solely payment of principal and interest.
However, the majority of financial assets within Aegon\u2019s European insurance entities are designated on FVPL to minimize
accounting mismatches. For a detailed breakdown of asset classes in measurement categories see note 19.1 Financial assets,
excluding derivatives.
(a) Equity instruments
Equity instruments are instruments that meet the definition of equity from the issuer\u2019s perspective; that is, instruments that
do not contain a contractual obligation to pay and that evidence a residual interest in the issuer\u2019s net assets. Examples of equity
instruments include basic ordinary shares.
Under IFRS 9, equity investments do not qualify for amortized cost or FVOCI treatment because they would fail the contractual
cash flow characteristics assessment (cash flows are typically declared dividends at the discretion of the issuer, instead
of interest). Thus, equity investments would generally only qualify for FVPL treatment and not be subject to impairment under
the Expected Credit Loss model.
However, IFRS 9 allows the entity to make an irrevocable election at initial recognition to present changes in the fair
value of equity investment in OCI rather than profit or loss. The equity investments designated as FVOCI are not subject
to impairment under the Expected Credit Loss model.
When equity investments measured at FVOCI are disposed, the unrealized gains or losses, including the OCI resulting from
foreign currency translation, will stay as a part of the equity and cannot be \u201crecycled\u201d into profit and loss. If applicable, dividends
should be recognized in profit or loss with or without such election.
Gains and losses on equity investments at FVPL are included in the \u2018Results from financial transactions\u2019 line in the consolidated
income statement.
(b) Debt instruments
Debt instruments are those instruments that meet the definition of a financial liability from the issuer\u2019s perspective, such
as mortgage loans, private loans, and government and corporate bonds.
Classification and subsequent measurement of debt instruments depend on:
\u2022
Aegon\u2019s business model for managing the asset;
\u2022
The cash flow characteristics of the asset; and
\u2022
The designation at FVPL to eliminate or significantly reduce an accounting mismatch or recognition inconsistency.
Based on these factors, Aegon classifies its debt instruments into one of the following three measurement categories:
\u2022
Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest (\"SPPI\"), and that are not designated at FVPL, are measured at amortized cost. The carrying
amount of these assets is adjusted by any expected credit loss allowance recognized (see note 4.2.6 Expected credit losses).
Interest revenue from these financial assets is included in \"Interest revenue on financial instruments calculated using the
effective interest rate method\".
\u2022
Fair value through other comprehensive income (\"FVOCI\"): Financial assets that are held for collection of contractual cash
flows and for selling the assets, where the assets\u2019 cash flows represent solely payments of principal and interest, and that are
not designated at FVPL, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the
recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses on the instrument\u2019s
amortized cost which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss
previously recognized in OCI is reclassified from equity to profit or loss and recognized in \"Net Investment result\". Interest
revenue from these financial assets is included in \"Interest revenue on financial instruments calculated using the effective
interest rate method\".
\u2022
Fair value through profit or loss (\"FVPL\"): Assets that do not meet the criteria for amortized cost or FVOCI are measured
mandatorily at fair value through profit or loss.
The Group has designated certain debt instruments as measured at FVPL because they relate to insurance contracts that
are measured in a way that incorporates current information and all related insurance finance income and expenses are
recognized in profit or loss, by which designation the Group eliminates accounting mismatches.
A gain or loss on a debt investment that is subsequently measured at FVPL and is not part of a hedging relationship
is recognized in profit or loss and presented in the profit or loss statement within \"Net trading income\" in the period in which
it arises, unless it arises from debt instruments that were designated at fair value or which are not held for trading, in which case
they are presented separately in \"Net investment result\". Interest revenue from these financial assets is included in \"Interest
revenue from financial instruments measured at FV\".
Business model
The Group determines its business model at the level that best reflects how it manages groups of financial assets to achieve
its business objective. The Group\u2019s business model is not assessed on an instrument-by-instrument basis, but at a higher level
of aggregated portfolios and is based on observable factors, such as:
\u2022
How the performance of the business model and the financial assets held within that business model are evaluated and
reported to the Group\u2019s senior management;
\u2022
The risks that affect the performance of the business model and the financial assets held within it. In particular, the way those
risks are managed;
\u2022
How the Group management is compensated, i.e. whether the compensation is based on the fair value of the assets managed
or on the contractual cash flows collected;
\u2022
The expected frequency, value and timing of sales are also important aspects of the Group\u2019s assessment.
The business model assessment is based on reasonably expected scenarios without taking \"worst case\" or \"stress case\"
scenarios into account. If cash flows after initial recognition are realized in a way that is different from the Group\u2019s original
expectations, the Group does not change the classification of the remaining financial assets held in that business model but
incorporates such information when assessing newly originated or newly purchased financial assets going forward.
Sales in themselves do not determine the business model and therefore cannot be considered in isolation. An entity must
consider information about sales within the context of the reasons for those sales and the conditions that existed at that time
as compared to current conditions.
Solely payment of principal and interest (\"SPPI\")
Where the business model is to hold assets to collect contractual cash flows or to collect contractual cash flows and cash
flows from the sale of the asset, Aegon assesses whether the financial instruments\u2019 cash flows represent solely payments
of principal and interest (the \"SPPI test\"). In making this assessment, Aegon considers whether the contractual cash flows
are consistent with a basic lending arrangement i.e. interest includes only consideration for the time value of money, credit
risk, other basic lending risks and a profit margin that is consistent with a basic lending arrangement. Where the contractual
terms introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related financial asset
is classified and measured at fair value through profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are
solely payment of principal and interest. Aegon reclassifies debt investments when and only when its business model for
managing those assets changes. The reclassification takes place from the start of the first reporting period following the
change. Such changes are expected to be very infrequent and none occurred during the period.
(c) Amortized cost and effective interest rate
The amortized cost of a debt instrument is the amount at which it is measured at initial recognition plus accrued interest minus
principal repayments, plus or minus the cumulative amortization of any difference between the book value at initial recognition
and the nominal amount and minus any allowance for impairment. The effective interest rate method is a method of calculating
the amortized cost and of allocating the interest revenue or expense over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash payments or receipts through the expected life of the debt instrument,
or when appropriate, a shorter period to the net carrying amount of the instrument. When calculating the effective interest
rate, all contractual terms are considered. Possible future credit losses are not taken into account. Charges and interest paid
or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other
premiums or discounts are included in the calculation.
For purchased or originated credit-impaired (\"POCI\") financial assets \u2013 assets that are credit-impaired (see definition in note
4.2.6 Expected credit losses) at initial recognition \u2013 Aegon calculates the credit-adjusted effective interest rate, which
is calculated based on the amortized cost of the financial asset instead of its gross carrying amount and incorporates the
impact of expected credit losses in estimated future cash flows.
For assets determined to be POCI, the general impairment model would not apply. Instead, impairment is determined based
on lifetime expected credit loss (ECL) since the losses are reflected in the fair value at initial recognition. No separate loss
allowance is recognized.
The effective interest rate for interest recognition throughout the life of the asset is a credit-adjusted effective interest rate
(EIR) since lifetime ECL is already reflected in the estimated cash flows when calculating the effective interest rate on initial
recognition. On a regular basis, the Group assesses the estimate of cash flows made at acquisition of the POCI instrument. The
assessment is performed by recalculating the gross carrying amount of the asset as the present value of the estimated future
cash flows, discounted using the initial credit-adjusted effective interest rate. As a result of this assessment, in an instance
where the payments received by the Group exceed or fall short of the initial cash flow estimate booked at acquisition, the gain
is recorded directly in the P&L as impairment (losses) / reversals.
(d) Interest revenue
Interest revenue is calculated by applying the effective interest rate to the gross carrying amount of financial assets, except for:
\u2022
POCI financial assets, for which the original credit-adjusted effective interest rate is applied to the amortized cost of the
financial asset.
\u2022
Financial assets that are not POCI but have subsequently become credit-impaired (or \"Stage 3\"), for which interest revenue is
calculated by applying the effective interest rate to their amortized cost (i.e. net of the expected credit loss provision). For the
definition of \"Stage 3\", see note 4.2.6 Expected credit losses.
IFRS 9 resulted in changes to IAS 1 for the presentation of Interest revenue for instruments calculated using the effective
interest rate method. The revised presentation requires it be shown as a separate line item in the consolidated income
statement. Interest revenue calculated using the effective interest rate relates to all financial assets, which are measured
at amortized cost or FVOCI. Interest revenue on financial assets and financial liabilities that are measured at fair value through
profit or loss are presented as \"Interest revenue on financial instruments measured at FVPL\".
The new interest presentation was applied together with the other requirements of IFRS 9.
(e) Modification of financial assets
Aegon sometimes renegotiates or otherwise modifies the contractual cash flows of financial assets. When this happens,
Aegon assesses whether or not the new terms are substantially different to the original terms. Aegon does this by considering,
among other things, the following qualitative and quantitative factors:
\u2022
If the borrower is in financial difficulty, whether the modification merely reduces the contractual cash flows to amounts the
borrower is expected to be able to pay.
\u2022
Whether any substantial new terms are introduced, such as a profit share/equity-based return that substantially affects the
risk profile of the loan or equity conversion option.
\u2022
Significant extension of the loan term when the borrower is not in financial difficulty.
\u2022
Significant change in the interest rate.
\u2022
Change in the currency the loan is denominated in.
\u2022
Insertion of collateral, other security or credit enhancements that significantly affect the credit risk associated with the loan.
\u2022
Change in seniority or subordination.
\u2022
Any change in SPPI assessment of the asset.
\u2022
Significant change in the present value of the instrument.
If the terms are substantially different, Aegon derecognizes the original financial asset and recognizes a \"new\" asset at fair
value and recalculates a new effective interest rate for the asset. The date of renegotiation is consequently considered
to be the date of initial recognition for impairment calculation purposes, including for the purpose of determining whether
a significant increase in credit risk has occurred. However, Aegon also assesses whether the new financial asset recognized
is deemed to be credit-impaired at initial recognition, especially in circumstances where the renegotiation was driven by the
debtor being unable to make the originally agreed payments. Differences in the carrying amount are also recognized in profit
or loss as a gain or loss on derecognition (Results from financial transactions).
If the terms are not substantially different, the renegotiation or modification does not result in derecognition, and Aegon
recalculates the gross carrying amount based on the revised cash flows of the financial asset and recognizes a modification
gain or loss in profit or loss as result from financial transactions. The new gross carrying amount is recalculated by discounting
the modified cash flows at the original effective interest rate (or credit-adjusted effective interest rate for purchased
or originated credit-impaired financial assets).
The impact of modifications of financial assets on the expected credit loss calculation is discussed in note 4.2.6 Expected
credit losses.
(f) Derecognition other than a modification of financial assets
A financial asset is derecognized when
\u2022
the contractual rights to the asset\u2019s cash flows expire; and
\u2022
when Aegon retains the right to receive cash flows from the asset or has an obligation to pay received cash flows in full
without delay to a third party; and
\u2022
either has transferred the asset and substantially all the risks and rewards of ownership, or has neither transferred nor
retained all the risks and rewards but has transferred control of the asset.
Financial assets of which Aegon has neither transferred nor retained significantly all the risk and rewards are recognized to the
extent of Aegon\u2019s continuing involvement. If significantly all risks are retained, the assets are not derecognized.
On derecognition, the difference between the disposal proceeds and the carrying amount is recognized in the income
statement within results from financial transactions.
(g) Derivatives and hedge accounting
Definition of derivatives
Derivatives are financial instruments classified as held for trading assets of which the value changes in response to an
underlying variable, which require little or no net initial investment and are settled at a future date.
Measurement of derivatives
Derivatives are initially recognized at fair value on the date on which the derivative contract is entered into and are
subsequently remeasured at fair value. All derivatives are carried as assets when fair value is positive and as liabilities when
fair value is negative.
Net fair value changes of derivatives are recognized in the income statement as result from financial transactions, unless
the derivative has been designated as a hedging instrument in a cash flow hedge or a hedge of a net investment in a foreign
operation. Fair value movements of fair value hedge instruments are offset by the fair value movements of the hedged item, and
the resulting hedge ineffectiveness, if any, is included in result from financial transactions.
Embedded derivatives and hybrid contracts
Certain derivatives are embedded in hybrid contracts, such as the conversion option in a convertible bond. If the hybrid
contract contains a host that is a financial asset, then the Group assesses the entire contract for classification and
measurement purposes. Otherwise, the embedded derivatives are treated as separate derivatives when:
\u2022
Their economic characteristics and risks are not closely related to those of the host contract;
\u2022
A separate instrument with the same terms would meet the definition of a derivative; and
\u2022
The hybrid contract is not measured at fair value through profit or loss.
These embedded derivatives are separately accounted for at fair value, with changes in fair value recognized in the income
statement as result from financial transactions, unless the Group chooses to designate the hybrid contracts at fair value
through profit or loss.
Hedge accounting
The method of recognizing the resulting fair value gain or loss depends on whether the derivative is designated and qualifies as
a hedging instrument and if so, the nature of the item being hedged. Aegon designates certain derivatives as either:
\u2022
Hedges of the fair value of recognized assets or liabilities or firm commitments (fair value hedges);
\u2022
Hedges of highly probable future cash flows attributable to a recognized asset or liability (cash flow hedges); or
\u2022
Hedges of a net investment in a foreign operation (net investment hedges).
Aegon documents, at the inception of the hedge, the relationship between hedged items and hedging instruments, as well
as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions
are highly effective in offsetting changes in fair values or cash flows of hedged items.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income
statement, together with changes in the fair value of the hedged assets or liabilities that are attributable to the hedged risk
as result from financial transactions.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of hedged items for
which the effective interest method is used is amortized to profit or loss over the period to maturity and recorded as \"Interest
revenue on financial instruments calculated using the effective interest method\".
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges
is recognized in OCI. The gain or loss relating to the ineffective portion is recognized immediately in the P&L as result from
financial transactions.
Amounts accumulated in equity are recycled to the P&L in the periods when the hedged item affects profit or loss. They are
recorded in the income or expense lines in which the revenue or expense associated with the hedged item is reported.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognized in the periods when the hedged item
effects profit or loss. When a forecast transaction is no longer expected to occur (e.g. the recognized hedged assets is disposed
of), the cumulative gains or losses previously recognized in OCI is immediately reclassified to the P&L.
Aegon designates and accounts for cash flow hedges when effectiveness requirements are achieved. The following cash flow
hedge type relationships are currently utilized by Aegon:
\u2022
An interest rate swap that converts a floating rate asset to a fixed rate asset (e.g. combining Treasury Inflation Protected
Securities asset and inflation swap to synthetically create fixed rate treasury asset).
\u2022
A cross currency interest rate swap that converts a foreign denominated floating rate asset to a USD fixed rate asset.
\u2022
A cross currency interest rate swap that converts a foreign denominated fixed rate asset to a USD fixed rate asset.
\u2022
A forward starting interest rate swap to hedge the forecasted purchases of fixed rate assets.
Net investment hedge
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the
hedging instrument relating to the effective portion of the hedge is recognized directly in OCI; the gains or losses relating to the
ineffective portion is recognized immediately in the P&L. Gains and losses accumulated in equity are included in the P&L when
the foreign operation is disposed of as part of the gain or loss of the disposal.
Additional details on derivatives is disclosed in note 20 \u2018Derivatives\u2019.
2.14.3 Impairment of financial assets
Aegon assesses on a forward-looking basis the expected credit losses (\"ECL\") associated with its debt instrument assets
carried at amortized cost and FVOCI. Aegon recognizes a loss allowance for such losses at each reporting date. The
measurement of ECL reflects:
\u2022
An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
\u2022
The time value of money; and
\u2022
Reasonable and supportable information that is available without undue cost or effort at the reporting date about past events,
current conditions and forecasts of future economic conditions.
Note 4.2.6 Expected credit losses provides more detail of how the expected credit loss allowance is measured.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22363": { "value": "(b) Debt instruments
Debt instruments are those instruments that meet the definition of a financial liability from the issuer\u2019s perspective, such
as mortgage loans, private loans, and government and corporate bonds.
Classification and subsequent measurement of debt instruments depend on:
\u2022
Aegon\u2019s business model for managing the asset;
\u2022
The cash flow characteristics of the asset; and
\u2022
The designation at FVPL to eliminate or significantly reduce an accounting mismatch or recognition inconsistency.
Based on these factors, Aegon classifies its debt instruments into one of the following three measurement categories:
\u2022
Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest (\"SPPI\"), and that are not designated at FVPL, are measured at amortized cost. The carrying
amount of these assets is adjusted by any expected credit loss allowance recognized (see note 4.2.6 Expected credit losses).
Interest revenue from these financial assets is included in \"Interest revenue on financial instruments calculated using the
effective interest rate method\".
\u2022
Fair value through other comprehensive income (\"FVOCI\"): Financial assets that are held for collection of contractual cash
flows and for selling the assets, where the assets\u2019 cash flows represent solely payments of principal and interest, and that are
not designated at FVPL, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the
recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses on the instrument\u2019s
amortized cost which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss
previously recognized in OCI is reclassified from equity to profit or loss and recognized in \"Net Investment result\". Interest
revenue from these financial assets is included in \"Interest revenue on financial instruments calculated using the effective
interest rate method\".
\u2022
Fair value through profit or loss (\"FVPL\"): Assets that do not meet the criteria for amortized cost or FVOCI are measured
mandatorily at fair value through profit or loss.
The Group has designated certain debt instruments as measured at FVPL because they relate to insurance contracts that
are measured in a way that incorporates current information and all related insurance finance income and expenses are
recognized in profit or loss, by which designation the Group eliminates accounting mismatches.
A gain or loss on a debt investment that is subsequently measured at FVPL and is not part of a hedging relationship
is recognized in profit or loss and presented in the profit or loss statement within \"Net trading income\" in the period in which
it arises, unless it arises from debt instruments that were designated at fair value or which are not held for trading, in which case
they are presented separately in \"Net investment result\". Interest revenue from these financial assets is included in \"Interest
revenue from financial instruments measured at FV\".
Business model
The Group determines its business model at the level that best reflects how it manages groups of financial assets to achieve
its business objective. The Group\u2019s business model is not assessed on an instrument-by-instrument basis, but at a higher level
of aggregated portfolios and is based on observable factors, such as:
\u2022
How the performance of the business model and the financial assets held within that business model are evaluated and
reported to the Group\u2019s senior management;
\u2022
The risks that affect the performance of the business model and the financial assets held within it. In particular, the way those
risks are managed;
\u2022
How the Group management is compensated, i.e. whether the compensation is based on the fair value of the assets managed
or on the contractual cash flows collected;
\u2022
The expected frequency, value and timing of sales are also important aspects of the Group\u2019s assessment.
The business model assessment is based on reasonably expected scenarios without taking \"worst case\" or \"stress case\"
scenarios into account. If cash flows after initial recognition are realized in a way that is different from the Group\u2019s original
expectations, the Group does not change the classification of the remaining financial assets held in that business model but
incorporates such information when assessing newly originated or newly purchased financial assets going forward.
Sales in themselves do not determine the business model and therefore cannot be considered in isolation. An entity must
consider information about sales within the context of the reasons for those sales and the conditions that existed at that time
as compared to current conditions.
Solely payment of principal and interest (\"SPPI\")
Where the business model is to hold assets to collect contractual cash flows or to collect contractual cash flows and cash
flows from the sale of the asset, Aegon assesses whether the financial instruments\u2019 cash flows represent solely payments
of principal and interest (the \"SPPI test\"). In making this assessment, Aegon considers whether the contractual cash flows
are consistent with a basic lending arrangement i.e. interest includes only consideration for the time value of money, credit
risk, other basic lending risks and a profit margin that is consistent with a basic lending arrangement. Where the contractual
terms introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related financial asset
is classified and measured at fair value through profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are
solely payment of principal and interest. Aegon reclassifies debt investments when and only when its business model for
managing those assets changes. The reclassification takes place from the start of the first reporting period following the
change. Such changes are expected to be very infrequent and none occurred during the period.", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22489": { "value": "(d) Interest revenue
Interest revenue is calculated by applying the effective interest rate to the gross carrying amount of financial assets, except for:
\u2022
POCI financial assets, for which the original credit-adjusted effective interest rate is applied to the amortized cost of the
financial asset.
\u2022
Financial assets that are not POCI but have subsequently become credit-impaired (or \"Stage 3\"), for which interest revenue is
calculated by applying the effective interest rate to their amortized cost (i.e. net of the expected credit loss provision). For the
definition of \"Stage 3\", see note 4.2.6 Expected credit losses.
IFRS 9 resulted in changes to IAS 1 for the presentation of Interest revenue for instruments calculated using the effective
interest rate method. The revised presentation requires it be shown as a separate line item in the consolidated income
statement. Interest revenue calculated using the effective interest rate relates to all financial assets, which are measured
at amortized cost or FVOCI. Interest revenue on financial assets and financial liabilities that are measured at fair value through
profit or loss are presented as \"Interest revenue on financial instruments measured at FVPL\".
The new interest presentation was applied together with the other requirements of IFRS 9.", "dimensions": { "concept": "agn:DescriptionOfAccountingPolicyForInterestRevenueExplanatoryTextBlock", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22570": { "value": "(f) Derecognition other than a modification of financial assets
A financial asset is derecognized when
\u2022
the contractual rights to the asset\u2019s cash flows expire; and
\u2022
when Aegon retains the right to receive cash flows from the asset or has an obligation to pay received cash flows in full
without delay to a third party; and
\u2022
either has transferred the asset and substantially all the risks and rewards of ownership, or has neither transferred nor
retained all the risks and rewards but has transferred control of the asset.
Financial assets of which Aegon has neither transferred nor retained significantly all the risk and rewards are recognized to the
extent of Aegon\u2019s continuing involvement. If significantly all risks are retained, the assets are not derecognized.
On derecognition, the difference between the disposal proceeds and the carrying amount is recognized in the income
statement within results from financial transactions. (b) Derecognition
Financial liabilities are derecognized when they are extinguished (i.e. when the obligation specified in the contract is discharged,
cancelled or expires).
The exchange between Aegon and its original lenders of debt instruments with substantially different terms, as well
as substantial modifications of the terms of existing financial liabilities, are accounted for as an extinguishment of the original
financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present
value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original
effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original
financial liability. In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes
in the type of interest rate, new conversion features attached to the instrument and change in covenants are also taken
into consideration. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any
costs or fees incurred are recognized as part of the gain or loss on the extinguishment. If the exchange or modification is not
accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortized
over the remaining term of the modified liability.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22615": { "value": "(g) Derivatives and hedge accounting
Definition of derivatives
Derivatives are financial instruments classified as held for trading assets of which the value changes in response to an
underlying variable, which require little or no net initial investment and are settled at a future date.
Measurement of derivatives
Derivatives are initially recognized at fair value on the date on which the derivative contract is entered into and are
subsequently remeasured at fair value. All derivatives are carried as assets when fair value is positive and as liabilities when
fair value is negative.
Net fair value changes of derivatives are recognized in the income statement as result from financial transactions, unless
the derivative has been designated as a hedging instrument in a cash flow hedge or a hedge of a net investment in a foreign
operation. Fair value movements of fair value hedge instruments are offset by the fair value movements of the hedged item, and
the resulting hedge ineffectiveness, if any, is included in result from financial transactions.
Embedded derivatives and hybrid contracts
Certain derivatives are embedded in hybrid contracts, such as the conversion option in a convertible bond. If the hybrid
contract contains a host that is a financial asset, then the Group assesses the entire contract for classification and
measurement purposes. Otherwise, the embedded derivatives are treated as separate derivatives when:
\u2022
Their economic characteristics and risks are not closely related to those of the host contract;
\u2022
A separate instrument with the same terms would meet the definition of a derivative; and
\u2022
The hybrid contract is not measured at fair value through profit or loss.
These embedded derivatives are separately accounted for at fair value, with changes in fair value recognized in the income
statement as result from financial transactions, unless the Group chooses to designate the hybrid contracts at fair value
through profit or loss.
Hedge accounting
The method of recognizing the resulting fair value gain or loss depends on whether the derivative is designated and qualifies as
a hedging instrument and if so, the nature of the item being hedged. Aegon designates certain derivatives as either:
\u2022
Hedges of the fair value of recognized assets or liabilities or firm commitments (fair value hedges);
\u2022
Hedges of highly probable future cash flows attributable to a recognized asset or liability (cash flow hedges); or
\u2022
Hedges of a net investment in a foreign operation (net investment hedges).
Aegon documents, at the inception of the hedge, the relationship between hedged items and hedging instruments, as well
as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions
are highly effective in offsetting changes in fair values or cash flows of hedged items.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income
statement, together with changes in the fair value of the hedged assets or liabilities that are attributable to the hedged risk
as result from financial transactions.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of hedged items for
which the effective interest method is used is amortized to profit or loss over the period to maturity and recorded as \"Interest
revenue on financial instruments calculated using the effective interest method\".
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges
is recognized in OCI. The gain or loss relating to the ineffective portion is recognized immediately in the P&L as result from
financial transactions.
Amounts accumulated in equity are recycled to the P&L in the periods when the hedged item affects profit or loss. They are
recorded in the income or expense lines in which the revenue or expense associated with the hedged item is reported.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognized in the periods when the hedged item
effects profit or loss. When a forecast transaction is no longer expected to occur (e.g. the recognized hedged assets is disposed
of), the cumulative gains or losses previously recognized in OCI is immediately reclassified to the P&L.
Aegon designates and accounts for cash flow hedges when effectiveness requirements are achieved. The following cash flow
hedge type relationships are currently utilized by Aegon:
\u2022
An interest rate swap that converts a floating rate asset to a fixed rate asset (e.g. combining Treasury Inflation Protected
Securities asset and inflation swap to synthetically create fixed rate treasury asset).
\u2022
A cross currency interest rate swap that converts a foreign denominated floating rate asset to a USD fixed rate asset.
\u2022
A cross currency interest rate swap that converts a foreign denominated fixed rate asset to a USD fixed rate asset.
\u2022
A forward starting interest rate swap to hedge the forecasted purchases of fixed rate assets.
Net investment hedge
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the
hedging instrument relating to the effective portion of the hedge is recognized directly in OCI; the gains or losses relating to the
ineffective portion is recognized immediately in the P&L. Gains and losses accumulated in equity are included in the P&L when
the foreign operation is disposed of as part of the gain or loss of the disposal.
Additional details on derivatives is disclosed in note 20 \u2018Derivatives\u2019.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22618": { "value": "Definition of derivatives
Derivatives are financial instruments classified as held for trading assets of which the value changes in response to an
underlying variable, which require little or no net initial investment and are settled at a future date.
Measurement of derivatives
Derivatives are initially recognized at fair value on the date on which the derivative contract is entered into and are
subsequently remeasured at fair value. All derivatives are carried as assets when fair value is positive and as liabilities when
fair value is negative.
Net fair value changes of derivatives are recognized in the income statement as result from financial transactions, unless
the derivative has been designated as a hedging instrument in a cash flow hedge or a hedge of a net investment in a foreign
operation. Fair value movements of fair value hedge instruments are offset by the fair value movements of the hedged item, and
the resulting hedge ineffectiveness, if any, is included in result from financial transactions.
Embedded derivatives and hybrid contracts
Certain derivatives are embedded in hybrid contracts, such as the conversion option in a convertible bond. If the hybrid
contract contains a host that is a financial asset, then the Group assesses the entire contract for classification and
measurement purposes. Otherwise, the embedded derivatives are treated as separate derivatives when:
\u2022
Their economic characteristics and risks are not closely related to those of the host contract;
\u2022
A separate instrument with the same terms would meet the definition of a derivative; and
\u2022
The hybrid contract is not measured at fair value through profit or loss.
These embedded derivatives are separately accounted for at fair value, with changes in fair value recognized in the income
statement as result from financial transactions, unless the Group chooses to designate the hybrid contracts at fair value
through profit or loss.Derivatives
To the extent that derivatives have a negative fair value at the end of the reporting period these are classified as financial
liabilities at fair value through profit or loss. Interest incomes and expenses of derivatives are presented in the statement
of comprehensive income as \"interest expense\" or \"Interest revenue on financial instruments measured at FVPL\".", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22645": { "value": "Hedge accounting
The method of recognizing the resulting fair value gain or loss depends on whether the derivative is designated and qualifies as
a hedging instrument and if so, the nature of the item being hedged. Aegon designates certain derivatives as either:
\u2022
Hedges of the fair value of recognized assets or liabilities or firm commitments (fair value hedges);
\u2022
Hedges of highly probable future cash flows attributable to a recognized asset or liability (cash flow hedges); or
\u2022
Hedges of a net investment in a foreign operation (net investment hedges).
Aegon documents, at the inception of the hedge, the relationship between hedged items and hedging instruments, as well
as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions
are highly effective in offsetting changes in fair values or cash flows of hedged items.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income
statement, together with changes in the fair value of the hedged assets or liabilities that are attributable to the hedged risk
as result from financial transactions.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of hedged items for
which the effective interest method is used is amortized to profit or loss over the period to maturity and recorded as \"Interest
revenue on financial instruments calculated using the effective interest method\".
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges
is recognized in OCI. The gain or loss relating to the ineffective portion is recognized immediately in the P&L as result from
financial transactions.
Amounts accumulated in equity are recycled to the P&L in the periods when the hedged item affects profit or loss. They are
recorded in the income or expense lines in which the revenue or expense associated with the hedged item is reported.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognized in the periods when the hedged item
effects profit or loss. When a forecast transaction is no longer expected to occur (e.g. the recognized hedged assets is disposed
of), the cumulative gains or losses previously recognized in OCI is immediately reclassified to the P&L.
Aegon designates and accounts for cash flow hedges when effectiveness requirements are achieved. The following cash flow
hedge type relationships are currently utilized by Aegon:
\u2022
An interest rate swap that converts a floating rate asset to a fixed rate asset (e.g. combining Treasury Inflation Protected
Securities asset and inflation swap to synthetically create fixed rate treasury asset).
\u2022
A cross currency interest rate swap that converts a foreign denominated floating rate asset to a USD fixed rate asset.
\u2022
A cross currency interest rate swap that converts a foreign denominated fixed rate asset to a USD fixed rate asset.
\u2022
A forward starting interest rate swap to hedge the forecasted purchases of fixed rate assets.
Net investment hedge
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the
hedging instrument relating to the effective portion of the hedge is recognized directly in OCI; the gains or losses relating to the
ineffective portion is recognized immediately in the P&L. Gains and losses accumulated in equity are included in the P&L when
the foreign operation is disposed of as part of the gain or loss of the disposal.
Additional details on derivatives is disclosed in note 20 \u2018Derivatives\u2019.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22725": { "value": "2.14.3 Impairment of financial assets
Aegon assesses on a forward-looking basis the expected credit losses (\"ECL\") associated with its debt instrument assets
carried at amortized cost and FVOCI. Aegon recognizes a loss allowance for such losses at each reporting date. The
measurement of ECL reflects:
\u2022
An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
\u2022
The time value of money; and
\u2022
Reasonable and supportable information that is available without undue cost or effort at the reporting date about past events,
current conditions and forecasts of future economic conditions.
Note 4.2.6 Expected credit losses provides more detail of how the expected credit loss allowance is measured.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22819": { "value": "Financial guarantee contracts and loan commitments
Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for
a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument.
Such financial guarantees are given to banks, financial institutions and others on behalf of customers to secure loans,
overdrafts and other banking facilities.
Financial guarantee contracts are initially measured at fair value and subsequently measured at the higher of:
\u2022
The amount of the loss allowance (calculated as described in note 4.2.6); and
\u2022
The premium received on initial recognition less income recognized in accordance with the principles of IFRS 15.
Loan commitments provided by Aegon are measured as the amount of the loss allowance (calculated as described in note
4.2.6 Expected credit losses). Aegon has not provided any commitment to provide loans at a below-market interest rate, or that
can be settled net in cash or by delivering or issuing another financial instrument.
For loan commitments and financial guarantee contracts, the loss allowance is recognized as a provision. However, for
contracts that include both a loan and an undrawn commitment and Aegon cannot separately identify the expected credit
losses on the undrawn commitment component from those on the loan component, the expected credit losses on the undrawn
commitment are recognized together with the loss allowance for the loan. To the extent that the combined expected credit
losses exceed the gross carrying amount of the loan, the expected credit losses are recognized as a provision.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialGuaranteesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22886": { "value": "2.15 Fee and commission income
Fees and commissions from investment management services and mutual funds are performed on an ongoing basis evenly
throughout the year and are accounted for monthly (1/12 of the contractual agreement). Performance fees may be charged
to policyholders in the event of outperformance in the investments compared to predefined benchmark levels. They are
accounted for only when specified hurdles for generating performance fees are achieved i.e. when the full performance
obligation is met.
Aegon acts also as an insurance broker selling insurance contracts of other insurance companies to policyholders and
receiving direct sales commission as well as commissions over time when the same policyholders renew their contracts. These
commissions are recognized only when received as policyholders\u2019 renewals are not certain enough to be recorded upfront.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFeeAndCommissionIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22898": { "value": "2.16 Intangible assets
The Group does not recognize as intangible assets those costs that are directly incurred in fulfilling the insurance contracts and
they comprise (both direct costs and an allocation of fixed and variable overheads).(b) Future servicing rights
On the acquisition of a portfolio of investment contracts without discretionary participation features under which Aegon will
render investment management services, the present value of future servicing rights is recognized as an intangible asset.
Future servicing rights can also be recognized on the sale of a loan portfolio or the acquisition of insurance agency activities.
The present value of the future servicing rights is amortized over the servicing period and is subject to impairment testing. It is
derecognized when the related contracts are settled or disposed.
Where applicable, Aegon recognizes other intangibles on the acquisition of a business combination such as those related
to customer relationships. This can include customer contracts, distribution agreements and client portfolios. For these
intangibles the present value of future cash flows are recognized and amortized in the period when future economic benefits
arise from these intangibles. These intangible assets are also presented under future servicing rights.
(c) Software and other intangible assets
Software and other intangible assets are recognized to the extent that the assets can be identified, are controlled by the Group,
are expected to provide future economic benefits and can be measured reliably. The Group does not recognize internally
generated intangible assets arising from research or internally generated goodwill, brands, customer lists and similar items.
Software and other intangible assets are carried at cost less accumulated depreciation and impairment losses. Depreciation
of the asset is over its useful life as the future economic benefits emerge and is recognized in the income statement as an
expense. The depreciation period and pattern are reviewed at each reporting date, with any changes recognized in the
income statement.
An intangible asset is derecognized when it is disposed of or when no future economic benefits are expected from its use
or disposal.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22899": { "value": "2.16 Intangible assets
The Group does not recognize as intangible assets those costs that are directly incurred in fulfilling the insurance contracts and
they comprise (both direct costs and an allocation of fixed and variable overheads).
(a) Goodwill
Goodwill is recognized as an intangible asset for interests in subsidiaries and is measured as the positive difference between
the acquisition cost and the Group\u2019s interest in the net fair value of the entity\u2019s identifiable assets, liabilities and contingent
liabilities. Subsequently, goodwill is carried at cost less accumulated impairment charges. It is derecognized when the interest
in the subsidiary is disposed.
(b) Future servicing rights
On the acquisition of a portfolio of investment contracts without discretionary participation features under which Aegon will
render investment management services, the present value of future servicing rights is recognized as an intangible asset.
Future servicing rights can also be recognized on the sale of a loan portfolio or the acquisition of insurance agency activities.
The present value of the future servicing rights is amortized over the servicing period and is subject to impairment testing. It is
derecognized when the related contracts are settled or disposed.
Where applicable, Aegon recognizes other intangibles on the acquisition of a business combination such as those related
to customer relationships. This can include customer contracts, distribution agreements and client portfolios. For these
intangibles the present value of future cash flows are recognized and amortized in the period when future economic benefits
arise from these intangibles. These intangible assets are also presented under future servicing rights.
(c) Software and other intangible assets
Software and other intangible assets are recognized to the extent that the assets can be identified, are controlled by the Group,
are expected to provide future economic benefits and can be measured reliably. The Group does not recognize internally
generated intangible assets arising from research or internally generated goodwill, brands, customer lists and similar items.
Software and other intangible assets are carried at cost less accumulated depreciation and impairment losses. Depreciation
of the asset is over its useful life as the future economic benefits emerge and is recognized in the income statement as an
expense. The depreciation period and pattern are reviewed at each reporting date, with any changes recognized in the
income statement.
An intangible asset is derecognized when it is disposed of or when no future economic benefits are expected from its use
or disposal.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22906": { "value": "(a) Goodwill
Goodwill is recognized as an intangible asset for interests in subsidiaries and is measured as the positive difference between
the acquisition cost and the Group\u2019s interest in the net fair value of the entity\u2019s identifiable assets, liabilities and contingent
liabilities. Subsequently, goodwill is carried at cost less accumulated impairment charges. It is derecognized when the interest
in the subsidiary is disposed.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22965": { "value": "2.17 Investment properties
Investments in real estate include property held to earn rentals or for capital appreciation, or both. Investments in real
estate are presented as \"Investments\". Property that is occupied by the Group and that is not intended to be sold in the near
future is classified as real estate held for own use and is presented in \"Other assets and receivables\".
All property is initially recognized at cost. Such cost includes the cost of replacing part of the real estate and borrowing cost for
long-term construction projects if recognition criteria are met. Subsequently, investments in real estate are measured at fair
value with the changes in fair value recognized in the income statement. Real estate held for own use is carried at its
revalued amount, which is the fair value at the date of revaluation less subsequent accumulated depreciation and
impairment losses. Depreciation is calculated on a straight line basis over the useful life of a building. Land is not depreciated.
Revaluation of real estate for own use is recognized in other comprehensive income and accumulated in revaluation reserve
in equity. On revaluation the accumulated depreciation is eliminated against the gross carrying amount of the asset and the net
amount is restated to the revalued amount.
On disposal of an asset, the difference between the net proceeds received and the carrying amount is recognized in the
income statement. Any remaining surplus attributable to real estate in own use in the revaluation reserve is transferred
to retained earnings.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentPropertyExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22983": { "value": "2.18 Investments in joint arrangements
In general, joint arrangements are contractual agreements whereby the Group undertakes, with other parties, an economic
activity that is subject to joint control. Joint control exists when it is contractually agreed to share control over an economic
activity. Joint control exists only when decisions about the relevant activities require the unanimous consent of the parties
sharing control.
Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights
and obligations each investor has rather than the legal structure of the joint arrangement. Aegon has assessed the nature of its
joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method.
Under the equity method of accounting, interests in joint ventures are initially recognized at cost, which includes positive
goodwill arising on acquisition. Negative goodwill is recognized in the income statement on the acquisition date. If joint ventures
are obtained in successive share purchases, each significant transaction is accounted for separately.
The carrying amount is subsequently adjusted to reflect the change in the Group\u2019s share in the net assets of the joint venture
and is subject to impairment testing. The net assets are determined based on the Group\u2019s accounting policies. Any gains and
losses recorded in other comprehensive income by the joint venture are recognized in other comprehensive income and
reflected in other reserves in shareholders\u2019 equity, while the share in the joint ventures net result is recognized as a separate
line item in the consolidated income statement. The Group\u2019s share in losses is recognized until the investment in the joint
ventures' equity and any other long-term interest that are part of the net investment are reduced to nil, unless guarantees exist.
Gains and losses on transactions between the Group and the joint ventures are eliminated to the extent of the Group\u2019s interest
in the entity, with the exception of losses that are evidence of impairment which are recognized immediately. Own equity
instruments of Aegon Ltd. that are held by the joint venture are not eliminated.
On disposal of an interest in a joint venture, the difference between the net proceeds and the carrying amount is recognized
in the income statement and gains and losses previously recorded directly in the revaluation reserve are reversed and recorded
through the income statement.
The Group\u2019s interests in some joint arrangements are underlying items of participating contracts. The Group has elected
to measure these investments at FVPL because it manages them on a fair value basis.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsInJointVentures", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f22984": { "value": "2.18 Investments in joint arrangements
In general, joint arrangements are contractual agreements whereby the Group undertakes, with other parties, an economic
activity that is subject to joint control. Joint control exists when it is contractually agreed to share control over an economic
activity. Joint control exists only when decisions about the relevant activities require the unanimous consent of the parties
sharing control.
Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights
and obligations each investor has rather than the legal structure of the joint arrangement. Aegon has assessed the nature of its
joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method.
Under the equity method of accounting, interests in joint ventures are initially recognized at cost, which includes positive
goodwill arising on acquisition. Negative goodwill is recognized in the income statement on the acquisition date. If joint ventures
are obtained in successive share purchases, each significant transaction is accounted for separately.
The carrying amount is subsequently adjusted to reflect the change in the Group\u2019s share in the net assets of the joint venture
and is subject to impairment testing. The net assets are determined based on the Group\u2019s accounting policies. Any gains and
losses recorded in other comprehensive income by the joint venture are recognized in other comprehensive income and
reflected in other reserves in shareholders\u2019 equity, while the share in the joint ventures net result is recognized as a separate
line item in the consolidated income statement. The Group\u2019s share in losses is recognized until the investment in the joint
ventures' equity and any other long-term interest that are part of the net investment are reduced to nil, unless guarantees exist.
Gains and losses on transactions between the Group and the joint ventures are eliminated to the extent of the Group\u2019s interest
in the entity, with the exception of losses that are evidence of impairment which are recognized immediately. Own equity
instruments of Aegon Ltd. that are held by the joint venture are not eliminated.
On disposal of an interest in a joint venture, the difference between the net proceeds and the carrying amount is recognized
in the income statement and gains and losses previously recorded directly in the revaluation reserve are reversed and recorded
through the income statement.
The Group\u2019s interests in some joint arrangements are underlying items of participating contracts. The Group has elected
to measure these investments at FVPL because it manages them on a fair value basis.
2.19 Investments in associates
The Group\u2019s interests in some associates are underlying items of participating contracts. The Group has elected to measure
these investments at FVPL because it manages them on a fair value basis.
Entities over which the Group has significant influence through power to participate in financial and operating policy decisions,
but which do not meet the definition of a subsidiary, are accounted for using the equity method. Interests held by venture
capital entities, mutual funds and investment funds that qualify as an associate are accounted for as an investment held at fair
value through profit or loss. Interests held by the Group in venture capital entities, mutual funds and investment funds that are
managed on a fair value basis, are also accounted for as investments held at fair value through profit or loss.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23013": { "value": "2.19 Investments in associates
The Group\u2019s interests in some associates are underlying items of participating contracts. The Group has elected to measure
these investments at FVPL because it manages them on a fair value basis.
Entities over which the Group has significant influence through power to participate in financial and operating policy decisions,
but which do not meet the definition of a subsidiary, are accounted for using the equity method. Interests held by venture
capital entities, mutual funds and investment funds that qualify as an associate are accounted for as an investment held at fair
value through profit or loss. Interests held by the Group in venture capital entities, mutual funds and investment funds that are
managed on a fair value basis, are also accounted for as investments held at fair value through profit or loss.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23062": { "value": "2.21 Other assets and receivables
Other assets include trade and other receivables, prepaid expenses, equipment and real estate held for own use. Trade and
other receivables are initially recognized at fair value and are subsequently measured at amortized cost. Equipment is initially
carried at cost, depreciated on a straight line basis over its useful life to its residual value and is subject to impairment testing.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23069": { "value": "2.22 Cash and cash equivalents
Cash comprises cash at banks and in-hand. Cash equivalents are short-term, highly liquid investments generally with original
maturities of three months or less that are readily convertible to known cash amounts, are subject to insignificant risks
of changes in value and are held for the purpose of meeting short-term cash requirements. Money market investments that are
held for investment purposes (backing insurance liabilities, investment liabilities or equity based on asset liability management
considerations) are not included in cash and cash equivalents but are presented as investments or investments for account
of policyholders.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23079": { "value": "2.23 Impairment of assets
An asset is impaired if the carrying amount exceeds the amount that would be recovered through its use or sale. For tangible
and intangible assets, if not held at fair value through profit or loss, the recoverable amount of the asset is estimated when there
are indications that the asset may be impaired.
Assets are tested individually for impairment when there are indications that the asset may be impaired. For goodwill and
intangible assets with an undefined life, an impairment test is performed at least once a year or more frequently as a result
of an event or change in circumstances that would indicate an impairment charge may be necessary. The impairment loss
is calculated as the difference between the carrying and the recoverable amount of the asset, which is the higher of an
asset\u2019s value in use and its fair value less cost of disposal. The value in use represents the discounted future net cash flows
from the continuing use and ultimate disposal of the asset and reflects its known inherent risks and uncertainties. The valuation
utilizes the best available information, including assumptions and projections considered reasonable and supportable
by management. The assumptions used in the valuation involve significant judgments and estimates. See note 24 Intangible
assets for more details.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23095": { "value": "2.24 Equity
Financial instruments that are issued by the Group are classified as equity if they represent a residual interest in the assets
of the Group after deducting all of its liabilities and the Group has an unconditional right to avoid delivering cash or another
financial asset to settle its contractual obligation. In addition to common shares, the Group has issued perpetual securities.
Perpetual securities have no final maturity date, repayment is at the discretion of Aegon and for junior perpetual capital
securities, Aegon has the option to defer coupon payments at its discretion. The perpetual capital securities are classified
as equity rather than debt, are measured at par and those that are denominated in US dollars are translated into euro using
historical exchange rates. Treasury shares are deducted from Group equity.
Non-cumulative subordinated notes were identified as a compound instrument due to the nature of this financial instrument.
For these non-cumulative subordinated notes, Aegon had an unconditional right to avoid delivering cash or another financial
asset to settle the coupon payments. The redemption of the principal was however not at the discretion of Aegon and therefore
Aegon had a contractual obligation to settle the redemption in cash or another financial asset or through the exchange
of financial assets and liabilities at potentially unfavorable conditions for Aegon. Compound instruments were separated
into liability components and equity components. The liability component for the non-cumulative subordinated notes was
equal to the present value of the redemption amount and carried at amortized cost using the effective interest rate method.
The unwinding of the discount of this component was recognized in the income statement. At initial recognition the equity
component was assigned the residual amount after deducting the liability component from the fair value of the instrument as a
whole. The equity component in US dollars was translated into euro using historical exchange rates. Incremental external costs
that are directly attributable to the issuing or buying back of own equity instruments are recognized in equity, net of tax. For
compound instruments incremental external costs that were directly attributable to the issuing or buying back of the compound
instruments were recognized proportionate to the equity component and liability component, net of tax. The Group recognizes
the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where
it originally recognized the past transactions or events that generated the distributable profits. A liability for non-cumulative
dividends payable is not recognized until the dividends have been declared and approved.
When the Group reacquires its own equity instrument and includes the share as an underlying item of direct participating
contracts, the Group may elect not to deduct the reacquired instrument from equity and instead account for the reacquired
instrument as if it were a financial asset and measure it at FVPL. This election is irrevocable and is made on an instrument-by-
instrument basis.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIssuedCapitalExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23150": { "value": "2.25 Trust pass-through securities and (subordinated) borrowings
A financial instrument issued by the Group is classified as a liability if the contractual obligation must be settled in cash
or another financial asset or through the exchange of financial assets and liabilities at potentially unfavorable conditions
for the Group.
Trust pass-through securities and (subordinated) borrowings are initially recognized at their fair value including directly
attributable transaction costs and are subsequently carried at amortized cost using the effective interest rate method, with
the exception of specific borrowings that are designated at fair value through profit or loss to eliminate, or significantly reduce,
an accounting mismatch, or specific borrowings which are carried at fair value through profit or loss as they are managed
and evaluated on a fair value basis. The liability is derecognized when the Group\u2019s obligation under the contract expires,
is discharged, or is cancelled.
Subordinated borrowings include the liability component of non-cumulative subordinated notes. These notes are identified
as a compound instrument due to the nature of this financial instrument. Compound instruments are separated into equity
components and liability components. The liability component for the non-cumulative subordinated notes is related to the
redemption amount. For further information on the accounting policy of the non-cumulative subordinated notes, see note
2.24 Equity.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23168": { "value": "2.26 Provisions
A provision is recognized for present legal or constructive obligations arising from past events, when it is probable that
it will result in an outflow of economic benefits and the amount can be reliably estimated. Management exercises judgment
in evaluating the probability that a loss will be incurred.
The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the
reporting date, considering all its inherent risks and uncertainties, as well as the time value of money. The estimate of the
amount of a loss requires management judgment in the selection of a proper calculation model and the specific assumptions
related to the particular exposure. The unwinding of the effect of discounting is recorded in the income statement as an
interest expense.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23198": { "value": "2.27 Assets and liabilities relating to employee benefits
(a) Short-term employee benefits
A liability is recognized for the undiscounted amount of short-term employee benefits expected to be settled within one year
after the end of the period in which the service was rendered. Accumulating short-term absences are recognized over the
period in which the service is provided. Benefits that are not service-related are recognized when the event that gives rise
to the obligation occurs.
(b) Post-employment benefits
The Group has issued defined contribution plans and defined benefit plans. A plan is classified as a defined contribution plan
when the Group has no further obligation than the payment of a fixed contribution. All other plans are classified as defined
benefit plans.
Defined contribution plans
The contribution payable to a defined contribution plan for services provided is recognized as an expense in the income
statement. An asset is recognized to the extent that the contribution paid exceeds the amount due for services provided.
Defined benefit plans
Measurement
The defined benefit obligation is based on the terms and conditions of the plan applicable on the reporting date. In measuring
the defined benefit obligation the Group uses the projected unit credit method and actuarial assumptions that represent the
management's best estimates. The benefits are discounted using an interest rate based on the market yield for high-quality
corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity that
approximate the terms of the related pension liability. Actuarial assumptions used in the measurement of the liability include
the discount rate, estimated future salary increases, mortality rates and price inflation. To the extent that actual experience
deviates from these assumptions, the valuation of defined benefit plans and the level of pension expenses recognized in the
future may be affected. Plan improvements (either vested or unvested) are recognized in the income statement at the date
when the plan improvement occurs.
Plan assets are qualifying insurance policies and assets held by long-term employee benefit funds that can only be used to pay
the employee benefits under the plan and are not available to the Group\u2019s creditors. They are measured at fair value and are
deducted from the defined benefit obligation in determining the amount recognized on the statement of financial position. For
reimbursements by associated third parties of some or all of the expenditure required to settle a defined benefit obligation,
a reimbursement asset is recognized on the basis of the present value of the related obligation, subject to any reduction
required if the reimbursement is not recoverable in full.
Profit or loss recognition
The cost of the defined benefit plans are determined at the beginning of the year and comprise the following components:
\u2022
Current year service cost which is recognized in profit or loss; and
\u2022
Net interest on the net defined benefit liability (asset) which is recognized in profit or loss.
Remeasurements of the net defined benefit liability (asset) which is recognized in other comprehensive income are revisited
quarterly and are not allowed to be reclassified to profit or loss in a subsequent period.
Deducted from current year service cost are discretionary employee contributions and employee contributions that are linked
to service (those which are independent of the number of years of service). Net interest on the net defined benefit liability
(asset) is determined by multiplying the net defined benefit liability (asset) by the applicable discount rate. Net interest on the
net defined benefit liability (asset) comprises interest income on plan assets and interest cost on the defined benefit obligation.
Whereby interest income on plan assets is a component of the return on plan assets and is determined by multiplying the
fair value of the plan assets by the applicable discount rate. The difference between the interest income on plan assets and
the actual return on plan assets is included in the remeasurement of the net defined benefit liability (asset). Any movements
during the period related to reimbursement assets, will be partly recognized in the income statement (interest cost on the
reimbursement right) and partly through other comprehensive income for the difference between the actual return and the
interest cost.
(c) Share-based payments
The Group has issued share-based plans that entitle selected employees to receive Aegon Ltd. common shares, subject
to pre-defined conditions such as the grant price of the shares and (business and personal) performance criteria. The number
of shares that will vest may partly depend on Aegon\u2019s relative total shareholder return in comparison with a peer group.
The expenses recognized for these plans are based on the fair value on the grant date of the shares. The fair value is measured
at the market price of Aegon Ltd. common shares, adjusted to take into account the non-vesting and market conditions upon
which the shares were granted. For example, where the employee is not entitled to receive dividends during the vesting
period, this factor is taken into account when estimating the fair value of the shares granted. For the determination of factors
such as expected dividends, market observable data has been considered. In addition, where the relative total shareholder
return is included in the performance criteria, this factor represents a market condition and hence is taken into account when
estimating the fair value of the shares granted.
The cost for long-term incentive plans are recognized in the income statement, together with a corresponding increase
in shareholders\u2019 equity, as the services are rendered. During this period the cumulative expense recognized at the reporting
date reflects management\u2019s best estimate of the number of shares expected to vest ultimately.
The withholding of shares to fund the payment to the tax authorities in respect of the employee\u2019s withholding tax obligation
associated with the share-based payment is accounted for as a deduction from equity for the shares withheld, except to the
extent that the payment exceeds the fair value at the net settlement date of the equity instruments withheld.", "dimensions": { "concept": "agn:DescriptionOfAccountingPolicyForAssetsAndLiabilitiesRelatingToEmployeeBenefitsExplanatoryTextBlock", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23272": { "value": "(c) Share-based payments
The Group has issued share-based plans that entitle selected employees to receive Aegon Ltd. common shares, subject
to pre-defined conditions such as the grant price of the shares and (business and personal) performance criteria. The number
of shares that will vest may partly depend on Aegon\u2019s relative total shareholder return in comparison with a peer group.
The expenses recognized for these plans are based on the fair value on the grant date of the shares. The fair value is measured
at the market price of Aegon Ltd. common shares, adjusted to take into account the non-vesting and market conditions upon
which the shares were granted. For example, where the employee is not entitled to receive dividends during the vesting
period, this factor is taken into account when estimating the fair value of the shares granted. For the determination of factors
such as expected dividends, market observable data has been considered. In addition, where the relative total shareholder
return is included in the performance criteria, this factor represents a market condition and hence is taken into account when
estimating the fair value of the shares granted.
The cost for long-term incentive plans are recognized in the income statement, together with a corresponding increase
in shareholders\u2019 equity, as the services are rendered. During this period the cumulative expense recognized at the reporting
date reflects management\u2019s best estimate of the number of shares expected to vest ultimately.
The withholding of shares to fund the payment to the tax authorities in respect of the employee\u2019s withholding tax obligation
associated with the share-based payment is accounted for as a deduction from equity for the shares withheld, except to the
extent that the payment exceeds the fair value at the net settlement date of the equity instruments withheld.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23293": { "value": "2.28 Deferred gains
Initial fees and front-end loadings paid by policyholders and other clients for future investment management services related
to investment contracts without discretionary participation features are deferred and recognized as revenue when the related
services are rendered.", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23300": { "value": "2.29 Taxation
The income tax charge on the result for the year comprises current and deferred tax. Current tax is calculated taking into
account items that are non-taxable or disallowed, using rates that have been enacted or substantively enacted by the reporting
date and any adjustments to tax payable relating to previous years.
Current tax receivables and payables for current and prior periods reflect the best estimate of the tax amount expected to be
paid or received and includes provisions for uncertain income tax positions, if any.
Deferred tax assets and liabilities are recognized, using the liability method, for temporary differences arising between the
carrying value and tax value of an item on the balance sheet and for unused tax losses and credits carried forward. Deferred tax
assets and liabilities are measured using tax rates applicable that have been enacted or substantively enacted at the balance
sheet date and are expected to apply when the deferred tax asset is realized, or the deferred tax liability is settled.
Deferred tax assets are recognized for deductible temporary differences and unused tax losses and credits carried forward
to the extent that the realization of the related tax benefit through future taxable profits is probable. The recognition of the
deferred tax assets is based on Aegon\u2019s mid-term projections including sensitivities and tax planning and is reassessed
periodically. Deferred tax liabilities relating to investments in subsidiaries, associates and joint ventures are not recognized
if the Group is able to control the timing of the reversal of the temporary difference and it is probable that the difference will not
be reversed in the foreseeable future.
Tax assets and liabilities are presented separately in the consolidated balance sheet except where there is a legally
enforceable right to offset the tax assets against tax liabilities within the same tax jurisdiction and the intention to settle such
balances on a net basis.
Tax assets and liabilities are recognized in relation to the underlying transaction either in profit and loss, other comprehensive
income or directly in equity.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23308": { "value": "Deferred tax assets and liabilities are recognized, using the liability method, for temporary differences arising between the
carrying value and tax value of an item on the balance sheet and for unused tax losses and credits carried forward. Deferred tax
assets and liabilities are measured using tax rates applicable that have been enacted or substantively enacted at the balance
sheet date and are expected to apply when the deferred tax asset is realized, or the deferred tax liability is settled.
Deferred tax assets are recognized for deductible temporary differences and unused tax losses and credits carried forward
to the extent that the realization of the related tax benefit through future taxable profits is probable. The recognition of the
deferred tax assets is based on Aegon\u2019s mid-term projections including sensitivities and tax planning and is reassessed
periodically. Deferred tax liabilities relating to investments in subsidiaries, associates and joint ventures are not recognized
if the Group is able to control the timing of the reversal of the temporary difference and it is probable that the difference will not
be reversed in the foreseeable future.
Tax assets and liabilities are presented separately in the consolidated balance sheet except where there is a legally
enforceable right to offset the tax assets against tax liabilities within the same tax jurisdiction and the intention to settle such
balances on a net basis.
Tax assets and liabilities are recognized in relation to the underlying transaction either in profit and loss, other comprehensive
income or directly in equity.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23345": { "value": "2.30 Contingent assets and liabilities
Contingent assets are disclosed in the notes if the inflow of economic benefits is probable, but not virtually certain. When the
inflow of economic benefits becomes virtually certain, the asset is no longer contingent and its recognition is appropriate.
A provision is recognized for present legal or constructive obligations arising from past events, when it is probable that it will
result in an outflow of economic benefits and the amount can be reliably estimated. If the outflow of economic benefits is not
probable, a contingent liability is disclosed, unless the possibility of an outflow of economic benefits is remote.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23354": { "value": "2.31 Leases
As a lessee
The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset
is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made
at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove
the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the
earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-
of-use assets are determined on the same basis as those of real estate and equipment. In addition, the right-of-use asset
is periodically reduced by impairment losses (using the same rate to measure the lease liability), if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group\u2019s incremental
borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. The lease liability is measured
at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments
arising from a change in an index or rate, if there is a change in the Group\u2019s estimate of the amount expected to be payable
under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension
or termination option. The Group presents right-of-use assets that do not meet the definition of investment property in \"Other
assets and receivables\" and lease liabilities in \"Other liabilities\" in the statement of financial position.
Short-term leases and leases of low-value assets The Group has elected not to recognize right-of-use assets and lease
liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets, including small
office equipment. The Group recognizes the lease payments associated with these leases as an expense on a straight-line
basis over the lease term.
As a lessor
Where the Group is the lessor under an operating lease, the assets subject to the operating lease arrangement are presented
in the statement of financial position according to the nature of the asset. Income from these leases is recognized in the
income statement on a straight line basis over the lease term, unless another systematic basis is more representative of the
time pattern in which use benefit derived from the leased asset is diminished.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23385": { "value": "2.32 Other operating expenses
With the exception of expenses made to acquire insurance contracts and investment contracts with discretionary participating
features, all expenses are incurred as the related activities are performed.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23414": { "value": "3 Critical accounting estimates and judgment in applying accounting policies
In preparing these consolidated financial statements, Aegon has made judgments, estimates and assumptions that affect
the application of the Group\u2019s accounting policies and the reported amount of assets, liabilities, income and expenses. Actual
results may differ from these estimates.
Included among the material (or potentially material) reported amounts and disclosures that require extensive use of estimates
are the fair value of certain invested assets and derivatives (please see note 38), the measurement of (re)insurance contracts
and investment contracts with discretionary participating features (please see note 29), and the measurement of the expected
credit loss allowance (please see note 4).
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized prospectively.
Macro-economic context
When making judgments, estimates and assumptions, Aegon has taken into consideration the current macro-economic context.
In 2023, the war in the Ukraine continued and another conflict between Israel and Hamas began. These events caused
a humanitarian crisis and also impacted global financial markets and caused significant economic turbulence. Aegon closely
monitors financial and wider economic developments to understand our exposure to potential shocks in the markets where
we invest, and Aegon works proactively to mitigate related risks. The inflation rates for the main economies that Aegon
is exposed to peaked in 2022 and first half of 2023, then it started decreasing during the second half of 2023. In the United
States, the inflation risk within long-term care claims derives primarily from wage inflation, which Aegon mitigates by offering
customers downgrades of the maximum daily benefit as an alternative to premium rate increases. In addition, Aegon\u2019s expense
savings program helped to mitigate the impact of rising inflation in the beginning of 2023. High inflation has prompted central
banks to start raising interest rates significantly. As a consequence, interest rates have increased significantly in Aegon\u2019s main
markets during 2022, however in 2023 interest rates have started to stabilize. Equity markets for Aegon have shown recovery
in 2023 compared to a decline of equity markets in 2022. Credit spreads have not changed significantly over 2023.
Management's assessment of going concern
The consolidated financial statements of Aegon have been prepared assuming a going concern basis of accounting based
on the reasonable assumption that the Company is, and will be, able to continue its normal course of business in the
foreseeable future. Relevant facts and circumstances relating to the consolidated financial position on December 31, 2023,
were assessed in order to reach the going concern assumption. The main areas assessed are the financial performance,
capital adequacy, financial position and flexibility, liquidity, ability to access capital markets, leverage ratios and the level
of Cash Capital at Holding. For further details, see note 37 Capital management and solvency. Considering all these areas
management concluded that the going concern assumption for Aegon is appropriate in preparing the consolidated financial
statements and there is no significant doubt about going concern.
Actuarial and economic assumptions
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment
to the carrying amount of insurance related assets and liabilities within the year ending December 31, 2023, is included in note
29 on Insurance contracts, reinsurance contracts held and investment contracts with discretionary participation features.
Measurement of the expected credit loss allowance (\u201cECL\u201d)
The measurement of the expected credit loss allowance for financial assets measured at amortized cost and FVOCI is an area
that requires the use of complex models and significant assumptions about future economic conditions and credit behavior
(e.g. the likelihood of customers defaulting and the resulting losses). Explanation of the inputs, assumptions and estimation
techniques used in measuring ECL is further detailed in note 4.2 \u2013 Credit risk, which also sets out key sensitivities of the ECL
to changes in these elements.
A number of significant judgments are also required in applying the accounting requirements for measuring ECL, such as:
\u2022
Determining criteria for significant increase in credit risk;
\u2022
Choosing appropriate models and assumptions for the measurement of ECL;
\u2022
Establishing the number and relative weightings of forward-looking scenarios for each type of product/market and the
associated ECL; and
\u2022
Establishing groups of similar financial assets for the purposes of measuring ECL.
\n
\n
Detailed information about the judgments and estimates made by the Group in the above areas and information incorporating
the forward-looking information into the measurement of the ECL is set out in note 4.2 \u2013 Credit risk.
Classification of financial assets
The assessment of the business model to determine within which classification the financial assets are held, depends
on whether the contractual terms of the assets are solely payments of principal and interest (\"SPPI\") on the principal amount
outstanding.
Detailed information about the judgments and estimates made by the Group in the SPPI and business model review are set out
in note 19 \u2013 Investments.
The classification of financial assets is based on Aegon\u2019s business model for managing the financial assets and the
contractual cash flow characteristics of the financial assets. The classification of financial assets determines how they are
accounted for and how they are measured on an ongoing basis. Based on business model and cash flow characteristics,
instruments are accounted for in one of the following measurement categories for financial assets:
\u2022
Debt instruments at amortized cost (e.g. loans, debt securities, cash equivalents);
\u2022
Debt instruments at fair value through other comprehensive income (FVOCI) with cumulative gains and losses reclassified to
profit or loss upon de-recognition (e.g. debt securities, security lending, repo);
\u2022
Debt instruments, derivatives, and equity instruments at fair value through profit or loss (FVPL);
\u2022
Equity instruments designated as measured at FVOCI with gains and losses remaining in other comprehensive income (OCI),
i.e. without recycling
\u2022
A financial asset will be measured at amortized cost if both of the following conditions are met:
\u2022
a) the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows
(held-to-collect); and
\u2022
b) the contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI on the principal
amount outstanding.
Determination of fair value and fair value hierarchy
Note 38 Fair value determines the fair value of financial instruments with significant unobservable inputs (i.e. level
3 financial assets).
The following is a description of Aegon\u2019s methods of determining fair value, and a quantification of its exposure to assets and
liabilities measured at fair value.
Fair value is defined as the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date under current market conditions (i.e. an exit price at the
measurement date from the perspective of a market participant that holds the asset or owes the liability). A fair value
measurement assumes that the transaction to sell the asset or transfer the liability takes place either:
\u2022
In the principal market for the asset or liability; or
\u2022
In the absence of a principal market, in the most advantageous market for the asset or liability.
Aegon uses the following hierarchy for measuring and disclosing of the fair value of assets and liabilities:
\u2022
Level I: quoted prices (unadjusted) in active markets for identical assets or liabilities that Aegon can access at the
measurement date;
\u2022
Level II: inputs other than quoted prices included within Level I that are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices of identical or similar assets and liabilities) using valuation techniques
for which all significant inputs are based on observable market data; and
\u2022
Level III: inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) using
valuation techniques for which any significant input is not based on observable market data.
The best evidence of fair value is a quoted price in an actively traded market. In the event that the market for a financial
instrument is not active or quoted market prices are not available, a valuation technique is used.
The degree of judgment used in measuring the fair value of assets and liabilities generally inversely correlates with the level
of observable valuation inputs. Aegon maximizes the use of observable inputs and minimizes the use of unobservable valuation
inputs when measuring fair value. Financial instruments, for example, with quoted prices in active markets generally have more
pricing observability and therefore less judgment is used in measuring fair value. Conversely, financial instruments for which
no quoted prices are available have less observability and are measured at fair value using valuation models or other pricing
techniques that require more judgment.
The assets and liabilities categorization within the fair value hierarchy is based on the lowest input that is significant to the fair
value measurement.
An active market is one in which transactions for the asset or liability take place with sufficient frequency and volume to provide
pricing information on an ongoing basis. The judgment as to whether a market is active may include, although not necessarily
determinative, lower transaction volumes, reduced transaction sizes and, in some cases, no observable trading activity
for short periods. In inactive markets, assurance is obtained that the transaction price provides evidence of fair value or it
is determined that adjustments to transaction prices are necessary to measure the fair value of the instrument.
The majority of valuation techniques employ only observable market data, and so the reliability of the fair value measurement
is high. However, certain assets and liabilities are valued on the basis of valuation techniques that feature one or more
significant market inputs that are unobservable and, for such assets and liabilities, the derivation of fair value is more
judgmental. An instrument is classified in its entirety as valued using significant unobservable inputs (Level III) if, in the opinion
of management, a significant proportion of the instrument\u2019s carrying amount is driven by unobservable inputs. \"Unobservable\"
in this context means that there is little or no current market data available from which to determine the price at which an at
arm\u2019s length transaction would be likely to occur. It generally does not mean that there is no market data available at all
upon which to base a determination of fair value. Additional information is provided in the table headed \"Effect of changes
in significant unobservable assumptions to reasonably possible alternatives\" in note 38 Fair Value. While Aegon believes
its valuation techniques are appropriate and consistent with other market participants, the use of different methodologies
or assumptions to determine the fair value of certain instruments (both financial and non-financial) could result in a different
estimate of fair value at the reporting date.
The valuation techniques applied to financial instrument affected by IBOR reforms remain consistent with those of other market
participants, and the uncertainty on the outcome of the reforms has not affected the classification of the instruments.
To operationalize Aegon\u2019s fair value hierarchy, individual instruments (both financial and non-financial) are assigned a fair
value level based primarily on the type of instrument and the source of the prices (e.g., index, third-party pricing service, broker,
internally modeled). Periodically, this logic for assigning fair value levels is reviewed to determine if any modifications are
necessary in the context of the current market environment.", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23518": { "value": "Determination of fair value and fair value hierarchy
Note 38 Fair value determines the fair value of financial instruments with significant unobservable inputs (i.e. level
3 financial assets).
The following is a description of Aegon\u2019s methods of determining fair value, and a quantification of its exposure to assets and
liabilities measured at fair value.
Fair value is defined as the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date under current market conditions (i.e. an exit price at the
measurement date from the perspective of a market participant that holds the asset or owes the liability). A fair value
measurement assumes that the transaction to sell the asset or transfer the liability takes place either:
\u2022
In the principal market for the asset or liability; or
\u2022
In the absence of a principal market, in the most advantageous market for the asset or liability.
Aegon uses the following hierarchy for measuring and disclosing of the fair value of assets and liabilities:
\u2022
Level I: quoted prices (unadjusted) in active markets for identical assets or liabilities that Aegon can access at the
measurement date;
\u2022
Level II: inputs other than quoted prices included within Level I that are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices of identical or similar assets and liabilities) using valuation techniques
for which all significant inputs are based on observable market data; and
\u2022
Level III: inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) using
valuation techniques for which any significant input is not based on observable market data.
The best evidence of fair value is a quoted price in an actively traded market. In the event that the market for a financial
instrument is not active or quoted market prices are not available, a valuation technique is used.
The degree of judgment used in measuring the fair value of assets and liabilities generally inversely correlates with the level
of observable valuation inputs. Aegon maximizes the use of observable inputs and minimizes the use of unobservable valuation
inputs when measuring fair value. Financial instruments, for example, with quoted prices in active markets generally have more
pricing observability and therefore less judgment is used in measuring fair value. Conversely, financial instruments for which
no quoted prices are available have less observability and are measured at fair value using valuation models or other pricing
techniques that require more judgment.
The assets and liabilities categorization within the fair value hierarchy is based on the lowest input that is significant to the fair
value measurement.
An active market is one in which transactions for the asset or liability take place with sufficient frequency and volume to provide
pricing information on an ongoing basis. The judgment as to whether a market is active may include, although not necessarily
determinative, lower transaction volumes, reduced transaction sizes and, in some cases, no observable trading activity
for short periods. In inactive markets, assurance is obtained that the transaction price provides evidence of fair value or it
is determined that adjustments to transaction prices are necessary to measure the fair value of the instrument.
The majority of valuation techniques employ only observable market data, and so the reliability of the fair value measurement
is high. However, certain assets and liabilities are valued on the basis of valuation techniques that feature one or more
significant market inputs that are unobservable and, for such assets and liabilities, the derivation of fair value is more
judgmental. An instrument is classified in its entirety as valued using significant unobservable inputs (Level III) if, in the opinion
of management, a significant proportion of the instrument\u2019s carrying amount is driven by unobservable inputs. \"Unobservable\"
in this context means that there is little or no current market data available from which to determine the price at which an at
arm\u2019s length transaction would be likely to occur. It generally does not mean that there is no market data available at all
upon which to base a determination of fair value. Additional information is provided in the table headed \"Effect of changes
in significant unobservable assumptions to reasonably possible alternatives\" in note 38 Fair Value. While Aegon believes
its valuation techniques are appropriate and consistent with other market participants, the use of different methodologies
or assumptions to determine the fair value of certain instruments (both financial and non-financial) could result in a different
estimate of fair value at the reporting date.
The valuation techniques applied to financial instrument affected by IBOR reforms remain consistent with those of other market
participants, and the uncertainty on the outcome of the reforms has not affected the classification of the instruments.
To operationalize Aegon\u2019s fair value hierarchy, individual instruments (both financial and non-financial) are assigned a fair
value level based primarily on the type of instrument and the source of the prices (e.g., index, third-party pricing service, broker,
internally modeled). Periodically, this logic for assigning fair value levels is reviewed to determine if any modifications are
necessary in the context of the current market environment.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23604": { "value": "4 Financial risks
4.1 General
Insurance risks are described in note 29.4 for risk exposures arising from contracts within the scope of IFRS 17. Financial risks
typically include, but are not limited to, credit risk, liquidity risk and market risk.
As an insurance group, Aegon is exposed to a variety of risks. Aegon's largest exposures are to changes in financial markets
(e.g. foreign currency, interest rate, credit and equity market risks) that affect the value of the investments, liabilities from
products that Aegon sells and deferred expenses. Other risks include insurance related risks, such as changes in mortality,
morbidity, bond credit spread and liquidity premium, which are discussed in note 29 Insurance contracts. Aegon manages risk
at local level where business is transacted, based on principles and policies established at the Group level. Aegon's integrated
approach to risk management involves similar measurement of risk and scope of risk coverage to allow for aggregation of the
Group's risk position.
To manage the risk from changes in financial markets, Aegon\u2019s products are priced using a market-consistent framework
and comprehensive asset liability management (ALM) programs are implemented to ensure that the assets backing
policyholder benefits are invested prudently over the long term. A range of ALM techniques are used across the Group. These
range in terms of sophistication and complexity from cash-flow matching (for traditional fixed annuities) to duration matching
(for the Universal Life range of products) to derivative-based semi-static and dynamic hedges (to match variable annuities and
indexed universal life.).
To manage its risk exposure, Aegon has risk policies in place. Many of these policies are group-wide while others are specific
to the unique situation of local businesses. For ALM specifically, the Enterprise Risk Management (ERM) framework includes
several risk policies that govern ALM strategies, such as the Investment and Counterparty Risk Policy (ICRP). The ICRP governs
the management of investment risks associated with credit, equity, property, alternative asset classes, interest rate and
currency risk in addition to option markets, implied volatility risk, interest rate options and swaptions. As well as product-level
ALM programs, subsidiary businesses are required by the ICRP to maintain overarching entity-level ALM strategies that set the
direction and limits for the aggregated product-level programs. Significant or complex ALM strategies are approved at group
level, and all programs are subject to Group Risk oversight.
Together with the ICRP, which guides ALM strategy, several other ERM policies govern concentration risk, liquidity risk, use
of derivatives and securities lending and repos. As Aegon uses derivatives extensively, collateral calls can be significant
depending on market circumstances. Liquidity is managed at legal entity level in the first instance with central coordination
by Aegon Ltd. Aegon US may use external market solutions to match projected liquidity requirements with funding.
Next to guidance, the Group level policies also provide limits to Aegon's exposure to major risks such as equity, interest
rates, credit, and currency. The limits in these policies in aggregate remain within Aegon's overall tolerance for risk and the
Group's financial resources. Operating within this policy framework, Aegon employs risk management programs including ALM
processes and models and hedging programs (which are largely conducted via the use of financial derivative instruments).
These risk management programs are in place in each country unit and are not only used to manage risk in each unit but are
also part of the Aegon's overall risk strategy.
Aegon operates a Derivative Use Policy to govern its use of derivatives. This policy establishes the control, authorization,
execution and monitoring requirements of the usage of such instruments. In addition, the policy stipulates necessary mitigation
of credit risk created through derivatives management tools. For derivatives, counterparty credit risk is normally mitigated
by requirements to post collateral via credit support annex agreements or through a central clearing house.
As part of its risk management programs, Aegon takes inventory of its current risk position across risk categories. Aegon also
measures the sensitivity of net result and shareholders' equity under both deterministic and stochastic scenarios. Management
uses the insight gained through these \"what if?\" scenarios to manage the Group's risk exposure and capital position. The
models, scenarios and assumptions used are reviewed regularly and updated as necessary.
Results of Aegon's sensitivity analyses are presented throughout this section to show the estimated sensitivity of CSM, net
result and shareholders' equity to various scenarios. For each type of market risk, the analysis shows how net result and
shareholders' equity would have been affected by changes in the relevant risk variable. In case of insurance contracts, changes
in assumptions could have immediate impact on net result, OCI and on CSM, depending on the measurement model. For each
sensitivity test the impact of a reasonably possible change in a single factor is shown. Management action is taken into account
to the extent that it is part of Aegon's regular policies and procedures, such as established hedging programs. However,
incidental management actions that would require a change in policies and procedures are not considered.
Each sensitivity analysis reflects the extent to which the shock tested would affect management's critical accounting estimates
and judgment in applying Aegon's accounting policies. Market-consistent assumptions underlying the measurement of non-
listed assets and liabilities are adjusted to reflect the shock tested. The shock may also affect the measurement of assets
and liabilities based on assumptions that are not observable in the market. For example, a shock in interest rates may lead
to increased expected credit losses on debt investments. Although management's short-term assumptions may change if there
is a reasonably possible change in a risk factor, long-term assumptions will generally not be revised unless there is evidence
that the movement is permanent. This fact is reflected in the sensitivity analyses.
The sensitivities do not reflect what the net result for the period would have been if risk variables had been different because
the analysis is based on the exposures in existence at the reporting date rather than on those that actually occurred during
the year. Nor are the results of the sensitivities intended to be an accurate prediction of Aegon's future shareholders' equity
or earnings. The analysis does not take into account the impact of future new business, which is an important component
of Aegon's future earnings. It also does not consider all methods available to management to respond to changes in the
financial environment, such as changing investment portfolio allocations or adjusting premiums and crediting rates.
Furthermore, the results of the analyses cannot be extrapolated nor can be interpolated for wider variations since effects
do not tend to be linear.
Concentration risk for financial risks are measured and managed at the following levels:
\u2022
Concentration per risk type: Risk exposures are measured per risk type as part of Aegon\u2019s internal economic framework. A
risk tolerance framework is in place which sets risk limits per risk type to target desired risk balance and promote
diversification across risk types;
\u2022
Concentration per counterparty: Risk exposure is measured and risk limits are in place per counterparty as part of the
Counterparty Name Limit Policy; and
\u2022
Concentration per sector, geography and asset class: Aegon\u2019s investment strategy is translated in investment mandates for
its internal and external asset managers. Through these investment mandates limits on sector, geography and asset class
are set. Compliance monitoring of the investment mandates is done by the insurance operating companies.
Moreover, concentration of financial risks are measured in Aegon business planning cycle. As part of business planning,
the resilience of Aegon's business strategy is tested in several extreme event scenarios. In the Adverse Financial scenario,
financial markets are stressed without assuming diversification across different market factors. Within the projection certain
management actions may be implemented when management deems this necessary.
Aegon's significant financial risks and related financial information are explained in the order as follows:
\u2022 Credit risk (note 4.2)
\u2022 Market risk (note 4.3)
\u2022
Equity market risk and other investment risks
\u2022 Interest rate risk
\u2022 Currency exchange risk
\u2022 Liquidity risk (note 4.4)
Certain information in this note is presented per segment, please see note 5 Segment information for the definition
of Aegon's segments.
4.2 Credit risk
Credit risk is the risk of financial loss to Aegon if a counterparty to a reinsurance contract or financial instrument fails to meet
its contractual obligations; the risk of economic loss due to the deterioration in the financial condition of counterparties, either
through fair value losses on traded securities or through defaults on traded securities, loans and mortgages.
Aegon implemented policies and procedures to govern credit limits and processes to manage credit risk, concentration risk
and counterparty risk with regards to all the Group\u2019s material businesses with credit exposures in scope, including bonds,
loans, cash and equivalents, collateralized assets, reinsurance assets, and assets measured at fair value. The Group uses risk
gradings aligned with the major credit rating agencies, and in case of specific asset portfolios like residential mortgage loans
implements internal risk gradings that reflect its assessment of the probability of default of individual counterparties.
The credit grades are calibrated such that the risk of default increases exponentially at each higher risk grade. For example,
this means that the difference in the Probability of Default (PD) between AAA and A grade is lower than the difference in the
PD between BBB and B rating grade.
4.2.1 Aegon\u2019s maximum exposure to credit risk
As premiums and deposits are received, these funds are invested to pay for future policyholder obligations. For assets
backing insurance liabilities measured under the general model and the premium allocated approach, as well as other \"free\"
assets, Aegon typically bears the risk for investment performance which is equal to the return of principal and interest. Aegon
is exposed to credit risk on its fixed-income portfolio (debt securities, mortgages and private placements), over-the-counter
derivatives and reinsurance contracts. Some issuers have defaulted on their financial obligations for various reasons, including
bankruptcy, lack of liquidity, downturns in the economy, downturns in real estate values, operational failure and fraud. During
financial downturns, Aegon can incur defaults or other reductions in the value of these securities and loans, which could have
a materially adverse effect on Aegon\u2019s business, results of operations and financial condition.
The estimates of best estimate liability for (re)insurance contracts assets represent Aegon\u2019s maximum exposure to credit risk
from these assets. Please see the cash flow information in note 29 (Insurance contracts and reinsurance contracts held).
The following table contains an analysis of Aegon\u2019s maximum credit risk exposure from financial assets. Please see note 39 and
40 for further information on capital commitments and contingencies and on collateral given, which may expose the Group
to credit risk.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Surplus
\u00a0
\u00a0
Maximum
\u00a0 \u00a0
Letters of
\u00a0
Master
\u00a0 \u00a0
collateral
\u00a0
\u00a0
exposure
\u00a0 \u00a0
credit /
Real
netting
\u00a0 \u00a0
(or over-
\u00a0
\u00a0
to credit
\u00a0 \u00a0
guaran-
estate
agree-
\u00a0
Total
collateral-
Net
2023
risk
Cash
Securities
tees
property
ments
Other
collateral
ization)
exposure
Debt securities
55,811
-
-
93
-
-
-
93
-
55,718
Money market and
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
other short-term
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investments
8,695
-
442
-
-
-
-
442
24
8,277
Loans
10,183
31
-
20
23,711
-
-
23,762
13,579
-
Unconsolidated
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investment funds
167,411
-
-
-
-
-
-
-
-
167,411
Deposits with
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
financial institutes
2,289
-
-
-
-
-
-
-
-
2,289
Other investments
5,040
-
-
-
-
-
-
-
-
5,040
Derivative assets
1,429
832
669
-
-
373
-
1,875
550
104
Reinsurance assets
16,608
-
13,416
82
-
-
-
13,498
-
3,110
On December 31
267,465
864
14,528
194
23,711
373
-
39,669
14,153
241,949
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Surplus
\u00a0
\u00a0
Maximum
\u00a0 \u00a0
Letters of
\u00a0
Master
\u00a0 \u00a0
collateral
\u00a0
\u00a0
exposure
\u00a0 \u00a0
credit /
Real
netting
\u00a0 \u00a0
(or over-
\u00a0
\u00a0
to credit
\u00a0 \u00a0
guaran-
estate
agree-
\u00a0
Total
collateral-
Net
2022
risk
Cash
Securities
tees
property
ments
Other
collateral
ization)
exposure
Debt securities
59,341
-
-
96
-
-
-
96
-
59,245
Money market and
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
other short-term
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investments
6,881
-
312
-
-
-
-
312
23
6,592
Loans
10,419
40
-
22
24,763
-
-
24,825
14,407
1
Unconsolidated
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investment funds
154,741
-
-
-
-
-
-
-
-
154,741
Deposits with
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
financial institutes
2,405
-
-
-
-
-
-
-
-
2,405
Other investments
4,618
-
-
-
58
-
-
58
35
4,595
Derivative assets
2,771
257
426
-
-
2,174
-
2,858
173
86
Reinsurance assets
16,939
-
14,162
103
-
-
-
14,265
-
2,675
On December 31
258,116
297
14,900
221
24,822
2,174
-
42,414
14,638
230,341
\n
Debt securities
Several bonds in Aegon's Americas' portfolio are guaranteed by Monoline insurers. This is shown in the table above in the
column \"Letters of credit / guarantees\".
Money market and short-term investments
The collateral reported for the money market and short-term investments are related to tri-party repurchase agreements
(repos). Within tri-party repos Aegon invests under short-term reverse repurchase agreements and the counterparty posts
collateral to a third party custodian. The collateral posted is typically high-quality, short-term securities and is only accessible
for or available to Aegon in the event the counterparty defaults.
The following table contains an analysis of Aegon\u2019s credit risk exposure for debt instruments for which an ECL allowance
is recognized. See note 4.2.6 for a more detailed description of ECL measurement. All asset categories not presented here are
determined to have non-material credit risk or to be of short-term nature (cash and cash equivalents, other receivables). The
gross carrying amount of financial assets below also represents Aegon\u2019s maximum exposure to credit risk on these assets.
\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2023
\u00a0 \u00a0
2022
\u00a0
ECL staging
\u00a0 \u00a0
ECL staging
\u00a0 \u00a0
\u00a0
Stage 1
Stage 2
Stage 3
\u00a0 \u00a0
Stage 1
Stage 2
Stage 3
\u00a0 \u00a0
\u00a0 \u00a0
Lifetime
Lifetime
Pur-
\u00a0 \u00a0
Lifetime
Lifetime
\u00a0 \u00a0
Financial assets
\u00a0
ECL not
ECL
chased
\u00a0 \u00a0
ECL not
ECL
Purchased
\u00a0
measured at FVOCI
12-month
credit-
credit-
credit
\u00a0
12-month
credit-
credit-
credit
\u00a0
- with recycling
ECL
impaired
impaired
impaired
Total
ECL
impaired
impaired
impaired
Total
AAA
2,961
-
-
-
2,961
9,562
-
-
-
9,562
AA
9,217
-
2
-
9,219
4,034
-
-
-
4,034
A
18,410
-
-
-
18,411
18,224
10
2
-
18,235
BBB
17,534
11
-
1
17,547
19,696
6
-
-
19,702
BB
899
136
-
-
1,035
1,250
172
3
2
1,427
B
431
120
3
-
554
432
153
5
-
590
CCC and lower
120
91
319
99
629
76
72
394
123
664
Gross carrying
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
amount
49,571
358
325
100
50,354
53,273
413
403
125
54,214
Expected credit loss
(147)
(25)
(64)
(2)
(238)
(157)
(32)
(86)
(1)
(276)
Total
49,571
358
325
100
50,354
53,273
413
403
125
54,214
\n
Loans
The real estate collateral for mortgages includes both residential and commercial properties. The collateral for commercial
mortgage loans in Aegon Americas is measured at fair value. At a minimum on an annual basis, a fair value is estimated for each
individual real estate property that has been pledged as collateral. When a loan is originally provided, an external appraisal
is obtained to estimate the value of the property. In subsequent years, the value is typically estimated internally using various
professionally accepted valuation methodologies. Internal appraisals are performed by qualified, professionally accredited
personnel. International valuation standards are used and the most significant assumptions made during the valuation of real
estate are the current cost of reproducing or replacing the property, the value that the property's net earning power will support,
and the value indicated by recent sales of comparable properties. Valuations are primarily supported by market evidence.
Cash collateral for mortgage loans includes the savings that have been received to redeem the underlying mortgage loans
at redemption date. These savings are part of the credit side of the statement of financial position but reduce the credit risk for
the mortgage loan as a whole.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2023
\u00a0 \u00a0
2022
\u00a0
ECL staging
\u00a0 \u00a0 \u00a0
ECL staging
\u00a0
\u00a0
Stage 1
Stage 2
Stage 3
\u00a0 \u00a0
Stage 1
Stage 2
Stage 3
\u00a0 \u00a0
\u00a0 \u00a0
Lifetime
Lifetime
\u00a0 \u00a0 \u00a0
Lifetime
Lifetime
\u00a0 \u00a0
\u00a0 \u00a0
ECL not
ECL
Purchased
\u00a0 \u00a0
ECL not
ECL
Purchased
\u00a0
Loans at
12-month
credit-
credit-
credit
\u00a0
12-month
credit-
credit-
credit
\u00a0
amortized cost
ECL
impaired
impaired
impaired
Total
ECL
impaired
impaired
impaired
Total
Internal grade 1
947
-
-
-
947
1,484
-
-
-
1,484
Internal grade 2
3,929
2
-
-
3,930
4,438
2
-
-
4,440
Internal grade 3
4,460
24
-
-
4,485
3,775
-
-
-
3,775
Internal grade 4
778
7
-
-
785
671
-
-
-
671
Internal grade 5
33
2
-
-
35
48
-
-
-
48
Internal grade 6
-
-
-
-
-
-
-
-
-
-
Internal grade 7 or
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
lower
-
-
-
-
-
-
-
-
-
-
Gross carrying
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
amount
10,147
35
-
-
10,183
10,416
2
-
-
10,419
Expected credit loss
(24)
(1)
-
-
(26)
(12)
-
-
-
(12)
Total
10,123
33
-
-
10,156
10,404
2
-
-
10,407
\n
Financial assets designated at fair value through profit or loss
Significant portion of instruments have been designated as FVPL. On December 31 2023, the maximum exposure to credit
risk of these financial assets was their carrying amount of EUR 1,736 million (December 2022: EUR 1,376 million). The credit
risk of these financial assets has not been hedged by the use of derivatives . The following changes in fair value have been
recognized for these investments:
\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0
Money market and
\u00a0
\u00a0 \u00a0
other short-term
\u00a0
Financial assets designated at FVPL
Debt securities
investments
Total
Change in fair value attributable to changes in credit risk during the year
46
(1)
45
Cumulative change in fair value attributable to changes in credit risk held on
\u00a0 \u00a0 \u00a0
December 31
20
-
20
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0
Money market and
\u00a0
\u00a0 \u00a0
other short-term
\u00a0
Financial assets designated at FVPL
Debt securities
investments
Total
Change in fair value attributable to changes in credit risk during the year
(24)
-
(24)
Cumulative change in fair value attributable to changes in credit risk held on
\u00a0 \u00a0 \u00a0
December 31
(22)
-
(22)
\n
The change in fair value attributable to changes in credit risk is determined as the total amount of the change in fair value
that is not attributable to changes in the observable benchmark interest rate or in other market rates. This approach provides
a reasonable approximation of changes attributable to credit risk because fixed income securities valuation is mainly driven
by two factors \u2013 interest rates and credit spreads, and the fair value change due to credit risk can therefore be estimated
by removing impacts from non-credit related factors.
Derivatives
The master netting agreements column in the table relates to derivative liability positions which are used in Aegon's credit
risk management. The offset in the master netting agreements column includes balances where there is a legally enforceable
right of offset, but no intention to settle these balances on a net basis under normal circumstances. As a result, there is a net
exposure for credit risk management purposes. However, as there is no intention to settle these balances on a net basis, they
do not qualify for net presentation for accounting purposes.
Reinsurance assets
The collateral related to the reinsurance assets include assets in trust that are held by the reinsurer for the benefit of Aegon.
The assets in trust can be accessed to pay policyholder benefits in the event the reinsurers fail to perform under the terms
of their contract. Further information on the related reinsurance transactions is included in note 29.
Collateral and other credit enhancements
Aegon employs a range of policies and practices to mitigate credit risk and the most common of these is accepting collateral
for funds advanced. The Group has internal policies on the acceptability of specific classes of collateral or credit risk mitigation.
Collateral and other credit enhancements obtained
On December 31, 2023, the Group held no collateral that were obtained during the year (EUR 0 in 2022) by taking possession
of collateral held as security against receivables. The Group\u2019s policy is to pursue timely realization of the collateral in an orderly
manner. Aegon does not generally use the non-cash collateral for its own operations.
4.2.2 Credit risk management
Aegon manages credit risk exposure by individual counterparty, sector and asset class, including cash positions. Normally,
Aegon mitigates credit risk in derivative contracts by entering into credit support agreement, where practical, and in ISDA
master netting agreements for most of Aegon's legal entities to facilitate Aegon's right to offset credit risk exposure. Main
counterparties to these transactions are investment banks which are typically rated \"A\" or higher. The credit support agreement
will normally dictate the threshold over which collateral needs to be pledged by Aegon or its counterparty. Transactions
requiring Aegon or its counterparty to post collateral are typically the result of derivative trades, comprised mostly of interest
rate swaps, equity swaps, currency swaps and credit swaps. Collateral received is mainly cash (USD and EUR). The credit
support agreements that outline the acceptable collateral require high-quality instruments to be posted. Over the last three
years, there was no default with any derivatives counterparty. The credit risk associated with financial assets subject to a
master netting agreement is eliminated only to the extent that financial liabilities due to the same counterparty will be settled
after the assets are realized. Eligible derivative transactions are traded via Central Clearing Houses as required by EMIR and
the Dodd-Frank act. Credit risk in these transactions is mitigated through posting of initial and variation margins.
Aegon may also mitigate credit risk in reinsurance contracts by including downgrade clauses that allow the recapture
of business, retaining ownership of assets required to support liabilities ceded or by requiring the reinsurer to hold assets
in trust. For the resulting net credit risk exposure, Aegon employs deterministic and stochastic credit risk modeling in order
to assess the Group's credit risk profile, associated earnings and capital implications due to various credit loss scenarios.
Aegon operates a Credit Name Limit Policy (CNLP) under which limits are placed on the aggregate exposure that it has to any
one counterparty. Limits are placed on the exposure at both group level and individual country units. The limits also vary by a
rating system, which is a composite of the main rating agencies (S&P, Moody's and Fitch) and Aegon's internal rating of the
counterparty. If an exposure exceeds the stated limit, then the exposure must be reduced to the limit for the country unit and
rating category as soon as possible. Exceptions to these limits can only be made after explicit approval from Aegon's Group
Risk and Capital Committee (GRCC). The policy is reviewed regularly.
The Group offers products that cover inflation risk for policyholders. To hedge the inflation risk, the Group invests in financial
instruments of which the value depends on the rate of inflation. This significantly reduces the net exposure to inflation risk.
4.2.3 Credit rating
Aegon group level long-term counterparty exposure limits are as follows:
Group limits per credit rating
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Amounts in EUR million
2023
2022
AAA
900
900
AA
900
900
A
675
675
BBB
450
450
BB
250
250
B
125
125
CCC or lower
50
50
\n
The ratings distribution of general account portfolios of Aegon's major reporting units, excluding reinsurance assets,
are presented in the table that follows, organized by rating category and split by assets that are valued at fair value and assets
that are valued at amortized cost. Aegon uses a composite rating based on a combination of the external ratings of S&P,
Moody's, Fitch and National Association of Insurance Commissioners (NAIC which is for US only) and internal ratings. The rating
used is the lower of the external rating and the internal rating.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Americas
United Kingdom
International
Asset Management
Total 2023
1)
\u00a0
Amor-
\u00a0
Amor-
\u00a0
Amor-
\u00a0
Amor-
\u00a0
Amor-
\u00a0
Total
Financial
tized
\u00a0
tized
\u00a0
tized
\u00a0
tized
\u00a0
tized
Fair
carrying
assets
cost
Fair value
cost
Fair value
cost
Fair value
cost
Fair value
cost
value
value
AAA
947
6,836
-
38
-
35
52
123
998
7,033
8,031
AA
3,930
9,191
-
514
-
161
-
-
3,930
9,866
13,796
A
4,485
19,474
-
220
1
791
-
-
4,486
20,486
24,972
BBB
785
17,679
-
124
-
466
-
-
803
18,269
19,072
BB
33
1,084
-
1
-
41
-
-
33
1,126
1,160
B
2
570
-
-
-
9
-
-
2
579
581
CCC or lower
-
986
-
-
-
6
-
-
-
992
992
Assets not rated
-
4,444
-
797
-
4
-
1
-
5,286
5,286
Total
10,182
60,264
-
1,695
1
1,514
52
124
10,253
63,638
73,891
ECL on financial
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
assets
(26)
(228)
-
-
-
(10)
-
-
(26)
(238)
(263)
On December
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
31, 2023
10,156
60,264
-
1,695
1
1,514
52
124
10,227
63,638
73,865
\n
1
Includes investments of Holding and other activities.
\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Americas
United Kingdom
International
Asset Management
Total 2022
1)
\u00a0
Amor-
\u00a0
Amor-
\u00a0
Amor-
\u00a0
Amor-
\u00a0
Amor-
\u00a0
Total
Financial
tized
\u00a0
tized
\u00a0
tized
\u00a0
tized
\u00a0
tized
\u00a0
carrying
assets
cost
Fair value
cost
Fair value
cost
Fair value
cost
Fair value
cost
Fair value
value
AAA
1,484
12,243
-
55
-
91
-
135
1,522
12,523
14,046
AA
4,440
3,996
-
461
-
158
-
-
4,440
4,615
9,055
A
3,775
20,233
-
262
7
921
-
-
3,782
21,416
25,198
BBB
671
19,313
-
123
1
763
-
-
672
20,198
20,870
BB
48
1,439
-
1
-
71
-
-
48
1,512
1,560
B
-
594
-
-
-
13
-
-
-
607
607
CCC or lower
-
900
-
-
-
5
-
-
-
905
905
Assets not rated
-
4,480
-
582
-
-
-
1
-
5,182
5,182
Total
10,417
63,200
-
1,483
9
2,021
-
136
10,464
66,959
77,423
ECL on financial
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
assets
(12)
(264)
-
-
-
(12)
-
-
(12)
(277)
(289)
On December
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
31, 2022
10,406
63,200
-
1,483
9
2,021
-
136
10,453
66,959
77,412
\n
1
Includes investments of Holding and other activities.
The following table shows the credit quality of the reinsurance contracts included in the statement of financial position:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Carrying value
2023
2022
AAA
-
-
AA
1,245
1,609
A
14,089
14,322
Below A
4
5
Not rated
662
733
On December 31
16,000
16,669
\n
4.2.4 Credit risk concentration
The tables that follow present specific credit risk concentration information for general account financial assets.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Of which
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
past due
\u00a0 \u00a0 \u00a0 \u00a0
Asset
\u00a0
and / or
Credit risk concentrations \u2013 debt securities and money
\u00a0
United
Interna-
Manage-
Total 2023
impaired
market investments
Americas
Kingdom
tional
ment
1)
assets
Residential mortgage-backed securities (RMBSs)
933
-
-
-
933
(13)
Commercial mortgage-backed securities (CMBSs)
2,216
73
34
-
2,323
(17)
Asset-backed securities (ABSs) - CDOs backed by ABS, Corp.
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
bonds, Bank loans
557
-
3
-
560
-
ABSs \u2013 Other
2,905
53
28
52
3,037
(9)
Financial - Banking
3,412
173
201
-
3,786
(14)
Financial - Other
11,909
38
289
97
12,332
(33)
Capital goods and other industry
3,443
24
143
-
3,609
(23)
Communications & Technology
4,242
2
140
-
4,384
(30)
Consumer cyclical
3,197
29
85
-
3,311
(20)
Consumer non-cyclical
5,661
74
111
-
5,846
(24)
Energy
2,821
20
55
-
2,896
(19)
Transportation
1,633
-
30
-
1,663
(6)
Utility
4,190
73
75
-
4,338
(10)
Government bonds
7,349
338
265
17
7,969
(20)
On December 31, 2023
54,467
898
1,458
166
56,988
(237)
\n
1
Includes investments of Holding and other activities.
\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Of which
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
past due
\u00a0\u00a0\u00a0\u00a0
Asset
\u00a0
and / or
Credit risk concentrations \u2013 debt securities and money
\u00a0
United
Interna-
Manage-
Total 2022
1)
impaired
market investments
Americas
Kingdom
tional
ment
assets
Residential mortgage-backed securities (RMBSs)
1,136
-
-
5
1,141
(9)
Commercial mortgage-backed securities (CMBSs)
2,707
94
37
-
2,838
-
Asset-backed securities (ABSs) - CDOs backed by ABS, Corp.
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
bonds, Bank loans
438
-
3
-
440
-
ABSs \u2013 Other
2,400
53
15
9
2,478
(6)
Financial - Banking
3,957
168
319
-
4,444
(14)
Financial - Other
10,778
36
353
96
11,264
(31)
Capital goods and other industry
3,769
22
132
-
3,923
(25)
Communications & Technology
4,658
2
171
-
4,831
(51)
Consumer cyclical
3,742
28
106
-
3,877
(25)
Consumer non-cyclical
5,445
85
144
-
5,674
(47)
Energy
3,205
19
102
-
3,326
(23)
Transportation
1,728
-
43
-
1,771
(6)
Utility
4,319
69
80
-
4,469
(11)
Government bonds
7,962
323
488
17
8,790
(26)
On December 31, 2022
56,243
901
1,994
128
59,265
(276)
\n
1
Includes investments of Holding and other activities.
\n\n\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
Credit risk concentrations \u2013 Government bonds per
\u00a0
United
\u00a0
Asset
\u00a0
country of risk
Americas
Kingdom
International
Management
Total 2023
1)
United States
6,632
-
62
-
6,694
Netherlands
-
-
2
-
2
United Kingdom
-
289
-
17
307
Austria
-
-
10
-
10
Belgium
-
-
4
-
4
France
-
28
8
-
36
Hungary
20
-
4
-
24
Indonesia
71
-
-
-
71
Luxembourg
-
-
1
-
1
Spain
-
-
153
-
153
Rest of Europe
46
-
13
-
58
Rest of world
581
21
8
-
610
On December 31, 2023
7,349
338
265
17
7,969
\n
1
Includes investments of Holding and other activities.
\n\n\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
Credit risk concentrations \u2013 Government bonds per
\u00a0
United
\u00a0
Asset
\u00a0
country of risk
Americas
Kingdom
International
Management
Total 2022
1)
United States
7,209
-
80
-
7,290
Netherlands
-
-
-
-
-
United Kingdom
-
275
-
17
292
Austria
-
-
3
-
3
Belgium
-
-
3
-
3
France
-
27
2
-
29
Hungary
18
-
4
-
22
Indonesia
82
-
-
-
82
Luxembourg
-
-
1
-
1
Spain
-
-
152
-
152
Rest of Europe
48
-
229
-
277
Rest of world
604
21
13
-
638
On December 31, 2022
7,962
323
488
17
8,790
\n
1
Includes investments of Holding and other activities.
\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Government
Corporate
RMBSs
\u00a0 \u00a0
\u00a0
Bonds
bonds
CMBSs ABSs
Other
Total 2023
1)
AAA
166
503
2,462
3,915
7,046
AA
6,444
2,262
1,160
-
9,866
A
723
16,352
2,101
-
19,176
BBB
354
17,408
404
-
18,165
BB
205
838
78
-
1,121
B
69
496
30
-
596
CCC or lower
9
245
618
-
872
Assets not rated
-
2
-
144
147
On December 31, 2023
7,969
38,106
6,853
4,059
56,988
\n
1
Includes investments of Holding and other activities.
2
CNLP Ratings are used and are the lower of the Barclay\u2019s Rating and the Internal Rating with the Barclay\u2019s rating being a blended rating of S&P, Fitch, and Moody\u2019s.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Government
Corporate
RMBSs CMBSs
\u00a0 \u00a0
\u00a0
Bonds
bonds
ABSs
Other
Total 2022
1)
AAA
5,980
724
2,997
2,780
12,482
AA
1,243
2,484
815
-
4,541
A
753
16,180
1,960
-
18,894
BBB
538
19,312
306
-
20,156
BB
206
1,204
102
-
1,513
B
65
519
23
-
607
CCC or lower
4
207
694
-
905
Assets not rated
-
15
-
152
167
On December 31, 2022
2)
8,790
40,645
6,897
2,933
59,265
\n
1
Includes investments of Holding and other activities.
2
CNLP Ratings are used and are the lower of the Barclay\u2019s Rating and the Internal Rating with the Barclay\u2019s rating being a blended rating of S&P, Fitch, and Moody\u2019s.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Of which past
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
due and / or
Credit risk concentrations \u2013
\u00a0
United
\u00a0
Asset
\u00a0
impaired
mortgage loans
Americas
Kingdom
International
Management
Total 2023
assets
Agricultural
46
-
-
-
46
-
Apartment
5,365
-
-
-
5,365
(10)
Industrial
410
-
-
-
410
-
Office
1,300
-
-
-
1,300
(14)
Retail
1,372
-
-
-
1,372
(1)
Other commercial
1,663
-
1
-
1,664
-
On December 31, 2023
10,156
-
1
-
10,156
(26)
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Of which past
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
due and / or
Credit risk concentrations \u2013
\u00a0
United
\u00a0
Asset
\u00a0
impaired
mortgage loans
Americas
Kingdom
International
Management
Total 2022
assets
Agricultural
49
-
-
-
49
-
Apartment
5,517
-
-
-
5,517
(4)
Industrial
402
-
-
-
402
-
Office
1,515
-
-
-
1,515
(7)
Retail
1,465
-
-
-
1,465
(1)
Other commercial
1,456
-
1
-
1,457
-
On December 31, 2022
10,406
-
1
-
10,406
(12)
4.2.5 Unconsolidated structured entities
Aegon's investments in unconsolidated structured entities such as RMBSs, CMBSs and ABSs and investment funds are
presented in the line item \"Investments\" of the statement of financial position. Aegon's interests in these unconsolidated
structured entities can be characterized as basic interests, Aegon does not have loans, derivatives, guarantees or other
interests related to these investments. Any existing commitments such as future purchases of interests in investment funds are
disclosed in note 39 Commitments and contingencies.
For debt instruments, specifically for RMBSs, CMBSs and ABSs, the maximum exposure to loss is equal to the carrying
amount which is reflected in the credit risk concentration table regarding debt securities and money market investments.
To manage credit risk Aegon invests primarily in senior notes of RMBSs, CMBSs and ABSs. The composition of the RMBSs,
CMBSs and ABSs portfolios of Aegon are widely dispersed looking at the individual amount per entity, therefore Aegon
only has non-controlling interests in individual unconsolidated structured entities. Furthermore these investments are not
originated by Aegon.
Except for commitments as noted in note 39 Commitments and contingencies, Aegon did not provide, nor is required to provide
financial or other support to unconsolidated structured entities. Nor does Aegon have intentions to provide financial or other
support to unconsolidated structured entities in which Aegon has an interest or previously had an interest.
For RMBSs, CMBSs and ABSs in which Aegon has an interest at reporting date, the following table presents total income
received from those interests. The Investments column reflects the carrying values recognized in the statement of financial
position of Aegon's interests in RMBSs, CMBSs and ABSs.
\u00a0
Total income for the year ended December 31, 2023
December 31, 2023
\u00a0 \u00a0
Total gains and
\u00a0 \u00a0
\u00a0 \u00a0
losses on sale of
\u00a0 \u00a0
2023
Interest income
assets
Total
Investments
Residential mortgage-backed securities
67
(15)
52
933
Commercial mortgage-backed securities
92
12
105
2,323
Asset-backed securities
40
14
54
560
ABSs - Other
134
57
191
3,037
Total
334
68
402
6,853
\u00a0
Total income for the year ended December 31, 2022
December 31, 2022
\u00a0 \u00a0
Total gains and
\u00a0 \u00a0
\u00a0 \u00a0
losses on sale of
\u00a0 \u00a0
2022
Interest income
assets
Total
Investments
Residential mortgage-backed securities
104
26
130
1,141
Commercial mortgage-backed securities
120
(723)
(603)
2,838
Asset-backed securities
25
(34)
(9)
440
ABSs - Other
92
(416)
(324)
2,478
Total
341
(1,148)
(807)
6,897
\n
4.2.6 Expected credit losses
Measurement
The estimation of credit exposure for risk management purposes is complex and requires the use of models, as the exposure
varies with changes in market conditions, expected cash flows and the passage of time. The assessment of credit risk
of a portfolio of assets entails further estimations as to the likelihood of defaults occurring, of the associated loss ratios
and of default correlations between counterparties. Aegon measures credit risk using Probability of Default (PD), Exposure
at Default (EAD) and Loss Given Default (LGD). This is similar to the approach used for the purposes of measuring the Expected
Credit Loss (ECL) under IFRS 9. See section on ECL developments in the reporting period later in this note for more details.
Losses as a result of credit risk are a natural part of investing in fixed-income securities. The amount of and compensation
for this risk are related. A significant management measure to avoid excessive credit risk is to diversify and limit exposure
to individual issuers.
a) Recognition of expected credit losses
IFRS 9 outlines a \"three-stage\" model for impairment based on relative changes in credit quality since initial recognition:
\u2022
a financial instrument that is not credit-impaired on initial recognition is classified in \"Stage 1\";
\u2022
if a significant increase in credit risk (\"SICR\") since initial recognition is identified, the financial instrument is moved to \"Stage
2\" but is not yet deemed to be credit-impaired (see \u201cSignificant increase in credit risk\u201d for further details);
\u2022
if the financial instrument is credit-impaired, the financial instrument is then moved to \"Stage 3\".
Credit risk is continuously monitored by the Group in all the above stages.
Financial instruments in Stage 1 have their Expected Credit Loss (ECL) measured at an amount equal to the portion of lifetime
expected credit losses that result from default events possible within the next 12 months. Financial instruments in Stages
2 or 3 have their ECL measured based on expected credit losses on a lifetime basis. Purchased or originated credit-impaired
financial assets are those financial assets that are credit-impaired on initial recognition. Their ECL is always measured on a
lifetime basis.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Stage 1
Stage 2
Stage 3
Purchased or Originated
\u00a0
Impaired
Under-performing
Non-performing
Credit Impared (POCI)
ECL
12 month ECL
Lifetime ECL
Lifetime ECL
Lifetime ECL
\u00a0\u00a0
Quantitative and
\u00a0\u00a0
Provision Trigger
n.a.
Qualitative Triggers
Qualitative Triggers
Qualitative Triggers
\u00a0
Up to date and early
> 30 DPD (rebuttable
> 90 DPD (rebuttable
\u00a0
Days Past Due ('DPD') Backstop
arrears (< 30 DPD)
presumption)
presumption)
n.a.
\u00a0\u00a0\u00a0\u00a0
Interest calculated on
\u00a0\u00a0\u00a0\u00a0
net carrying amount
\u00a0
Interest calculated on
Interest calculated on
Interest calculated on
using a credit-adjusted
Interest Income
gross carrying amount
gross carrying amount
net carrying amount
effective interest rate
\n
1
n.a. in above table should be read as \u201cnot applicable\u201d.
Following this assessment, IFRS 9 requires the incorporation of multiple, forward looking macro- scenarios to drive the
ECL provision.
IFRS 9 requires that the measurement of ECL represent an unbiased probability-weighted amount that is to be determined by:
\u2022
evaluating a range of possible outcomes;
\u2022
use reasonable and supportable information available without undue cost and effort about past events;
\u2022 current conditions; and
\u2022
forecasts of future economic conditions.
When incorporating forward looking information, consideration should be given to the relevance of the information (and the
availability of more relevant information) for each specific financial instrument or group of financial instruments. Forward
looking information that is relevant for one financial instrument may not be relevant or as relevant for other financial
instruments depending on the specific drivers of credit risk. To the extent relevant, forward-looking information used for the
measurement of ECLs it needs to be consistent with that used for the assessment of a significant increase in credit risk.
The models used by the Group generally employ a Probability of Default / Loss Given Default / Exposure at Default methodology;
each model consists of multiple sub-models that are used to generate the measurement of expected credit loss.
Credit losses are calculated as the product of projected PD, LGD and EAD and are discounted using an appropriate discount
rate. The ECL is determined as the probability weighted discounted credit losses that are determined for different scenarios (i.e.
base, positive, adverse).
Given the need to adapt the models to the different portfolio characteristics, all ECL models have different key judgments and
assumptions. As such, the below paragraphs outline the key judgements and assumptions made by the Group in addressing the
key requirements on a model-by-model basis.
The Group employs separate models to calculate ECL on each category of financial assets.
For bonds and private placements, the Group applies a global correlation model. It provides correlations of credit quality
movements across different asset classes, linked with movements in the macro economy. Global correlation model is therefore
used for determining the conditional PD and LGD, given a macroeconomic scenario. Unconditional PD and LGD curves are
modelled with use of different methods for sovereign debt, corporate bonds and private placements.
For commercial mortgage loans and mortgage-backed securities the parameters are estimated with commercial mortgage
metrics which uses corporate bond PD and LGD estimates further adjusted with other assumptions based on debt service
coverage and loan-to-value ratios.
The Group applies a separate model for asset-backed securities, which pools the instruments based on the underlying
collateral and estimates credit loss parameters collectively. Collateralized debt (loan) obligations (CDOs and CLOs) are special
types of asset-backed securities to which a different set of models are applied depending on region of the exposure.
b) Significant increase in credit risk
Aegon considers a financial instrument to have experienced a significant increase in credit risk when one or more of the
following quantitative, qualitative or backstop criteria have been met:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Asset class
Quantitative criteria
Qualitative criteria
Backstop criteria
\u00a0
Relative change in Forward-in-
\u00a0 \u00a0
Commercial mortgages
Time Probability of Default
None
60 days past due backstop
Private loans
Relative changes in rating
Watchlist approach
No other backstop applied
Debt securities
Relative changes in rating
Watchlist approach
No other backstop applied
Structured finance
Relative changes in rating
Watchlist approach
30 days past due backstop
Deposits with financial institutions
Relative changes in rating
Watchlist approach
No other backstop applied
\u00a0
Defined as for the respective
\u00a0 \u00a0
\u00a0
loans to which the commitment
\u00a0 \u00a0
Loan commitments
relates
\u00a0 \u00a0
\u00a0
Defined as for the respective
\u00a0 \u00a0
\u00a0
loans to which the commitment
\u00a0 \u00a0
Financial guarantees
relates
\u00a0 \u00a0
\n
The quantitative factor(s) should indicate whether the credit risk of an instrument has increased significantly since initial
recognition. When making this assessment, Aegon shall use the change in the risk of a default occurring over the expected life
of the financial instrument. Aegon uses a mix of relative and absolute thresholds:
\u2022
The relative threshold measures the relative increase in credit risk since origination.
\u2022
The absolute threshold defines a stage for each rating and is mainly used when the rating at origination is not available or
when an instrument is already in default.
The relative thresholds are defined in two steps:
\u2022
A PD-based statistical analysis is performed to determine an optimal PD threshold that provides the best predictor for default;
\u2022
The PD-based thresholds are translated in rating-based rules, which are more intuitive and practically applicable.
These PD thresholds can be translated into rating-based thresholds using standard Moody\u2019s rating to PD mappings.
The difference between the PD at origination and the PD corresponding to the threshold determines the number of notches that
the rating must drop by. E.g. for a one year old instrument with a one year remaining maturity this gives the following result:
Starting Rating
Number of Notches Down
1/Aaa
2/Aa1
3/Aa2
4/Aa3
5/A1
6/A2
7/A3
8/Baa1
9/Baa2
10/Baa3
11/Ba1
12/Ba2
13/Ba3
6
5
4
3
PD amounts used by Aegon are bunched into ranges in below table. Each range contains the minimum and maximum
of PDs on both financial and corporate assets of a 1-10 year term. As Aegon US represents the Group the best, PD amounts
of Americas is presented below.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
PD range 2023
Minimum
Maximum
AAA
0.0002
0.0024
AA
0.0003
0.0037
A
0.0007
0.0057
BBB
0.0020
0.0085
BB
0.0055
0.0085
B
0.0138
0.0308
CCC or lower
0.0205
1.0000
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
PD range 2022
Minimum
Maximum
AAA
0.0003
0.0016
AA
0.0004
0.0029
A
0.0011
0.0051
BBB
0.0030
0.0088
BB
0.0081
0.0172
B
0.0160
0.0436
CCC or lower
0.0279
1.0000
\n
Quantitative criteria
For debt securities, private loans, structured finance securities and deposits with financial institutions the relative change
of the credit rating is used as primary indicator to assess significant increase in credit risk, for this purpose external credit
ratings are used.
Qualitative criteria
For debt securities, private loans, structured finance securities and deposits with financial institutions the watchlist approach
is applied as an additional qualitative criterion.
The watchlist approach means exposure of instruments on the watchlist are intensively monitored. Financial assets are added
to the watchlist based on if their relative change in fair value has surpassed a predetermined threshold:
\u2022
The fair value either drops to 80% and below the (amortized) cost price and stays there for six months; or
\u2022
The fair value falls by 20% over 3 months; or
\u2022
The fair value falls to 60% and below the (amortized) cost price.
In relation to debt securities and private loans, where a watchlist is used to monitor credit risk, this assessment is performed
at the counterparty level and on a periodic basis. The criteria used to identify SICR are monitored and reviewed periodically for
appropriateness by the Group.
Backstop
A backstop is applied to exposures considered to have experienced a significant increase in credit risk if the borrower is more
than 30 days past due on its contractual payments in case of structured finance and 60 days in case commercial mortgage
loans. No backstop is applied to the other asset classes.
Aegon has used the low credit risk exemption for debt instruments. Debt instruments that have a credit rating which responds
with \"investment grade\" (rating \"BBB\" or higher) are considered as having low credit risk. As such, external and internal credit
ratings are used respectively for these assets to assess whether a significant increase in credit risk has occurred.
Low credit risk exemption is applied for staging purposes on instruments rated BBB and higher. (IFRS 9 provides an exception
for financial instruments that have low credit risk at the reporting date, commonly referred to as the \u201clow credit risk exemption\u201d
or LCRE, it is an exception to the general model where entities have an option not to assess whether credit risk has increased
significantly since initial recognition if the credit risk is considered low.)
Loan commitments and financial guarantees
For loan commitments and financial guarantees, Aegon defines default in the same way as for the respective loan or financial
instrument to which a commitment relates or a guarantee is issued for (considering the factors described above).
c) Definition of default and credit-impaired assets
Aegon assesses a financial instrument to be in default or credit-impaired using the following criteria:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Asset class
Quantitative criteria
Qualitative criteria
Commercial mortgages
90 days past due backstop
Foreclosure
\u00a0\u00a0
Sale at material credit-related economic loss
Debt securities and private loans
5 days past due backstop
Rating falling to 'D' (external or internal)
\u00a0\u00a0
Breach of significant covenants without reasonably
\u00a0\u00a0
supportable waiver obtained
\u00a0\u00a0
Distressed restructuring taking place
\u00a0\u00a0
Bankruptcy or an equivalent of an injunction for the obligor
\u00a0\u00a0
was filed
\u00a0\u00a0
Obligor was classified as default internally
Deposits with financial institution
5 days past due backstop
Rating falling to 'D' (external or internal)
\u00a0\u00a0
Breach of significant covenants without reasonably
\u00a0\u00a0
supportable waiver obtained
\u00a0\u00a0
Distressed restructuring taking place
\u00a0\u00a0
Bankruptcy or an equivalent of an injunction for the obligor
\u00a0\u00a0
was filed
\u00a0\u00a0
Obligor was classified as default internally
Structured securities
90 days past due backstop
Rating falling to 'D' (external or internal)
\u00a0\u00a0
Loss coverage ratio (Ratio of credit-related losses to the par
\u00a0\u00a0
value of a debt security) is below 1
Receivables
90 days past due backstop
\u00a0
\u00a0
Defined as for the respective loans to
Defined as for the respective loans to which the commitment
Loan commitments
which the commitment relates
relates
\u00a0
Defined as for the respective
\u00a0
\u00a0
exposures to which the financial
Defined as for the respective exposures to which the financial
Financial guarantee contracts
guarantee relates
guarantee relates
\n
Distressed restructuring means material forgiveness, or postponements of principal, interest, or where relevant, fees which
is likely to result in a diminished financial obligation.
In addition to the criteria included in the table above, Aegon identifies other indicators of unlikeliness to pay, which include but
are not limited to the following:
\u2022
a borrower\u2019s sources of recurring income are no longer available to meet the payments of instalments;
\u2022
there are justified concerns about a borrower\u2019s future ability to generate stable and sufficient cash flows;
\u2022
the borrower\u2019s overall leverage level has significantly increased beyond applicable limits or there are justified expectations of
such changes to leverage;
\u2022
for the exposures to an individual: default of a company fully owned by a single individual where this individual provided the
institution with a personal guarantee for all obligations of a company;
\u2022 material fraud; or
\u2022 death of a client.
All the criteria above have been applied to the financial instruments held by Aegon and are consistent with the definition
of default used for internal credit risk management purposes. The definition of default has been applied consistently to model
the Probability of Default, Exposure at Default throughout the Aegon\u2019s expected loss calculations.
An instrument is considered to no longer be in default (i.e. to have \"cured\") when it no longer meets any of the default criteria
for a consecutive period of six months and an assessment has shown the obligor is no longer unlikely to pay. This period
of six months considers the likelihood of a financial instrument returning to default status after cure using different possible
cure definitions.
d) Measuring ECL \u2013 inputs, assumptions and estimation techniques
The ECL is measured on either a \"12-month basis\" (Stage 1) or \"lifetime basis\" (Stages 2 and 3), depending on whether
a significant increase in credit risk has occurred since initial recognition or whether an asset is considered to be credit-impaired.
The expected credit losses are the discounted product of the Probability of Default, Exposure at Default, and Loss Given Default,
defined as follows:
\u2022
The PD represents the likelihood of a borrower defaulting on its financial obligation (as per \u201cDefinition of default and credit-
impaired\u201d above), either over the next 12 months (12M PD), or over the remaining lifetime (Lifetime PD) of the obligation.
\u2022
EAD is based on the amounts the Group expects to be owed at the time of default.
\u2022
Loss Given Default represents Aegon\u2019s expectation of the extent of loss on a defaulted exposure. LGD varies by type of
counterparty, type and seniority of claim and availability of collateral or other credit support. LGD is expressed as a
percentage loss per unit of exposure at the time of default.
The discount rate used in the ECL calculation is the original effective interest rate or an approximation thereof.
The lifetime PD is calculated for a financial instrument that results in default by summing the probabilities of all future
developments which end-up in the ECL. All possible future developments are enumerated and for each future development
a probability is calculated. The possibility of full prepayment is included among all possible future developments. For each
possible future development the probability is estimated using statistical modeling techniques.
Forward-looking economic information is included in determining the 12-month and lifetime ECL, and lifetime PD by using a set
of variables describing the state of the macro economy as input in the calculation of the probability of default and prepayment.
As described above, and subject to using a maximum of a 12-month PD for financial assets for which credit risk has not
significantly increased, the Group measures ECL considering the risk of default over the maximum contractual period (including
any borrower\u2019s extension options) over which Aegon is exposed to credit risk, even if the Group considers a longer period.
There have been no significant changes in estimation techniques or significant assumptions made during the reporting period.
e) Forward-looking information incorporated in the ECL models
The assessment of significant increase in credit risk (SICR) and the calculation of ECL both incorporate forward-looking
information. Aegon has performed historical analysis and identified the key economic variables impacting credit risk and
expected credit losses for each portfolio.
These economic variables and their associated impact on the ECL and Lifetime PD vary by financial instrument. Expert
judgment has also been applied in this process. Forecasts of these economic variables (the \u201cbase economic scenario\u201d) give
the best estimate view of the economy over the next five years. After five years, to project the economic variables out for the
full remaining lifetime of each instrument, a mean reversion approach has been used, which means that economic variables
tend to either a long run average rate (e.g. for unemployment) or a long run average growth rate (e.g. GDP) over a period of three
years. Statistical regression analysis has been performed to understand the impact changes in these macro-economic
variables have had historically on default and prepayment rates.
Using the base scenario as a starting point, three macro-economic scenarios are generated by applying shocks to the macro-
economic variables in a positive and negative direction, taking into account their correlation as historically observed, resulting
in a positive, neutral and negative scenario. The shocks applied correspond to the historical average deviance from the long
term mean observed in the best/worst 10% of the historically observed quarters. The ECL is calculated for each of the three
scenarios, multiplied by the scenario weighting, and summed. The use of multiple economic scenarios ensures that the ECL
represents the best estimate of expected credit loss and is not merely the credit loss in the most likely scenario.
As with any economic forecasts, the projections and likelihoods of occurrence are subject to a high degree of inherent
uncertainty, and therefore, the actual outcomes may be significantly different to those projected. The Group considers these
forecasts to represent its best estimate of the possible outcomes.
Economic variable assumptions
The most significant period-end assumptions used for the ECL estimate are set out below. The scenarios \u201cbase\u201d, \u201cupside\u201d, and
\u201cdownside\u201d were used for all portfolios.
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
Economic variable
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
assumptions,
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
December 31,
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
2023
\u00a0
2024
2025
2026
2027
Units
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Interest Rates: 10-Year Treasury Constant
Interest rates
Base
4.11
4.04
4.02
4.03
Maturities, (% p.a., NSA
1)
)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Interest Rates: 10-Year Treasury Constant
Interest rates
Upside
4.21
4.13
4.02
4.03
Maturities, (% p.a., NSA
1)
)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Interest Rates: 10-Year Treasury Constant
Interest rates
Downside
2.31
3.24
3.71
3.89
Maturities, (% p.a., NSA
1)
)
Unemployment rate
Base
4.03
4.06
3.97
3.94
(%, SA)
Unemployment rate
Upside
3.08
3.41
3.34
3.35
(%, SA)
Unemployment rate
Downside
7.56
6.90
5.70
4.88
(%, SA)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Existing Single-Family Home Price: Median,
House Price Index
Base
400.12
393.70
394.21
403.50
(Ths. USD, SA)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Existing Single-Family Home Price: Median,
House Price Index
Upside
419.87
423.62
428.16
439.72
(Ths. USD, SA)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Existing Single-Family Home Price: Median,
House Price Index
Downside
339.91
347.29
352.66
363.59
(Ths. USD, SA)
Domestic GDP
Base
22,900.95
23,303.78
23,825.37
24,397.71
Bil. Ch. 2012 USD, SAAR
2)
Domestic GDP
Upside
23,354.42
23,883.09
24,451.63
25,020.82
Bil. Ch. 2012 USD, SAAR
2)
Domestic GDP
Downside
22,039.64
22,368.94
23,099.22
23,768.80
Bil. Ch. 2012 USD, SAAR
2)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Standard & Poor's (S&P); Moody's Analytics
Equity
Base
4,672.66
4,796.24
5,043.19
5,368.63
Forecasted
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Standard & Poor's (S&P); Moody's Analytics
Equity
Upside
4,950.59
5,058.20
5,256.09
5,490.26
Forecasted
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Standard & Poor's (S&P); Moody's Analytics
Equity
Downside
2,904.90
3,226.25
3,942.26
4,603.90
Forecasted
\n
1
NSA: National Security Agency
2
SAAR: Seasonally adjusted annual rate
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
Economic variable
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
assumptions,
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
December 31,
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
2022
\u00a0
2023
2024
2025
2026
Units
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Interest Rates: 10-Year Treasury Constant Maturities, (%
Interest rates
Base
3.94
3.86
3.86
3.99
p.a., NSA
1)
)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Interest Rates: 10-Year Treasury Constant Maturities, (%
Interest rates
Upside
4.04
3.96
3.86
3.98
p.a., NSA
1)
)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Interest Rates: 10-Year Treasury Constant Maturities, (%
Interest rates
Downside
2.13
2.59
3.34
3.78
p.a., NSA
1)
)
Unemployment rate
Base
3.82
4.22
4.19
4.15
(%, SA)
Unemployment rate
Upside
3.04
3.33
3.59
3.53
(%, SA)
Unemployment rate
Downside
6.52
7.64
6.34
5.48
(%, SA)
House Price Index
Base
385.74
372.68
371.61
379.79
Existing Single-Family Home Price: Median, (Ths. USD, SA)
House Price Index
Upside
396.53
400.29
399.99
413.28
Existing Single-Family Home Price: Median, (Ths. USD, SA)
House Price Index
Downside
341.01
331.35
339.24
347.82
Existing Single-Family Home Price: Median, (Ths. USD, SA)
Domestic GDP
Base
20,410.05
20,741.30
21,301.03
21,891.77
Bil. Ch. 2012 USD, SAAR
2)
Domestic GDP
Upside
20,705.70
21,265.32
21,796.25
22,379.68
Bil. Ch. 2012 USD, SAAR
2)
Domestic GDP
Downside
20,009.19
19,956.30
20,566.77
21,238.89
Bil. Ch. 2012 USD, SAAR
2)
Equity
Base
4,343.49
4,498.93
4,655.70
4,905.28
Standard & Poor's (S&P); Moody's Analytics Forecasted
Equity
Upside
4,690.53
4,727.85
4,923.08
5,047.37
Standard & Poor's (S&P); Moody's Analytics Forecasted
Equity
Downside
3,062.99
2,836.89
3,326.54
4,000.34
Standard & Poor's (S&P); Moody's Analytics Forecasted
\n
1
NSA: National Security Agency
2
SAAR: Seasonally adjusted annual rate
The weightings assigned to each economic scenario were as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Weightings
Base
Upside
Downside
On December 31, 2023
40
30
30
On December 31, 2022
40
30
30
\n
Other forward-looking considerations not otherwise incorporated within the above scenarios, such as the impact of any
regulatory, legislative or political changes, have also been considered, but are not deemed to have a material impact,
and therefore, no adjustment has been made to the ECL for such factors. This process is reviewed and monitored for
appropriateness on a quarterly basis.
f) Write-off policy
The Group writes-off financial assets, in whole or in part, when it has exhausted all practical recovery efforts and has concluded
there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include (i) ceasing
enforcement activity; and (ii) where Aegon\u2019s recovery method is foreclosing on collateral and the value of the collateral is such
that there is no reasonable expectation of recovering in full.
The Group may write-off financial assets that are still subject to enforcement activity. The outstanding contractual amounts
of such assets written-off during 2023 is not material. The Group still seeks to recover amounts it is legally owed in full, but
which have been partially written off due to no reasonable expectation of full recovery.
g) Modification of financial assets
The Group has the option to modify the terms of loans provided to customers due to commercial renegotiations, or for
distressed loans, with a view to maximizing recovery. Such restructuring activities include extended payment term and
penalty interest arrangements. Restructuring policies and practices are based on indicators or criteria which, in the judgment
of management, indicate that payment will most likely continue. These policies are kept under continuous review.
The risk of default of such assets after modification is assessed at the reporting date and compared with the risk under the
original terms at initial recognition, when the modification is not substantial and so does not result in derecognition of the
original asset. The Group monitors the subsequent performance of modified assets. Aegon may determine that the credit risk
has significantly improved after restructuring, so that the assets are moved from Stage 3 or Stage 2 (Lifetime ECL) to Stage 1
(12-month ECL) (see note 4.2.6(a) for details of the Group ECL staging classification). This is only the case for assets which have
performed in accordance with the new terms for three consecutive months or more. The gross carrying amount of such assets
held on December 31 2023 was EUR 0 million (2022: EUR 0 million).
ECL developments in the reporting period
Aegon regularly monitors industry sectors and individual debt securities for sources of changes in the ECL allowance. These
sources may include one or more of the following:
\u2022
Transfers between Stages 1, 2 and 3 due to financial instruments experiencing significant increases (or decreases) of
credit risk or becoming credit-impaired in the period, and the consequent \u201cstep up\u201d (or \u201cstep down\u201d) between 12-month and
lifetime ECL;
\u2022
Additional allowances for new financial instruments recognized during the period, as well as releases for financial
instruments de-recognized in the period;
Impact on the measurement of ECL due to changes in PDs, EADs and LGDs in the period, arising from regular refreshing of
inputs to models;
\u2022
Impacts on the measurement of ECL due to changes made to models and assumptions;
\u2022
Discount unwind within ECL due to the passage of time, as ECL is measured on a present value basis;
\u2022
Foreign exchange retranslations for assets denominated in foreign currencies and other movements; and,
\u2022
Financial assets derecognized during the period and write-offs of allowances related to assets that were written off during
the period.
In addition, for asset-backed securities, cash flow trends and underlying levels of collateral are monitored. Furthermore,
quality ratings of investment portfolios are based on a composite of the main rating agencies (S&P, Moody\u2019s and Fitch) and
Aegon\u2019s internal rating of the counterparty. The following tables explain the changes in the loss allowance changes between
the beginning and the end of the annual period due to these factors:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0\u00a0\u00a0
2023
\u00a0\u00a0
\u00a0\u00a0
ECL staging
\u00a0\u00a0\u00a0
\u00a0
Stage 1
Stage 2
Stage 3
\u00a0\u00a0
\u00a0\u00a0
Lifetime ECL
\u00a0\u00a0\u00a0
\u00a0\u00a0
not credit-
Lifetime ECL
Purchased
\u00a0
Debt securities
12-month ECL
impaired
credit-impaired
credit impaired
Total
Loss allowance on January 1
(156)
(32)
(86)
(1)
(276)
Transfers:
\u00a0\u00a0\u00a0\u00a0\u00a0
- Transfer from Stage 1 to Stage 2
2
(2)
-
-
-
- Transfer from Stage 1 to Stage 3
2
-
(2)
-
-
- Transfer from Stage 2 to Stage 1
(3)
3
-
-
-
- Transfer from Stage 2 to Stage 3
-
3
(3)
-
-
- Transfer from Stage 3 to Stage 2
-
(4)
4
-
-
- Transfer from Stage 3 to Stage 1
(39)
-
39
-
-
Impact on year-end ECL of exposures transferred
\u00a0\u00a0\u00a0\u00a0\u00a0
between stages during the year
36
(2)
(39)
-
(5)
Financial assets derecognized during the period
26
3
44
-
73
New financial assets originated or purchased
(16)
(1)
(9)
-
(26)
Change in models
(5)
6
(14)
(1)
(13)
Net exchange differences
5
1
2
-
9
Loss allowance on December 31
(147)
(25)
(64)
(2)
(238)
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2022
\u00a0 \u00a0
ECL staging
\u00a0 \u00a0 \u00a0
\u00a0
Stage 1
Stage 2
Stage 3
\u00a0 \u00a0
\u00a0 \u00a0
Lifetime ECL
\u00a0 \u00a0 \u00a0
\u00a0 \u00a0
not credit-
Lifetime ECL
Purchased
\u00a0
Debt securities
12-month ECL
impaired
credit-impaired
credit impaired
Total
Loss allowance on January 1
(161)
(13)
(38)
(2)
(214)
Transfers:
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
- Transfer from Stage 1 to Stage 2
7
(7)
-
-
-
- Transfer from Stage 1 to Stage 3
3
-
(3)
-
-
- Transfer from Stage 2 to Stage 1
(10)
10
-
-
-
- Transfer from Stage 2 to Stage 3
-
1
(1)
-
-
- Transfer from Stage 3 to Stage 2
-
(8)
8
-
-
- Transfer from Stage 3 to Stage 1
(21)
-
21
-
-
Impact on year-end ECL of exposures transferred
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
between stages during the year
26
(16)
(82)
-
(72)
Financial assets derecognized during the period
33
6
20
-
58
New financial assets originated or purchased
(29)
(2)
(24)
-
(56)
Change in models
5
(2)
16
1
20
Net exchange differences
(11)
(1)
(2)
-
(13)
Transfers to disposal groups
1
-
-
-
1
Loss allowance on December 31
(156)
(32)
(86)
(1)
(276)
\n
The ECL allowance for debt securities measured at FVOCI of EUR 237 million (December 2022: EUR 276 million) does not
reduce the carrying amount of these investments (which are measured at fair value) but gives rise to an equal and opposite
gain in OCI.
Expected credit losses on mortgage loans increased by EUR (14) million to EUR (26) million as per December 2023 (2022: (12)
million). The increase in expected credit losses was mainly due to Change in models (14) million (2022: EUR 10 million). The
majority of the expected credit losses recognized are in Stage 1 EUR (24) million (2022: EUR (12) million).
In 2022 all Private loans and Other loans and relared expected credit losses were transferred to disposal groups. Upon
completion of the a.s.r. transaction all Private loans and Other loans and related expected credit losses were derecognized.
Based on the tables above, the following is a reconciliation of the loss allowance movements with an impact on the income
statement with the net impairment charge presented in the income statement. Other represents impairment charges on asset
types which are not individually material.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2023
2022
Mortgage loans measured at amortized cost
(15)
10
Debt securities measured at FVOCI
(44)
(108)
Other
(60)
(41)
Net impairment charge in P&L
(119)
(138)
\n
The following table further explains changes in the gross carrying amount / market value of the financial assets and their
significance to the changes in the loss allowance for the same portfolio as discussed above:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2023
\u00a0 \u00a0
ECL staging
\u00a0 \u00a0 \u00a0
\u00a0
Stage 1
Stage 2
Stage 3
\u00a0 \u00a0
\u00a0 \u00a0
Lifetime ECL
\u00a0 \u00a0 \u00a0
\u00a0 \u00a0
not credit-
Lifetime ECL
Purchased
\u00a0
Mortgage loans
12-month ECL
impaired
credit-impaired
credit impaired
Total
Gross carrying amount on January 1
10,416
2
-
-
10,418
Transfers:
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
- Transfer from Stage 1 to Stage 2
(39)
39
-
-
-
Financial assets derecognized during the period other
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
than write-offs
(566)
(5)
-
-
(571)
New financial assets originated or purchased
691
-
-
-
691
Net exchange differences
(354)
(1)
-
-
(355)
Gross carrying amount on December 31
10,147
35
-
-
10,182
(-) Expected credit losses on December 31
(24)
(1)
-
-
(26)
Net carrying amount on December 31
10,123
33
-
-
10,156
\n \n
2022
ECL staging
Stage 1
Stage 2
Stage 3
Lifetime ECL
not credit-
Lifetime ECL
Purchased
Mortgage loans
12-month ECL
impaired
credit-impaired
credit impaired
Total
Gross carrying amount on January 1
24,032
391
14
-
24,437
Transfers:
- Transfer from Stage 1 to Stage 2
(508)
508
-
-
-
- Transfer from Stage 1 to Stage 3
(1)
-
1
-
-
- Transfer from Stage 2 to Stage 1
29
(29)
-
-
-
Financial assets derecognized during the period other
than write-offs
(2,456)
(62)
(3)
-
(2,521)
New financial assets originated or purchased
3,738
109
-
-
3,848
Amortizations through income statement
(2)
-
-
-
(2)
Realized gains and losses through income statement
36
-
-
-
36
Net exchange differences
615
2
-
-
617
Other movements
(1,474)
-
-
-
(1,474)
Transfer to/from other headings
(2)
-
-
-
(2)
Transfers to disposal groups
(13,590)
(918)
(13)
-
(14,521)
Gross carrying amount on December 31
10,416
2
-
-
10,418
(-) Expected credit losses on December 31
(12)
-
-
-
(12)
Net carrying amount on December 31
10,405
2
-
-
10,407
\n
Other movements includes the elimination of movements connected to Aegon the Netherlands after the completion
\n
of the sale.
\n\n \n
2023
ECL staging
Stage 1
Stage 2
Stage 3
Lifetime ECL
not credit-
Lifetime ECL
Purchased
Debt securities
12-month ECL
impaired
credit-impaired
credit impaired
Total
Gross carrying amount on January 1
50,666
413
403
125
51,607
Transfers:
- Transfer from Stage 1 to Stage 2
(80)
80
-
-
-
- Transfer from Stage 1 to Stage 3
(45)
-
45
-
-
- Transfer from Stage 2 to Stage 3
-
(23)
23
-
-
- Transfer from Stage 3 to Stage 2
-
6
(6)
-
-
- Transfer from Stage 2 to Stage 1
76
(76)
-
-
-
- Transfer from Stage 3 to Stage 1
59
-
(59)
-
-
Financial assets derecognized during the period other
than write-offs
(7,836)
(83)
(111)
(27)
(8,057)
New financial assets originated or purchased
3,672
37
22
-
3,731
Unrealized gains/losses through equity
1,488
16
1
(10)
1,495
Amortizations through income statement
113
-
19
17
148
Net exchange differences
(1,637)
(13)
(12)
(4)
(1,666)
Other movements
(9)
-
-
-
(9)
Transfer to/from other headings
(6)
-
-
-
(6)
Gross carrying amount on December 31
46,461
357
325
100
47,242
Expected credit losses on December 31
(147)
(25)
(64)
(2)
(237)
\n \n
2022
ECL staging
Stage 1
Stage 2
Stage 3
Lifetime ECL
not credit-
Lifetime ECL
Purchased
Debt securities
12-month ECL
impaired
credit-impaired
credit impaired
Total
Gross carrying amount on January 1
70,132
259
433
150
70,974
Transfers:
- Transfer from Stage 1 to Stage 2
(228)
228
-
-
-
- Transfer from Stage 1 to Stage 3
(77)
-
77
-
-
- Transfer from Stage 2 to Stage 3
-
(15)
15
-
-
- Transfer from Stage 3 to Stage 2
-
2
(2)
-
-
- Transfer from Stage 2 to Stage 1
33
(33)
-
-
-
- Transfer from Stage 3 to Stage 1
6
-
(6)
-
-
Financial assets derecognized during the period other
than write-offs
(11,855)
(47)
(112)
(30)
(12,043)
New financial assets originated or purchased
6,411
45
45
-
6,501
Unrealized gains/losses through equity
(16,599)
(94)
(123)
(26)
(16,842)
Amortizations through income statement
267
2
38
20
327
Movements related to fair value hedges
(12)
-
-
-
(12)
Net exchange differences
4,525
15
29
10
4,580
Other movements
(52)
50
10
-
7
Transfers to disposal groups
(1,884)
-
-
-
(1,884)
Gross carrying amount on December 31
50,666
413
403
125
51,607
Expected credit losses on December 31
(156)
(32)
(86)
(1)
(276)
\n
The total amount of undiscounted ECL at initial recognition for purchased or originated credit-impaired financial assets
\n
recognized during the period was EUR EUR 2 million (2022: EUR 1 million).
\n
Sensitivity on ECL to future-economic conditions
\n
ECL are sensitive to judgments and assumptions made regarding the formulation of forward looking scenarios and how
\n
such scenarios are incorporated into the calculations. Management performs a sensitivity analysis on the ECL recognized
\n
on material classes of its assets. As ECL is not material at the end of 2023 and 2022, sensitivity on ECL is being assessed to be
\n
not material for 2023 and 2022 either.
\n
4.3 Market risk
\n
Market risk is the risk that changes in market prices (e.g. foreign exchange rates, interest rates) will affect the fulfillment
\n
cash flows of insurance and reinsurance contracts as well as the fair value or future cash flows of financial instruments. The
\n
objective of market risk management is to control exposures within acceptable parameters while optimizing the return on risk.
\n
Aegon\u2019s management of market risk comprises equity price risk, interest rate risk and currency risk.
\n
4.3.1 Equity market risk and other investments risk
\n
Fluctuations in the equity, real estate and capital markets have affected Aegon's profitability, capital position and sales of equity
\n
related products in the past and may continue to do so. Exposure to equity, real estate and capital markets exists in both
\n
assets and liabilities. Asset exposure exists through direct equity investment, where Aegon bears all or most of the volatility
\n
in returns and investment performance risk. Equity market exposure is also present in insurance and investment contracts for
\n
policyholders where funds are invested in equities, backing variable annuities, unit-linked products and mutual funds. Although
\n
most of the risk remains with the policyholder, lower investment returns can reduce the asset management fee earned
\n
by Aegon on the asset balance in these products. In addition, some of this business has minimum return or accumulation
\n
guarantees.
\n
In 2021, Transamerica expanded its dynamic hedge program to variable annuities with guaranteed minimum death benefit
\n
riders (GMDB) and remaining policies with guaranteed minimum income (GMIB) riders. This builds on the effective dynamic
\n
hedge program of policies with guaranteed minimum withdrawal benefits (GMWB). The dynamic hedge program covers the
\n
equity risks (and interest rate risk) embedded in the guarantees of its entire variable annuity portfolio. Dynamic hedging
\n
stabilizes cash flows and reduces sensitivities to changes in equity markets (and interest rates) on an economic basis.
The equity, real estate and other non-fixed-income portfolio of Aegon is as follows:
\n \n
Asset
Holding
United
Interna-
Manage-
and other
Total
Equity, real estate and non-fixed income exposure
Americas
Kingdom
tional
ment
activities
2023
1)
Equity funds
133
-
-
9
-
141
Common shares
1)
106
14
5
-
-
126
Preferred shares
29
-
-
-
-
29
Investments in real estate
38
-
17
-
-
55
Hedge funds
6
-
-
-
-
6
Other alternative investments
2,404
-
-
-
-
2,404
Other financial assets
1,856
772
4
1
-
2,633
On December 31
4,573
786
27
10
-
5,395
1
Common shares in Holding and other activities includes the elimination of treasury shares in the general account for an amount of EUR nil million.
\n \n
Asset
Holding
United
Interna-
Manage-
and other
Equity, real estate and non-fixed income exposure
Americas
Kingdom
tional
ment
activities
Total 2022
1)
Equity funds
141
-
3
7
-
151
Common shares
1)
148
25
5
-
1
179
Preferred shares
26
-
-
-
-
26
Investments in real estate
42
-
17
-
-
59
Hedge funds
10
-
-
-
-
10
Other alternative investments
2,169
-
-
-
-
2,169
Other financial assets
1,904
531
5
1
-
2,441
On December 31
4,440
556
30
9
1
5,035
1
Common shares in Holding and other activities includes the elimination of treasury shares in the general account for an amount of EUR nil million.
\n \n
United
Asset
Market risk concentrations \u2013 shares
Americas
Kingdom
International
Management
Total 2023
Communication
2
-
-
-
2
Consumer
4
-
-
-
4
Financials
136
-
5
-
142
Funds
30
14
-
-
45
Industries
11
-
-
-
11
Other
84
-
4
9
97
On December 31
267
14
10
9
300
\n \n
United
Asset
Market risk concentrations \u2013 shares
Americas
Kingdom
International
Management
Total 2022
Communication
2
-
-
-
2
Consumer
13
-
-
-
13
Financials
154
-
5
-
159
Funds
19
25
-
-
45
Industries
4
-
-
-
4
Other
123
-
4
7
135
On December 31
315
25
10
7
358
The table that follows sets forth the closing levels of certain major indices at the end of the last five years.
\n \n
2023
2022
2021
2020
2019
S&P 500
4,770
3,840
4,766
3,756
3,231
Nasdaq
15,011
10,466
15,645
12,888
8,973
FTSE 100
7,733
7,452
7,385
6,461
7,542
AEX
787
689
798
625
605
An analysis of Aegon\u2019s sensitivity to a 10% and 25% increase or decrease in equity prices at the reporting date, assuming that
all other variables remain constant, is presented below.
\n \n
2023
2022
Shareholders\u2019
Shareholders\u2019
Estimated approximate effects on:
CSM
Net result
equity
CSM
Net result
equity
Equity 10% increase
Financial instruments
(5)
(13)
(10)
29
Insurance and reinsurance assets
-
(271)
(265)
-
(325)
(320)
Insurance and reinsurance liabilities
310
422
397
291
415
397
Equity 10% decrease
Financial instruments
4
11
16
(28)
Insurance and reinsurance assets
-
229
225
-
344
340
Insurance and reinsurance liabilities
(316)
(465)
(431)
(274)
(522)
(509)
Equity 25% increase
Financial instruments
(31)
(50)
(43)
59
Insurance and reinsurance assets
-
(737)
(721)
-
(699)
(690)
Insurance and reinsurance liabilities
775
1,035
989
723
917
872
Equity 25% decrease
Financial instruments
35
53
55
(53)
Insurance and reinsurance assets
-
965
945
-
1,010
997
Insurance and reinsurance liabilities
(804)
(1,499)
(1,434)
(618)
(1,539)
(1,505)
Equity sensitivities on CSM mainly relate to VFA products in US and UK and reflect the impact on the present value of future fee
income triggered by changes in underlying asset values due to market changes.
Equity sensitivities on Net result and Shareholders' equity are not symmetric for increases and decreases of equity markets.
This is mainly driven by the hedged VFA products within Variable Annuities in the US. In our sensitivity modelling we assume
a level of hedge ineffectiveness thus generating a negative net impact here for both increased and decreased equity markets.
4.3.2 Interest rate risk
Aegon bears interest rate risk with many of its products. In cases where cash flows are highly predictable, investing in assets
that closely match the cash flow profile of the liabilities can offset this risk. For some Aegon country units, local capital
markets are not well developed, which prevents the complete matching of assets and liabilities for those businesses. For some
products, cash flows are less predictable as a result of policyholder actions that can be affected by the level of interest rates.
In periods of rapidly increasing interest rates, policy loans, surrenders and withdrawals may increase. Premiums in flexible
premium policies may decrease as policyholders seek investments with higher perceived returns. This activity may result
in cash payments by Aegon requiring the sale of invested assets at a time when the prices of those assets are adversely
affected by the increase in market interest rates; this may result in realized investment losses. These cash payments
to policyholders result in a decrease in total invested assets and a decrease in net result.
During periods of sustained low interest rates, Aegon may not be able to preserve margins as a result of minimum interest rate
guarantees and minimum guaranteed crediting rates provided on policies. Also, investment earnings may be lower because
the interest earnings on new fixed-income investments are likely to have declined with the market interest rates. Mortgage
loans and redeemable bonds in the investment portfolio are more likely to be repaid as borrowers seek to borrow at lower
interest rates and Aegon may be required to reinvest the proceeds in securities bearing lower interest rates. Accordingly, net
result declines as a result of a decrease in the spread between returns on the investment portfolio and the interest rates either
credited to policyholders or assumed in reserves.
Aegon manages interest rate risk closely, taking into account all the complexity regarding policyholder behavior and
management action. Aegon employs sophisticated interest rate measurement techniques and actively uses derivatives
and other risk mitigation tools to closely manage its interest rate risk exposure. Aegon operates an Investment &
Counterparty Risk policy that limits the amount of interest rate risk to which the Group is exposed. All derivative use
is governed by Aegon's Derivative Use Policy. A detailed description on the use of derivatives within Aegon is included in note
20 Derivatives.
In 2020 Transamerica commenced a multi-year plan to gradually reduce its economic interest rate risk, primarily by lengthening
the duration of the assets to provide a closer match to the liability duration and extending the existing forward starting swap
program. The program has been completed in 2022.
Furthermore, in 2021, Transamerica expanded its dynamic hedge program to variable annuities with guaranteed minimum
death benefit riders (GMDB) and remaining policies with guaranteed minimum income (GMIB) riders. This builds on the effective
dynamic hedge program of policies with guaranteed minimum withdrawal benefits (GMWB). The dynamic hedge program
covers the interest rate (and equity risks) embedded in the guarantees of its entire variable annuity portfolio. Dynamic hedging
stabilizes cash flows and reduces sensitivities to changes in interest rates (and equity markets) on an economic basis.
The following table shows interest rates at the end of each of the last five years.
\n \n
2023
2022
2021
2020
2019
3-month US LIBOR
5.59%
4.77%
0.21%
0.24%
1.91%
3-month EURIBOR
3.91%
2.13%
(0.57%)
(0.55%)
(0.38%)
10-year US Treasury
3.86%
3.83%
1.78%
0.91%
1.91%
10-year Dutch government
2.32%
2.91%
(0.03%)
(0.48%)
(0.06%)
An analysis of Aegon\u2019s sensitivity to a 100 basis points parallel increase or decrease in market interest rates at the reporting
date, assuming that all other variables remain constant, is presented below:
\n \n
2023
2022
Sharehold-
Sharehold-
Estimated approximate effects on:
CSM
Net result
ers\u2019 equity
CSM
Net result
ers\u2019 equity
100 bps increase - Yield curve
Financial instruments
(114)
(652)
(153)
(605)
Insurance and reinsurance assets
(4)
(1,029)
(3,876)
(2)
(1,217)
(4,190)
Insurance and reinsurance liabilities
126
1,008
4,158
185
1,149
4,123
100 bps decrease - Yield curve
Financial instruments
35
655
55
570
Insurance and reinsurance assets
6
1,258
4,625
4
1,482
5,149
Insurance and reinsurance liabilities
(133)
(1,306)
(5,303)
(208)
(1,480)
(5,527)
The exposures of our different products vary and in particular we have a number of asymmetric exposures. This is mainly
explained by some of the US products:
\u2022
For a number of products (e.g. our Stable Value Solutions and parts of the Universal Life products) we have stable surrender
values alongside stable crediting rates which mean that as interest rates rises it becomes more attractive in the short term
for customers to lapse their policies and due to the market movements this leads to increased losses. There are also
asymmetries from accounting rules of IFRS, where decreases in interest rates which turn SVS liabilities negative will be
floored at zero based on IFRS 9 rules applied to these contracts.
\u2022
For other longer duration products such as Long Term Care and Unit Linked products with Non Lapse or secondary
guarantees, we have a natural convexity, meaning we are more exposed to interest rates falling, which results in adverse
sensitivities on these products than to interest rates rising which are positive. This is because we still expect to receive
premiums over the next 10 to 20 years but will continue to pay claims for many years thereafter.
The interaction of these two factors with the more symmetrical exposures on other products results in our overall sensitivities
showing an adverse impact to both rising and falling interest rates.
Risks and risks management arising from financial instruments subject to interest rate benchmark reform
The future of IBORs (Interbank Offered Rates) such as EURIBOR, EONIA and LIBOR has been a major topic on the global agenda
since the G20 asked the Financial Stability Board (FSB) to undertake a fundamental review of leading interest rate benchmarks
in 2013. The FSB proposed new standards to reform interest rate benchmarks and the use of transaction-based input data
instead of non-transactional/panel input data. In the EU this is adopted in the new Benchmark Regulation (BMR) which stipulates
that from January 2020 only BMR compliant benchmarks may be used within the EU.
In order to prepare for the IBOR transition all Aegon units have written transition plans containing among others project
solutions and actions, timelines and ownership to ensure timely preparation and implementation. Actions have been completed
in accordance with these transition plans.
There are no plans for the discontinuation for EURIBOR and appropriate fallback language has been implemented for
derivatives via the International Swaps and Derivatives Association (\"ISDA\") fallback protocol and rulebook changes by the
clearing houses.
In July 2020 the discount rates of EUR cleared derivatives switched from EONIA to \u20acSTR which impacted the valuation
of derivatives for which compensation was exchanged. All EUR Credit Support Annex (\"CSA\") which have positions outstanding
have been amended from EONIA to \u20acSTR discounting. In the United States, the cleared market has switched discount rates
from Fed Funds to SOFR in October 2020. The switch in discount rates is expected to lead to increased liquidity in the new risk
free rates.
Aegon recognizes that the reform of IBORs and any transition to replacement rates entail risks for all our businesses across our
assets and liabilities. These risks include, but are not limited to:
\u2022
Legal risks, as Aegon is required to make changes to documentation for new and existing transactions, such as funding
instruments issued with an IBOR reference and derivatives held with an IBOR reference;
\u2022
Financial risks, arising from any changes in the valuation of financial instruments linked to benchmark rates, such as
derivatives and floating rate notes, issued by, or invested in by Aegon;
\u2022
Pricing risks, as changes to benchmark indices could impact pricing mechanisms on some funding instruments or
investments;
\u2022
Operational risks, due to the potential requirement to adapt informational technology systems, trade reporting infrastructure
and operational processes; and
\u2022
Conduct risks, relating to communication with potential impact on Aegon\u2019s customers, and engagement during the transition
period.
Various supranational institutions, central banks, regulators, benchmark administrators and industry working groups play
a role in the benchmark reform and the preparation for the replacement of IBORs. Although a lot of work has been done, there
is still significant uncertainty around liquidity development, and the timetable and mechanisms for implementation, including
application of spread adjustments to the alternative reference rates. Accordingly, it is not currently possible to determine
whether, or to what extent, any such changes would affect Aegon. However, the implementation of alternative reference rates
may have a material adverse effect on Aegon\u2019s business, financial condition, customers, and operations.
The table below summarize the exposures of non-derivative financial assets and non-derivative liabilities that yet have
to transition to alternative benchmark rates.
\n \n
2023
2022
Financial
Financial
Non derivative financial instruments to transition to alternative
Financial assets
liabilities
Financial assets
liabilities
benchmark
non-derivatives
non-derivatives
non-derivatives
non-derivatives
By benchmark rate
GBP LIBOR
27
-
27
-
USD LIBOR
66
-
814
1,218
Total
93
-
841
1,218
During 2023 all derivative financial instruments with USD Libor as a benchmark rate, with a total nominal value of EUR 39,752,
transitioned to an alternative benchmark rate. There are no remaining derivative financial instruments to be transitioned to an
alternative benchmark rate.
4.3.3 Currency exchange rate risk
As an international group, Aegon is subject to foreign currency translation risk. Foreign currency exposure exists mainly
when policies are denominated in currencies other than the issuer's functional currency. Currency risk in the investment
portfolios backing insurance and investment liabilities is managed using asset liability matching principles. Assets allocated
to equity are kept in local currencies to the extent shareholders' equity is required to satisfy regulatory and self-imposed
capital requirements. Therefore, currency exchange rate fluctuations will affect the level of shareholders' equity as a result
of translation of subsidiaries into euro, the Group's presentation currency. Aegon holds the remainder of its capital base
(perpetual capital securities, subordinated and senior debt) in various currencies in amounts that are targeted to correspond
to the book value of the country units. This balancing mitigates currency translation impacts on shareholders' equity and
leverage ratios. Aegon does not hedge the income streams from the main non-euro units and, as a result, earnings may
fluctuate due to currency translation. As Aegon has significant business segments in the Americas and in the United Kingdom,
the principal sources of exposure from currency fluctuations are from the differences between the US dollar and the euro and
between the UK pound and the euro. Aegon may experience significant changes in net result and shareholders' equity because
of these fluctuations.
Aegon operates an Investment & Counterparty Risk Policy which applies currency risk exposure limits both at Group and
regional levels, and under which direct currency speculation or program trading by country units is not allowed unless explicit
approval has been granted by the Group Risk and Capital Committee and the CEO. Assets should be held in the functional
currency of the business written or hedged back to that currency. Where this is not possible or practical, remaining currency
exposure should be sufficiently documented and limits are placed on the total exposure at both group level and for individual
country units.
Information on Aegon's historical net result and shareholders' equity in functional currency are shown in the table below:
\n \n
2023
2022
Net result
Americas (in USD)
(266)
562
United Kingdom (in GBP)
26
57
Equity in functional currency
Americas (in USD)
3,690
3,456
United Kingdom (in GBP)
1,256
1,373
The summary quantitative information about Aegon\u2019s exposure to currency risk arising from insurance and reinsurance
contracts and financial instruments was as follows:
\n \n
2023
2022
EUR
GBP
USD
Other
Total
EUR
GBP
USD
Other
Total
Financial instruments
- assets
722
1,713
70,557
928
73,921
733
1,501
73,745
1,493
77,471
Financial instruments
- liabilities
2,823
40,242
38,387
-
81,452
3,304
32,595
39,781
-
75,681
Insurance and
reinsurance
contract - assets
7
2
16,744
39
16,793
5
369
16,557
45
16,976
Insurance and
reinsurance
contract - liabilities
715
61,922
130,886
6,124
199,648
690
58,676
130,991
7,088
197,445
The exchange rates for US dollar and UK pound per euro for each of the last five year ends are set forth in the table below:
Closing rates
2023
2022
2021
2020
2019
USD
1.10
1.07
1.14
1.22
1.12
GBP
0.87
0.89
0.84
0.90
0.85
Aegon Group companies' foreign currency exposure from monetary assets and liabilities denominated in foreign currencies
(that is, other than the entity's functional currency), is not material.
Sensitivity analysis of net result and shareholders' equity to translation risk
The sensitivity analysis in the following table shows an estimate of the translation effect of movements in the exchange rates
of functional currencies of foreign subsidiaries against the euro presentation currency of the Group's financial statements,
on net income and shareholders' equity.
Estimated approximate
Estimated approximate
effects on shareholders'
Movement of markets
1)
effects on net income
equity
2023
Increase by 15% of USD currencies relative to the euro
(27)
769
Increase by 15% of GBP currencies relative to the euro
(2)
264
Increase by 15% of non-euro currencies relative to the euro
(49)
1,145
Decrease by 15% of USD currencies relative to the euro
20
(569)
Decrease by 15% of GBP currencies relative to the euro
2
(195)
Decrease by 15% of non-euro currencies relative to the euro
36
(847)
2022
Increase by 15% of USD currencies relative to the euro
116
761
Increase by 15% of GBP currencies relative to the euro
4
281
Increase by 15% of non-euro currencies relative to the euro
108
1,190
Decrease by 15% of USD currencies relative to the euro
(86)
(562)
Decrease by 15% of GBP currencies relative to the euro
(3)
(208)
Decrease by 15% of non-euro currencies relative to the euro
(80)
(880)
1
The effect of currency exchange movements is reflected as a one-time shift up or down in the value of the non-euro currencies relative to the euro on December 31.
4.4 Liquidity risk
Liquidity risk is inherent in much of Aegon's business. Each asset purchased and liability incurred has its own liquidity
characteristics. Some liabilities are surrenderable while some assets, such as privately placed loans, mortgage loans, real
estate and limited partnership interests, have low liquidity. If Aegon requires significant amounts of cash on short notice
in excess of normal cash requirements and existing credit facilities, it may have difficulty selling these investments at attractive
prices or in a timely manner. Liquidity risk is also affected by the use of collateralized financial derivatives to mitigate other risks.
Aegon operates a Liquidity Risk Policy under which country units are obliged to maintain sufficient levels of highly liquid
assets to meet cash demands by policyholders and account holders over the next two years. Potential cash demands are
assessed under a stress scenario including spikes in disintermediation risk due to rising interest rates and concerns over
Aegon's financial strength due to multiple downgrades of the Group's credit rating. At the same time, the liquidity of assets
other than cash and government issues is assumed to be severely impaired for an extended period of time. All legal entities and
Aegon Group must maintain enough liquidity in order to meet all cash needs under this extreme scenario.
Aegon held EUR 19,399 million of investments in cash, money market products and government bonds that are readily saleable
or redeemable on demand, which excludes the investment of the disposal group (2022: EUR 17,166 million). The Group
expects to meet its obligations, even in a stressed liquidity event, from operating cash flows and the proceeds of maturing
assets as well as these highly liquid assets. Further, the Group has access to back-up credit facilities, as disclosed in note
31 Borrowings, amounting to EUR 2,623 million which were unused at the end of the reporting period (2022: EUR 3,435 million).
The maturity analysis below shows the remaining contractual maturities of each category of financial liabilities
(including coupon interest). When the counterparty has a choice of when an amount is paid, the liability is included on the
basis of the earliest date on which it can be required to be paid. Financial liabilities that can be required to be paid on demand
without any delay are reported in the category \"On demand.\" If there is a notice period, it has been assumed that notice is given
immediately and the repayment has been presented at the earliest date after the end of the notice period. When the amount
payable is not fixed, the amount reported is determined by reference to the conditions existing at the reporting date. For
example, when the amount payable varies with changes in an index, the amount disclosed may be based on the level of the
index at the reporting date.
To manage the liquidity risk arising from financial liabilities, Aegon holds liquid assets comprising cash and cash equivalents
and investment grade investment securities for which there is an active and liquid market. These assets can be readily sold
to meet liquidity requirements. For this reason, Aegon believes that it is not necessary to disclose a maturity analysis in respect
of these assets to enable users to evaluate the nature and extent of liquidity risk.
Aegon's liquidity management is based on expected claims and benefit payments rather than on the contractual maturities.
The projected cash benefit payments in the table below (maturity analysis - insurance and reinsurance contracts) are based
on management's best estimates of the expected gross benefits and expenses, partially offset by the expected gross
premiums, fees and charges relating to the existing business in force. Estimated cash benefit payments are based on mortality,
morbidity and lapse assumptions based on Aegon's historical experience, modified for recently observed trends. Actual
payment obligations may differ if experience varies from these assumptions. The cash benefit payments are presented on an
undiscounted basis and are before deduction of tax and before reinsurance.
The following table (maturity analysis - financial instruments) details the Group's liquidity analysis for its derivative financial
instruments, based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a
net basis, and the undiscounted gross inflows and outflows on those derivatives that require gross settlement.
For maturity information on other obligations, please see note 39 Commitments and contingencies.
Maturity analysis - insurance and reinsurance contracts
The following tables provides a maturity analysis of Aegon\u2019s insurance and reinsurance contracts, which reflects the dates
on which the cash flows are expected to occur. The cash flows presented below represent the undiscounted best estimate
liability for the relevant periods.
\n \n
Undiscounted best estimate liability (i.e.
Remaining contractual undiscounted net
< 1 yr
1 < 2 yrs
2 < 3 yrs
3 < 4 yrs
4 < 5 yrs
> 5 yrs
Total
cash flows)
amount
amount
amount
amount
amount
amount
amount
2023
Insurance contracts:
- Direct participating contracts
8,737
8,287
8,186
7,823
7,187
127,351
167,571
- Without direct participation contracts
9,105
8,651
8,041
7,541
6,960
103,939
144,237
Investment contracts with DPF:
- Direct participating contracts
1,717
1,637
1,788
1,732
1,511
21,407
29,793
Reinsurance contracts held, in a liability
position
46
43
41
39
39
1,370
1,578
Total
19,605
18,618
18,056
17,136
15,698
254,067
343,179
2022
Insurance contracts:
- Direct participating contracts
7,900
8,062
7,876
7,475
7,319
136,457
175,089
- Without direct participation contracts
4,313
3,619
3,350
3,217
3,201
141,794
159,494
Investment contracts with DPF:
- Direct participating contracts
1,764
1,894
1,835
1,615
1,590
20,934
29,632
Reinsurance contracts held, in a liability
position
18
18
18
18
19
782
874
Total
13,996
13,594
13,079
12,325
12,129
299,967
365,089
\n \n
< 1 yr
1 < 2 yrs
2 < 3 yrs
3 < 4 yrs
4 < 5 yrs
> 5 yrs
Total
Expected release of risk adjustment
amount
amount
amount
amount
amount
amount
amount
2023
Insurance contracts:
- Direct participating contracts
30
35
32
29
29
413
568
- Without direct participation contracts
72
63
60
57
58
2,373
2,683
Investment contracts with DPF:
- Direct participating contracts
9
12
10
8
9
81
128
- Without direct participation contracts
-
-
-
-
-
-
-
Reinsurance contracts held, in a liability
position
(12)
(11)
(11)
(10)
(10)
(278)
(332)
Total
98
99
92
85
85
2,589
3,047
2022
Insurance contracts:
- Direct participating contracts
28
28
25
25
25
383
514
- Without direct participation contracts
91
80
74
70
69
2,539
2,922
Investment contracts with DPF:
- Direct participating contracts
9
9
7
8
7
69
109
- Without direct participation contracts
-
-
-
-
-
-
-
Reinsurance contracts held, in a liability
position
5
4
3
3
3
83
101
Total
133
120
110
106
104
3,073
3,646
No amount of the insurance contract liabilities are payable on demand (2022: 0).
Maturity analysis \u2013 financial instruments
\n \n
Maturity analysis \u2013 gross undiscounted
contractual cash flows (for non-deriva-
< 1 yr
1 < 2 yrs
2 < 3 yrs
3 < 4 yrs
4 < 5 yrs
< 5 yrs
Total
tives)
On demand
amount
amount
amount
amount
amount
amount
amount
2023
Trust pass-through securities
-
9
9
88
3
3
71
184
Subordinated loans
-
111
83
83
83
63
3,158
3,579
Borrowings
-
123
1,057
726
48
48
1,140
3,143
Investment contracts
34,464
40,059
11
8
110
23
74
74,749
Lease liabilities
-
34
29
24
21
18
114
240
Other financial liabilities
4,582
930
52
7
-
4
-
5,575
2022
Trust pass-through securities
-
10
10
10
92
3
77
200
Subordinated loans
-
113
113
85
85
85
3,309
3,792
Borrowings
-
1,312
155
2,867
61
47
594
5,036
Investment contracts
32,104
32,452
9
16
13
117
113
64,824
Lease liabilities
-
35
32
26
21
19
117
251
Other financial liabilities
4,259
623
284
54
17
-
81
5,318
\n \n
2023
Maturity analysis relating to derivatives
1)
< 1 yr
1 < 2 yrs
2 < 3 yrs
3 < 4 yrs
4 < 5 yrs
> 5 yr
Total
(Contractual cash flows),
On demand
amount
amount
amount
amount
amount
amount
amount
Gross settled
Cash inflows
-
9,757
170
171
202
145
2,560
13,004
Cash outflows
-
(9,710)
(121)
(134)
(191)
(134)
(2,458)
(12,748)
Net settled
Cash inflows
-
282
253
260
286
341
7,509
8,930
Cash outflows
-
(560)
(224)
(244)
(266)
(271)
(12,248)
(13,813)
\n \n
2022
Maturity analysis relating to derivatives
1)
< 1 yr
1 < 2 yrs
2 < 3 yrs
3 < 4 yrs
4 < 5 yrs
> 5 yr
Total
(Contractual cash flows),
On demand
amount
amount
amount
amount
amount
amount
amount
Gross settled
Cash inflows
-
15,315
156
146
155
188
2,570
18,530
Cash outflows
-
(15,250)
(104)
(103)
(123)
(180)
(2,385)
(18,146)
Net settled
Cash inflows
-
1,552
1,295
1,060
964
933
10,039
15,843
Cash outflows
-
(1,937)
(1,285)
(1,037)
(962)
(934)
(17,914)
(24,068)
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f23736": { "value": "4.2 Credit risk
Credit risk is the risk of financial loss to Aegon if a counterparty to a reinsurance contract or financial instrument fails to meet
its contractual obligations; the risk of economic loss due to the deterioration in the financial condition of counterparties, either
through fair value losses on traded securities or through defaults on traded securities, loans and mortgages.
Aegon implemented policies and procedures to govern credit limits and processes to manage credit risk, concentration risk
and counterparty risk with regards to all the Group\u2019s material businesses with credit exposures in scope, including bonds,
loans, cash and equivalents, collateralized assets, reinsurance assets, and assets measured at fair value. The Group uses risk
gradings aligned with the major credit rating agencies, and in case of specific asset portfolios like residential mortgage loans
implements internal risk gradings that reflect its assessment of the probability of default of individual counterparties.
The credit grades are calibrated such that the risk of default increases exponentially at each higher risk grade. For example,
this means that the difference in the Probability of Default (PD) between AAA and A grade is lower than the difference in the
PD between BBB and B rating grade.
4.2.1 Aegon\u2019s maximum exposure to credit risk
As premiums and deposits are received, these funds are invested to pay for future policyholder obligations. For assets
backing insurance liabilities measured under the general model and the premium allocated approach, as well as other \"free\"
assets, Aegon typically bears the risk for investment performance which is equal to the return of principal and interest. Aegon
is exposed to credit risk on its fixed-income portfolio (debt securities, mortgages and private placements), over-the-counter
derivatives and reinsurance contracts. Some issuers have defaulted on their financial obligations for various reasons, including
bankruptcy, lack of liquidity, downturns in the economy, downturns in real estate values, operational failure and fraud. During
financial downturns, Aegon can incur defaults or other reductions in the value of these securities and loans, which could have
a materially adverse effect on Aegon\u2019s business, results of operations and financial condition.
The estimates of best estimate liability for (re)insurance contracts assets represent Aegon\u2019s maximum exposure to credit risk
from these assets. Please see the cash flow information in note 29 (Insurance contracts and reinsurance contracts held).
The following table contains an analysis of Aegon\u2019s maximum credit risk exposure from financial assets. Please see note 39 and
40 for further information on capital commitments and contingencies and on collateral given, which may expose the Group
to credit risk.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Surplus
\u00a0
\u00a0
Maximum
\u00a0 \u00a0
Letters of
\u00a0
Master
\u00a0 \u00a0
collateral
\u00a0
\u00a0
exposure
\u00a0 \u00a0
credit /
Real
netting
\u00a0 \u00a0
(or over-
\u00a0
\u00a0
to credit
\u00a0 \u00a0
guaran-
estate
agree-
\u00a0
Total
collateral-
Net
2023
risk
Cash
Securities
tees
property
ments
Other
collateral
ization)
exposure
Debt securities
55,811
-
-
93
-
-
-
93
-
55,718
Money market and
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
other short-term
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investments
8,695
-
442
-
-
-
-
442
24
8,277
Loans
10,183
31
-
20
23,711
-
-
23,762
13,579
-
Unconsolidated
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investment funds
167,411
-
-
-
-
-
-
-
-
167,411
Deposits with
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
financial institutes
2,289
-
-
-
-
-
-
-
-
2,289
Other investments
5,040
-
-
-
-
-
-
-
-
5,040
Derivative assets
1,429
832
669
-
-
373
-
1,875
550
104
Reinsurance assets
16,608
-
13,416
82
-
-
-
13,498
-
3,110
On December 31
267,465
864
14,528
194
23,711
373
-
39,669
14,153
241,949
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Surplus
\u00a0
\u00a0
Maximum
\u00a0 \u00a0
Letters of
\u00a0
Master
\u00a0 \u00a0
collateral
\u00a0
\u00a0
exposure
\u00a0 \u00a0
credit /
Real
netting
\u00a0 \u00a0
(or over-
\u00a0
\u00a0
to credit
\u00a0 \u00a0
guaran-
estate
agree-
\u00a0
Total
collateral-
Net
2022
risk
Cash
Securities
tees
property
ments
Other
collateral
ization)
exposure
Debt securities
59,341
-
-
96
-
-
-
96
-
59,245
Money market and
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
other short-term
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investments
6,881
-
312
-
-
-
-
312
23
6,592
Loans
10,419
40
-
22
24,763
-
-
24,825
14,407
1
Unconsolidated
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
investment funds
154,741
-
-
-
-
-
-
-
-
154,741
Deposits with
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
financial institutes
2,405
-
-
-
-
-
-
-
-
2,405
Other investments
4,618
-
-
-
58
-
-
58
35
4,595
Derivative assets
2,771
257
426
-
-
2,174
-
2,858
173
86
Reinsurance assets
16,939
-
14,162
103
-
-
-
14,265
-
2,675
On December 31
258,116
297
14,900
221
24,822
2,174
-
42,414
14,638
230,341
\n
Debt securities
Several bonds in Aegon's Americas' portfolio are guaranteed by Monoline insurers. This is shown in the table above in the
column \"Letters of credit / guarantees\".
Money market and short-term investments
The collateral reported for the money market and short-term investments are related to tri-party repurchase agreements
(repos). Within tri-party repos Aegon invests under short-term reverse repurchase agreements and the counterparty posts
collateral to a third party custodian. The collateral posted is typically high-quality, short-term securities and is only accessible
for or available to Aegon in the event the counterparty defaults.
The following table contains an analysis of Aegon\u2019s credit risk exposure for debt instruments for which an ECL allowance
is recognized. See note 4.2.6 for a more detailed description of ECL measurement. All asset categories not presented here are
determined to have non-material credit risk or to be of short-term nature (cash and cash equivalents, other receivables). The
gross carrying amount of financial assets below also represents Aegon\u2019s maximum exposure to credit risk on these assets.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2023
\u00a0 \u00a0
2022
\u00a0
ECL staging
\u00a0 \u00a0
ECL staging
\u00a0 \u00a0
\u00a0
Stage 1
Stage 2
Stage 3
\u00a0 \u00a0
Stage 1
Stage 2
Stage 3
\u00a0 \u00a0
\u00a0 \u00a0
Lifetime
Lifetime
Pur-
\u00a0 \u00a0
Lifetime
Lifetime
\u00a0 \u00a0
Financial assets
\u00a0
ECL not
ECL
chased
\u00a0 \u00a0
ECL not
ECL
Purchased
\u00a0
measured at FVOCI
12-month
credit-
credit-
credit
\u00a0
12-month
credit-
credit-
credit
\u00a0
- with recycling
ECL
impaired
impaired
impaired
Total
ECL
impaired
impaired
impaired
Total
AAA
2,961
-
-
-
2,961
9,562
-
-
-
9,562
AA
9,217
-
2
-
9,219
4,034
-
-
-
4,034
A
18,410
-
-
-
18,411
18,224
10
2
-
18,235
BBB
17,534
11
-
1
17,547
19,696
6
-
-
19,702
BB
899
136
-
-
1,035
1,250
172
3
2
1,427
B
431
120
3
-
554
432
153
5
-
590
CCC and lower
120
91
319
99
629
76
72
394
123
664
Gross carrying
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
amount
49,571
358
325
100
50,354
53,273
413
403
125
54,214
Expected credit loss
(147)
(25)
(64)
(2)
(238)
(157)
(32)
(86)
(1)
(276)
Total
49,571
358
325
100
50,354
53,273
413
403
125
54,214
\n
Loans
The real estate collateral for mortgages includes both residential and commercial properties. The collateral for commercial
mortgage loans in Aegon Americas is measured at fair value. At a minimum on an annual basis, a fair value is estimated for each
individual real estate property that has been pledged as collateral. When a loan is originally provided, an external appraisal
is obtained to estimate the value of the property. In subsequent years, the value is typically estimated internally using various
professionally accepted valuation methodologies. Internal appraisals are performed by qualified, professionally accredited
personnel. International valuation standards are used and the most significant assumptions made during the valuation of real
estate are the current cost of reproducing or replacing the property, the value that the property's net earning power will support,
and the value indicated by recent sales of comparable properties. Valuations are primarily supported by market evidence.
Cash collateral for mortgage loans includes the savings that have been received to redeem the underlying mortgage loans
at redemption date. These savings are part of the credit side of the statement of financial position but reduce the credit risk for
the mortgage loan as a whole.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2023
\u00a0 \u00a0
2022
\u00a0
ECL staging
\u00a0 \u00a0 \u00a0
ECL staging
\u00a0
\u00a0
Stage 1
Stage 2
Stage 3
\u00a0 \u00a0
Stage 1
Stage 2
Stage 3
\u00a0 \u00a0
\u00a0 \u00a0
Lifetime
Lifetime
\u00a0 \u00a0 \u00a0
Lifetime
Lifetime
\u00a0 \u00a0
\u00a0 \u00a0
ECL not
ECL
Purchased
\u00a0 \u00a0
ECL not
ECL
Purchased
\u00a0
Loans at
12-month
credit-
credit-
credit
\u00a0
12-month
credit-
credit-
credit
\u00a0
amortized cost
ECL
impaired
impaired
impaired
Total
ECL
impaired
impaired
impaired
Total
Internal grade 1
947
-
-
-
947
1,484
-
-
-
1,484
Internal grade 2
3,929
2
-
-
3,930
4,438
2
-
-
4,440
Internal grade 3
4,460
24
-
-
4,485
3,775
-
-
-
3,775
Internal grade 4
778
7
-
-
785
671
-
-
-
671
Internal grade 5
33
2
-
-
35
48
-
-
-
48
Internal grade 6
-
-
-
-
-
-
-
-
-
-
Internal grade 7 or
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
lower
-
-
-
-
-
-
-
-
-
-
Gross carrying
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
amount
10,147
35
-
-
10,183
10,416
2
-
-
10,419
Expected credit loss
(24)
(1)
-
-
(26)
(12)
-
-
-
(12)
Total
10,123
33
-
-
10,156
10,404
2
-
-
10,407
\n
Financial assets designated at fair value through profit or loss
Significant portion of instruments have been designated as FVPL. On December 31 2023, the maximum exposure to credit
risk of these financial assets was their carrying amount of EUR 1,736 million (December 2022: EUR 1,376 million). The credit
risk of these financial assets has not been hedged by the use of derivatives . The following changes in fair value have been
recognized for these investments:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0
Money market and
\u00a0
\u00a0 \u00a0
other short-term
\u00a0
Financial assets designated at FVPL
Debt securities
investments
Total
Change in fair value attributable to changes in credit risk during the year
46
(1)
45
Cumulative change in fair value attributable to changes in credit risk held on
\u00a0 \u00a0 \u00a0
December 31
20
-
20
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0
Money market and
\u00a0
\u00a0 \u00a0
other short-term
\u00a0
Financial assets designated at FVPL
Debt securities
investments
Total
Change in fair value attributable to changes in credit risk during the year
(24)
-
(24)
Cumulative change in fair value attributable to changes in credit risk held on
\u00a0 \u00a0 \u00a0
December 31
(22)
-
(22)
\n
The change in fair value attributable to changes in credit risk is determined as the total amount of the change in fair value
that is not attributable to changes in the observable benchmark interest rate or in other market rates. This approach provides
a reasonable approximation of changes attributable to credit risk because fixed income securities valuation is mainly driven
by two factors \u2013 interest rates and credit spreads, and the fair value change due to credit risk can therefore be estimated
by removing impacts from non-credit related factors.
Derivatives
The master netting agreements column in the table relates to derivative liability positions which are used in Aegon's credit
risk management. The offset in the master netting agreements column includes balances where there is a legally enforceable
right of offset, but no intention to settle these balances on a net basis under normal circumstances. As a result, there is a net
exposure for credit risk management purposes. However, as there is no intention to settle these balances on a net basis, they
do not qualify for net presentation for accounting purposes.
Reinsurance assets
The collateral related to the reinsurance assets include assets in trust that are held by the reinsurer for the benefit of Aegon.
The assets in trust can be accessed to pay policyholder benefits in the event the reinsurers fail to perform under the terms
of their contract. Further information on the related reinsurance transactions is included in note 29.
Collateral and other credit enhancements
Aegon employs a range of policies and practices to mitigate credit risk and the most common of these is accepting collateral
for funds advanced. The Group has internal policies on the acceptability of specific classes of collateral or credit risk mitigation.
Collateral and other credit enhancements obtained
On December 31, 2023, the Group held no collateral that were obtained during the year (EUR 0 in 2022) by taking possession
of collateral held as security against receivables. The Group\u2019s policy is to pursue timely realization of the collateral in an orderly
manner. Aegon does not generally use the non-cash collateral for its own operations.
4.2.2 Credit risk management
Aegon manages credit risk exposure by individual counterparty, sector and asset class, including cash positions. Normally,
Aegon mitigates credit risk in derivative contracts by entering into credit support agreement, where practical, and in ISDA
master netting agreements for most of Aegon's legal entities to facilitate Aegon's right to offset credit risk exposure. Main
counterparties to these transactions are investment banks which are typically rated \"A\" or higher. The credit support agreement
will normally dictate the threshold over which collateral needs to be pledged by Aegon or its counterparty. Transactions
requiring Aegon or its counterparty to post collateral are typically the result of derivative trades, comprised mostly of interest
rate swaps, equity swaps, currency swaps and credit swaps. Collateral received is mainly cash (USD and EUR). The credit
support agreements that outline the acceptable collateral require high-quality instruments to be posted. Over the last three
years, there was no default with any derivatives counterparty. The credit risk associated with financial assets subject to a
master netting agreement is eliminated only to the extent that financial liabilities due to the same counterparty will be settled
after the assets are realized. Eligible derivative transactions are traded via Central Clearing Houses as required by EMIR and
the Dodd-Frank act. Credit risk in these transactions is mitigated through posting of initial and variation margins.
Aegon may also mitigate credit risk in reinsurance contracts by including downgrade clauses that allow the recapture
of business, retaining ownership of assets required to support liabilities ceded or by requiring the reinsurer to hold assets
in trust. For the resulting net credit risk exposure, Aegon employs deterministic and stochastic credit risk modeling in order
to assess the Group's credit risk profile, associated earnings and capital implications due to various credit loss scenarios.
Aegon operates a Credit Name Limit Policy (CNLP) under which limits are placed on the aggregate exposure that it has to any
one counterparty. Limits are placed on the exposure at both group level and individual country units. The limits also vary by a
rating system, which is a composite of the main rating agencies (S&P, Moody's and Fitch) and Aegon's internal rating of the
counterparty. If an exposure exceeds the stated limit, then the exposure must be reduced to the limit for the country unit and
rating category as soon as possible. Exceptions to these limits can only be made after explicit approval from Aegon's Group
Risk and Capital Committee (GRCC). The policy is reviewed regularly.
The Group offers products that cover inflation risk for policyholders. To hedge the inflation risk, the Group invests in financial
instruments of which the value depends on the rate of inflation. This significantly reduces the net exposure to inflation risk.
4.2.3 Credit rating
Aegon group level long-term counterparty exposure limits are as follows:
Group limits per credit rating
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Amounts in EUR million
2023
2022
AAA
900
900
AA
900
900
A
675
675
BBB
450
450
BB
250
250
B
125
125
CCC or lower
50
50
\n
The ratings distribution of general account portfolios of Aegon's major reporting units, excluding reinsurance assets,
are presented in the table that follows, organized by rating category and split by assets that are valued at fair value and assets
that are valued at amortized cost. Aegon uses a composite rating based on a combination of the external ratings of S&P,
Moody's, Fitch and National Association of Insurance Commissioners (NAIC which is for US only) and internal ratings. The rating
used is the lower of the external rating and the internal rating.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Americas
United Kingdom
International
Asset Management
Total 2023
1)
\u00a0
Amor-
\u00a0
Amor-
\u00a0
Amor-
\u00a0
Amor-
\u00a0
Amor-
\u00a0
Total
Financial
tized
\u00a0
tized
\u00a0
tized
\u00a0
tized
\u00a0
tized
Fair
carrying
assets
cost
Fair value
cost
Fair value
cost
Fair value
cost
Fair value
cost
value
value
AAA
947
6,836
-
38
-
35
52
123
998
7,033
8,031
AA
3,930
9,191
-
514
-
161
-
-
3,930
9,866
13,796
A
4,485
19,474
-
220
1
791
-
-
4,486
20,486
24,972
BBB
785
17,679
-
124
-
466
-
-
803
18,269
19,072
BB
33
1,084
-
1
-
41
-
-
33
1,126
1,160
B
2
570
-
-
-
9
-
-
2
579
581
CCC or lower
-
986
-
-
-
6
-
-
-
992
992
Assets not rated
-
4,444
-
797
-
4
-
1
-
5,286
5,286
Total
10,182
60,264
-
1,695
1
1,514
52
124
10,253
63,638
73,891
ECL on financial
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
assets
(26)
(228)
-
-
-
(10)
-
-
(26)
(238)
(263)
On December
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
31, 2023
10,156
60,264
-
1,695
1
1,514
52
124
10,227
63,638
73,865
\n
1
Includes investments of Holding and other activities.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Americas
United Kingdom
International
Asset Management
Total 2022
1)
\u00a0
Amor-
\u00a0
Amor-
\u00a0
Amor-
\u00a0
Amor-
\u00a0
Amor-
\u00a0
Total
Financial
tized
\u00a0
tized
\u00a0
tized
\u00a0
tized
\u00a0
tized
\u00a0
carrying
assets
cost
Fair value
cost
Fair value
cost
Fair value
cost
Fair value
cost
Fair value
value
AAA
1,484
12,243
-
55
-
91
-
135
1,522
12,523
14,046
AA
4,440
3,996
-
461
-
158
-
-
4,440
4,615
9,055
A
3,775
20,233
-
262
7
921
-
-
3,782
21,416
25,198
BBB
671
19,313
-
123
1
763
-
-
672
20,198
20,870
BB
48
1,439
-
1
-
71
-
-
48
1,512
1,560
B
-
594
-
-
-
13
-
-
-
607
607
CCC or lower
-
900
-
-
-
5
-
-
-
905
905
Assets not rated
-
4,480
-
582
-
-
-
1
-
5,182
5,182
Total
10,417
63,200
-
1,483
9
2,021
-
136
10,464
66,959
77,423
ECL on financial
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
assets
(12)
(264)
-
-
-
(12)
-
-
(12)
(277)
(289)
On December
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
31, 2022
10,406
63,200
-
1,483
9
2,021
-
136
10,453
66,959
77,412
\n
1
Includes investments of Holding and other activities.
The following table shows the credit quality of the reinsurance contracts included in the statement of financial position:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Carrying value
2023
2022
AAA
-
-
AA
1,245
1,609
A
14,089
14,322
Below A
4
5
Not rated
662
733
On December 31
16,000
16,669
\n
4.2.4 Credit risk concentration
The tables that follow present specific credit risk concentration information for general account financial assets.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Of which
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
past due
\u00a0 \u00a0 \u00a0 \u00a0
Asset
\u00a0
and / or
Credit risk concentrations \u2013 debt securities and money
\u00a0
United
Interna-
Manage-
Total 2023
impaired
market investments
Americas
Kingdom
tional
ment
1)
assets
Residential mortgage-backed securities (RMBSs)
933
-
-
-
933
(13)
Commercial mortgage-backed securities (CMBSs)
2,216
73
34
-
2,323
(17)
Asset-backed securities (ABSs) - CDOs backed by ABS, Corp.
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
bonds, Bank loans
557
-
3
-
560
-
ABSs \u2013 Other
2,905
53
28
52
3,037
(9)
Financial - Banking
3,412
173
201
-
3,786
(14)
Financial - Other
11,909
38
289
97
12,332
(33)
Capital goods and other industry
3,443
24
143
-
3,609
(23)
Communications & Technology
4,242
2
140
-
4,384
(30)
Consumer cyclical
3,197
29
85
-
3,311
(20)
Consumer non-cyclical
5,661
74
111
-
5,846
(24)
Energy
2,821
20
55
-
2,896
(19)
Transportation
1,633
-
30
-
1,663
(6)
Utility
4,190
73
75
-
4,338
(10)
Government bonds
7,349
338
265
17
7,969
(20)
On December 31, 2023
54,467
898
1,458
166
56,988
(237)
\n
1
Includes investments of Holding and other activities.
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Of which
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
past due
\u00a0\u00a0\u00a0\u00a0
Asset
\u00a0
and / or
Credit risk concentrations \u2013 debt securities and money
\u00a0
United
Interna-
Manage-
Total 2022
1)
impaired
market investments
Americas
Kingdom
tional
ment
assets
Residential mortgage-backed securities (RMBSs)
1,136
-
-
5
1,141
(9)
Commercial mortgage-backed securities (CMBSs)
2,707
94
37
-
2,838
-
Asset-backed securities (ABSs) - CDOs backed by ABS, Corp.
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
bonds, Bank loans
438
-
3
-
440
-
ABSs \u2013 Other
2,400
53
15
9
2,478
(6)
Financial - Banking
3,957
168
319
-
4,444
(14)
Financial - Other
10,778
36
353
96
11,264
(31)
Capital goods and other industry
3,769
22
132
-
3,923
(25)
Communications & Technology
4,658
2
171
-
4,831
(51)
Consumer cyclical
3,742
28
106
-
3,877
(25)
Consumer non-cyclical
5,445
85
144
-
5,674
(47)
Energy
3,205
19
102
-
3,326
(23)
Transportation
1,728
-
43
-
1,771
(6)
Utility
4,319
69
80
-
4,469
(11)
Government bonds
7,962
323
488
17
8,790
(26)
On December 31, 2022
56,243
901
1,994
128
59,265
(276)
\n
1
Includes investments of Holding and other activities.
\n\n\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
Credit risk concentrations \u2013 Government bonds per
\u00a0
United
\u00a0
Asset
\u00a0
country of risk
Americas
Kingdom
International
Management
Total 2023
1)
United States
6,632
-
62
-
6,694
Netherlands
-
-
2
-
2
United Kingdom
-
289
-
17
307
Austria
-
-
10
-
10
Belgium
-
-
4
-
4
France
-
28
8
-
36
Hungary
20
-
4
-
24
Indonesia
71
-
-
-
71
Luxembourg
-
-
1
-
1
Spain
-
-
153
-
153
Rest of Europe
46
-
13
-
58
Rest of world
581
21
8
-
610
On December 31, 2023
7,349
338
265
17
7,969
\n
1
Includes investments of Holding and other activities.
\n\n\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
Credit risk concentrations \u2013 Government bonds per
\u00a0
United
\u00a0
Asset
\u00a0
country of risk
Americas
Kingdom
International
Management
Total 2022
1)
United States
7,209
-
80
-
7,290
Netherlands
-
-
-
-
-
United Kingdom
-
275
-
17
292
Austria
-
-
3
-
3
Belgium
-
-
3
-
3
France
-
27
2
-
29
Hungary
18
-
4
-
22
Indonesia
82
-
-
-
82
Luxembourg
-
-
1
-
1
Spain
-
-
152
-
152
Rest of Europe
48
-
229
-
277
Rest of world
604
21
13
-
638
On December 31, 2022
7,962
323
488
17
8,790
\n
1
Includes investments of Holding and other activities.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Government
Corporate
RMBSs
\u00a0 \u00a0
\u00a0
Bonds
bonds
CMBSs ABSs
Other
Total 2023
1)
AAA
166
503
2,462
3,915
7,046
AA
6,444
2,262
1,160
-
9,866
A
723
16,352
2,101
-
19,176
BBB
354
17,408
404
-
18,165
BB
205
838
78
-
1,121
B
69
496
30
-
596
CCC or lower
9
245
618
-
872
Assets not rated
-
2
-
144
147
On December 31, 2023
7,969
38,106
6,853
4,059
56,988
\n
1
Includes investments of Holding and other activities.
2
CNLP Ratings are used and are the lower of the Barclay\u2019s Rating and the Internal Rating with the Barclay\u2019s rating being a blended rating of S&P, Fitch, and Moody\u2019s.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Government
Corporate
RMBSs CMBSs
\u00a0 \u00a0
\u00a0
Bonds
bonds
ABSs
Other
Total 2022
1)
AAA
5,980
724
2,997
2,780
12,482
AA
1,243
2,484
815
-
4,541
A
753
16,180
1,960
-
18,894
BBB
538
19,312
306
-
20,156
BB
206
1,204
102
-
1,513
B
65
519
23
-
607
CCC or lower
4
207
694
-
905
Assets not rated
-
15
-
152
167
On December 31, 2022
2)
8,790
40,645
6,897
2,933
59,265
\n
1
Includes investments of Holding and other activities.
2
CNLP Ratings are used and are the lower of the Barclay\u2019s Rating and the Internal Rating with the Barclay\u2019s rating being a blended rating of S&P, Fitch, and Moody\u2019s.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Of which past
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
due and / or
Credit risk concentrations \u2013
\u00a0
United
\u00a0
Asset
\u00a0
impaired
mortgage loans
Americas
Kingdom
International
Management
Total 2023
assets
Agricultural
46
-
-
-
46
-
Apartment
5,365
-
-
-
5,365
(10)
Industrial
410
-
-
-
410
-
Office
1,300
-
-
-
1,300
(14)
Retail
1,372
-
-
-
1,372
(1)
Other commercial
1,663
-
1
-
1,664
-
On December 31, 2023
10,156
-
1
-
10,156
(26)
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Of which past
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
due and / or
Credit risk concentrations \u2013
\u00a0
United
\u00a0
Asset
\u00a0
impaired
mortgage loans
Americas
Kingdom
International
Management
Total 2022
assets
Agricultural
49
-
-
-
49
-
Apartment
5,517
-
-
-
5,517
(4)
Industrial
402
-
-
-
402
-
Office
1,515
-
-
-
1,515
(7)
Retail
1,465
-
-
-
1,465
(1)
Other commercial
1,456
-
1
-
1,457
-
On December 31, 2022
10,406
-
1
-
10,406
(12)
4.2.5 Unconsolidated structured entities
Aegon's investments in unconsolidated structured entities such as RMBSs, CMBSs and ABSs and investment funds are
presented in the line item \"Investments\" of the statement of financial position. Aegon's interests in these unconsolidated
structured entities can be characterized as basic interests, Aegon does not have loans, derivatives, guarantees or other
interests related to these investments. Any existing commitments such as future purchases of interests in investment funds are
disclosed in note 39 Commitments and contingencies.
For debt instruments, specifically for RMBSs, CMBSs and ABSs, the maximum exposure to loss is equal to the carrying
amount which is reflected in the credit risk concentration table regarding debt securities and money market investments.
To manage credit risk Aegon invests primarily in senior notes of RMBSs, CMBSs and ABSs. The composition of the RMBSs,
CMBSs and ABSs portfolios of Aegon are widely dispersed looking at the individual amount per entity, therefore Aegon
only has non-controlling interests in individual unconsolidated structured entities. Furthermore these investments are not
originated by Aegon.
Except for commitments as noted in note 39 Commitments and contingencies, Aegon did not provide, nor is required to provide
financial or other support to unconsolidated structured entities. Nor does Aegon have intentions to provide financial or other
support to unconsolidated structured entities in which Aegon has an interest or previously had an interest.
For RMBSs, CMBSs and ABSs in which Aegon has an interest at reporting date, the following table presents total income
received from those interests. The Investments column reflects the carrying values recognized in the statement of financial
position of Aegon's interests in RMBSs, CMBSs and ABSs.
\u00a0
Total income for the year ended December 31, 2023
December 31, 2023
\u00a0 \u00a0
Total gains and
\u00a0 \u00a0
\u00a0 \u00a0
losses on sale of
\u00a0 \u00a0
2023
Interest income
assets
Total
Investments
Residential mortgage-backed securities
67
(15)
52
933
Commercial mortgage-backed securities
92
12
105
2,323
Asset-backed securities
40
14
54
560
ABSs - Other
134
57
191
3,037
Total
334
68
402
6,853
\u00a0
Total income for the year ended December 31, 2022
December 31, 2022
\u00a0 \u00a0
Total gains and
\u00a0 \u00a0
\u00a0 \u00a0
losses on sale of
\u00a0 \u00a0
2022
Interest income
assets
Total
Investments
Residential mortgage-backed securities
104
26
130
1,141
Commercial mortgage-backed securities
120
(723)
(603)
2,838
Asset-backed securities
25
(34)
(9)
440
ABSs - Other
92
(416)
(324)
2,478
Total
341
(1,148)
(807)
6,897
\n
4.2.6 Expected credit losses
Measurement
The estimation of credit exposure for risk management purposes is complex and requires the use of models, as the exposure
varies with changes in market conditions, expected cash flows and the passage of time. The assessment of credit risk
of a portfolio of assets entails further estimations as to the likelihood of defaults occurring, of the associated loss ratios
and of default correlations between counterparties. Aegon measures credit risk using Probability of Default (PD), Exposure
at Default (EAD) and Loss Given Default (LGD). This is similar to the approach used for the purposes of measuring the Expected
Credit Loss (ECL) under IFRS 9. See section on ECL developments in the reporting period later in this note for more details.
Losses as a result of credit risk are a natural part of investing in fixed-income securities. The amount of and compensation
for this risk are related. A significant management measure to avoid excessive credit risk is to diversify and limit exposure
to individual issuers.
a) Recognition of expected credit losses
IFRS 9 outlines a \"three-stage\" model for impairment based on relative changes in credit quality since initial recognition:
\u2022
a financial instrument that is not credit-impaired on initial recognition is classified in \"Stage 1\";
\u2022
if a significant increase in credit risk (\"SICR\") since initial recognition is identified, the financial instrument is moved to \"Stage
2\" but is not yet deemed to be credit-impaired (see \u201cSignificant increase in credit risk\u201d for further details);
\u2022
if the financial instrument is credit-impaired, the financial instrument is then moved to \"Stage 3\".
Credit risk is continuously monitored by the Group in all the above stages.
Financial instruments in Stage 1 have their Expected Credit Loss (ECL) measured at an amount equal to the portion of lifetime
expected credit losses that result from default events possible within the next 12 months. Financial instruments in Stages
2 or 3 have their ECL measured based on expected credit losses on a lifetime basis. Purchased or originated credit-impaired
financial assets are those financial assets that are credit-impaired on initial recognition. Their ECL is always measured on a
lifetime basis.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Stage 1
Stage 2
Stage 3
Purchased or Originated
\u00a0
Impaired
Under-performing
Non-performing
Credit Impared (POCI)
ECL
12 month ECL
Lifetime ECL
Lifetime ECL
Lifetime ECL
\u00a0\u00a0
Quantitative and
\u00a0\u00a0
Provision Trigger
n.a.
Qualitative Triggers
Qualitative Triggers
Qualitative Triggers
\u00a0
Up to date and early
> 30 DPD (rebuttable
> 90 DPD (rebuttable
\u00a0
Days Past Due ('DPD') Backstop
arrears (< 30 DPD)
presumption)
presumption)
n.a.
\u00a0\u00a0\u00a0\u00a0
Interest calculated on
\u00a0\u00a0\u00a0\u00a0
net carrying amount
\u00a0
Interest calculated on
Interest calculated on
Interest calculated on
using a credit-adjusted
Interest Income
gross carrying amount
gross carrying amount
net carrying amount
effective interest rate
\n
1
n.a. in above table should be read as \u201cnot applicable\u201d.
Following this assessment, IFRS 9 requires the incorporation of multiple, forward looking macro- scenarios to drive the
ECL provision.
IFRS 9 requires that the measurement of ECL represent an unbiased probability-weighted amount that is to be determined by:
\u2022
evaluating a range of possible outcomes;
\u2022
use reasonable and supportable information available without undue cost and effort about past events;
\u2022 current conditions; and
\u2022
forecasts of future economic conditions.
When incorporating forward looking information, consideration should be given to the relevance of the information (and the
availability of more relevant information) for each specific financial instrument or group of financial instruments. Forward
looking information that is relevant for one financial instrument may not be relevant or as relevant for other financial
instruments depending on the specific drivers of credit risk. To the extent relevant, forward-looking information used for the
measurement of ECLs it needs to be consistent with that used for the assessment of a significant increase in credit risk.
The models used by the Group generally employ a Probability of Default / Loss Given Default / Exposure at Default methodology;
each model consists of multiple sub-models that are used to generate the measurement of expected credit loss.
Credit losses are calculated as the product of projected PD, LGD and EAD and are discounted using an appropriate discount
rate. The ECL is determined as the probability weighted discounted credit losses that are determined for different scenarios (i.e.
base, positive, adverse).
Given the need to adapt the models to the different portfolio characteristics, all ECL models have different key judgments and
assumptions. As such, the below paragraphs outline the key judgements and assumptions made by the Group in addressing the
key requirements on a model-by-model basis.
The Group employs separate models to calculate ECL on each category of financial assets.
For bonds and private placements, the Group applies a global correlation model. It provides correlations of credit quality
movements across different asset classes, linked with movements in the macro economy. Global correlation model is therefore
used for determining the conditional PD and LGD, given a macroeconomic scenario. Unconditional PD and LGD curves are
modelled with use of different methods for sovereign debt, corporate bonds and private placements.
For commercial mortgage loans and mortgage-backed securities the parameters are estimated with commercial mortgage
metrics which uses corporate bond PD and LGD estimates further adjusted with other assumptions based on debt service
coverage and loan-to-value ratios.
The Group applies a separate model for asset-backed securities, which pools the instruments based on the underlying
collateral and estimates credit loss parameters collectively. Collateralized debt (loan) obligations (CDOs and CLOs) are special
types of asset-backed securities to which a different set of models are applied depending on region of the exposure.
b) Significant increase in credit risk
Aegon considers a financial instrument to have experienced a significant increase in credit risk when one or more of the
following quantitative, qualitative or backstop criteria have been met:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Asset class
Quantitative criteria
Qualitative criteria
Backstop criteria
\u00a0
Relative change in Forward-in-
\u00a0 \u00a0
Commercial mortgages
Time Probability of Default
None
60 days past due backstop
Private loans
Relative changes in rating
Watchlist approach
No other backstop applied
Debt securities
Relative changes in rating
Watchlist approach
No other backstop applied
Structured finance
Relative changes in rating
Watchlist approach
30 days past due backstop
Deposits with financial institutions
Relative changes in rating
Watchlist approach
No other backstop applied
\u00a0
Defined as for the respective
\u00a0 \u00a0
\u00a0
loans to which the commitment
\u00a0 \u00a0
Loan commitments
relates
\u00a0 \u00a0
\u00a0
Defined as for the respective
\u00a0 \u00a0
\u00a0
loans to which the commitment
\u00a0 \u00a0
Financial guarantees
relates
\u00a0 \u00a0
\n
The quantitative factor(s) should indicate whether the credit risk of an instrument has increased significantly since initial
recognition. When making this assessment, Aegon shall use the change in the risk of a default occurring over the expected life
of the financial instrument. Aegon uses a mix of relative and absolute thresholds:
\u2022
The relative threshold measures the relative increase in credit risk since origination.
\u2022
The absolute threshold defines a stage for each rating and is mainly used when the rating at origination is not available or
when an instrument is already in default.
The relative thresholds are defined in two steps:
\u2022
A PD-based statistical analysis is performed to determine an optimal PD threshold that provides the best predictor for default;
\u2022
The PD-based thresholds are translated in rating-based rules, which are more intuitive and practically applicable.
These PD thresholds can be translated into rating-based thresholds using standard Moody\u2019s rating to PD mappings.
The difference between the PD at origination and the PD corresponding to the threshold determines the number of notches that
the rating must drop by. E.g. for a one year old instrument with a one year remaining maturity this gives the following result:
Starting Rating
Number of Notches Down
1/Aaa
2/Aa1
3/Aa2
4/Aa3
5/A1
6/A2
7/A3
8/Baa1
9/Baa2
10/Baa3
11/Ba1
12/Ba2
13/Ba3
6
5
4
3
PD amounts used by Aegon are bunched into ranges in below table. Each range contains the minimum and maximum
of PDs on both financial and corporate assets of a 1-10 year term. As Aegon US represents the Group the best, PD amounts
of Americas is presented below.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
PD range 2023
Minimum
Maximum
AAA
0.0002
0.0024
AA
0.0003
0.0037
A
0.0007
0.0057
BBB
0.0020
0.0085
BB
0.0055
0.0085
B
0.0138
0.0308
CCC or lower
0.0205
1.0000
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
PD range 2022
Minimum
Maximum
AAA
0.0003
0.0016
AA
0.0004
0.0029
A
0.0011
0.0051
BBB
0.0030
0.0088
BB
0.0081
0.0172
B
0.0160
0.0436
CCC or lower
0.0279
1.0000
\n
Quantitative criteria
For debt securities, private loans, structured finance securities and deposits with financial institutions the relative change
of the credit rating is used as primary indicator to assess significant increase in credit risk, for this purpose external credit
ratings are used.
Qualitative criteria
For debt securities, private loans, structured finance securities and deposits with financial institutions the watchlist approach
is applied as an additional qualitative criterion.
The watchlist approach means exposure of instruments on the watchlist are intensively monitored. Financial assets are added
to the watchlist based on if their relative change in fair value has surpassed a predetermined threshold:
\u2022
The fair value either drops to 80% and below the (amortized) cost price and stays there for six months; or
\u2022
The fair value falls by 20% over 3 months; or
\u2022
The fair value falls to 60% and below the (amortized) cost price.
In relation to debt securities and private loans, where a watchlist is used to monitor credit risk, this assessment is performed
at the counterparty level and on a periodic basis. The criteria used to identify SICR are monitored and reviewed periodically for
appropriateness by the Group.
Backstop
A backstop is applied to exposures considered to have experienced a significant increase in credit risk if the borrower is more
than 30 days past due on its contractual payments in case of structured finance and 60 days in case commercial mortgage
loans. No backstop is applied to the other asset classes.
Aegon has used the low credit risk exemption for debt instruments. Debt instruments that have a credit rating which responds
with \"investment grade\" (rating \"BBB\" or higher) are considered as having low credit risk. As such, external and internal credit
ratings are used respectively for these assets to assess whether a significant increase in credit risk has occurred.
Low credit risk exemption is applied for staging purposes on instruments rated BBB and higher. (IFRS 9 provides an exception
for financial instruments that have low credit risk at the reporting date, commonly referred to as the \u201clow credit risk exemption\u201d
or LCRE, it is an exception to the general model where entities have an option not to assess whether credit risk has increased
significantly since initial recognition if the credit risk is considered low.)
Loan commitments and financial guarantees
For loan commitments and financial guarantees, Aegon defines default in the same way as for the respective loan or financial
instrument to which a commitment relates or a guarantee is issued for (considering the factors described above).
c) Definition of default and credit-impaired assets
Aegon assesses a financial instrument to be in default or credit-impaired using the following criteria:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Asset class
Quantitative criteria
Qualitative criteria
Commercial mortgages
90 days past due backstop
Foreclosure
\u00a0\u00a0
Sale at material credit-related economic loss
Debt securities and private loans
5 days past due backstop
Rating falling to 'D' (external or internal)
\u00a0\u00a0
Breach of significant covenants without reasonably
\u00a0\u00a0
supportable waiver obtained
\u00a0\u00a0
Distressed restructuring taking place
\u00a0\u00a0
Bankruptcy or an equivalent of an injunction for the obligor
\u00a0\u00a0
was filed
\u00a0\u00a0
Obligor was classified as default internally
Deposits with financial institution
5 days past due backstop
Rating falling to 'D' (external or internal)
\u00a0\u00a0
Breach of significant covenants without reasonably
\u00a0\u00a0
supportable waiver obtained
\u00a0\u00a0
Distressed restructuring taking place
\u00a0\u00a0
Bankruptcy or an equivalent of an injunction for the obligor
\u00a0\u00a0
was filed
\u00a0\u00a0
Obligor was classified as default internally
Structured securities
90 days past due backstop
Rating falling to 'D' (external or internal)
\u00a0\u00a0
Loss coverage ratio (Ratio of credit-related losses to the par
\u00a0\u00a0
value of a debt security) is below 1
Receivables
90 days past due backstop
\u00a0
\u00a0
Defined as for the respective loans to
Defined as for the respective loans to which the commitment
Loan commitments
which the commitment relates
relates
\u00a0
Defined as for the respective
\u00a0
\u00a0
exposures to which the financial
Defined as for the respective exposures to which the financial
Financial guarantee contracts
guarantee relates
guarantee relates
\n
Distressed restructuring means material forgiveness, or postponements of principal, interest, or where relevant, fees which
is likely to result in a diminished financial obligation.
In addition to the criteria included in the table above, Aegon identifies other indicators of unlikeliness to pay, which include but
are not limited to the following:
\u2022
a borrower\u2019s sources of recurring income are no longer available to meet the payments of instalments;
\u2022
there are justified concerns about a borrower\u2019s future ability to generate stable and sufficient cash flows;
\u2022
the borrower\u2019s overall leverage level has significantly increased beyond applicable limits or there are justified expectations of
such changes to leverage;
\u2022
for the exposures to an individual: default of a company fully owned by a single individual where this individual provided the
institution with a personal guarantee for all obligations of a company;
\u2022 material fraud; or
\u2022 death of a client.
All the criteria above have been applied to the financial instruments held by Aegon and are consistent with the definition
of default used for internal credit risk management purposes. The definition of default has been applied consistently to model
the Probability of Default, Exposure at Default throughout the Aegon\u2019s expected loss calculations.
An instrument is considered to no longer be in default (i.e. to have \"cured\") when it no longer meets any of the default criteria
for a consecutive period of six months and an assessment has shown the obligor is no longer unlikely to pay. This period
of six months considers the likelihood of a financial instrument returning to default status after cure using different possible
cure definitions.
d) Measuring ECL \u2013 inputs, assumptions and estimation techniques
The ECL is measured on either a \"12-month basis\" (Stage 1) or \"lifetime basis\" (Stages 2 and 3), depending on whether
a significant increase in credit risk has occurred since initial recognition or whether an asset is considered to be credit-impaired.
The expected credit losses are the discounted product of the Probability of Default, Exposure at Default, and Loss Given Default,
defined as follows:
\u2022
The PD represents the likelihood of a borrower defaulting on its financial obligation (as per \u201cDefinition of default and credit-
impaired\u201d above), either over the next 12 months (12M PD), or over the remaining lifetime (Lifetime PD) of the obligation.
\u2022
EAD is based on the amounts the Group expects to be owed at the time of default.
\u2022
Loss Given Default represents Aegon\u2019s expectation of the extent of loss on a defaulted exposure. LGD varies by type of
counterparty, type and seniority of claim and availability of collateral or other credit support. LGD is expressed as a
percentage loss per unit of exposure at the time of default.
The discount rate used in the ECL calculation is the original effective interest rate or an approximation thereof.
The lifetime PD is calculated for a financial instrument that results in default by summing the probabilities of all future
developments which end-up in the ECL. All possible future developments are enumerated and for each future development
a probability is calculated. The possibility of full prepayment is included among all possible future developments. For each
possible future development the probability is estimated using statistical modeling techniques.
Forward-looking economic information is included in determining the 12-month and lifetime ECL, and lifetime PD by using a set
of variables describing the state of the macro economy as input in the calculation of the probability of default and prepayment.
As described above, and subject to using a maximum of a 12-month PD for financial assets for which credit risk has not
significantly increased, the Group measures ECL considering the risk of default over the maximum contractual period (including
any borrower\u2019s extension options) over which Aegon is exposed to credit risk, even if the Group considers a longer period.
There have been no significant changes in estimation techniques or significant assumptions made during the reporting period.
e) Forward-looking information incorporated in the ECL models
The assessment of significant increase in credit risk (SICR) and the calculation of ECL both incorporate forward-looking
information. Aegon has performed historical analysis and identified the key economic variables impacting credit risk and
expected credit losses for each portfolio.
These economic variables and their associated impact on the ECL and Lifetime PD vary by financial instrument. Expert
judgment has also been applied in this process. Forecasts of these economic variables (the \u201cbase economic scenario\u201d) give
the best estimate view of the economy over the next five years. After five years, to project the economic variables out for the
full remaining lifetime of each instrument, a mean reversion approach has been used, which means that economic variables
tend to either a long run average rate (e.g. for unemployment) or a long run average growth rate (e.g. GDP) over a period of three
years. Statistical regression analysis has been performed to understand the impact changes in these macro-economic
variables have had historically on default and prepayment rates.
Using the base scenario as a starting point, three macro-economic scenarios are generated by applying shocks to the macro-
economic variables in a positive and negative direction, taking into account their correlation as historically observed, resulting
in a positive, neutral and negative scenario. The shocks applied correspond to the historical average deviance from the long
term mean observed in the best/worst 10% of the historically observed quarters. The ECL is calculated for each of the three
scenarios, multiplied by the scenario weighting, and summed. The use of multiple economic scenarios ensures that the ECL
represents the best estimate of expected credit loss and is not merely the credit loss in the most likely scenario.
As with any economic forecasts, the projections and likelihoods of occurrence are subject to a high degree of inherent
uncertainty, and therefore, the actual outcomes may be significantly different to those projected. The Group considers these
forecasts to represent its best estimate of the possible outcomes.
Economic variable assumptions
The most significant period-end assumptions used for the ECL estimate are set out below. The scenarios \u201cbase\u201d, \u201cupside\u201d, and
\u201cdownside\u201d were used for all portfolios.
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
Economic variable
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
assumptions,
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
December 31,
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
2023
\u00a0
2024
2025
2026
2027
Units
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Interest Rates: 10-Year Treasury Constant
Interest rates
Base
4.11
4.04
4.02
4.03
Maturities, (% p.a., NSA
1)
)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Interest Rates: 10-Year Treasury Constant
Interest rates
Upside
4.21
4.13
4.02
4.03
Maturities, (% p.a., NSA
1)
)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Interest Rates: 10-Year Treasury Constant
Interest rates
Downside
2.31
3.24
3.71
3.89
Maturities, (% p.a., NSA
1)
)
Unemployment rate
Base
4.03
4.06
3.97
3.94
(%, SA)
Unemployment rate
Upside
3.08
3.41
3.34
3.35
(%, SA)
Unemployment rate
Downside
7.56
6.90
5.70
4.88
(%, SA)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Existing Single-Family Home Price: Median,
House Price Index
Base
400.12
393.70
394.21
403.50
(Ths. USD, SA)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Existing Single-Family Home Price: Median,
House Price Index
Upside
419.87
423.62
428.16
439.72
(Ths. USD, SA)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Existing Single-Family Home Price: Median,
House Price Index
Downside
339.91
347.29
352.66
363.59
(Ths. USD, SA)
Domestic GDP
Base
22,900.95
23,303.78
23,825.37
24,397.71
Bil. Ch. 2012 USD, SAAR
2)
Domestic GDP
Upside
23,354.42
23,883.09
24,451.63
25,020.82
Bil. Ch. 2012 USD, SAAR
2)
Domestic GDP
Downside
22,039.64
22,368.94
23,099.22
23,768.80
Bil. Ch. 2012 USD, SAAR
2)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Standard & Poor's (S&P); Moody's Analytics
Equity
Base
4,672.66
4,796.24
5,043.19
5,368.63
Forecasted
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Standard & Poor's (S&P); Moody's Analytics
Equity
Upside
4,950.59
5,058.20
5,256.09
5,490.26
Forecasted
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Standard & Poor's (S&P); Moody's Analytics
Equity
Downside
2,904.90
3,226.25
3,942.26
4,603.90
Forecasted
\n
1
NSA: National Security Agency
2
SAAR: Seasonally adjusted annual rate
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
Economic variable
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
assumptions,
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
December 31,
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
2022
\u00a0
2023
2024
2025
2026
Units
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Interest Rates: 10-Year Treasury Constant Maturities, (%
Interest rates
Base
3.94
3.86
3.86
3.99
p.a., NSA
1)
)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Interest Rates: 10-Year Treasury Constant Maturities, (%
Interest rates
Upside
4.04
3.96
3.86
3.98
p.a., NSA
1)
)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Interest Rates: 10-Year Treasury Constant Maturities, (%
Interest rates
Downside
2.13
2.59
3.34
3.78
p.a., NSA
1)
)
Unemployment rate
Base
3.82
4.22
4.19
4.15
(%, SA)
Unemployment rate
Upside
3.04
3.33
3.59
3.53
(%, SA)
Unemployment rate
Downside
6.52
7.64
6.34
5.48
(%, SA)
House Price Index
Base
385.74
372.68
371.61
379.79
Existing Single-Family Home Price: Median, (Ths. USD, SA)
House Price Index
Upside
396.53
400.29
399.99
413.28
Existing Single-Family Home Price: Median, (Ths. USD, SA)
House Price Index
Downside
341.01
331.35
339.24
347.82
Existing Single-Family Home Price: Median, (Ths. USD, SA)
Domestic GDP
Base
20,410.05
20,741.30
21,301.03
21,891.77
Bil. Ch. 2012 USD, SAAR
2)
Domestic GDP
Upside
20,705.70
21,265.32
21,796.25
22,379.68
Bil. Ch. 2012 USD, SAAR
2)
Domestic GDP
Downside
20,009.19
19,956.30
20,566.77
21,238.89
Bil. Ch. 2012 USD, SAAR
2)
Equity
Base
4,343.49
4,498.93
4,655.70
4,905.28
Standard & Poor's (S&P); Moody's Analytics Forecasted
Equity
Upside
4,690.53
4,727.85
4,923.08
5,047.37
Standard & Poor's (S&P); Moody's Analytics Forecasted
Equity
Downside
3,062.99
2,836.89
3,326.54
4,000.34
Standard & Poor's (S&P); Moody's Analytics Forecasted
\n
1
NSA: National Security Agency
2
SAAR: Seasonally adjusted annual rate
The weightings assigned to each economic scenario were as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Weightings
Base
Upside
Downside
On December 31, 2023
40
30
30
On December 31, 2022
40
30
30
\n
Other forward-looking considerations not otherwise incorporated within the above scenarios, such as the impact of any
regulatory, legislative or political changes, have also been considered, but are not deemed to have a material impact,
and therefore, no adjustment has been made to the ECL for such factors. This process is reviewed and monitored for
appropriateness on a quarterly basis.
f) Write-off policy
The Group writes-off financial assets, in whole or in part, when it has exhausted all practical recovery efforts and has concluded
there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include (i) ceasing
enforcement activity; and (ii) where Aegon\u2019s recovery method is foreclosing on collateral and the value of the collateral is such
that there is no reasonable expectation of recovering in full.
The Group may write-off financial assets that are still subject to enforcement activity. The outstanding contractual amounts
of such assets written-off during 2023 is not material. The Group still seeks to recover amounts it is legally owed in full, but
which have been partially written off due to no reasonable expectation of full recovery.
g) Modification of financial assets
The Group has the option to modify the terms of loans provided to customers due to commercial renegotiations, or for
distressed loans, with a view to maximizing recovery. Such restructuring activities include extended payment term and
penalty interest arrangements. Restructuring policies and practices are based on indicators or criteria which, in the judgment
of management, indicate that payment will most likely continue. These policies are kept under continuous review.
The risk of default of such assets after modification is assessed at the reporting date and compared with the risk under the
original terms at initial recognition, when the modification is not substantial and so does not result in derecognition of the
original asset. The Group monitors the subsequent performance of modified assets. Aegon may determine that the credit risk
has significantly improved after restructuring, so that the assets are moved from Stage 3 or Stage 2 (Lifetime ECL) to Stage 1
(12-month ECL) (see note 4.2.6(a) for details of the Group ECL staging classification). This is only the case for assets which have
performed in accordance with the new terms for three consecutive months or more. The gross carrying amount of such assets
held on December 31 2023 was EUR 0 million (2022: EUR 0 million).
ECL developments in the reporting period
Aegon regularly monitors industry sectors and individual debt securities for sources of changes in the ECL allowance. These
sources may include one or more of the following:
\u2022
Transfers between Stages 1, 2 and 3 due to financial instruments experiencing significant increases (or decreases) of
credit risk or becoming credit-impaired in the period, and the consequent \u201cstep up\u201d (or \u201cstep down\u201d) between 12-month and
lifetime ECL;
\u2022
Additional allowances for new financial instruments recognized during the period, as well as releases for financial
instruments de-recognized in the period;
Impact on the measurement of ECL due to changes in PDs, EADs and LGDs in the period, arising from regular refreshing of
inputs to models;
\u2022
Impacts on the measurement of ECL due to changes made to models and assumptions;
\u2022
Discount unwind within ECL due to the passage of time, as ECL is measured on a present value basis;
\u2022
Foreign exchange retranslations for assets denominated in foreign currencies and other movements; and,
\u2022
Financial assets derecognized during the period and write-offs of allowances related to assets that were written off during
the period.
In addition, for asset-backed securities, cash flow trends and underlying levels of collateral are monitored. Furthermore,
quality ratings of investment portfolios are based on a composite of the main rating agencies (S&P, Moody\u2019s and Fitch) and
Aegon\u2019s internal rating of the counterparty. The following tables explain the changes in the loss allowance changes between
the beginning and the end of the annual period due to these factors:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0\u00a0\u00a0
2023
\u00a0\u00a0
\u00a0\u00a0
ECL staging
\u00a0\u00a0\u00a0
\u00a0
Stage 1
Stage 2
Stage 3
\u00a0\u00a0
\u00a0\u00a0
Lifetime ECL
\u00a0\u00a0\u00a0
\u00a0\u00a0
not credit-
Lifetime ECL
Purchased
\u00a0
Debt securities
12-month ECL
impaired
credit-impaired
credit impaired
Total
Loss allowance on January 1
(156)
(32)
(86)
(1)
(276)
Transfers:
\u00a0\u00a0\u00a0\u00a0\u00a0
- Transfer from Stage 1 to Stage 2
2
(2)
-
-
-
- Transfer from Stage 1 to Stage 3
2
-
(2)
-
-
- Transfer from Stage 2 to Stage 1
(3)
3
-
-
-
- Transfer from Stage 2 to Stage 3
-
3
(3)
-
-
- Transfer from Stage 3 to Stage 2
-
(4)
4
-
-
- Transfer from Stage 3 to Stage 1
(39)
-
39
-
-
Impact on year-end ECL of exposures transferred
\u00a0\u00a0\u00a0\u00a0\u00a0
between stages during the year
36
(2)
(39)
-
(5)
Financial assets derecognized during the period
26
3
44
-
73
New financial assets originated or purchased
(16)
(1)
(9)
-
(26)
Change in models
(5)
6
(14)
(1)
(13)
Net exchange differences
5
1
2
-
9
Loss allowance on December 31
(147)
(25)
(64)
(2)
(238)
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2022
\u00a0 \u00a0
ECL staging
\u00a0 \u00a0 \u00a0
\u00a0
Stage 1
Stage 2
Stage 3
\u00a0 \u00a0
\u00a0 \u00a0
Lifetime ECL
\u00a0 \u00a0 \u00a0
\u00a0 \u00a0
not credit-
Lifetime ECL
Purchased
\u00a0
Debt securities
12-month ECL
impaired
credit-impaired
credit impaired
Total
Loss allowance on January 1
(161)
(13)
(38)
(2)
(214)
Transfers:
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
- Transfer from Stage 1 to Stage 2
7
(7)
-
-
-
- Transfer from Stage 1 to Stage 3
3
-
(3)
-
-
- Transfer from Stage 2 to Stage 1
(10)
10
-
-
-
- Transfer from Stage 2 to Stage 3
-
1
(1)
-
-
- Transfer from Stage 3 to Stage 2
-
(8)
8
-
-
- Transfer from Stage 3 to Stage 1
(21)
-
21
-
-
Impact on year-end ECL of exposures transferred
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
between stages during the year
26
(16)
(82)
-
(72)
Financial assets derecognized during the period
33
6
20
-
58
New financial assets originated or purchased
(29)
(2)
(24)
-
(56)
Change in models
5
(2)
16
1
20
Net exchange differences
(11)
(1)
(2)
-
(13)
Transfers to disposal groups
1
-
-
-
1
Loss allowance on December 31
(156)
(32)
(86)
(1)
(276)
\n
The ECL allowance for debt securities measured at FVOCI of EUR 237 million (December 2022: EUR 276 million) does not
reduce the carrying amount of these investments (which are measured at fair value) but gives rise to an equal and opposite
gain in OCI.
Expected credit losses on mortgage loans increased by EUR (14) million to EUR (26) million as per December 2023 (2022: (12)
million). The increase in expected credit losses was mainly due to Change in models (14) million (2022: EUR 10 million). The
majority of the expected credit losses recognized are in Stage 1 EUR (24) million (2022: EUR (12) million).
In 2022 all Private loans and Other loans and relared expected credit losses were transferred to disposal groups. Upon
completion of the a.s.r. transaction all Private loans and Other loans and related expected credit losses were derecognized.
Based on the tables above, the following is a reconciliation of the loss allowance movements with an impact on the income
statement with the net impairment charge presented in the income statement. Other represents impairment charges on asset
types which are not individually material.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2023
2022
Mortgage loans measured at amortized cost
(15)
10
Debt securities measured at FVOCI
(44)
(108)
Other
(60)
(41)
Net impairment charge in P&L
(119)
(138)
\n
The following table further explains changes in the gross carrying amount / market value of the financial assets and their
significance to the changes in the loss allowance for the same portfolio as discussed above:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2023
\u00a0 \u00a0
ECL staging
\u00a0 \u00a0 \u00a0
\u00a0
Stage 1
Stage 2
Stage 3
\u00a0 \u00a0
\u00a0 \u00a0
Lifetime ECL
\u00a0 \u00a0 \u00a0
\u00a0 \u00a0
not credit-
Lifetime ECL
Purchased
\u00a0
Mortgage loans
12-month ECL
impaired
credit-impaired
credit impaired
Total
Gross carrying amount on January 1
10,416
2
-
-
10,418
Transfers:
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
- Transfer from Stage 1 to Stage 2
(39)
39
-
-
-
Financial assets derecognized during the period other
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
than write-offs
(566)
(5)
-
-
(571)
New financial assets originated or purchased
691
-
-
-
691
Net exchange differences
(354)
(1)
-
-
(355)
Gross carrying amount on December 31
10,147
35
-
-
10,182
(-) Expected credit losses on December 31
(24)
(1)
-
-
(26)
Net carrying amount on December 31
10,123
33
-
-
10,156
\n \n
2022
ECL staging
Stage 1
Stage 2
Stage 3
Lifetime ECL
not credit-
Lifetime ECL
Purchased
Mortgage loans
12-month ECL
impaired
credit-impaired
credit impaired
Total
Gross carrying amount on January 1
24,032
391
14
-
24,437
Transfers:
- Transfer from Stage 1 to Stage 2
(508)
508
-
-
-
- Transfer from Stage 1 to Stage 3
(1)
-
1
-
-
- Transfer from Stage 2 to Stage 1
29
(29)
-
-
-
Financial assets derecognized during the period other
than write-offs
(2,456)
(62)
(3)
-
(2,521)
New financial assets originated or purchased
3,738
109
-
-
3,848
Amortizations through income statement
(2)
-
-
-
(2)
Realized gains and losses through income statement
36
-
-
-
36
Net exchange differences
615
2
-
-
617
Other movements
(1,474)
-
-
-
(1,474)
Transfer to/from other headings
(2)
-
-
-
(2)
Transfers to disposal groups
(13,590)
(918)
(13)
-
(14,521)
Gross carrying amount on December 31
10,416
2
-
-
10,418
(-) Expected credit losses on December 31
(12)
-
-
-
(12)
Net carrying amount on December 31
10,405
2
-
-
10,407
\n
Other movements includes the elimination of movements connected to Aegon the Netherlands after the completion
\n
of the sale.
\n\n \n
2023
ECL staging
Stage 1
Stage 2
Stage 3
Lifetime ECL
not credit-
Lifetime ECL
Purchased
Debt securities
12-month ECL
impaired
credit-impaired
credit impaired
Total
Gross carrying amount on January 1
50,666
413
403
125
51,607
Transfers:
- Transfer from Stage 1 to Stage 2
(80)
80
-
-
-
- Transfer from Stage 1 to Stage 3
(45)
-
45
-
-
- Transfer from Stage 2 to Stage 3
-
(23)
23
-
-
- Transfer from Stage 3 to Stage 2
-
6
(6)
-
-
- Transfer from Stage 2 to Stage 1
76
(76)
-
-
-
- Transfer from Stage 3 to Stage 1
59
-
(59)
-
-
Financial assets derecognized during the period other
than write-offs
(7,836)
(83)
(111)
(27)
(8,057)
New financial assets originated or purchased
3,672
37
22
-
3,731
Unrealized gains/losses through equity
1,488
16
1
(10)
1,495
Amortizations through income statement
113
-
19
17
148
Net exchange differences
(1,637)
(13)
(12)
(4)
(1,666)
Other movements
(9)
-
-
-
(9)
Transfer to/from other headings
(6)
-
-
-
(6)
Gross carrying amount on December 31
46,461
357
325
100
47,242
Expected credit losses on December 31
(147)
(25)
(64)
(2)
(237)
\n \n
2022
ECL staging
Stage 1
Stage 2
Stage 3
Lifetime ECL
not credit-
Lifetime ECL
Purchased
Debt securities
12-month ECL
impaired
credit-impaired
credit impaired
Total
Gross carrying amount on January 1
70,132
259
433
150
70,974
Transfers:
- Transfer from Stage 1 to Stage 2
(228)
228
-
-
-
- Transfer from Stage 1 to Stage 3
(77)
-
77
-
-
- Transfer from Stage 2 to Stage 3
-
(15)
15
-
-
- Transfer from Stage 3 to Stage 2
-
2
(2)
-
-
- Transfer from Stage 2 to Stage 1
33
(33)
-
-
-
- Transfer from Stage 3 to Stage 1
6
-
(6)
-
-
Financial assets derecognized during the period other
than write-offs
(11,855)
(47)
(112)
(30)
(12,043)
New financial assets originated or purchased
6,411
45
45
-
6,501
Unrealized gains/losses through equity
(16,599)
(94)
(123)
(26)
(16,842)
Amortizations through income statement
267
2
38
20
327
Movements related to fair value hedges
(12)
-
-
-
(12)
Net exchange differences
4,525
15
29
10
4,580
Other movements
(52)
50
10
-
7
Transfers to disposal groups
(1,884)
-
-
-
(1,884)
Gross carrying amount on December 31
50,666
413
403
125
51,607
Expected credit losses on December 31
(156)
(32)
(86)
(1)
(276)
\n
The total amount of undiscounted ECL at initial recognition for purchased or originated credit-impaired financial assets
\n
recognized during the period was EUR EUR 2 million (2022: EUR 1 million).
\n
Sensitivity on ECL to future-economic conditions
\n
ECL are sensitive to judgments and assumptions made regarding the formulation of forward looking scenarios and how
\n
such scenarios are incorporated into the calculations. Management performs a sensitivity analysis on the ECL recognized
\n
on material classes of its assets. As ECL is not material at the end of 2023 and 2022, sensitivity on ECL is being assessed to be
\nnot material for 2023 and 2022 either. ", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f28034": { "value": "4.2.5 Unconsolidated structured entities
Aegon's investments in unconsolidated structured entities such as RMBSs, CMBSs and ABSs and investment funds are
presented in the line item \"Investments\" of the statement of financial position. Aegon's interests in these unconsolidated
structured entities can be characterized as basic interests, Aegon does not have loans, derivatives, guarantees or other
interests related to these investments. Any existing commitments such as future purchases of interests in investment funds are
disclosed in note 39 Commitments and contingencies.
For debt instruments, specifically for RMBSs, CMBSs and ABSs, the maximum exposure to loss is equal to the carrying
amount which is reflected in the credit risk concentration table regarding debt securities and money market investments.
To manage credit risk Aegon invests primarily in senior notes of RMBSs, CMBSs and ABSs. The composition of the RMBSs,
CMBSs and ABSs portfolios of Aegon are widely dispersed looking at the individual amount per entity, therefore Aegon
only has non-controlling interests in individual unconsolidated structured entities. Furthermore these investments are not
originated by Aegon.
Except for commitments as noted in note 39 Commitments and contingencies, Aegon did not provide, nor is required to provide
financial or other support to unconsolidated structured entities. Nor does Aegon have intentions to provide financial or other
support to unconsolidated structured entities in which Aegon has an interest or previously had an interest.
For RMBSs, CMBSs and ABSs in which Aegon has an interest at reporting date, the following table presents total income
received from those interests. The Investments column reflects the carrying values recognized in the statement of financial
position of Aegon's interests in RMBSs, CMBSs and ABSs.
\u00a0
Total income for the year ended December 31, 2023
December 31, 2023
\u00a0 \u00a0
Total gains and
\u00a0 \u00a0
\u00a0 \u00a0
losses on sale of
\u00a0 \u00a0
2023
Interest income
assets
Total
Investments
Residential mortgage-backed securities
67
(15)
52
933
Commercial mortgage-backed securities
92
12
105
2,323
Asset-backed securities
40
14
54
560
ABSs - Other
134
57
191
3,037
Total
334
68
402
6,853
\u00a0
Total income for the year ended December 31, 2022
December 31, 2022
\u00a0 \u00a0
Total gains and
\u00a0 \u00a0
\u00a0 \u00a0
losses on sale of
\u00a0 \u00a0
2022
Interest income
assets
Total
Investments
Residential mortgage-backed securities
104
26
130
1,141
Commercial mortgage-backed securities
120
(723)
(603)
2,838
Asset-backed securities
25
(34)
(9)
440
ABSs - Other
92
(416)
(324)
2,478
Total
341
(1,148)
(807)
6,897
\n", "dimensions": { "concept": "ifrs-full:DisclosureOfUnconsolidatedStructuredEntitiesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f28228": { "value": "4.2.6 Expected credit losses
Measurement
The estimation of credit exposure for risk management purposes is complex and requires the use of models, as the exposure
varies with changes in market conditions, expected cash flows and the passage of time. The assessment of credit risk
of a portfolio of assets entails further estimations as to the likelihood of defaults occurring, of the associated loss ratios
and of default correlations between counterparties. Aegon measures credit risk using Probability of Default (PD), Exposure
at Default (EAD) and Loss Given Default (LGD). This is similar to the approach used for the purposes of measuring the Expected
Credit Loss (ECL) under IFRS 9. See section on ECL developments in the reporting period later in this note for more details.
Losses as a result of credit risk are a natural part of investing in fixed-income securities. The amount of and compensation
for this risk are related. A significant management measure to avoid excessive credit risk is to diversify and limit exposure
to individual issuers.
a) Recognition of expected credit losses
IFRS 9 outlines a \"three-stage\" model for impairment based on relative changes in credit quality since initial recognition:
\u2022
a financial instrument that is not credit-impaired on initial recognition is classified in \"Stage 1\";
\u2022
if a significant increase in credit risk (\"SICR\") since initial recognition is identified, the financial instrument is moved to \"Stage
2\" but is not yet deemed to be credit-impaired (see \u201cSignificant increase in credit risk\u201d for further details);
\u2022
if the financial instrument is credit-impaired, the financial instrument is then moved to \"Stage 3\".
Credit risk is continuously monitored by the Group in all the above stages.
Financial instruments in Stage 1 have their Expected Credit Loss (ECL) measured at an amount equal to the portion of lifetime
expected credit losses that result from default events possible within the next 12 months. Financial instruments in Stages
2 or 3 have their ECL measured based on expected credit losses on a lifetime basis. Purchased or originated credit-impaired
financial assets are those financial assets that are credit-impaired on initial recognition. Their ECL is always measured on a
lifetime basis.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Stage 1
Stage 2
Stage 3
Purchased or Originated
\u00a0
Impaired
Under-performing
Non-performing
Credit Impared (POCI)
ECL
12 month ECL
Lifetime ECL
Lifetime ECL
Lifetime ECL
\u00a0\u00a0
Quantitative and
\u00a0\u00a0
Provision Trigger
n.a.
Qualitative Triggers
Qualitative Triggers
Qualitative Triggers
\u00a0
Up to date and early
> 30 DPD (rebuttable
> 90 DPD (rebuttable
\u00a0
Days Past Due ('DPD') Backstop
arrears (< 30 DPD)
presumption)
presumption)
n.a.
\u00a0\u00a0\u00a0\u00a0
Interest calculated on
\u00a0\u00a0\u00a0\u00a0
net carrying amount
\u00a0
Interest calculated on
Interest calculated on
Interest calculated on
using a credit-adjusted
Interest Income
gross carrying amount
gross carrying amount
net carrying amount
effective interest rate
\n
1
n.a. in above table should be read as \u201cnot applicable\u201d.
Following this assessment, IFRS 9 requires the incorporation of multiple, forward looking macro- scenarios to drive the
ECL provision.
IFRS 9 requires that the measurement of ECL represent an unbiased probability-weighted amount that is to be determined by:
\u2022
evaluating a range of possible outcomes;
\u2022
use reasonable and supportable information available without undue cost and effort about past events;
\u2022 current conditions; and
\u2022
forecasts of future economic conditions.
When incorporating forward looking information, consideration should be given to the relevance of the information (and the
availability of more relevant information) for each specific financial instrument or group of financial instruments. Forward
looking information that is relevant for one financial instrument may not be relevant or as relevant for other financial
instruments depending on the specific drivers of credit risk. To the extent relevant, forward-looking information used for the
measurement of ECLs it needs to be consistent with that used for the assessment of a significant increase in credit risk.
The models used by the Group generally employ a Probability of Default / Loss Given Default / Exposure at Default methodology;
each model consists of multiple sub-models that are used to generate the measurement of expected credit loss.
Credit losses are calculated as the product of projected PD, LGD and EAD and are discounted using an appropriate discount
rate. The ECL is determined as the probability weighted discounted credit losses that are determined for different scenarios (i.e.
base, positive, adverse).
Given the need to adapt the models to the different portfolio characteristics, all ECL models have different key judgments and
assumptions. As such, the below paragraphs outline the key judgements and assumptions made by the Group in addressing the
key requirements on a model-by-model basis.
The Group employs separate models to calculate ECL on each category of financial assets.
For bonds and private placements, the Group applies a global correlation model. It provides correlations of credit quality
movements across different asset classes, linked with movements in the macro economy. Global correlation model is therefore
used for determining the conditional PD and LGD, given a macroeconomic scenario. Unconditional PD and LGD curves are
modelled with use of different methods for sovereign debt, corporate bonds and private placements.
For commercial mortgage loans and mortgage-backed securities the parameters are estimated with commercial mortgage
metrics which uses corporate bond PD and LGD estimates further adjusted with other assumptions based on debt service
coverage and loan-to-value ratios.
The Group applies a separate model for asset-backed securities, which pools the instruments based on the underlying
collateral and estimates credit loss parameters collectively. Collateralized debt (loan) obligations (CDOs and CLOs) are special
types of asset-backed securities to which a different set of models are applied depending on region of the exposure.
b) Significant increase in credit risk
Aegon considers a financial instrument to have experienced a significant increase in credit risk when one or more of the
following quantitative, qualitative or backstop criteria have been met:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Asset class
Quantitative criteria
Qualitative criteria
Backstop criteria
\u00a0
Relative change in Forward-in-
\u00a0 \u00a0
Commercial mortgages
Time Probability of Default
None
60 days past due backstop
Private loans
Relative changes in rating
Watchlist approach
No other backstop applied
Debt securities
Relative changes in rating
Watchlist approach
No other backstop applied
Structured finance
Relative changes in rating
Watchlist approach
30 days past due backstop
Deposits with financial institutions
Relative changes in rating
Watchlist approach
No other backstop applied
\u00a0
Defined as for the respective
\u00a0 \u00a0
\u00a0
loans to which the commitment
\u00a0 \u00a0
Loan commitments
relates
\u00a0 \u00a0
\u00a0
Defined as for the respective
\u00a0 \u00a0
\u00a0
loans to which the commitment
\u00a0 \u00a0
Financial guarantees
relates
\u00a0 \u00a0
\n
The quantitative factor(s) should indicate whether the credit risk of an instrument has increased significantly since initial
recognition. When making this assessment, Aegon shall use the change in the risk of a default occurring over the expected life
of the financial instrument. Aegon uses a mix of relative and absolute thresholds:
\u2022
The relative threshold measures the relative increase in credit risk since origination.
\u2022
The absolute threshold defines a stage for each rating and is mainly used when the rating at origination is not available or
when an instrument is already in default.
The relative thresholds are defined in two steps:
\u2022
A PD-based statistical analysis is performed to determine an optimal PD threshold that provides the best predictor for default;
\u2022
The PD-based thresholds are translated in rating-based rules, which are more intuitive and practically applicable.
These PD thresholds can be translated into rating-based thresholds using standard Moody\u2019s rating to PD mappings.
The difference between the PD at origination and the PD corresponding to the threshold determines the number of notches that
the rating must drop by. E.g. for a one year old instrument with a one year remaining maturity this gives the following result:
Starting Rating
Number of Notches Down
1/Aaa
2/Aa1
3/Aa2
4/Aa3
5/A1
6/A2
7/A3
8/Baa1
9/Baa2
10/Baa3
11/Ba1
12/Ba2
13/Ba3
6
5
4
3
PD amounts used by Aegon are bunched into ranges in below table. Each range contains the minimum and maximum
of PDs on both financial and corporate assets of a 1-10 year term. As Aegon US represents the Group the best, PD amounts
of Americas is presented below.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
PD range 2023
Minimum
Maximum
AAA
0.0002
0.0024
AA
0.0003
0.0037
A
0.0007
0.0057
BBB
0.0020
0.0085
BB
0.0055
0.0085
B
0.0138
0.0308
CCC or lower
0.0205
1.0000
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
PD range 2022
Minimum
Maximum
AAA
0.0003
0.0016
AA
0.0004
0.0029
A
0.0011
0.0051
BBB
0.0030
0.0088
BB
0.0081
0.0172
B
0.0160
0.0436
CCC or lower
0.0279
1.0000
\n
Quantitative criteria
For debt securities, private loans, structured finance securities and deposits with financial institutions the relative change
of the credit rating is used as primary indicator to assess significant increase in credit risk, for this purpose external credit
ratings are used.
Qualitative criteria
For debt securities, private loans, structured finance securities and deposits with financial institutions the watchlist approach
is applied as an additional qualitative criterion.
The watchlist approach means exposure of instruments on the watchlist are intensively monitored. Financial assets are added
to the watchlist based on if their relative change in fair value has surpassed a predetermined threshold:
\u2022
The fair value either drops to 80% and below the (amortized) cost price and stays there for six months; or
\u2022
The fair value falls by 20% over 3 months; or
\u2022
The fair value falls to 60% and below the (amortized) cost price.
In relation to debt securities and private loans, where a watchlist is used to monitor credit risk, this assessment is performed
at the counterparty level and on a periodic basis. The criteria used to identify SICR are monitored and reviewed periodically for
appropriateness by the Group.
Backstop
A backstop is applied to exposures considered to have experienced a significant increase in credit risk if the borrower is more
than 30 days past due on its contractual payments in case of structured finance and 60 days in case commercial mortgage
loans. No backstop is applied to the other asset classes.
Aegon has used the low credit risk exemption for debt instruments. Debt instruments that have a credit rating which responds
with \"investment grade\" (rating \"BBB\" or higher) are considered as having low credit risk. As such, external and internal credit
ratings are used respectively for these assets to assess whether a significant increase in credit risk has occurred.
Low credit risk exemption is applied for staging purposes on instruments rated BBB and higher. (IFRS 9 provides an exception
for financial instruments that have low credit risk at the reporting date, commonly referred to as the \u201clow credit risk exemption\u201d
or LCRE, it is an exception to the general model where entities have an option not to assess whether credit risk has increased
significantly since initial recognition if the credit risk is considered low.)
Loan commitments and financial guarantees
For loan commitments and financial guarantees, Aegon defines default in the same way as for the respective loan or financial
instrument to which a commitment relates or a guarantee is issued for (considering the factors described above).
c) Definition of default and credit-impaired assets
Aegon assesses a financial instrument to be in default or credit-impaired using the following criteria:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Asset class
Quantitative criteria
Qualitative criteria
Commercial mortgages
90 days past due backstop
Foreclosure
\u00a0\u00a0
Sale at material credit-related economic loss
Debt securities and private loans
5 days past due backstop
Rating falling to 'D' (external or internal)
\u00a0\u00a0
Breach of significant covenants without reasonably
\u00a0\u00a0
supportable waiver obtained
\u00a0\u00a0
Distressed restructuring taking place
\u00a0\u00a0
Bankruptcy or an equivalent of an injunction for the obligor
\u00a0\u00a0
was filed
\u00a0\u00a0
Obligor was classified as default internally
Deposits with financial institution
5 days past due backstop
Rating falling to 'D' (external or internal)
\u00a0\u00a0
Breach of significant covenants without reasonably
\u00a0\u00a0
supportable waiver obtained
\u00a0\u00a0
Distressed restructuring taking place
\u00a0\u00a0
Bankruptcy or an equivalent of an injunction for the obligor
\u00a0\u00a0
was filed
\u00a0\u00a0
Obligor was classified as default internally
Structured securities
90 days past due backstop
Rating falling to 'D' (external or internal)
\u00a0\u00a0
Loss coverage ratio (Ratio of credit-related losses to the par
\u00a0\u00a0
value of a debt security) is below 1
Receivables
90 days past due backstop
\u00a0
\u00a0
Defined as for the respective loans to
Defined as for the respective loans to which the commitment
Loan commitments
which the commitment relates
relates
\u00a0
Defined as for the respective
\u00a0
\u00a0
exposures to which the financial
Defined as for the respective exposures to which the financial
Financial guarantee contracts
guarantee relates
guarantee relates
\n
Distressed restructuring means material forgiveness, or postponements of principal, interest, or where relevant, fees which
is likely to result in a diminished financial obligation.
In addition to the criteria included in the table above, Aegon identifies other indicators of unlikeliness to pay, which include but
are not limited to the following:
\u2022
a borrower\u2019s sources of recurring income are no longer available to meet the payments of instalments;
\u2022
there are justified concerns about a borrower\u2019s future ability to generate stable and sufficient cash flows;
\u2022
the borrower\u2019s overall leverage level has significantly increased beyond applicable limits or there are justified expectations of
such changes to leverage;
\u2022
for the exposures to an individual: default of a company fully owned by a single individual where this individual provided the
institution with a personal guarantee for all obligations of a company;
\u2022 material fraud; or
\u2022 death of a client.
All the criteria above have been applied to the financial instruments held by Aegon and are consistent with the definition
of default used for internal credit risk management purposes. The definition of default has been applied consistently to model
the Probability of Default, Exposure at Default throughout the Aegon\u2019s expected loss calculations.
An instrument is considered to no longer be in default (i.e. to have \"cured\") when it no longer meets any of the default criteria
for a consecutive period of six months and an assessment has shown the obligor is no longer unlikely to pay. This period
of six months considers the likelihood of a financial instrument returning to default status after cure using different possible
cure definitions.
d) Measuring ECL \u2013 inputs, assumptions and estimation techniques
The ECL is measured on either a \"12-month basis\" (Stage 1) or \"lifetime basis\" (Stages 2 and 3), depending on whether
a significant increase in credit risk has occurred since initial recognition or whether an asset is considered to be credit-impaired.
The expected credit losses are the discounted product of the Probability of Default, Exposure at Default, and Loss Given Default,
defined as follows:
\u2022
The PD represents the likelihood of a borrower defaulting on its financial obligation (as per \u201cDefinition of default and credit-
impaired\u201d above), either over the next 12 months (12M PD), or over the remaining lifetime (Lifetime PD) of the obligation.
\u2022
EAD is based on the amounts the Group expects to be owed at the time of default.
\u2022
Loss Given Default represents Aegon\u2019s expectation of the extent of loss on a defaulted exposure. LGD varies by type of
counterparty, type and seniority of claim and availability of collateral or other credit support. LGD is expressed as a
percentage loss per unit of exposure at the time of default.
The discount rate used in the ECL calculation is the original effective interest rate or an approximation thereof.
The lifetime PD is calculated for a financial instrument that results in default by summing the probabilities of all future
developments which end-up in the ECL. All possible future developments are enumerated and for each future development
a probability is calculated. The possibility of full prepayment is included among all possible future developments. For each
possible future development the probability is estimated using statistical modeling techniques.
Forward-looking economic information is included in determining the 12-month and lifetime ECL, and lifetime PD by using a set
of variables describing the state of the macro economy as input in the calculation of the probability of default and prepayment.
As described above, and subject to using a maximum of a 12-month PD for financial assets for which credit risk has not
significantly increased, the Group measures ECL considering the risk of default over the maximum contractual period (including
any borrower\u2019s extension options) over which Aegon is exposed to credit risk, even if the Group considers a longer period.
There have been no significant changes in estimation techniques or significant assumptions made during the reporting period.
e) Forward-looking information incorporated in the ECL models
The assessment of significant increase in credit risk (SICR) and the calculation of ECL both incorporate forward-looking
information. Aegon has performed historical analysis and identified the key economic variables impacting credit risk and
expected credit losses for each portfolio.
These economic variables and their associated impact on the ECL and Lifetime PD vary by financial instrument. Expert
judgment has also been applied in this process. Forecasts of these economic variables (the \u201cbase economic scenario\u201d) give
the best estimate view of the economy over the next five years. After five years, to project the economic variables out for the
full remaining lifetime of each instrument, a mean reversion approach has been used, which means that economic variables
tend to either a long run average rate (e.g. for unemployment) or a long run average growth rate (e.g. GDP) over a period of three
years. Statistical regression analysis has been performed to understand the impact changes in these macro-economic
variables have had historically on default and prepayment rates.
Using the base scenario as a starting point, three macro-economic scenarios are generated by applying shocks to the macro-
economic variables in a positive and negative direction, taking into account their correlation as historically observed, resulting
in a positive, neutral and negative scenario. The shocks applied correspond to the historical average deviance from the long
term mean observed in the best/worst 10% of the historically observed quarters. The ECL is calculated for each of the three
scenarios, multiplied by the scenario weighting, and summed. The use of multiple economic scenarios ensures that the ECL
represents the best estimate of expected credit loss and is not merely the credit loss in the most likely scenario.
As with any economic forecasts, the projections and likelihoods of occurrence are subject to a high degree of inherent
uncertainty, and therefore, the actual outcomes may be significantly different to those projected. The Group considers these
forecasts to represent its best estimate of the possible outcomes.
Economic variable assumptions
The most significant period-end assumptions used for the ECL estimate are set out below. The scenarios \u201cbase\u201d, \u201cupside\u201d, and
\u201cdownside\u201d were used for all portfolios.
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
Economic variable
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
assumptions,
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
December 31,
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
2023
\u00a0
2024
2025
2026
2027
Units
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Interest Rates: 10-Year Treasury Constant
Interest rates
Base
4.11
4.04
4.02
4.03
Maturities, (% p.a., NSA
1)
)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Interest Rates: 10-Year Treasury Constant
Interest rates
Upside
4.21
4.13
4.02
4.03
Maturities, (% p.a., NSA
1)
)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Interest Rates: 10-Year Treasury Constant
Interest rates
Downside
2.31
3.24
3.71
3.89
Maturities, (% p.a., NSA
1)
)
Unemployment rate
Base
4.03
4.06
3.97
3.94
(%, SA)
Unemployment rate
Upside
3.08
3.41
3.34
3.35
(%, SA)
Unemployment rate
Downside
7.56
6.90
5.70
4.88
(%, SA)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Existing Single-Family Home Price: Median,
House Price Index
Base
400.12
393.70
394.21
403.50
(Ths. USD, SA)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Existing Single-Family Home Price: Median,
House Price Index
Upside
419.87
423.62
428.16
439.72
(Ths. USD, SA)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Existing Single-Family Home Price: Median,
House Price Index
Downside
339.91
347.29
352.66
363.59
(Ths. USD, SA)
Domestic GDP
Base
22,900.95
23,303.78
23,825.37
24,397.71
Bil. Ch. 2012 USD, SAAR
2)
Domestic GDP
Upside
23,354.42
23,883.09
24,451.63
25,020.82
Bil. Ch. 2012 USD, SAAR
2)
Domestic GDP
Downside
22,039.64
22,368.94
23,099.22
23,768.80
Bil. Ch. 2012 USD, SAAR
2)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Standard & Poor's (S&P); Moody's Analytics
Equity
Base
4,672.66
4,796.24
5,043.19
5,368.63
Forecasted
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Standard & Poor's (S&P); Moody's Analytics
Equity
Upside
4,950.59
5,058.20
5,256.09
5,490.26
Forecasted
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Standard & Poor's (S&P); Moody's Analytics
Equity
Downside
2,904.90
3,226.25
3,942.26
4,603.90
Forecasted
\n
1
NSA: National Security Agency
2
SAAR: Seasonally adjusted annual rate
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
Economic variable
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
assumptions,
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
December 31,
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
2022
\u00a0
2023
2024
2025
2026
Units
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Interest Rates: 10-Year Treasury Constant Maturities, (%
Interest rates
Base
3.94
3.86
3.86
3.99
p.a., NSA
1)
)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Interest Rates: 10-Year Treasury Constant Maturities, (%
Interest rates
Upside
4.04
3.96
3.86
3.98
p.a., NSA
1)
)
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Interest Rates: 10-Year Treasury Constant Maturities, (%
Interest rates
Downside
2.13
2.59
3.34
3.78
p.a., NSA
1)
)
Unemployment rate
Base
3.82
4.22
4.19
4.15
(%, SA)
Unemployment rate
Upside
3.04
3.33
3.59
3.53
(%, SA)
Unemployment rate
Downside
6.52
7.64
6.34
5.48
(%, SA)
House Price Index
Base
385.74
372.68
371.61
379.79
Existing Single-Family Home Price: Median, (Ths. USD, SA)
House Price Index
Upside
396.53
400.29
399.99
413.28
Existing Single-Family Home Price: Median, (Ths. USD, SA)
House Price Index
Downside
341.01
331.35
339.24
347.82
Existing Single-Family Home Price: Median, (Ths. USD, SA)
Domestic GDP
Base
20,410.05
20,741.30
21,301.03
21,891.77
Bil. Ch. 2012 USD, SAAR
2)
Domestic GDP
Upside
20,705.70
21,265.32
21,796.25
22,379.68
Bil. Ch. 2012 USD, SAAR
2)
Domestic GDP
Downside
20,009.19
19,956.30
20,566.77
21,238.89
Bil. Ch. 2012 USD, SAAR
2)
Equity
Base
4,343.49
4,498.93
4,655.70
4,905.28
Standard & Poor's (S&P); Moody's Analytics Forecasted
Equity
Upside
4,690.53
4,727.85
4,923.08
5,047.37
Standard & Poor's (S&P); Moody's Analytics Forecasted
Equity
Downside
3,062.99
2,836.89
3,326.54
4,000.34
Standard & Poor's (S&P); Moody's Analytics Forecasted
\n
1
NSA: National Security Agency
2
SAAR: Seasonally adjusted annual rate
The weightings assigned to each economic scenario were as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Weightings
Base
Upside
Downside
On December 31, 2023
40
30
30
On December 31, 2022
40
30
30
\n
Other forward-looking considerations not otherwise incorporated within the above scenarios, such as the impact of any
regulatory, legislative or political changes, have also been considered, but are not deemed to have a material impact,
and therefore, no adjustment has been made to the ECL for such factors. This process is reviewed and monitored for
appropriateness on a quarterly basis.
f) Write-off policy
The Group writes-off financial assets, in whole or in part, when it has exhausted all practical recovery efforts and has concluded
there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include (i) ceasing
enforcement activity; and (ii) where Aegon\u2019s recovery method is foreclosing on collateral and the value of the collateral is such
that there is no reasonable expectation of recovering in full.
The Group may write-off financial assets that are still subject to enforcement activity. The outstanding contractual amounts
of such assets written-off during 2023 is not material. The Group still seeks to recover amounts it is legally owed in full, but
which have been partially written off due to no reasonable expectation of full recovery.
g) Modification of financial assets
The Group has the option to modify the terms of loans provided to customers due to commercial renegotiations, or for
distressed loans, with a view to maximizing recovery. Such restructuring activities include extended payment term and
penalty interest arrangements. Restructuring policies and practices are based on indicators or criteria which, in the judgment
of management, indicate that payment will most likely continue. These policies are kept under continuous review.
The risk of default of such assets after modification is assessed at the reporting date and compared with the risk under the
original terms at initial recognition, when the modification is not substantial and so does not result in derecognition of the
original asset. The Group monitors the subsequent performance of modified assets. Aegon may determine that the credit risk
has significantly improved after restructuring, so that the assets are moved from Stage 3 or Stage 2 (Lifetime ECL) to Stage 1
(12-month ECL) (see note 4.2.6(a) for details of the Group ECL staging classification). This is only the case for assets which have
performed in accordance with the new terms for three consecutive months or more. The gross carrying amount of such assets
held on December 31 2023 was EUR 0 million (2022: EUR 0 million).
ECL developments in the reporting period
Aegon regularly monitors industry sectors and individual debt securities for sources of changes in the ECL allowance. These
sources may include one or more of the following:
\u2022
Transfers between Stages 1, 2 and 3 due to financial instruments experiencing significant increases (or decreases) of
credit risk or becoming credit-impaired in the period, and the consequent \u201cstep up\u201d (or \u201cstep down\u201d) between 12-month and
lifetime ECL;
\u2022
Additional allowances for new financial instruments recognized during the period, as well as releases for financial
instruments de-recognized in the period;
Impact on the measurement of ECL due to changes in PDs, EADs and LGDs in the period, arising from regular refreshing of
inputs to models;
\u2022
Impacts on the measurement of ECL due to changes made to models and assumptions;
\u2022
Discount unwind within ECL due to the passage of time, as ECL is measured on a present value basis;
\u2022
Foreign exchange retranslations for assets denominated in foreign currencies and other movements; and,
\u2022
Financial assets derecognized during the period and write-offs of allowances related to assets that were written off during
the period.
In addition, for asset-backed securities, cash flow trends and underlying levels of collateral are monitored. Furthermore,
quality ratings of investment portfolios are based on a composite of the main rating agencies (S&P, Moody\u2019s and Fitch) and
Aegon\u2019s internal rating of the counterparty. The following tables explain the changes in the loss allowance changes between
the beginning and the end of the annual period due to these factors:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0\u00a0\u00a0
2023
\u00a0\u00a0
\u00a0\u00a0
ECL staging
\u00a0\u00a0\u00a0
\u00a0
Stage 1
Stage 2
Stage 3
\u00a0\u00a0
\u00a0\u00a0
Lifetime ECL
\u00a0\u00a0\u00a0
\u00a0\u00a0
not credit-
Lifetime ECL
Purchased
\u00a0
Debt securities
12-month ECL
impaired
credit-impaired
credit impaired
Total
Loss allowance on January 1
(156)
(32)
(86)
(1)
(276)
Transfers:
\u00a0\u00a0\u00a0\u00a0\u00a0
- Transfer from Stage 1 to Stage 2
2
(2)
-
-
-
- Transfer from Stage 1 to Stage 3
2
-
(2)
-
-
- Transfer from Stage 2 to Stage 1
(3)
3
-
-
-
- Transfer from Stage 2 to Stage 3
-
3
(3)
-
-
- Transfer from Stage 3 to Stage 2
-
(4)
4
-
-
- Transfer from Stage 3 to Stage 1
(39)
-
39
-
-
Impact on year-end ECL of exposures transferred
\u00a0\u00a0\u00a0\u00a0\u00a0
between stages during the year
36
(2)
(39)
-
(5)
Financial assets derecognized during the period
26
3
44
-
73
New financial assets originated or purchased
(16)
(1)
(9)
-
(26)
Change in models
(5)
6
(14)
(1)
(13)
Net exchange differences
5
1
2
-
9
Loss allowance on December 31
(147)
(25)
(64)
(2)
(238)
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2022
\u00a0 \u00a0
ECL staging
\u00a0 \u00a0 \u00a0
\u00a0
Stage 1
Stage 2
Stage 3
\u00a0 \u00a0
\u00a0 \u00a0
Lifetime ECL
\u00a0 \u00a0 \u00a0
\u00a0 \u00a0
not credit-
Lifetime ECL
Purchased
\u00a0
Debt securities
12-month ECL
impaired
credit-impaired
credit impaired
Total
Loss allowance on January 1
(161)
(13)
(38)
(2)
(214)
Transfers:
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
- Transfer from Stage 1 to Stage 2
7
(7)
-
-
-
- Transfer from Stage 1 to Stage 3
3
-
(3)
-
-
- Transfer from Stage 2 to Stage 1
(10)
10
-
-
-
- Transfer from Stage 2 to Stage 3
-
1
(1)
-
-
- Transfer from Stage 3 to Stage 2
-
(8)
8
-
-
- Transfer from Stage 3 to Stage 1
(21)
-
21
-
-
Impact on year-end ECL of exposures transferred
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
between stages during the year
26
(16)
(82)
-
(72)
Financial assets derecognized during the period
33
6
20
-
58
New financial assets originated or purchased
(29)
(2)
(24)
-
(56)
Change in models
5
(2)
16
1
20
Net exchange differences
(11)
(1)
(2)
-
(13)
Transfers to disposal groups
1
-
-
-
1
Loss allowance on December 31
(156)
(32)
(86)
(1)
(276)
\n
The ECL allowance for debt securities measured at FVOCI of EUR 237 million (December 2022: EUR 276 million) does not
reduce the carrying amount of these investments (which are measured at fair value) but gives rise to an equal and opposite
gain in OCI.
Expected credit losses on mortgage loans increased by EUR (14) million to EUR (26) million as per December 2023 (2022: (12)
million). The increase in expected credit losses was mainly due to Change in models (14) million (2022: EUR 10 million). The
majority of the expected credit losses recognized are in Stage 1 EUR (24) million (2022: EUR (12) million).
In 2022 all Private loans and Other loans and relared expected credit losses were transferred to disposal groups. Upon
completion of the a.s.r. transaction all Private loans and Other loans and related expected credit losses were derecognized.
Based on the tables above, the following is a reconciliation of the loss allowance movements with an impact on the income
statement with the net impairment charge presented in the income statement. Other represents impairment charges on asset
types which are not individually material.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2023
2022
Mortgage loans measured at amortized cost
(15)
10
Debt securities measured at FVOCI
(44)
(108)
Other
(60)
(41)
Net impairment charge in P&L
(119)
(138)
\n
The following table further explains changes in the gross carrying amount / market value of the financial assets and their
significance to the changes in the loss allowance for the same portfolio as discussed above:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2023
\u00a0 \u00a0
ECL staging
\u00a0 \u00a0 \u00a0
\u00a0
Stage 1
Stage 2
Stage 3
\u00a0 \u00a0
\u00a0 \u00a0
Lifetime ECL
\u00a0 \u00a0 \u00a0
\u00a0 \u00a0
not credit-
Lifetime ECL
Purchased
\u00a0
Mortgage loans
12-month ECL
impaired
credit-impaired
credit impaired
Total
Gross carrying amount on January 1
10,416
2
-
-
10,418
Transfers:
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
- Transfer from Stage 1 to Stage 2
(39)
39
-
-
-
Financial assets derecognized during the period other
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
than write-offs
(566)
(5)
-
-
(571)
New financial assets originated or purchased
691
-
-
-
691
Net exchange differences
(354)
(1)
-
-
(355)
Gross carrying amount on December 31
10,147
35
-
-
10,182
(-) Expected credit losses on December 31
(24)
(1)
-
-
(26)
Net carrying amount on December 31
10,123
33
-
-
10,156
\n \n
2022
ECL staging
Stage 1
Stage 2
Stage 3
Lifetime ECL
not credit-
Lifetime ECL
Purchased
Mortgage loans
12-month ECL
impaired
credit-impaired
credit impaired
Total
Gross carrying amount on January 1
24,032
391
14
-
24,437
Transfers:
- Transfer from Stage 1 to Stage 2
(508)
508
-
-
-
- Transfer from Stage 1 to Stage 3
(1)
-
1
-
-
- Transfer from Stage 2 to Stage 1
29
(29)
-
-
-
Financial assets derecognized during the period other
than write-offs
(2,456)
(62)
(3)
-
(2,521)
New financial assets originated or purchased
3,738
109
-
-
3,848
Amortizations through income statement
(2)
-
-
-
(2)
Realized gains and losses through income statement
36
-
-
-
36
Net exchange differences
615
2
-
-
617
Other movements
(1,474)
-
-
-
(1,474)
Transfer to/from other headings
(2)
-
-
-
(2)
Transfers to disposal groups
(13,590)
(918)
(13)
-
(14,521)
Gross carrying amount on December 31
10,416
2
-
-
10,418
(-) Expected credit losses on December 31
(12)
-
-
-
(12)
Net carrying amount on December 31
10,405
2
-
-
10,407
\n
Other movements includes the elimination of movements connected to Aegon the Netherlands after the completion
\n
of the sale.
\n\n \n
2023
ECL staging
Stage 1
Stage 2
Stage 3
Lifetime ECL
not credit-
Lifetime ECL
Purchased
Debt securities
12-month ECL
impaired
credit-impaired
credit impaired
Total
Gross carrying amount on January 1
50,666
413
403
125
51,607
Transfers:
- Transfer from Stage 1 to Stage 2
(80)
80
-
-
-
- Transfer from Stage 1 to Stage 3
(45)
-
45
-
-
- Transfer from Stage 2 to Stage 3
-
(23)
23
-
-
- Transfer from Stage 3 to Stage 2
-
6
(6)
-
-
- Transfer from Stage 2 to Stage 1
76
(76)
-
-
-
- Transfer from Stage 3 to Stage 1
59
-
(59)
-
-
Financial assets derecognized during the period other
than write-offs
(7,836)
(83)
(111)
(27)
(8,057)
New financial assets originated or purchased
3,672
37
22
-
3,731
Unrealized gains/losses through equity
1,488
16
1
(10)
1,495
Amortizations through income statement
113
-
19
17
148
Net exchange differences
(1,637)
(13)
(12)
(4)
(1,666)
Other movements
(9)
-
-
-
(9)
Transfer to/from other headings
(6)
-
-
-
(6)
Gross carrying amount on December 31
46,461
357
325
100
47,242
Expected credit losses on December 31
(147)
(25)
(64)
(2)
(237)
\n \n
2022
ECL staging
Stage 1
Stage 2
Stage 3
Lifetime ECL
not credit-
Lifetime ECL
Purchased
Debt securities
12-month ECL
impaired
credit-impaired
credit impaired
Total
Gross carrying amount on January 1
70,132
259
433
150
70,974
Transfers:
- Transfer from Stage 1 to Stage 2
(228)
228
-
-
-
- Transfer from Stage 1 to Stage 3
(77)
-
77
-
-
- Transfer from Stage 2 to Stage 3
-
(15)
15
-
-
- Transfer from Stage 3 to Stage 2
-
2
(2)
-
-
- Transfer from Stage 2 to Stage 1
33
(33)
-
-
-
- Transfer from Stage 3 to Stage 1
6
-
(6)
-
-
Financial assets derecognized during the period other
than write-offs
(11,855)
(47)
(112)
(30)
(12,043)
New financial assets originated or purchased
6,411
45
45
-
6,501
Unrealized gains/losses through equity
(16,599)
(94)
(123)
(26)
(16,842)
Amortizations through income statement
267
2
38
20
327
Movements related to fair value hedges
(12)
-
-
-
(12)
Net exchange differences
4,525
15
29
10
4,580
Other movements
(52)
50
10
-
7
Transfers to disposal groups
(1,884)
-
-
-
(1,884)
Gross carrying amount on December 31
50,666
413
403
125
51,607
Expected credit losses on December 31
(156)
(32)
(86)
(1)
(276)
\n
The total amount of undiscounted ECL at initial recognition for purchased or originated credit-impaired financial assets
\n
recognized during the period was EUR EUR 2 million (2022: EUR 1 million).
\n
Sensitivity on ECL to future-economic conditions
\n
ECL are sensitive to judgments and assumptions made regarding the formulation of forward looking scenarios and how
\n
such scenarios are incorporated into the calculations. Management performs a sensitivity analysis on the ECL recognized
\n
on material classes of its assets. As ECL is not material at the end of 2023 and 2022, sensitivity on ECL is being assessed to be
\nnot material for 2023 and 2022 either.", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f31514": { "value": "4.3 Market risk
Market risk is the risk that changes in market prices (e.g. foreign exchange rates, interest rates) will affect the fulfillment
\n
cash flows of insurance and reinsurance contracts as well as the fair value or future cash flows of financial instruments. The
\n
objective of market risk management is to control exposures within acceptable parameters while optimizing the return on risk.
\n
Aegon\u2019s management of market risk comprises equity price risk, interest rate risk and currency risk.
\n
4.3.1 Equity market risk and other investments risk
\n
Fluctuations in the equity, real estate and capital markets have affected Aegon's profitability, capital position and sales of equity
\n
related products in the past and may continue to do so. Exposure to equity, real estate and capital markets exists in both
\n
assets and liabilities. Asset exposure exists through direct equity investment, where Aegon bears all or most of the volatility
\n
in returns and investment performance risk. Equity market exposure is also present in insurance and investment contracts for
\n
policyholders where funds are invested in equities, backing variable annuities, unit-linked products and mutual funds. Although
\n
most of the risk remains with the policyholder, lower investment returns can reduce the asset management fee earned
\n
by Aegon on the asset balance in these products. In addition, some of this business has minimum return or accumulation
\n
guarantees.
\n
In 2021, Transamerica expanded its dynamic hedge program to variable annuities with guaranteed minimum death benefit
\n
riders (GMDB) and remaining policies with guaranteed minimum income (GMIB) riders. This builds on the effective dynamic
\n
hedge program of policies with guaranteed minimum withdrawal benefits (GMWB). The dynamic hedge program covers the
\n
equity risks (and interest rate risk) embedded in the guarantees of its entire variable annuity portfolio. Dynamic hedging
\n
stabilizes cash flows and reduces sensitivities to changes in equity markets (and interest rates) on an economic basis.
The equity, real estate and other non-fixed-income portfolio of Aegon is as follows:
\n \n
Asset
Holding
United
Interna-
Manage-
and other
Total
Equity, real estate and non-fixed income exposure
Americas
Kingdom
tional
ment
activities
2023
1)
Equity funds
133
-
-
9
-
141
Common shares
1)
106
14
5
-
-
126
Preferred shares
29
-
-
-
-
29
Investments in real estate
38
-
17
-
-
55
Hedge funds
6
-
-
-
-
6
Other alternative investments
2,404
-
-
-
-
2,404
Other financial assets
1,856
772
4
1
-
2,633
On December 31
4,573
786
27
10
-
5,395
1
Common shares in Holding and other activities includes the elimination of treasury shares in the general account for an amount of EUR nil million.
\n \n
Asset
Holding
United
Interna-
Manage-
and other
Equity, real estate and non-fixed income exposure
Americas
Kingdom
tional
ment
activities
Total 2022
1)
Equity funds
141
-
3
7
-
151
Common shares
1)
148
25
5
-
1
179
Preferred shares
26
-
-
-
-
26
Investments in real estate
42
-
17
-
-
59
Hedge funds
10
-
-
-
-
10
Other alternative investments
2,169
-
-
-
-
2,169
Other financial assets
1,904
531
5
1
-
2,441
On December 31
4,440
556
30
9
1
5,035
1
Common shares in Holding and other activities includes the elimination of treasury shares in the general account for an amount of EUR nil million.
\n \n
United
Asset
Market risk concentrations \u2013 shares
Americas
Kingdom
International
Management
Total 2023
Communication
2
-
-
-
2
Consumer
4
-
-
-
4
Financials
136
-
5
-
142
Funds
30
14
-
-
45
Industries
11
-
-
-
11
Other
84
-
4
9
97
On December 31
267
14
10
9
300
\n \n
United
Asset
Market risk concentrations \u2013 shares
Americas
Kingdom
International
Management
Total 2022
Communication
2
-
-
-
2
Consumer
13
-
-
-
13
Financials
154
-
5
-
159
Funds
19
25
-
-
45
Industries
4
-
-
-
4
Other
123
-
4
7
135
On December 31
315
25
10
7
358
The table that follows sets forth the closing levels of certain major indices at the end of the last five years.
\n \n
2023
2022
2021
2020
2019
S&P 500
4,770
3,840
4,766
3,756
3,231
Nasdaq
15,011
10,466
15,645
12,888
8,973
FTSE 100
7,733
7,452
7,385
6,461
7,542
AEX
787
689
798
625
605
An analysis of Aegon\u2019s sensitivity to a 10% and 25% increase or decrease in equity prices at the reporting date, assuming that
all other variables remain constant, is presented below.
\n \n
2023
2022
Shareholders\u2019
Shareholders\u2019
Estimated approximate effects on:
CSM
Net result
equity
CSM
Net result
equity
Equity 10% increase
Financial instruments
(5)
(13)
(10)
29
Insurance and reinsurance assets
-
(271)
(265)
-
(325)
(320)
Insurance and reinsurance liabilities
310
422
397
291
415
397
Equity 10% decrease
Financial instruments
4
11
16
(28)
Insurance and reinsurance assets
-
229
225
-
344
340
Insurance and reinsurance liabilities
(316)
(465)
(431)
(274)
(522)
(509)
Equity 25% increase
Financial instruments
(31)
(50)
(43)
59
Insurance and reinsurance assets
-
(737)
(721)
-
(699)
(690)
Insurance and reinsurance liabilities
775
1,035
989
723
917
872
Equity 25% decrease
Financial instruments
35
53
55
(53)
Insurance and reinsurance assets
-
965
945
-
1,010
997
Insurance and reinsurance liabilities
(804)
(1,499)
(1,434)
(618)
(1,539)
(1,505)
Equity sensitivities on CSM mainly relate to VFA products in US and UK and reflect the impact on the present value of future fee
income triggered by changes in underlying asset values due to market changes.
Equity sensitivities on Net result and Shareholders' equity are not symmetric for increases and decreases of equity markets.
This is mainly driven by the hedged VFA products within Variable Annuities in the US. In our sensitivity modelling we assume
a level of hedge ineffectiveness thus generating a negative net impact here for both increased and decreased equity markets.
4.3.2 Interest rate risk
Aegon bears interest rate risk with many of its products. In cases where cash flows are highly predictable, investing in assets
that closely match the cash flow profile of the liabilities can offset this risk. For some Aegon country units, local capital
markets are not well developed, which prevents the complete matching of assets and liabilities for those businesses. For some
products, cash flows are less predictable as a result of policyholder actions that can be affected by the level of interest rates.
In periods of rapidly increasing interest rates, policy loans, surrenders and withdrawals may increase. Premiums in flexible
premium policies may decrease as policyholders seek investments with higher perceived returns. This activity may result
in cash payments by Aegon requiring the sale of invested assets at a time when the prices of those assets are adversely
affected by the increase in market interest rates; this may result in realized investment losses. These cash payments
to policyholders result in a decrease in total invested assets and a decrease in net result.
During periods of sustained low interest rates, Aegon may not be able to preserve margins as a result of minimum interest rate
guarantees and minimum guaranteed crediting rates provided on policies. Also, investment earnings may be lower because
the interest earnings on new fixed-income investments are likely to have declined with the market interest rates. Mortgage
loans and redeemable bonds in the investment portfolio are more likely to be repaid as borrowers seek to borrow at lower
interest rates and Aegon may be required to reinvest the proceeds in securities bearing lower interest rates. Accordingly, net
result declines as a result of a decrease in the spread between returns on the investment portfolio and the interest rates either
credited to policyholders or assumed in reserves.
Aegon manages interest rate risk closely, taking into account all the complexity regarding policyholder behavior and
management action. Aegon employs sophisticated interest rate measurement techniques and actively uses derivatives
and other risk mitigation tools to closely manage its interest rate risk exposure. Aegon operates an Investment &
Counterparty Risk policy that limits the amount of interest rate risk to which the Group is exposed. All derivative use
is governed by Aegon's Derivative Use Policy. A detailed description on the use of derivatives within Aegon is included in note
20 Derivatives.
In 2020 Transamerica commenced a multi-year plan to gradually reduce its economic interest rate risk, primarily by lengthening
the duration of the assets to provide a closer match to the liability duration and extending the existing forward starting swap
program. The program has been completed in 2022.
Furthermore, in 2021, Transamerica expanded its dynamic hedge program to variable annuities with guaranteed minimum
death benefit riders (GMDB) and remaining policies with guaranteed minimum income (GMIB) riders. This builds on the effective
dynamic hedge program of policies with guaranteed minimum withdrawal benefits (GMWB). The dynamic hedge program
covers the interest rate (and equity risks) embedded in the guarantees of its entire variable annuity portfolio. Dynamic hedging
stabilizes cash flows and reduces sensitivities to changes in interest rates (and equity markets) on an economic basis.
The following table shows interest rates at the end of each of the last five years.
\n \n
2023
2022
2021
2020
2019
3-month US LIBOR
5.59%
4.77%
0.21%
0.24%
1.91%
3-month EURIBOR
3.91%
2.13%
(0.57%)
(0.55%)
(0.38%)
10-year US Treasury
3.86%
3.83%
1.78%
0.91%
1.91%
10-year Dutch government
2.32%
2.91%
(0.03%)
(0.48%)
(0.06%)
An analysis of Aegon\u2019s sensitivity to a 100 basis points parallel increase or decrease in market interest rates at the reporting
date, assuming that all other variables remain constant, is presented below:
\n \n
2023
2022
Sharehold-
Sharehold-
Estimated approximate effects on:
CSM
Net result
ers\u2019 equity
CSM
Net result
ers\u2019 equity
100 bps increase - Yield curve
Financial instruments
(114)
(652)
(153)
(605)
Insurance and reinsurance assets
(4)
(1,029)
(3,876)
(2)
(1,217)
(4,190)
Insurance and reinsurance liabilities
126
1,008
4,158
185
1,149
4,123
100 bps decrease - Yield curve
Financial instruments
35
655
55
570
Insurance and reinsurance assets
6
1,258
4,625
4
1,482
5,149
Insurance and reinsurance liabilities
(133)
(1,306)
(5,303)
(208)
(1,480)
(5,527)
The exposures of our different products vary and in particular we have a number of asymmetric exposures. This is mainly
explained by some of the US products:
\u2022
For a number of products (e.g. our Stable Value Solutions and parts of the Universal Life products) we have stable surrender
values alongside stable crediting rates which mean that as interest rates rises it becomes more attractive in the short term
for customers to lapse their policies and due to the market movements this leads to increased losses. There are also
asymmetries from accounting rules of IFRS, where decreases in interest rates which turn SVS liabilities negative will be
floored at zero based on IFRS 9 rules applied to these contracts.
\u2022
For other longer duration products such as Long Term Care and Unit Linked products with Non Lapse or secondary
guarantees, we have a natural convexity, meaning we are more exposed to interest rates falling, which results in adverse
sensitivities on these products than to interest rates rising which are positive. This is because we still expect to receive
premiums over the next 10 to 20 years but will continue to pay claims for many years thereafter.
The interaction of these two factors with the more symmetrical exposures on other products results in our overall sensitivities
showing an adverse impact to both rising and falling interest rates.
Risks and risks management arising from financial instruments subject to interest rate benchmark reform
The future of IBORs (Interbank Offered Rates) such as EURIBOR, EONIA and LIBOR has been a major topic on the global agenda
since the G20 asked the Financial Stability Board (FSB) to undertake a fundamental review of leading interest rate benchmarks
in 2013. The FSB proposed new standards to reform interest rate benchmarks and the use of transaction-based input data
instead of non-transactional/panel input data. In the EU this is adopted in the new Benchmark Regulation (BMR) which stipulates
that from January 2020 only BMR compliant benchmarks may be used within the EU.
In order to prepare for the IBOR transition all Aegon units have written transition plans containing among others project
solutions and actions, timelines and ownership to ensure timely preparation and implementation. Actions have been completed
in accordance with these transition plans.
There are no plans for the discontinuation for EURIBOR and appropriate fallback language has been implemented for
derivatives via the International Swaps and Derivatives Association (\"ISDA\") fallback protocol and rulebook changes by the
clearing houses.
In July 2020 the discount rates of EUR cleared derivatives switched from EONIA to \u20acSTR which impacted the valuation
of derivatives for which compensation was exchanged. All EUR Credit Support Annex (\"CSA\") which have positions outstanding
have been amended from EONIA to \u20acSTR discounting. In the United States, the cleared market has switched discount rates
from Fed Funds to SOFR in October 2020. The switch in discount rates is expected to lead to increased liquidity in the new risk
free rates.
Aegon recognizes that the reform of IBORs and any transition to replacement rates entail risks for all our businesses across our
assets and liabilities. These risks include, but are not limited to:
\u2022
Legal risks, as Aegon is required to make changes to documentation for new and existing transactions, such as funding
instruments issued with an IBOR reference and derivatives held with an IBOR reference;
\u2022
Financial risks, arising from any changes in the valuation of financial instruments linked to benchmark rates, such as
derivatives and floating rate notes, issued by, or invested in by Aegon;
\u2022
Pricing risks, as changes to benchmark indices could impact pricing mechanisms on some funding instruments or
investments;
\u2022
Operational risks, due to the potential requirement to adapt informational technology systems, trade reporting infrastructure
and operational processes; and
\u2022
Conduct risks, relating to communication with potential impact on Aegon\u2019s customers, and engagement during the transition
period.
Various supranational institutions, central banks, regulators, benchmark administrators and industry working groups play
a role in the benchmark reform and the preparation for the replacement of IBORs. Although a lot of work has been done, there
is still significant uncertainty around liquidity development, and the timetable and mechanisms for implementation, including
application of spread adjustments to the alternative reference rates. Accordingly, it is not currently possible to determine
whether, or to what extent, any such changes would affect Aegon. However, the implementation of alternative reference rates
may have a material adverse effect on Aegon\u2019s business, financial condition, customers, and operations.
The table below summarize the exposures of non-derivative financial assets and non-derivative liabilities that yet have
to transition to alternative benchmark rates.
\n \n
2023
2022
Financial
Financial
Non derivative financial instruments to transition to alternative
Financial assets
liabilities
Financial assets
liabilities
benchmark
non-derivatives
non-derivatives
non-derivatives
non-derivatives
By benchmark rate
GBP LIBOR
27
-
27
-
USD LIBOR
66
-
814
1,218
Total
93
-
841
1,218
During 2023 all derivative financial instruments with USD Libor as a benchmark rate, with a total nominal value of EUR 39,752,
transitioned to an alternative benchmark rate. There are no remaining derivative financial instruments to be transitioned to an
alternative benchmark rate.
4.3.3 Currency exchange rate risk
As an international group, Aegon is subject to foreign currency translation risk. Foreign currency exposure exists mainly
when policies are denominated in currencies other than the issuer's functional currency. Currency risk in the investment
portfolios backing insurance and investment liabilities is managed using asset liability matching principles. Assets allocated
to equity are kept in local currencies to the extent shareholders' equity is required to satisfy regulatory and self-imposed
capital requirements. Therefore, currency exchange rate fluctuations will affect the level of shareholders' equity as a result
of translation of subsidiaries into euro, the Group's presentation currency. Aegon holds the remainder of its capital base
(perpetual capital securities, subordinated and senior debt) in various currencies in amounts that are targeted to correspond
to the book value of the country units. This balancing mitigates currency translation impacts on shareholders' equity and
leverage ratios. Aegon does not hedge the income streams from the main non-euro units and, as a result, earnings may
fluctuate due to currency translation. As Aegon has significant business segments in the Americas and in the United Kingdom,
the principal sources of exposure from currency fluctuations are from the differences between the US dollar and the euro and
between the UK pound and the euro. Aegon may experience significant changes in net result and shareholders' equity because
of these fluctuations.
Aegon operates an Investment & Counterparty Risk Policy which applies currency risk exposure limits both at Group and
regional levels, and under which direct currency speculation or program trading by country units is not allowed unless explicit
approval has been granted by the Group Risk and Capital Committee and the CEO. Assets should be held in the functional
currency of the business written or hedged back to that currency. Where this is not possible or practical, remaining currency
exposure should be sufficiently documented and limits are placed on the total exposure at both group level and for individual
country units.
Information on Aegon's historical net result and shareholders' equity in functional currency are shown in the table below:
\n \n
2023
2022
Net result
Americas (in USD)
(266)
562
United Kingdom (in GBP)
26
57
Equity in functional currency
Americas (in USD)
3,690
3,456
United Kingdom (in GBP)
1,256
1,373
The summary quantitative information about Aegon\u2019s exposure to currency risk arising from insurance and reinsurance
contracts and financial instruments was as follows:
\n \n
2023
2022
EUR
GBP
USD
Other
Total
EUR
GBP
USD
Other
Total
Financial instruments
- assets
722
1,713
70,557
928
73,921
733
1,501
73,745
1,493
77,471
Financial instruments
- liabilities
2,823
40,242
38,387
-
81,452
3,304
32,595
39,781
-
75,681
Insurance and
reinsurance
contract - assets
7
2
16,744
39
16,793
5
369
16,557
45
16,976
Insurance and
reinsurance
contract - liabilities
715
61,922
130,886
6,124
199,648
690
58,676
130,991
7,088
197,445
The exchange rates for US dollar and UK pound per euro for each of the last five year ends are set forth in the table below:
Closing rates
2023
2022
2021
2020
2019
USD
1.10
1.07
1.14
1.22
1.12
GBP
0.87
0.89
0.84
0.90
0.85
Aegon Group companies' foreign currency exposure from monetary assets and liabilities denominated in foreign currencies
(that is, other than the entity's functional currency), is not material.
Sensitivity analysis of net result and shareholders' equity to translation risk
The sensitivity analysis in the following table shows an estimate of the translation effect of movements in the exchange rates
of functional currencies of foreign subsidiaries against the euro presentation currency of the Group's financial statements,
on net income and shareholders' equity.
Estimated approximate
Estimated approximate
effects on shareholders'
Movement of markets
1)
effects on net income
equity
2023
Increase by 15% of USD currencies relative to the euro
(27)
769
Increase by 15% of GBP currencies relative to the euro
(2)
264
Increase by 15% of non-euro currencies relative to the euro
(49)
1,145
Decrease by 15% of USD currencies relative to the euro
20
(569)
Decrease by 15% of GBP currencies relative to the euro
2
(195)
Decrease by 15% of non-euro currencies relative to the euro
36
(847)
2022
Increase by 15% of USD currencies relative to the euro
116
761
Increase by 15% of GBP currencies relative to the euro
4
281
Increase by 15% of non-euro currencies relative to the euro
108
1,190
Decrease by 15% of USD currencies relative to the euro
(86)
(562)
Decrease by 15% of GBP currencies relative to the euro
(3)
(208)
Decrease by 15% of non-euro currencies relative to the euro
(80)
(880)
1
The effect of currency exchange movements is reflected as a one-time shift up or down in the value of the non-euro currencies relative to the euro on December 31.", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f32887": { "value": "4.3.3 Currency exchange rate risk
As an international group, Aegon is subject to foreign currency translation risk. Foreign currency exposure exists mainly
when policies are denominated in currencies other than the issuer's functional currency. Currency risk in the investment
portfolios backing insurance and investment liabilities is managed using asset liability matching principles. Assets allocated
to equity are kept in local currencies to the extent shareholders' equity is required to satisfy regulatory and self-imposed
capital requirements. Therefore, currency exchange rate fluctuations will affect the level of shareholders' equity as a result
of translation of subsidiaries into euro, the Group's presentation currency. Aegon holds the remainder of its capital base
(perpetual capital securities, subordinated and senior debt) in various currencies in amounts that are targeted to correspond
to the book value of the country units. This balancing mitigates currency translation impacts on shareholders' equity and
leverage ratios. Aegon does not hedge the income streams from the main non-euro units and, as a result, earnings may
fluctuate due to currency translation. As Aegon has significant business segments in the Americas and in the United Kingdom,
the principal sources of exposure from currency fluctuations are from the differences between the US dollar and the euro and
between the UK pound and the euro. Aegon may experience significant changes in net result and shareholders' equity because
of these fluctuations.
Aegon operates an Investment & Counterparty Risk Policy which applies currency risk exposure limits both at Group and
regional levels, and under which direct currency speculation or program trading by country units is not allowed unless explicit
approval has been granted by the Group Risk and Capital Committee and the CEO. Assets should be held in the functional
currency of the business written or hedged back to that currency. Where this is not possible or practical, remaining currency
exposure should be sufficiently documented and limits are placed on the total exposure at both group level and for individual
country units.
Information on Aegon's historical net result and shareholders' equity in functional currency are shown in the table below:
\n \n
2023
2022
Net result
Americas (in USD)
(266)
562
United Kingdom (in GBP)
26
57
Equity in functional currency
Americas (in USD)
3,690
3,456
United Kingdom (in GBP)
1,256
1,373
The summary quantitative information about Aegon\u2019s exposure to currency risk arising from insurance and reinsurance
contracts and financial instruments was as follows:
\n \n
2023
2022
EUR
GBP
USD
Other
Total
EUR
GBP
USD
Other
Total
Financial instruments
- assets
722
1,713
70,557
928
73,921
733
1,501
73,745
1,493
77,471
Financial instruments
- liabilities
2,823
40,242
38,387
-
81,452
3,304
32,595
39,781
-
75,681
Insurance and
reinsurance
contract - assets
7
2
16,744
39
16,793
5
369
16,557
45
16,976
Insurance and
reinsurance
contract - liabilities
715
61,922
130,886
6,124
199,648
690
58,676
130,991
7,088
197,445
The exchange rates for US dollar and UK pound per euro for each of the last five year ends are set forth in the table below:
Closing rates
2023
2022
2021
2020
2019
USD
1.10
1.07
1.14
1.22
1.12
GBP
0.87
0.89
0.84
0.90
0.85
Aegon Group companies' foreign currency exposure from monetary assets and liabilities denominated in foreign currencies
(that is, other than the entity's functional currency), is not material.
Sensitivity analysis of net result and shareholders' equity to translation risk
The sensitivity analysis in the following table shows an estimate of the translation effect of movements in the exchange rates
of functional currencies of foreign subsidiaries against the euro presentation currency of the Group's financial statements,
on net income and shareholders' equity.
Estimated approximate
Estimated approximate
effects on shareholders'
Movement of markets
1)
effects on net income
equity
2023
Increase by 15% of USD currencies relative to the euro
(27)
769
Increase by 15% of GBP currencies relative to the euro
(2)
264
Increase by 15% of non-euro currencies relative to the euro
(49)
1,145
Decrease by 15% of USD currencies relative to the euro
20
(569)
Decrease by 15% of GBP currencies relative to the euro
2
(195)
Decrease by 15% of non-euro currencies relative to the euro
36
(847)
2022
Increase by 15% of USD currencies relative to the euro
116
761
Increase by 15% of GBP currencies relative to the euro
4
281
Increase by 15% of non-euro currencies relative to the euro
108
1,190
Decrease by 15% of USD currencies relative to the euro
(86)
(562)
Decrease by 15% of GBP currencies relative to the euro
(3)
(208)
Decrease by 15% of non-euro currencies relative to the euro
(80)
(880)
1
The effect of currency exchange movements is reflected as a one-time shift up or down in the value of the non-euro currencies relative to the euro on December 31.", "dimensions": { "concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f33348": { "value": "4.4 Liquidity risk
Liquidity risk is inherent in much of Aegon's business. Each asset purchased and liability incurred has its own liquidity
characteristics. Some liabilities are surrenderable while some assets, such as privately placed loans, mortgage loans, real
estate and limited partnership interests, have low liquidity. If Aegon requires significant amounts of cash on short notice
in excess of normal cash requirements and existing credit facilities, it may have difficulty selling these investments at attractive
prices or in a timely manner. Liquidity risk is also affected by the use of collateralized financial derivatives to mitigate other risks.
Aegon operates a Liquidity Risk Policy under which country units are obliged to maintain sufficient levels of highly liquid
assets to meet cash demands by policyholders and account holders over the next two years. Potential cash demands are
assessed under a stress scenario including spikes in disintermediation risk due to rising interest rates and concerns over
Aegon's financial strength due to multiple downgrades of the Group's credit rating. At the same time, the liquidity of assets
other than cash and government issues is assumed to be severely impaired for an extended period of time. All legal entities and
Aegon Group must maintain enough liquidity in order to meet all cash needs under this extreme scenario.
Aegon held EUR 19,399 million of investments in cash, money market products and government bonds that are readily saleable
or redeemable on demand, which excludes the investment of the disposal group (2022: EUR 17,166 million). The Group
expects to meet its obligations, even in a stressed liquidity event, from operating cash flows and the proceeds of maturing
assets as well as these highly liquid assets. Further, the Group has access to back-up credit facilities, as disclosed in note
31 Borrowings, amounting to EUR 2,623 million which were unused at the end of the reporting period (2022: EUR 3,435 million).
The maturity analysis below shows the remaining contractual maturities of each category of financial liabilities
(including coupon interest). When the counterparty has a choice of when an amount is paid, the liability is included on the
basis of the earliest date on which it can be required to be paid. Financial liabilities that can be required to be paid on demand
without any delay are reported in the category \"On demand.\" If there is a notice period, it has been assumed that notice is given
immediately and the repayment has been presented at the earliest date after the end of the notice period. When the amount
payable is not fixed, the amount reported is determined by reference to the conditions existing at the reporting date. For
example, when the amount payable varies with changes in an index, the amount disclosed may be based on the level of the
index at the reporting date.
To manage the liquidity risk arising from financial liabilities, Aegon holds liquid assets comprising cash and cash equivalents
and investment grade investment securities for which there is an active and liquid market. These assets can be readily sold
to meet liquidity requirements. For this reason, Aegon believes that it is not necessary to disclose a maturity analysis in respect
of these assets to enable users to evaluate the nature and extent of liquidity risk.
Aegon's liquidity management is based on expected claims and benefit payments rather than on the contractual maturities.
The projected cash benefit payments in the table below (maturity analysis - insurance and reinsurance contracts) are based
on management's best estimates of the expected gross benefits and expenses, partially offset by the expected gross
premiums, fees and charges relating to the existing business in force. Estimated cash benefit payments are based on mortality,
morbidity and lapse assumptions based on Aegon's historical experience, modified for recently observed trends. Actual
payment obligations may differ if experience varies from these assumptions. The cash benefit payments are presented on an
undiscounted basis and are before deduction of tax and before reinsurance.
The following table (maturity analysis - financial instruments) details the Group's liquidity analysis for its derivative financial
instruments, based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a
net basis, and the undiscounted gross inflows and outflows on those derivatives that require gross settlement.
For maturity information on other obligations, please see note 39 Commitments and contingencies.
Maturity analysis - insurance and reinsurance contracts
The following tables provides a maturity analysis of Aegon\u2019s insurance and reinsurance contracts, which reflects the dates
on which the cash flows are expected to occur. The cash flows presented below represent the undiscounted best estimate
liability for the relevant periods.
\n \n
Undiscounted best estimate liability (i.e.
Remaining contractual undiscounted net
< 1 yr
1 < 2 yrs
2 < 3 yrs
3 < 4 yrs
4 < 5 yrs
> 5 yrs
Total
cash flows)
amount
amount
amount
amount
amount
amount
amount
2023
Insurance contracts:
- Direct participating contracts
8,737
8,287
8,186
7,823
7,187
127,351
167,571
- Without direct participation contracts
9,105
8,651
8,041
7,541
6,960
103,939
144,237
Investment contracts with DPF:
- Direct participating contracts
1,717
1,637
1,788
1,732
1,511
21,407
29,793
Reinsurance contracts held, in a liability
position
46
43
41
39
39
1,370
1,578
Total
19,605
18,618
18,056
17,136
15,698
254,067
343,179
2022
Insurance contracts:
- Direct participating contracts
7,900
8,062
7,876
7,475
7,319
136,457
175,089
- Without direct participation contracts
4,313
3,619
3,350
3,217
3,201
141,794
159,494
Investment contracts with DPF:
- Direct participating contracts
1,764
1,894
1,835
1,615
1,590
20,934
29,632
Reinsurance contracts held, in a liability
position
18
18
18
18
19
782
874
Total
13,996
13,594
13,079
12,325
12,129
299,967
365,089
\n \n
< 1 yr
1 < 2 yrs
2 < 3 yrs
3 < 4 yrs
4 < 5 yrs
> 5 yrs
Total
Expected release of risk adjustment
amount
amount
amount
amount
amount
amount
amount
2023
Insurance contracts:
- Direct participating contracts
30
35
32
29
29
413
568
- Without direct participation contracts
72
63
60
57
58
2,373
2,683
Investment contracts with DPF:
- Direct participating contracts
9
12
10
8
9
81
128
- Without direct participation contracts
-
-
-
-
-
-
-
Reinsurance contracts held, in a liability
position
(12)
(11)
(11)
(10)
(10)
(278)
(332)
Total
98
99
92
85
85
2,589
3,047
2022
Insurance contracts:
- Direct participating contracts
28
28
25
25
25
383
514
- Without direct participation contracts
91
80
74
70
69
2,539
2,922
Investment contracts with DPF:
- Direct participating contracts
9
9
7
8
7
69
109
- Without direct participation contracts
-
-
-
-
-
-
-
Reinsurance contracts held, in a liability
position
5
4
3
3
3
83
101
Total
133
120
110
106
104
3,073
3,646
No amount of the insurance contract liabilities are payable on demand (2022: 0).
Maturity analysis \u2013 financial instruments
\n \n
Maturity analysis \u2013 gross undiscounted
contractual cash flows (for non-deriva-
< 1 yr
1 < 2 yrs
2 < 3 yrs
3 < 4 yrs
4 < 5 yrs
< 5 yrs
Total
tives)
On demand
amount
amount
amount
amount
amount
amount
amount
2023
Trust pass-through securities
-
9
9
88
3
3
71
184
Subordinated loans
-
111
83
83
83
63
3,158
3,579
Borrowings
-
123
1,057
726
48
48
1,140
3,143
Investment contracts
34,464
40,059
11
8
110
23
74
74,749
Lease liabilities
-
34
29
24
21
18
114
240
Other financial liabilities
4,582
930
52
7
-
4
-
5,575
2022
Trust pass-through securities
-
10
10
10
92
3
77
200
Subordinated loans
-
113
113
85
85
85
3,309
3,792
Borrowings
-
1,312
155
2,867
61
47
594
5,036
Investment contracts
32,104
32,452
9
16
13
117
113
64,824
Lease liabilities
-
35
32
26
21
19
117
251
Other financial liabilities
4,259
623
284
54
17
-
81
5,318
\n \n
2023
Maturity analysis relating to derivatives
1)
< 1 yr
1 < 2 yrs
2 < 3 yrs
3 < 4 yrs
4 < 5 yrs
> 5 yr
Total
(Contractual cash flows),
On demand
amount
amount
amount
amount
amount
amount
amount
Gross settled
Cash inflows
-
9,757
170
171
202
145
2,560
13,004
Cash outflows
-
(9,710)
(121)
(134)
(191)
(134)
(2,458)
(12,748)
Net settled
Cash inflows
-
282
253
260
286
341
7,509
8,930
Cash outflows
-
(560)
(224)
(244)
(266)
(271)
(12,248)
(13,813)
\n \n
2022
Maturity analysis relating to derivatives
1)
< 1 yr
1 < 2 yrs
2 < 3 yrs
3 < 4 yrs
4 < 5 yrs
> 5 yr
Total
(Contractual cash flows),
On demand
amount
amount
amount
amount
amount
amount
amount
Gross settled
Cash inflows
-
15,315
156
146
155
188
2,570
18,530
Cash outflows
-
(15,250)
(104)
(103)
(123)
(180)
(2,385)
(18,146)
Net settled
Cash inflows
-
1,552
1,295
1,060
964
933
10,039
15,843
Cash outflows
-
(1,937)
(1,285)
(1,037)
(962)
(934)
(17,914)
(24,068)
", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f34672": { "value": "5 Segment information
Aegon\u2019s operating segments are based on the businesses as presented in internal reports that are regularly reviewed by the
Executive Director which is regarded as the chief operating decision maker. All reportable segments are involved in insurance
or reinsurance business, asset management or services related to these activities. The reportable segments are:
\u2022
Americas: which covers business units in the United States, including any of the units\u2019 activities located outside of the
United States;
\u2022
The Netherlands: which covered businesses activities from Aegon the Netherlands (no longer a reporting segment following
the completion of the transaction with a.s.r.);
\u2022
United Kingdom: which covers businesses activities from platform business and traditional insurance in the United Kingdom;
\u2022
International: which covers operations in Spain & Portugal, China, Brazil, Bermuda, Hong Kong, and Singapore including any of
the units\u2019 activities located outside these countries;
\u2022
Asset Management: which covers business activities from AAM Global Platforms and Strategic Partnerships;
\u2022
Holding and other activities: which includes financing, employee and other administrative expenses of holding companies.
Aegon\u2019s segment information is prepared by consolidating on a proportionate basis Aegon\u2019s joint ventures and associated
companies except for its 29.99% stake in a.s.r.. The result of associate a.s.r. is included in Other income / (charges).
Performance Measure
Aegon uses the non-EU-IFRS performance measure operating result. Similar as under the previous accounting policies,
operating result reflects Aegon\u2019s profit before tax from underlying business operations and mainly excludes components that
relate to accounting mismatches that are dependent on market volatility, updates to best estimate actuarial and economic
assumptions and model updates or events that are considered outside the normal course of business.
Aegon believes that its performance measure operating result provides meaningful information about the operating results
of Aegon\u2019s business, including insight into the financial measures that Aegon\u2019s senior management uses in managing
the business. While many other insurers in Aegon\u2019s peer group present substantially similar performance measures, the
performance measures presented in this document may nevertheless differ from the performance measures presented
by other insurers.
The reconciliation from result before tax from continuing operations, being the most comparable EU-IFRS measure, to operating
result is presented in the tables in this note.
There have been changes in the calculation of the items excluded from operating result (fair value items, realized gains or
losses on investments, impairment charges/reversals, other income or charges and share in earnings of joint ventures and
associates - these items are further discussed below) due to the adoption of IFRS 9 and IFRS 17. For example:
\u2022
Fair value items have reduced significantly, reflecting fewer accounting mismatches under the new accounting policies.
\u2022
Realized gains/(losses) on investments now includes realized gains and losses on financial assets measured at amortized
cost and financial assets classified at FVOCI.
\u2022
Impairment losses and reversals of impairment losses reflect the change in ECL for financial assets.
\u2022
Other non-operating results continue to include items that cannot be directly allocated to a specific line of business and
items that are outside the normal course of business. It no longer includes all impacts of actuarial and economic assumption
and model updates as most of these are recorded in CSM, but only:
\u2022
the impact of changes in actuarial assumptions and model updates on onerous contracts, and
\u2022
the impact of changes in financial assumptions and the passage of time on onerous groups of VFA contracts to which no
risk mitigation is applied.
Fair value items
Fair value items include the following:
\u2022
Over- or underperformance of investments and guarantees held at fair value for which management's best estimate
investment return is included in operating result;
\u2022
Hedge ineffectiveness on hedge transactions, fair value changes on economic hedges without natural offset in earnings and
for which no hedge accounting is applied and fair value movements on real estate are included under fair value items;
\u2022
Certain assets held by Aegon are carried at fair value and managed on a total return basis, with no offsetting changes in the
valuation of related liabilities. These include assets such as investments in hedge funds, private equities, real estate (limited
partnerships), convertible bonds and structured products;
\u2022
Certain products offered by Aegon Americas contain guarantees and are reported on a fair value basis and include the total
return annuities and variable annuities. The earnings on these products are impacted by movements in equity markets and
risk-free interest rates. Short-term developments in the financial markets may therefore cause volatility in earnings;
\u2022
Changes in value of VFA products that result in (a reversal of) onerous contracts;
\u2022
Changes in discount rates for General model insurance contracts, including the revaluation of changes in non-financial
assumptions and experience adjustments that adjust CSM to current interest rates.
Other income / (charges)
Other income / (charges) include the following:
\u2022
Items which cannot be directly allocated to a specific line of business;
\u2022
The impact of changes in actuarial assumptions and model updates on onerous contracts;
\u2022
The impact of changes in financial assumptions and the passage of time on onerous groups of VFA contracts to which no risk
mitigation is applied, and;
\u2022
Items that are outside the normal course of business, including restructuring charges.
In the Consolidated income statement, for onerous contracts, actuarial assumption and model updates are included in
\"Insurance service result\". Restructuring charges are included in \"Other operating expenses\".
Share in earnings of joint ventures and associates
Earnings from Aegon\u2019s joint ventures in China, India, Spain & Portugal, and Aegon\u2019s associates in France and United Kingdom
are reported as part of operating result.
Segment results
The following table presents Aegon's segment results.
\n \n
Joint
Asset
Holding
ventures and
Income statement -
The
United
Interna-
Manage-
and other
Elimina-
Segment
associates
Consoli-
Operating result
Americas
Netherlands
1)
Kingdom
tional
ment
activities
tions
total
eliminations
dated
Year ended December 31,
2023
Operating result
1,107
-
214
196
145
(173)
10
1,498
19
1,517
Fair value items
138
-
(76)
(1)
(8)
24
(1)
76
9
85
Realized gains / (losses) on
investments
(683)
-
-
24
-
-
-
(659)
(30)
(689)
Impairment losses / (reversals)
(62)
-
-
(23)
-
(7)
-
(92)
2
(90)
Non-operating items
(607)
-
(76)
(1)
(8)
17
(1)
(675)
(19)
(695)
Other income / (charges)
(961)
(65)
(85)
(110)
(31)
110
2
(1,140)
(90)
(1,230)
Result before tax
(460)
(65)
52
85
106
(46)
11
(317)
(91)
(408)
Income tax (expense) / benefit
214
-
(23)
(69)
(36)
31
-
118
91
209
Net result
(246)
(65)
29
16
70
(14)
11
(199)
-
(199)
Inter-segment operating result
(569)
(48)
(75)
256
150
286
Revenues
Insurance contracts
revenue
- Insurance contracts: direct part.
9,468
-
600
1,095
-
-
(51)
11,112
(1,490)
9,622
- Insurance contracts: without
direct part.
-
-
-
700
-
-
-
700
-
700
Investment contracts with
discretionary participation
features revenue
- Insurance contracts: direct part.
-
-
64
-
-
-
-
64
-
64
- Insurance contracts: without
direct part.
-
-
-
-
-
-
-
-
-
-
Insurance revenue
9,468
-
663
1,795
-
-
(51)
11,876
(1,490)
10,386
Interest revenue on financial
instruments calculated using
the effective interest method
3,108
-
58
87
2
90
(6)
3,339
(3)
3,336
Interest revenue on financial
instruments measured at FVPL
339
-
486
1
-
-
-
826
-
826
Other investment income
14
-
1,818
104
14
498
(498)
1,950
(116)
1,833
Fee and commission income
1,653
-
214
34
632
-
(158)
2,376
(215)
2,160
Other revenues
-
-
-
37
1
-
-
38
(38)
-
Total revenues
14,582
-
3,239
2,058
649
589
(713)
20,404
(1,862)
18,541
Inter-segment revenues
49
-
-
1
172
500
1
The net result represents the standalone result of \u2018The Netherlands\u2019. After elimination, the remaining result is EUR (17). See note 45 Held for sale and
discontinued operations for more details.
On July 4, 2023, Aegon announced the completion of the combination of its Dutch pension, life and non-life insurance, banking,
and mortgage origination activities with a.s.r., and the beginning of its asset management partnership with a.s.r. As part of the
transaction, Aegon received EUR 2.2 billion in cash proceeds and almost a 30% stake in a.s.r. In light of the transaction, Aegon
the Netherlands is no longer reported as a separate segment, and its first half 2023 result is included in Other charges in the
income statement.
The other charges of the Americas in 2023 are mainly due to unfavorable assumption updates and restructuring charges.
\n \n
Joint
Asset
Holding
ventures and
Income statement -
The
United
Interna-
Manage-
and other
Elimina-
Segment
associates
Consoli-
Operating result
Americas
Netherlands
1)
Kingdom
tional
ment
activities
tions
total
eliminations
dated
Year ended December 31,
2022
Operating result
1,433
-
211
202
193
(220)
(17)
1,802
(59)
1,743
Fair value items
(85)
-
(71)
38
(3)
(21)
(76)
(218)
8
(209)
Realized gains / (losses) on
investments
(518)
-
-
30
-
7
-
(481)
(16)
(497)
Impairment losses / (reversals)
(78)
-
(11)
(14)
-
(18)
-
(122)
1
(121)
Non-operating items
(681)
-
(83)
54
(3)
(32)
(76)
(820)
(7)
(827)
Other income / (charges)
(117)
(1,823)
(64)
326
(19)
(118)
-
(1,815)
(19)
(1,834)
Result before tax
636
(1,823)
64
582
171
(371)
(93)
(834)
(85)
(919)
Income tax (expense) / benefit
(102)
-
2
(57)
(67)
68
-
(156)
85
(71)
Net result
533
(1,823)
67
526
104
(303)
(93)
(990)
-
(990)
Inter-segment operating result
(458)
(94)
(75)
236
188
203
\n \n
Revenues
Insurance contracts
revenue
- Insurance contracts: direct part.
10,174
-
628
967
-
-
(32)
11,736
(1,210)
10,526
- Insurance contracts: without
direct part.
-
-
-
651
-
-
-
651
-
651
Investment contracts with
discretionary participation
features revenue
- Insurance contracts: direct part.
-
-
74
-
-
-
-
74
-
74
- Insurance contracts: without
direct part.
-
-
-
-
-
-
-
-
-
-
Insurance revenue
10,174
-
701
1,618
-
-
(32)
12,461
(1,210)
11,251
Interest revenue on financial
instruments calculated using
the effective interest method
3,105
-
12
191
-
2
(5)
3,306
(3)
3,303
Interest revenue on financial
instruments measured at FVPL
228
-
399
(3)
-
-
-
624
-
624
Other investment income
32
-
1,530
100
12
425
(425)
1,673
(110)
1,564
Fee and commission income
1,756
-
223
62
693
-
(187)
2,548
(254)
2,294
Other revenues
-
-
-
25
5
-
-
30
(30)
-
Total revenues
15,295
-
2,865
1,993
710
427
(648)
20,642
(1,607)
19,035
Inter-segment revenues
33
-
-
-
208
426
1
The net result represents the standalone result of \u2018The Netherlands\u2019. After elimination and considering the result included in the Holdings and other activities, the
remaining result is EUR (1,746). See note 45 Held for sale and discontinued operations for more details
The Americas recorded other charges of EUR 117 million in 2022 mainly due to unfavorable assumption updates and
restructuring charges.
Operating result reconciliation
The reconciliation from operating result to result before tax, being the most comparable EU-IFRS measure, is presented
in the table below. For those items that cannot be directly reconciled to the respective notes, the explanation is provided
below the table.
\n \n
Presentation Non-operating items and other income/ (charges)
Note
2023
2022
Result before tax from continuing operations
(391)
827
Elimination of share in earnings of joint ventures and associates
(19)
59
Insurance revenue
6
(15)
1
Insurance service expenses
7
427
442
Net income / (expenses) on reinsurance held
8
(23)
(40)
Net fair value change of financial investments at fair value through profit or loss, other
than derivatives
9.4 / 10.4
(224)
183
Net fair value change of derivatives
(7)
-
Realized gains and losses on financial investments
9.4 / 10.4
683
670
Net fair value change on investments in real estate
9.4 / 10.4
(2)
(1)
Impairment (losses) reversals
9.5 / 10.5
90
121
Insurance finance income / (expenses)
9
375
(614)
Net reinsurance finance income / (expenses) on reinsurance held
9
(85)
68
Investment contract income / (expenses)
10
(5)
(2)
Net fair value change on borrowings and other financial liabilities
-
(5)
Fee and commission income
12
(11)
(14)
Commissions and expenses
13
596
378
Other income
14
(18)
(341)
Other charges
14
79
-
Results of businesses disposed during reporting periods
48
70
Operating result
1,498
1,802
\u2022
Insurance service expenses are mainly driven by two items:
\u2022
Assumption changes on onerous contracts amounting to a loss of EUR 497 million (2022: loss of EUR 93 million), which is
included in Other income / (charges).
\u2022
Change in value of VFA products that result in (a reversal of) onerous contracts, amounting to a gain of EUR 129 million
(2022: loss of 273 million), which is included in Fair value items.
\u2022
Net income / (expenses) on reinsurance held mainly consist of assumption changes that relate to (a reversal of) underlying
onerous contracts, amounting to a gain of EUR 31 million (2022: gain of EUR 38 million), which is included in Other income /
(charges).
\u2022
Net fair value change of financial investments at fair value through profit or loss, other than derivatives reflects the over- or
underperformance of investments and guarantees held at fair value for which the expecting long-term return is included in
operating result.
\u2022
Insurance finance income / (expenses) mainly relate to changes in discount rates, amounting to a loss of EUR 354 million
(2022: a gain of EUR 614 million), which is included in Fair value items.
\u2022
Net reinsurance finance income / (expenses) on reinsurance held relate to changes in discount rates, amounting to a gain of
EUR 84 million (2022: loss of EUR 70 million), which is included in Fair value items.
\u2022
Commissions and expenses, which are included in Other income / (charges), relate to items which can cannot be directly
allocated to a specific line of business and restructuring charges.
Other selected income statement items
\n \n
Asset
Holding
United
Interna-
Manage-
and other
Americas
Kingdom
tional
ment
activities
Total
2023
Amortization of deferred expenses and future servicing rights
24
2
1
6
-
33
Depreciation
64
12
5
2
14
97
Impairment losses / (reversals) on financial assets, excluding
receivables
59
-
-
-
-
59
Impairment losses / (reversals) on non- financial assets and
receivables
32
-
21
-
7
60
2022
Amortization of deferred expenses and future servicing rights
34
2
3
-
-
38
Depreciation
67
11
6
2
17
103
Impairment losses / (reversals) on financial assets, excluding
receivables
78
-
13
-
-
92
Impairment losses / (reversals) on non- financial assets and
receivables
17
11
-
-
18
46
Number of employees
\n \n
Asset
Holding
United
Interna-
Manage-
and other
Number of employees
Americas
Kingdom
tional
ment
activities
Total
2023
Number of employees - headcount
6,967
2,591
3,654
1,409
1,037
15,658
Of which Aegon's share of employees in joint ventures and
associates
1)
-
49
2,936
219
-
3,204
2022
Number of employees - headcount
6,153
2,621
4,281
1,464
958
15,478
Of which Aegon's share of employees in joint ventures and
associates
-
62
3,239
206
-
3,507
1
Excludes a.s.r. as the results of this associate is not included in Operating result
Summarized assets and liabilities per segment
\n \n
Asset
Holding
United
Interna-
manage-
and other
Elimina-
Americas
Kingdom
tional
ment
activities
tions
Total
2023
Assets
Cash and Cash equivalents
1,042
200
106
246
2,479
-
4,074
Assets held for sale
-
432
-
-
-
-
432
Investments
161,715
102,795
1,678
176
18
-
266,382
Investments in joint ventures
-
-
1,034
397
-
-
1,430
Investments in associates
-
-
5
279
2,622
-
2,906
Reinsurance contract assets
16,563
2
5,656
-
-
(5,613)
16,608
Insurance contract assets
181
-
3
-
-
-
185
Deferred expenses
428
19
-
-
-
-
447
Other assets
6,486
1,818
183
359
8,095
(7,823)
9,118
Total assets
186,415
105,265
8,664
1,457
13,215
(13,436)
301,581
Liabilities
Reinsurance contract liabilities
396
-
211
-
-
-
608
Insurance contract liabilities
136,116
40,329
6,628
-
-
(5,626)
177,446
Investment contracts with discretionary
participating features
-
21,594
-
-
-
-
21,594
Investment contracts without discretionary
participating features
35,181
40,085
-
-
-
-
75,266
Liabilities held for sale / disposal groups
-
389
-
-
-
-
389
Other liabilities
11,257
1,418
219
397
3,660
(228)
16,723
Total liabilities
182,950
103,815
7,058
397
3,660
(5,854)
292,026
\n \n
The
Asset
Holding
Nether-
United
Interna-
manage-
and other
Elimina-
Americas
lands
Kingdom
tional
ment
activities
tions
Total
2022
Assets
Cash and Cash equivalents
1,097
-
182
116
367
1,639
-
3,402
Assets held for sale
-
88,440
-
-
-
-
-
88,440
Investments
160,624
-
91,463
2,497
136
39
-
254,759
Investments in joint ventures
-
-
-
959
471
-
-
1,430
Investments in associates
-
11
-
20
129
16
(11)
165
Reinsurance contract assets
16,520
-
369
6,273
-
-
(6,223)
16,939
Insurance contract assets
36
-
-
-
-
-
-
36
Deferred expenses
432
-
20
-
-
-
-
452
Other assets
9,652
1,076
1,973
336
146
16,455
(14,774)
14,864
Total assets
188,362
89,527
94,007
10,201
1,249
18,148
(21,008)
380,487
Liabilities
Reinsurance contract liabilities
62
-
-
208
-
-
-
270
Insurance contract liabilities
137,195
(0)
37,621
7,570
-
-
(6,266)
176,120
Investment contracts with discretionary
participating features
-
-
21,055
-
-
-
-
21,055
Investment contracts without discretionary
participating features
32,788
-
32,440
-
-
-
-
65,227
Liabilities held for sale / disposal groups
-
83,959
-
-
-
-
-
83,959
Other liabilities
14,920
934
1,344
281
424
7,213
(2,196)
22,922
Total liabilities
184,965
84,893
92,460
8,059
424
7,213
(8,462)
369,553
Amounts included in the tables on investments are presented on an EU-IFRS basis, which means that investments in joint
ventures and associates are not consolidated on a proportionate basis. Instead, these investments are included on a single line
using the equity method of accounting.
Investments
\n \n
Asset
Holding
United
Interna-
manage-
and other
Elimina-
Americas
Kingdom
tional
ment
activities
tions
Total
2023
Shares
267
16,192
23
9
-
-
16,491
Debt securities
47,547
6,916
1,295
52
-
-
55,811
Unconsolidated investment funds
92,520
74,719
173
-
-
-
167,411
Loans
10,156
2,269
3
-
18
-
12,446
Other financial assets
11,187
2,266
166
115
-
-
13,735
Investments in real estate
38
433
17
-
-
-
488
Total investments on balance sheet
161,715
102,795
1,678
176
18
-
266,382
Off-balance sheet investments third parties
225,090
135,270
3,711
195,304
-
-
559,375
Total revenue-generating investments
386,806
238,064
5,389
195,480
18
-
825,757
Investments
Financial assets measured at FVOCI
Backing insurance contracts without direct
participation
42,973
-
1,439
-
-
-
44,412
Backing investment contracts without direct
participation
5,854
-
-
-
-
-
5,854
Non-insurance related assets
-
-
1
97
-
-
98
Financial assets measured at FVPL
Backing direct participation insurance
contracts
67,532
40,008
173
-
-
-
107,714
Backing insurance contracts without direct
participation
9,696
1,243
27
-
-
-
10,967
Backing direct participation investment
contracts
24,988
22,771
-
-
-
-
47,759
Backing investment contracts without direct
participation
386
-
19
-
-
-
405
Non-insurance related assets
92
38,339
-
27
-
-
38,458
Financial assets measured at amortized
cost
10,156
-
1
52
18
-
10,227
Investments in real estate
38
433
17
-
-
-
488
Total investments on balance sheet
161,715
102,795
1,678
176
18
-
266,382
Investments in joint ventures
-
-
1,034
397
-
-
1,430
Investments in associates
-
-
5
279
2,622
-
2,906
Other assets
24,700
2,470
5,948
606
10,575
(13,436)
30,863
Consolidated total assets
186,415
105,265
8,664
1,457
13,215
(13,436)
301,581
\n \n
The
Asset
Holding
Nether-
United
Interna-
manage-
and other
Elimina-
Americas
lands
Kingdom
tional
ment
activities
tions
Total
2022
Shares
315
-
15,518
21
7
1
-
15,863
Debt securities
51,008
-
6,455
1,864
15
-
-
59,341
Unconsolidated investment funds
89,535
-
64,776
431
-
-
-
154,741
Loans
10,406
-
2,354
14
-
38
-
12,812
Other financial assets
9,318
-
1,917
150
114
-
-
11,500
Investments in real estate
42
-
443
17
-
-
-
502
Total investments on balance sheet
160,624
-
91,463
2,497
136
39
-
254,759
Off-balance sheet investments third parties
216,060
-
122,742
3,384
141,067
-
-
483,253
Total revenue-generating investments
376,684
-
214,205
5,881
141,203
39
-
738,013
Investments
Financial assets measured at FVOCI
Backing insurance contracts without direct
participation
46,665
-
-
1,900
-
-
-
48,565
Backing investment contracts without direct
participation
5,482
-
-
-
-
-
-
5,482
Non-insurance related assets
-
-
-
81
96
-
-
177
Financial assets measured at FVPL
Backing direct participation insurance
contracts
66,344
-
36,843
140
-
-
-
103,327
Backing insurance contracts without direct
participation
8,164
-
1,083
305
-
-
-
9,552
Backing direct participation investment
contracts
23,191
-
22,262
-
-
-
-
45,453
Backing investment contracts without direct
participation
285
-
-
47
-
-
-
331
Non-insurance related assets
46
-
30,832
-
40
1
-
30,918
Financial assets measured at
amortized cost
10,406
-
-
9
-
38
-
10,453
Investments in real estate
42
-
443
17
-
-
-
502
Total investments on balance sheet
160,624
-
91,463
2,497
136
39
-
254,759
Investments in joint ventures
-
-
-
959
471
-
-
1,430
Investments in associates
-
11
-
20
129
16
(11)
165
Other assets
27,399
89,516
2,544
6,726
513
18,094
(20,658)
124,133
Consolidated total assets
188,023
89,527
94,007
10,201
1,249
18,148
(20,669)
380,487
Insurance, reinsurance and investment contracts with discretionary participation feature
\n \n
United
Summarized assets and liabilities per segment
Americas
Kingdom
International
Eliminations
Total
2023
Insurance contracts
Direct participating contracts
70,436
39,687
193
-
110,315
Without direct participation contracts
65,499
642
6,393
(5,626)
66,907
Contracts measured under the PAA
-
-
39
-
39
Investment contracts with DPF
Direct participating contracts
-
21,594
-
-
21,594
Insurance contracts and investment contracts without
participation features
135,934
61,922
6,625
(5,626)
198,855
Reinsurance contracts held
16,166
2
5,445
(5,613)
16,000
\n \n
United
Summarized assets and liabilities per segment
Americas
Kingdom
International
Eliminations
Total
2022
Insurance contracts
Direct participating contracts
69,163
36,694
187
-
106,044
Without direct participation contracts
67,996
927
6,944
(6,266)
69,600
Contracts measured under the PAA
-
-
439
-
439
Investment contracts with DPF
Direct participating contracts
-
21,055
-
-
21,055
Insurance contracts and investment contracts without
participation features
137,159
58,676
7,570
(6,266)
197,139
Reinsurance contracts held
16,458
369
6,065
(6,223)
16,669
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f36817": { "value": "Number of employees \n \n
Asset
Holding
United
Interna-
Manage-
and other
Number of employees
Americas
Kingdom
tional
ment
activities
Total
2023
Number of employees - headcount
6,967
2,591
3,654
1,409
1,037
15,658
Of which Aegon's share of employees in joint ventures and
associates
1)
-
49
2,936
219
-
3,204
2022
Number of employees - headcount
6,153
2,621
4,281
1,464
958
15,478
Of which Aegon's share of employees in joint ventures and
associates
-
62
3,239
206
-
3,507
1
Excludes a.s.r. as the results of this associate is not included in Operating result", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f39300": { "value": "6 Insurance revenue \n \n
2023
2022
Investment
Investment
Insurance
contracts with
Insurance
contracts with
Amounts related to changes in liability for remaining coverage
contracts
DPF
contracts
DPF
Expected insurance claims and expenses
8,383
32
9,092
49
Earnings released from contractual service margin
952
17
1,029
11
Release of risk adjustment for non-financial risk
340
15
320
14
Allocated portion of consideration that relates to recovery
acquisition costs
558
-
545
-
Other
(39)
-
(42)
-
Contracts not measured under the PAA
10,195
64
10,944
74
Contracts measured under the PAA
127
-
233
-
Total Insurance revenue
10,322
64
11,178
74
The following table shows the revenue recognized on insurance and investments contracts with discretionary participating
features by transition method. Other contracts comprise contracts transitioned under the full retrospective approach and
contracts issued after the transition to IFRS 17.
\n \n
Revenue recognized on contracts in-force on the transition date to IFRS 17
2023
2022
Insurance contracts
Related to contracts transitioned under the modified retrospective method
514
559
Related to contracts transitioned under the fair value approach
8,707
9,513
Other contracts
1,101
1,105
Total revenue reported in the period
10,322
11,178
Investment contracts with discretionary participating features
Related to contracts transitioned under the fair value approach
64
74
Total revenue reported in the period
64
74
7 Insurance service expenses
\n \n
2023
2022
Investment
Investment
Insurance
contracts with
Insurance
contracts with
contracts
DPF
contracts
DPF
Incurred claims and other incurred insurance service expenses
(8,404)
(36)
(9,030)
(54)
Changes in fulfilment cash flows relating to incurred claims
(17)
-
8
-
Onerous contract losses (and reversals)
(1,079)
-
(1,247)
-
Amortization of insurance acquisition costs
(558)
-
(545)
-
Contracts not measured under the PAA
(10,058)
(36)
(10,815)
(54)
Contracts measured under the PAA
(132)
-
(228)
-
Total insurance service expenses
(10,190)
(36)
(11,043)
(54)
9 Insurance net investment result \n \n
Investment
contracts with
Insurance contracts
DPF
2023
Without
Note
Direct Part
direct part.
Direct Part
Total
Insurance investment return
Interest revenue on financial instruments calculated using the
effective interest method
9.1
-
2,738
-
2,738
Interest revenue on financial instruments measured at FVPL
9.2
231
369
137
737
Other investment income
9.3
845
11
427
1,283
Results from financial transactions
9.4
11,446
(467)
1,322
12,302
Impairment (losses) / reversals
9.5
-
(86)
-
(86)
Interest expenses
-
(218)
-
(218)
P&L impacts
12,523
2,347
1,886
16,756
Gains / (losses) on financial assets measured at FVOCI
-
1,311
-
1,311
Gains / (losses) transferred to income statement on disposal of
financial assets measured at FVOCI
-
577
-
577
OCI impacts
-
1,888
-
1,888
Total insurance investment return
12,523
4,235
1,886
18,644
Insurance finance income / (expenses) \u2013 General model
Interest accreted to insurance contracts
-
(3,098)
-
(3,098)
Changes in interest rates and other financial assumptions
-
(1,587)
-
(1,587)
Revaluation of changes in non-financial assumptions and
experience adjustments to current interest rates ,
-
(421)
-
(421)
Insurance finance income / (expenses) \u2013 Variable fee
approach
Change in fair value of underlying assets of products with direct
participating features
(13,730)
-
(1,921)
(15,651)
Change in fulfilment value not recognized in CSM due to risk
mitigation option
1,493
-
-
1,493
Insurance finance income / (expenses) \u2013 Premium
allocation approach
Insurance finance expenses from PAA contracts
-
(12)
-
(12)
Total insurance finance income / (expenses)
(12,237)
(5,118)
(1,921)
(19,276)
Represented by:
Amounts recognized in profit or loss
(12,244)
(3,485)
(1,921)
(17,650)
Amounts recognized in OCI
7
(1,633)
-
(1,626)
Reinsurance finance income / (expenses) on
reinsurance held
Interest accreted to reinsurance contracts
-
630
-
630
Changes in interest rates and other financial assumptions
-
283
-
283
Revaluation of changes in non-financial assumptions and
experience adjustments to current interest rates
-
148
-
148
Changes in risk of non-performance of reinsurers
-
(12)
-
(12)
Reinsurance finance income / (expenses) on reinsurance
held
-
1,048
-
1,048
Represented by:
Amounts recognized in profit or loss
-
699
-
699
Amounts recognized in OCI
-
349
-
349
Insurance net investment result
285
165
(34)
415
Represented by:
Amounts recognized in profit or loss
278
(440)
(34)
(196)
Amounts recognized in OCI
7
604
-
611
\n \n
Investment
contracts with
Insurance contracts
DPF
2022
Without
Note
Direct Part
direct part.
Direct Part
Total
Insurance investment return
Interest revenue on financial instruments calculated using the
effective interest method
9.1
-
2,898
-
2,898
Interest revenue on financial instruments measured at FVPL
9.2
182
265
128
575
Other investment income
9.3
701
31
421
1,153
Results from financial transactions
9.4
(24,716)
(909)
(3,880)
(29,505)
Impairment (losses) / reversals
9.5
-
(95)
-
(95)
Interest expenses
-
(97)
-
(97)
P&L impacts
(23,833)
2,092
(3,331)
(25,072)
Gains / (losses) on investments in equity instruments
designated at FVOCI
-
2
-
2
Gains / (losses) on financial assets measured at FVOCI
-
(14,571)
-
(14,571)
Gains / (losses) transferred to income statement on disposal of
financial assets measured at FVOCI
-
488
-
488
OCI impacts
-
(14,081)
-
(14,081)
Total insurance investment return
(23,833)
(11,989)
(3,331)
(39,153)
Insurance finance income / (expenses) \u2013 General model
Interest accreted to insurance contracts
-
(3,045)
-
(3,045)
Changes in interest rates and other financial assumptions
-
18,495
-
18,495
Revaluation of changes in non-financial assumptions and
experience adjustments to current interest rates ,
-
786
-
786
Insurance finance income / (expenses) \u2013 Variable fee
approach
Change in fair value of underlying assets of products with direct
participating features
20,886
-
3,247
24,133
Change in fulfilment value not recognized in CSM due to risk
mitigation option
3,323
-
-
3,323
Insurance finance income / (expenses) \u2013 Premium
allocation approach
Insurance finance expenses from PAA contracts
-
(7)
-
(7)
Total insurance finance income / (expenses)
24,208
16,230
3,247
43,685
Represented by:
Amounts recognized in profit or loss
24,233
(2,475)
3,247
25,005
Amounts recognized in OCI
(25)
18,705
-
18,680
Reinsurance finance income / (expenses) on
reinsurance held
Interest accreted to reinsurance contracts
-
660
-
660
Changes in interest rates and other financial assumptions
-
(4,469)
-
(4,469)
Revaluation of changes in non-financial assumptions and
experience adjustments to current interest rates
-
(267)
-
(267)
Changes in risk of non-performance of reinsurers
-
3
-
3
Reinsurance finance income / (expenses) on reinsurance
held
-
(4,073)
-
(4,073)
Represented by:
Amounts recognized in profit or loss
-
599
-
599
Amounts recognized in OCI
-
(4,672)
-
(4,672)
Insurance net investment result
375
168
(84)
458
Represented by:
Amounts recognized in profit or loss
400
217
(84)
532
Amounts recognized in OCI
(25)
(49)
-
(74)
During the reporting period, Aegon did not change the basis of disaggregation of insurance finance income / (expenses)
between the Income statement and OCI.
9.1 Interest revenue on financial instruments calculated using the effective interest method
\n \n
2023
Without direct part.
Total
Debt securities and money market instruments
2,166
2,166
Loans
433
433
Other
139
139
At December 31
2,738
2,738
\n \n
2022
Without direct part.
Total
Debt securities and money market instruments
2,479
2,479
Loans
425
425
Other
(6)
(6)
At December 31
2,898
2,898
9.2 Interest revenue on financial instruments measured at FVPL
\n \n
Investment
Insurance contracts
contracts with DPF
2023
Direct Part
Without direct part.
Direct Part
Total
Non-derivative assets applying the fair value option
231
54
137
422
Non-derivative assets failing the SPPI criteria
-
315
-
315
On December 31
231
369
137
737
\n \n
Investment
Insurance contracts
contracts with DPF
2022
Direct Part
Without direct part.
Direct Part
Total
Non-derivative assets applying the fair value option
188
48
128
364
Non-derivative assets failing the SPPI criteria
-
217
-
217
Non-derivative assets \u2013 PH designated
(5)
-
-
(5)
On December 31
182
265
128
575
9.3 Other investment income
\n \n
Investment
Insurance contracts
contracts with DPF
2023
Direct Part
Without direct part.
Direct Part
Total
Dividend income
828
12
417
1,257
Rental income
17
(2)
11
26
On December 31
845
11
427
1,283
\n \n
Investment
Insurance contracts
contracts with DPF
2022
Direct Part
Without direct part.
Direct Part
Total
Dividend income
680
28
407
1,115
Rental income
20
4
14
38
On December 31
701
31
421
1,153
9.4 Results from financial transactions
\n \n
Investment
Insurance contracts
contracts with DPF
2023
Direct Part
Without direct part.
Direct Part
Total
Net fair value change of financial investments
at fair value through profit or loss, other than
derivatives
Shares
800
13
413
1,225
Debt securities and money market investments
55
1,366
36
1,457
Unconsolidated investment funds
11,800
11
939
12,750
Other
-
15
-
15
12,655
1,404
1,388
15,447
Net fair value change of derivatives
Economic hedges where no hedge accounting is
applied
(95)
29
(48)
(114)
Bifurcated embedded derivatives
-
(1)
-
(1)
Change in fair value of hedges on guarantees in
products with direct participating features
(1,085)
-
-
(1,085)
Ineffective portion of hedge transactions to which
hedge accounting is applied
-
3
-
3
(1,181)
31
(48)
(1,197)
Realized gains and (losses) on financial
investments
Debt securities and money market investments
-
(15)
-
(15)
-
(16)
-
(16)
Realized gains and (losses) on financial
investments comprised of:
Investments measured at fair value through other
comprehensive income ('FVOCI')
-
(15)
-
(15)
Other
Gains and (losses) on investments in real estate
(28)
-
(18)
(46)
Net fair value change on investments in real estate
-
2
-
2
(28)
2
(18)
(44)
On December 31
11,446
1,421
1,322
14,190
Represented by:
Assets designated at FVPL
12,627
(562)
1,370
13,435
Assets mandatorily measured at FVPL
(1,181)
95
(48)
(1,134)
Other (i.e. FVOCI)
-
1,888
-
1,888
\n \n
Investment
Insurance contracts
contracts with DPF
2022
Direct Part
Without direct part.
Direct Part
Total
Net fair value change of financial investments
at fair value through profit or loss, other than
derivatives
Shares
(1,566)
(33)
(950)
(2,548)
Debt securities and money market investments
(1,153)
(14,958)
(737)
(16,847)
Unconsolidated investment funds
(18,538)
(38)
(1,785)
(20,360)
Other
-
329
-
329
(21,256)
(14,699)
(3,471)
(39,427)
Net fair value change of derivatives
Economic hedges where no hedge accounting is
applied
(333)
(361)
(385)
(1,080)
Bifurcated embedded derivatives
-
(1)
-
(1)
Change in fair value of hedges on guarantees in
products with direct participating features
(3,093)
-
-
(3,093)
Ineffective portion of hedge transactions to which
hedge accounting is applied
-
(3)
-
(3)
(3,427)
(364)
(385)
(4,176)
Realized gains and (losses) on financial
investments
Loans
-
36
-
36
-
35
-
35
Realized gains and (losses) on financial
investments comprised of:
Investments measured at amortized cost
-
36
-
36
Other
Gains and (losses) on investments in real estate
(33)
-
(23)
(56)
Net fair value change on investments in real estate
-
1
-
1
Net foreign currency gains and (losses)
-
37
-
37
(33)
38
(23)
(18)
On December 31
(24,716)
(14,990)
(3,880)
(43,586)
Represented by:
Assets designated at FVPL
(21,289)
(714)
(3,495)
(25,498)
Assets mandatorily measured at FVPL
(3,427)
(194)
(385)
(4,006)
Other (i.e. FVOCI)
-
(14,081)
-
(14,081)
9.5 Impairment (losses) / reversals
\n \n
2023
2022
Impairment losses on financial assets, excluding receivables
Debt securities and money market investments
(77)
(121)
Loans
(15)
10
Other
-
6
Impairment reversals on financial assets, excluding receivables
Debt securities and money market investments
37
26
Impairment losses and reversals on non-financial assets and receivables
(31)
(17)
On December 31
(86)
(95)
", "dimensions": { "concept": "agn:DisclosureOfInsuranceRevenueExplanatoryTextBlock", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f39633": { "value": "8 Net income / (expenses) on reinsurance held \n \n
2023
2022
Assumption changes that relate to (a reversal of) underlying onerous contracts
31
38
Experience adjustments that relate to (a reversal of) underlying onerous contracts
516
562
Release of the contractual service margin for services received
(26)
63
Release of risk adjustment for non-financial risk
(118)
(134)
Experience adjustments on current service
(217)
(280)
Changes in fulfilment cash flows relating to incurred claims
(2)
(12)
Loss on retrospective reinsurance (reinsurance purchased relating to incurred claims)
(17)
-
New contracts issued/acquired: loss on initial recognition of underlying contracts
12
31
Establishing of loss recovery component from onerous underlying contracts
7
8
Reversals of a loss-recovery component other than changes in the FCF of reinsurance contracts held
(3)
(2)
Contracts not measured under the PAA
181
274
Contracts measured under the PAA
1
1
Net income / (expenses) on reinsurance held
182
275
29 Insurance contracts, reinsurance contracts held and investment contracts with discretionary
participating features
29.1 Contracts by measurement model
The following tables show the assets and liabilities for groups of insurance contracts issued and reinsurance contracts held
by measurement model.
\n \n
Contracts not
Contracts
measured under
measured under
Insurance contracts
the PAA
the PAA
Total
Portfolios in an asset position
185
-
185
Portfolios in a liability position
177,407
39
177,446
Net balance, on December 31, 2023
177,222
39
177,262
Portfolios in an asset position
36
-
36
Portfolios in a liability position
175,681
439
176,120
Net balance, on December 31, 2022
175,645
439
176,083
\n \n
Contracts not
Contracts
measured under
measured under
Reinsurance contracts held
the PAA
the PAA
Total
Portfolios in an asset position
16,601
7
16,608
Portfolios in a liability position
608
-
608
On December 31, 2023
15,993
7
16,000
Portfolios in an asset position
16,934
6
16,939
Portfolios in a liability position
270
-
270
On December 31, 2022
16,664
6
16,669
All groups of investment contracts with discretionary participating features were not measured under the PAA and were in a
liability position at the reporting and comparative dates.
\n
\n
\n\n
\n
\n
\n\n
\n
\n
29.2 Movements in carrying amounts on insurance contracts, investment contracts with discretionary
participation features and reinsurance contracts held
The following tables show the movement in the net carrying amounts of insurance contracts issued, investment contracts with
discretionary participating features issued and reinsurance contracts held. Two types of tables are presented:
\u2022
Tables that analyze movements by type of liabilities and reconciles them to the condensed income statement and the
condensed statement of comprehensive income
\u2022
Tables that analyze movements by measurement component
29.2.1 Movement schedules by type of liability
\n \n
Remaining coverage
Excluding loss
Loss
Insurance contracts not measured under PAA - by type
component
component
Incurred claims
Total
Opening assets
40
(1)
(2)
36
Opening liabilities
163,758
1,455
10,468
175,681
Net opening balance, on January 1, 2023
163,719
1,456
10,470
175,645
Insurance revenue
(10,195)
-
-
(10,195)
Incurred claims and other insurance service expenses
-
(186)
8,593
8,407
Amortization of insurance acquisition cash flows
558
-
-
558
Losses (and reversal of losses) on onerous contracts
-
1,084
-
1,084
Adjustments to liabilities for incurred claims
-
-
9
9
Insurance service expenses
558
899
8,601
10,058
Investment components
(4,834)
-
4,834
-
Insurance service result
(14,471)
898
13,436
(137)
Insurance finance (income) / expenses (P&L and OCI)
17,262
81
-
17,343
Cash flows
(4,892)
(150)
(5,582)
(10,624)
Contracts disposed during the period
(347)
-
-
(347)
Transfers to disposal groups
(1)
(211)
(133)
(345)
Other movements
20
-
-
20
Transfer (to)/from other headings
(514)
(33)
36
(512)
Net exchange differences
(3,252)
(54)
(515)
(3,821)
Net closing balance, on December 31, 2023
157,524
1,987
17,711
177,222
Closing assets
1,589
(1,042)
(362)
185
Closing liabilities
159,113
945
17,349
177,407
\n \n
Remaining coverage
Excluding loss
Loss
Insurance contracts not measured under PAA - by type
component
component
Incurred claims
Total
Opening assets
780
-
(669)
110
Opening liabilities
286,352
343
1,407
288,102
Net opening balance, on January 1, 2022
285,572
343
2,076
287,991
Insurance revenue
(13,522)
-
-
(13,522)
Incurred claims and other insurance service expenses
-
(51)
11,372
11,321
Amortization of insurance acquisition cash flows
547
-
-
547
Losses (and reversal of losses) on onerous contracts
-
1,335
-
1,335
Adjustments to liabilities for incurred claims
-
-
8
8
Insurance service expenses
547
1,284
11,381
13,212
Investment components
(4,820)
(50)
4,870
-
Insurance service result
(17,795)
1,234
16,251
(309)
Insurance finance (income) / expenses (P&L and OCI)
(57,191)
(49)
-
(57,240)
Cash flows
(4,031)
(33)
(7,866)
(11,930)
Contracts disposed during the period
(278)
-
-
(278)
Transfers to disposal groups
(51,983)
(54)
-
(52,037)
Other movements
(28)
33
-
5
Net exchange differences
9,453
(19)
9
9,442
Net closing balance, on December 31, 2022
163,719
1,456
10,470
175,645
Closing assets
40
(1)
(2)
36
Closing liabilities
163,758
1,455
10,468
175,681
\n \n
Remaining coverage
Liability for incurred claims
Excluding loss
Loss
Best estimate
Risk
Insurance contracts PAA - by type
component
component
liability
adjustment
Total
Opening assets
-
-
-
-
-
Opening liabilities
404
2
33
-
439
Net opening balance, on January 1, 2023
404
2
33
-
439
Insurance revenue
(127)
-
-
-
(127)
Incurred claims and other insurance service expenses
-
-
96
-
96
Amortization of insurance acquisition cash flows
19
-
-
-
19
Losses (and reversals of losses) on onerous contracts
-
2
-
-
2
Adjustments to liabilities for incurred claims
-
-
14
-
14
Insurance service expenses
19
2
110
-
132
Investment components
-
-
-
-
-
Insurance service result
(108)
2
110
-
5
Insurance finance (income) / expenses (P&L and OCI)
12
-
-
-
12
Cash flows
95
-
(114)
-
(19)
Disposal of a business
(407)
-
-
-
(407)
Net exchange differences
9
-
-
-
9
Net closing balance, on December 31, 2023
6
4
29
-
39
Closing assets
-
-
-
-
-
Closing liabilities
6
4
29
-
39
\n \n
Remaining coverage
Liability for incurred claims
Excluding loss
Loss
Best estimate
Risk
Insurance contracts PAA - by type
component
component
liability
adjustment
Total
Opening assets
-
-
-
-
-
Opening liabilities
1,242
-
712
10
1,964
Net opening balance, on January 1, 2022
1,242
-
712
10
1,964
Insurance revenue
(563)
-
-
-
(563)
Incurred claims and other insurance service expenses
-
-
254
-
253
Amortization of insurance acquisition cash flows
22
-
-
-
22
Losses (and reversals of losses) on onerous contracts
-
2
-
-
2
Adjustments to liabilities for incurred claims
-
-
259
(3)
257
Insurance service expenses
22
2
513
(3)
534
Investment components
-
-
-
-
-
Insurance service result
(542)
2
513
(3)
(29)
Insurance finance (income) / expenses (P&L and OCI)
7
-
(110)
-
(103)
Cash flows
515
-
(470)
-
45
Disposal of a business
(729)
-
(75)
-
(804)
Transfers to disposal groups
(15)
-
(532)
(7)
(554)
Net exchange differences
(75)
-
(5)
-
(80)
Net closing balance, on December 31, 2022
404
2
33
-
439
Closing assets
-
-
-
-
-
Closing liabilities
404
2
33
-
439
\n \n
Asset for remaining coverage
Excluding loss
Asset for
recovery
Loss recovery
incurred
Reinsurance contracts held - Analysis by type, no PAA
component
component
claims
Total
Opening assets
14,801
1,607
526
16,934
Opening liabilities
(217)
(57)
5
(270)
Net opening balance, on January 1, 2023
14,584
1,549
530
16,664
Changes in the statements of P&L and OCI
Net expenses from reinsurance contracts
453
(235)
(38)
181
Other reinsurance finance (income) / expenses
1,026
34
-
1,060
Effect of changes in risk of non-performance of reinsurers
(12)
-
-
(12)
Total changes in the statements of P&L and OCI
1,467
(200)
(37)
1,229
Cash flows
(397)
(158)
(425)
(979)
Other movements
(424)
139
(86)
(371)
Net exchange differences
(511)
(34)
(4)
(550)
Net closing balance, on 31 December 31, 2023
14,719
1,296
(22)
15,993
Closing assets
16,457
349
(205)
16,601
Closing liabilities
1,738
(947)
(183)
608
\n \n
Asset for remaining coverage
Excluding loss
recovery
Loss recovery
Asset for
Reinsurance contracts held - Analysis by type, no PAA
component
component
incurred claims
Total
Opening assets
20,704
202
383
21,288
Opening liabilities
(1,116)
-
645
(471)
Net opening balance, on January 1, 2022
19,588
202
1,028
20,818
Changes in the statements of P&L and OCI
Net expenses from reinsurance contracts
(1,028)
1,380
(103)
248
Other reinsurance finance income / (expenses)
(3,956)
10
-
(3,945)
Investment components
(6)
(2)
8
-
Effect of changes in risk of non-performance of reinsurers
1
-
-
1
Total changes in the statements of P&L and OCI
(4,988)
1,388
(96)
(3,696)
Cash flows
(1,021)
(12)
(466)
(1,498)
Other movements
(322)
(1)
-
(323)
Net exchange differences
1,327
(28)
64
1,363
Net closing balance, on 31 December 31, 2022
14,584
1,549
530
16,664
Closing assets
14,801
1,607
526
16,934
Closing liabilities
217
57
5
270
\n \n
Remaining coverage
Excluding loss
Loss
Incurred
Investment contracts with DPF - by type
component
component
claims
Total
Opening assets
-
-
-
-
Opening liabilities
21,055
-
-
21,055
Net balance, on January 1, 2023
21,055
-
-
21,055
Insurance revenue
(64)
-
-
(64)
Incurred claims and other insurance service expenses
-
-
36
36
Insurance service expenses
-
-
36
36
Investment components
(2,417)
-
2,418
-
Insurance service result
(2,481)
-
2,453
(28)
Insurance finance (income) / expenses (P&L and OCI)
1,921
-
-
1,921
Cash flows
423
-
(2,453)
(2,030)
Other movements
172
-
-
172
Net exchange differences
503
-
-
503
Net closing balance, on December 31, 2023
21,594
-
-
21,594
Closing assets
-
-
-
-
Closing liabilities
21,594
-
-
21,594
\n \n
Remaining coverage
Excluding loss
Loss compo-
Investment contracts with DPF - by type
component
nent
Incurred claims
Total
Opening assets
-
-
-
-
Opening liabilities
27,392
-
-
27,392
Net balance, on January 1, 2023
27,392
-
-
27,392
Insurance revenue
(74)
-
-
(74)
Incurred claims and other insurance service expenses
-
-
58
58
Losses (and reversal of losses) on onerous contracts
-
(5)
-
(5)
Insurance service expenses
-
(5)
58
54
Investment components
(2,254)
5
2,250
-
Insurance service result
(2,328)
-
2,308
(20)
Insurance finance (income) / expenses (P&L and OCI)
(3,247)
-
-
(3,247)
Cash flows
511
-
(2,308)
(1,797)
Net exchange differences
(1,273)
-
-
(1,273)
Net closing balance, on December 31, 2023
21,055
-
-
21,055
Closing assets
-
-
-
-
Closing liabilities
21,055
-
-
21,055
29.2.2 Movement schedules by measurement component
\n \n
Best estimate
Risk
Contractual
Insurance contracts not measured under PAA - by component
liability
adjustment
service margin
Total
Opening assets
100
-
(64)
36
Opening liabilities
163,381
3,436
8,865
175,681
Net opening balance, on January 1, 2023
163,280
3,435
8,929
175,645
Changes in estimates that adjust contractual service margin
(204)
380
(176)
-
Changes in estimates that result in (a reversal of) onerous contracts
974
51
-
1,025
New contracts issued \u2013 non-onerous
(563)
90
473
-
New contracts issued \u2013 onerous
38
22
-
60
Changes that relate to future service
245
542
297
1,084
Earnings released from contractual service margin
-
-
(952)
(952)
Release of risk adjustment
-
(345)
-
(345)
Experience adjustments on current service
75
-
-
75
Revenue recognized for incurred policyholder tax expenses
(15)
-
-
(15)
Changes that relate to current service
60
(345)
(952)
(1,238)
Experience adjustments on claims incurred
17
-
-
17
Changes that relate to past service
17
-
-
17
Insurance service result
322
197
(656)
(137)
General model
Interest accreted to insurance contracts
2,680
195
223
3,098
Changes in interest rates and other financial assumptions
1,573
14
-
1,587
Revaluation of changes in non-financial assumptions and experience
adjustments to current interest rates
425
(4)
-
421
Variable fee approach
Change in fair value of the underlying assets of products with direct
participating features
13,730
-
-
13,730
Change in fulfilment value of products with direct participating features
not recognized in CSM due to risk mitigation option
(1,493)
-
-
(1,493)
Insurance finance (income) / expenses
16,915
205
223
17,343
Premiums received
14,203
-
-
14,203
Claims, benefits and expenses paid
(23,862)
-
-
(23,862)
Acquisition costs paid
(936)
-
-
(936)
Other
(30)
-
-
(30)
Cash flows
(10,624)
-
-
(10,624)
Contracts disposed during the period
(283)
(5)
(59)
(347)
Transfers to disposal groups
(59)
(197)
(89)
(345)
Other
41
-
(21)
20
Transfer (to)/from other headings
(511)
(1)
(1)
(512)
Other movements
(811)
(203)
(169)
(1,184)
Net exchange differences
(3,520)
(98)
(203)
(3,821)
Net closing balance, on December 31, 2023
165,562
3,537
8,124
177,222
Closing assets
475
(286)
(4)
185
Closing liabilities
166,036
3,251
8,120
177,407
\n \n
Best estimate
Contractual
Insurance contracts not measured under PAA - by component
liability
Risk adjustment
service margin
Total
Opening assets
1,086
(510)
(465)
110
Opening liabilities
271,870
4,831
11,401
288,102
Net opening balance, on January 1, 2022
270,784
5,341
11,866
287,991
Changes in estimates that adjust contractual service margin
909
(1,232)
323
-
Changes in estimates that result in (a reversal of) onerous contracts
1,408
(131)
-
1,277
New contracts issued \u2013 non-onerous
(595)
103
493
-
New contracts issued \u2013 onerous
27
29
-
56
Changes that relate to future service
1,749
(1,231)
816
1,333
Earnings released from contractual service margin
-
-
(1,229)
(1,229)
Release of risk adjustment
-
(359)
-
(359)
Experience adjustments on current service
(47)
1
-
(46)
Revenue recognized for incurred policyholder tax expenses
1
-
-
1
Changes that relate to current service
(46)
(359)
(1,229)
(1,634)
Experience adjustments on claims incurred
(7)
-
-
(8)
Changes that relate to past service
(7)
-
-
(8)
Insurance service result
1,695
(1,591)
(414)
(309)
General model
Interest accreted to insurance contracts
2,548
156
221
2,925
Changes in interest rates and other financial assumptions
(28,114)
(58)
-
(28,172)
Revaluation of changes in non-financial assumptions and experience
adjustments to current interest rates
(862)
19
-
(843)
Variable fee approach
Change in fair value of the underlying assets of products with direct
participating features
(25,351)
-
-
(25,351)
Change in fulfilment value of products with direct participating
features not recognized in CSM due to risk mitigation option
(5,799)
-
-
(5,799)
Insurance finance (income) / expenses
(57,578)
117
221
(57,240)
Premiums received
15,444
-
-
15,444
Claims, benefits and expenses paid
(26,454)
-
-
(26,454)
Acquisition costs paid
(892)
-
-
(892)
Other
(28)
-
-
(28)
Cash flows
(11,930)
-
-
(11,930)
Contracts disposed during the period
(177)
(5)
(96)
(278)
Transfers to disposal groups
(48,338)
(659)
(3,040)
(52,037)
Other
-
-
5
5
Other movements
(48,515)
(663)
(3,131)
(52,310)
Net exchange differences
8,825
231
387
9,442
Net closing balance, on December 31, 2022
163,280
3,435
8,929
175,645
Closing assets
100
-
(64)
36
Closing liabilities
163,381
3,436
8,865
175,681
\n \n
Reinsurance contracts held - Movement schedule by
Best estimate
Contractual
component, no PAA
liability
Risk adjustment
service margin
Total
Opening assets
16,233
1,010
(309)
16,934
Opening liabilities
(371)
(101)
202
(270)
Net opening balance, on January 1, 2023
15,862
909
(107)
16,664
Changes in estimates that adjust the contractual service margin
(3)
6
(4)
-
Changes in estimates that relate to losses and reversals of losses
on underlying onerous contracts
477
67
6
550
New reinsurance contracts issued / acquired recognized in the year
(330)
42
271
(17)
Initial recognition of onerous underlying contracts
-
-
12
12
Changes that relate to future service
144
114
286
544
CSM recognized for service received
-
-
(26)
(26)
Release of risk adjustment
-
(118)
-
(118)
Experience adjustment on current service
(217)
-
-
(217)
Changes that relate to current service
(217)
(118)
(26)
(361)
Experience adjustment on claims component
(2)
-
-
(2)
Changes that relate to past service
(2)
-
-
(2)
Net income/expenses of reinsurance held
(76)
(3)
260
181
Reinsurance finance income / (expenses)
1,013
48
(13)
1,048
Premiums paid, net of received fixed commission
2,642
-
-
2,642
Amounts received
(3,622)
-
-
(3,622)
Cash flows
(979)
-
-
(979)
Other movements
(132)
(176)
(63)
(371)
Other movements
(132)
(176)
(63)
(371)
Net exchange difference
(528)
(23)
2
(550)
Net closing balance, on December 31, 2023
15,160
755
78
15,993
Closing assets
16,184
423
(7)
16,601
Closing liabilities
(1,024)
332
85
(608)
\n \n
Reinsurance contracts held - Movement schedule by
Best estimate
Contractual
component, no PAA
liability
Risk adjustment
service margin
Total
Opening assets
20,608
1,009
(328)
21,288
Opening liabilities
(1,617)
585
561
(471)
Net opening balance, on January 1, 2022
18,991
1,594
233
20,818
Changes in estimates that adjust the contractual service margin
244
(408)
164
-
Changes in estimates that relate to losses and reversals of losses
on underlying onerous contracts
655
(58)
10
607
New reinsurance contracts issued / acquired recognized in the year
(8)
21
(13)
-
Initial recognition of onerous underlying contracts
-
-
31
31
Changes that relate to future service
891
(444)
192
638
CSM recognized for service received
-
-
42
42
Release of risk adjustment
-
(147)
-
(147)
Experience adjustment on current service
(274)
-
-
(274)
Changes that relate to current service
(274)
(147)
42
(379)
Experience adjustment on claims component
(12)
-
-
(12)
Changes that relate to past service
(12)
-
-
(12)
Net income/expenses of reinsurance held
605
(591)
234
248
Reinsurance finance income / (expenses)
(3,954)
47
(37)
(3,944)
Premiums paid, net of received fixed commission
3,005
-
-
3,005
Amounts received
(4,503)
-
-
(4,503)
Cash flows
(1,498)
-
-
(1,498)
Other movements
403
(206)
(520)
(323)
Other movements
403
(206)
(520)
(323)
Net exchange difference
1,316
65
(17)
1,363
Net closing balance, on December 31, 2022
15,862
909
(107)
16,664
Closing assets
16,233
1,010
(309)
16,934
Closing liabilities
(371)
(101)
202
(270)
\n \n
Best estimate
Contractual
Investment contracts with DPF - by component
liability
Risk adjustment
service margin
Total
Opening assets
-
-
-
-
Opening liabilities
20,874
109
72
21,055
Net balance, on January 1, 2023
20,874
109
72
21,055
Changes in estimates that adjust contractual service margin
(152)
31
121
-
Changes that relate to future service
(152)
31
121
-
Earnings released from contractual service margin
-
-
(17)
(17)
Release of risk adjustment
-
(15)
-
(15)
Experience adjustments on current service
4
-
-
4
Changes that relate to current service
4
(15)
(17)
(28)
Changes that relate to past service
-
-
-
-
Insurance service result
(148)
16
104
(28)
Variable fee approach
Change in fair value of the underlying assets of products with direct
participating features
1,921
-
-
1,921
Insurance finance (income) / expenses
1,921
-
-
1,921
Premiums received
475
-
-
475
Claims, benefits and expenses paid
(2,506)
-
-
(2,506)
Cash flows
(2,030)
-
-
(2,030)
Other
170
-
1
172
Other movements
170
-
1
172
Net exchange differences
498
3
2
503
Net closing balance, on December 31, 2023
21,285
128
180
21,594
Closing assets
-
-
-
-
Closing liabilities
21,285
128
180
21,594
\n \n
Best estimate
Contractual
Investment contracts with DPF - by component
liability
Risk adjustment
service margin
Total
Opening assets
-
-
-
-
Opening liabilities
27,064
133
195
27,392
Net balance, on January 1, 2022
27,064
133
195
27,392
Changes in estimates that adjust contractual service margin
110
(3)
(106)
-
Changes that relate to future service
110
(3)
(106)
-
Earnings released from contractual service margin
-
-
(11)
(11)
Release of risk adjustment
-
(14)
-
(14)
Experience adjustments on current service
5
-
-
5
Changes that relate to current service
5
(14)
(11)
(20)
Changes that relate to past service
-
-
-
-
Insurance service result
114
(17)
(117)
(20)
Variable fee approach
Change in fair value of the underlying assets of products with direct
participating features
(3,247)
-
-
(3,247)
Insurance finance (income) / expenses
(3,247)
-
-
(3,247)
Premiums received
511
-
-
511
Claims, benefits and expenses paid
(2,308)
-
-
(2,308)
Cash flows
(1,797)
-
-
(1,797)
Net exchange differences
(1,261)
(6)
(6)
(1,273)
Net closing balance, on December 31, 2022
20,874
109
72
21,055
Closing assets
-
-
-
-
Closing liabilities
20,874
109
72
21,055
29.2.3 New contracts recognized
New insurance contracts recognized, no PAA
\n \n
2023
Issued
non-onerous
Issued onerous
New contracts recognized
contracts
contracts
Total
Present value of cash inflows
(5,155)
(545)
(5,701)
Present value of cash outflows, excl. acquisition costs
4,593
583
5,176
Risk adjustment for non-financial risk
90
22
112
Contractual service margin
473
-
473
(Gain) / loss recognized on initial recognition
-
60
60
\n \n
2022
Issued
non-onerous
Issued onerous
New contracts recognized
contracts
contracts
Total
Present value of cash inflows
(5,020)
(475)
(5,494)
Present value of cash outflows, excl. acquisition costs
4,447
504
4,951
Risk adjustment for non-financial risk
98
27
125
Contractual service margin
474
-
474
(Gain) / loss recognized on initial recognition
-
57
57
1
The table do not hold results from Aegon the Netherlands; therefore, numbers differ from 29.2.2 Movement schedules by measurement component table
New reinsurance contracts recognized, no PAA
\n \n
Reinsurance
2023
contracts
Present value of cash inflows
201
Present value of cash outflows
(531)
Risk adjustment for non-financial risk
42
Contractual service margin
271
Income recognized on initial recognition
(17)
2022
Present value of cash inflows
251
Present value of cash outflows
(259)
Risk adjustment for non-financial risk
21
Contractual service margin
(13)
Income recognized on initial recognition
0
29.2.4 Maturity analysis contractual service margin
\n \n
2023
2022
Discounted
Discounted
Maturity analysis CSM insurance contracts
CSM
CSM
<1 year
839
1,076
1-2 years
756
802
2-3 years
684
723
3-4 years
618
654
4-5 years
559
591
5-10 years
2,071
2,210
10-20 years
1,850
2,024
> 20 years
748
849
On December 31
8,124
8,929
\n \n
2023
2022
Discounted
Discounted
Maturity analysis CSM reinsurance contracts held, no PAA
CSM
CSM
< 1yr
8
(22)
1 < 2 yrs
7
(15)
2 < 3 yrs
6
(13)
3 < 4 yrs
6
(12)
4 < 5 yrs
5
(10)
5 < 10 yrs
18
(32)
10 - 20 yrs
17
(16)
> 20 yrs
12
13
On December 31
78
(107)
29.2.5 Movement schedules contractual service margin by transition method
Contractual service margin recognized on contracts in-force on the transition date to IFRS 17
\n \n
Insurance contracts
Investment contracts with DPF
Reinsurance contracts held
Total
Total
Total
MRA
1)
FVA
2)
Other
CSM
MRA
FVA
Other
CSM
MRA
FVA
Other
CSM
On January 1,
2023
1,836
4,673
2,420
8,929
-
72
-
72
1
(129)
21
(107)
Changes in
estimates that
adjust CSM
(40)
(105)
(32)
(176)
-
121
-
121
-
11
(14)
(4)
Changes in
estimates that
relate to losses
and reversals of
losses on
underlying
onerous
contracts
-
-
-
-
-
-
-
-
-
4
2
6
New contracts
issued:
non-onerous
-
-
473
473
-
-
-
-
-
-
283
283
Earnings released
from contractual
service margin
(191)
(498)
(264)
(952)
-
(17)
-
(17)
-
9
(34)
(26)
Insurance finance
income /
(expense)
8
159
57
223
-
-
-
-
-
(21)
8
(13)
Cash flow -
contracts
disposed
-
(59)
-
(59)
-
-
-
-
-
-
-
-
Net exchange
differences
(57)
(128)
(17)
(203)
-
2
-
2
-
6
(5)
2
Other
1
(42)
(68)
(110)
-
1
-
1
-
(30)
(33)
(63)
On December 31,
2023
1,557
4,000
2,568
8,124
-
180
-
180
-
(149)
227
78
1
MRA: Modified Retrospective Approach
2
FVA: Fair Value Approach
\n \n
Insurance contracts
Investment contracts with DPF
Reinsurance contracts held
Total
Total
Total
MRA
1)
FVA
2)
Other
CSM
MRA
FVA
Other
CSM
MRA
FVA
Other
CSM
On January 1,
2022
2,639
7,036
2,191
11,866
-
195
-
195
-
238
(5)
233
Changes in
estimates that
adjust CSM
(792)
1,101
15
323
-
(106)
-
(106)
-
167
(3)
164
Changes in
estimates that
relate to losses
and reversals of
losses on
underlying
onerous
contracts
-
-
-
-
-
-
-
-
-
3
8
10
New contracts
issued:
non-onerous
-
-
493
493
-
-
-
-
-
(8)
26
18
Earnings released
from contractual
service margin
(205)
(764)
(260)
(1,229)
-
(11)
-
(11)
-
45
(4)
42
Insurance finance
income /
(expense)
9
179
33
221
-
-
-
-
-
(37)
-
(37)
Cash flow -
contracts
disposed
-
(96)
-
(96)
-
-
-
-
-
-
-
-
Net exchange
differences
186
246
(45)
387
-
(6)
-
(6)
-
(17)
-
(17)
Other
-
(3,028)
(7)
(3,035)
-
-
-
-
-
(520)
-
(520)
On December 31,
2022
1,836
4,673
2,420
8,929
-
72
-
72
1
(129)
21
(107)
1
MRA: Modified Retrospective Approach
2
FVA: Fair Value Approach
Other in the table above relates to derecognition of liabilities following the completion of the transaction with a.s.r.
29.2.6 Investments and other assets allocated to contracts that were not transitioned fully retrospectively
On transition to IFRS 17, amounts were recognized in the revaluation reserve for insurance contracts, investment contracts
with discretionary features and reinsurance contracts held using the modified retrospective approach and/or the fair
value approach.
Part of the assets backing these groups of insurance contracts are measured at fair value through other comprehensive
income. The movement in the period in the cumulative amount recognized in OCI for these assets is reflected in the table below:
\n \n
Assets backing up:
Insurance Contracts
On January 1, 2023
(2,375)
Gross revaluation
1,137
Net gains/losses transferred to income statement
309
Foreign currency translation differences
55
Tax effect
(322)
Other
47
On December 31, 2023
(1,147)
\n \n
Assets backing up:
Insurance Contracts
On January 1, 2022
6,456
Gross revaluation
(12,445)
Net gains/losses transferred to income statement
425
Foreign currency translation differences
540
Tax effect
2,578
Other
72
On December 31, 2022
(2,375)
Of the Gross revaluation, EUR 1,211 million was unrealized gains through equity (2022: loss of EUR 12,434 million). The Net
gains/losses transferred to the income statement include EUR 437 million due to transfer disposal (2022: EUR 549 million).
29.3 Critical judgments and estimates
29.3.1 Fulfilment cash flows
The fulfillment cash flows comprise:
\u2022
Estimates of future cash flows;
\u2022
An adjustment to reflect time value of money and the financial risks related to future cash flows, to the extent that the
financial risks are not included in the estimates of future cash flows and
\u2022
A risk adjustment for non-financial risk.
Each measurement element requires the use of significant judgment and estimates.
29.3.1.1 Valuation methods
Aegon\u2019s objective in estimating future cash flows is to determine a range of scenarios that reflects the full range of possible
outcomes. Each scenario specifies the amount and timing of the cash flows for a particular outcome, and the estimated
probability of that outcome. The cash flows from each scenario are discounted and weighted by the estimated probability
of that outcome to derive an expected present value.
When determining the expected value of the full range of possible outcomes, the objective is to incorporate all reasonable
and supportable information available without undue cost or effort in an unbiased way, rather than to identify every possible
scenario. In some cases, relatively simple modeling provides an answer within an acceptable range of precision. In other cases,
more complex valuation methods are required to satisfy the measurement objective. For example, if cash flows reflect a series
of interrelated (implicit or explicit) options and respond in a non-linear fashion to changes in economic conditions, then Aegon
often uses stochastic modeling techniques to estimate the expected present value. Stochastic modeling involves projecting
future cash flows under a large number of possible economic scenarios for market variables such as interest rates and
equity returns. Other methods that are used to measure non-linear cash flows include closed form solutions and replicating
portfolio techniques.
29.3.1.2 Actuarial assumptions
When estimating future cash flows, Aegon sets actuarial assumptions for underwriting risk including policy claims (such
as mortality, longevity or morbidity), policyholder behavior (such as lapses, surrender of policies or partial withdrawals),
property & casualty loss ratios and expenses. Actuarial assumptions are reviewed annually, with the exception of expense
assumptions which might be updated more frequently as a result on the quarterly monitoring of actual expenses.
Underwriting assumptions
Mortality tables applied are generally developed based on a blend of company experience and industry wide studies, taking
into consideration product characteristics, own risk selection criteria, target market and past experience. Mortality experience
is monitored through regular studies, the results of which are fed into the pricing cycle for new products and reflected in the
liability calculation for in-force groups of contracts where appropriate. For contracts insuring survivorship or mortality,
allowance is made for further longevity or mortality improvements. Morbidity assumptions are based on own claims severity
and frequency experience, adjusted where appropriate for industry information. Industry survey is used for judgment-based
assumptions like for example morbidity improvement and cost of long-term care (LTC) inflation.
Surrender and lapse rates depend on product features, policy duration and external circumstances such as the interest rate
environment and competitor behavior. For policies where policyholders are expected to have financial incentive to choose
a favorable lapse timing based on the market conditions, a dynamic lapse assumption is utilized to reflect expected
policyholder behavior when applying multiple scenarios in measurement. Own experience, as well as industry published data,
are used to in establishing assumptions. Lapse experience is correlated to mortality and morbidity levels, as higher or lower
levels of surrenders may indicate future claims will be higher or lower than anticipated. Such correlations are accounted for
in the mortality and morbidity assumptions based on the emerging analysis of experience.
Policyholder benefits that are directly linked to asset performance are projected at rates that are consistent with the discount
rates applied. For cash flows like crediting rates, the projected cash flows reflect how the reporting unit would determine
crediting rates in a given scenario based on the Group\u2019s crediting policies. Other management actions are taken into account
to the extent that they are part of Aegon\u2019s regular policies and procedures.
Given that Aegon applies the premium allocation approach to most of its non-life insurance business, actuarial assumptions
related to (ultimate) loss ratio assumptions only impact the fulfillment cash flows for onerous groups of contracts with
remaining coverage and for contracts with incurred claims. Aegon uses a range of loss reserving techniques to estimate
(ultimate) claims ratios, using historical claims development data as well as market observable inputs. Large ticket reported
claims are assessed on an individual basis.
Expense assumptions
Expenses that are attributable to the fulfillment cash flows include acquisition expenses, maintenance expenses and claims
settlement costs, as well as overhead costs that Aegon considers to be unavoidable when fulfilling the in-force contracts.
Investment expenses are included in the fulfillment cash flows for contracts that provide investment-related or investment-
return services, as well as for contracts where Aegon performs investment activities that enhance the policyholders\u2019 benefits
from insurance coverage. Aegon\u2019s expense assumptions are based on the current level of expenses, adjusted for future
expense inflation and the impact of known one-off projects (such as planned cost saving initiatives or projects to implement
additional regulatory reporting requirements). In not-at-scale units, further adjustment is made to reflect a long-term scale
of business.
When allocating the attributable expenses to groups of contracts, Aegon leverages allocation approaches used for pricing
or regulatory reporting. Where EU-IFRS requires a greater level of granularity, additional allocation keys are applied that
have been defined based on, for example, further expense studies. The expense inflation assumption is split into a financial
component that is calibrated to market observables and a non-financial component that is set as an actuarial assumption.
The non-financial component of the expense inflation assumption represents the estimated difference between general
market inflation implied by the market and expense inflation that is specific to Aegon\u2019s product characteristics. Some inflation
assumptions (such as LTC utilization and health medical inflation in the Americas) do not include a financial component but
are entirely set as an actuarial assumption, given that they are weakly correlated with general inflation indices and there is no
hedge market for such rates.
Discount rates and other financial assumptions
Aegon adjusts the estimated future cash flows of a group of contracts to reflect the time value of money and the financial risks
related to those cash flows, to the extent that the financial risks are not included in the estimates of cash flows. The discount
rates applied to the estimates of the future cash flows:
\u2022
Reflect the time value of money, the characteristics of the cash flows and the liquidity characteristics of the insurance
contracts;
\u2022
Are consistent with observable current market prices (if any) for financial instruments with cash flows whose characteristics
are consistent with those of the insurance contracts, in terms of, for example, timing, currency and liquidity; and
\u2022
Exclude the effect of factors that influence observable market prices but do not affect the future cash flows of the insurance
contracts.
No implicit adjustments for non-financial risk are included in the discount rates, as the risk adjustment for non-financial risks
is explicitly included in the fulfillment cash flows.
When determining the discount rates at the date of initial recognition of a group of contracts, Aegon uses weighted-average
discount rates over the period that contracts in that group are issued.
EU-IFRS explicitly mentions two calibration options for the discount rate, namely the \"top-down approach\" and \"bottom-up\"
approach. Aegon has generalized both approaches into a direct discounting technique in which discount rates are determined
as the sum of the risk-free rate plus a percentage of the illiquidity premium (ILP). The ILP is an extra spread that an investor can
earn by investing in a security that offers limited or no ability for the investor to exit the investment prior to its maturity. If an
insurance liability is illiquid (meaning that the policyholder has limited or no ability to cash it in prior to maturity or contingency-
based payment), the liability is discounted at a rate that includes an ILP because illiquid assets (earning an illiquidity premium)
may be purchased to back or replicate that liability.
Risk-free yield curve
Aegon has identified various rates available in the EUR, GBP and USD markets that can be used as a basis for the risk-free
yield curve, including EURIBOR swap rates for EUR, reformed Sterling Overnight Index Average (SONIA) for GBP, and Secured
Overnight Funding Rates (SOFR) and US Treasury rates for USD. EURIBOR rates are adjusted for credit risk by subtracting
a credit risk allowance. No adjustment is made to overnight swap rates and US Treasury rates, as the credit risk of these
instruments is deemed negligible.
A full risk-free yield curve is derived by first interpolating between tenors for which market data is available, and then
extrapolating the yield curve beyond market observable maturities. Discount rates converge linearly in 10 years to an ultimate
forward rate. A uniform last liquid point for EUR and USD is set at 30 years, GBP is set at 50 years. The ultimate forward rates
reflect a long-term view on nominal interest rates and is set by management per currency, considering expected real interest
rates and long-term inflation together with the current market environment. The ultimate forward rates have been reviewed
as part of the annual Group economic assumptions update and revised to a common level of 3.45% effective December 31,
2023. (December 31, 2022: 3.50%,3.65% and 3.45% for the USD, EUR, and GBP respectively.)
Aegon reviews the risk-free last liquid point and ultimate forward rates quarterly which, although expected to be infrequent, may
lead to assumption updates if there are significant changes in market conditions.
\n \n
Yield curves (zero coupon rates excluding ILP)
December 31, 2023
1 year
5 years
10 years
15 years
20 years
EUR
3.36%
2.33%
2.39%
2.47%
2.40%
GBP
4.74%
3.35%
3.28%
3.40%
3.43%
USD
4.83%
3.89%
3.90%
4.00%
4.39%
\n \n
Yield curves (zero coupon rates excluding ILP)
December 31, 2022
1 year
5 years
10 years
15 years
20 years
EUR
3.18%
3.10%
3.05%
2.98%
2.73%
GBP
4.46%
4.06%
3.71%
3.62%
3.54%
USD
4.97%
4.03%
3.83%
3.94%
4.31%
Illiquidity premium (ILP)
Aegon sets ILPs at the level of the reporting unit or major business unit, reflecting how it manages the investments and ALM
risk for the given block of liabilities. For example, in the US Aegon has set ILPs by lines of business which has resulted in 9 ILP
curves. For each unit, an ILP curve is constructed that is based on the market-observables returns on a reference portfolio
of assets. The reference portfolio is based on the unit\u2019s investment policy target mix of fixed interest securities and excludes
alternative investments (such as equities and real estate investments).
To derive the ILP curve for respective lines of business, market observable spreads are sourced and adjusted for expected and
unexpected default losses. The ILP is based on the line of business reference portfolio and investment strategy.
The full ILP curve is derived by interpolating between the observable tenors and then extrapolating the yield linearly beyond
the ILP last liquid point to the ultimate forward ILP. The last liquid point can be set separately for each duration bucket or, as a
practical simplification, as a single point in time for the entire reference portfolio. The ultimate forward spread is set based
on historical 50th percentile spread adjusted for expected and unexpected default losses.
Aegon updates the reference portfolio quarterly, and the ILP last liquid point and ILP ultimate forward rate are revised
accordingly. The most significant products of Aegon Ltd. are presented below.
\n \n
ILP per portfolio, December 31, 2023
1 year
5 years
10 years
15 years
20 years
30 years
Fixed Deferred Annuity
1.15%
1.21%
1.12%
1.11%
1.11%
1.11%
Indexed Universal Life
1.20%
1.24%
1.20%
1.18%
1.18%
1.21%
Long-Term Care
0.97%
0.98%
0.98%
1.15%
1.20%
1.30%
Traditional Life
0.99%
1.01%
1.02%
1.15%
1.19%
1.28%
Universal Life
1.01%
1.03%
1.02%
1.13%
1.17%
1.26%
Variable Annuities
0.69%
0.69%
0.68%
0.67%
0.64%
0.67%
Annuities
0.89%
0.89%
0.89%
0.89%
0.89%
0.76%
Individual Protection
0.49%
0.49%
0.49%
0.49%
0.49%
0.40%
\n \n
ILP per portfolio, December 31, 2022
1 year
5 years
10 years
15 years
20 years
30 years
Fixed Deferred Annuity
1.44%
1.48%
1.31%
1.12%
1.12%
1.12%
Indexed Universal Life
1.48%
1.45%
1.33%
1.22%
1.22%
1.21%
Long-Term Care
1.37%
1.38%
1.38%
1.32%
1.32%
1.32%
Traditional Life
1.41%
1.42%
1.40%
1.31%
1.31%
1.31%
Universal Life
1.43%
1.44%
1.39%
1.29%
1.28%
1.28%
Variable Annuities
0.67%
0.67%
0.67%
0.67%
0.67%
0.68%
Annuities
1.08%
1.08%
1.08%
1.08%
1.08%
1.03%
Individual Protection
0.50%
0.50%
0.50%
0.50%
0.50%
0.42%
Illiquidity factor
The illiquidity factor reflects the liquidity characteristics of a certain group of insurance contracts.
Groups of contracts whose cash flows are not dependent on the underlying assets are assigned an illiquidity factor of 100%.
Groups of contracts for which the cash flows predominantly vary with the underlying assets are assigned an illiquidity factor
of 0%. For example, Aegon UK does not apply an illiquidity factor to the Unit Linked products. For a few products that include
both types of cash flows, such as US variable annuity products with guaranteed minimum withdrawal benefits, a combination
of 100% and 0% ILP is used.
Other significant financial assumptions
Interest rate volatilities are modelled based on swaption prices, in line with current market pricing.
Risk adjustment for non-financial risk
The risk adjustment for non-financial risk is included explicitly as a separate component of the fulfillment cash flows. It reflects
the compensation that Aegon requires for bearing the uncertainty about the amount and timing of the cash flows that arises
from non-financial risk as it fulfils insurance contracts.
The non-financial risks considered include mortality, morbidity, policyholder behavior, expense, and product specific operational
risk. Non-financial risks that do not arise from the insurance contracts, such as general operational risk, are not reflected in the
risk adjustment. The risk adjustment reflects both the risk that actual experience differs from the best estimate assumption
used to project future cash flows due to mis-estimation (parameter risk), as well as the risk of random fluctuations around the
true estimates (contagion risk).
Diversification benefits are recognized at the Group level. To align with market practice, Aegon only reflects the degree
of diversification between non-financial risks, and contrary to its pricing methodology, ignores diversification benefits between
financial and non-financial risks. Diversification effects include the impact of reinsurance ceded, as well insurance contracts
classified as held for sale.
Aegon generally applies a simplified confidence interval technique which estimates the risk adjustment for non-financial
risk using a confidence level (probability of sufficiency) approach at the 80th percentile. Under this approach, a probability
distribution is assumed for each particular risk and the amount above the expected present value of future cash flows
determined (using a shock factor). The impacts for each risk are then aggregated using a correlation matrix, reflecting
diversification between the various non-financial risk types. For some products, Aegon measures contagion risk using the
Conditional Tail Expectation technique at the 75th percentile. Regardless of the technique applied, the confidence interval
is computed across the entire product lifetime in order to fully reflect the risk.
Changes in methods and inputs used to measure fulfillment cash flows
Actuarial assumptions are reviewed periodically in the second quarter for the United States and in the fourth quarter for Europe
and Asia, based on historical experience, observable market data, including market transactions such as acquisitions and
reinsurance transactions, anticipated trends and legislative changes. Similarly, the models and systems used for determining
our liabilities and reinsurance assets are reviewed periodically, and if deemed necessary, updated based on emerging best
practice and available technology.
During 2023, Aegon implemented actuarial assumption and model updates which are mainly related to Aegon\u2019s business
in the Americas.
Assumption updates (non-financial assumptions) are absorbed in the CSM where there are sufficient balances. The change
in CSM will impact the amount amortized in the current period and all prospective periods. The total pre-tax impact of non-
financial assumption changes at the end of 2023 is a EUR 497 million increase to liabilities. Most of the impact was driven
by the model update on policyholder behaviour mainly on Indiviual Life and Variable Annuities lines of business and expense
assumption updates. Main assumption updates are all on morbidity but they are offset by a change in CSM so this change has
limited impact on total liabilites.
Aegon did not make any significant changes to the contract boundaries in the current reporting period, nor did it update the
approaches used to determine the discount rate or estimate the risk adjustment for non-financial risk.
29.3.2 Relevant other significant judgments
In addition to the judgments and estimates made in measuring the fulfillment cash flows that are described above, other
significant judgments are applied in determining:
\u2022
The relative weighting of coverage units when multiple services are provided;
\u2022
The non-distinct investment component, which is excluded from insurance revenue; and
\u2022
The adjustment for nonperformance risk that is applied to reinsurance contracts held.
29.3.2.1 Weighting of coverage units
Often one single metric can be defined that captures multiple services provided under one contract. Different approaches
are used by Aegon when assessing the relative weighting of the benefits of different services. In some cases, the weighting
is done in a way that directly flows from the composition of the benefits under the contract. For example, for a life insurance
product with an account value that can be surrendered, coverage units can be based on the total death benefit as this amount
comprises both the account value (investment service) and the excess death benefits (insurance service). In other cases,
significant judgment is required. For example, for US long-term care insurance products, multiple drivers impact the maximum
daily benefit to which a policyholder could be entitled. To reflect this, the coverage unit is computed using a combination of the
initial allowed benefit, the benefit period, as well as adjustments for any inflation protection and if the policy is paid-up on the
contingent non-forfeiture option.
29.3.2.2 Investment component
Aegon reports insurance revenue and insurance service expenses excluding non-distinct investment components.
An investment component is defined as the amount that an insurance contract requires Aegon to repay to a policyholder, even
if the insured event does not occur.
Aegon determines the investment component, when a claim is incurred as an amount is released from the liability for remaining
coverage. When doing so it considers which payments would have been possible immediately prior to the claims date. For
example, a payment might have needed to be made to the policyholder in light of policy surrender, the uptake of a policy loan
or the partial withdrawal, or the transfer of an insurance policy to another insurer. The investment component is defined net
of any penalty or similar charges.
29.3.2.3 Adjustment to reinsurance contracts held for non-performance risk
The nonperformance risk by the reinsurer is based on Aegon\u2019s credit exposure, net of collateral, and the perceived counterparty
default risk. In assessing the credit exposure, Aegon takes into account treaty provisions for non-performance, such as the
automatic recapture of the reinsured business on default of the reinsurer.
When estimating a reinsurer\u2019s default risk, Aegon considers the current financial condition and credit standing of the reinsurer,
expert judgment specific to the local reinsurance market and historical data (such as Moody\u2019s Loss Given Default rates). The
ultimate adjustment reflects the risk of potential reinsurance counterparty failure due to default (i.e. credit events), as well
as disputes resulting in reduced payments and the potential for current conditions to change over time.
29.4 Underwriting risk
Aegon\u2019s earnings depend significantly upon the extent to which actual claims experience differs from the assumptions used
in setting the prices for products and establishing the technical liabilities and liabilities for claims. To the extent that actual
claims experience is less favorable than the underlying assumptions used in establishing such liabilities, income would
be reduced. Furthermore, if these higher claims were part of a permanent trend, Aegon may be required to change best
estimate assumptions for future claims which could increase the required reserves for these future claims, which could reduce
income. In addition, certain acquisition costs related to the sale of new policies and the purchase of policies already in force
have been recorded as assets on the statement of financial position and are being amortized into the income statement over
time. If the assumptions relating to the future profitability of these policies (such as future claims, investment income and
expenses) are not realized, the amortization of these costs could be accelerated and may even require write offs should there
be an expectation of unrecoverability. This could have a materially adverse effect on Aegon\u2019s business, results of operations
and financial condition.
Sources of underwriting risk include policyholder behavior (such as lapses, surrender of policies or partial withdrawals),
policy claims (such as mortality, longevity or morbidity) and expenses. For some product lines, Aegon is at risk if policy
lapses increase as sometimes Aegon is unable to fully recover upfront expenses in selling a product despite the presence
of commission recoveries or surrender charges and fees. There are also products where Aegon is at risk if lapses decrease, for
example where this would result in a higher utilization rate of product guarantees. For mortality and morbidity risk, Aegon sells
certain types of policies that are at risk if mortality or morbidity increases, such as term life insurance and accident insurance,
Aegon also sells certain types of policies that are at risk if mortality decreases (longevity risk) such as annuity products.
Aegon is also at risk if expenses are higher than the expenses assumed beforehand by management and that were priced into
the products.
Aegon monitors and manages its underwriting risk by underwriting risk type. Attribution analysis is performed on earnings
and reserve movements in order to understand the source of any material variation in actual results from what was expected.
Aegon\u2019s units also perform experience studies for underwriting risk assumptions, comparing Aegon\u2019s experience to industry
experience as well as combining Aegon\u2019s experience and industry experience based on the depth of the history of each source
to Aegon\u2019s underwriting assumptions. Where policy charges are flexible in products, Aegon uses these analyses as the basis for
modifying these charges, with a view to maintain a balance between policyholder and shareholder interests. Aegon also has the
ability to reduce expense levels over time, thus mitigating unfavorable expense variation.
Another way to mitigate underwriting risk is through reinsurance. Aegon uses reinsurance to primarily manage and diversify
risk, limit volatility, improve capital positions, limit maximum losses and gain access to reinsurer support. While the objectives
and use can vary by region due to local market considerations and product offerings, the use of reinsurance is coordinated and
monitored globally.
The key areas where reinsurance is used is to reduce our exposure to mortality and morbidity risk primarily through
a combination of quota-share and Excess of Loss reinsurance. Also, Excess of Loss reinsurance is used to limit our exposure
to large losses on non-life business.
In order to minimize its reinsurer defaults exposure, Aegon regularly monitors the creditworthiness of its reinsurers, and where
appropriate, arranges additional protection through letters of credit, trust agreements and over-collateralization. For certain
agreements, funds are withheld for investment rather than relying on the reinsurer to meet investment expectations. Default
exposure is further reduced by using multiple reinsurers within certain reinsurance agreements.
External reinsurance counterparties are, in general, major global reinsurers. At the same time, local reinsurers are utilized
to ensure a balance for local capacity and diversification.
\n \n
Concentration of underwriting risk
Americas
United Kingdom
International
Total
Insurance contracts
Direct participating contracts
70,436
39,687
193
110,315
Without direct participation contracts
59,873
642
6,432
66,946
Investment contracts with DPF
Direct participating contracts
-
21,594
-
21,594
On December 31, 2023
130,308
61,922
6,625
198,855
\n \n
Concentration of underwriting risk
Americas
United Kingdom
International
Total
Insurance contracts
Direct participating contracts
69,163
36,694
187
106,044
Without direct participation contracts
61,730
927
7,383
70,039
Investment contracts with DPF
Direct participating contracts
-
21,055
-
21,055
On December 31, 2022
130,892
58,676
7,570
197,139
Sensitivity analysis of net result, shareholders\u2019 equity and CSM to changes in various underwriting risks
Sensitivity analysis of net result and shareholders\u2019 equity to various underwriting risks is shown in the table that follows.
Aegon's best estimate assumptions already include our view of expected future developments and the sensitivities represent
an increase or decrease of lapse rates, mortality rates and morbidity rates, compared to Aegon's best estimate assumptions.
These underwriting sensitivities were run using a permanent shock applied to all of Aegon's products, exposed to an increase
and to a decrease in the corresponding rates. Due to the nature of IFRS and how changes in assumptions are absorbed by the
CSM while a contract is not onerous, but are reflected in the net result if it is onerous, it is possible that the results of opposite
sensitivities seem counterintuitive. For example we see how both a mortality up and down sensitivity lead to a negative net
result. This happens as the contracts that are exposed to mortality increases, become onerous under a mortality up sensitivity,
leading to a negative net result. On the other hand, under a mortality down sensitivity the positive effects are absorbed by an
increase in CSM, leading to higher net results in the future but not in the current net result shown in the table.
\n \n
2023
On net result
On shareholders' equity
On CSM
Gross of
Net of
Gross of
Net of
Gross of
Net of
Estimated approximate effect
reinsurance
reinsurance
reinsurance
reinsurance
reinsurance
reinsurance
Without direct participation contracts
20% increase in lapse rates
(95)
(58)
(43)
(7)
(126)
(151)
20% decrease in lapse rates
57
35
41
18
117
169
5% increase in mortality rates
(520)
(87)
(443)
(19)
(86)
11
5% decrease in mortality rates
419
11
338
(62)
177
55
10% increase in morbidity rates
(139)
(138)
(153)
(152)
(759)
(746)
10% decrease in morbidity rates
53
53
75
77
908
894
5% increase in expenses
(14)
(12)
(12)
(10)
(133)
(134)
5% decrease in expenses
36
36
35
35
163
164
Direct participating contracts
20% increase in lapse rates
55
48
56
58
(32)
(336)
20% decrease in lapse rates
(70)
(53)
(65)
(62)
123
428
5% increase in mortality rates
(84)
(78)
(71)
(67)
(699)
(314)
5% decrease in mortality rates
(5)
(16)
(15)
(23)
835
436
10% increase in morbidity rates
-
-
-
-
-
-
10% decrease in morbidity rates
-
-
-
-
-
-
5% increase in expenses
(13)
(13)
(13)
(14)
(205)
(201)
5% decrease in expenses
12
12
13
13
206
203
Non-life contracts
10% increase in claims
(6)
(5)
(8)
(6)
-
-
10% decrease in claims
6
5
9
6
-
-
\n \n
2022
On net result
On shareholders' equity
On CSM
Gross of
Net of
Gross of
Net of
Gross of
Net of
Estimated approximate effect
reinsurance
reinsurance
reinsurance
reinsurance
reinsurance
reinsurance
Without direct participation contracts
20% increase in lapse rates
(94)
(61)
(34)
(2)
67
(172)
20% decrease in lapse rates
72
42
46
15
(83)
205
5% increase in mortality rates
(507)
(84)
(451)
(33)
(343)
(14)
5% decrease in mortality rates
422
11
362
(43)
430
78
10% increase in morbidity rates
(121)
(119)
(94)
(92)
(833)
(819)
10% decrease in morbidity rates
33
28
11
8
980
969
5% increase in expenses
(7)
(6)
(2)
(1)
(157)
(152)
5% decrease in expenses
5
4
1
-
183
153
Direct participating contracts
20% increase in lapse rates
43
29
69
50
187
29
20% decrease in lapse rates
(106)
(72)
(125)
(92)
68
188
5% increase in mortality rates
(47)
(22)
(37)
(15)
(565)
(365)
5% decrease in mortality rates
10
(14)
-
(21)
623
411
10% increase in morbidity rates
-
-
-
-
-
-
10% decrease in morbidity rates
-
-
-
-
-
-
5% increase in expenses
(8)
(7)
(7)
(7)
(220)
(219)
5% decrease in expenses
5
5
5
5
221
220
Non-life contracts
10% increase in claims
(1)
(1)
(1)
(1)
-
-
10% decrease in claims
1
1
1
1
-
-
29.5 Risk mitigation
Aegon has chosen to apply the risk mitigation option and recognize changes in fulfillment value of products with direct
participating features in the P&L and OCI, instead of adjusting the CSM. The adjustment to the CSM that would otherwise have
been made in December 31, 2023 is EUR 1,476 million.", "dimensions": { "concept": "agn:DisclosureOfNetExpensesOnReinsuranceHeldExplanatoryTextBlock", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f41977": { "value": "9.5 Impairment (losses) / reversals \n \n
2023
2022
Impairment losses on financial assets, excluding receivables
Debt securities and money market investments
(77)
(121)
Loans
(15)
10
Other
-
6
Impairment reversals on financial assets, excluding receivables
Debt securities and money market investments
37
26
Impairment losses and reversals on non-financial assets and receivables
(31)
(17)
On December 31
(86)
(95)
10.5 Impairment (losses) / reversals \n \n
2023
2022
Impairment losses on financial assets, excluding receivables
Debt securities and money market investments
(4)
(13)
Impairment losses and reversals on non-financial assets and receivables
(29)
(30)
On December 31
(33)
(43)
", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f42056": { "value": "10 Other net investment result \n \n
Note
2023
2022
Interest revenue on financial instruments calculated using the effective interest
method
10.1
599
409
Interest revenue on financial instruments measured at FVPL
10.2
89
49
Other investment income
10.3
550
411
Results from financial transactions
10.4
6,929
(10,656)
Impairment (losses) / reversals
10.5
(33)
(43)
Investment contract income / (expenses)
(7,851)
9,808
Interest expenses
(45)
(3)
On December 31
238
(26)
10.1 Interest revenue on financial instruments calculated using the effective interest method
\n \n
2023
2022
Debt securities and money market instruments
457
405
Other
142
3
On December 31
599
409
10.2 Interest revenue on financial instruments measured at FVPL
\n \n
2023
2022
Non-derivative assets applying the fair value option
89
49
On December 31
89
49
10.3 Other investment income
\n \n
2023
2022
Dividend income
547
410
Rental income
3
1
On December 31
550
411
10.4 Results from financial transactions
\n \n
2023
2022
Net fair value change of financial investments at fair value through profit or loss,
other than derivatives
Shares
195
(281)
Debt securities and money market investments
46
(222)
Unconsolidated investment funds
6,805
(9,961)
7,047
(10,463)
Net fair value change of derivatives
Economic hedges where no hedge accounting is applied
(8)
(162)
Bifurcated embedded derivatives
5
29
Ineffective portion of hedge transactions to which hedge accounting is applied
3
4
-
(129)
Realized gains and (losses) on financial investments
Debt securities and money market investments
(113)
(58)
(113)
(58)
Comprised of:
Investments measured at fair value through other comprehensive income ('FVOCI')
(113)
(58)
Other
Net fair value change on investments in real estate
(6)
(5)
Net foreign currency gains and (losses)
2
(1)
(4)
(6)
On December 31
6,929
(10,656)
Represented by:
Assets designated at FVPL
7,043
(10,466)
Assets mandatorily measured at FVPL
3
3
Other (i.e. FVOCI)
(117)
(192)
10.5 Impairment (losses) / reversals
\n \n
2023
2022
Impairment losses on financial assets, excluding receivables
Debt securities and money market investments
(4)
(13)
Impairment losses and reversals on non-financial assets and receivables
(29)
(30)
On December 31
(33)
(43)
", "dimensions": { "concept": "agn:DisclosureOfOtherNetInvestmentResultExplanatoryTextBlock", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f42444": { "value": "11 Financing net investment result \n \n
Note
2023
2022
Interest charges
11.1
(182)
(182)
Other financing income
-
5
On December 31
(182)
(178)
11.1 Interest charges
\n \n
2023
2022
Subordinated loans
(115)
(119)
Trust pass-through securities
(9)
(9)
Borrowings
(58)
(54)
On December 31
(182)
(182)
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f42481": { "value": "11.1 Interest charges \n \n
2023
2022
Subordinated loans
(115)
(119)
Trust pass-through securities
(9)
(9)
Borrowings
(58)
(54)
On December 31
(182)
(182)
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f42536": { "value": "12 Fees and commission income \n \n
2023
2022
Fee income from asset management
1,967
2,079
Commission income
21
23
Other fee and commission income
174
171
On December 31
2,163
2,272
Included in fees and commission income:
Fees on trust and fiduciary activities
220
248
", "dimensions": { "concept": "ifrs-full:DisclosureOfFeeAndCommissionIncomeExpenseExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f42586": { "value": "13 Other operating expenses \n \n
2023
2022
Insurance
Non-Insurance
Insurance
Non-Insurance
related
related
related
related
Policyholder claims and benefits
6,965
-
7,736
-
Onerous contract losses (and reversals)
1,081
-
1,250
-
Commissions
1,403
1,069
1,214
1,011
Handling and clearing fees
-
32
1
31
Right of use assets \u2013 interest expense
-
7
-
7
Employee expenses
604
1,107
637
1,059
Administration expenses
551
780
594
669
Deferred transaction expenses
-
(29)
-
(28)
Amortization of deferred expenses
-
21
-
28
Amortization of other intangibles
-
13
-
9
Total
10,604
3,000
11,433
2,786
Amounts attributed to insurance acquisition cash flows (see cash
flow in note 29)
(956)
-
(903)
-
Amortization of insurance acquisition cash flows (see note 6/7)
558
-
545
-
Amortization of insurance acquisition cash flows PAA
19
-
22
-
Total other operating expenses
10,226
3,000
11,097
2,786
\n \n
Employee expenses
2023
2022
Salaries
1,131
1,138
Post-employment benefit costs
125
117
Social security charges
107
101
Other personnel costs
294
292
Shares
54
48
Total
1,711
1,696
Included in employee expenses:
Defined contribution expenses
57
48
Other operating expenses that arise directly from or can be allocated to the fulfillment of insurance contracts or investment
contracts with discretionary participating features, are considered insurance service expenses and recognized in the income
statement as the services under the contract are provided (see Notes 6 and 7). Other operating expenses that do not meet the
definition of fulfillment cash flows, including unexpected amounts of waste labor and other resources (e.g. start-up costs of new
businesses) are expensed when incurred.
Long term incentive plans
Selected senior employees within Aegon, who have not been classified as Material Risk Takers, can be made eligible for
variable compensation, which is partially paid in cash and partially in Aegon shares. The grant price of these shares is equal
to the volume weighted average price (VWAP) on the Euronext stock exchange in Amsterdam during the period between
December 15 preceding the plan year and January 15 of the plan year. The actual allocation of variable compensation in cash
and shares depends on Aegon's performance, the employee\u2019s unit performance and individual performance against predefined
\n
\n
financial and non-financial performance indicators and targets, as well as the continued employment of the employee. Once
variable compensation is allocated, the cash part is paid directly and the payment of the shares is deferred for two years. These
shares shall vest and be released following the adoption of the Company\u2019s Annual Accounts by the Board of Directors following
the last deferral year. Employees are not eligible to receive dividend during the deferral period. In exceptional circumstances
variable compensation can be adjusted downwards before allocation or pay-out (malus) or after pay-out (claw back), after
considering the outcomes of an ex-ante or ex-post risk assessment.
Variable Compensation Material Risk Takers
The Executive Director, members of the Executive Committee and certain other senior employees are classified as Material
Risk Takers in accordance with BMA Insurance Code of Conduct, and through 2023 the Solvency II Legal Framework. In line with
these rules, variable compensation for Material Risk Takers is partially paid in cash and partly in Aegon shares. The grant price
of these shares is equal to the volume weighted average price (VWAP) on the Euronext stock exchange in Amsterdam during
the period between December 15 preceding the plan year and January 15 of the plan year. The actual allocation of variable
compensation in cash and shares depends on Aegon's performance, the employee\u2019s unit performance and individual
performance against predefined financial and non-financial performance indicators and targets, as well as the continued
employment of the employee. Once variable compensation is allocated, the cash part is paid directly and the payment of the
shares is deferred for three years. These shares shall vest and be released following the adoption of the Company\u2019s Annual
Accounts by the Board of Directors following the last deferral year. Employees are not eligible to receive dividend during
the deferral period. For the Executive Director, the paid-out shares are subject to an additional holding period of two years.
During this holding period, the Executive Director is not allowed to sell these shares. In exceptional circumstances variable
compensation can be adjusted downwards before allocation or pay-out (malus) or after pay-out (claw back), after considering
the outcomes of an ex-ante or ex-post risk assessment.
Shares as Fixed Compensation
Selected members of the Executive Committee as well as other senior employees receive part of their fixed compensation
in Aegon shares each pay round, next to receiving fixed compensation in cash. The grant price of these shares is equal to the
volume weighted average price (VWAP) on the Euronext stock exchange in Amsterdam during the period between December
15 preceding the plan year and January 15 of the plan year. Once allocated these shares are unconditional and do not depend
on the continued employment of the employee. These shares vest following approval of the Company\u2019s Annual Accounts by the
Board of Directors, or the payout is deferred until the Company\u2019s Annual Accounts have been approved by the Board three
years after the plan year. In the former case, these paid-out shares are subject to an additional holding period of three years,
while in the latter case there is no holding period after pay-out. During the holding period (if applicable), the employee is not
allowed to sell these shares. During the deferral period (if applicable), the employee is not eligible to receive dividend.
Shares as part of a Sign-on Arrangement
Employees may be offered a sign-on arrangement when joining Aegon, with payments in cash and Aegon shares, within the
applicable rules and regulations. Once allocated, the sign-on shares depend on the continued employment of the employee.
These shares are deferred and typically cliff-vest after one, two and three years after allocation. These shares are only paid out
after approval of the Company\u2019s Annual Accounts following the last deferral year. Employees are not eligible to receive dividend
during the deferral period.
The following overview contains the cumulative number of shares and their status in relation to active long term incentive plans,
variable compensation allocated to Material Risk Takers, shares allocated as fixed compensation and shares allocated as part
of a sign-on arrangement.
\n \n
Number of shares per plan year
2019
2020
2021
2022
2023
Total
Conditionally granted
1)
7,378,113
8,381,086
9,449,451
7,495,307
7,932,942
40,636,899
Allocated
2)
6,761,360
6,522,324
13,297,242
10,953,082
1,511,212
39,045,220
1
The at target number of shares which were conditionally granted for the plan year.
2
The allocated number of shares based on the actual performance during the plan year.
Number of shares per plan year
\n \n
2019
2020
2021
2022
2023
Total
Unvested on January 1, 2022
6,796,979
6,997,435
11,825,532
-
-
25,619,946
Conditionally granted as variable compensation
1)
-
-
-
7,495,307
-
7,495,307
Allocated
2)
3,445
1,832
3,847,791
2,136,074
-
5,989,142
Forfeited
(103,121)
(262,567)
(1,050,197)
-
-
(1,415,885)
Vested
(2,899,400)
(327,134)
(835,534)
(183,739)
-
(4,245,807)
Unvested on December 31, 2022
3,797,903
6,409,566
13,787,592
9,447,642
-
33,442,703
Conditionally granted as variable compensation
1)
-
-
-
-
7,932,942
7,932,942
Allocated
2)
95,653
130,020
(16,864)
1,321,701
1,511,212
3,041,722
Forfeited
(142,634)
(232,905)
(437,677)
(182,796)
(49,968)
(1,045,980)
Vested
(3,750,922)
(2,645,290)
(747,687)
(663,161)
(31,033)
(7,838,093)
Unvested on December 31, 2023
-
3,661,391
12,585,364
9,923,386
9,363,153
35,533,294
Grant price (in EUR)
3)
4.162
4.083
3.293
4.491
4.833
2.741 to
1.794 to
1.625 to
3.341 to
3.555 to
Fair value of shares at grant date (in EUR)
4)
3.737
3.737
3.978
5.061
4.524
1
The at target number of shares which were conditionally granted as variable compensation for the plan year.
2
Shares that are already allocated during a plan year, are a combination of shares as part of fixed compensation or a sign-on arrangement (e.g. the 2,136,074 shares
allocated during the calendar year 2022 in relation to the 2022 plan year). Shares that are allocated in the calendar year after a plan year, concerns the difference
between the conditionally granted shares for that plan year and the actual number of shares which have been allocated as variable compensation (e.g. the
3,847,791 share correction during 2022 for the 2021 plan year). This number can therefore be positive or negative. Shares allocated during a calendar year in
relation to earlier plan years are backdated corrections to the administration (e.g. during 2022 a correction of 3,455 shares was made in relation to the 2019 plan
year).
3
This is the volume weighted average price (VWAP) of Aegon on the Euronext Amsterdam stock exchange for the period December 15 to January 15. For instance
for the 2023 plan year, this is the VWAP for the period December 15, 2022 to January 15, 2023.
4
These fair values are adjusted for expected dividend (for which the participants are not eligible during the deferral period) and for the impact of relative total
shareholder return as performance indicator for variable compensation (where applicable).
Aegon applies a net settlement option for participants in order to meet their income tax obligations when their shares are paid
out. This means that Aegon will not sell shares on the market but hold these shares within Aegon and settle directly with the tax
authorities in cash.
See the Remuneration Report for detailed information on conditional shares granted to the Executive Director.
14 Other income / (charges)
\n \n
2023
2022
Other income
35
341
Other charges
(92)
-
On December 31
(57)
341
The other charges in 2023 mainly relate to the book loss of the divestment of Aegon's businesses in Poland and Romania
to Vienna Insurance Group AG Wiener Versicherung Gruppe (VIG), amounting to EUR 78 million.
Other income in 2022 includes the book gain on the divestment of Aegon Hungary and Aegon Turkey to Vienna Insurance
Group AG Wiener Versicherung Gruppe (VIG) amounting to EUR 237 million, and the book gain on the divestment
of Aegon's 50% stake in the Spanish insurance joint venture with LIberbank to Unicaja Banco amounting to EUR 91 million.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f42587": { "value": "13 Other operating expenses \n \n
2023
2022
Insurance
Non-Insurance
Insurance
Non-Insurance
related
related
related
related
Policyholder claims and benefits
6,965
-
7,736
-
Onerous contract losses (and reversals)
1,081
-
1,250
-
Commissions
1,403
1,069
1,214
1,011
Handling and clearing fees
-
32
1
31
Right of use assets \u2013 interest expense
-
7
-
7
Employee expenses
604
1,107
637
1,059
Administration expenses
551
780
594
669
Deferred transaction expenses
-
(29)
-
(28)
Amortization of deferred expenses
-
21
-
28
Amortization of other intangibles
-
13
-
9
Total
10,604
3,000
11,433
2,786
Amounts attributed to insurance acquisition cash flows (see cash
flow in note 29)
(956)
-
(903)
-
Amortization of insurance acquisition cash flows (see note 6/7)
558
-
545
-
Amortization of insurance acquisition cash flows PAA
19
-
22
-
Total other operating expenses
10,226
3,000
11,097
2,786
\n \n
Employee expenses
2023
2022
Salaries
1,131
1,138
Post-employment benefit costs
125
117
Social security charges
107
101
Other personnel costs
294
292
Shares
54
48
Total
1,711
1,696
Included in employee expenses:
Defined contribution expenses
57
48
Other operating expenses that arise directly from or can be allocated to the fulfillment of insurance contracts or investment
contracts with discretionary participating features, are considered insurance service expenses and recognized in the income
statement as the services under the contract are provided (see Notes 6 and 7). Other operating expenses that do not meet the
definition of fulfillment cash flows, including unexpected amounts of waste labor and other resources (e.g. start-up costs of new
businesses) are expensed when incurred.
Long term incentive plans
Selected senior employees within Aegon, who have not been classified as Material Risk Takers, can be made eligible for
variable compensation, which is partially paid in cash and partially in Aegon shares. The grant price of these shares is equal
to the volume weighted average price (VWAP) on the Euronext stock exchange in Amsterdam during the period between
December 15 preceding the plan year and January 15 of the plan year. The actual allocation of variable compensation in cash
and shares depends on Aegon's performance, the employee\u2019s unit performance and individual performance against predefined
\n
\n
financial and non-financial performance indicators and targets, as well as the continued employment of the employee. Once
variable compensation is allocated, the cash part is paid directly and the payment of the shares is deferred for two years. These
shares shall vest and be released following the adoption of the Company\u2019s Annual Accounts by the Board of Directors following
the last deferral year. Employees are not eligible to receive dividend during the deferral period. In exceptional circumstances
variable compensation can be adjusted downwards before allocation or pay-out (malus) or after pay-out (claw back), after
considering the outcomes of an ex-ante or ex-post risk assessment.
Variable Compensation Material Risk Takers
The Executive Director, members of the Executive Committee and certain other senior employees are classified as Material
Risk Takers in accordance with BMA Insurance Code of Conduct, and through 2023 the Solvency II Legal Framework. In line with
these rules, variable compensation for Material Risk Takers is partially paid in cash and partly in Aegon shares. The grant price
of these shares is equal to the volume weighted average price (VWAP) on the Euronext stock exchange in Amsterdam during
the period between December 15 preceding the plan year and January 15 of the plan year. The actual allocation of variable
compensation in cash and shares depends on Aegon's performance, the employee\u2019s unit performance and individual
performance against predefined financial and non-financial performance indicators and targets, as well as the continued
employment of the employee. Once variable compensation is allocated, the cash part is paid directly and the payment of the
shares is deferred for three years. These shares shall vest and be released following the adoption of the Company\u2019s Annual
Accounts by the Board of Directors following the last deferral year. Employees are not eligible to receive dividend during
the deferral period. For the Executive Director, the paid-out shares are subject to an additional holding period of two years.
During this holding period, the Executive Director is not allowed to sell these shares. In exceptional circumstances variable
compensation can be adjusted downwards before allocation or pay-out (malus) or after pay-out (claw back), after considering
the outcomes of an ex-ante or ex-post risk assessment.
Shares as Fixed Compensation
Selected members of the Executive Committee as well as other senior employees receive part of their fixed compensation
in Aegon shares each pay round, next to receiving fixed compensation in cash. The grant price of these shares is equal to the
volume weighted average price (VWAP) on the Euronext stock exchange in Amsterdam during the period between December
15 preceding the plan year and January 15 of the plan year. Once allocated these shares are unconditional and do not depend
on the continued employment of the employee. These shares vest following approval of the Company\u2019s Annual Accounts by the
Board of Directors, or the payout is deferred until the Company\u2019s Annual Accounts have been approved by the Board three
years after the plan year. In the former case, these paid-out shares are subject to an additional holding period of three years,
while in the latter case there is no holding period after pay-out. During the holding period (if applicable), the employee is not
allowed to sell these shares. During the deferral period (if applicable), the employee is not eligible to receive dividend.
Shares as part of a Sign-on Arrangement
Employees may be offered a sign-on arrangement when joining Aegon, with payments in cash and Aegon shares, within the
applicable rules and regulations. Once allocated, the sign-on shares depend on the continued employment of the employee.
These shares are deferred and typically cliff-vest after one, two and three years after allocation. These shares are only paid out
after approval of the Company\u2019s Annual Accounts following the last deferral year. Employees are not eligible to receive dividend
during the deferral period.
The following overview contains the cumulative number of shares and their status in relation to active long term incentive plans,
variable compensation allocated to Material Risk Takers, shares allocated as fixed compensation and shares allocated as part
of a sign-on arrangement.
\n \n
Number of shares per plan year
2019
2020
2021
2022
2023
Total
Conditionally granted
1)
7,378,113
8,381,086
9,449,451
7,495,307
7,932,942
40,636,899
Allocated
2)
6,761,360
6,522,324
13,297,242
10,953,082
1,511,212
39,045,220
1
The at target number of shares which were conditionally granted for the plan year.
2
The allocated number of shares based on the actual performance during the plan year.
Number of shares per plan year
\n \n
2019
2020
2021
2022
2023
Total
Unvested on January 1, 2022
6,796,979
6,997,435
11,825,532
-
-
25,619,946
Conditionally granted as variable compensation
1)
-
-
-
7,495,307
-
7,495,307
Allocated
2)
3,445
1,832
3,847,791
2,136,074
-
5,989,142
Forfeited
(103,121)
(262,567)
(1,050,197)
-
-
(1,415,885)
Vested
(2,899,400)
(327,134)
(835,534)
(183,739)
-
(4,245,807)
Unvested on December 31, 2022
3,797,903
6,409,566
13,787,592
9,447,642
-
33,442,703
Conditionally granted as variable compensation
1)
-
-
-
-
7,932,942
7,932,942
Allocated
2)
95,653
130,020
(16,864)
1,321,701
1,511,212
3,041,722
Forfeited
(142,634)
(232,905)
(437,677)
(182,796)
(49,968)
(1,045,980)
Vested
(3,750,922)
(2,645,290)
(747,687)
(663,161)
(31,033)
(7,838,093)
Unvested on December 31, 2023
-
3,661,391
12,585,364
9,923,386
9,363,153
35,533,294
Grant price (in EUR)
3)
4.162
4.083
3.293
4.491
4.833
2.741 to
1.794 to
1.625 to
3.341 to
3.555 to
Fair value of shares at grant date (in EUR)
4)
3.737
3.737
3.978
5.061
4.524
1
The at target number of shares which were conditionally granted as variable compensation for the plan year.
2
Shares that are already allocated during a plan year, are a combination of shares as part of fixed compensation or a sign-on arrangement (e.g. the 2,136,074 shares
allocated during the calendar year 2022 in relation to the 2022 plan year). Shares that are allocated in the calendar year after a plan year, concerns the difference
between the conditionally granted shares for that plan year and the actual number of shares which have been allocated as variable compensation (e.g. the
3,847,791 share correction during 2022 for the 2021 plan year). This number can therefore be positive or negative. Shares allocated during a calendar year in
relation to earlier plan years are backdated corrections to the administration (e.g. during 2022 a correction of 3,455 shares was made in relation to the 2019 plan
year).
3
This is the volume weighted average price (VWAP) of Aegon on the Euronext Amsterdam stock exchange for the period December 15 to January 15. For instance
for the 2023 plan year, this is the VWAP for the period December 15, 2022 to January 15, 2023.
4
These fair values are adjusted for expected dividend (for which the participants are not eligible during the deferral period) and for the impact of relative total
shareholder return as performance indicator for variable compensation (where applicable).
Aegon applies a net settlement option for participants in order to meet their income tax obligations when their shares are paid
out. This means that Aegon will not sell shares on the market but hold these shares within Aegon and settle directly with the tax
authorities in cash.
See the Remuneration Report for detailed information on conditional shares granted to the Executive Director.", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f43253": { "value": "14 Other income / (charges) \n \n
2023
2022
Other income
35
341
Other charges
(92)
-
On December 31
(57)
341
The other charges in 2023 mainly relate to the book loss of the divestment of Aegon's businesses in Poland and Romania
to Vienna Insurance Group AG Wiener Versicherung Gruppe (VIG), amounting to EUR 78 million.
Other income in 2022 includes the book gain on the divestment of Aegon Hungary and Aegon Turkey to Vienna Insurance
Group AG Wiener Versicherung Gruppe (VIG) amounting to EUR 237 million, and the book gain on the divestment
of Aegon's 50% stake in the Spanish insurance joint venture with LIberbank to Unicaja Banco amounting to EUR 91 million.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f43305": { "value": "15 Income tax \n \n
2023
2022
Current tax
Current year
4
(6)
Adjustments to prior years
(9)
(3)
Total current tax
(5)
(9)
Deferred tax
Origination / (reversal) of temporary differences
(247)
43
Changes in tax rates / bases
1
5
Changes in deferred tax assets as a result of recognition / write off of previously not recognized /
recognized tax losses, tax credits and deductible temporary differences
9
8
Non-recognition of deferred tax assets
61
9
Adjustments to prior years
(27)
16
Total deferred tax
(204)
80
Income tax for the period (income) / charge
(209)
71
\n \n
Reconciliation between standard and effective income tax:
2023
2022
Result before tax
(391)
827
Income tax calculated using weighted average applicable statutory tax rates
(94)
188
Difference due to the effects of:
Non-taxable income
(39)
(103)
Non-tax deductible expenses
12
15
Changes in tax rate/base
1
24
Different tax rates on overseas earnings
3
3
Tax credits
(34)
(43)
Other taxes
-
(17)
Adjustments to prior years
(36)
12
Changes in deferred tax assets as a result of recognition / write off of previously not recognized /
recognized tax losses, tax credits and deductible temporary differences
9
8
Non-recognition of deferred tax assets
20
9
Tax effect of (profit) / losses from joint ventures and associates
(47)
(19)
Other
(3)
(7)
(115)
(118)
Income tax for the period (income) / charge
(209)
71
In September 2023, the legal seat of Aegon N.V. was redomiciled to Bermuda. Headquarters remained in the Netherlands and
the company remained a Dutch tax resident.
The weighted average applicable statutory tax rate for 2023 is 24.1% (2022: 22.8%). The weighted average applicable statutory
tax rate increased compared to 2022 due to the relatively high contribution of negative income before tax in the United States
versus positive income from equity accounted joint ventures and associates which is presented net of tax in the consolidated
income statement.
Non-taxable income in 2023 is comprised of the regular non-taxable items such as the dividend received deduction in the
United States and the participation exemption in the Netherlands. Compared to 2022 the non-taxable income includes the tax
exempt sale proceeds of the Hungarian and Turkish business.
In the United Kingdom, the corporate income tax rate increased from 19% to 25% as of April 1, 2023. The beneficial impact
of this tax rate change was included in the 2022 change in tax rate/base.
Tax credits mainly include tax benefits from United States investments that provide affordable housing to individuals and
families that meet median household income requirements.
Other taxes are higher compared to 2022 due to favorable investment markets which yielded higher policyholder taxes in the
United Kingdom, offset against state tax benefits in the United States due to pretax losses.
In 2023, adjustments to prior years mainly consist of adjustments to the 2022 dividend received deduction in the United States.
Non-recognition of deferred tax assets in 2023 includes the processing of the tax impact related to the new introduced
corporate income tax regime in Bermuda that is effective in 2024.
The following tables present income tax related to components of other comprehensive income and retained earnings.
\n \n
2023
2022
Items that will not be reclassified to profit and loss:
Remeasurements of defined benefit plans
17
(249)
Total items that will not be reclassified to profit and loss
17
(249)
Items that may be reclassified subsequently to profit and loss:
(Gains) / losses on revaluation of FVOCI investments
(487)
3,499
Revaluation reserve - Insurance contracts
397
(4,211)
Revaluation reserve - Reinsurance contracts
(126)
1,243
Changes in cash flow hedging reserve
42
42
Movement in foreign currency translation and net foreign investment hedging reserve
3
(12)
Total items that may be reclassified subsequently to profit and loss
(171)
561
Total income tax related to components of other comprehensive income
(154)
312
\n \n
Note
2023
2022
Income tax related to equity instruments and other
Income tax related to equity instruments
26
17
2
Other
1
1
Total income tax recognized directly in retained earnings
18
3
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f43684": { "value": "16 Earnings per share
The Group has applied the option from IAS 32 to recognize some of the Group\u2019s ordinary shares held as underlying items
of direct participating contracts as if they were financial assets. These shares are treated as outstanding shares (i.e. not
treasury shares) and therefore not deducted from the number of shares outstanding.
Basic earnings per share
Basic earnings per share is calculated by dividing the net result attributable to owners, after deduction of coupons on perpetual
securities and non-cumulative subordinated notes by the weighted average number of common shares, excluding common
shares purchased by the Company and held as treasury shares (see note 25.1 Share capital \u2013 par value and 25.3 Treasury
shares respectively).
\n \n
Continuing and discontinued operations
2023
2022
Net result attributable to owners of Aegon Ltd. from continuing and discontinued operations
(179)
(1,019)
Coupons on perpetual securities
(48)
(36)
Net result attributable to owners for basic earnings per share calculation from continuing and
discontinued operations
(227)
(1,055)
Net result attributable to common shareholders from continuing and discontinued operations
(225)
(1,048)
Net result attributable to common shareholders B from continuing and discontinued operations
(1)
(7)
Weighted average number of common shares outstanding (in million)
1,879
2,010
Weighted average number of common shares B outstanding (in million)
490
536
Basic earnings per common share (EUR per share) from continuing and discontinued operations
(0.12)
(0.52)
Basic earnings per common share B (EUR per share) from continuing and discontinued operations
-
(0.01)
\n \n
Continuing operations
2023
2022
Net result attributable to owners of Aegon Ltd. from continuing operations
(162)
727
Coupons on perpetual securities
(48)
(36)
Net result attributable to owners for basic earnings per share calculation from continuing
operations
(210)
691
Net result attributable to common shareholders from continuing operations
(209)
686
Net result attributable to common shareholders B from continuing operations
(1)
5
Weighted average number of common shares outstanding (in million)
1,879
2,010
Weighted average number of common shares B outstanding (in million)
490
536
Basic earnings per common share (EUR per share) from continuing operations
(0.11)
0.34
Basic earnings per common share B (EUR per share) from continuing operations
-
0.01
\n \n
Discontinued operations
2023
2022
Net result attributable to owners of Aegon Ltd. from discontinued operations
(17)
(1,746)
Net result attributable to owners for basic earnings per share calculation from discontinued
operations
(17)
(1,746)
Net result attributable to common shareholders from discontinued operations
(16)
(1,734)
Net result attributable to common shareholders B from discontinued operations
-
(12)
Weighted average number of common shares outstanding (in million)
1,879
2,010
Weighted average number of common shares B outstanding (in million)
490
536
Basic earnings per common share (EUR per share) from discontinued operations
(0.01)
(0.86)
Basic earnings per common share B (EUR per share) from discontinued operations
-
(0.02)
Diluted earnings per share
The diluted earnings per share equaled the basic earnings per share for all years disclosed since there were no long-term
incentive plans which were considered dilutive.", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f43940": { "value": "17 Dividend per common share
Final dividend 2023
Aegon aims to pay a sustainable dividend to allow equity investors to participate in the company\u2019s performance. The Board
of Directors will, in the absence of unforeseen circumstances, propose a final dividend for 2023 of EUR 0.16 per common
share at the Annual General Meeting of Shareholders to be held on June 12, 2024. Although not formally required under
Aegon\u2019s current bye-laws, Aegon has decided to make the approval of the 2023 final dividend subject to a binding vote at the
June 12, 2024 general meeting. This is because Aegon will be proposing to amend its bye-laws at that same general meeting
to include, amongst other things, a binding vote on the approval of final dividends, as previously announced. If approved, and
in combination with the interim dividend of EUR 0.14 per share paid over the first half of 2023, Aegon\u2019s total dividend over 2023
will amount to EUR 0.30 per common share. This represents an increase of EUR 0.07 or 30% compared with the total dividend
per common share over 2022.
If the proposed dividend is approved by shareholders, Aegon\u2019s shares will be quoted ex-dividend on June 14, 2024. The record
date for the dividend will be June 17, 2024, and the dividend will be payable as of July 8, 2024.
In addition to the 2023 final dividend, it is proposed to execute a EUR 35 million share buyback to avoid diluting the stock
related to long-term incentive compensation (LTIC) share rewards. This share buyback will be added to the final tranche of the
running EUR 1.5 billion share buyback program, bringing the total size of the program to EUR 1.535 billion. The execution
of the final tranche is aimed to start on April 8, 2024 and to be completed on or before June 30, 2024. The Board of Directors
is authorized to execute this share buyback, based on the authorization granted to it during the 2023 AGM.
Interim dividend 2023
Aegon paid a 2023 interim dividend of EUR 0.14 per common share and EUR 0.0035 per common share B. The dividend was
paid on September 27, 2023.
Final dividend 2022
At the Annual General Meeting of Shareholders held on May 25 2023, the Executive Board of Aegon N.V. proposed a final
dividend for the year 2022 of EUR 0.12 per common share and EUR 0.003 per common share B. In combination with the interim
dividend 2022 of EUR 0.11 per common share, Aegon's total dividend over 2022 amounted to EUR 0.23 per common share and
EUR 0.00575 per common share B. Aegon has moved to a cash-only dividend.
Interim dividend 2022
The interim dividend 2022 was paid in cash or stock at the election of the shareholder. Approximately 60% of shareholders
elected to receive the final dividend in shares. Those who elected stock dividend received one Aegon common share for every
42 common shares held. The stock fraction is based on Aegon's average share price as quoted on Euronext Amsterdam, using
the high and low of each of the five trading days from September 8 up to and including September 14, 2022. The average share
price calculated on this basis amounted to EUR 4.61. The dividend was paid on September 21, 2022.
The shares repurchased as part of the buyback program to neutralize the dilutive effect of the 2022 interim dividend,
as announced on September 27, 2022, will be held as treasury shares and will be used to pay future dividends in shares.
Between October 3, 2022 and December 15, 2022, common shares for an amount of EUR 134 million were repurchased.
A total of 29,833,390 common shares were repurchased at an average price of EUR 4.4897 per share.", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f43989": { "value": "0.23", "decimals": 2, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00", "unit": "iso4217:EUR/xbrli:shares" } }, "f44003": { "value": "18 Cash and cash equivalents \n \n
2023
2022
Cash at bank and in hand
1,614
1,827
Short-term deposits
340
345
Money market investments
2,120
1,230
On December 31
4,074
3,402
Cash collateral related to securities lending, repurchase agreements and margins on derivatives
transactions
3,416
5,072
Income from security lending programs
7
7
Weighted effective interest rate on short-term deposits
3.90%
1.70%
Average maturity on short-term deposits (in days)
11
17
The carrying amounts disclosed reasonably approximate the fair values at year-end.
For cash collateral received related to securities lending, repurchase agreements and margins on derivatives transactions,
a corresponding liability to repay the cash is recognized in other liabilities (see note 35 Other liabilities). Also, see note
40 Transfer of financial assets for details on collateral received and paid. Investment of cash collateral received is restricted
through limitations on credit worthiness, duration, approved investment categories and borrower limits. Short-term collateral
relates to cash collateral received included in cash and cash equivalents and the remainder is included in other asset classes
as that collateral is typically reinvested. Aegon earns a share of the spread between the collateral earnings and the rebate paid
to the borrower of the securities which is reflected in Income from securities lending programs.
Cash and cash equivalent balances that are not available for use by the group is EUR 98 million (2022: EUR 93 million).
\n \n
Note
2023
2022
Cash and cash equivalents
4,074
3,402
Cash classified as Assets held for sale
-
5,085
Net cash and cash equivalents
4,074
8,486
\n \n
Summary cash flow statement
2023
2022
Net cash flows from operating activities
864
2,672
Net cash flows from investing activities
(1,996)
733
Net cash flows from financing activities
(3,241)
(1,834)
Net increase / (decrease) in cash and cash equivalents
(4,373)
1,570
Net cash and cash equivalents on December 31, are impacted by:
Positive (negative) effects of changes in exchange rates
(38)
55
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44182": { "value": "Analysis of cash flows
2023 compared to 2022
Net cash flows from operating activities
Total net cash flow from operating activities decreased by EUR 1,808 million to a EUR 864 million inflow (2022: EUR 2,672 million
inflow). Mainly due to:
\u2022
Changes in results from financial transactions (see note 9 Insurance net investment result and note 10 Other net investment
result), partly offset by changes in financial results from insurance and investment contracts (see note 29 on (re-) insurance
contracts and investment contracts with DPF and note 30 Investment contracts without DPF), and
\u2022
The net disposal of investments (see note 19 Investments).
Net cash flows from investing activities
Net cash flows from investing activities decreased by EUR 2,729 million to a EUR 1,996 million outflow (2022: EUR 733 million
inflow). This is mainly driven by net cash outflows related to the disposal of Aegon the Netherlands (see note 42 Companies and
businesses acquired and divested and note 45 Held for sale and discontinued operations).
Net cash flows from financing activities
Net cash flow from financing activities decreased by EUR 1,407 million to a EUR 3,241 million outflow (2022: EUR 1,834 million
outflow). The decrease is mainly driven by proceeds of borrowings (see note 31 Borrowings).
Reconciliation of liabilities arising from financing activities
The table below shows the reconciliation between the net cash flows from financing activities and the liabilities as included
in the consolidated statement of financial position.
\n \n
Cash flows
Non-cash changes
Realized
Move-
gains /
ments
losses in
related to
Transfers
Net
Reconciliation of debt from
January 1,
Disposal of
income
fair value
Amortiza-
to disposal
exchange
December
financing activities
2023
Addition
Repayment
a business
statement
hedges
tion
groups
difference
31, 2023
Subordinated borrowings
2,295
-
-
-
-
-
3
-
(54)
2,244
Trust pass-through securities
118
-
-
-
-
(3)
(1)
-
(4)
111
Borrowings
4,051
1,604
(3,239)
(8)
-
-
2
-
(54)
2,356
Assets held to hedge Trust
pass-through securities
(11)
-
-
-
(3)
-
-
-
-
(14)
\n \n
Cash flows
Non-cash changes
Realized
Move-
gains /
ments
losses in
related to
Transfers
Net
Reconciliation of debt from
January 1,
Disposal of
income
fair value
Amortiza-
to disposal
exchange
December
financing activities
2022
Addition
Repayment
a business
statement
hedges
tion
groups
difference
31, 2022
Subordinated borrowings
2,194
-
-
-
-
-
3
-
98
2,295
Trust pass-through securities
126
-
-
-
-
(15)
(1)
-
8
118
Borrowings
9,661
3,569
(4,086)
-
-
-
1
(5,227)
133
4,051
Assets held to hedge Trust
pass-through securities
3
-
-
-
(15)
-
-
-
-
(11)
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashFlowStatementExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44636": { "value": "19 Investments \n \n
Investments
Insurance related
2023
Investment contracts
Insurance contracts
with DPF
Non-Insur-
Without
Without
ance
Direct Part.
direct part.
Direct Part.
direct part.
related
Total
Financial assets measured at FVOCI \u2013 with recycling
-
44,404
-
5,854
97
50,354
Financial assets measured at FVOCI \u2013 no recycling
-
9
-
-
1
10
Financial assets measured at amortized cost
-
7,941
-
2,216
70
10,227
Financial assets measured at FVPL \u2013 designated
107,714
2,078
47,759
19
38,347
195,916
Financial assets measured at FVPL \u2013 mandatory
-
8,889
-
386
111
9,386
Total financial assets, excluding derivatives
107,714
63,321
47,759
8,474
38,626
265,894
Investments in real estate
227
55
152
-
54
488
Total investments
107,941
63,376
47,911
8,474
38,680
266,382
\n \n
Investments
Insurance related
2022
Investment contracts
Insurance contracts
with DPF
Non-Insur-
Without
Without
ance
Direct Part.
direct part.
Direct Part.
direct part.
related
Total
Financial assets measured at FVOCI \u2013 with recycling
-
48,556
-
5,482
176
54,214
Financial assets measured at FVOCI \u2013 no recycling
-
9
-
-
1
10
Financial assets measured at amortized cost
-
8,254
-
2,159
39
10,453
Financial assets measured at FVPL \u2013 designated
103,327
1,833
45,453
47
30,843
181,503
Financial assets measured at FVPL \u2013 mandatory
-
7,719
-
285
75
8,079
Total financial assets, excluding derivatives
103,327
66,371
45,453
7,972
31,134
254,257
Investments in real estate
236
59
168
-
40
502
Total investments
103,562
66,430
45,620
7,972
31,174
254,759
Of the debt securities, money market and other short-term investments, mortgage loans and private loans EUR 8,727 million
is current (December 2022: EUR 7,305 million).
See note 38 \"Fair Value\" for information on fair value measurement, including loans that are held at amortized cost.
19.1 Financial assets, excluding derivatives, by measurement category
\n \n
Financial assets, excluding deriva-
tives, by measurement category
2023
FVOCI
(With
FVOCI (no
Amortized
FVPL
FVPL
recycling)
recycling)
cost
(designated)
(mandatory)
Total
Fair value
Investments where Aegon bears the risk
for investment performance
Shares
-
10
-
-
291
300
300
Debt securities
47,191
-
52
1,538
858
49,639
49,639
Money market and other short-term
investments
3,135
-
-
215
3,999
7,349
7,349
Deposits with financial institutions
-
-
18
-
-
18
18
Mortgage loans
-
-
10,157
-
-
10,157
9,025
Other
29
-
1
773
4,239
5,040
5,040
Total
50,354
10
10,227
2,526
9,386
72,504
71,371
\n \n
Financial assets, excluding derivatives, by measurement category
2022
FVOCI
(With
FVOCI (no
Amortized
FVPL
FVPL
recycling)
recycling)
cost
(designated)
(mandatory)
Total
Fair value
Investments where Aegon bears the risk
for investment performance
Shares
-
10
-
-
348
358
358
Debt securities
51,607
-
-
1,241
799
53,647
53,647
Money market and other short-term
investments
2,576
-
-
167
2,876
5,618
5,618
Deposits with financial institutions
-
-
45
-
-
45
45
Mortgage loans
-
-
10,406
-
-
10,406
9,218
Other
31
-
1
532
4,056
4,619
4,619
Total
54,214
10
10,453
1,940
8,079
74,694
73,505
In both 2022 and 2023 no significant transactions took place with respect to Shares recognized at FVOCI. No dividends were
received during 2023 (2022: 0).
\n \n
Financial assets, excluding derivatives, by measurement category
2023
2022
FVPL (designated)
FVPL (designated)
Investments where policyholders bear the risk for investment performance
Shares
16,191
15,505
Debt securities
6,172
5,694
Money market and other short-term investments
1,346
1,263
Unconsolidated investment funds
167,411
154,741
Deposits with financial institutions
2,271
2,360
Total
193,390
179,563
During the period ended December 31, 2023 the Group has not made changes to its business model or reclassified
financial assets.
See note 38 \"Fair Value\" for a summary of all financial assets and financial liabilities measured at fair value through profit
or loss. See note 40 Transfers of financial assets for a discussion of collateral received and paid.
19.2 Investment properties
\n \n
2023
2022
On January 1
502
3,206
Additions
42
41
Subsequent expenditure capitalized
2
12
Disposals
(18)
(83)
Fair value gains / (losses)
(50)
(112)
Transfers to disposal groups
-
(2,545)
Transfers to other headings
-
7
Net exchange differences
9
(24)
On December 31
488
502
Value of Aegon's properties, which were appraised in the current year
99%
99%
Appraisals performed by independent external appraisers
95%
95%
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f45494": { "value": "19.2 Investment properties \n \n
2023
2022
On January 1
502
3,206
Additions
42
41
Subsequent expenditure capitalized
2
12
Disposals
(18)
(83)
Fair value gains / (losses)
(50)
(112)
Transfers to disposal groups
-
(2,545)
Transfers to other headings
-
7
Net exchange differences
9
(24)
On December 31
488
502
Value of Aegon's properties, which were appraised in the current year
99%
99%
Appraisals performed by independent external appraisers
95%
95%
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentPropertyExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f45598": { "value": "20 Derivatives \n \n
Derivative assets
Derivative liabilities
Insurance related
Insurance related
2023
Invest-
Invest-
ment
ment
contracts
contracts
Insurance contracts
with DPF
Insurance contracts
with DPF
Without
Non-
Without
Non-Insur-
Direct
direct
Direct
Insurance
Direct
direct
Direct
ance
Derivatives
Part.
part.
Part.
related
Total
Part.
part.
Part.
related
Total
FVPL - mandatorily
Derivatives not
designated in a
hedge
35
1,171
25
7
1,238
296
823
300
47
1,466
Derivatives
designated as fair
value hedges
-
4
-
1
4
-
4
-
-
4
Derivatives
designated as cash
flow hedges
-
147
-
-
147
-
961
-
-
961
Derivatives
designated as net
foreign investment
hedges
-
-
-
39
39
-
-
-
48
48
Total
35
1,322
25
46
1,429
296
1,788
300
96
2,479
Segregated by:
Derivatives where
Aegon bears the
risk for financial
performance
-
1,322
-
40
1,361
-
1,788
-
90
1,878
Derivatives where
the policyholder
bears the risk for
financial
performance
35
-
25
7
67
296
-
300
5
601
\n \n
Derivative assets
Derivative liabilities
Insurance related
Insurance related
2022
Invest-
Invest-
ment
ment
contracts
contracts
Insurance contracts
with DPF
Insurance contracts
with DPF
Without
Non-
Without
Non-Insur-
Direct
direct
Direct
Insurance
Direct
direct
Direct
ance
Derivatives
Part.
part.
Part.
related
Total
Part.
part.
Part.
related
Total
FVPL - mandatorily
Derivatives not
designated in a
hedge
29
2,392
20
5
2,445
344
3,182
366
65
3,958
Derivatives
designated as fair
value hedges
-
3
-
-
4
-
4
-
-
4
Derivatives
designated as cash
flow hedges
-
204
-
-
204
-
1,108
-
-
1,108
Derivatives
designated as net
foreign investment
hedges
-
-
-
118
118
-
-
-
104
104
Total
29
2,599
20
123
2,771
344
4,295
366
170
5,175
Segregated by:
Derivatives where
Aegon bears the
risk for financial
performance
-
2,599
-
119
2,718
-
4,295
-
165
4,459
Derivatives where
the policyholder
bears the risk for
financial
performance
29
-
20
5
53
344
-
366
5
715
Where Aegon hedges minimum guarantees embedded in VFA products, the change in the fulfillment cash flows relating to the
hedged position is recognized in income rather than being booked to the Contractual Service Margin. In 2023, the amount
booked to income was EUR 1,481 million (2022: EUR 3,341 million).
The decrease in derivatives assets and derivative liabilities is mainly the result of increasing interest rates in 2023.
The derivatives are measured at fair value through profit or loss in accordance with IFRS 9. For more details on fair value
measurement of derivatives see note 38 Fair value.
Use of derivatives
Derivatives not designated in a hedge
\n \n
Derivative asset
Derivative liability
Derivatives not designated in a hedge \u2013 where Aegon bears
the risk
2023
2022
2023
2022
Derivatives held as an economic hedge
1,171
2,392
812
3,197
Bifurcated embedded derivatives
-
-
53
46
Total
1,171
2,392
865
3,242
Aegon utilizes derivative instruments as a part of its asset liability risk management practices. The derivatives held for risk
management purposes are classified as economic hedges to the extent that they do not qualify for hedge accounting, or that
Aegon has elected not to apply hedge accounting. The economic hedges of certain exposures relate to an existing asset,
liability or future reinvestment risk. In all cases, these are in accordance with internal risk guidelines and are closely monitored
for continuing compliance.
Bifurcated embedded derivatives that are not closely related to the host contracts have been bifurcated and recorded at fair
value in the consolidated statement of financial position. These bifurcated embedded derivatives are embedded in various
institutional products.
Credit Default Swaps
Aegon has entered into free-standing credit derivative transactions. The positions outstanding at the end of the year were:
\n \n
2023
2022
Credit derivative disclosure by quality
Notional
Fair value
Notional
Fair value
AAA
3
-
5
-
AA
97
1
177
2
A
1,021
16
964
9
BBB
2,746
52
3,446
18
BB
119
1
144
(1)
B or lower
57
-
86
-
Total
4,043
71
4,820
28
The use of credit default swaps (CDS) is to create synthetic bonds. Aegon US uses credit default swaps to replicate or
synthesize bonds, this is done via Replication (Synthetic Asset) Transactions (RSAT).
This is an insurance industry concept which allows insurance companies to use a derivative in conjunction with a cash
investment to reproduce the investment characteristics of an otherwise permissible investment. There are three main types of
RSAT transactions:
\u2022 single asset replications
\u2022 RSATs involving indices
\u2022
RSATs involving baskets of assets
In each case the approach allows Aegon US to access credit risk in derivative form by using credit default swaps in conjunction
with cash or sovereign bonds to replicate (synthetically create) corporate bonds.
The table above provides a breakdown in credit quality of these credit derivatives.
Derivatives designated as fair value hedges
Aegon's fair value hedges include interest rate swaps, swaptions, equity and fixed income total return swaps, equity options,
equity futures, bond futures and variance swaps that are used to protect against changes in the fair value of interest rate and
equity sensitive instruments or liabilities. Gains and losses on derivatives designated under fair value hedge accounting are
recognized in the income statement. The effective portion of the fair value change on the hedged item is also recognized in the
income statement. As a result, only the net accounting ineffectiveness has an impact on the net result.
Aegon has entered into interest rate swap agreements that effectively convert certain fixed-rate assets and liabilities to a
floating-rate basis. These hedges are used for portfolio management to better match assets to liabilities or to protect the
value of the hedged item from interest rate movements. These agreements involve the payment or receipt of fixed-rate interest
amounts in exchange for floating-rate interest amounts over the life of the agreement without the exchange of the underlying
principal amounts. Some of the arrangements use forward starting swaps to better match the duration of assets and liabilities.
Aegon has entered into cross-currency interest rate swap agreements that effectively convert certain foreign currency
fixed-rate and floating-rate assets and liabilities to US dollar floating-rate assets and liabilities. These agreements involve the
exchange of the underlying principal amounts.
Derivatives designated as cash flow hedges
Aegon has entered primarily into interest rate swap agreements that effectively convert certain variable-rate assets and
liabilities to a fixed-rate basis in order to match the cash flows of the assets and liabilities within Aegon\u2019s portfolio more
closely. These agreements involve the payment or receipt of variable-rate interest amounts in exchange for fixed-rate interest
amounts over the life of the agreement without the exchange of the underlying principal amounts. Aegon hedges its exposure
to the variability of future cash flows from the interest rate movements for terms up to 21 years for hedges converting existing
floating-rate assets and liabilities to fixed-rate assets.
Aegon uses forward starting interest rate swap agreements to hedge the variability in future cash flows associated with the
forecasted purchase of fixed-income assets. These agreements reduce the impact of future interest rate changes on the
forecasted transaction. Fair value adjustments for these interest rate swaps are deferred and recorded in equity until the
occurrence of the forecasted transaction at which time the interest rate swaps will be terminated. The accumulated gain or loss
in equity will be amortized into investment income as the acquired asset affects income. Aegon hedges its exposure to the
variability of future cash flows from interest rate movements for terms up to 20 years. The cash flows from these hedging
instruments are expected to affect the profit and loss for approximately the next 39 years. For the year ended December 31,
2023, the contracts for which cash flow hedge accounting was terminated resulted in deferred gains of EUR 75 million (2022:
EUR 12 million) that are recognized directly in equity to be reclassified into net result during the period when the cash flows
occur of the underlying hedged items. During the year ended December 31, 2023, none of Aegon's active cash flow hedges
were discontinued as it was highly probable that the original forecasted transactions would occur by the end of the originally
specified time period documented at the inception of the hedging relationship. All reported discontinued cash flow hedges are
a product of completed forecasted transactions at which point the hedges were unwound.
Aegon projects investment needs many years into the future in order to support the insurance liabilities and pay all contractual
obligations arising from the policies in force today.
In addition, Aegon also makes use of cross currency swaps to convert variable or fixed foreign currency cash flows into fixed
cash flows in local currencies. The cash flows from these hedging instruments are expected to occur over the next 33 years.
These agreements involve the exchange of the underlying principal amounts.
\n \n
Hedge ineffectiveness and reclassification of gains (losses)
2023
2022
Hedge ineffectiveness on cash flow hedges
3
(3)
Gains (losses) reclassified from equity into the income statement
20
(102)
Expected deferred gain (loss) to be reclassified from equity into net result during the next 12 months
114
116
The periods when the cash flows are expected to occur are as follows:
\n \n
< 1yr
1 < 2 yrs
2 < 3 yrs
3 < 4 yrs
4 < 5 yrs
> 5 yrs
Total 2023
Cash inflows
282
253
260
286
341
7,509
8,930
Cash outflows
560
224
244
266
271
12,248
13,813
Net cash flows
(277)
28
16
19
70
(4,740)
(4,883)
\n \n
< 1yr
1 < 2 yrs
2 < 3 yrs
3 < 4 yrs
4 < 5 yrs
> 5 yrs
Total 2022
Cash inflows
1,552
1,295
1,060
964
933
10,039
15,843
Cash outflows
1,937
1,285
1,037
962
934
17,914
24,068
Net cash flows
(385)
10
23
3
(2)
(7,875)
(8,225)
Effect of uncertainty of IBOR reform on derivatives designated as fair value and cash flows hedges
The future of IBORs (Interbank Offered Rates) such as EURIBOR, EONIA and LIBOR has been a major topic on the global agenda
since the G20 asked the Financial Stability Board (FSB) to undertake a fundamental review of leading interest rate benchmarks
in 2013. The FSB proposed new standards to reform interest rate benchmarks and the use of transaction-based input data
instead of non-transactional/panel input data. In the EU this is adopted in the new Benchmark Regulation (BMR) which stipulates
that from January 2020 only BMR compliant benchmarks may be used within the EU.
In order to prepare for the IBOR transition all Aegon units have written transition plans containing among others project
solutions and actions, timelines and ownership to ensure timely preparation and implementation. Actions as described in the
transition plan have been implemented.
In July 2020, the discount rates of EUR cleared derivatives switched from EONIA to \u20acSTR which impacted the valuation
of derivatives for which compensation was exchanged. All EUR Credit Support Annex (\"CSA\") which have positions outstanding
have been amended from EONIA to \u20acSTR discounting. In the United States, the cleared market has switched discount rates
from Fed Funds to Secured Overnight Funding Rate (\"SOFR\") in October 2020. The switch in discount rates is expected to lead
to increased liquidity in the new risk free rates.
The majority of the fair value and cash flow hedges were directly exposed to changes in benchmark rates (predominantly
EURIBOR and USD LIBOR). There are no plans for the discontinuation of EURIBOR and appropriate fallback language was
implemented via the International Swaps and Derivatives (\"ISDA\") fallback protocol and rulebook changes by the clearing
houses. The relevant USD LIBOR benchmark rates were available for existing contracts until mid-2023 and these derivatives
were actively transitioned to SOFR before the 2023 deadline or via the ISDA fallback protocol.
Net foreign investment hedges
Aegon funds its investments in insurance subsidiaries with a mixture of debt and equity. Aegon aims to denominate debt
funding in the same currency as the functional currency of the investment. Investments outside the Eurozone, the United
States and the United Kingdom are funded in euros. When the debt funding of investments is not in the functional currency
of the investment, Aegon uses derivatives to swap the currency exposure of the debt instrument to the appropriate functional
currency. This policy will ensure that total capital will reflect currency movements without distorting debt to shareholders\u2019
equity ratios. Aegon utilizes various financial instruments as designated hedging instruments of its foreign investments.
These instruments include long-term and short-term borrowings, short-term debts to credit institutions, cross currency swap
contracts and forward foreign exchange contracts.
Terms and conditions of hedging instruments
The following table sets out the maturity profile and average price/rate of the hedging instruments used
in Aegon\u2019s hedging strategies:
\n \n
2023
Maturity
Up to 1
month
1-3 months
3-12 months
1-5 years
> 5 years
Fair value hedges
Interest rate contracts
Notional
-
-
-
88
21
Foreign exchange contracts
Notional
-
-
-
-
8
Cash flow hedges
Interest rate contracts
Notional
-
-
-
-
5,540
Average fixed interest rate
-
-
-
-
2.83%
Foreign exchange contracts
Notional
-
-
-
121
835
Average exchange rate EUR/USD
-
-
-
1.16
1.13
Average exchange rate EUR/GBP
-
-
-
-
-
Average exchange rate USD/EUR
-
-
-
0.87
0.88
Average exchange rate USD/GBP
-
-
-
0.74
0.76
Average exchange rate GBP/EUR
-
-
-
1.35
1.32
Average exchange rate GBP/USD
-
-
-
-
-
Net investment hedges
Foreign exchange - FX forward
Notional
(8)
(1)
-
-
-
Average exchange rate EUR/USD
0.91
0.91
-
-
-
Average exchange rate EUR/GBP
1.15
-
-
-
-
\n \n
2022
Maturity
Up to 1
month
1-3 months
3-12 months
1-5 years
> 5 years
Fair value hedges
Interest rate contracts
Notional
-
-
-
87
26
Foreign exchange contracts
Notional
-
-
-
-
8
Cash flow hedges
Interest rate contracts
Notional
-
-
-
-
6,738
Average fixed interest rate
-
-
-
-
2.90%
Foreign exchange contracts
Notional
-
-
-
88
788
Average exchange rate EUR/USD
-
-
-
1.18
1.14
Average exchange rate EUR/GBP
-
-
-
-
-
Average exchange rate USD/EUR
-
-
-
0.85
0.88
Average exchange rate USD/GBP
-
-
-
0.75
0.75
Average exchange rate GBP/EUR
-
-
-
-
-
Average exchange rate GBP/USD
-
-
-
1.34
1.34
Net investment hedges
Foreign exchange - FX forward
Notional
(4)
23
(5)
-
-
Average exchange rate EUR/USD
0.94
0.94
0.94
-
-
Average exchange rate EUR/GBP
1.13
1.13
1.13
-
-
Impacts of hedge accounting in the statement of financial position, statement of comprehensive income and statement of
changes in equity
The following table contains details of the hedging instruments used in Aegon\u2019s hedging strategies that are booked under line
item \"Derivatives\" in the consolidated statement of financial position:
\n \n
2023
Carrying amounts
Changes in fair
value used for
calculating
hedge
Notional
Assets
Liabilities
ineffectiveness
Fair value hedges
Interest rate contracts
109
1
4
-
Foreign exchange contracts
8
4
-
1
Cash flow hedges
Interest rate contracts
5,540
42
950
106
Foreign exchange contracts
956
105
11
(44)
Net investment hedges
Foreign exchange - FX forward
(9)
39
48
-
\n \n
2022
Carrying amounts
Changes in fair
value used for
calculating
hedge
Notional
Assets
Liabilities
ineffectiveness
Fair value hedges
Interest rate contracts
113
-
4
(3)
Foreign exchange contracts
8
3
-
-
Cash flow hedges
Interest rate contracts
6,738
55
1,102
(383)
Foreign exchange contracts
876
149
6
116
Net investment hedges
Foreign exchange - FX forward
14
118
104
-
The following table contains details of the hedged exposures covered by Aegon\u2019s hedging strategies that are booked under line
item \"Derivatives\" in the consolidated statement of financial position:
\n \n
2023
Accumulated amount
of fair value
Cash flow hedge /
adjustments on the
currency translation
Carrying amounts
hedged item
reserve
Change
in fair
value of
hedged
item for
ineffec-
tiveness
Continu-
Discon-
Balance sheet line
assess-
ing
tinued
Assets
Liabilities
Assets
Liabilities
item
ment
hedges
hedges
Fair value hedges
Trust pass-through
Corporate Debt Hedge Program
-
67
-
(13)
securities
3
n.a.
n.a.
Investment contracts
without discretionary
Offshore Liability Hedge Program
-
12
-
2
participating features
-
n.a.
n.a.
Synthetic Asset Fair value hedges
34
-
4
-
Investments
1
n.a.
n.a.
Cash flow hedges
Synethetic Asset Cash flow hedges
2,672
-
-
-
Investments
11
87
-
Life & Health Liability Investment
Risk Hedge Program
n.a.
n.a.
n.a.
n.a.
n.a.
5
(348)
232
Long Term Care (LTC) Liability
Hedge Program
n.a.
n.a.
n.a.
n.a.
n.a.
1
(15)
1,085
IMD Payout Hedge
n.a.
n.a.
n.a.
n.a.
n.a.
-
-
29
TRS (Vivendi) Hedge
n.a.
n.a.
n.a.
n.a.
n.a.
-
-
3
Net investment hedges
Investments in foreign operations
n.a.
n.a.
n.a.
n.a.
n.a.
-
(324)
-
1
n.a. in above table should be read as \u201cnot applicable\u201d.
\n \n
2022
Accumulated amount
of fair value
Cash flow hedge /
adjustments on the
currency translation
Carrying amounts
hedged item
reserve
Change
in fair
value of
hedged
item for
ineffec-
tiveness
Continu-
Discon-
Balance sheet line
assess-
ing
tinued
Assets
Liabilities
Assets
Liabilities
item
ment
hedges
hedges
Fair value hedges
Trust pass-through
Corporate Debt Hedge Program
-
72
-
(10)
securities
15
n.a.
n.a.
Investment contracts
without discretionary
Offshore Liability Hedge Program
-
12
-
2
participating features
(3)
n.a.
n.a.
Synthetic Asset Fair value hedges
34
-
3
-
Investments
(8)
n.a.
n.a.
Cash flow hedges
Synethetic Asset Cash flow hedges
3,127
n.a.
n.a.
n.a.
Investments
(1,667)
82
Life & Health Liability Investment
Risk Hedge Program
n.a.
n.a.
n.a.
n.a.
n.a.
(586)
(365)
393
Long Term Care (LTC) Liability
Hedge Program
n.a.
n.a.
n.a.
n.a.
n.a.
(129)
(17)
1,177
IMD Payout Hedge
n.a.
n.a.
n.a.
n.a.
n.a.
-
-
31
TRS (Vivendi) Hedge
4
Net investment hedges
Investments in foreign operations
n.a.
n.a.
n.a.
n.a.
n.a.
-
(371)
-
1
n.a. in above table should be read as \u201cnot applicable\u201d.
Potential sources of hedge ineffectiveness
Macro hedge on mortgage portfolio in the Netherlands
Aegon held a portfolio of long-term fixed rate mortgages and therefore was exposed to changes in fair value due to movements
in market interest rates. Aegon managed this risk exposure by entering into interest rate swaps.
Only the interest rate risk element was hedged and therefore other risks, such as credit risk, were managed but not hedged by
Aegon. The interest risk component was determined as the change in fair value of the long-term fixed rate mortgages arising
solely from changes in 3-month LIBOR. Such changes were usually the largest component of the overall change in fair value.
This strategy was designated as a fair value hedge and its effectiveness was assessed by comparing changes in the fair value
of the loans attributable to changes in the benchmark rate of interest with changes in the fair value of the interest rate swaps.
\u2022
Differences between the expected and actual volume of prepayments, as Aegon hedged to the expected repayment date
taking into account expected prepayments based on past experience;
\u2022
Difference in the discounting between the hedged item and the hedging instrument, as cash collateralized interest rate
swaps were discounted using Overnight Indexed Swaps (OIS) discount curves, which were not applied to the fixed rate
mortgages;
\u2022
Hedging derivatives with a non-zero fair value at the date of initial designation as a hedging instrument; and
\u2022
Counterparty credit risk which impacted the fair value of uncollateralized interest rate swaps but not the hedged items.
Aegon had not identified any other sources of hedge ineffectiveness in the period.
Aegon the Netherlands managed the interest rate risk arising from fixed rate mortgages by entering into interest rate swaps
on a monthly basis. The exposure from this portfolio frequently changed due to new loans originated, contractual repayments
and early prepayments made by customers in each period. As a result, Aegon the Netherlands adopted a dynamic hedging
strategy to hedge the exposure profile by closing and entering into new swap arrangements at each month-end. Aegon
the Netherlands used the portfolio fair value hedge of interest rate risk to recognize fair value changes related to changes
in interest rate risk in the mortgage portfolio, and therefore reduced the profit or loss volatility that would have otherwise arisen
from changes in fair value of the interest rate swaps alone. This approach was applicable until the completion of the transaction
with a.s.r. on July 4, 2023.
Corporate debt hedge
\u2022
If there is a mismatch between critical terms of hedging instruments and hedged items, changes in fair value may not be
offset. The qualitative hedge effectiveness test assures all critical terms align.
\u2022
Counterparty default: If the counterparty fails to fulfill the contract, the hedge would not be highly effective. All derivatives in
this program are collateralized or cleared, so impact from this credit risk will not dominate the hedge relationship.
Life & Health liability investment risk hedge
\u2022
Counterparty default: If the counterparty fails to fulfill the contract, the hedge would not be highly effective. All derivatives in
this program are collateralized or cleared, so impact from this credit risk will not dominate the hedge relationship.
\u2022
Expected future transactions fail to occur as projected: the hedging instrument (i.e. FSS) terms are already known and easily
valued. However, the hedged item consists of one or more forecasted asset purchases for which we are unable to project
exactly the dates, coupon rates, and other underlying terms. Given these unknown variables in the hedged item, for the period
in which the FSS remains in inventory and the forecasted transactions have not been completed, the hedged item portion of
this relationship will be setup assuming identical dates and rates as outlined in the hedging instrument.
\u2022
When the forecasted transaction (i.e. bond purchase) is completed and the terms of the underlying hedged item are known,
hedge ineffectiveness would possibly arise if the timing of the asset being purchased differs from the unwind date of the
swaps designated as the hedging instrument, or the coupon rate of the asset being purchased differs from the coupon rate
on the receive leg of the swap, or a combination of both.
Long Term Care (LTC) liability hedge
\u2022
The hedge ineffectiveness would possibly arise if the timing of the asset being purchased differs from the unwind date of the
swaps designated as the hedging instrument, or the coupon rate of the asset being purchased differs from the coupon rate
on the receive leg of the swap, or a combination of both.
Synthetic asset cash flow hedge
\u2022
Mismatch of critical terms: If critical terms do not match between the hedged item and the hedged instrument, hedge
ineffectiveness can arise.
\u2022
Counterparty default: If the counterparty fails to fulfill the contract, the hedge would not be highly effective. All derivatives in
this program are collateralized or cleared, so impact from this credit risk will not dominate the hedge relationship.
The following table contains information regarding the effectiveness of the hedging relationships designated by Aegon, as well
as the impacts on profit or loss and other comprehensive income that are booked under line item \"Results from financial
transactions\" (including the reclassified amount where applicable):
\n \n
2023
Amounts reclassified from
reserves to P&L as
Hedge
P&L line item that
hedged cash
Gains / (loss)
ineffectiveness
includes hedge
flows will no
hedged item
recognized in OCI
recognized in P&L
ineffectiveness
longer occur
affected P&L
Fair value hedges
Results from financial
Interest rate contracts
n.a.
(3)
transactions
n.a.
n.a.
Results from financial
Foreign exchange contracts
n.a.
-
transactions
n.a.
n.a.
Cash flow hedges
Results from financial
Interest rate contracts
-
-
transactions
-
-
Results from financial
Foreign exchange contracts
-
(2)
transactions
-
-
Net investment hedges
Results from financial
Foreign exchange - FX forward
-
-
transactions
-
-
1
n.a. in above table should be read as \u201cnot applicable\u201d.
\n \n
2022
Amounts reclassified from
reserves to P&L as
Hedge
P&L line item that
hedged cash
Gains / (loss)
ineffectiveness
includes hedge
flows will no
hedged item
recognized in OCI
recognized in P&L
ineffectiveness
longer occur
affected P&L
Fair value hedges
Results from financial
Interest rate contracts
n.a.
1
transactions
n.a.
n.a.
Results from financial
Foreign exchange contracts
n.a.
(4)
transactions
n.a.
n.a.
Cash flow hedges
Results from financial
Interest rate contracts
-
1
transactions
-
-
Results from financial
Foreign exchange contracts
-
2
transactions
-
-
Net investment hedges
Results from financial
Foreign exchange - FX forward
-
-
transactions
-
-
1
n.a. in above table should be read as \u201cnot applicable\u201d.
Aegon recognizes the separate line items: \"Changes in cash flow hedging reserve\" and \"Movement in foreign currency
translation and net foreign investment hedging reserves\" in the statement of comprehensive income related to hedges of net
positions gains and losses. Refer to note 25 Shareholders' equity for more details on these items.
Financial instruments designated and measured at FVPL
The following table shows reconciliation of nominal amount and fair value of credit derivatives that have been used to manage
the credit risk of financial instruments designated as FVPL:
\n \n
CDSs
Credit derivative disclosure by quality
Nominal amount
Fair value
On January 1, 2023
4,820
28
Increase/(Decrease) during the year
(778)
43
On December 31, 2023
4,043
71
\n \n
CDSs
Credit derivative disclosure by quality
Nominal amount
Fair value
On January 1, 2022
4,449
70
Increase/(Decrease) during the year
371
(42)
On December 31, 2022
4,820
28
", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f46897": { "value": "Derivatives designated as fair value hedges
Aegon's fair value hedges include interest rate swaps, swaptions, equity and fixed income total return swaps, equity options,
equity futures, bond futures and variance swaps that are used to protect against changes in the fair value of interest rate and
equity sensitive instruments or liabilities. Gains and losses on derivatives designated under fair value hedge accounting are
recognized in the income statement. The effective portion of the fair value change on the hedged item is also recognized in the
income statement. As a result, only the net accounting ineffectiveness has an impact on the net result.
Aegon has entered into interest rate swap agreements that effectively convert certain fixed-rate assets and liabilities to a
floating-rate basis. These hedges are used for portfolio management to better match assets to liabilities or to protect the
value of the hedged item from interest rate movements. These agreements involve the payment or receipt of fixed-rate interest
amounts in exchange for floating-rate interest amounts over the life of the agreement without the exchange of the underlying
principal amounts. Some of the arrangements use forward starting swaps to better match the duration of assets and liabilities.
Aegon has entered into cross-currency interest rate swap agreements that effectively convert certain foreign currency
fixed-rate and floating-rate assets and liabilities to US dollar floating-rate assets and liabilities. These agreements involve the
exchange of the underlying principal amounts.
Derivatives designated as cash flow hedges
Aegon has entered primarily into interest rate swap agreements that effectively convert certain variable-rate assets and
liabilities to a fixed-rate basis in order to match the cash flows of the assets and liabilities within Aegon\u2019s portfolio more
closely. These agreements involve the payment or receipt of variable-rate interest amounts in exchange for fixed-rate interest
amounts over the life of the agreement without the exchange of the underlying principal amounts. Aegon hedges its exposure
to the variability of future cash flows from the interest rate movements for terms up to 21 years for hedges converting existing
floating-rate assets and liabilities to fixed-rate assets.
Aegon uses forward starting interest rate swap agreements to hedge the variability in future cash flows associated with the
forecasted purchase of fixed-income assets. These agreements reduce the impact of future interest rate changes on the
forecasted transaction. Fair value adjustments for these interest rate swaps are deferred and recorded in equity until the
occurrence of the forecasted transaction at which time the interest rate swaps will be terminated. The accumulated gain or loss
in equity will be amortized into investment income as the acquired asset affects income. Aegon hedges its exposure to the
variability of future cash flows from interest rate movements for terms up to 20 years. The cash flows from these hedging
instruments are expected to affect the profit and loss for approximately the next 39 years. For the year ended December 31,
2023, the contracts for which cash flow hedge accounting was terminated resulted in deferred gains of EUR 75 million (2022:
EUR 12 million) that are recognized directly in equity to be reclassified into net result during the period when the cash flows
occur of the underlying hedged items. During the year ended December 31, 2023, none of Aegon's active cash flow hedges
were discontinued as it was highly probable that the original forecasted transactions would occur by the end of the originally
specified time period documented at the inception of the hedging relationship. All reported discontinued cash flow hedges are
a product of completed forecasted transactions at which point the hedges were unwound.
Aegon projects investment needs many years into the future in order to support the insurance liabilities and pay all contractual
obligations arising from the policies in force today.
In addition, Aegon also makes use of cross currency swaps to convert variable or fixed foreign currency cash flows into fixed
cash flows in local currencies. The cash flows from these hedging instruments are expected to occur over the next 33 years.
These agreements involve the exchange of the underlying principal amounts.
\n \n
Hedge ineffectiveness and reclassification of gains (losses)
2023
2022
Hedge ineffectiveness on cash flow hedges
3
(3)
Gains (losses) reclassified from equity into the income statement
20
(102)
Expected deferred gain (loss) to be reclassified from equity into net result during the next 12 months
114
116
The periods when the cash flows are expected to occur are as follows:
\n \n
< 1yr
1 < 2 yrs
2 < 3 yrs
3 < 4 yrs
4 < 5 yrs
> 5 yrs
Total 2023
Cash inflows
282
253
260
286
341
7,509
8,930
Cash outflows
560
224
244
266
271
12,248
13,813
Net cash flows
(277)
28
16
19
70
(4,740)
(4,883)
\n \n
< 1yr
1 < 2 yrs
2 < 3 yrs
3 < 4 yrs
4 < 5 yrs
> 5 yrs
Total 2022
Cash inflows
1,552
1,295
1,060
964
933
10,039
15,843
Cash outflows
1,937
1,285
1,037
962
934
17,914
24,068
Net cash flows
(385)
10
23
3
(2)
(7,875)
(8,225)
Effect of uncertainty of IBOR reform on derivatives designated as fair value and cash flows hedges
The future of IBORs (Interbank Offered Rates) such as EURIBOR, EONIA and LIBOR has been a major topic on the global agenda
since the G20 asked the Financial Stability Board (FSB) to undertake a fundamental review of leading interest rate benchmarks
in 2013. The FSB proposed new standards to reform interest rate benchmarks and the use of transaction-based input data
instead of non-transactional/panel input data. In the EU this is adopted in the new Benchmark Regulation (BMR) which stipulates
that from January 2020 only BMR compliant benchmarks may be used within the EU.
In order to prepare for the IBOR transition all Aegon units have written transition plans containing among others project
solutions and actions, timelines and ownership to ensure timely preparation and implementation. Actions as described in the
transition plan have been implemented.
In July 2020, the discount rates of EUR cleared derivatives switched from EONIA to \u20acSTR which impacted the valuation
of derivatives for which compensation was exchanged. All EUR Credit Support Annex (\"CSA\") which have positions outstanding
have been amended from EONIA to \u20acSTR discounting. In the United States, the cleared market has switched discount rates
from Fed Funds to Secured Overnight Funding Rate (\"SOFR\") in October 2020. The switch in discount rates is expected to lead
to increased liquidity in the new risk free rates.
The majority of the fair value and cash flow hedges were directly exposed to changes in benchmark rates (predominantly
EURIBOR and USD LIBOR). There are no plans for the discontinuation of EURIBOR and appropriate fallback language was
implemented via the International Swaps and Derivatives (\"ISDA\") fallback protocol and rulebook changes by the clearing
houses. The relevant USD LIBOR benchmark rates were available for existing contracts until mid-2023 and these derivatives
were actively transitioned to SOFR before the 2023 deadline or via the ISDA fallback protocol.
Net foreign investment hedges
Aegon funds its investments in insurance subsidiaries with a mixture of debt and equity. Aegon aims to denominate debt
funding in the same currency as the functional currency of the investment. Investments outside the Eurozone, the United
States and the United Kingdom are funded in euros. When the debt funding of investments is not in the functional currency
of the investment, Aegon uses derivatives to swap the currency exposure of the debt instrument to the appropriate functional
currency. This policy will ensure that total capital will reflect currency movements without distorting debt to shareholders\u2019
equity ratios. Aegon utilizes various financial instruments as designated hedging instruments of its foreign investments.
These instruments include long-term and short-term borrowings, short-term debts to credit institutions, cross currency swap
contracts and forward foreign exchange contracts.
Terms and conditions of hedging instruments
The following table sets out the maturity profile and average price/rate of the hedging instruments used
in Aegon\u2019s hedging strategies:
\n \n
2023
Maturity
Up to 1
month
1-3 months
3-12 months
1-5 years
> 5 years
Fair value hedges
Interest rate contracts
Notional
-
-
-
88
21
Foreign exchange contracts
Notional
-
-
-
-
8
Cash flow hedges
Interest rate contracts
Notional
-
-
-
-
5,540
Average fixed interest rate
-
-
-
-
2.83%
Foreign exchange contracts
Notional
-
-
-
121
835
Average exchange rate EUR/USD
-
-
-
1.16
1.13
Average exchange rate EUR/GBP
-
-
-
-
-
Average exchange rate USD/EUR
-
-
-
0.87
0.88
Average exchange rate USD/GBP
-
-
-
0.74
0.76
Average exchange rate GBP/EUR
-
-
-
1.35
1.32
Average exchange rate GBP/USD
-
-
-
-
-
Net investment hedges
Foreign exchange - FX forward
Notional
(8)
(1)
-
-
-
Average exchange rate EUR/USD
0.91
0.91
-
-
-
Average exchange rate EUR/GBP
1.15
-
-
-
-
\n \n
2022
Maturity
Up to 1
month
1-3 months
3-12 months
1-5 years
> 5 years
Fair value hedges
Interest rate contracts
Notional
-
-
-
87
26
Foreign exchange contracts
Notional
-
-
-
-
8
Cash flow hedges
Interest rate contracts
Notional
-
-
-
-
6,738
Average fixed interest rate
-
-
-
-
2.90%
Foreign exchange contracts
Notional
-
-
-
88
788
Average exchange rate EUR/USD
-
-
-
1.18
1.14
Average exchange rate EUR/GBP
-
-
-
-
-
Average exchange rate USD/EUR
-
-
-
0.85
0.88
Average exchange rate USD/GBP
-
-
-
0.75
0.75
Average exchange rate GBP/EUR
-
-
-
-
-
Average exchange rate GBP/USD
-
-
-
1.34
1.34
Net investment hedges
Foreign exchange - FX forward
Notional
(4)
23
(5)
-
-
Average exchange rate EUR/USD
0.94
0.94
0.94
-
-
Average exchange rate EUR/GBP
1.13
1.13
1.13
-
-
Impacts of hedge accounting in the statement of financial position, statement of comprehensive income and statement of
changes in equity
The following table contains details of the hedging instruments used in Aegon\u2019s hedging strategies that are booked under line
item \"Derivatives\" in the consolidated statement of financial position:
\n \n
2023
Carrying amounts
Changes in fair
value used for
calculating
hedge
Notional
Assets
Liabilities
ineffectiveness
Fair value hedges
Interest rate contracts
109
1
4
-
Foreign exchange contracts
8
4
-
1
Cash flow hedges
Interest rate contracts
5,540
42
950
106
Foreign exchange contracts
956
105
11
(44)
Net investment hedges
Foreign exchange - FX forward
(9)
39
48
-
\n \n
2022
Carrying amounts
Changes in fair
value used for
calculating
hedge
Notional
Assets
Liabilities
ineffectiveness
Fair value hedges
Interest rate contracts
113
-
4
(3)
Foreign exchange contracts
8
3
-
-
Cash flow hedges
Interest rate contracts
6,738
55
1,102
(383)
Foreign exchange contracts
876
149
6
116
Net investment hedges
Foreign exchange - FX forward
14
118
104
-
The following table contains details of the hedged exposures covered by Aegon\u2019s hedging strategies that are booked under line
item \"Derivatives\" in the consolidated statement of financial position:
\n \n
2023
Accumulated amount
of fair value
Cash flow hedge /
adjustments on the
currency translation
Carrying amounts
hedged item
reserve
Change
in fair
value of
hedged
item for
ineffec-
tiveness
Continu-
Discon-
Balance sheet line
assess-
ing
tinued
Assets
Liabilities
Assets
Liabilities
item
ment
hedges
hedges
Fair value hedges
Trust pass-through
Corporate Debt Hedge Program
-
67
-
(13)
securities
3
n.a.
n.a.
Investment contracts
without discretionary
Offshore Liability Hedge Program
-
12
-
2
participating features
-
n.a.
n.a.
Synthetic Asset Fair value hedges
34
-
4
-
Investments
1
n.a.
n.a.
Cash flow hedges
Synethetic Asset Cash flow hedges
2,672
-
-
-
Investments
11
87
-
Life & Health Liability Investment
Risk Hedge Program
n.a.
n.a.
n.a.
n.a.
n.a.
5
(348)
232
Long Term Care (LTC) Liability
Hedge Program
n.a.
n.a.
n.a.
n.a.
n.a.
1
(15)
1,085
IMD Payout Hedge
n.a.
n.a.
n.a.
n.a.
n.a.
-
-
29
TRS (Vivendi) Hedge
n.a.
n.a.
n.a.
n.a.
n.a.
-
-
3
Net investment hedges
Investments in foreign operations
n.a.
n.a.
n.a.
n.a.
n.a.
-
(324)
-
1
n.a. in above table should be read as \u201cnot applicable\u201d.
\n \n
2022
Accumulated amount
of fair value
Cash flow hedge /
adjustments on the
currency translation
Carrying amounts
hedged item
reserve
Change
in fair
value of
hedged
item for
ineffec-
tiveness
Continu-
Discon-
Balance sheet line
assess-
ing
tinued
Assets
Liabilities
Assets
Liabilities
item
ment
hedges
hedges
Fair value hedges
Trust pass-through
Corporate Debt Hedge Program
-
72
-
(10)
securities
15
n.a.
n.a.
Investment contracts
without discretionary
Offshore Liability Hedge Program
-
12
-
2
participating features
(3)
n.a.
n.a.
Synthetic Asset Fair value hedges
34
-
3
-
Investments
(8)
n.a.
n.a.
Cash flow hedges
Synethetic Asset Cash flow hedges
3,127
n.a.
n.a.
n.a.
Investments
(1,667)
82
Life & Health Liability Investment
Risk Hedge Program
n.a.
n.a.
n.a.
n.a.
n.a.
(586)
(365)
393
Long Term Care (LTC) Liability
Hedge Program
n.a.
n.a.
n.a.
n.a.
n.a.
(129)
(17)
1,177
IMD Payout Hedge
n.a.
n.a.
n.a.
n.a.
n.a.
-
-
31
TRS (Vivendi) Hedge
4
Net investment hedges
Investments in foreign operations
n.a.
n.a.
n.a.
n.a.
n.a.
-
(371)
-
1
n.a. in above table should be read as \u201cnot applicable\u201d.
Potential sources of hedge ineffectiveness
Macro hedge on mortgage portfolio in the Netherlands
Aegon held a portfolio of long-term fixed rate mortgages and therefore was exposed to changes in fair value due to movements
in market interest rates. Aegon managed this risk exposure by entering into interest rate swaps.
Only the interest rate risk element was hedged and therefore other risks, such as credit risk, were managed but not hedged by
Aegon. The interest risk component was determined as the change in fair value of the long-term fixed rate mortgages arising
solely from changes in 3-month LIBOR. Such changes were usually the largest component of the overall change in fair value.
This strategy was designated as a fair value hedge and its effectiveness was assessed by comparing changes in the fair value
of the loans attributable to changes in the benchmark rate of interest with changes in the fair value of the interest rate swaps.
\u2022
Differences between the expected and actual volume of prepayments, as Aegon hedged to the expected repayment date
taking into account expected prepayments based on past experience;
\u2022
Difference in the discounting between the hedged item and the hedging instrument, as cash collateralized interest rate
swaps were discounted using Overnight Indexed Swaps (OIS) discount curves, which were not applied to the fixed rate
mortgages;
\u2022
Hedging derivatives with a non-zero fair value at the date of initial designation as a hedging instrument; and
\u2022
Counterparty credit risk which impacted the fair value of uncollateralized interest rate swaps but not the hedged items.
Aegon had not identified any other sources of hedge ineffectiveness in the period.
Aegon the Netherlands managed the interest rate risk arising from fixed rate mortgages by entering into interest rate swaps
on a monthly basis. The exposure from this portfolio frequently changed due to new loans originated, contractual repayments
and early prepayments made by customers in each period. As a result, Aegon the Netherlands adopted a dynamic hedging
strategy to hedge the exposure profile by closing and entering into new swap arrangements at each month-end. Aegon
the Netherlands used the portfolio fair value hedge of interest rate risk to recognize fair value changes related to changes
in interest rate risk in the mortgage portfolio, and therefore reduced the profit or loss volatility that would have otherwise arisen
from changes in fair value of the interest rate swaps alone. This approach was applicable until the completion of the transaction
with a.s.r. on July 4, 2023.
Corporate debt hedge
\u2022
If there is a mismatch between critical terms of hedging instruments and hedged items, changes in fair value may not be
offset. The qualitative hedge effectiveness test assures all critical terms align.
\u2022
Counterparty default: If the counterparty fails to fulfill the contract, the hedge would not be highly effective. All derivatives in
this program are collateralized or cleared, so impact from this credit risk will not dominate the hedge relationship.
Life & Health liability investment risk hedge
\u2022
Counterparty default: If the counterparty fails to fulfill the contract, the hedge would not be highly effective. All derivatives in
this program are collateralized or cleared, so impact from this credit risk will not dominate the hedge relationship.
\u2022
Expected future transactions fail to occur as projected: the hedging instrument (i.e. FSS) terms are already known and easily
valued. However, the hedged item consists of one or more forecasted asset purchases for which we are unable to project
exactly the dates, coupon rates, and other underlying terms. Given these unknown variables in the hedged item, for the period
in which the FSS remains in inventory and the forecasted transactions have not been completed, the hedged item portion of
this relationship will be setup assuming identical dates and rates as outlined in the hedging instrument.
\u2022
When the forecasted transaction (i.e. bond purchase) is completed and the terms of the underlying hedged item are known,
hedge ineffectiveness would possibly arise if the timing of the asset being purchased differs from the unwind date of the
swaps designated as the hedging instrument, or the coupon rate of the asset being purchased differs from the coupon rate
on the receive leg of the swap, or a combination of both.
Long Term Care (LTC) liability hedge
\u2022
The hedge ineffectiveness would possibly arise if the timing of the asset being purchased differs from the unwind date of the
swaps designated as the hedging instrument, or the coupon rate of the asset being purchased differs from the coupon rate
on the receive leg of the swap, or a combination of both.
Synthetic asset cash flow hedge
\u2022
Mismatch of critical terms: If critical terms do not match between the hedged item and the hedged instrument, hedge
ineffectiveness can arise.
\u2022
Counterparty default: If the counterparty fails to fulfill the contract, the hedge would not be highly effective. All derivatives in
this program are collateralized or cleared, so impact from this credit risk will not dominate the hedge relationship.
The following table contains information regarding the effectiveness of the hedging relationships designated by Aegon, as well
as the impacts on profit or loss and other comprehensive income that are booked under line item \"Results from financial
transactions\" (including the reclassified amount where applicable):
\n \n
2023
Amounts reclassified from
reserves to P&L as
Hedge
P&L line item that
hedged cash
Gains / (loss)
ineffectiveness
includes hedge
flows will no
hedged item
recognized in OCI
recognized in P&L
ineffectiveness
longer occur
affected P&L
Fair value hedges
Results from financial
Interest rate contracts
n.a.
(3)
transactions
n.a.
n.a.
Results from financial
Foreign exchange contracts
n.a.
-
transactions
n.a.
n.a.
Cash flow hedges
Results from financial
Interest rate contracts
-
-
transactions
-
-
Results from financial
Foreign exchange contracts
-
(2)
transactions
-
-
Net investment hedges
Results from financial
Foreign exchange - FX forward
-
-
transactions
-
-
1
n.a. in above table should be read as \u201cnot applicable\u201d.
\n \n
2022
Amounts reclassified from
reserves to P&L as
Hedge
P&L line item that
hedged cash
Gains / (loss)
ineffectiveness
includes hedge
flows will no
hedged item
recognized in OCI
recognized in P&L
ineffectiveness
longer occur
affected P&L
Fair value hedges
Results from financial
Interest rate contracts
n.a.
1
transactions
n.a.
n.a.
Results from financial
Foreign exchange contracts
n.a.
(4)
transactions
n.a.
n.a.
Cash flow hedges
Results from financial
Interest rate contracts
-
1
transactions
-
-
Results from financial
Foreign exchange contracts
-
2
transactions
-
-
Net investment hedges
Results from financial
Foreign exchange - FX forward
-
-
transactions
-
-
1
n.a. in above table should be read as \u201cnot applicable\u201d.
Aegon recognizes the separate line items: \"Changes in cash flow hedging reserve\" and \"Movement in foreign currency
translation and net foreign investment hedging reserves\" in the statement of comprehensive income related to hedges of net
positions gains and losses. Refer to note 25 Shareholders' equity for more details on these items.
Financial instruments designated and measured at FVPL
The following table shows reconciliation of nominal amount and fair value of credit derivatives that have been used to manage
the credit risk of financial instruments designated as FVPL:
\n \n
CDSs
Credit derivative disclosure by quality
Nominal amount
Fair value
On January 1, 2023
4,820
28
Increase/(Decrease) during the year
(778)
43
On December 31, 2023
4,043
71
\n \n
CDSs
Credit derivative disclosure by quality
Nominal amount
Fair value
On January 1, 2022
4,449
70
Increase/(Decrease) during the year
371
(42)
On December 31, 2022
4,820
28
", "dimensions": { "concept": "ifrs-full:DisclosureOfDetailedInformationAboutHedgingInstrumentsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f49487": { "value": "21 Investments in joint ventures and associates \n \n
Joint ventures
Associates
2023
2022
2023
2022
On January 1
1,430
1,715
165
1,289
Additions
49
30
2,765
40
Disposals
-
(81)
(12)
(8)
Share in net income
196
289
103
4
Share in changes in equity (note 25.6)
(2)
(33)
(9)
3
Impairment losses
-
-
(25)
(9)
Dividend
(211)
(79)
(81)
(58)
Net exchange difference
(32)
(28)
-
(1)
Transfers to disposal groups
-
(382)
-
(1,096)
On December 31
1,430
1,430
2,906
165
The disposal of joint ventures in 2022 relates to the divestment of Aegon's 50% stake in the Spanish insurance joint venture
with Liberbank to Unicaja Banco, see note 42 Companies and businesses acquired and divested.
The joint ventures and associates are accounted for using the equity method and are considered to be non-current. The
investments in joint ventures and associates include interest in insurance companies that are required to maintain a minimum
solvency margin based on local directives. Such restrictions can affect the ability of these joint ventures and associates
to transfer funds in the form of cash dividends, or repayment of loans or advances, and therefore, there can be no assurance
that these restrictions will not become a limitation in the future. See note 39 Commitments and contingencies for any
commitments and contingencies related to investments in joint ventures. There are no unrecognized shares of losses in joint
ventures and associates. The financial statements of the principal joint ventures and associates have the same reporting
date as the Group. See note 43 Group companies for a listing of the investments in joint ventures and associates and the
Group\u2019s percentage holding.Summarized financial information of associates
The summarized financial information of associates presented below is based on the Group\u2019s relative holding.
The following tables reflect the condensed statement of financial position and income statement of Aegon's material associate
a.s.r. at 100%. a.s.r. is a listed company in the Netherlands in which Aegon holds a stake of 29,98% as per December 31, 2023.
The income statement includes the a.s.r. results for the period July 4, 2023 to December 31, 2023.
\n \n
a.s.r.
2023
Summarized statement of financial position
Investments
92,177
Derivatives
12,907
Other assets
45,673
Total assets
150,758
Insurance liabilities
99,475
Borrowings and subordinated liabilities
8,386
Derivatives
10,132
Other liabilities
23,467
Total liabilities
141,460
Non-controlling interest
35
Other equity instruments
974
Total other equity components
1,008
Net assets
8,289
\n \n
a.s.r.
2023
Summarized statement of comprehensive income
Insurance revenues
4,944
Insurance service result
274
Profit or loss from continuing operations
450
Income tax expense or income
(103)
Post-tax profit or loss from continuing operations
347
Post-tax profit or loss from discontinued operations
-
Other comprehensive income - that may be recycled to profit or loss
17
Other comprehensive income - that will not be recycled to profit or loss
(58)
Total comprehensive income
306
Dividends received
68
Group share
29,98%
Group share of post-tax profit or loss
110
Group share of other comprehensive income
(12)
\n \n
a.s.r.
2023
Net assets of a.s.r. as presented above
8,289
Net assets of a.s.r., excluding goodwill, fair value adjustments and other equity transactions
8,180
Group share of net assets of a.s.r., excluding goodwill, fair value adjustments and other equity transactions
2,453
Fair value adjustments
47
Goodwill on acquisition
117
Carrying amount of investment in a.s.r.
2,618
The following tables includes associates that Aegon considered immaterial.
\n \n
Other Associates
2023
2022
Summarized statement of financial position
Current assets
309
105
Non-current assets
725
139
Total assets
1,034
244
Current liabilities
217
37
Non-current liabilities
17
45
Total current liabilities
235
82
Net assets
799
162
Summarized statement of comprehensive income
Post-tax profit or (loss)
(7)
(11)
Other comprehensive income
6
2
Total comprehensive income
(1)
(9)
Dividends received
11
28
Carrying amount
288
165
Investments in associates
The principal investments in associates are listed by geographical segment. The voting powers in these associates is equal
to the shareholdings, unless stated otherwise.
Holding
\u2022
ASR Nederland N.V., Utrecht (29.98%)
With respect to a.s.r., for a period of 5 years post closing. Aegon also has an exclusive right to nominate up to two members
of the Supervisory Board (if Aegon holds more than 20% of the shares it may nominate two members, if it holds 20% or less
but more than 10% of the shares it may nominate one member). In addition, Aegon has the right to designate its nominees for
the Audit and Risk Committee and the ESG Committee if certain conditions are met. Furthermore, in case the incumbent CEO
of a.s.r. does not serve the full term due to earlier resignation or dismissal, the appointment of the successor requires the
unanimous vote of all Supervisory Directors in office.
For as long as Aegon holds more than 20% of the shares, the affirmative vote of the non-independent Aegon nominee
is required for:
\u2022
significant changes to dividend policy (as per current stated a.s.r. policies);
\u2022
certain dilutive transactions (issuance of equity or debt instruments); and
\u2022
M&A transactions (acquisitions and divestments, joint ventures and long term co-operations) with a value exceeding
EUR 500 million.
Furthermore, for as long as Aegon holds more than 20% of the shares, the below needs the unanimous vote of all Supervisory
Directors in office and the affirmative vote of the non-independent Aegon nominee:
\u2022
material decisions on capital management, material reinsurance, and capital allocation / distribution, in each case to the
extent this would result in a material change to the characteristics of the risk profile of (the enterprise of) a.s.r. and other than
in the ordinary course of business.
Except for significant changes to the dividend policy, the same applies when Aegon holds 20% or less but more than 10%
of the shares.
Asset Management
\u2022
La Banque Postale Asset Management, Paris (France) (25%)
See note 21 Investments in joint ventures and associates for further details on these investments.", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f49488": { "value": "21 Investments in joint ventures and associates \n \n
Joint ventures
Associates
2023
2022
2023
2022
On January 1
1,430
1,715
165
1,289
Additions
49
30
2,765
40
Disposals
-
(81)
(12)
(8)
Share in net income
196
289
103
4
Share in changes in equity (note 25.6)
(2)
(33)
(9)
3
Impairment losses
-
-
(25)
(9)
Dividend
(211)
(79)
(81)
(58)
Net exchange difference
(32)
(28)
-
(1)
Transfers to disposal groups
-
(382)
-
(1,096)
On December 31
1,430
1,430
2,906
165
The disposal of joint ventures in 2022 relates to the divestment of Aegon's 50% stake in the Spanish insurance joint venture
with Liberbank to Unicaja Banco, see note 42 Companies and businesses acquired and divested.
The joint ventures and associates are accounted for using the equity method and are considered to be non-current. The
investments in joint ventures and associates include interest in insurance companies that are required to maintain a minimum
solvency margin based on local directives. Such restrictions can affect the ability of these joint ventures and associates
to transfer funds in the form of cash dividends, or repayment of loans or advances, and therefore, there can be no assurance
that these restrictions will not become a limitation in the future. See note 39 Commitments and contingencies for any
commitments and contingencies related to investments in joint ventures. There are no unrecognized shares of losses in joint
ventures and associates. The financial statements of the principal joint ventures and associates have the same reporting
date as the Group. See note 43 Group companies for a listing of the investments in joint ventures and associates and the
Group\u2019s percentage holding.
Summarized financial information of joint ventures
The summarized financial information presented in the following table presents the joint ventures on a 100% basis. Aegon
considers its investments in Santander Vida Seguros y Reaseguros S.A. (\"Santander Spain Life\") and Aegon Industrial Fund
Management Co.Ltd. (\"AIFMC\") as material joint ventures and are therefore presented separately.
\n \n
Santander Spain Life
AIFMC
Other Joint ventures
2023
2022
2023
2022
2023
2022
Summarized statement of financial position
Cash and cash equivalents
18
23
421
392
47
99
Other current assets
76
73
654
836
840
561
Total current assets
94
96
1,075
1,229
887
660
Non-current assets
1,056
1,068
-
200
6,234
5,325
Total assets
1,150
1,164
1,075
1,429
7,121
5,985
Other current liabilities
64
95
(149)
526
643
499
Total current liabilities
64
95
(149)
526
643
500
Non-current financial liabilities excluding trade payables and
other provisions
-
-
-
-
64
67
Other non-current liabilities
403
410
414
-
5,257
4,351
Total non-current financial liabilities
403
410
414
-
5,321
4,418
Total liabilities
467
506
265
526
5,964
4,918
Net assets
683
658
810
903
1,157
1,067
Summarized statement of comprehensive income
Revenue
482
265
478
644
2,586
2,267
Results from financial transactions
-
-
-
-
-
(2)
Depreciation and amortization
(32)
(30)
(5)
(4)
(27)
(28)
Interest income
4
1
10
9
117
103
Interest expense
-
-
-
-
(10)
(7)
Profit or loss
97
79
193
330
259
258
Income tax (expense) or income
(24)
(18)
(53)
(92)
(88)
(53)
Post-tax profit or (loss)
73
61
140
238
170
205
Other comprehensive income
9
(24)
-
-
32
(41)
Total comprehensive income
82
37
140
238
203
164
Dividends received
58
30
122
-
211
54
An overview of the summarized financial information of the carrying amount of the joint ventures is as follows:
\n \n
Santander Spain Life
AIFMC
Other Joint ventures
2023
2022
2023
2022
2023
2022
Net assets of joint venture as presented above
683
658
810
903
1,157
1,067
Net assets of joint venture excluding goodwill
603
578
809
902
1,030
972
Group share of net assets of joint venture, excluding goodwill
308
295
397
471
518
488
Goodwill on acquisition
80
80
1
1
128
95
Carrying amount
387
375
397
471
646
584
Aegon\u2019s group share of net assets of joint ventures, as presented in the table above, is less than Aegon\u2019s share of the net assets
as presented in the summarized financial information on a 100% basis, due to the inclusion of third parties in the joint ventures.
The following table includes the summarized financial information of the joint ventures based on the Group\u2019s relative holding.
\n \n
Santander Spain Life
AIFMC
Other Joint ventures
2023
2022
2023
2022
2023
2022
Post-tax profit or loss
37
31
69
116
90
105
Other comprehensive income
4
(12)
-
-
17
(21)
Total comprehensive income
42
19
69
116
107
84
Investments in associates
The principal investments in associates are listed by geographical segment. The voting powers in these associates is equal
to the shareholdings, unless stated otherwise.
Holding
\u2022
ASR Nederland N.V., Utrecht (29.98%)
With respect to a.s.r., for a period of 5 years post closing. Aegon also has an exclusive right to nominate up to two members
of the Supervisory Board (if Aegon holds more than 20% of the shares it may nominate two members, if it holds 20% or less
but more than 10% of the shares it may nominate one member). In addition, Aegon has the right to designate its nominees for
the Audit and Risk Committee and the ESG Committee if certain conditions are met. Furthermore, in case the incumbent CEO
of a.s.r. does not serve the full term due to earlier resignation or dismissal, the appointment of the successor requires the
unanimous vote of all Supervisory Directors in office.
For as long as Aegon holds more than 20% of the shares, the affirmative vote of the non-independent Aegon nominee
is required for:
\u2022
significant changes to dividend policy (as per current stated a.s.r. policies);
\u2022
certain dilutive transactions (issuance of equity or debt instruments); and
\u2022
M&A transactions (acquisitions and divestments, joint ventures and long term co-operations) with a value exceeding
EUR 500 million.
Furthermore, for as long as Aegon holds more than 20% of the shares, the below needs the unanimous vote of all Supervisory
Directors in office and the affirmative vote of the non-independent Aegon nominee:
\u2022
material decisions on capital management, material reinsurance, and capital allocation / distribution, in each case to the
extent this would result in a material change to the characteristics of the risk profile of (the enterprise of) a.s.r. and other than
in the ordinary course of business.
Except for significant changes to the dividend policy, the same applies when Aegon holds 20% or less but more than 10%
of the shares.
Asset Management
\u2022
La Banque Postale Asset Management, Paris (France) (25%)
See note 21 Investments in joint ventures and associates for further details on these investments.", "dimensions": { "concept": "ifrs-full:DisclosureOfJointVenturesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f50590": { "value": "22 Deferred expenses \n \n
2023
2022
Deferred transaction costs for investment management services
447
452
Current
20
29
Non-current
427
424
\n \n
Deferred
transaction costs
On January 1, 2023
452
Costs deferred during the year
29
Amortization through income statement
(21)
Net exchange differences
(14)
On December 31, 2023
447
On January 1, 2022
428
Costs deferred during the year
28
Amortization through income statement
(28)
Net exchange differences
25
On December 31, 2022
452
", "dimensions": { "concept": "agn:DisclosureOfDeferredExpensesExplanatoryTextBlock", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f50680": { "value": "23 Other assets and receivables \n \n
Note
2023
2022
Real estate held for own use and equipment
23.1
258
324
Receivables
23.2
3,567
7,857
Accrued income
23.3
736
814
Right-of-use assets
23.4
150
158
On December 31
4,712
9,153
23.1 Real estate held for own use and equipment
\n \n
Total real estate held for own use and equipment
2023
2022
Real estate held for own use
64
73
Equipment
194
251
On December 31
258
324
\n
\n
\n \n
Real estate held for own use
2023
2022
Cost
On January 1
73
185
Capitalized subsequent expenditure
1
1
Disposals
-
(32)
Unrealized gains/(losses) through equity
(2)
(1)
Depreciation through income statement
(2)
(4)
Impairment losses
(3)
-
Transfers to disposal groups
-
(76)
Net exchange differences
(2)
4
Other
-
(4)
On December 31
64
73
Gross carrying value
87
96
Accumulated depreciation and impairments
(23)
(23)
Net book value on December 31
64
73
Real estate held for own use:
Carrying amount under a historical cost model
70
72
% of real estate appraised in the current year
76%
7%
% of appraisals performed by independent external appraisers
100%
100%
General account real estate held for own use has not been pledged as security for liabilities, nor are there any restrictions
on title. Depreciation expenses are recorded in note 13 \"Other operating expenses\" in the income statement. The useful lives
of buildings range between 40 and 50 years.
\n \n
Equipment
2023
2022
Cost
On January 1
251
270
Additions
62
72
Acquisitions through business combinations
-
2
Disposals
(47)
(6)
Depreciation through income statement
(66)
(71)
Transfers to disposal groups
-
(27)
Net exchange differences
(6)
13
Other
-
(1)
On December 31
194
251
Gross carrying value
602
636
Accumulated depreciation and impairments
(408)
(386)
Net book value on December 31
194
251
None of the equipment is held for lease (2022: none). Equipment has not been pledged as security for liabilities, nor are there
any restrictions on title. Depreciation expenses have been recorded in note 13 \"Other operating expenses\" in the income
statement. Equipment is generally depreciated over a period of three to five years.
23.2 Receivables
\n \n
2023
2022
Loans to associates
8
8
Receivables from policyholders
137
142
Receivables from brokers and agents
239
256
Cash outstanding from assets sold
133
134
Trade receivables
178
881
Cash collateral
516
3,372
Income tax receivable
172
294
Other
2,194
2,899
Expected credit losses
(10)
(129)
On December 31
3,567
7,857
Current
3,564
7,843
Non-current
2
13
With the exception of receivables from reinsurers, the receivables balances presented above are mostly not externally rated.
The decrease in cash collateral at December 31, 2023 compared to December 31, 2022 is mainly due to the decrease in the
volume of derivative transactions as a result of the transaction with a.s.r.
The movements in the expected credit losses for receivables during the year were as follows:
\n \n
2023
2022
On January 1
(129)
(113)
Expected credit losses
(29)
(18)
Reversal of expected credit losses
-
2
Transfers to disposal groups
-
4
Other movements
148
(5)
On December 31
(10)
(129)
Other movements in 2023 reflect that ECL balances related to insurance and reinsurance receivables are presented as part
of insurance and reinsurance contracts.
23.3 Accrued income
\n \n
2023
2022
Accrued interest
736
813
Other
-
1
On December 31
736
814
Current
736
814
23.4 Right-of-use assets
\n \n
Real estate for
own use
Equipment
Other
Total
Net Book Value
On January 1, 2023
143
14
1
158
Additions
19
4
3
26
Disposals
(1)
-
-
(1)
Modification of lease contracts
2
-
-
2
Depreciation through income statement
(24)
(8)
(1)
(32)
On December 31, 2023
138
10
3
150
Gross carrying value
247
37
7
290
Accumulated depreciation
(109)
(27)
(3)
(140)
Net book value 2023
138
10
3
150
Net Book Value
On January 1, 2022
182
14
3
199
Additions
24
10
1
34
Disposals
(8)
-
-
(8)
Modification of lease contracts
3
-
-
3
Depreciation through income statement
(29)
(10)
(1)
(41)
Transfers to disposal groups
(28)
-
-
(28)
Net exchange differences
(2)
1
-
(2)
Other
2
-
-
2
On December 31, 2022
143
14
1
158
Gross carrying value
256
35
4
295
Accumulated depreciation
(113)
(21)
(3)
(138)
Net book value 2022
143
14
1
158
Right-of-use assets are mainly held by Aegon UK and Aegon Americas.
For information on the Lease liabilities and respective maturity analysis, please see note 35 Other liabilities and note
4 Financial risks, respectively.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f51041": { "value": "23.2 Receivables \n \n
2023
2022
Loans to associates
8
8
Receivables from policyholders
137
142
Receivables from brokers and agents
239
256
Cash outstanding from assets sold
133
134
Trade receivables
178
881
Cash collateral
516
3,372
Income tax receivable
172
294
Other
2,194
2,899
Expected credit losses
(10)
(129)
On December 31
3,567
7,857
Current
3,564
7,843
Non-current
2
13
With the exception of receivables from reinsurers, the receivables balances presented above are mostly not externally rated.
The decrease in cash collateral at December 31, 2023 compared to December 31, 2022 is mainly due to the decrease in the
volume of derivative transactions as a result of the transaction with a.s.r.
The movements in the expected credit losses for receivables during the year were as follows:
\n \n
2023
2022
On January 1
(129)
(113)
Expected credit losses
(29)
(18)
Reversal of expected credit losses
-
2
Transfers to disposal groups
-
4
Other movements
148
(5)
On December 31
(10)
(129)
Other movements in 2023 reflect that ECL balances related to insurance and reinsurance receivables are presented as part
of insurance and reinsurance contracts.", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f51248": { "value": "23.4 Right-of-use assets \n \n
Real estate for
own use
Equipment
Other
Total
Net Book Value
On January 1, 2023
143
14
1
158
Additions
19
4
3
26
Disposals
(1)
-
-
(1)
Modification of lease contracts
2
-
-
2
Depreciation through income statement
(24)
(8)
(1)
(32)
On December 31, 2023
138
10
3
150
Gross carrying value
247
37
7
290
Accumulated depreciation
(109)
(27)
(3)
(140)
Net book value 2023
138
10
3
150
Net Book Value
On January 1, 2022
182
14
3
199
Additions
24
10
1
34
Disposals
(8)
-
-
(8)
Modification of lease contracts
3
-
-
3
Depreciation through income statement
(29)
(10)
(1)
(41)
Transfers to disposal groups
(28)
-
-
(28)
Net exchange differences
(2)
1
-
(2)
Other
2
-
-
2
On December 31, 2022
143
14
1
158
Gross carrying value
256
35
4
295
Accumulated depreciation
(113)
(21)
(3)
(138)
Net book value 2022
143
14
1
158
Right-of-use assets are mainly held by Aegon UK and Aegon Americas.
For information on the Lease liabilities and respective maturity analysis, please see note 35 Other liabilities and note
4 Financial risks, respectively.", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f51249": { "value": "23.4 Right-of-use assets \n \n
Real estate for
own use
Equipment
Other
Total
Net Book Value
On January 1, 2023
143
14
1
158
Additions
19
4
3
26
Disposals
(1)
-
-
(1)
Modification of lease contracts
2
-
-
2
Depreciation through income statement
(24)
(8)
(1)
(32)
On December 31, 2023
138
10
3
150
Gross carrying value
247
37
7
290
Accumulated depreciation
(109)
(27)
(3)
(140)
Net book value 2023
138
10
3
150
Net Book Value
On January 1, 2022
182
14
3
199
Additions
24
10
1
34
Disposals
(8)
-
-
(8)
Modification of lease contracts
3
-
-
3
Depreciation through income statement
(29)
(10)
(1)
(41)
Transfers to disposal groups
(28)
-
-
(28)
Net exchange differences
(2)
1
-
(2)
Other
2
-
-
2
On December 31, 2022
143
14
1
158
Gross carrying value
256
35
4
295
Accumulated depreciation
(113)
(21)
(3)
(138)
Net book value 2022
143
14
1
158
Right-of-use assets are mainly held by Aegon UK and Aegon Americas.
For information on the Lease liabilities and respective maturity analysis, please see note 35 Other liabilities and note
4 Financial risks, respectively.", "dimensions": { "concept": "ifrs-full:DisclosureOfQuantitativeInformationAboutRightofuseAssetsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f51536": { "value": "24 Intangible assets \n \n
Future
servicing
Goodwill
rights
Software
Other
Total
Net book value
On January 1, 2023
316
59
21
25
420
Additions
-
122
41
3
166
Amortization through income statement
-
(11)
(8)
(2)
(21)
Business combinations, disposals and other changes
(18)
(38)
(5)
8
(54)
Net exchange differences
(6)
-
-
-
(7)
On December 31, 2023
291
131
48
33
504
Gross carrying value
411
298
71
56
835
Accumulated amortization, depreciation and impairment losses
(120)
(166)
(23)
(23)
(331)
Net book value 2023
291
131
48
33
504
\n \n
Net book value
On January 1, 2022
391
68
83
43
585
Additions
-
-
20
6
26
Amortization through income statement
-
(9)
(16)
(5)
(30)
Business combinations, disposals and other changes
11
(1)
(27)
12
(5)
Net exchange differences
10
1
(2)
-
9
Transfers to disposal groups
(97)
-
(37)
(32)
(165)
On December 31, 2022
316
59
21
25
420
Gross carrying value
487
344
85
46
963
Accumulated amortization, depreciation and impairment losses
(171)
(286)
(64)
(21)
(543)
Net book value 2022
316
59
21
25
420
Amortization and depreciation through income statement is included in Note 13 \"Other operating expenses\". None of the
intangible assets have titles that are restricted or have been pledged as security for liabilities.
With the exception of goodwill, all intangible assets within the Americas have a finite useful life and are amortized accordingly.
Future servicing rights are amortized over the term of the related insurance contracts, which can vary significantly depending
on the maturity of the acquired portfolio. Future servicing rights are amortized over a period of 10 to 30 years of which 12 years
remain at December 31, 2023 (2022: 12 years). Software is generally depreciated over an average period of 3 to 5 years
(no changes compared to 2022).", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f51537": { "value": "24 Intangible assets \n \n
Future
servicing
Goodwill
rights
Software
Other
Total
Net book value
On January 1, 2023
316
59
21
25
420
Additions
-
122
41
3
166
Amortization through income statement
-
(11)
(8)
(2)
(21)
Business combinations, disposals and other changes
(18)
(38)
(5)
8
(54)
Net exchange differences
(6)
-
-
-
(7)
On December 31, 2023
291
131
48
33
504
Gross carrying value
411
298
71
56
835
Accumulated amortization, depreciation and impairment losses
(120)
(166)
(23)
(23)
(331)
Net book value 2023
291
131
48
33
504
\n \n
Net book value
On January 1, 2022
391
68
83
43
585
Additions
-
-
20
6
26
Amortization through income statement
-
(9)
(16)
(5)
(30)
Business combinations, disposals and other changes
11
(1)
(27)
12
(5)
Net exchange differences
10
1
(2)
-
9
Transfers to disposal groups
(97)
-
(37)
(32)
(165)
On December 31, 2022
316
59
21
25
420
Gross carrying value
487
344
85
46
963
Accumulated amortization, depreciation and impairment losses
(171)
(286)
(64)
(21)
(543)
Net book value 2022
316
59
21
25
420
Amortization and depreciation through income statement is included in Note 13 \"Other operating expenses\". None of the
intangible assets have titles that are restricted or have been pledged as security for liabilities.
With the exception of goodwill, all intangible assets within the Americas have a finite useful life and are amortized accordingly.
Future servicing rights are amortized over the term of the related insurance contracts, which can vary significantly depending
on the maturity of the acquired portfolio. Future servicing rights are amortized over a period of 10 to 30 years of which 12 years
remain at December 31, 2023 (2022: 12 years). Software is generally depreciated over an average period of 3 to 5 years
(no changes compared to 2022).
Goodwill
The goodwill balance has been allocated across the cash-generating units which are expected to benefit from the synergies
inherent in the goodwill. Goodwill is tested for impairment both annually and when there are specific indicators of a potential
impairment. The recoverable amount is the higher of the value in use and fair value less costs of disposal for a cash-generating
unit. The operating assumptions used in all the calculations are best estimate assumptions and based on historical data
where available.
The economic assumptions used in all the calculations are based on observable market data and projections of future trends.
All the cash-generating units tested showed that the recoverable amount was higher than their carrying values, including
goodwill. A reasonably possible change in any key assumption is not expected to cause the carrying value of the cash-
generating units to exceed its recoverable amount.
A summary of the cash-generating units to which the goodwill is allocated is as follows:
\n \n
2023
2022
Americas
201
208
United Kingdom
56
54
International
-
18
Asset Management
34
35
On December 31
291
316
Within the Americas, Transamerica's goodwill is allocated to groups of cash-generating units including variable annuities,
fixed annuities and the retirement plans cash-generating unit. Transamerica uses the value in use concept to determine
the recoverable amount and it is calculated annually in the fourth quarter. Transamerica reviewed the recoverable amount
of the retirement plan cash-generating units under the Economic Available Capital (EAC) approach. This approach measures
the difference between the market value of assets assigned to a block of business and the market value of liabilities. The
EAC is reflective of market conditions where a pre-tax benchmark discount rate ranged from approximately 5.53% to 4.63%
from the one month to 30-year tenors. Transamerica reviewed the recoverable amount of the annuities cash-generating
units under the Contractual Service Margin (CSM) approach. The CSM is a component of the asset or liability for the group
of insurance contracts that represents the unearned profit the entity will recognize as it provides services in the future. Based
on the value in use tests, Transamerica\u2019s goodwill for the group of annuities cash-generating units (2023: EUR 129 million;
2022: EUR 133 million) remains unchanged from prior period except for the impact of currency translation adjustments.
Transamerica\u2019s goodwill for the retirement plans cash-generating unit (2023: EUR 72 million; 2022: EUR 75 million) remains
unchanged from prior period except for the impact of currency translation adjustments.
In the UK, the cash-generating unit for the goodwill impairment assessment is Aegon UK. The value in use of Scottish
Equitable plc is the most material part of the Aegon UK value in use calculation The value in use of SE plc was determined
using SE plc\u2019s Solvency II own funds value with adjustments for contract boundaries, and risk margin. An allowance has also
been made for the present value of profits from expected new business in the next 3 years. A key variable is the present
value of profits from expected new business in the next 3 years, which if this does not arise would reduce the value in use
by EUR 79 million, however there would still be over EUR 1,385 million headroom.
Future servicing rights
The additions in Future servicing rights reflect the investment mandates received by Aegon Asset Management following the
closure of the transaction with a.s.r.", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f51842": { "value": "Goodwill
The goodwill balance has been allocated across the cash-generating units which are expected to benefit from the synergies
inherent in the goodwill. Goodwill is tested for impairment both annually and when there are specific indicators of a potential
impairment. The recoverable amount is the higher of the value in use and fair value less costs of disposal for a cash-generating
unit. The operating assumptions used in all the calculations are best estimate assumptions and based on historical data
where available.
The economic assumptions used in all the calculations are based on observable market data and projections of future trends.
All the cash-generating units tested showed that the recoverable amount was higher than their carrying values, including
goodwill. A reasonably possible change in any key assumption is not expected to cause the carrying value of the cash-
generating units to exceed its recoverable amount.
A summary of the cash-generating units to which the goodwill is allocated is as follows:
\n \n
2023
2022
Americas
201
208
United Kingdom
56
54
International
-
18
Asset Management
34
35
On December 31
291
316
Within the Americas, Transamerica's goodwill is allocated to groups of cash-generating units including variable annuities,
fixed annuities and the retirement plans cash-generating unit. Transamerica uses the value in use concept to determine
the recoverable amount and it is calculated annually in the fourth quarter. Transamerica reviewed the recoverable amount
of the retirement plan cash-generating units under the Economic Available Capital (EAC) approach. This approach measures
the difference between the market value of assets assigned to a block of business and the market value of liabilities. The
EAC is reflective of market conditions where a pre-tax benchmark discount rate ranged from approximately 5.53% to 4.63%
from the one month to 30-year tenors. Transamerica reviewed the recoverable amount of the annuities cash-generating
units under the Contractual Service Margin (CSM) approach. The CSM is a component of the asset or liability for the group
of insurance contracts that represents the unearned profit the entity will recognize as it provides services in the future. Based
on the value in use tests, Transamerica\u2019s goodwill for the group of annuities cash-generating units (2023: EUR 129 million;
2022: EUR 133 million) remains unchanged from prior period except for the impact of currency translation adjustments.
Transamerica\u2019s goodwill for the retirement plans cash-generating unit (2023: EUR 72 million; 2022: EUR 75 million) remains
unchanged from prior period except for the impact of currency translation adjustments.
In the UK, the cash-generating unit for the goodwill impairment assessment is Aegon UK. The value in use of Scottish
Equitable plc is the most material part of the Aegon UK value in use calculation The value in use of SE plc was determined
using SE plc\u2019s Solvency II own funds value with adjustments for contract boundaries, and risk margin. An allowance has also
been made for the present value of profits from expected new business in the next 3 years. A key variable is the present
value of profits from expected new business in the next 3 years, which if this does not arise would reduce the value in use
by EUR 79 million, however there would still be over EUR 1,385 million headroom.
Future servicing rights
The additions in Future servicing rights reflect the investment mandates received by Aegon Asset Management following the
closure of the transaction with a.s.r.", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f51946": { "value": "25 Shareholders\u2019 equity
Issued share capital and reserves attributable to shareholders of Aegon Ltd.
\n \n
Note
2023
2022
Share capital \u2013 par value
25.1
265
319
Share premium
25.2
6,853
6,853
Total share capital
7,118
7,172
Retained earnings
5,099
7,770
Treasury shares
25.3
(346)
(668)
Total retained earnings
4,753
7,103
Revaluation reserves
1)
25.4
(3,770)
(4,563)
Remeasurement of defined benefit plans
2)
25.5
(1,006)
(1,565)
Other reserves
3)
25.6
379
669
Total shareholders' equity
7,475
8,815
1
Included in the 2022 Revaluation reserves is an amount of EUR (31) million relating to Aegon the Netherlands classification as discontinued operations, refer to
note 45 Held for sale and discontinued operations
2
Included in the 2022 Remeasurement of defined benefit plans is an amount of EUR (675) million relating to Aegon the Netherlands classification as discontinued
operations, refer to note 45 Held for sale and discontinued operations
3
Included in the 2022 Other reserves is an amount of EUR 15 million relating to Aegon the Netherlands classification as discontinued operations, refer to note 45
Held for sale and discontinued operations
\n \n
2023
2022
Number of shares
Number of shares
Share capital transactions relating to common shares
(thousands)
(thousands)
Transactions in 2023:
Cancellation of shares
(451,140)
Transactions in 2022:
Final dividend 2021
1)
(18,676)
Share buyback program (final dividend 2021)
24,364
Interim dividend 2022
1)
(21,365)
Share buyback program (interim dividend 2022)
29,833
1
Dividend distribution paid from treasury shares (note 25.3)
In 2023, Aegon cancelled a total of 294,703,317 common shares and 156,436,840 common shares B. The purpose of the
share cancellation is to reduce the number of threasury shares that are not used to cover obligations arising from share-based
incentive plans or other obligations.
25.1 Share capital \u2013 par value
\n \n
2023
2022
Common shares
218
253
Common shares B
47
66
On December 31
265
319
\n \n
Common shares
2023
2022
Authorized share capital
480
720
Number of authorized shares (in million)
4,000
6,000
Par value in cents per share
12
12
\n \n
Common shares B
2023
2022
Authorized share capital
240
360
Number of authorized shares (in million)
2,000
3,000
Par value in cents per share
12
12
\n \n
Common shares
Common shares B
Number of shares
Number of shares
(thousands)
Total amount
(thousands)
Total amount
On December 31, 2021
2,106,313
253
568,839
68
Shares withdrawn
(10,665)
(1)
(22,643)
(3)
Dividend
13,782
2
-
-
On December 31, 2022
2,109,430
253
546,196
66
Shares withdrawn
(294,703)
(35)
(156,437)
(19)
Dividend
-
-
-
-
On December 31, 2023
1,814,727
218
389,759
47
The withdrawal of common shares was executed in two transactions during 2023. In July 2023, 79,703,317 common shares
and 43,817,400 common shares B; while in December 2023, 215,000,000 common shares and 112,619,440 common shares
B were cancelled.
The common shares and common shares B withdrawn in 2022 are the result of the cancellation of 10,664,951 and 22,643,360
shares, respectively, following the repurchase by the Company in connection with the share buyback program.
The table below represents weighted average number of common shares including treasury shares attributable to Aegon Ltd.:
\n \n
Weighted average number of
Weighted average number of
common shares (thousands)
common shares B (thousands)
2022
2,107,315
559,906
2023
2,067,119
523,149
All issued common shares and common shares B each have a nominal value of EUR 0.12 and are fully paid up. The Board
is authorized, subject to certain restrictions of Bermuda law and the Bye-Laws, to repurchase Aegon Ltd. shares.
Vereniging Aegon, based in The Hague, the Netherlands, holds all the issued and outstanding common shares B.
For detailed information on the transaction between Aegon Ltd. and Vereniging Aegon, see note 44 Related party transactions
in the consolidated financial statements.
25.2 Share premium
\n \n
2023
2022
On January 1
6,853
7,033
Share dividend
-
(180)
On December 31
6,853
6,853
Share premium relating to:
- Common shares
5,200
5,200
- Common shares B
1,653
1,653
Total share premium
6,853
6,853
The share premium account reflects the balance of paid-in amounts above par value at issuance of new shares less the
amounts charged for share dividends.
25.3 Treasury shares
On the reporting date, Aegon Ltd. held 72,319,889 (2022: 145,821,347) of its own common shares and 7,945,440 (2022:
51,762,840) own common shares B with a par value of EUR 0.12 each.
In 2023, on July 6, Aegon announced the beginning of a EUR 1.5 billion share buyback program. This follows the completion
of the combination of its Dutch pension, life and non-life insurance, banking, and mortgage origination activities with a.s.r.
on July 4, 2023. The share buyback program is aimed to be completed on or before June 30, 2024, barring unforeseen
circumstances. Aegon has engaged third parties to execute the buyback transactions on its behalf. The common shares will
be repurchased at a maximum of the average of the daily volume-weighted average prices during the repurchase period.
On June 2, 2023, Aegon completed its share buyback program, as announced on February 9, 2023, aimed at returning
EUR 200 million of surplus cash capital to shareholders. Between February 10, 2023 and June 2, 2023, a total of 46,797,567
common shares were repurchased at an average price of EUR 4.2737 per share.
Movements in the number of treasury common shares held by Aegon Ltd. were as follows:
\n \n
2023
2022
Number of shares
Number of shares
(thousands)
Amount
(thousands)
Amount
On January 1
145,821
662
70,958
262
Transactions in 2023:
Purchase: 1 transaction, average price EUR 5.00
8,516
43
Sale: 2 transactions, average price EUR 4.46
(4,924)
(22)
Purchase: 1 transaction, average price EUR 4.27
46,798
200
Sale: 1 transaction, average price EUR 4.46
(69)
-
Share withdrawn: 1 transaction, average price EUR 4.59
(79,703)
(366)
Purchase: 2 transactions, average price EUR 4.77
170,881
815
Share Withdrawn: 1 transaction, average price EUR 4.59
(215,000)
(986)
Transactions in 2022:
Purchase: 1 transaction, average price EUR 4.92
10,158
50
Sale: 3 transactions, average price EUR 2.46
(4,708)
(12)
Sale: 1 transaction, average price EUR 3.12
(18,676)
(58)
Purchase: 1 transaction, average price EUR 4.38
24,364
107
Share withdrawn: 1 transaction, average price EUR 3.70
(10,665)
(39)
Sale: 1 transaction, average price EUR 3.91
(21,365)
(84)
Purchase: 1 transaction, average price EUR 4.49
29,833
134
Purchase: 3 transactions, average price EUR 4.58
65,921
302
On December 31
72,320
346
145,821
662
Movements in the number of treasury common shares B held by Aegon Ltd. were as follows:
\n \n
2023
2022
Number of shares
Number of shares
(thousands)
Amount
(thousands)
Amount
On January 1
51,763
6
30,589
3
Transactions in 2023:
Share withdrawn: 1 transaction, average price EUR 0.11
(43,817)
(5)
Purchase: 1 transaction, average price EUR 0.13
112,619
15
Share withdrawn: 1 transaction, average price EUR 0.13
(112,619)
(15)
Transactions in 2022:
Share withdrawn: 1 transaction, average price EUR 0.10
(22,643)
(2)
Purchase: 1 transaction, average price EUR 0.12
43,817
5
On December 31
7,945
1
51,763
6
\n \n
Weighted average number of treasury
shares, including treasury shares held
Weighted average number of treasury
by subsidiaries (thousands)
shares B (thousands)
2022
97,807
23,696
2023
188,403
33,035
25.4 Revaluation reserves
\n \n
Investments
measured at
Real estate
Cash flow
fair value
held for own
hedging
Insurance
Reinsurance
through OCI
use
reserve
contracts
contracts held
Total
On January 1, 2023
(5,251)
15
1,024
2,215
(2,566)
(4,563)
Gross revaluation
1,552
(2)
(62)
(1,626)
349
211
Net (gains) / losses transferred to
income statement
706
-
(130)
-
-
577
Foreign currency translation
differences
138
-
(31)
(47)
82
142
Tax effect
(487)
-
42
397
(126)
(174)
Disposal of group assets
42
(3)
-
-
-
38
On December 31, 2023
(3,300)
9
842
939
(2,261)
(3,770)
On January 1, 2022
6,810
32
1,100
(11,291)
768
(2,580)
Gross revaluation
(16,743)
(1)
(66)
18,680
(4,672)
(2,803)
Net (gains) / losses transferred to
income statement
541
-
(126)
-
-
415
Foreign currency translation
differences
588
-
74
(931)
95
(174)
Tax effect
3,499
-
42
(4,211)
1,243
574
Disposal of group assets
46
(16)
-
(31)
-
(2)
Other
7
-
-
-
-
7
On December 31, 2022
(5,251)
15
1,024
2,215
(2,566)
(4,563)
The revaluation accounts for both investments measured at FVOCI and for real estate held for own use include unrealized gains
and losses on these investments, net of tax. Upon sale, the amounts realized are recognized in the income statement (for FVOCI
investments with recycling) or transferred to retained earnings (for real estate held for own use). The revaluation reserve also
includes the loss allowance recognized for financial assets measured at FVOCI.
The closing balances of the revaluation reserve for investments measured at FVOCI relate to the following instruments:
\n \n
2023
2022
Shares
2
2
Debt securities
(3,297)
(5,249)
Money market and other short-term investments
(5)
(5)
Revaluation reserve for investments measured at FVOCI
(3,300)
(5,251)
The cash flow hedging reserve includes (un)realized gains and losses on the effective portions of hedging instruments, net
of tax. The amounts are recognized in the income statement at the moment of realization of the hedged position to offset the
gain or loss from the hedged cash flow. No amounts have been released from equity to be included in the initial measurement
of non-financial assets or liabilities.
25.5 Remeasurement of defined benefit plans
\n \n
2023
2022
On January 1
(1,565)
(2,199)
Remeasurements of defined benefit plans
(110)
904
Tax effect
17
(250)
Net exchange differences
14
(20)
Disposal of a business
638
-
Total remeasurement of defined benefit plans
(1,006)
(1,565)
25.6 Other reserves
\n \n
Net foreign
Equity movements
Foreign currency
investment hedging
of joint ventures
translation reserve
reserve
and associates
Total
On January 1, 2023
1,108
(371)
(68)
669
Movement in foreign currency translation and net
foreign investment hedging reserves
(290)
54
-
(236)
Disposal of a business
(29)
-
(15)
(45)
Tax effect
10
(6)
-
3
Equity movements of joint ventures
-
-
(2)
(2)
Equity movements of associates
-
-
(9)
(9)
On December 31, 2023
798
(324)
(95)
379
On January 1, 2022
596
(338)
-
258
Movement in foreign currency translation and net
foreign investment hedging reserves
436
(116)
(2)
318
Disposal of a business
104
67
(36)
135
Tax effect
(28)
16
-
(12)
Equity movements of joint ventures
-
-
(33)
(33)
Equity movements of associates
-
-
3
3
On December 31, 2022
1,108
(371)
(68)
669
The foreign currency translation reserve includes the currency results from investments in non-euro denominated subsidiaries.
The amounts are released to the income statement upon the sale of the subsidiary.
The net foreign investment hedging reserve is made up of gains and losses on the effective portions of hedging instruments,
net of tax. The amounts are recognized in the income statement at the moment of realization of the hedged position to offset
the gain or loss from the net foreign investment.
The equity movements of joint ventures and associates reflect Aegon's share of changes recognized directly in the joint
venture's and associate\u2019s equity.
26 Other equity instruments
\n \n
Perpetual
Junior
Perpetual
contingent
perpetual
cumulative
Share options
convertible
capital
subordinated
and incentive
securities
securities
bonds
plans
1)
Total
On January 1, 2023
500
923
454
66
1,943
Shares granted / Share options cost incurred
-
-
-
33
33
Shares vested / Share options forfeited
-
-
-
(25)
(25)
On December 31, 2023
500
923
454
74
1,951
On January 1, 2022
500
1,352
454
57
2,363
Shares granted / Share options cost incurred
-
-
-
32
32
Shares vested / Share options forfeited
-
-
-
(23)
(23)
Securities redeemed
-
(429)
-
-
(429)
On December 31, 2022
500
923
454
66
1,943
1
Incentive plans include the shares granted to personnel which are not yet vested.
\n \n
Year of
Perpetual contingent convertible securities
Coupon rate
Coupon date
next call
2023
2022
Semi-annually,
EUR 500 million
5.625%
1)
April 15
2029
500
500
On December 31
500
500
1
The coupon is fixed at 5.625% until the first call date and reset thereafter to a 5 year mid swap plus a margin of 5.207%.
The securities have been issued at par and have subordination provisions, rank junior to all other liabilities and senior
to shareholders' equity only. The conditions of the securities contain certain provisions for coupon payment deferral. Although
the securities have no stated maturity, Aegon has the right to call the securities for redemption at par for the first time between
April 15, 2029 and October 15, 2029 and every reset date (October 15, with five year intervals) thereafter.
\n \n
Year of next
Junior perpetual capital securities
Coupon rate
Coupon date
call
2023
2022
floating CMS
Quarterly, July
USD 500 million
rate
1)
15
2024
402
402
floating DSL
Quarterly, July
EUR 950 million
3)
rate
2)
15
2024
521
521
On December 31
923
923
1
The coupon of the USD 500 million junior perpetual capital securities is reset each quarter based on the aggregate of (i) the 10-year USD SOFR ICE swap rate, (ii)
a spread adjustment of 29 basis points and (iii) a credit spread of ten basis, with a maximum of 8.5%.
2
The coupon of the EUR 950 million junior perpetual capital securities is reset each quarter based on the then prevailing ten-year Dutch government bond yield
plus a spread of ten basis points, with a maximum of 8%.
3
On April 5, 2022 Aegon completed a tender offer buying back EUR 429 million of perpetual capital securities, part of the EUR 950 million notes issued in 2004.
The interest rate exposure on some of these securities has been swapped to a SOFR or EURIBOR based yield.
The securities have been issued at par. The securities have subordination provisions, rank junior to all other liabilities and senior
to shareholders' equity only. The conditions of the securities contain certain provisions for coupon payment deferral and,
in situations under Aegon's control, mandatory coupon payment events. Although the securities have no stated maturity, Aegon
has the right to call the securities for redemption at par for the first time on the coupon date in the years as specified, or on any
coupon payment date thereafter.
\n \n
Year of
Perpetual cumulative subordinated bonds
Coupon rate
Coupon date
next call
2023
2022
Annually, June
EUR 114 million
1.506%
1),
4)
8
2025
114
114
Annually,
EUR 136 million
1.425%
2),
4)
October 14
2028
136
136
Annually, March
EUR 203 million
0.496%
3),
4)
4
2031
203
203
On December 31
454
454
1
The coupon of the EUR 114 million bonds was originally set at 8% until June 8, 2005. Subsequently, the coupon has been reset at 4.156% until June 8, 2015 and
1.506% until June 8, 2025.
2
The coupon of the EUR 136 million bonds was originally set at 7.25% until October 14, 2008. Subsequently, the coupon has been reset at 5.185% until October
14, 2018 and 1.425% until October 14, 2028.
3
The coupon of the EUR 203 million bonds was originally set at 7.125% until March 4, 2011. Subsequently, the coupon has been reset at 4.26% until March 4,
2021 and 0.496% until March 4, 2031.
4
If the bonds are not called on the respective call dates and after consecutive period of ten years, the coupons will be reset at the then prevailing effective yield of
ten-year Dutch government securities plus a spread of 85 basis points.
These bonds have the same subordination provisions as dated subordinated debt. In addition, the conditions of the bonds
contain provisions for coupon payment deferral. Although the bonds have no stated maturity, Aegon has the right to call the
bonds for redemption at par for the first time on the coupon date in the year of next call.", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f52142": { "value": "25.1 Share capital \u2013 par value \n \n
2023
2022
Common shares
218
253
Common shares B
47
66
On December 31
265
319
\n \n
Common shares
2023
2022
Authorized share capital
480
720
Number of authorized shares (in million)
4,000
6,000
Par value in cents per share
12
12
\n \n
Common shares B
2023
2022
Authorized share capital
240
360
Number of authorized shares (in million)
2,000
3,000
Par value in cents per share
12
12
\n \n
Common shares
Common shares B
Number of shares
Number of shares
(thousands)
Total amount
(thousands)
Total amount
On December 31, 2021
2,106,313
253
568,839
68
Shares withdrawn
(10,665)
(1)
(22,643)
(3)
Dividend
13,782
2
-
-
On December 31, 2022
2,109,430
253
546,196
66
Shares withdrawn
(294,703)
(35)
(156,437)
(19)
Dividend
-
-
-
-
On December 31, 2023
1,814,727
218
389,759
47
The withdrawal of common shares was executed in two transactions during 2023. In July 2023, 79,703,317 common shares
and 43,817,400 common shares B; while in December 2023, 215,000,000 common shares and 112,619,440 common shares
B were cancelled.
The common shares and common shares B withdrawn in 2022 are the result of the cancellation of 10,664,951 and 22,643,360
shares, respectively, following the repurchase by the Company in connection with the share buyback program.
The table below represents weighted average number of common shares including treasury shares attributable to Aegon Ltd.:
\n \n
Weighted average number of
Weighted average number of
common shares (thousands)
common shares B (thousands)
2022
2,107,315
559,906
2023
2,067,119
523,149
All issued common shares and common shares B each have a nominal value of EUR 0.12 and are fully paid up. The Board
is authorized, subject to certain restrictions of Bermuda law and the Bye-Laws, to repurchase Aegon Ltd. shares.
Vereniging Aegon, based in The Hague, the Netherlands, holds all the issued and outstanding common shares B.
For detailed information on the transaction between Aegon Ltd. and Vereniging Aegon, see note 44 Related party transactions
in the consolidated financial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f52453": { "value": "25.3 Treasury shares
On the reporting date, Aegon Ltd. held 72,319,889 (2022: 145,821,347) of its own common shares and 7,945,440 (2022:
51,762,840) own common shares B with a par value of EUR 0.12 each.
In 2023, on July 6, Aegon announced the beginning of a EUR 1.5 billion share buyback program. This follows the completion
of the combination of its Dutch pension, life and non-life insurance, banking, and mortgage origination activities with a.s.r.
on July 4, 2023. The share buyback program is aimed to be completed on or before June 30, 2024, barring unforeseen
circumstances. Aegon has engaged third parties to execute the buyback transactions on its behalf. The common shares will
be repurchased at a maximum of the average of the daily volume-weighted average prices during the repurchase period.
On June 2, 2023, Aegon completed its share buyback program, as announced on February 9, 2023, aimed at returning
EUR 200 million of surplus cash capital to shareholders. Between February 10, 2023 and June 2, 2023, a total of 46,797,567
common shares were repurchased at an average price of EUR 4.2737 per share.
Movements in the number of treasury common shares held by Aegon Ltd. were as follows:
\n \n
2023
2022
Number of shares
Number of shares
(thousands)
Amount
(thousands)
Amount
On January 1
145,821
662
70,958
262
Transactions in 2023:
Purchase: 1 transaction, average price EUR 5.00
8,516
43
Sale: 2 transactions, average price EUR 4.46
(4,924)
(22)
Purchase: 1 transaction, average price EUR 4.27
46,798
200
Sale: 1 transaction, average price EUR 4.46
(69)
-
Share withdrawn: 1 transaction, average price EUR 4.59
(79,703)
(366)
Purchase: 2 transactions, average price EUR 4.77
170,881
815
Share Withdrawn: 1 transaction, average price EUR 4.59
(215,000)
(986)
Transactions in 2022:
Purchase: 1 transaction, average price EUR 4.92
10,158
50
Sale: 3 transactions, average price EUR 2.46
(4,708)
(12)
Sale: 1 transaction, average price EUR 3.12
(18,676)
(58)
Purchase: 1 transaction, average price EUR 4.38
24,364
107
Share withdrawn: 1 transaction, average price EUR 3.70
(10,665)
(39)
Sale: 1 transaction, average price EUR 3.91
(21,365)
(84)
Purchase: 1 transaction, average price EUR 4.49
29,833
134
Purchase: 3 transactions, average price EUR 4.58
65,921
302
On December 31
72,320
346
145,821
662
Movements in the number of treasury common shares B held by Aegon Ltd. were as follows:
\n \n
2023
2022
Number of shares
Number of shares
(thousands)
Amount
(thousands)
Amount
On January 1
51,763
6
30,589
3
Transactions in 2023:
Share withdrawn: 1 transaction, average price EUR 0.11
(43,817)
(5)
Purchase: 1 transaction, average price EUR 0.13
112,619
15
Share withdrawn: 1 transaction, average price EUR 0.13
(112,619)
(15)
Transactions in 2022:
Share withdrawn: 1 transaction, average price EUR 0.10
(22,643)
(2)
Purchase: 1 transaction, average price EUR 0.12
43,817
5
On December 31
7,945
1
51,763
6
\n \n
Weighted average number of treasury
shares, including treasury shares held
Weighted average number of treasury
by subsidiaries (thousands)
shares B (thousands)
2022
97,807
23,696
2023
188,403
33,035
", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f52844": { "value": "25.4 Revaluation reserves \n \n
Investments
measured at
Real estate
Cash flow
fair value
held for own
hedging
Insurance
Reinsurance
through OCI
use
reserve
contracts
contracts held
Total
On January 1, 2023
(5,251)
15
1,024
2,215
(2,566)
(4,563)
Gross revaluation
1,552
(2)
(62)
(1,626)
349
211
Net (gains) / losses transferred to
income statement
706
-
(130)
-
-
577
Foreign currency translation
differences
138
-
(31)
(47)
82
142
Tax effect
(487)
-
42
397
(126)
(174)
Disposal of group assets
42
(3)
-
-
-
38
On December 31, 2023
(3,300)
9
842
939
(2,261)
(3,770)
On January 1, 2022
6,810
32
1,100
(11,291)
768
(2,580)
Gross revaluation
(16,743)
(1)
(66)
18,680
(4,672)
(2,803)
Net (gains) / losses transferred to
income statement
541
-
(126)
-
-
415
Foreign currency translation
differences
588
-
74
(931)
95
(174)
Tax effect
3,499
-
42
(4,211)
1,243
574
Disposal of group assets
46
(16)
-
(31)
-
(2)
Other
7
-
-
-
-
7
On December 31, 2022
(5,251)
15
1,024
2,215
(2,566)
(4,563)
The revaluation accounts for both investments measured at FVOCI and for real estate held for own use include unrealized gains
and losses on these investments, net of tax. Upon sale, the amounts realized are recognized in the income statement (for FVOCI
investments with recycling) or transferred to retained earnings (for real estate held for own use). The revaluation reserve also
includes the loss allowance recognized for financial assets measured at FVOCI.
The closing balances of the revaluation reserve for investments measured at FVOCI relate to the following instruments:
\n \n
2023
2022
Shares
2
2
Debt securities
(3,297)
(5,249)
Money market and other short-term investments
(5)
(5)
Revaluation reserve for investments measured at FVOCI
(3,300)
(5,251)
The cash flow hedging reserve includes (un)realized gains and losses on the effective portions of hedging instruments, net
of tax. The amounts are recognized in the income statement at the moment of realization of the hedged position to offset the
gain or loss from the hedged cash flow. No amounts have been released from equity to be included in the initial measurement
of non-financial assets or liabilities.
25.5 Remeasurement of defined benefit plans
\n \n
2023
2022
On January 1
(1,565)
(2,199)
Remeasurements of defined benefit plans
(110)
904
Tax effect
17
(250)
Net exchange differences
14
(20)
Disposal of a business
638
-
Total remeasurement of defined benefit plans
(1,006)
(1,565)
25.6 Other reserves
\n \n
Net foreign
Equity movements
Foreign currency
investment hedging
of joint ventures
translation reserve
reserve
and associates
Total
On January 1, 2023
1,108
(371)
(68)
669
Movement in foreign currency translation and net
foreign investment hedging reserves
(290)
54
-
(236)
Disposal of a business
(29)
-
(15)
(45)
Tax effect
10
(6)
-
3
Equity movements of joint ventures
-
-
(2)
(2)
Equity movements of associates
-
-
(9)
(9)
On December 31, 2023
798
(324)
(95)
379
On January 1, 2022
596
(338)
-
258
Movement in foreign currency translation and net
foreign investment hedging reserves
436
(116)
(2)
318
Disposal of a business
104
67
(36)
135
Tax effect
(28)
16
-
(12)
Equity movements of joint ventures
-
-
(33)
(33)
Equity movements of associates
-
-
3
3
On December 31, 2022
1,108
(371)
(68)
669
The foreign currency translation reserve includes the currency results from investments in non-euro denominated subsidiaries.
The amounts are released to the income statement upon the sale of the subsidiary.
The net foreign investment hedging reserve is made up of gains and losses on the effective portions of hedging instruments,
net of tax. The amounts are recognized in the income statement at the moment of realization of the hedged position to offset
the gain or loss from the net foreign investment.
The equity movements of joint ventures and associates reflect Aegon's share of changes recognized directly in the joint
venture's and associate\u2019s equity.", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f53937": { "value": "27 Subordinated borrowings \n \n
Issue /
Year of
Coupon rate
Coupon date
Maturity
next call
2023
2022
Fixed to floating subordinated notes
Annually, April
EUR 700 million
4%
2)
25
2014/44
2024
700
699
Semi-annually,
USD 800 million
5.5%
3)
April 11
2018/48
2028
718
743
Fixed subordinated notes
Quarterly,
USD 925 million
1)
5.1%
March 15
2019/49
2024
826
852
On December 31
2,244
2,295
Fair value of subordinated borrowings
2,122
2,035
1
Issued by a subsidiary of, and guaranteed by Aegon Ltd.
2
The coupon is fixed at 4% until the first call date and floating thereafter with a 3 months Euribor plus a margin of 335bps.
3
The coupon is fixed at 5.5% until the first call date in 2028 and floating thereafter with a 6 month USD LIBOR (subject to US LIBOR Act) plus a margin of 3.539%.
These securities are subordinated and rank senior to the junior perpetual capital securities and the perpetual contingent
convertible securities, equally with the perpetual cumulative subordinated bonds and junior to all other liabilities. The
conditions of the securities contain certain provisions for coupon payment deferral. There have been no defaults or breaches
of conditions during the period.", "dimensions": { "concept": "agn:DisclosureOfSubordinatedBorrowingsExplanatoryTextBlock", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f54111": { "value": "28 Trust pass-through securities \n \n
Year of
Coupon rate
Coupon date
Issue / Maturity
next call
2023
2022
Semi-annually,
USD 225 million
1)
7.65%
December 1
1996/2026
n.a.
67
72
Semi-annually,
USD 190 million
1)
7.625%
November 15
1997/2037
n.a.
44
46
On December 31
111
118
Fair value of trust pass-through securities
125
133
1
Issued by a subsidiary of, and guaranteed by Aegon Ltd.
2
n.a. in above table should be read as \u201cnot applicable\u201d.
Trust pass-through securities are securities through which the holder participates in a trust. The assets of these trusts
consist of junior subordinated deferrable interest debentures issued by Transamerica Corporation. The trust pass-through
securities carry provisions with regard to deferral of distributions for extension periods up to a maximum of 10 consecutive
semi-annual periods. The trust pass-through securities are subordinated to all other unsubordinated borrowings and liabilities
of Transamerica Corporation.
There were no defaults or breaches of conditions during the period.", "dimensions": { "concept": "agn:DisclosureOfTrustPassThroughSecuritiesExplanatoryTextBlock", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f54221": { "value": "29 Insurance contracts, reinsurance contracts held and investment contracts with discretionary
participating features
29.1 Contracts by measurement model
The following tables show the assets and liabilities for groups of insurance contracts issued and reinsurance contracts held
by measurement model.
\n \n
Contracts not
Contracts
measured under
measured under
Insurance contracts
the PAA
the PAA
Total
Portfolios in an asset position
185
-
185
Portfolios in a liability position
177,407
39
177,446
Net balance, on December 31, 2023
177,222
39
177,262
Portfolios in an asset position
36
-
36
Portfolios in a liability position
175,681
439
176,120
Net balance, on December 31, 2022
175,645
439
176,083
\n \n
Contracts not
Contracts
measured under
measured under
Reinsurance contracts held
the PAA
the PAA
Total
Portfolios in an asset position
16,601
7
16,608
Portfolios in a liability position
608
-
608
On December 31, 2023
15,993
7
16,000
Portfolios in an asset position
16,934
6
16,939
Portfolios in a liability position
270
-
270
On December 31, 2022
16,664
6
16,669
All groups of investment contracts with discretionary participating features were not measured under the PAA and were in a
liability position at the reporting and comparative dates.
\n
\n
\n\n
\n
\n
\n\n
\n
\n
29.2 Movements in carrying amounts on insurance contracts, investment contracts with discretionary
participation features and reinsurance contracts held
The following tables show the movement in the net carrying amounts of insurance contracts issued, investment contracts with
discretionary participating features issued and reinsurance contracts held. Two types of tables are presented:
\u2022
Tables that analyze movements by type of liabilities and reconciles them to the condensed income statement and the
condensed statement of comprehensive income
\u2022
Tables that analyze movements by measurement component
29.2.1 Movement schedules by type of liability
\n \n
Remaining coverage
Excluding loss
Loss
Insurance contracts not measured under PAA - by type
component
component
Incurred claims
Total
Opening assets
40
(1)
(2)
36
Opening liabilities
163,758
1,455
10,468
175,681
Net opening balance, on January 1, 2023
163,719
1,456
10,470
175,645
Insurance revenue
(10,195)
-
-
(10,195)
Incurred claims and other insurance service expenses
-
(186)
8,593
8,407
Amortization of insurance acquisition cash flows
558
-
-
558
Losses (and reversal of losses) on onerous contracts
-
1,084
-
1,084
Adjustments to liabilities for incurred claims
-
-
9
9
Insurance service expenses
558
899
8,601
10,058
Investment components
(4,834)
-
4,834
-
Insurance service result
(14,471)
898
13,436
(137)
Insurance finance (income) / expenses (P&L and OCI)
17,262
81
-
17,343
Cash flows
(4,892)
(150)
(5,582)
(10,624)
Contracts disposed during the period
(347)
-
-
(347)
Transfers to disposal groups
(1)
(211)
(133)
(345)
Other movements
20
-
-
20
Transfer (to)/from other headings
(514)
(33)
36
(512)
Net exchange differences
(3,252)
(54)
(515)
(3,821)
Net closing balance, on December 31, 2023
157,524
1,987
17,711
177,222
Closing assets
1,589
(1,042)
(362)
185
Closing liabilities
159,113
945
17,349
177,407
\n \n
Remaining coverage
Excluding loss
Loss
Insurance contracts not measured under PAA - by type
component
component
Incurred claims
Total
Opening assets
780
-
(669)
110
Opening liabilities
286,352
343
1,407
288,102
Net opening balance, on January 1, 2022
285,572
343
2,076
287,991
Insurance revenue
(13,522)
-
-
(13,522)
Incurred claims and other insurance service expenses
-
(51)
11,372
11,321
Amortization of insurance acquisition cash flows
547
-
-
547
Losses (and reversal of losses) on onerous contracts
-
1,335
-
1,335
Adjustments to liabilities for incurred claims
-
-
8
8
Insurance service expenses
547
1,284
11,381
13,212
Investment components
(4,820)
(50)
4,870
-
Insurance service result
(17,795)
1,234
16,251
(309)
Insurance finance (income) / expenses (P&L and OCI)
(57,191)
(49)
-
(57,240)
Cash flows
(4,031)
(33)
(7,866)
(11,930)
Contracts disposed during the period
(278)
-
-
(278)
Transfers to disposal groups
(51,983)
(54)
-
(52,037)
Other movements
(28)
33
-
5
Net exchange differences
9,453
(19)
9
9,442
Net closing balance, on December 31, 2022
163,719
1,456
10,470
175,645
Closing assets
40
(1)
(2)
36
Closing liabilities
163,758
1,455
10,468
175,681
\n \n
Remaining coverage
Liability for incurred claims
Excluding loss
Loss
Best estimate
Risk
Insurance contracts PAA - by type
component
component
liability
adjustment
Total
Opening assets
-
-
-
-
-
Opening liabilities
404
2
33
-
439
Net opening balance, on January 1, 2023
404
2
33
-
439
Insurance revenue
(127)
-
-
-
(127)
Incurred claims and other insurance service expenses
-
-
96
-
96
Amortization of insurance acquisition cash flows
19
-
-
-
19
Losses (and reversals of losses) on onerous contracts
-
2
-
-
2
Adjustments to liabilities for incurred claims
-
-
14
-
14
Insurance service expenses
19
2
110
-
132
Investment components
-
-
-
-
-
Insurance service result
(108)
2
110
-
5
Insurance finance (income) / expenses (P&L and OCI)
12
-
-
-
12
Cash flows
95
-
(114)
-
(19)
Disposal of a business
(407)
-
-
-
(407)
Net exchange differences
9
-
-
-
9
Net closing balance, on December 31, 2023
6
4
29
-
39
Closing assets
-
-
-
-
-
Closing liabilities
6
4
29
-
39
\n \n
Remaining coverage
Liability for incurred claims
Excluding loss
Loss
Best estimate
Risk
Insurance contracts PAA - by type
component
component
liability
adjustment
Total
Opening assets
-
-
-
-
-
Opening liabilities
1,242
-
712
10
1,964
Net opening balance, on January 1, 2022
1,242
-
712
10
1,964
Insurance revenue
(563)
-
-
-
(563)
Incurred claims and other insurance service expenses
-
-
254
-
253
Amortization of insurance acquisition cash flows
22
-
-
-
22
Losses (and reversals of losses) on onerous contracts
-
2
-
-
2
Adjustments to liabilities for incurred claims
-
-
259
(3)
257
Insurance service expenses
22
2
513
(3)
534
Investment components
-
-
-
-
-
Insurance service result
(542)
2
513
(3)
(29)
Insurance finance (income) / expenses (P&L and OCI)
7
-
(110)
-
(103)
Cash flows
515
-
(470)
-
45
Disposal of a business
(729)
-
(75)
-
(804)
Transfers to disposal groups
(15)
-
(532)
(7)
(554)
Net exchange differences
(75)
-
(5)
-
(80)
Net closing balance, on December 31, 2022
404
2
33
-
439
Closing assets
-
-
-
-
-
Closing liabilities
404
2
33
-
439
\n \n
Asset for remaining coverage
Excluding loss
Asset for
recovery
Loss recovery
incurred
Reinsurance contracts held - Analysis by type, no PAA
component
component
claims
Total
Opening assets
14,801
1,607
526
16,934
Opening liabilities
(217)
(57)
5
(270)
Net opening balance, on January 1, 2023
14,584
1,549
530
16,664
Changes in the statements of P&L and OCI
Net expenses from reinsurance contracts
453
(235)
(38)
181
Other reinsurance finance (income) / expenses
1,026
34
-
1,060
Effect of changes in risk of non-performance of reinsurers
(12)
-
-
(12)
Total changes in the statements of P&L and OCI
1,467
(200)
(37)
1,229
Cash flows
(397)
(158)
(425)
(979)
Other movements
(424)
139
(86)
(371)
Net exchange differences
(511)
(34)
(4)
(550)
Net closing balance, on 31 December 31, 2023
14,719
1,296
(22)
15,993
Closing assets
16,457
349
(205)
16,601
Closing liabilities
1,738
(947)
(183)
608
\n \n
Asset for remaining coverage
Excluding loss
recovery
Loss recovery
Asset for
Reinsurance contracts held - Analysis by type, no PAA
component
component
incurred claims
Total
Opening assets
20,704
202
383
21,288
Opening liabilities
(1,116)
-
645
(471)
Net opening balance, on January 1, 2022
19,588
202
1,028
20,818
Changes in the statements of P&L and OCI
Net expenses from reinsurance contracts
(1,028)
1,380
(103)
248
Other reinsurance finance income / (expenses)
(3,956)
10
-
(3,945)
Investment components
(6)
(2)
8
-
Effect of changes in risk of non-performance of reinsurers
1
-
-
1
Total changes in the statements of P&L and OCI
(4,988)
1,388
(96)
(3,696)
Cash flows
(1,021)
(12)
(466)
(1,498)
Other movements
(322)
(1)
-
(323)
Net exchange differences
1,327
(28)
64
1,363
Net closing balance, on 31 December 31, 2022
14,584
1,549
530
16,664
Closing assets
14,801
1,607
526
16,934
Closing liabilities
217
57
5
270
\n \n
Remaining coverage
Excluding loss
Loss
Incurred
Investment contracts with DPF - by type
component
component
claims
Total
Opening assets
-
-
-
-
Opening liabilities
21,055
-
-
21,055
Net balance, on January 1, 2023
21,055
-
-
21,055
Insurance revenue
(64)
-
-
(64)
Incurred claims and other insurance service expenses
-
-
36
36
Insurance service expenses
-
-
36
36
Investment components
(2,417)
-
2,418
-
Insurance service result
(2,481)
-
2,453
(28)
Insurance finance (income) / expenses (P&L and OCI)
1,921
-
-
1,921
Cash flows
423
-
(2,453)
(2,030)
Other movements
172
-
-
172
Net exchange differences
503
-
-
503
Net closing balance, on December 31, 2023
21,594
-
-
21,594
Closing assets
-
-
-
-
Closing liabilities
21,594
-
-
21,594
\n \n
Remaining coverage
Excluding loss
Loss compo-
Investment contracts with DPF - by type
component
nent
Incurred claims
Total
Opening assets
-
-
-
-
Opening liabilities
27,392
-
-
27,392
Net balance, on January 1, 2023
27,392
-
-
27,392
Insurance revenue
(74)
-
-
(74)
Incurred claims and other insurance service expenses
-
-
58
58
Losses (and reversal of losses) on onerous contracts
-
(5)
-
(5)
Insurance service expenses
-
(5)
58
54
Investment components
(2,254)
5
2,250
-
Insurance service result
(2,328)
-
2,308
(20)
Insurance finance (income) / expenses (P&L and OCI)
(3,247)
-
-
(3,247)
Cash flows
511
-
(2,308)
(1,797)
Net exchange differences
(1,273)
-
-
(1,273)
Net closing balance, on December 31, 2023
21,055
-
-
21,055
Closing assets
-
-
-
-
Closing liabilities
21,055
-
-
21,055
29.2.2 Movement schedules by measurement component
\n \n
Best estimate
Risk
Contractual
Insurance contracts not measured under PAA - by component
liability
adjustment
service margin
Total
Opening assets
100
-
(64)
36
Opening liabilities
163,381
3,436
8,865
175,681
Net opening balance, on January 1, 2023
163,280
3,435
8,929
175,645
Changes in estimates that adjust contractual service margin
(204)
380
(176)
-
Changes in estimates that result in (a reversal of) onerous contracts
974
51
-
1,025
New contracts issued \u2013 non-onerous
(563)
90
473
-
New contracts issued \u2013 onerous
38
22
-
60
Changes that relate to future service
245
542
297
1,084
Earnings released from contractual service margin
-
-
(952)
(952)
Release of risk adjustment
-
(345)
-
(345)
Experience adjustments on current service
75
-
-
75
Revenue recognized for incurred policyholder tax expenses
(15)
-
-
(15)
Changes that relate to current service
60
(345)
(952)
(1,238)
Experience adjustments on claims incurred
17
-
-
17
Changes that relate to past service
17
-
-
17
Insurance service result
322
197
(656)
(137)
General model
Interest accreted to insurance contracts
2,680
195
223
3,098
Changes in interest rates and other financial assumptions
1,573
14
-
1,587
Revaluation of changes in non-financial assumptions and experience
adjustments to current interest rates
425
(4)
-
421
Variable fee approach
Change in fair value of the underlying assets of products with direct
participating features
13,730
-
-
13,730
Change in fulfilment value of products with direct participating features
not recognized in CSM due to risk mitigation option
(1,493)
-
-
(1,493)
Insurance finance (income) / expenses
16,915
205
223
17,343
Premiums received
14,203
-
-
14,203
Claims, benefits and expenses paid
(23,862)
-
-
(23,862)
Acquisition costs paid
(936)
-
-
(936)
Other
(30)
-
-
(30)
Cash flows
(10,624)
-
-
(10,624)
Contracts disposed during the period
(283)
(5)
(59)
(347)
Transfers to disposal groups
(59)
(197)
(89)
(345)
Other
41
-
(21)
20
Transfer (to)/from other headings
(511)
(1)
(1)
(512)
Other movements
(811)
(203)
(169)
(1,184)
Net exchange differences
(3,520)
(98)
(203)
(3,821)
Net closing balance, on December 31, 2023
165,562
3,537
8,124
177,222
Closing assets
475
(286)
(4)
185
Closing liabilities
166,036
3,251
8,120
177,407
\n \n
Best estimate
Contractual
Insurance contracts not measured under PAA - by component
liability
Risk adjustment
service margin
Total
Opening assets
1,086
(510)
(465)
110
Opening liabilities
271,870
4,831
11,401
288,102
Net opening balance, on January 1, 2022
270,784
5,341
11,866
287,991
Changes in estimates that adjust contractual service margin
909
(1,232)
323
-
Changes in estimates that result in (a reversal of) onerous contracts
1,408
(131)
-
1,277
New contracts issued \u2013 non-onerous
(595)
103
493
-
New contracts issued \u2013 onerous
27
29
-
56
Changes that relate to future service
1,749
(1,231)
816
1,333
Earnings released from contractual service margin
-
-
(1,229)
(1,229)
Release of risk adjustment
-
(359)
-
(359)
Experience adjustments on current service
(47)
1
-
(46)
Revenue recognized for incurred policyholder tax expenses
1
-
-
1
Changes that relate to current service
(46)
(359)
(1,229)
(1,634)
Experience adjustments on claims incurred
(7)
-
-
(8)
Changes that relate to past service
(7)
-
-
(8)
Insurance service result
1,695
(1,591)
(414)
(309)
General model
Interest accreted to insurance contracts
2,548
156
221
2,925
Changes in interest rates and other financial assumptions
(28,114)
(58)
-
(28,172)
Revaluation of changes in non-financial assumptions and experience
adjustments to current interest rates
(862)
19
-
(843)
Variable fee approach
Change in fair value of the underlying assets of products with direct
participating features
(25,351)
-
-
(25,351)
Change in fulfilment value of products with direct participating
features not recognized in CSM due to risk mitigation option
(5,799)
-
-
(5,799)
Insurance finance (income) / expenses
(57,578)
117
221
(57,240)
Premiums received
15,444
-
-
15,444
Claims, benefits and expenses paid
(26,454)
-
-
(26,454)
Acquisition costs paid
(892)
-
-
(892)
Other
(28)
-
-
(28)
Cash flows
(11,930)
-
-
(11,930)
Contracts disposed during the period
(177)
(5)
(96)
(278)
Transfers to disposal groups
(48,338)
(659)
(3,040)
(52,037)
Other
-
-
5
5
Other movements
(48,515)
(663)
(3,131)
(52,310)
Net exchange differences
8,825
231
387
9,442
Net closing balance, on December 31, 2022
163,280
3,435
8,929
175,645
Closing assets
100
-
(64)
36
Closing liabilities
163,381
3,436
8,865
175,681
\n \n
Reinsurance contracts held - Movement schedule by
Best estimate
Contractual
component, no PAA
liability
Risk adjustment
service margin
Total
Opening assets
16,233
1,010
(309)
16,934
Opening liabilities
(371)
(101)
202
(270)
Net opening balance, on January 1, 2023
15,862
909
(107)
16,664
Changes in estimates that adjust the contractual service margin
(3)
6
(4)
-
Changes in estimates that relate to losses and reversals of losses
on underlying onerous contracts
477
67
6
550
New reinsurance contracts issued / acquired recognized in the year
(330)
42
271
(17)
Initial recognition of onerous underlying contracts
-
-
12
12
Changes that relate to future service
144
114
286
544
CSM recognized for service received
-
-
(26)
(26)
Release of risk adjustment
-
(118)
-
(118)
Experience adjustment on current service
(217)
-
-
(217)
Changes that relate to current service
(217)
(118)
(26)
(361)
Experience adjustment on claims component
(2)
-
-
(2)
Changes that relate to past service
(2)
-
-
(2)
Net income/expenses of reinsurance held
(76)
(3)
260
181
Reinsurance finance income / (expenses)
1,013
48
(13)
1,048
Premiums paid, net of received fixed commission
2,642
-
-
2,642
Amounts received
(3,622)
-
-
(3,622)
Cash flows
(979)
-
-
(979)
Other movements
(132)
(176)
(63)
(371)
Other movements
(132)
(176)
(63)
(371)
Net exchange difference
(528)
(23)
2
(550)
Net closing balance, on December 31, 2023
15,160
755
78
15,993
Closing assets
16,184
423
(7)
16,601
Closing liabilities
(1,024)
332
85
(608)
\n \n
Reinsurance contracts held - Movement schedule by
Best estimate
Contractual
component, no PAA
liability
Risk adjustment
service margin
Total
Opening assets
20,608
1,009
(328)
21,288
Opening liabilities
(1,617)
585
561
(471)
Net opening balance, on January 1, 2022
18,991
1,594
233
20,818
Changes in estimates that adjust the contractual service margin
244
(408)
164
-
Changes in estimates that relate to losses and reversals of losses
on underlying onerous contracts
655
(58)
10
607
New reinsurance contracts issued / acquired recognized in the year
(8)
21
(13)
-
Initial recognition of onerous underlying contracts
-
-
31
31
Changes that relate to future service
891
(444)
192
638
CSM recognized for service received
-
-
42
42
Release of risk adjustment
-
(147)
-
(147)
Experience adjustment on current service
(274)
-
-
(274)
Changes that relate to current service
(274)
(147)
42
(379)
Experience adjustment on claims component
(12)
-
-
(12)
Changes that relate to past service
(12)
-
-
(12)
Net income/expenses of reinsurance held
605
(591)
234
248
Reinsurance finance income / (expenses)
(3,954)
47
(37)
(3,944)
Premiums paid, net of received fixed commission
3,005
-
-
3,005
Amounts received
(4,503)
-
-
(4,503)
Cash flows
(1,498)
-
-
(1,498)
Other movements
403
(206)
(520)
(323)
Other movements
403
(206)
(520)
(323)
Net exchange difference
1,316
65
(17)
1,363
Net closing balance, on December 31, 2022
15,862
909
(107)
16,664
Closing assets
16,233
1,010
(309)
16,934
Closing liabilities
(371)
(101)
202
(270)
\n \n
Best estimate
Contractual
Investment contracts with DPF - by component
liability
Risk adjustment
service margin
Total
Opening assets
-
-
-
-
Opening liabilities
20,874
109
72
21,055
Net balance, on January 1, 2023
20,874
109
72
21,055
Changes in estimates that adjust contractual service margin
(152)
31
121
-
Changes that relate to future service
(152)
31
121
-
Earnings released from contractual service margin
-
-
(17)
(17)
Release of risk adjustment
-
(15)
-
(15)
Experience adjustments on current service
4
-
-
4
Changes that relate to current service
4
(15)
(17)
(28)
Changes that relate to past service
-
-
-
-
Insurance service result
(148)
16
104
(28)
Variable fee approach
Change in fair value of the underlying assets of products with direct
participating features
1,921
-
-
1,921
Insurance finance (income) / expenses
1,921
-
-
1,921
Premiums received
475
-
-
475
Claims, benefits and expenses paid
(2,506)
-
-
(2,506)
Cash flows
(2,030)
-
-
(2,030)
Other
170
-
1
172
Other movements
170
-
1
172
Net exchange differences
498
3
2
503
Net closing balance, on December 31, 2023
21,285
128
180
21,594
Closing assets
-
-
-
-
Closing liabilities
21,285
128
180
21,594
\n \n
Best estimate
Contractual
Investment contracts with DPF - by component
liability
Risk adjustment
service margin
Total
Opening assets
-
-
-
-
Opening liabilities
27,064
133
195
27,392
Net balance, on January 1, 2022
27,064
133
195
27,392
Changes in estimates that adjust contractual service margin
110
(3)
(106)
-
Changes that relate to future service
110
(3)
(106)
-
Earnings released from contractual service margin
-
-
(11)
(11)
Release of risk adjustment
-
(14)
-
(14)
Experience adjustments on current service
5
-
-
5
Changes that relate to current service
5
(14)
(11)
(20)
Changes that relate to past service
-
-
-
-
Insurance service result
114
(17)
(117)
(20)
Variable fee approach
Change in fair value of the underlying assets of products with direct
participating features
(3,247)
-
-
(3,247)
Insurance finance (income) / expenses
(3,247)
-
-
(3,247)
Premiums received
511
-
-
511
Claims, benefits and expenses paid
(2,308)
-
-
(2,308)
Cash flows
(1,797)
-
-
(1,797)
Net exchange differences
(1,261)
(6)
(6)
(1,273)
Net closing balance, on December 31, 2022
20,874
109
72
21,055
Closing assets
-
-
-
-
Closing liabilities
20,874
109
72
21,055
29.2.3 New contracts recognized
New insurance contracts recognized, no PAA
\n \n
2023
Issued
non-onerous
Issued onerous
New contracts recognized
contracts
contracts
Total
Present value of cash inflows
(5,155)
(545)
(5,701)
Present value of cash outflows, excl. acquisition costs
4,593
583
5,176
Risk adjustment for non-financial risk
90
22
112
Contractual service margin
473
-
473
(Gain) / loss recognized on initial recognition
-
60
60
\n \n
2022
Issued
non-onerous
Issued onerous
New contracts recognized
contracts
contracts
Total
Present value of cash inflows
(5,020)
(475)
(5,494)
Present value of cash outflows, excl. acquisition costs
4,447
504
4,951
Risk adjustment for non-financial risk
98
27
125
Contractual service margin
474
-
474
(Gain) / loss recognized on initial recognition
-
57
57
1
The table do not hold results from Aegon the Netherlands; therefore, numbers differ from 29.2.2 Movement schedules by measurement component table
New reinsurance contracts recognized, no PAA
\n \n
Reinsurance
2023
contracts
Present value of cash inflows
201
Present value of cash outflows
(531)
Risk adjustment for non-financial risk
42
Contractual service margin
271
Income recognized on initial recognition
(17)
2022
Present value of cash inflows
251
Present value of cash outflows
(259)
Risk adjustment for non-financial risk
21
Contractual service margin
(13)
Income recognized on initial recognition
0
29.2.4 Maturity analysis contractual service margin
\n \n
2023
2022
Discounted
Discounted
Maturity analysis CSM insurance contracts
CSM
CSM
<1 year
839
1,076
1-2 years
756
802
2-3 years
684
723
3-4 years
618
654
4-5 years
559
591
5-10 years
2,071
2,210
10-20 years
1,850
2,024
> 20 years
748
849
On December 31
8,124
8,929
\n \n
2023
2022
Discounted
Discounted
Maturity analysis CSM reinsurance contracts held, no PAA
CSM
CSM
< 1yr
8
(22)
1 < 2 yrs
7
(15)
2 < 3 yrs
6
(13)
3 < 4 yrs
6
(12)
4 < 5 yrs
5
(10)
5 < 10 yrs
18
(32)
10 - 20 yrs
17
(16)
> 20 yrs
12
13
On December 31
78
(107)
29.2.5 Movement schedules contractual service margin by transition method
Contractual service margin recognized on contracts in-force on the transition date to IFRS 17
\n \n
Insurance contracts
Investment contracts with DPF
Reinsurance contracts held
Total
Total
Total
MRA
1)
FVA
2)
Other
CSM
MRA
FVA
Other
CSM
MRA
FVA
Other
CSM
On January 1,
2023
1,836
4,673
2,420
8,929
-
72
-
72
1
(129)
21
(107)
Changes in
estimates that
adjust CSM
(40)
(105)
(32)
(176)
-
121
-
121
-
11
(14)
(4)
Changes in
estimates that
relate to losses
and reversals of
losses on
underlying
onerous
contracts
-
-
-
-
-
-
-
-
-
4
2
6
New contracts
issued:
non-onerous
-
-
473
473
-
-
-
-
-
-
283
283
Earnings released
from contractual
service margin
(191)
(498)
(264)
(952)
-
(17)
-
(17)
-
9
(34)
(26)
Insurance finance
income /
(expense)
8
159
57
223
-
-
-
-
-
(21)
8
(13)
Cash flow -
contracts
disposed
-
(59)
-
(59)
-
-
-
-
-
-
-
-
Net exchange
differences
(57)
(128)
(17)
(203)
-
2
-
2
-
6
(5)
2
Other
1
(42)
(68)
(110)
-
1
-
1
-
(30)
(33)
(63)
On December 31,
2023
1,557
4,000
2,568
8,124
-
180
-
180
-
(149)
227
78
1
MRA: Modified Retrospective Approach
2
FVA: Fair Value Approach
\n \n
Insurance contracts
Investment contracts with DPF
Reinsurance contracts held
Total
Total
Total
MRA
1)
FVA
2)
Other
CSM
MRA
FVA
Other
CSM
MRA
FVA
Other
CSM
On January 1,
2022
2,639
7,036
2,191
11,866
-
195
-
195
-
238
(5)
233
Changes in
estimates that
adjust CSM
(792)
1,101
15
323
-
(106)
-
(106)
-
167
(3)
164
Changes in
estimates that
relate to losses
and reversals of
losses on
underlying
onerous
contracts
-
-
-
-
-
-
-
-
-
3
8
10
New contracts
issued:
non-onerous
-
-
493
493
-
-
-
-
-
(8)
26
18
Earnings released
from contractual
service margin
(205)
(764)
(260)
(1,229)
-
(11)
-
(11)
-
45
(4)
42
Insurance finance
income /
(expense)
9
179
33
221
-
-
-
-
-
(37)
-
(37)
Cash flow -
contracts
disposed
-
(96)
-
(96)
-
-
-
-
-
-
-
-
Net exchange
differences
186
246
(45)
387
-
(6)
-
(6)
-
(17)
-
(17)
Other
-
(3,028)
(7)
(3,035)
-
-
-
-
-
(520)
-
(520)
On December 31,
2022
1,836
4,673
2,420
8,929
-
72
-
72
1
(129)
21
(107)
1
MRA: Modified Retrospective Approach
2
FVA: Fair Value Approach
Other in the table above relates to derecognition of liabilities following the completion of the transaction with a.s.r.
29.2.6 Investments and other assets allocated to contracts that were not transitioned fully retrospectively
On transition to IFRS 17, amounts were recognized in the revaluation reserve for insurance contracts, investment contracts
with discretionary features and reinsurance contracts held using the modified retrospective approach and/or the fair
value approach.
Part of the assets backing these groups of insurance contracts are measured at fair value through other comprehensive
income. The movement in the period in the cumulative amount recognized in OCI for these assets is reflected in the table below:
\n \n
Assets backing up:
Insurance Contracts
On January 1, 2023
(2,375)
Gross revaluation
1,137
Net gains/losses transferred to income statement
309
Foreign currency translation differences
55
Tax effect
(322)
Other
47
On December 31, 2023
(1,147)
\n \n
Assets backing up:
Insurance Contracts
On January 1, 2022
6,456
Gross revaluation
(12,445)
Net gains/losses transferred to income statement
425
Foreign currency translation differences
540
Tax effect
2,578
Other
72
On December 31, 2022
(2,375)
Of the Gross revaluation, EUR 1,211 million was unrealized gains through equity (2022: loss of EUR 12,434 million). The Net
gains/losses transferred to the income statement include EUR 437 million due to transfer disposal (2022: EUR 549 million).
29.3 Critical judgments and estimates
29.3.1 Fulfilment cash flows
The fulfillment cash flows comprise:
\u2022
Estimates of future cash flows;
\u2022
An adjustment to reflect time value of money and the financial risks related to future cash flows, to the extent that the
financial risks are not included in the estimates of future cash flows and
\u2022
A risk adjustment for non-financial risk.
Each measurement element requires the use of significant judgment and estimates.
29.3.1.1 Valuation methods
Aegon\u2019s objective in estimating future cash flows is to determine a range of scenarios that reflects the full range of possible
outcomes. Each scenario specifies the amount and timing of the cash flows for a particular outcome, and the estimated
probability of that outcome. The cash flows from each scenario are discounted and weighted by the estimated probability
of that outcome to derive an expected present value.
When determining the expected value of the full range of possible outcomes, the objective is to incorporate all reasonable
and supportable information available without undue cost or effort in an unbiased way, rather than to identify every possible
scenario. In some cases, relatively simple modeling provides an answer within an acceptable range of precision. In other cases,
more complex valuation methods are required to satisfy the measurement objective. For example, if cash flows reflect a series
of interrelated (implicit or explicit) options and respond in a non-linear fashion to changes in economic conditions, then Aegon
often uses stochastic modeling techniques to estimate the expected present value. Stochastic modeling involves projecting
future cash flows under a large number of possible economic scenarios for market variables such as interest rates and
equity returns. Other methods that are used to measure non-linear cash flows include closed form solutions and replicating
portfolio techniques.
29.3.1.2 Actuarial assumptions
When estimating future cash flows, Aegon sets actuarial assumptions for underwriting risk including policy claims (such
as mortality, longevity or morbidity), policyholder behavior (such as lapses, surrender of policies or partial withdrawals),
property & casualty loss ratios and expenses. Actuarial assumptions are reviewed annually, with the exception of expense
assumptions which might be updated more frequently as a result on the quarterly monitoring of actual expenses.
Underwriting assumptions
Mortality tables applied are generally developed based on a blend of company experience and industry wide studies, taking
into consideration product characteristics, own risk selection criteria, target market and past experience. Mortality experience
is monitored through regular studies, the results of which are fed into the pricing cycle for new products and reflected in the
liability calculation for in-force groups of contracts where appropriate. For contracts insuring survivorship or mortality,
allowance is made for further longevity or mortality improvements. Morbidity assumptions are based on own claims severity
and frequency experience, adjusted where appropriate for industry information. Industry survey is used for judgment-based
assumptions like for example morbidity improvement and cost of long-term care (LTC) inflation.
Surrender and lapse rates depend on product features, policy duration and external circumstances such as the interest rate
environment and competitor behavior. For policies where policyholders are expected to have financial incentive to choose
a favorable lapse timing based on the market conditions, a dynamic lapse assumption is utilized to reflect expected
policyholder behavior when applying multiple scenarios in measurement. Own experience, as well as industry published data,
are used to in establishing assumptions. Lapse experience is correlated to mortality and morbidity levels, as higher or lower
levels of surrenders may indicate future claims will be higher or lower than anticipated. Such correlations are accounted for
in the mortality and morbidity assumptions based on the emerging analysis of experience.
Policyholder benefits that are directly linked to asset performance are projected at rates that are consistent with the discount
rates applied. For cash flows like crediting rates, the projected cash flows reflect how the reporting unit would determine
crediting rates in a given scenario based on the Group\u2019s crediting policies. Other management actions are taken into account
to the extent that they are part of Aegon\u2019s regular policies and procedures.
Given that Aegon applies the premium allocation approach to most of its non-life insurance business, actuarial assumptions
related to (ultimate) loss ratio assumptions only impact the fulfillment cash flows for onerous groups of contracts with
remaining coverage and for contracts with incurred claims. Aegon uses a range of loss reserving techniques to estimate
(ultimate) claims ratios, using historical claims development data as well as market observable inputs. Large ticket reported
claims are assessed on an individual basis.
Expense assumptions
Expenses that are attributable to the fulfillment cash flows include acquisition expenses, maintenance expenses and claims
settlement costs, as well as overhead costs that Aegon considers to be unavoidable when fulfilling the in-force contracts.
Investment expenses are included in the fulfillment cash flows for contracts that provide investment-related or investment-
return services, as well as for contracts where Aegon performs investment activities that enhance the policyholders\u2019 benefits
from insurance coverage. Aegon\u2019s expense assumptions are based on the current level of expenses, adjusted for future
expense inflation and the impact of known one-off projects (such as planned cost saving initiatives or projects to implement
additional regulatory reporting requirements). In not-at-scale units, further adjustment is made to reflect a long-term scale
of business.
When allocating the attributable expenses to groups of contracts, Aegon leverages allocation approaches used for pricing
or regulatory reporting. Where EU-IFRS requires a greater level of granularity, additional allocation keys are applied that
have been defined based on, for example, further expense studies. The expense inflation assumption is split into a financial
component that is calibrated to market observables and a non-financial component that is set as an actuarial assumption.
The non-financial component of the expense inflation assumption represents the estimated difference between general
market inflation implied by the market and expense inflation that is specific to Aegon\u2019s product characteristics. Some inflation
assumptions (such as LTC utilization and health medical inflation in the Americas) do not include a financial component but
are entirely set as an actuarial assumption, given that they are weakly correlated with general inflation indices and there is no
hedge market for such rates.
Discount rates and other financial assumptions
Aegon adjusts the estimated future cash flows of a group of contracts to reflect the time value of money and the financial risks
related to those cash flows, to the extent that the financial risks are not included in the estimates of cash flows. The discount
rates applied to the estimates of the future cash flows:
\u2022
Reflect the time value of money, the characteristics of the cash flows and the liquidity characteristics of the insurance
contracts;
\u2022
Are consistent with observable current market prices (if any) for financial instruments with cash flows whose characteristics
are consistent with those of the insurance contracts, in terms of, for example, timing, currency and liquidity; and
\u2022
Exclude the effect of factors that influence observable market prices but do not affect the future cash flows of the insurance
contracts.
No implicit adjustments for non-financial risk are included in the discount rates, as the risk adjustment for non-financial risks
is explicitly included in the fulfillment cash flows.
When determining the discount rates at the date of initial recognition of a group of contracts, Aegon uses weighted-average
discount rates over the period that contracts in that group are issued.
EU-IFRS explicitly mentions two calibration options for the discount rate, namely the \"top-down approach\" and \"bottom-up\"
approach. Aegon has generalized both approaches into a direct discounting technique in which discount rates are determined
as the sum of the risk-free rate plus a percentage of the illiquidity premium (ILP). The ILP is an extra spread that an investor can
earn by investing in a security that offers limited or no ability for the investor to exit the investment prior to its maturity. If an
insurance liability is illiquid (meaning that the policyholder has limited or no ability to cash it in prior to maturity or contingency-
based payment), the liability is discounted at a rate that includes an ILP because illiquid assets (earning an illiquidity premium)
may be purchased to back or replicate that liability.
Risk-free yield curve
Aegon has identified various rates available in the EUR, GBP and USD markets that can be used as a basis for the risk-free
yield curve, including EURIBOR swap rates for EUR, reformed Sterling Overnight Index Average (SONIA) for GBP, and Secured
Overnight Funding Rates (SOFR) and US Treasury rates for USD. EURIBOR rates are adjusted for credit risk by subtracting
a credit risk allowance. No adjustment is made to overnight swap rates and US Treasury rates, as the credit risk of these
instruments is deemed negligible.
A full risk-free yield curve is derived by first interpolating between tenors for which market data is available, and then
extrapolating the yield curve beyond market observable maturities. Discount rates converge linearly in 10 years to an ultimate
forward rate. A uniform last liquid point for EUR and USD is set at 30 years, GBP is set at 50 years. The ultimate forward rates
reflect a long-term view on nominal interest rates and is set by management per currency, considering expected real interest
rates and long-term inflation together with the current market environment. The ultimate forward rates have been reviewed
as part of the annual Group economic assumptions update and revised to a common level of 3.45% effective December 31,
2023. (December 31, 2022: 3.50%,3.65% and 3.45% for the USD, EUR, and GBP respectively.)
Aegon reviews the risk-free last liquid point and ultimate forward rates quarterly which, although expected to be infrequent, may
lead to assumption updates if there are significant changes in market conditions.
\n \n
Yield curves (zero coupon rates excluding ILP)
December 31, 2023
1 year
5 years
10 years
15 years
20 years
EUR
3.36%
2.33%
2.39%
2.47%
2.40%
GBP
4.74%
3.35%
3.28%
3.40%
3.43%
USD
4.83%
3.89%
3.90%
4.00%
4.39%
\n \n
Yield curves (zero coupon rates excluding ILP)
December 31, 2022
1 year
5 years
10 years
15 years
20 years
EUR
3.18%
3.10%
3.05%
2.98%
2.73%
GBP
4.46%
4.06%
3.71%
3.62%
3.54%
USD
4.97%
4.03%
3.83%
3.94%
4.31%
Illiquidity premium (ILP)
Aegon sets ILPs at the level of the reporting unit or major business unit, reflecting how it manages the investments and ALM
risk for the given block of liabilities. For example, in the US Aegon has set ILPs by lines of business which has resulted in 9 ILP
curves. For each unit, an ILP curve is constructed that is based on the market-observables returns on a reference portfolio
of assets. The reference portfolio is based on the unit\u2019s investment policy target mix of fixed interest securities and excludes
alternative investments (such as equities and real estate investments).
To derive the ILP curve for respective lines of business, market observable spreads are sourced and adjusted for expected and
unexpected default losses. The ILP is based on the line of business reference portfolio and investment strategy.
The full ILP curve is derived by interpolating between the observable tenors and then extrapolating the yield linearly beyond
the ILP last liquid point to the ultimate forward ILP. The last liquid point can be set separately for each duration bucket or, as a
practical simplification, as a single point in time for the entire reference portfolio. The ultimate forward spread is set based
on historical 50th percentile spread adjusted for expected and unexpected default losses.
Aegon updates the reference portfolio quarterly, and the ILP last liquid point and ILP ultimate forward rate are revised
accordingly. The most significant products of Aegon Ltd. are presented below.
\n \n
ILP per portfolio, December 31, 2023
1 year
5 years
10 years
15 years
20 years
30 years
Fixed Deferred Annuity
1.15%
1.21%
1.12%
1.11%
1.11%
1.11%
Indexed Universal Life
1.20%
1.24%
1.20%
1.18%
1.18%
1.21%
Long-Term Care
0.97%
0.98%
0.98%
1.15%
1.20%
1.30%
Traditional Life
0.99%
1.01%
1.02%
1.15%
1.19%
1.28%
Universal Life
1.01%
1.03%
1.02%
1.13%
1.17%
1.26%
Variable Annuities
0.69%
0.69%
0.68%
0.67%
0.64%
0.67%
Annuities
0.89%
0.89%
0.89%
0.89%
0.89%
0.76%
Individual Protection
0.49%
0.49%
0.49%
0.49%
0.49%
0.40%
\n \n
ILP per portfolio, December 31, 2022
1 year
5 years
10 years
15 years
20 years
30 years
Fixed Deferred Annuity
1.44%
1.48%
1.31%
1.12%
1.12%
1.12%
Indexed Universal Life
1.48%
1.45%
1.33%
1.22%
1.22%
1.21%
Long-Term Care
1.37%
1.38%
1.38%
1.32%
1.32%
1.32%
Traditional Life
1.41%
1.42%
1.40%
1.31%
1.31%
1.31%
Universal Life
1.43%
1.44%
1.39%
1.29%
1.28%
1.28%
Variable Annuities
0.67%
0.67%
0.67%
0.67%
0.67%
0.68%
Annuities
1.08%
1.08%
1.08%
1.08%
1.08%
1.03%
Individual Protection
0.50%
0.50%
0.50%
0.50%
0.50%
0.42%
Illiquidity factor
The illiquidity factor reflects the liquidity characteristics of a certain group of insurance contracts.
Groups of contracts whose cash flows are not dependent on the underlying assets are assigned an illiquidity factor of 100%.
Groups of contracts for which the cash flows predominantly vary with the underlying assets are assigned an illiquidity factor
of 0%. For example, Aegon UK does not apply an illiquidity factor to the Unit Linked products. For a few products that include
both types of cash flows, such as US variable annuity products with guaranteed minimum withdrawal benefits, a combination
of 100% and 0% ILP is used.
Other significant financial assumptions
Interest rate volatilities are modelled based on swaption prices, in line with current market pricing.
Risk adjustment for non-financial risk
The risk adjustment for non-financial risk is included explicitly as a separate component of the fulfillment cash flows. It reflects
the compensation that Aegon requires for bearing the uncertainty about the amount and timing of the cash flows that arises
from non-financial risk as it fulfils insurance contracts.
The non-financial risks considered include mortality, morbidity, policyholder behavior, expense, and product specific operational
risk. Non-financial risks that do not arise from the insurance contracts, such as general operational risk, are not reflected in the
risk adjustment. The risk adjustment reflects both the risk that actual experience differs from the best estimate assumption
used to project future cash flows due to mis-estimation (parameter risk), as well as the risk of random fluctuations around the
true estimates (contagion risk).
Diversification benefits are recognized at the Group level. To align with market practice, Aegon only reflects the degree
of diversification between non-financial risks, and contrary to its pricing methodology, ignores diversification benefits between
financial and non-financial risks. Diversification effects include the impact of reinsurance ceded, as well insurance contracts
classified as held for sale.
Aegon generally applies a simplified confidence interval technique which estimates the risk adjustment for non-financial
risk using a confidence level (probability of sufficiency) approach at the 80th percentile. Under this approach, a probability
distribution is assumed for each particular risk and the amount above the expected present value of future cash flows
determined (using a shock factor). The impacts for each risk are then aggregated using a correlation matrix, reflecting
diversification between the various non-financial risk types. For some products, Aegon measures contagion risk using the
Conditional Tail Expectation technique at the 75th percentile. Regardless of the technique applied, the confidence interval
is computed across the entire product lifetime in order to fully reflect the risk.
Changes in methods and inputs used to measure fulfillment cash flows
Actuarial assumptions are reviewed periodically in the second quarter for the United States and in the fourth quarter for Europe
and Asia, based on historical experience, observable market data, including market transactions such as acquisitions and
reinsurance transactions, anticipated trends and legislative changes. Similarly, the models and systems used for determining
our liabilities and reinsurance assets are reviewed periodically, and if deemed necessary, updated based on emerging best
practice and available technology.
During 2023, Aegon implemented actuarial assumption and model updates which are mainly related to Aegon\u2019s business
in the Americas.
Assumption updates (non-financial assumptions) are absorbed in the CSM where there are sufficient balances. The change
in CSM will impact the amount amortized in the current period and all prospective periods. The total pre-tax impact of non-
financial assumption changes at the end of 2023 is a EUR 497 million increase to liabilities. Most of the impact was driven
by the model update on policyholder behaviour mainly on Indiviual Life and Variable Annuities lines of business and expense
assumption updates. Main assumption updates are all on morbidity but they are offset by a change in CSM so this change has
limited impact on total liabilites.
Aegon did not make any significant changes to the contract boundaries in the current reporting period, nor did it update the
approaches used to determine the discount rate or estimate the risk adjustment for non-financial risk.
29.3.2 Relevant other significant judgments
In addition to the judgments and estimates made in measuring the fulfillment cash flows that are described above, other
significant judgments are applied in determining:
\u2022
The relative weighting of coverage units when multiple services are provided;
\u2022
The non-distinct investment component, which is excluded from insurance revenue; and
\u2022
The adjustment for nonperformance risk that is applied to reinsurance contracts held.
29.3.2.1 Weighting of coverage units
Often one single metric can be defined that captures multiple services provided under one contract. Different approaches
are used by Aegon when assessing the relative weighting of the benefits of different services. In some cases, the weighting
is done in a way that directly flows from the composition of the benefits under the contract. For example, for a life insurance
product with an account value that can be surrendered, coverage units can be based on the total death benefit as this amount
comprises both the account value (investment service) and the excess death benefits (insurance service). In other cases,
significant judgment is required. For example, for US long-term care insurance products, multiple drivers impact the maximum
daily benefit to which a policyholder could be entitled. To reflect this, the coverage unit is computed using a combination of the
initial allowed benefit, the benefit period, as well as adjustments for any inflation protection and if the policy is paid-up on the
contingent non-forfeiture option.
29.3.2.2 Investment component
Aegon reports insurance revenue and insurance service expenses excluding non-distinct investment components.
An investment component is defined as the amount that an insurance contract requires Aegon to repay to a policyholder, even
if the insured event does not occur.
Aegon determines the investment component, when a claim is incurred as an amount is released from the liability for remaining
coverage. When doing so it considers which payments would have been possible immediately prior to the claims date. For
example, a payment might have needed to be made to the policyholder in light of policy surrender, the uptake of a policy loan
or the partial withdrawal, or the transfer of an insurance policy to another insurer. The investment component is defined net
of any penalty or similar charges.
29.3.2.3 Adjustment to reinsurance contracts held for non-performance risk
The nonperformance risk by the reinsurer is based on Aegon\u2019s credit exposure, net of collateral, and the perceived counterparty
default risk. In assessing the credit exposure, Aegon takes into account treaty provisions for non-performance, such as the
automatic recapture of the reinsured business on default of the reinsurer.
When estimating a reinsurer\u2019s default risk, Aegon considers the current financial condition and credit standing of the reinsurer,
expert judgment specific to the local reinsurance market and historical data (such as Moody\u2019s Loss Given Default rates). The
ultimate adjustment reflects the risk of potential reinsurance counterparty failure due to default (i.e. credit events), as well
as disputes resulting in reduced payments and the potential for current conditions to change over time.
29.4 Underwriting risk
Aegon\u2019s earnings depend significantly upon the extent to which actual claims experience differs from the assumptions used
in setting the prices for products and establishing the technical liabilities and liabilities for claims. To the extent that actual
claims experience is less favorable than the underlying assumptions used in establishing such liabilities, income would
be reduced. Furthermore, if these higher claims were part of a permanent trend, Aegon may be required to change best
estimate assumptions for future claims which could increase the required reserves for these future claims, which could reduce
income. In addition, certain acquisition costs related to the sale of new policies and the purchase of policies already in force
have been recorded as assets on the statement of financial position and are being amortized into the income statement over
time. If the assumptions relating to the future profitability of these policies (such as future claims, investment income and
expenses) are not realized, the amortization of these costs could be accelerated and may even require write offs should there
be an expectation of unrecoverability. This could have a materially adverse effect on Aegon\u2019s business, results of operations
and financial condition.
Sources of underwriting risk include policyholder behavior (such as lapses, surrender of policies or partial withdrawals),
policy claims (such as mortality, longevity or morbidity) and expenses. For some product lines, Aegon is at risk if policy
lapses increase as sometimes Aegon is unable to fully recover upfront expenses in selling a product despite the presence
of commission recoveries or surrender charges and fees. There are also products where Aegon is at risk if lapses decrease, for
example where this would result in a higher utilization rate of product guarantees. For mortality and morbidity risk, Aegon sells
certain types of policies that are at risk if mortality or morbidity increases, such as term life insurance and accident insurance,
Aegon also sells certain types of policies that are at risk if mortality decreases (longevity risk) such as annuity products.
Aegon is also at risk if expenses are higher than the expenses assumed beforehand by management and that were priced into
the products.
Aegon monitors and manages its underwriting risk by underwriting risk type. Attribution analysis is performed on earnings
and reserve movements in order to understand the source of any material variation in actual results from what was expected.
Aegon\u2019s units also perform experience studies for underwriting risk assumptions, comparing Aegon\u2019s experience to industry
experience as well as combining Aegon\u2019s experience and industry experience based on the depth of the history of each source
to Aegon\u2019s underwriting assumptions. Where policy charges are flexible in products, Aegon uses these analyses as the basis for
modifying these charges, with a view to maintain a balance between policyholder and shareholder interests. Aegon also has the
ability to reduce expense levels over time, thus mitigating unfavorable expense variation.
Another way to mitigate underwriting risk is through reinsurance. Aegon uses reinsurance to primarily manage and diversify
risk, limit volatility, improve capital positions, limit maximum losses and gain access to reinsurer support. While the objectives
and use can vary by region due to local market considerations and product offerings, the use of reinsurance is coordinated and
monitored globally.
The key areas where reinsurance is used is to reduce our exposure to mortality and morbidity risk primarily through
a combination of quota-share and Excess of Loss reinsurance. Also, Excess of Loss reinsurance is used to limit our exposure
to large losses on non-life business.
In order to minimize its reinsurer defaults exposure, Aegon regularly monitors the creditworthiness of its reinsurers, and where
appropriate, arranges additional protection through letters of credit, trust agreements and over-collateralization. For certain
agreements, funds are withheld for investment rather than relying on the reinsurer to meet investment expectations. Default
exposure is further reduced by using multiple reinsurers within certain reinsurance agreements.
External reinsurance counterparties are, in general, major global reinsurers. At the same time, local reinsurers are utilized
to ensure a balance for local capacity and diversification.
\n \n
Concentration of underwriting risk
Americas
United Kingdom
International
Total
Insurance contracts
Direct participating contracts
70,436
39,687
193
110,315
Without direct participation contracts
59,873
642
6,432
66,946
Investment contracts with DPF
Direct participating contracts
-
21,594
-
21,594
On December 31, 2023
130,308
61,922
6,625
198,855
\n \n
Concentration of underwriting risk
Americas
United Kingdom
International
Total
Insurance contracts
Direct participating contracts
69,163
36,694
187
106,044
Without direct participation contracts
61,730
927
7,383
70,039
Investment contracts with DPF
Direct participating contracts
-
21,055
-
21,055
On December 31, 2022
130,892
58,676
7,570
197,139
Sensitivity analysis of net result, shareholders\u2019 equity and CSM to changes in various underwriting risks
Sensitivity analysis of net result and shareholders\u2019 equity to various underwriting risks is shown in the table that follows.
Aegon's best estimate assumptions already include our view of expected future developments and the sensitivities represent
an increase or decrease of lapse rates, mortality rates and morbidity rates, compared to Aegon's best estimate assumptions.
These underwriting sensitivities were run using a permanent shock applied to all of Aegon's products, exposed to an increase
and to a decrease in the corresponding rates. Due to the nature of IFRS and how changes in assumptions are absorbed by the
CSM while a contract is not onerous, but are reflected in the net result if it is onerous, it is possible that the results of opposite
sensitivities seem counterintuitive. For example we see how both a mortality up and down sensitivity lead to a negative net
result. This happens as the contracts that are exposed to mortality increases, become onerous under a mortality up sensitivity,
leading to a negative net result. On the other hand, under a mortality down sensitivity the positive effects are absorbed by an
increase in CSM, leading to higher net results in the future but not in the current net result shown in the table.
\n \n
2023
On net result
On shareholders' equity
On CSM
Gross of
Net of
Gross of
Net of
Gross of
Net of
Estimated approximate effect
reinsurance
reinsurance
reinsurance
reinsurance
reinsurance
reinsurance
Without direct participation contracts
20% increase in lapse rates
(95)
(58)
(43)
(7)
(126)
(151)
20% decrease in lapse rates
57
35
41
18
117
169
5% increase in mortality rates
(520)
(87)
(443)
(19)
(86)
11
5% decrease in mortality rates
419
11
338
(62)
177
55
10% increase in morbidity rates
(139)
(138)
(153)
(152)
(759)
(746)
10% decrease in morbidity rates
53
53
75
77
908
894
5% increase in expenses
(14)
(12)
(12)
(10)
(133)
(134)
5% decrease in expenses
36
36
35
35
163
164
Direct participating contracts
20% increase in lapse rates
55
48
56
58
(32)
(336)
20% decrease in lapse rates
(70)
(53)
(65)
(62)
123
428
5% increase in mortality rates
(84)
(78)
(71)
(67)
(699)
(314)
5% decrease in mortality rates
(5)
(16)
(15)
(23)
835
436
10% increase in morbidity rates
-
-
-
-
-
-
10% decrease in morbidity rates
-
-
-
-
-
-
5% increase in expenses
(13)
(13)
(13)
(14)
(205)
(201)
5% decrease in expenses
12
12
13
13
206
203
Non-life contracts
10% increase in claims
(6)
(5)
(8)
(6)
-
-
10% decrease in claims
6
5
9
6
-
-
\n \n
2022
On net result
On shareholders' equity
On CSM
Gross of
Net of
Gross of
Net of
Gross of
Net of
Estimated approximate effect
reinsurance
reinsurance
reinsurance
reinsurance
reinsurance
reinsurance
Without direct participation contracts
20% increase in lapse rates
(94)
(61)
(34)
(2)
67
(172)
20% decrease in lapse rates
72
42
46
15
(83)
205
5% increase in mortality rates
(507)
(84)
(451)
(33)
(343)
(14)
5% decrease in mortality rates
422
11
362
(43)
430
78
10% increase in morbidity rates
(121)
(119)
(94)
(92)
(833)
(819)
10% decrease in morbidity rates
33
28
11
8
980
969
5% increase in expenses
(7)
(6)
(2)
(1)
(157)
(152)
5% decrease in expenses
5
4
1
-
183
153
Direct participating contracts
20% increase in lapse rates
43
29
69
50
187
29
20% decrease in lapse rates
(106)
(72)
(125)
(92)
68
188
5% increase in mortality rates
(47)
(22)
(37)
(15)
(565)
(365)
5% decrease in mortality rates
10
(14)
-
(21)
623
411
10% increase in morbidity rates
-
-
-
-
-
-
10% decrease in morbidity rates
-
-
-
-
-
-
5% increase in expenses
(8)
(7)
(7)
(7)
(220)
(219)
5% decrease in expenses
5
5
5
5
221
220
Non-life contracts
10% increase in claims
(1)
(1)
(1)
(1)
-
-
10% decrease in claims
1
1
1
1
-
-
29.5 Risk mitigation
Aegon has chosen to apply the risk mitigation option and recognize changes in fulfillment value of products with direct
participating features in the P&L and OCI, instead of adjusting the CSM. The adjustment to the CSM that would otherwise have
been made in December 31, 2023 is EUR 1,476 million.", "dimensions": { "concept": "agn:DisclosureOfInsuranceContractsReinsuranceContractsAndInvestmentContractsWithDiscretionaryParticipatingFeaturesExplanatoryTextBlock", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f61952": { "value": "30 Investment contracts without discretionary participating features
30.1 Investment contracts without DPF where Aegon bears the risk
\n \n
2023
2022
On January 1
9,597
20,674
Deposits
1,606
22,638
Withdrawals
(1,405)
(23,118)
Interest credited
221
232
Net exchange differences
(345)
582
Transfer to/from other headings
567
797
Transfers to disposal groups
-
(12,179)
Other
(18)
(29)
On December 31
10,222
9,597
\n \n
Investment contracts consist of the following:
2023
2022
Institutional guaranteed products
169
179
Fixed annuities
10,024
9,418
Other
29
-
On December 31
10,222
9,597
\n
\n
30.2 Investment contracts without DPF where the policyholder bears the risk
\n \n
2023
2022
On January 1
55,631
71,690
Gross premium and deposits \u2013 existing and new business
12,648
11,261
Withdrawals
(9,840)
(15,233)
Interest credited
7,636
(9,864)
Fund charges released
(313)
(324)
Net exchange differences
(40)
437
Transfers to disposal groups
-
(1,396)
Transfer to/from other headings
(680)
(943)
Other
2
2
On December 31
65,044
55,631
", "dimensions": { "concept": "agn:DisclosureOfInvestmentContractsLiabilitiesWithoutDiscretionaryParticipatingFeaturesExplanatoryTextBlock", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f62166": { "value": "31 Borrowings \n \n
2023
2022
Capital funding
763
1,245
Operational funding
1,593
2,806
On December 31
2,356
4,051
Current
32
1,150
Non-current
2,325
2,901
On December 31
2,356
4,051
Fair value of borrowings
2,459
4,114
Aegon\u2019s borrowings are defined separately as capital funding and operational funding. Capital funding includes debt
securities that are issued for general corporate purposes and for capitalizing its business units. Capital funding is part of the
Company\u2019s total capitalization that is used for financing its subsidiaries and the cash held at the holding company. Operational
funding includes debt securities that are issued for financing of dedicated pools of assets. These assets are either legally
segregated or tracked as separate portfolios.
The difference between the contractually required payment at maturity date and the carrying amount of the borrowings
amounted to EUR 6 million positive (2022: EUR 7 million positive).
Capital funding
A detailed composition of capital funding is included in the following table:
\n \n
(sorted at maturity)
Coupon rate
Coupon date
Issue / Maturity
2023
2022
EUR 500 million Senior Unsecured Notes
1.000%
December 8
2016 / 23
-
499
GBP 250 million Medium-Term Notes
6.125%
December 15
1999 / 31
287
281
Semi-annually,
GBP 400 million Senior Unsecured Notes
6.625%
December 16
2009 / 39
457
446
Other
18
19
On December 31
763
1,245
During 2023, the EUR 500 million senior unsecured notes with a coupon rate of 1% was redeemed.
These loans are considered senior debt in calculating financial leverage in note 37 Capital management and solvency.
Operational funding
During 2023, the operational funding decreased by EUR 1.2 billion mainly due to the partial redemption of the FHLB borrowing.
\n \n
Coupon rate
Coupon date
Issue / Maturity
2023
2022
FHLB Secured borrowings
1)
Floating
Quarterly
2021 / 24
1,562
2,806
North Westerly VI Note
1)
Floating
Quarterly
2020 / 32
15
-
North Westerly VII Note
1)
Floating
Quarterly
2021 / 34
16
-
On December 31
1,593
2,806
1
Issued by a subsidiary of Aegon Ltd.
Other
\n \n
Undrawn committed borrowing facilities:
2023
2022
Floating-rate
- Expiring beyond one year
2,623
3,435
On December 31
2,623
3,435
There were no defaults or breaches of conditions during the period. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f62436": { "value": "32 Provisions \n \n
2023
2022
On January 1
100
193
Additional provisions
77
28
Disposal of a business
(13)
(8)
Unused amounts reversed through the income statement
(25)
(10)
Used during the year
(54)
(57)
Net exchange differences
(2)
5
Transfers to disposal groups
-
(52)
On December 31
83
100
Current
78
90
Non-current
5
10
The provisions on December 31, 2023 consisted of litigation provisions of EUR 65 million (2022: EUR 71 million) mainly
related to settlement in the United States in case alleging mischaracterization of agents as independent contractors
instead of employees (see note 39 Commitments and contingencies), restructuring provisions of EUR 9 million (2022:
EUR 9 million) and other provisions of EUR 9 million (2022: EUR 19 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f62521": { "value": "33 Defined benefit plans \n \n
2023
2022
Retirement benefit plans
368
225
Other post-employment benefit plans
178
184
Total defined benefit plans
546
409
Retirement benefit plans in surplus
103
87
Reimbursement rights
20
-
Total defined benefit assets
123
87
Retirement benefit plans in deficit
491
312
Other post-employment benefit plans in deficit
178
184
Total defined benefit liabilities
669
496
\n
\n
\n \n
2023
2022
Other
Other
post-employ-
post-employ-
Movements during the year in defined
Retirement
ment benefit
Retirement
ment benefit
benefit plans
benefit plans
plans
Total
benefit plans
plans
Total
On January 1
225
184
409
3,547
277
3,824
Defined benefit expenses
113
19
132
68
17
85
Remeasurements of defined benefit plans
167
(7)
160
(837)
(67)
(904)
Contributions paid
(83)
-
(83)
(38)
-
(38)
Benefits paid
(39)
(12)
(51)
(117)
(17)
(134)
Net exchange differences
(15)
(6)
(21)
21
15
36
Transfers to disposal groups
-
-
-
(2,421)
(41)
(2,462)
Other
-
-
-
1
-
1
On December 31
368
178
546
225
184
409
The amounts recognized in the statement of financial position are determined as follows:
\n \n
2023
2022
Other
Other
post-employ-
post-employ-
Retirement
ment benefit
Retirement
ment benefit
benefit plans
plans
Total
benefit plans
plans
Total
Present value of wholly or partly funded
obligations
3,165
-
3,165
3,098
-
3,098
Fair value of plan assets
(3,051)
-
(3,051)
(3,083)
-
(3,083)
Fair value of reimbursement rights
(20)
2
(19)
-
-
-
93
2
95
15
-
15
Present value of wholly unfunded obligations
275
176
451
210
184
394
On December 31
368
178
546
225
184
409
The fair value of Aegon\u2019s own transferable financial instruments included in plan assets and the fair value of other assets used
by Aegon included in plan assets was nil in both 2023 and 2022.
\n \n
2023
2022
Other
Other
post-employ-
post-employ-
Retirement
ment benefit
Retirement
ment benefit
Defined benefit expenses
benefit plans
plans
Total
benefit plans
plans
Total
Current year service cost
38
6
44
32
11
43
Net interest on the net defined benefit liability
(asset)
10
9
19
38
6
45
Past service cost
66
4
69
(3)
-
(3)
Total defined benefit expenses
113
19
132
68
17
85
Defined benefit expenses are included in \"Post-employment benefit costs\" in note 13 Other operating expenses.
\n \n
Movements during the year of the present value of the defined benefit obligations
2023
2022
On January 1
3,491
8,541
Current year service cost
46
43
Interest expense
172
158
Remeasurements of the defined benefit obligations:
- Actuarial gains and losses arising from changes in demographic assumptions
53
(3)
- Actuarial gains and losses arising from changes in financial assumptions
61
(2,420)
Past service cost
109
(3)
Benefits paid
(252)
(529)
Net exchange differences
(65)
164
Transfer to disposal groups
-
(2,462)
Other
-
1
On December 31
3,616
3,491
\n \n
Movements during the year in plan assets for retirement benefit plans
2023
2022
On January 1
3,083
4,717
Interest income (based on discount rate)
153
114
Remeasurements of the net defined liability (asset)
(21)
(1,518)
Contributions by employer
83
38
Benefits paid
(203)
(395)
Net exchange differences
(44)
127
On December 31
3,051
3,083
\n \n
2023
2022
Breakdown of plan assets for
in % of total
in % of total
retirement benefit plans
Quoted
Unquoted
Total
plan assets
Quoted
Unquoted
Total
plan assets
Debt instrument
424
177
601
20%
336
154
490
16%
Derivatives
-
(143)
(143)
(5%)
-
(218)
(218)
(7%)
Investment funds
-
2,142
2,142
70%
-
2,214
2,214
72%
Structured securities
-
200
200
7%
-
268
268
9%
Other
-
252
252
8%
-
328
328
11%
On December 31
424
2,627
3,051
100%
336
2,746
3,083
100%
\n \n
Movements during the year of the fair value of the reimbursement rights
2023
2022
On January 1
-
-
Current year service cost
2
-
Remeasurements of the defined benefit obligations:
- Actuarial gains and losses arising from changes in demographic assumptions
-
-
- Actuarial gains and losses arising from changes in financial assumptions
(25)
-
Past service cost
40
-
Benefits paid
2
-
On December 31
20
-
Defined benefit plans are mainly operated by Transamerica, Aegon UK and Aegon Employees Netherlands. The following
sections contain a general description of the plans in each of these subsidiaries and a summary of the principal actuarial
assumptions applied in determining the value of defined benefit plans. Businesses included in all other operating segments
mostly operate defined contribution plans. Please refer to note 13 Other operating expenses for a total overview of employee
expenses including the total defined contribution expenses.
Transamerica
Transamerica has defined benefit plans covering substantially all its employees that are qualified under the Internal Revenue
Service Code, including all requirements for minimum funding levels. The defined benefit plans are governed by the Board
of Directors of Transamerica Corporation. The Board of Directors has the full power and discretion to administer the plan
and to apply all of its provisions, including such responsibilities as, but not limited to, developing the investment policy and
managing assets for the plan, maintaining required funding levels for the plan, deciding questions related to eligibility and
benefit amounts, resolving disputes that may arise from plan participants and for complying with the plan provisions, and legal
requirements related to the plan and its operation. The benefits are based on years of service and the employee\u2019s eligible
annual compensation. The plan provides benefits are based on the employee\u2019s eligible annual compensation. The plans provide
benefits based on a cash balance formula (which defines the accrued benefit in terms of a stated account balance), depending
on the age and service of the plan participant. The defined benefit plans have a deficit of EUR 216 million on December 31,
2023 (2022: EUR 102 million deficit).
Investment strategies are established based on asset and liability studies by actuaries which are updated as they consider
appropriate. These studies, along with the investment policy, assist to develop the appropriate investment criteria for the plan,
including asset allocation mix, return objectives, investment risk and time horizon, benchmarks and performance standards,
and restrictions and prohibitions. The overall goal is to maximize total investment returns to provide sufficient funding for the
present and anticipated future benefit obligations within the constraints of a prudent level of portfolio risk and diversification.
Aegon believes that the asset allocation is an important factor in determining the long-term performance of the plan.
The plan uses multiple asset classes as well as sub-classes to meet the asset allocation and other requirements of the
investment policy, which minimizes investment risk. From time to time the actual asset allocation may deviate from the desired
asset allocation ranges due to different market performance among the various asset categories. If it is determined that
rebalancing is required, future additions and withdrawals will be used to bring the allocation to the desired level.
Transamerica maintains minimum required funding levels as set forth by the Internal Revenue Code. If contributions are
required, the funding would be provided from the Company\u2019s general account assets. Pension plan contributions were not
required for Transamerica in 2023 or 2022. However, with the Aegon Ltd.Transamerica Management Board approval of a
proposal from Transamerica Corporation, Transamerica Corporation made a pension plan contribution of EUR 45 million
in September 2023 that was over and above the minimum required funding levels as set forth by the Internal Revenue Code.
In 2022, Transamerica Corporation did not make a pension plan contribution.
Transamerica also sponsors supplemental retirement plans to provide senior management with benefits in excess of normal
retirement benefits. The plans are unfunded and are not qualified under the Internal Revenue Code. The supplemental
retirement plans are governed by either Transamerica Corporation, or the Compensation Committee of the Board of Directors
of Transamerica Corporation. Transamerica Corporation, or the Compensation Committee of the Board of Directors has the
full power and discretion to apply all the plan\u2019s provisions, including such responsibilities as, but not limited to, interpret the
plan provisions, to make factual determinations under the plan, to determine plan benefits, and to comply with any statutory
reporting and disclosure requirements. The benefits are based on years of service and the employee\u2019s eligible annual
compensation. The plans provide benefits based on a traditional final average formula or a cash balance formula (which
defines the accrued benefit in terms of a stated account balance), depending on the age and service of the plan participant.
The company funds the benefit payments of the supplemental retirement plans from its general account assets. The unfunded
amount related to these plans, for which a liability has been recorded, was EUR 174 million (2022: EUR 197 million unfunded).
Transamerica provides health care benefits to retired employees through continuation of coverage primarily in self-funded
plans, and partly in fully insured plans, which are classified as unfunded per IAS 19 financial guidance. The postretirement
health care benefits under the Plans are administered by Transamerica Corporation, which has delegated the claims
administration to third-party administrators. Transamerica maintains two plans which provide continuation of coverage for
retiree medical benefits. For each plan, Transamerica has the fiduciary responsibility to administer the plan in accordance with
its terms, and decides questions related to eligibility and determines plan provisions and benefit amounts.
Under the Employee Retirement Income Security Act (ERISA), Transamerica has the fiduciary responsibility to monitor the
quality of services provided by the third-party claims administrator and to replace the third-party administrator if needed.
In addition, Transamerica has the fiduciary obligation to interpret the provisions of the plans, and to comply with any statutory
reporting and disclosure requirements. Finally, Transamerica reviews the terms of the plans and makes changes to the plans
if and when appropriate. Transamerica funds the benefit payments or premium payments of the post-retirement health
care plans from its general account assets. The post-retirement health benefit liability amounted to EUR 176 million (2022:
EUR 184 million).
The weighted average duration of the defined benefit obligation is 9.0 years (2022: 9.8 years).
The principal actuarial assumptions that apply for the year ended December 31 are as follows:
\n \n
Actuarial assumptions used to determine defined benefit obligations at year-end
2023
2022
Demographic actuarial assumptions
Mortality
US mortality table
1)
US mortality table
1)
Financial actuarial assumptions
Discount rate
5.00%/4.93%
5.22%/5.14%
Salary increase rate
4.00%
4.00%
Health care trend rate
6.80%
6.30%
1
2023 assumption -PRI-2012 Employee, Healthy Annuitant and Contingent Survivor Tables (90% white collar/10% blue collar) projected with Scale MP-2021.
Comparative figures are as included in the Integrated Annual Report 2022.
The principal actuarial assumptions have an effect on the amounts reported for the defined benefit obligation. A change
as indicated in the table below in the principal actuarial assumptions would have the following effects on the defined benefit
obligation per year-end:
\n \n
Estimated approximate effects on the
defined benefit obligation
2023
2022
Demographic actuarial assumptions
10% increase in mortality rates
(47)
(50)
10% decrease in mortality rates
53
54
Financial actuarial assumptions
100 basis points increase in discount rate
(205)
(222)
100 basis points decrease in discount rate
250
277
100 basis points increase in salary increase rate
5
4
100 basis points decrease in salary increase rate
(4)
(3)
100 basis points increase in health care trend rate
10
10
100 basis points decrease in health care trend rate
(9)
(9)
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice,
this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the
defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation
calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the
pension liability recognized within the statement of financial position.
\n \n
Target allocation of plan assets for retirement benefit plans for the
next annual period is:
Equity instruments
2%-4%
Debt instruments
80%-90%
Other
8%-16%
Aegon UK
Aegon UK operated a defined benefit pension scheme providing benefits for staff based on final pensionable salary and years
of service. The scheme closed to new entrants a number of years ago and closed to future accrual on March 31, 2013. Aegon
UK now offers a defined contribution pension scheme to all employees.
The pension scheme is administered separately from Aegon UK and is governed by Trustees, who are required to act in the best
interests of the pension scheme members.
The pension scheme Trustees are required to carry out triennial valuations on the scheme\u2019s funding position, with the latest
valuation being on September 30, 2022. As part of this triennial valuation process, a schedule of contributions is agreed
between the Trustees and Aegon UK in accordance with UK pensions legislation and guidance issued by the Pensions Regulator
in the United Kingdom. The schedule of contributions includes deficit reduction contributions to clear any scheme deficit. Under
IAS 19, the defined benefit plan has a surplus of EUR 103 million on December 31, 2023 (2022: EUR 87 million surplus). During
2023, EUR 37 million (2022: EUR 38 million) of contributions were paid into the scheme.
The investment strategy for the scheme is determined by the trustees in consultation with Aegon UK. Currently 16% of assets
are invested in growth assets (i.e. primarily equities) and 84% are income and liability driven investments where the investments
are a portfolio of fixed interest and inflation-linked bonds and related derivatives, selected to broadly match the interest rate and
inflation profile of liabilities.
Under the scheme rules, pensions in payment increase in line with the UK Retail Price Index, and deferred benefits increase
in line with the UK Consumer Price Index. The pension scheme is therefore exposed to UK inflation changes as well as interest
rate risks, investment returns and changes in the life expectancy of pensioners.
The scheme purchased two buy-in policies in the name of the Trustee to cover full scheme benefits for a group of pensioners
in 2019 and 2022. The liabilities (and matching assets) calculated on the year end assumptions has been included in the
funded position on December 31, 2023.
The weighted average duration of the defined benefit obligation is 14.9 years (2022: 15.3 years).
The principal actuarial assumptions that apply for the year ended December 31 are as follows:
\n \n
Actuarial assumptions used to determine defined benefit obligations at year-end
2023
2022
Demographic actuarial assumptions
Mortality
UK mortality table
1)
UK mortality table
2)
Financial actuarial assumptions
Discount rate
4.79%
4.96%
Price inflation
3.10%
3.20%
1
Club Vita tables based on analysis of Scheme membership CMI 2022 1.5%/1.25% p.a. (males/females)
2
Club Vita tables based on analysis of Scheme membership CMI 2021 1.5%/1.25% p.a. (males/females)
The principal actuarial assumptions have an effect on the amounts reported for the defined benefit obligation. A change
as indicated in the table below in the principal actuarial assumptions would have the following effects on the defined benefit
obligation per year-end:
\n \n
Estimated approximate effects on the
defined benefit obligation
2023
2022
Demographic actuarial assumptions
10% increase in mortality rates
(20)
(19)
10% decrease in mortality rates
23
22
Financial actuarial assumptions
100 basis points increase in discount rate
(131)
(130)
100 basis points decrease in discount rate
166
164
100 basis points increase in price inflation
62
55
100 basis points decrease in price inflation
(128)
(113)
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice,
this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the
defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation
calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the
pension liability recognized within the statement of financial position.
\n \n
Target allocation of plan assets for retirement benefit plans for the
next annual period is:
Equity instruments
16.1%
Debt instruments
83.9%
Aegon Employees Netherlands B.V.
Until July 1, 2023, Aegon Nederland N.V. was the employer of the employees of Aegon in the Netherlands. Following the
transaction with a.s.r., the remaining employees of Aegon located in the Netherlands were transferred to Aegon Employees
Netherlands B.V. (AEN), an Aegon subsidiary included in the Holdings segment, per July 1, 2023. AEN offers a defined
contribution pension scheme to all employees in the Netherlands.
Aegon Nederland N.V. operated a defined benefit pension plan under a pension contract. As of January 1, 2020, the defined
benefit pension plan is closed for new members and there will be no further accrual of benefits to existing members.
Entitlements before January 1, 2020, will remain unchanged and the indexation for those accruals will remain in force. The
pension contract was updated as AEN was added as an employer upon the date of the transfer of employees to AEN.
The defined benefit plans cover retirement benefits, disability, death and survivor pensions and the defined benefit obligation
amounts to EUR 90 million at December 31, 2023. The defined benefit obligation are backed by investments owned by Aegon
Nederland N.V. The obligation of Aegon Nederland N.V. to fund the defined benefit obligation through these investments
is reported as a reimbursement right on the balance sheet of AEN. The average remaining duration of the defined benefits
obligation is 21.9 years.
Also included in the reimbursement rights is the present value of the expected guaranteed premiums and management fees
to be paid to Aegon Nederland N.V. by AEN. The present value as of December 31, 2023 amounts to EUR 69 million, discounted
at a rate of 3.42%. The average remaining duration of the expected guaranteed premium and management fee is 16.9 years.
The liabilities related to other post-employment benefit plans, consisting of former Board of Directors unconditional indexation,
jubilee and mortgage discount liabilities, are wholly unfunded and amount to EUR 5 million at December 31, 2023. The weighted
average duration of the other post-employment benefit plans is 12.0 years.
The principal actuarial assumptions that apply for the year-ended December 31 are as follows:
\n \n
Actuarial assumptions used to determine defined benefit
obligations at year-end
2023
Demographic actuarial assumptions
Mortality
AEGON 2023
1)
Financial actuarial assumptions
Discount rate
3.42%
Price inflation
2.36%
1
During 2023 the mortality table is adjusted, based on experience adjustments.
The principal actuarial assumptions have an effect on the amounts reported for the defined benefit obligation. A change
as indicated in the table below in the principal actuarial assumptions of the retirement benefit plan would have the following
effects per year-end:
\n \n
Estimated approximate effects on the defined benefit obligation
2023
Demographic actuarial assumptions
10% increase in mortality rates
(1)
10% decrease in mortality rates
1
Financial actuarial assumptions
100 basis points increase in discount rate
(14)
100 basis points decrease in discount rate
18
The above sensitivity analysis is based on a change in one assumption while holding all other assumptions constant. In practice,
this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the
defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation
calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the
defined benefit obligation recognized within the statement of financial position.
All other operating segments
Businesses included in all other operating segments mostly operate defined contribution plans. Please see note 13 Other
operating expenses for the employee expenses regarding these contribution plans.", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f64053": { "value": "34 Deferred tax \n \n
Deferred tax
2023
2022
Deferred tax assets
2,350
2,433
Deferred tax liabilities
(57)
(30)
On December 31
2,293
2,403
\n \n
Deferred tax assets comprise temporary differences on:
2023
2022
Real estate
(2)
(15)
Financial assets
803
1,569
Insurance and investment contracts
(599)
(1,416)
Deferred expenses, VOBA and other intangible assets
539
573
Defined benefit plans
214
196
Tax losses and credits carried forward
1,112
1,287
Other
283
239
On December 31
2,350
2,433
\n \n
Deferred tax liabilities comprise temporary differences on:
2023
2022
Financial assets
(6)
(6)
Insurance and investment contracts
62
33
Deferred expenses, VOBA and other intangible assets
2
-
Other
(1)
3
On December 31
57
30
The following table provides a movement schedule of net deferred tax broken-down by those items for which a deferred tax
asset or liability has been recognized.
\n \n
Deferred
expenses,
Tax losses
Insurance
VOBA and
and
and
other
Defined
credits
Financial
investment
intangible
benefit
carried
Real estate
assets
contracts
assets
plans
forward
Other
Total
On January 1, 2023
15
(1,574)
1,449
(573)
(196)
(1,287)
(235)
(2,403)
Charged to income statement
(12)
170
(479)
12
6
49
51
(204)
Charged to OCI
-
436
(271)
-
(31)
-
-
134
Net exchange differences
-
38
(32)
19
7
26
18
76
Disposal of a business
-
2
(4)
-
-
(8)
2
(8)
Transfers to disposal groups
-
-
-
-
-
(1)
1
-
Transfer to/from other headings
-
118
-
-
-
-
(118)
-
Transfer to/from current income tax
-
-
-
-
-
109
-
109
Other
-
-
(1)
5
-
(1)
(2)
2
On December 31, 2023
2
(809)
661
(537)
(214)
(1,112)
(284)
(2,293)
On January 1, 2022
776
3,336
(4,452)
(448)
(154)
(988)
(45)
(1,974)
Charged to income statement
(75)
(2,928)
3,380
(217)
(191)
180
(105)
45
Charged to OCI
-
(2,770)
2,256
-
252
-
(56)
(319)
Net exchange differences
1
139
(163)
(28)
(12)
(24)
(22)
(109)
Disposal of a business
(1)
1
(2)
-
-
-
(3)
(5)
Transfers to disposal groups
(685)
841
306
(1)
(94)
(454)
26
(61)
Transfer to/from other headings
-
(194)
122
121
3
(27)
(26)
(1)
Transfer to/from current income tax
-
-
-
-
-
25
-
25
Other
-
-
-
-
-
-
(4)
(4)
On December 31, 2022
15
(1,574)
1,449
(573)
(196)
(1,287)
(235)
(2,403)
Transfer to/from current income tax relates to the deferred tax asset for the loss carry forward position of the Dutch fiscal unity.
Deferred tax assets are recognized for tax losses and credits carried forward to the extent that the realization of the related tax
benefit through future taxable profits is probable. For an amount of gross EUR 2,564 million; an amount of tax EUR 573 million
related to tax losses carried forward (2022: gross EUR 2,858 million; tax EUR 635 million) and an amount of tax EUR 583 million
related to tax credits carried forward (2022: tax EUR 595 million) the realization of the deferred tax asset is dependent on the
projection of future taxable profits.
For the following amounts, arranged by loss carry forward periods, the deferred tax asset is not recognized:
\n \n
Not recognized deferred tax
Gross amounts
1)
assets
2023
2022
2023
2022
< 5 years
28
58
13
16
\u2265 5 \u2013 10 years
1
7
(0)
2
\u2265 10 \u2013 15 years
-
-
65
59
\u2265 15 \u2013 20 years
-
-
-
-
Indefinitely
939
651
231
169
On December 31
969
716
308
246
1
The gross value of state tax loss carry forward is not summarized in the disclosure, due to the fact that the United States files in different state jurisdictions with
various applicable tax rates and apportionment rules
Deferred corporate income tax assets in respect of deductible temporary differences are recognized to the extent that the
realization of the related tax benefit through future taxable profits is probable. For the following amounts relating to deductible
temporary differences the realization of the deferred corporate income tax asset is dependent on future taxable profits
in excess of the profits arising from the reversal of existing taxable temporary differences.
\n \n
Gross amounts
Deferred tax assets
2023
2022
2023
2022
Deferred corporate income tax asset dependent on retaining bond
and similar investments until the earlier of market recovery or
maturity
4,729
6,166
993
1,295
Deferred corporate income tax asset dependent on future taxable
profits
1,717
27
362
7
On December 31
6,446
6,193
1,355
1,302
In 2022 Aegon did not recognize deferred tax assets in respect of deductible temporary differences relating to Financial assets
and Other items for the amount. The amount of gross EUR 29 million; tax EUR 5 million is no longer accounted for since this
relates to the divested business of Poland.
The non-recognized deferred tax liabilities in 2022 for withholding tax and other taxes payable on the unremitted earnings
of certain subsidiaries totaled gross EUR 1,758 million; tax EUR 454 million was settled in 2023.
Deferred taxes are non-current by nature and the majority of the deferred tax assets and liabilities will therefore reverse after
more than one year after the balance sheet date.", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f64877": { "value": "35 Other liabilities \n \n
2023
2022
Payables due to policyholders
1,632
684
Payables due to brokers and agents
482
454
Social security and taxes payable
59
49
Income tax payable
1
10
Investment creditors
995
970
Cash collateral on derivative transactions
964
2,483
Cash collateral on securities lent
2,357
2,417
Cash collateral - other
68
64
Repurchase agreements
28
107
Lease liabilities
205
210
Other creditors
1,599
2,828
On December 31
8,390
10,278
Current
8,210
10,069
Non-current
180
208
The decrease in other liabilities is mainly the result of lower cash collateral on derivative transactions which is driven by the
divestment of Aegon the Netherlands.
The carrying amounts disclosed are reasonable approximations of the fair values at year-end, given the predominantly current
nature of the other liabilities. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f64990": { "value": "36 Accruals \n \n
2023
2022
Accrued interest
47
129
Accrued expenses
281
243
On December 31
328
372
The carrying amounts disclosed reasonably approximate the fair values at year-end.", "dimensions": { "concept": "agn:DisclosureOfAccrualsExplanatoryTextBlock", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f65023": { "value": "37 Capital management and solvency
The Group\u2019s lead regulator, the Bermuda Monetary Authority (BMA), monitors capital requirements for the Group as a whole.
The Group\u2019s individual subsidiaries are directly supervised by their local regulators. The Group is required by the BMA to hold
an excess of its assets over its insurance contract liabilities calculated on a regulatory basis. Aegon\u2019s group solvency ratio
under the Bermuda solvency framework is broadly aligned with that under the previously applied Solvency II framework during
a transition period until the end of 2027. This includes the method to translate Transamerica\u2019s capital position into the group
solvency position.
The Group and its individual subsidiaries may also be subject to supervisory intervention by their local regulators at local entity
level. The Group and its individually regulated subsidiaries complied with all externally imposed capital requirements during
2023 and 2022.
Strategic importance
Aegon\u2019s approach toward capital management plays a vital role in supporting the execution of its strategy. The key capital
management priority is to ensure adequate capitalization to cover Aegon\u2019s obligations toward its policyholders and debtholders
while providing sustainable dividends to shareholders. This priority is accomplished by allocating capital to products that offer
high growth and return prospects.
Management of capital
Disciplined risk and capital management support Aegon\u2019s decisions in deploying the capital that is generated in the
Company's businesses and that is provided for by investors. Aegon balances the funding of new business growth with the
\n
\n
\n\n
\n
\n
funding required to ensure that its obligations toward policyholders and debtholders are always adequately met and provide
a sustainable dividend to shareholders.
Aegon\u2019s goal for both its operating units and for the Aegon group as a whole is to maintain a strong financial position and
to be able to sustain losses from extreme business and market conditions. Aegon\u2019s Enterprise Risk Management (ERM)
framework ensures that the Aegon Group and its operating companies are adequately capitalized and that obligations toward
policyholders are always adequately met. Embedded in this larger framework is Aegon\u2019s capital management policy, which
is based on adequate capitalization of the operating units, Cash Capital at Holding and leverage.
Aegon manages capital in the operating units to their respective operating levels, sufficient to absorb moderate shocks and pay
sustainable remittances to the Group, and above their minimum dividend payment levels. Cash Capital at Holding is maintained
within an operating range of EUR 0.5 \u2013 1.5 billion and covers holding expenses, near-term dividends, and contingencies,
such as potential recapitalization of units. In 2023, Aegon achieved its goal to reduce its gross financial leverage to around
EUR 5.0 billion, as announced during the June 2023 Capital Markets Day. Gross financial leverage was EUR 5.1 billion per
December 31, 2023, after a EUR 500 million reduction in gross financial leverage in December 2023 funded from the proceeds
of the a.s.r. transaction.
The frequent monitoring of actual and forecasted capitalization levels of its underlying businesses is an important element
in Aegon's capital framework in order to actively steer and manage toward maintaining adequate capitalization levels. Group
operating capital generation contributed favorably and more than offset dividend payments.
Capital ratios of Aegon's main operating units
\n \n
December 31, 2023
1)
December 31, 2022
US RBC ratio
432%
425%
Scottish Equitable Plc (UK) Solvency II ratio
187%
169%
1
The capital ratios are estimates and are not final until filed with the respective supervisory authority.
The estimated RBC ratio in the United States increased from 425% on December 31, 2022, to 432% on December 31, 2023,
and remained above the operating level of 400%. Markets had beneficial impacts driven by credit spread narrowing and default
experience. The strong operating performances and one-off items were largely offset by remittances.
The Solvency II ratio for Scottish Equitable Plc increased from 169% on December 31, 2022, to 187% on December 31, 2023,
and remained above the operating level of 150%. This is driven by the UK Risk Margin reform, as the unfavorable impacts from
markets and remittances to Aegon UK were offset by operating capital generation.
The ability of Aegon's operating units, principally insurance companies, to pay remittances to the holding company
is constrained by the requirement for these operating units to remain adequately capitalized to the levels set by local insurance
regulations and governed by local insurance supervisory authorities. Based on the capitalization level of the operating units,
local insurance supervisors are able to restrict and/or prohibit the transfer of remittances to the holding company. In addition,
the ability of operating units to pay remittances to the holding company can be constrained by the requirement for these
operating units to hold sufficient shareholders' equity as determined by law. The capitalization level and shareholders' equity
of the operating units can be impacted by various factors (e.g. general economic conditions, capital market risks, underwriting
risk factors, changes in government regulations, and legal and arbitrational proceedings). To mitigate the impact of such factors
on the ability of operating units to transfer funds, Aegon establishes an operating level of capital in each of the units, 150% SCR
for Solvency II units, including the UK, and 400% RBC CAL in the US, which includes additional capital in excess of regulatory
capital requirements. Aegon manages capital in the units to this operating level over-the-cycle.
Cash Capital at Holding
Cash Capital at Holding increased from EUR 1.6 billion on December 31, 2022 to EUR 2.4 billion on December 31, 2023.
This increase was largely due to EUR 2.2 billion of cash proceeds from completing the transaction with a.s.r., as announced
on July 4, 2023. The proceeds from this divestiture provided Aegon surplus cash to return capital to its shareholders
via a EUR 1,500 million share buyback (of which over EUR 750 million in 2023) and to have the contractual redemption
of EUR 500 million senior debt in December 2023 without replacement.
Group Solvency Ratio
Aegon\u2019s group solvency ratio and surplus under the Bermuda solvency framework is broadly in line with that under the
Solvency II framework during a transition period until the end of 2027. The method to translate Transamerica\u2019s capital
position into the group solvency position is also similar to the methodology previously applied under Solvency II. Aegon's UK
insurance subsidiaries have been included in the Aegon\u2019s Solvency calculation in accordance with UK Solvency II standards,
including Aegon UK\u2019s approved Partial Internal Model. After the transition period, Aegon will fully adopt the Bermudian
solvency framework.
The Group solvency ratio is calculated as the ratio between the Eligible Own Funds and the Solvency Capital Requirement
(SCR). The Eligible Own Funds equal to the Available Own Funds after applying any Own Funds eligibility restrictions.
\n \n
December 31, 2023
1)
December 31, 2022
Group Eligible Own Funds
14,250
16,332
Group SCR
7,366
7,844
Group solvency ratio
193%
208%
1
The solvency ratios are estimates and are not final until filed with the respective supervisory authority.
Aegon\u2019s Group solvency ratio was 193% on December 31, 2023, compared to 208% on December 31, 2022. The decrease
in Group solvency ratio is mainly driven by the transaction with a.s.r.
Minimum regulatory requirements
Insurance laws and regulations in local regulatory jurisdictions often contain minimum regulatory capital requirements.
Bermuda and the BMA, as group supervisor and local entity supervisor of Bermuda subsidiaries, defined a minimum solvency
margin. For insurance companies in the European Union and the UK also, minimum capital requirement is defined, being
the Minimum Capital Requirement. An irreparable breach of the minimum regulatory capital requirements would lead to a
withdrawal of the Company's insurance license. Similarly, for the US insurance entities the withdrawal of the insurance license
is triggered by a breach of the 100% Authorized Control Level (ACL), which is set at 50% of the Company Action Level (CAL).
Aegon views the higher capital requirement, 120% of the SCR for the Group or 100% of local entity SCR CAL as the level
around which supervisors will formally require management to provide regulatory recovery plans.
During 2023, the Aegon Group and the regulated entities within the Aegon Group that are subject to regulatory capital
requirements on a solo-level continued to comply with the solvency requirements.
Capital leverage
1
Aegon\u2019s total capitalization reflects the capital employed in the business units and consists adjusted valuation equity
and total
gross financial leverage. Aegon assesses its gross financial leverage position based on various leverage metrics, including the
gross financial leverage ratio, which is calculated by dividing total financial leverage by total capitalization. Aegon defines total
financial leverage as debt or debt-like funding issued for general corporate purposes and for capitalizing Aegon\u2019s business
units. Total financial leverage includes hybrid instruments, in addition to both subordinated and senior debt. Aegon\u2019s total
capitalization comprises the following components:
\u2022
Shareholders\u2019 equity based on IFRS as adopted by the EU;
\u2022
Non-controlling interests and Long Term Incentive Plans not yet vested
\u2022
Contractual service margin net of tax; and
\u2022 Total financial leverage.
1
Adjusted valuation equity is defined as the sum of shareholders\u2019 equity, non-controlling interests, long term incentive plans not yet vested and the tax adjusted
contractual service margin.
The following table shows the composition of Aegon's total capitalization, the calculation of the gross financial leverage ratio
and its fixed charge coverage:
\n \n
Note
2023
2022
Total shareholders\u2019 equity
25
7,475
8,815
Non-controlling interests and share options not yet exercised
26, SOFP
2)
203
243
CSM after tax
29
6,403
7,227
Adjusted valuation equity
14,080
16,285
Perpetual contingent convertible securities
26
500
500
Junior perpetual capital securities
26
923
923
Perpetual cumulative subordinated bonds
26
454
454
Subordinated Borrowings
27
2,244
2,295
Trust pass-through securities
28
111
118
Currency revaluation other equity instruments
1)
50
66
Hybrid leverage
4,282
4,356
Senior debt
31
3)
782
1,265
Senior leverage
782
1,265
Total gross financial leverage
5,064
5,621
Total capitalization
19,144
21,906
Gross financial leverage ratio
26.5%
25.7%
Fixed Charge Coverage
6.5 x
8.7 x
1
Other equity instruments that are denominated in foreign currencies are, for purpose of calculating hybrid leverage, revalued to the period-end exchange rate.
2
Non-controlling interests are disclosed in the statement of financial position.
3
Senior debt for the gross financial leverage calculation also contains swaps for an amount of EUR 19 million (2022: EUR 20 million).
Distributable reserves
Aegon Ltd. is subject to legal restrictions with regard to the amount of dividends it can pay to its shareholders.
Aegon shall only declare or pay a dividend or make a distribution from contributed surplus in accordance with Bermuda law.
Among other things this means that Aegon shall not declare or pay a dividend or make a distribution from contributed surplus
in the event that there are reasonable grounds for believing that (i) the company is, or would after the payment be, unable to pay
its liabilities as they become due; or (ii) the realizable value of the company\u2019s assets would thereby be less than its liabilities.
In accordance to the Dutch act Non-residential companies (\"Wet op de formeel buitenlandse vennootschappen\") the members
of the Board of Directors will need to satisfy themselves that after distributions to shareholders, repurchase of shares and
reduction of the issued capital with repayment of shares Aegon Ltd. remains in the position to proceed with the payment
of its due debts.", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f65420": { "value": "38 Fair value
The estimated fair values of Aegon\u2019s assets and liabilities correspond with the amounts that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When
available, Aegon uses quoted market prices in active markets to determine the fair value of investments and derivatives. In the
absence of an active market, the fair value of investments in financial assets is estimated by using other market observable
data, such as corroborated external quotes and present value or other valuation techniques. An active market is one in which
transactions are taking place regularly on an arm\u2019s length basis. Fair value is not determined based upon a forced liquidation
or distressed sale.
Valuation techniques are used when Aegon determines the market is inactive or quoted market prices are not available for
the asset or liability at the measurement date. However, the fair value measurement objective remains the same, that is,
to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between
market participants at the measurement date under current market conditions (i.e. an exit price at the measurement date
from the perspective of a market participant that holds the asset or owes the liability). Therefore, unobservable inputs reflect
Aegon\u2019s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including
assumptions about risk). These inputs are developed based on the best information available.
Aegon employs an oversight structure over valuation of financial instruments that includes appropriate segregation of duties.
Senior management, independent of the investing functions, is responsible for the oversight of control and valuation policies
and for reporting the results of these policies. For fair values determined by reference to external quotation or evidenced
pricing parameters, independent price determination or validation is utilized to corroborate those inputs. Further details of the
validation processes are set out below.
Valuation of assets and liabilities is based on a pricing hierarchy, in order to maintain a controlled process that will
systematically promote the use of prices from sources in which Aegon has the most confidence, where the least amount
of manual intervention exists and to embed consistency in the selection of price sources. Depending on asset type the pricing
hierarchy consists of a waterfall that starts with making use of market prices from indices and follows with making use of third-
party pricing services or brokers.
Fair value hierarchy
The following table sets out the fair values of financial instruments by the level of the fair value hierarchy into which each fair
value measurement is categorized. It does not include fair value information for cash and cash equivalents, receivables, and
payables, whose carrying amounts are a reasonable approximation of fair value, or for lease liabilities.
\n \n
2023
Fair value hierarchy
Level I
Level II
Level III
Total
Assets measured at FVOCI
Shares
5
-
4
10
Debt securities
5,644
41,031
516
47,191
Money market and other short-term investments
3,028
97
9
3,135
Other investments at fair value
-
29
-
29
8,678
41,157
530
50,364
Financial assets measured at fair value through profit or
loss
Shares
153
43
94
291
Debt securities
302
2,009
86
2,396
Money market and other short-term investments
4,041
173
-
4,215
Other investments at fair value
1
773
4,237
5,011
Derivatives
47
1,374
8
1,429
Investments in real estate
-
-
55
55
Investments in real estate for policyholders
-
-
433
433
Investments where the policyholder bears the risk
90,027
103,022
342
193,390
94,570
107,395
5,255
207,220
Revalued amounts
Real estate held for own use
-
-
61
61
Total financial assets measured at fair value
103,248
148,551
5,846
257,645
Financial liabilities carried at fair value
Investment contracts without DPF where the policyholder bears the
risk
-
65,044
-
65,044
Derivatives
39
2,434
6
2,479
Total financial liabilities measured at fair value
39
67,478
6
67,523
\n \n
2022
Fair value hierarchy
Level I
Level II
Level III
Total
Assets measured at FVOCI
Shares
5
-
4
10
Debt securities
6,353
45,073
181
51,607
Money market and other short-term investments
1,597
973
5
2,576
Other investments at fair value
-
31
-
31
7,956
46,077
191
54,223
Financial assets measured at fair value through profit or loss
Shares
160
61
127
348
Debt securities
282
1,722
35
2,040
Money market and other short-term investments
2,084
957
1
3,042
Other investments at fair value
1
537
4,050
4,588
Derivatives
33
2,728
11
2,771
Investments in real estate
-
-
59
59
Investments in real estate for policyholders
-
-
443
443
Investments where the policyholder bears the risk
87,362
91,799
402
179,563
89,922
97,804
5,128
192,855
Revalued amounts
Real estate held for own use
-
-
73
73
Total financial assets measured at fair value
97,878
143,881
5,392
247,151
Financial liabilities carried at fair value
Investment contracts without DPF where the policyholder bears the risk
-
55,631
-
55,631
Derivatives
51
5,111
12
5,175
Total financial liabilities measured at fair value
51
60,742
12
60,806
Significant transfers between Level I, Level II and Level III
Aegon\u2019s policy is to record transfers of assets and liabilities between Level I, Level II and Level III at their fair values from the
beginning of each reporting period.
The table below shows transfers between Level I and Level II for financial assets and financial liabilities recorded at fair value
on a recurring basis.
\n \n
2023
2022
Transfers Level I
Transfers Level II
Transfers Level I
Transfers Level II
Significant transfers between level I, level II and level III
to Level II
to Level I
to Level II
to Level I
Assets measured at FVOCI
Debt securities
-
141
23
5
Money market and other short-term investments
45
245
-
460
45
386
23
464
Financial assets measured at fair value through profit or
loss
Shares
-
-
10
128
Money market and other short-term investments
-
795
-
275
Investments where the policyholder bears the risk
1
-
-
28
1
795
10
431
Revalued amounts
Real estate held for own use
-
-
-
-
Total financial assets measured at fair value
46
1,182
34
895
Transfers are identified based on transaction volume and frequency, which are indicative of an active market.
Movements in Level III financial instruments measured at fair value
The following table summarizes the change of all assets and liabilities measured at estimated fair value on a recurring basis
using significant unobservable inputs (Level III), including realized and unrealized gains (losses) of all assets and liabilities and
unrealized gains (losses) of all assets and liabilities still held at the end of the respective period.
\n \n
Total unrealized
gains and losses
for the period
Total gains /
Total
Transfers
recorded in the P&L
Disposal
losses in
gains /
Net
from
Transfers
On
for instruments
Financial assets carried at
of a
income
losses in
Settle-
exchange
Reclas-
levels I
Transfers to
to disposal
December
held on December
fair value
2023
business
statement
1)
OCI
2)
Purchases
Sales
ments
difference
sification
and II
levels I and II
groups
31, 2023
31, 2023
3)
FVOCI
Shares
4
-
-
-
-
-
-
-
-
-
-
-
4
-
Debt securities
181
-
(1)
11
263
(124)
(15)
(12)
-
214
(1)
-
516
-
Money markets and other
short-term investments
5
-
-
4
-
-
-
-
-
-
-
-
9
-
191
-
(1)
15
263
(124)
(15)
(12)
-
214
(1)
-
530
-
FVPL
Shares
127
-
2
-
12
(47)
-
(4)
-
5
-
-
94
3
Debt securities
35
-
17
-
38
(43)
(4)
(2)
-
46
-
-
86
(8)
Money markets and other
short-term investments
1
-
-
-
-
-
-
-
-
-
(1)
-
-
-
Other investments at fair
value
4,050
-
(65)
-
652
(254)
-
(144)
-
-
-
-
4,237
(70)
Derivatives
11
-
(3)
-
-
(1)
-
-
-
-
-
-
8
(3)
Investments in real estate
59
-
2
-
2
(6)
-
(1)
-
-
-
-
55
-
Investments in real estate for
policyholders
443
-
(52)
-
42
(12)
-
11
-
-
-
-
433
(42)
Investments where the
policyholder bears the risk
402
-
(37)
-
37
(59)
-
(1)
-
-
-
-
342
-
5,128
-
(136)
-
782
(422)
(4)
(142)
-
51
(2)
-
5,255
(120)
Revalued amounts
Real estate held for own use
73
-
(3)
(2)
(1)
-
-
(2)
-
-
-
-
64
-
73
-
(3)
(2)
(1)
-
-
(2)
-
-
-
-
64
-
Total financial assets
measured at fair value
5,392
-
(141)
13
1,044
(546)
(19)
(157)
-
265
(3)
-
5,849
(120)
Financial liabilities
carried at fair value
Investment contracts without
DPF where the policyholder
bears the risk
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Derivatives
12
-
(6)
-
-
-
-
-
-
-
-
-
6
-
12
-
(6)
-
-
-
-
-
-
-
-
-
6
-
1
Includes impairments and movements related to fair value hedges. Gains and losses are recorded in the line item Results from financial transactions of the
income statement.
2
Total gains and losses are recorded in line items Gains / (losses) on financial assets measured at FVOCI and Gains / (losses) transferred to income statement on
disposal of financial assets measured at FVOCI of the statement of comprehensive income.
3
Total gains / (losses) for the period during which the financial instrument was in Level III.
\n \n
Total unrealized
gains and losses for
the period recorded
Total gains /
Total
Transfers
in the P&L for
Disposal
losses in
gains /
Net
from
On
instruments held on
Financial assets carried
of a
income
losses in
Settle-
exchange
Reclas-
levels I
Transfers to
Transfers to
December
December 31,
at fair value
2022
business
statement
1)
OCI
2)
Purchases
Sales
ments
difference
sification
and II
levels I and II
disposal groups
31, 2022
2022
3)
FVOCI
Shares
4
-
-
-
-
-
-
-
-
-
-
-
4
-
Debt securities
365
-
(1)
(73)
98
(47)
(16)
23
-
37
(207)
-
181
-
Money markets and other
short-term investments
28
-
-
(23)
-
-
-
-
-
-
-
-
5
-
398
-
(1)
(95)
98
(47)
(16)
23
-
37
(207)
-
191
-
FVPL
Shares
1,530
-
137
-
191
(365)
-
12
-
-
-
(1,378)
127
(41)
Debt securities
242
-
(11)
-
45
(3)
(5)
3
-
2
(140)
(98)
35
(12)
Money markets and other
short-term investments
-
-
1
-
-
-
-
-
-
-
-
-
1
1
Loans
22,727
-
(4,529)
-
1,802
(1,825)
-
-
-
-
-
(18,175)
-
-
Other investments at
fair value
3,548
-
247
-
627
(587)
(14)
229
-
-
-
-
4,050
159
Derivatives
1
-
10
-
-
-
-
-
-
-
-
-
11
10
Investments in real estate
2,643
-
(51)
-
42
(40)
-
3
7
-
-
(2,545)
59
1
Investments in real estate for
policyholders
563
-
(61)
-
10
(42)
-
(27)
-
-
-
-
443
(69)
Investments where the
policyholder bears the risk
895
-
43
-
(468)
876
-
(14)
-
2
-
(932)
402
(55)
32,149
-
(4,214)
-
2,249
(1,986)
(19)
205
7
4
(140)
(23,128)
5,128
(6)
Revalued amounts
Real estate held for own use
185
(23)
(3)
-
(1)
(8)
-
4
(5)
-
-
(76)
73
-
185
(23)
(3)
-
(1)
(8)
-
4
(5)
-
-
(76)
73
-
Total financial assets
measured at fair value
32,732
(24)
(4,218)
(95)
2,346
(2,042)
(34)
232
2
41
(347)
(23,203)
5,392
(7)
Financial liabilities
carried at fair value
Investment contracts without
DPF where the policyholder
bears the risk
(33)
-
(23)
-
(559)
721
-
-
-
1
-
(105)
-
-
Derivatives
41
-
(31)
-
-
-
-
3
-
-
-
(1)
12
-
Total financial liabilities
measured at fair value
8
-
(54)
-
(559)
721
-
3
-
1
-
(106)
12
-
1
Includes impairments and movements related to fair value hedges. Gains and losses are recorded in the line item Results from financial transactions of the income
statement.
2
Total gains and losses are recorded in line items Gains / (losses) on financial assets measured at FVOCI and Gains / (losses) transferred to income statement on disposal
of financial assets measured at FVOCI of the statement of comprehensive income.
3
Total gains / (losses) for the period during which the financial instrument was in Level III.
During 2022 and 2023, Aegon transferred certain financial instruments from Level I and II to Level III of the fair value hierarchy.
The reason for the change in level was that the market liquidity for these securities decreased, which led to a change in market
observability of prices. Prior to transfer, the fair value for the Level II securities was determined using observable market
transactions, internal models or corroborated broker quotes respectively for the same or similar instruments. Since the
transfer, all such assets have been valued using valuation models incorporating significant non market-observable inputs
or uncorroborated broker quotes.
Similarly, during 2022 and 2023, Aegon transferred certain financial instruments from Level III to Level I and II of the fair value
hierarchy. The change in level was mainly the result of a return of activity in the market for these securities and that for these
securities the fair value could be determined using observable market transactions or corroborated broker quotes for the same
or similar instruments.
Valuation techniques and significant unobservable inputs
The table below presents information about the significant unobservable inputs used for recurring fair value measurements for
certain Level III financial instruments.
\n \n
Range
Range
Significant
December
(weighted
December
(weighted
Valuation technique
1)
unobservable input
2)
31, 2023
average)
31, 2022
average)
Assets carried at fair value
Fair value through OCI
Shares
Net asset value
n.a.
-
n.a.
-
n.a.
Other
n.a.
4
n.a.
4
n.a.
4
4
Debt securities
Broker quote
n.a.
416
n.a.
33
n.a.
Constant
Discounted cash flow
Prepayment Rate
2
1.81%
2
40.53%
Constant
Discounted cash flow
Prepayment Rate
-
Other
n.a.
98
n.a.
147
n.a.
516
181
Other investments at fair value
Investment funds
Net asset value
n.a.
-
n.a.
-
n.a.
Other
Other
n.a.
9
n.a.
5
n.a.
9
5
On December 31
530
191
Fair value through profit or loss
Shares
Net asset value
n.a.
91
n.a.
126
n.a.
Shares
Broker quote
n.a.
4
n.a.
1
n.a.
Debt securities
Broker quote
n.a.
80
n.a.
5
n.a.
Constant prepay-
Debt securities
Discounted cash flow
ment rate
-
7.10%
-
7.80%
Debt securities
Other
n.a.
6
n.a.
30
n.a.
180
161
Other investments at fair value
Investment funds
Net asset value
n.a.
3,532
3,439
n.a.
Tax credit investments
Discounted cash flow
Discount rate
705
6.88%
610
7.10%
Other
Other
n.a.
-
-
n.a.
4,237
4,050
Total assets at fair value
3)
4,947
4,403
Liabilities carried at fair value
Derivatives
Embedded derivatives in insurance
contracts
Discounted cash flow
Own credit spread
3
n.a
8
0.45%
Other
Discounted cash flow
Other
3
n.a
4
n.a
Total liabilities at fair value
6
12
-
1
Other in the table above (column Valuation technique) includes investments for which the fair value is uncorroborated and no broker quote is received.
2
Not applicable (n.a.) has been included when the unobservable inputs are not developed by the Group and are not reasonably available. Refer to the section Fair
value measurement in this note for a detailed description of Aegon\u2019s methods of determining fair value and the valuation techniques.
3
Investments where the policyholder bears the risk are excluded from the table above and from the disclosure regarding reasonably possible alternative
assumptions. Assets where the policyholder bears the risk, and their returns, belong to policyholders and do not impact Aegon\u2019s net result or equity. The effect on
total assets is offset by the effect on total liabilities.
For reference purposes, the valuation techniques included in the table above are described in more detail on the
following pages.
Fair value information about assets and liabilities not measured at fair value
The following table presents the carrying values and estimated fair values of assets and liabilities, excluding assets and
liabilities which are carried at fair value on a recurring basis.
\n \n
Carrying
Total estimated
amount
fair value
December 31,
Estimated fair
December 31,
2023
value hierarchy
2023
Level I
Level II
Level III
Assets
Mortgage loans - held at amortized cost
10,157
-
1
9,024
9,025
Other loans - held at amortized cost
70
70
1
-
70
Liabilities
Subordinated borrowings - held at amortized cost
2,244
1,392
730
-
2,122
Trust pass-through securities - held at amortized cost
111
-
125
-
125
Borrowings \u2013 held at amortized cost
2,356
879
1,580
-
2,459
Investment contracts - held at amortized cost
10,222
-
-
8,755
8,755
\n \n
Carrying
Total estimated
amount
fair value
December 31,
Estimated fair
December 31,
2022
value hierarchy
2022
Level I
Level II
Level III
Assets
Mortgage loans - held at amortized cost
10,407
-
1
9,218
9,218
Other loans - held at amortized cost
46
39
7
-
46
Liabilities
Subordinated borrowings - held at amortized cost
2,295
1,372
663
-
2,035
Trust pass-through securities - held at amortized cost
118
-
133
-
133
Borrowings \u2013 held at amortized cost
4,051
1,289
2,825
-
4,114
Investment contracts - held at amortized cost
9,597
-
-
8,416
8,416
Certain financial instruments that are not carried at fair value are carried at amounts that approximate fair value, due to their
short-term nature and generally negligible credit risk. These instruments include cash and cash equivalents, short-term
receivables and accrued interest receivable, short-term liabilities, and accrued liabilities. These instruments are not included
in the table above.
Fair value measurement
The description of Aegon's methods of determining fair value and the valuation techniques are described on the
following pages.
Shares
When available, Aegon uses quoted market prices in active markets to determine the fair value of its investments in shares.
For Level III unquoted shares, the net asset value can be considered the best approximation to the fair value. Net asset value
is the value of an entity's assets minus the value of its liabilities and may be the same as the book value or the equity value
of the entity.
Also for unquoted shares, the fair value may be estimated using other methods, such as observations of the price/earnings
or price/cash flow ratios of quoted companies considered comparable to the companies being valued. Valuations are adjusted
to account for company-specific issues and the lack of liquidity inherent in an unquoted investment. Adjustments for lack
of liquidity are generally based on available market evidence. In addition, a variety of other factors are reviewed by management,
including, but not limited to, current operating performance, changes in market outlook and the third-party financing
environment.
Included in this category are shares in a Federal Home Loan Bank (FHLB) for an amount of EUR 82 million (2022:
EUR 124 million), which are reported as part of the line-item Net asset value. A FHLB has implicit financial support from the
United States government. The redemption value of the shares is fixed at par and they can only be redeemed by the FHLB.
Debt securities
The fair values of debt securities are determined by management after taking into consideration several sources of data.
When available, Aegon uses quoted market prices in active markets to determine the fair value of its debt securities. As stated
previously, Aegon\u2019s valuation policy utilizes a pricing hierarchy which dictates that publicly available prices are initially sought
from indices and third-party pricing services. In the event that pricing is not available from these sources, those securities are
submitted to brokers to obtain quotes, the majority of which are non-binding. As part of the pricing process, Aegon assesses the
appropriateness of each quote (i.e. as to whether the quote is based on observable market transactions or not) to determine the
most appropriate estimate of fair value.
When broker quotes are not available, securities are priced using internal cash flow modeling techniques. These valuation
methodologies commonly use the following inputs: reported trades, bids, offers, issuer spreads, benchmark yields, estimated
prepayment speeds, issue specific credit adjustments, indicative quotes from market makers and/or estimated cash flows.
To understand the valuation methodologies used by third-party pricing services Aegon reviews and monitors the applicable
methodology documents of the third-party pricing services. Any changes to their methodologies are noted and reviewed for
reasonableness. In addition, Aegon performs in-depth reviews of prices received from third-party pricing services on a sample
basis. The objective for such reviews is to demonstrate that Aegon can corroborate detailed information such as assumptions,
inputs and methodologies used in pricing individual securities against documented pricing methodologies. Only third-party
pricing services and brokers with a substantial presence in the market and with appropriate experience and expertise are used.
Third-party pricing services will often determine prices using recently reported trades for identical or similar securities. The
third-party pricing service makes adjustments for the elapsed time from the trade date to the reporting date to take into
account available market information. Lacking recently reported trades, third-party pricing services and brokers will use
modeling techniques to determine a security price where expected future cash flows are developed based on the performance
of the underlying collateral and discounted using an estimated market rate.
Periodically, Aegon performs an analysis of the inputs obtained from third-party pricing services and brokers to ensure that
the inputs are reasonable and produce a reasonable estimate of fair value. Aegon\u2019s asset specialists and investment valuation
specialists consider both qualitative and quantitative factors as part of this analysis. Several examples of analytical procedures
performed include, but are not limited to, recent transactional activity for similar debt securities, review of pricing statistics and
trends and consideration of recent relevant market events. Other controls and procedures over pricing received from indices,
third-party pricing services, or brokers include validation checks such as exception reports which highlight significant price
changes, stale prices or unpriced securities. In addition, Aegon performs back testing on a sample basis. Back testing involves
selecting a sample of securities trades and comparing the prices in those transactions to prices used for financial reporting.
Significant variances between the price used for financial reporting and the transaction price are investigated to explain the
cause of the difference.
Credit ratings are also an important consideration in the valuation of securities and are included in the internal process
for determining Aegon\u2019s view of the risk associated with each security. However, Aegon does not rely solely on external
credit ratings and there is an internal process, based on market observable inputs, for determining Aegon\u2019s view of the risks
associated with each security.
Aegon\u2019s portfolio of private placement securities (held at fair value under the classification of fair value through OCI or fair
value through profit or loss) is valued using a matrix pricing methodology. The pricing matrix is obtained from a third-party
service provider and indicates current spreads for securities based on weighted average life, credit rating, and industry sector.
Each month, Aegon\u2019s asset specialists review the matrix to ensure the spreads are reasonable by comparing them to observed
spreads for similar bonds traded in the market. Other inputs to the valuation include coupon rate, the current interest rate
curve used for discounting and a liquidity premium to account for the illiquid nature of these securities. The liquidity premiums
are determined based upon the pricing of recent transactions in the private placements market; comparing the value of the
privately offered security to a similar public security. The impact of the liquidity premium for private placement securities to the
overall valuation is insignificant.
Aegon's portfolio of debt securities can be subdivided into Residential mortgage-backed securities (RMBS), Commercial
mortgage-backed securities (CMBS), Asset-backed securities (ABS), Corporate bonds and Government debt. Below relevant
details of the valuation methodologies for these specific types of debt securities are described.
Residential mortgage-backed securities, commercial mortgage-backed securities and asset-backed securities
Valuations of RMBS, CMBS and ABS are monitored and reviewed on a monthly basis. Valuations per asset type are based on a
pricing hierarchy which uses a waterfall approach that starts with market prices from indices and follows with third-party pricing
services or brokers. The pricing hierarchy is dependent on the possibilities of corroboration of the market prices. If no market
prices are available, Aegon uses internal models to determine fair value. Significant inputs included in the internal models are
generally determined based on relative value analyses, which incorporate comparisons to instruments with similar collateral
and risk profiles. Market standard models may be used to model the specific collateral composition and cash flow structure
of each transaction. The most significant unobservable input is the liquidity premium which is embedded in the discount rate.
Aegon the Netherlands has mandated Aegon Asset Management to invest in RMBS transactions. Aegon Asset Management
uses its own proprietary cash flow tools to analyze and stress test RMBS transactions. The key input parameters are default
rates and loss given default assumptions, which are established based on historical pool characteristics and current
loan level data.
Corporate bonds
Valuations of corporate bonds are monitored and reviewed on a monthly basis. The pricing hierarchy is dependent on the
possibility of corroboration of market prices when available. If no market prices are available, valuations are determined by a
discounted cash flow methodology using an internally calculated yield. The yield is comprised of a credit spread over a given
benchmark. In all cases the benchmark is an observable input. The credit spread contains both observable and unobservable
inputs. Aegon starts by taking an observable credit spread from a similar bond of the given issuer, and then adjust this spread
based on unobservable inputs. These unobservable inputs may include subordination, liquidity and maturity differences.
During 2023, there were no corporate bonds that met the policy threshold to be internally modeled.
Government debt
When available, Aegon uses quoted market prices in active markets to determine the fair value of its government debt
investments. When Aegon cannot make use of quoted market prices, market prices from indices or quotes from third-party
pricing services or brokers are used.
Money market and other short-term investments and deposits with financial institutions
The fair value of assets maturing within a year is assumed to be approximated by their carrying amount adjusted for
credit risk where appropriate. Credit risk adjustments are based on market observable credit spreads if available,
or management\u2019s estimate if not market observable.
Tax credit investments
The Level III fair value of tax credit investments is determined by using a discounted cash flow valuation technique. This
valuation technique takes into consideration projections of future capital contributions and distributions, as well as future
tax credits and the tax benefits of future operating losses. The present value of these cash flows is calculated by applying
a discount rate. In general, the discount rate is determined based on the cash outflows for the investments and the cash inflows
from the tax credits and/or tax benefits (and the timing of these cash flows). These inputs are unobservable in the marketplace.
The discount rate used in valuation of tax credit investments was 6.9% (December 31, 2022: 7.1%).
Investment funds: Real estate funds, private equity funds and hedge funds
The fair values of investments held in non-quoted investment funds are determined by management after taking into
consideration information provided by the fund managers. Aegon reviews the valuations each month and performs analytical
procedures and trending analyses to ensure the fair values are appropriate. The net asset value is considered the best valuation
method that approximates the fair value of the funds.
Mortgage loans, policy loans and private loans
(held at amortized cost)
For private loans, fixed interest mortgage loans and other loans originated by the Group, the fair value used for disclosure
purposes is estimated by discounting expected future cash flows using a current market rate applicable to financial
instruments with similar yield and maturity characteristics. For fixed interest mortgage loans, the market rate is adjusted for
expenses, prepayment rates, lapse assumptions (unobservable inputs), liquidity and credit risk (market observable inputs).
An increase in expense spread, prepayment rates and/or prepayment assumptions, would decrease the fair value of the
mortgage loan portfolio.
The fair value of floating interest rate mortgage loans, policy loans and private placements used for disclosure purposes
is assumed to be approximated by their carrying amount, adjusted for changes in credit risk. Credit risk adjustments are based
on market observable credit spreads if available, or management\u2019s estimate if not market observable.
Derivatives
Where quoted market prices are not available, other valuation techniques, such as option pricing or stochastic modeling,
are applied. The valuation techniques incorporate all factors that a typical market participant would consider and are based
on observable market data when available. Models are validated before they are used and calibrated to ensure that outputs
reflect actual experience and comparable market prices.
Fair values for exchange-traded derivatives, principally futures and certain options, are based on quoted market prices in active
markets. Fair values for over-the-counter (OTC) derivative financial instruments represent amounts estimated to be received
from or paid to a third party in settlement of these instruments. These derivatives are valued using pricing models based on the
net present value of estimated future cash flows, directly observed prices from exchange-traded derivatives, other OTC trades,
or external pricing services. Most valuations are derived from swap and volatility matrices, which are constructed for applicable
indices and currencies using current market data from many industry standard sources. Option pricing is based on industry
standard valuation models and current market levels, where applicable. The pricing of complex or illiquid instruments
is based on internal models or an independent third party. For long-dated illiquid contracts, extrapolation methods are applied
to observed market data in order to estimate inputs and assumptions that are not directly observable. To value OTC derivatives,
management uses observed market information, other trades in the market and dealer prices.
Some OTC derivatives are so-called longevity derivatives. The payout of longevity derivatives is linked to publicly available
mortality tables. The derivatives are measured using the present value of the best estimate of expected payouts of the
derivative plus a risk margin. The best estimate of expected payouts is determined using best estimate of mortality
developments. Aegon determined the risk margin by stressing the best estimate mortality developments to quantify the risk
and applying a cost-of-capital methodology. Depending on the duration of the longevity swaps either the projected mortality
development or discount rate are the most significant unobservable inputs.
Aegon normally mitigates counterparty credit risk in derivative contracts by entering into collateral agreements where practical
and in ISDA master netting agreements for each of the Group\u2019s legal entities to facilitate Aegon\u2019s right to offset credit risk
exposure. Changes in the fair value of derivatives attributable to changes in counterparty credit risk were not significant.
Real estate
Valuations of Level III investments in real estate and real estate held for own use are conducted in full by independent external
appraisers at least every three to five years and reviewed at least once a year by qualified internal appraisers to ensure the
value correctly reflects the fair value at the reporting date. Appraisals are different for each specific local market but are
based on market guidelines such as International Valuation Standards, Uniform Standards of Professional Appraisal Practice
or guidelines issued by the Investment Property Databank. Valuations are mostly based on active market prices, adjusted for
any difference in the nature, location or condition of the specific property. If such information is not available, other valuation
methods are applied, considering the value that the property\u2019s net earning power will support, the value indicated by recent
sales of comparable properties and the current cost of reproducing or replacing the property. Discount rates used in the
valuation of real estate reflect the risk embedded in the projected cash flows for the asset being valued. Capitalization rates
represent the income rate for a real estate property that reflects the relationship between a single year\u2019s net operating income
expectancy and the total property price or value. For property held for own use, appraisers consider the present value of the
future rental income cash flows that could be achieved had the real estate been rented to a third party.
Trust pass-through securities and subordinated borrowings
Trust pass-through securities and subordinated borrowings are either carried at fair value (if they are designated as financial
liabilities at fair value through profit or loss) or amortized cost (with fair value being disclosed in the notes to the consolidated
financial statements). For the determination of the fair value of these instruments, the level hierarchy as described by EU-IFRS
is used. The preferred method of obtaining the fair value of the fair value option bonds is the quoted price (Level I). In case
markets are less liquid or the quoted prices are not available, Aegon\u2019s valuation policy utilizes a pricing hierarchy which dictates
that publicly available prices are initially sought from indices and third-party pricing services. The US trust pass-through
securities and subordinated borrowings are classified as Level II of the fair value hierarchy.
Investment contracts
Investment contracts issued by Aegon are either carried at fair value (if they are designated as financial liabilities at fair value
through profit or loss) or amortized cost (with fair value being disclosed in the notes to the consolidated financial statements).
These contracts are not quoted in active markets and their fair values are determined by using valuation techniques, such
as discounted cash flow methods and stochastic modeling or in relation to the unit price of the underlying assets. All models
are validated and calibrated. A variety of factors are considered, including time value, volatility, policyholder behavior, servicing
costs and fair values of similar instruments.
Certain investment products are not quoted in active markets and their fair values are determined by using valuation
techniques. Because of the dynamic and complex nature of these cash flows, stochastic or similar techniques under a variety
of market return scenarios are often used. A variety of factors are considered, including expected market rates of return, market
volatility, correlations of market returns, discount rates and actuarial assumptions.
The expected returns are based on risk-free rates, such as the current Secured Overnight Financing Rate (SOFR) swap
rates and associated forward rates, the Overnight Index Swap (OIS) curve or the current rates on local government bonds.
London Interbank Offered Rate (LIBOR) was replaced with SOFR in the second quarter of 2022. Market volatility assumptions
for each underlying index are based on observed market implied volatility data and/or observed market performance.
Correlations of market returns for various underlying indices are based on observed market returns and their interrelationships
over a number of years preceding the valuation date. Current risk-free spot rates are used to determine the present value
of expected future cash flows produced in the stochastic projection process.
Assumptions on customer behavior, such as lapses, included in the models are derived in the same way as the assumptions
used to measure insurance liabilities.
Summary of total financial assets and financial liabilities at fair value through profit or loss
The table that follows summarizes the carrying amounts of financial assets and financial liabilities that are classified as fair
value through profit or loss, with appropriate distinction between those financial assets and financial liabilities held for trading
and those that, upon initial recognition, were designated as fair value through profit or loss.
\n \n
2023
2022
Trading
Designated
Trading
Designated
Investments where Aegon bears the risk
9,386
2,526
8,079
1,940
Investments where the policyholder bears the risk
-
193,823
-
180,006
Derivatives with positive values not designated as hedges
1,238
-
2,445
Total financial assets at fair value through profit or loss
10,625
196,349
10,524
181,946
Investment contracts without DPF where the policyholder bears the
risk
-
65,044
-
55,631
Derivatives with negative values not designated as hedges
1,466
-
3,958
-
Total financial liabilities at fair value through profit or loss
1,466
65,044
3,958
55,631
Investments where Aegon bears the risk
Aegon has certain insurance and investment liabilities that are carried at fair value with changes in the fair value recognized
in the income statement. The Group has elected to designate the investments backing those liabilities at fair value through
profit or loss, as a classification of fair value through OCI would result in accumulation of unrealized gains and losses in a
revaluation reserve within equity while changes to the liability would be reflected in net result (accounting mismatch).
Investments where the policyholder bears the risk
Investments where the policyholder bears the risk comprise assets that are linked to various insurance and investment
contracts for which the financial risks are borne by the customer. Under the Group\u2019s accounting policies these insurance and
investment liabilities are measured at the fair value of the linked assets with changes in the fair value recognized in the income
statement. To avoid an accounting mismatch the linked assets have been designated as fair value through profit or loss.
In addition, the investment where the policyholders bears the risk include with profit assets, where Aegon manages these
assets together with related liabilities on a fair value basis in accordance with a documented policy of asset and liability
management. In accordance with the Group\u2019s accounting policies, these assets have been designated as fair value through
profit or loss.
Investment contracts without discretionary participating features where the policyholder bears the risk
With the exception of the financial liabilities with discretionary participating features that are not subject to the classification
and measurement requirements for financial instruments, all investment contracts without discretionary participating features
where the policyholder bears the risk that are carried at fair value or at the fair value of the linked assets are included in the
table above.
Derivatives
With the exception of derivatives designated as a hedging instrument, all derivatives are included in the table above.
Gains and losses on financial assets and financial liabilities classified at fair value through profit or loss
Gains and losses recognized in the income statement on financial assets and financial liabilities classified as fair value through
profit or loss can be summarized as follows:
\n \n
2023
2022
Trading
Designated
Trading
Designated
Net gains and (losses)
(1,244)
21,207
(4,431)
(35,205)
No loans and receivables were designated at fair value through profit or loss.
Changes in the fair value of investment contracts without discretionary participating features where the policyholders bears
the risk that are designated at fair value through profit or loss were not attributable to changes in Aegon\u2019s credit spread. There
are also no differences between the carrying amounts of these financial liabilities and the contractual amounts payable
at maturity (net of surrender penalties).", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f65421": { "value": "38 Fair value
The estimated fair values of Aegon\u2019s assets and liabilities correspond with the amounts that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When
available, Aegon uses quoted market prices in active markets to determine the fair value of investments and derivatives. In the
absence of an active market, the fair value of investments in financial assets is estimated by using other market observable
data, such as corroborated external quotes and present value or other valuation techniques. An active market is one in which
transactions are taking place regularly on an arm\u2019s length basis. Fair value is not determined based upon a forced liquidation
or distressed sale.
Valuation techniques are used when Aegon determines the market is inactive or quoted market prices are not available for
the asset or liability at the measurement date. However, the fair value measurement objective remains the same, that is,
to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between
market participants at the measurement date under current market conditions (i.e. an exit price at the measurement date
from the perspective of a market participant that holds the asset or owes the liability). Therefore, unobservable inputs reflect
Aegon\u2019s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including
assumptions about risk). These inputs are developed based on the best information available.
Aegon employs an oversight structure over valuation of financial instruments that includes appropriate segregation of duties.
Senior management, independent of the investing functions, is responsible for the oversight of control and valuation policies
and for reporting the results of these policies. For fair values determined by reference to external quotation or evidenced
pricing parameters, independent price determination or validation is utilized to corroborate those inputs. Further details of the
validation processes are set out below.
Valuation of assets and liabilities is based on a pricing hierarchy, in order to maintain a controlled process that will
systematically promote the use of prices from sources in which Aegon has the most confidence, where the least amount
of manual intervention exists and to embed consistency in the selection of price sources. Depending on asset type the pricing
hierarchy consists of a waterfall that starts with making use of market prices from indices and follows with making use of third-
party pricing services or brokers.
Fair value hierarchy
The following table sets out the fair values of financial instruments by the level of the fair value hierarchy into which each fair
value measurement is categorized. It does not include fair value information for cash and cash equivalents, receivables, and
payables, whose carrying amounts are a reasonable approximation of fair value, or for lease liabilities.
\n \n
2023
Fair value hierarchy
Level I
Level II
Level III
Total
Assets measured at FVOCI
Shares
5
-
4
10
Debt securities
5,644
41,031
516
47,191
Money market and other short-term investments
3,028
97
9
3,135
Other investments at fair value
-
29
-
29
8,678
41,157
530
50,364
Financial assets measured at fair value through profit or
loss
Shares
153
43
94
291
Debt securities
302
2,009
86
2,396
Money market and other short-term investments
4,041
173
-
4,215
Other investments at fair value
1
773
4,237
5,011
Derivatives
47
1,374
8
1,429
Investments in real estate
-
-
55
55
Investments in real estate for policyholders
-
-
433
433
Investments where the policyholder bears the risk
90,027
103,022
342
193,390
94,570
107,395
5,255
207,220
Revalued amounts
Real estate held for own use
-
-
61
61
Total financial assets measured at fair value
103,248
148,551
5,846
257,645
Financial liabilities carried at fair value
Investment contracts without DPF where the policyholder bears the
risk
-
65,044
-
65,044
Derivatives
39
2,434
6
2,479
Total financial liabilities measured at fair value
39
67,478
6
67,523
\n \n
2022
Fair value hierarchy
Level I
Level II
Level III
Total
Assets measured at FVOCI
Shares
5
-
4
10
Debt securities
6,353
45,073
181
51,607
Money market and other short-term investments
1,597
973
5
2,576
Other investments at fair value
-
31
-
31
7,956
46,077
191
54,223
Financial assets measured at fair value through profit or loss
Shares
160
61
127
348
Debt securities
282
1,722
35
2,040
Money market and other short-term investments
2,084
957
1
3,042
Other investments at fair value
1
537
4,050
4,588
Derivatives
33
2,728
11
2,771
Investments in real estate
-
-
59
59
Investments in real estate for policyholders
-
-
443
443
Investments where the policyholder bears the risk
87,362
91,799
402
179,563
89,922
97,804
5,128
192,855
Revalued amounts
Real estate held for own use
-
-
73
73
Total financial assets measured at fair value
97,878
143,881
5,392
247,151
Financial liabilities carried at fair value
Investment contracts without DPF where the policyholder bears the risk
-
55,631
-
55,631
Derivatives
51
5,111
12
5,175
Total financial liabilities measured at fair value
51
60,742
12
60,806
Significant transfers between Level I, Level II and Level III
Aegon\u2019s policy is to record transfers of assets and liabilities between Level I, Level II and Level III at their fair values from the
beginning of each reporting period.
The table below shows transfers between Level I and Level II for financial assets and financial liabilities recorded at fair value
on a recurring basis.
\n \n
2023
2022
Transfers Level I
Transfers Level II
Transfers Level I
Transfers Level II
Significant transfers between level I, level II and level III
to Level II
to Level I
to Level II
to Level I
Assets measured at FVOCI
Debt securities
-
141
23
5
Money market and other short-term investments
45
245
-
460
45
386
23
464
Financial assets measured at fair value through profit or
loss
Shares
-
-
10
128
Money market and other short-term investments
-
795
-
275
Investments where the policyholder bears the risk
1
-
-
28
1
795
10
431
Revalued amounts
Real estate held for own use
-
-
-
-
Total financial assets measured at fair value
46
1,182
34
895
Transfers are identified based on transaction volume and frequency, which are indicative of an active market.
Movements in Level III financial instruments measured at fair value
The following table summarizes the change of all assets and liabilities measured at estimated fair value on a recurring basis
using significant unobservable inputs (Level III), including realized and unrealized gains (losses) of all assets and liabilities and
unrealized gains (losses) of all assets and liabilities still held at the end of the respective period.
\n \n
Total unrealized
gains and losses
for the period
Total gains /
Total
Transfers
recorded in the P&L
Disposal
losses in
gains /
Net
from
Transfers
On
for instruments
Financial assets carried at
of a
income
losses in
Settle-
exchange
Reclas-
levels I
Transfers to
to disposal
December
held on December
fair value
2023
business
statement
1)
OCI
2)
Purchases
Sales
ments
difference
sification
and II
levels I and II
groups
31, 2023
31, 2023
3)
FVOCI
Shares
4
-
-
-
-
-
-
-
-
-
-
-
4
-
Debt securities
181
-
(1)
11
263
(124)
(15)
(12)
-
214
(1)
-
516
-
Money markets and other
short-term investments
5
-
-
4
-
-
-
-
-
-
-
-
9
-
191
-
(1)
15
263
(124)
(15)
(12)
-
214
(1)
-
530
-
FVPL
Shares
127
-
2
-
12
(47)
-
(4)
-
5
-
-
94
3
Debt securities
35
-
17
-
38
(43)
(4)
(2)
-
46
-
-
86
(8)
Money markets and other
short-term investments
1
-
-
-
-
-
-
-
-
-
(1)
-
-
-
Other investments at fair
value
4,050
-
(65)
-
652
(254)
-
(144)
-
-
-
-
4,237
(70)
Derivatives
11
-
(3)
-
-
(1)
-
-
-
-
-
-
8
(3)
Investments in real estate
59
-
2
-
2
(6)
-
(1)
-
-
-
-
55
-
Investments in real estate for
policyholders
443
-
(52)
-
42
(12)
-
11
-
-
-
-
433
(42)
Investments where the
policyholder bears the risk
402
-
(37)
-
37
(59)
-
(1)
-
-
-
-
342
-
5,128
-
(136)
-
782
(422)
(4)
(142)
-
51
(2)
-
5,255
(120)
Revalued amounts
Real estate held for own use
73
-
(3)
(2)
(1)
-
-
(2)
-
-
-
-
64
-
73
-
(3)
(2)
(1)
-
-
(2)
-
-
-
-
64
-
Total financial assets
measured at fair value
5,392
-
(141)
13
1,044
(546)
(19)
(157)
-
265
(3)
-
5,849
(120)
Financial liabilities
carried at fair value
Investment contracts without
DPF where the policyholder
bears the risk
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Derivatives
12
-
(6)
-
-
-
-
-
-
-
-
-
6
-
12
-
(6)
-
-
-
-
-
-
-
-
-
6
-
1
Includes impairments and movements related to fair value hedges. Gains and losses are recorded in the line item Results from financial transactions of the
income statement.
2
Total gains and losses are recorded in line items Gains / (losses) on financial assets measured at FVOCI and Gains / (losses) transferred to income statement on
disposal of financial assets measured at FVOCI of the statement of comprehensive income.
3
Total gains / (losses) for the period during which the financial instrument was in Level III.
\n \n
Total unrealized
gains and losses for
the period recorded
Total gains /
Total
Transfers
in the P&L for
Disposal
losses in
gains /
Net
from
On
instruments held on
Financial assets carried
of a
income
losses in
Settle-
exchange
Reclas-
levels I
Transfers to
Transfers to
December
December 31,
at fair value
2022
business
statement
1)
OCI
2)
Purchases
Sales
ments
difference
sification
and II
levels I and II
disposal groups
31, 2022
2022
3)
FVOCI
Shares
4
-
-
-
-
-
-
-
-
-
-
-
4
-
Debt securities
365
-
(1)
(73)
98
(47)
(16)
23
-
37
(207)
-
181
-
Money markets and other
short-term investments
28
-
-
(23)
-
-
-
-
-
-
-
-
5
-
398
-
(1)
(95)
98
(47)
(16)
23
-
37
(207)
-
191
-
FVPL
Shares
1,530
-
137
-
191
(365)
-
12
-
-
-
(1,378)
127
(41)
Debt securities
242
-
(11)
-
45
(3)
(5)
3
-
2
(140)
(98)
35
(12)
Money markets and other
short-term investments
-
-
1
-
-
-
-
-
-
-
-
-
1
1
Loans
22,727
-
(4,529)
-
1,802
(1,825)
-
-
-
-
-
(18,175)
-
-
Other investments at
fair value
3,548
-
247
-
627
(587)
(14)
229
-
-
-
-
4,050
159
Derivatives
1
-
10
-
-
-
-
-
-
-
-
-
11
10
Investments in real estate
2,643
-
(51)
-
42
(40)
-
3
7
-
-
(2,545)
59
1
Investments in real estate for
policyholders
563
-
(61)
-
10
(42)
-
(27)
-
-
-
-
443
(69)
Investments where the
policyholder bears the risk
895
-
43
-
(468)
876
-
(14)
-
2
-
(932)
402
(55)
32,149
-
(4,214)
-
2,249
(1,986)
(19)
205
7
4
(140)
(23,128)
5,128
(6)
Revalued amounts
Real estate held for own use
185
(23)
(3)
-
(1)
(8)
-
4
(5)
-
-
(76)
73
-
185
(23)
(3)
-
(1)
(8)
-
4
(5)
-
-
(76)
73
-
Total financial assets
measured at fair value
32,732
(24)
(4,218)
(95)
2,346
(2,042)
(34)
232
2
41
(347)
(23,203)
5,392
(7)
Financial liabilities
carried at fair value
Investment contracts without
DPF where the policyholder
bears the risk
(33)
-
(23)
-
(559)
721
-
-
-
1
-
(105)
-
-
Derivatives
41
-
(31)
-
-
-
-
3
-
-
-
(1)
12
-
Total financial liabilities
measured at fair value
8
-
(54)
-
(559)
721
-
3
-
1
-
(106)
12
-
1
Includes impairments and movements related to fair value hedges. Gains and losses are recorded in the line item Results from financial transactions of the income
statement.
2
Total gains and losses are recorded in line items Gains / (losses) on financial assets measured at FVOCI and Gains / (losses) transferred to income statement on disposal
of financial assets measured at FVOCI of the statement of comprehensive income.
3
Total gains / (losses) for the period during which the financial instrument was in Level III.
During 2022 and 2023, Aegon transferred certain financial instruments from Level I and II to Level III of the fair value hierarchy.
The reason for the change in level was that the market liquidity for these securities decreased, which led to a change in market
observability of prices. Prior to transfer, the fair value for the Level II securities was determined using observable market
transactions, internal models or corroborated broker quotes respectively for the same or similar instruments. Since the
transfer, all such assets have been valued using valuation models incorporating significant non market-observable inputs
or uncorroborated broker quotes.
Similarly, during 2022 and 2023, Aegon transferred certain financial instruments from Level III to Level I and II of the fair value
hierarchy. The change in level was mainly the result of a return of activity in the market for these securities and that for these
securities the fair value could be determined using observable market transactions or corroborated broker quotes for the same
or similar instruments.
Valuation techniques and significant unobservable inputs
The table below presents information about the significant unobservable inputs used for recurring fair value measurements for
certain Level III financial instruments.
\n \n
Range
Range
Significant
December
(weighted
December
(weighted
Valuation technique
1)
unobservable input
2)
31, 2023
average)
31, 2022
average)
Assets carried at fair value
Fair value through OCI
Shares
Net asset value
n.a.
-
n.a.
-
n.a.
Other
n.a.
4
n.a.
4
n.a.
4
4
Debt securities
Broker quote
n.a.
416
n.a.
33
n.a.
Constant
Discounted cash flow
Prepayment Rate
2
1.81%
2
40.53%
Constant
Discounted cash flow
Prepayment Rate
-
Other
n.a.
98
n.a.
147
n.a.
516
181
Other investments at fair value
Investment funds
Net asset value
n.a.
-
n.a.
-
n.a.
Other
Other
n.a.
9
n.a.
5
n.a.
9
5
On December 31
530
191
Fair value through profit or loss
Shares
Net asset value
n.a.
91
n.a.
126
n.a.
Shares
Broker quote
n.a.
4
n.a.
1
n.a.
Debt securities
Broker quote
n.a.
80
n.a.
5
n.a.
Constant prepay-
Debt securities
Discounted cash flow
ment rate
-
7.10%
-
7.80%
Debt securities
Other
n.a.
6
n.a.
30
n.a.
180
161
Other investments at fair value
Investment funds
Net asset value
n.a.
3,532
3,439
n.a.
Tax credit investments
Discounted cash flow
Discount rate
705
6.88%
610
7.10%
Other
Other
n.a.
-
-
n.a.
4,237
4,050
Total assets at fair value
3)
4,947
4,403
Liabilities carried at fair value
Derivatives
Embedded derivatives in insurance
contracts
Discounted cash flow
Own credit spread
3
n.a
8
0.45%
Other
Discounted cash flow
Other
3
n.a
4
n.a
Total liabilities at fair value
6
12
-
1
Other in the table above (column Valuation technique) includes investments for which the fair value is uncorroborated and no broker quote is received.
2
Not applicable (n.a.) has been included when the unobservable inputs are not developed by the Group and are not reasonably available. Refer to the section Fair
value measurement in this note for a detailed description of Aegon\u2019s methods of determining fair value and the valuation techniques.
3
Investments where the policyholder bears the risk are excluded from the table above and from the disclosure regarding reasonably possible alternative
assumptions. Assets where the policyholder bears the risk, and their returns, belong to policyholders and do not impact Aegon\u2019s net result or equity. The effect on
total assets is offset by the effect on total liabilities.
For reference purposes, the valuation techniques included in the table above are described in more detail on the
following pages.
Fair value information about assets and liabilities not measured at fair value
The following table presents the carrying values and estimated fair values of assets and liabilities, excluding assets and
liabilities which are carried at fair value on a recurring basis.
\n \n
Carrying
Total estimated
amount
fair value
December 31,
Estimated fair
December 31,
2023
value hierarchy
2023
Level I
Level II
Level III
Assets
Mortgage loans - held at amortized cost
10,157
-
1
9,024
9,025
Other loans - held at amortized cost
70
70
1
-
70
Liabilities
Subordinated borrowings - held at amortized cost
2,244
1,392
730
-
2,122
Trust pass-through securities - held at amortized cost
111
-
125
-
125
Borrowings \u2013 held at amortized cost
2,356
879
1,580
-
2,459
Investment contracts - held at amortized cost
10,222
-
-
8,755
8,755
\n \n
Carrying
Total estimated
amount
fair value
December 31,
Estimated fair
December 31,
2022
value hierarchy
2022
Level I
Level II
Level III
Assets
Mortgage loans - held at amortized cost
10,407
-
1
9,218
9,218
Other loans - held at amortized cost
46
39
7
-
46
Liabilities
Subordinated borrowings - held at amortized cost
2,295
1,372
663
-
2,035
Trust pass-through securities - held at amortized cost
118
-
133
-
133
Borrowings \u2013 held at amortized cost
4,051
1,289
2,825
-
4,114
Investment contracts - held at amortized cost
9,597
-
-
8,416
8,416
Certain financial instruments that are not carried at fair value are carried at amounts that approximate fair value, due to their
short-term nature and generally negligible credit risk. These instruments include cash and cash equivalents, short-term
receivables and accrued interest receivable, short-term liabilities, and accrued liabilities. These instruments are not included
in the table above.
Fair value measurement
The description of Aegon's methods of determining fair value and the valuation techniques are described on the
following pages.
Shares
When available, Aegon uses quoted market prices in active markets to determine the fair value of its investments in shares.
For Level III unquoted shares, the net asset value can be considered the best approximation to the fair value. Net asset value
is the value of an entity's assets minus the value of its liabilities and may be the same as the book value or the equity value
of the entity.
Also for unquoted shares, the fair value may be estimated using other methods, such as observations of the price/earnings
or price/cash flow ratios of quoted companies considered comparable to the companies being valued. Valuations are adjusted
to account for company-specific issues and the lack of liquidity inherent in an unquoted investment. Adjustments for lack
of liquidity are generally based on available market evidence. In addition, a variety of other factors are reviewed by management,
including, but not limited to, current operating performance, changes in market outlook and the third-party financing
environment.
Included in this category are shares in a Federal Home Loan Bank (FHLB) for an amount of EUR 82 million (2022:
EUR 124 million), which are reported as part of the line-item Net asset value. A FHLB has implicit financial support from the
United States government. The redemption value of the shares is fixed at par and they can only be redeemed by the FHLB.
Debt securities
The fair values of debt securities are determined by management after taking into consideration several sources of data.
When available, Aegon uses quoted market prices in active markets to determine the fair value of its debt securities. As stated
previously, Aegon\u2019s valuation policy utilizes a pricing hierarchy which dictates that publicly available prices are initially sought
from indices and third-party pricing services. In the event that pricing is not available from these sources, those securities are
submitted to brokers to obtain quotes, the majority of which are non-binding. As part of the pricing process, Aegon assesses the
appropriateness of each quote (i.e. as to whether the quote is based on observable market transactions or not) to determine the
most appropriate estimate of fair value.
When broker quotes are not available, securities are priced using internal cash flow modeling techniques. These valuation
methodologies commonly use the following inputs: reported trades, bids, offers, issuer spreads, benchmark yields, estimated
prepayment speeds, issue specific credit adjustments, indicative quotes from market makers and/or estimated cash flows.
To understand the valuation methodologies used by third-party pricing services Aegon reviews and monitors the applicable
methodology documents of the third-party pricing services. Any changes to their methodologies are noted and reviewed for
reasonableness. In addition, Aegon performs in-depth reviews of prices received from third-party pricing services on a sample
basis. The objective for such reviews is to demonstrate that Aegon can corroborate detailed information such as assumptions,
inputs and methodologies used in pricing individual securities against documented pricing methodologies. Only third-party
pricing services and brokers with a substantial presence in the market and with appropriate experience and expertise are used.
Third-party pricing services will often determine prices using recently reported trades for identical or similar securities. The
third-party pricing service makes adjustments for the elapsed time from the trade date to the reporting date to take into
account available market information. Lacking recently reported trades, third-party pricing services and brokers will use
modeling techniques to determine a security price where expected future cash flows are developed based on the performance
of the underlying collateral and discounted using an estimated market rate.
Periodically, Aegon performs an analysis of the inputs obtained from third-party pricing services and brokers to ensure that
the inputs are reasonable and produce a reasonable estimate of fair value. Aegon\u2019s asset specialists and investment valuation
specialists consider both qualitative and quantitative factors as part of this analysis. Several examples of analytical procedures
performed include, but are not limited to, recent transactional activity for similar debt securities, review of pricing statistics and
trends and consideration of recent relevant market events. Other controls and procedures over pricing received from indices,
third-party pricing services, or brokers include validation checks such as exception reports which highlight significant price
changes, stale prices or unpriced securities. In addition, Aegon performs back testing on a sample basis. Back testing involves
selecting a sample of securities trades and comparing the prices in those transactions to prices used for financial reporting.
Significant variances between the price used for financial reporting and the transaction price are investigated to explain the
cause of the difference.
Credit ratings are also an important consideration in the valuation of securities and are included in the internal process
for determining Aegon\u2019s view of the risk associated with each security. However, Aegon does not rely solely on external
credit ratings and there is an internal process, based on market observable inputs, for determining Aegon\u2019s view of the risks
associated with each security.
Aegon\u2019s portfolio of private placement securities (held at fair value under the classification of fair value through OCI or fair
value through profit or loss) is valued using a matrix pricing methodology. The pricing matrix is obtained from a third-party
service provider and indicates current spreads for securities based on weighted average life, credit rating, and industry sector.
Each month, Aegon\u2019s asset specialists review the matrix to ensure the spreads are reasonable by comparing them to observed
spreads for similar bonds traded in the market. Other inputs to the valuation include coupon rate, the current interest rate
curve used for discounting and a liquidity premium to account for the illiquid nature of these securities. The liquidity premiums
are determined based upon the pricing of recent transactions in the private placements market; comparing the value of the
privately offered security to a similar public security. The impact of the liquidity premium for private placement securities to the
overall valuation is insignificant.
Aegon's portfolio of debt securities can be subdivided into Residential mortgage-backed securities (RMBS), Commercial
mortgage-backed securities (CMBS), Asset-backed securities (ABS), Corporate bonds and Government debt. Below relevant
details of the valuation methodologies for these specific types of debt securities are described.
Residential mortgage-backed securities, commercial mortgage-backed securities and asset-backed securities
Valuations of RMBS, CMBS and ABS are monitored and reviewed on a monthly basis. Valuations per asset type are based on a
pricing hierarchy which uses a waterfall approach that starts with market prices from indices and follows with third-party pricing
services or brokers. The pricing hierarchy is dependent on the possibilities of corroboration of the market prices. If no market
prices are available, Aegon uses internal models to determine fair value. Significant inputs included in the internal models are
generally determined based on relative value analyses, which incorporate comparisons to instruments with similar collateral
and risk profiles. Market standard models may be used to model the specific collateral composition and cash flow structure
of each transaction. The most significant unobservable input is the liquidity premium which is embedded in the discount rate.
Aegon the Netherlands has mandated Aegon Asset Management to invest in RMBS transactions. Aegon Asset Management
uses its own proprietary cash flow tools to analyze and stress test RMBS transactions. The key input parameters are default
rates and loss given default assumptions, which are established based on historical pool characteristics and current
loan level data.
Corporate bonds
Valuations of corporate bonds are monitored and reviewed on a monthly basis. The pricing hierarchy is dependent on the
possibility of corroboration of market prices when available. If no market prices are available, valuations are determined by a
discounted cash flow methodology using an internally calculated yield. The yield is comprised of a credit spread over a given
benchmark. In all cases the benchmark is an observable input. The credit spread contains both observable and unobservable
inputs. Aegon starts by taking an observable credit spread from a similar bond of the given issuer, and then adjust this spread
based on unobservable inputs. These unobservable inputs may include subordination, liquidity and maturity differences.
During 2023, there were no corporate bonds that met the policy threshold to be internally modeled.
Government debt
When available, Aegon uses quoted market prices in active markets to determine the fair value of its government debt
investments. When Aegon cannot make use of quoted market prices, market prices from indices or quotes from third-party
pricing services or brokers are used.
Money market and other short-term investments and deposits with financial institutions
The fair value of assets maturing within a year is assumed to be approximated by their carrying amount adjusted for
credit risk where appropriate. Credit risk adjustments are based on market observable credit spreads if available,
or management\u2019s estimate if not market observable.
Tax credit investments
The Level III fair value of tax credit investments is determined by using a discounted cash flow valuation technique. This
valuation technique takes into consideration projections of future capital contributions and distributions, as well as future
tax credits and the tax benefits of future operating losses. The present value of these cash flows is calculated by applying
a discount rate. In general, the discount rate is determined based on the cash outflows for the investments and the cash inflows
from the tax credits and/or tax benefits (and the timing of these cash flows). These inputs are unobservable in the marketplace.
The discount rate used in valuation of tax credit investments was 6.9% (December 31, 2022: 7.1%).
Investment funds: Real estate funds, private equity funds and hedge funds
The fair values of investments held in non-quoted investment funds are determined by management after taking into
consideration information provided by the fund managers. Aegon reviews the valuations each month and performs analytical
procedures and trending analyses to ensure the fair values are appropriate. The net asset value is considered the best valuation
method that approximates the fair value of the funds.
Mortgage loans, policy loans and private loans
(held at amortized cost)
For private loans, fixed interest mortgage loans and other loans originated by the Group, the fair value used for disclosure
purposes is estimated by discounting expected future cash flows using a current market rate applicable to financial
instruments with similar yield and maturity characteristics. For fixed interest mortgage loans, the market rate is adjusted for
expenses, prepayment rates, lapse assumptions (unobservable inputs), liquidity and credit risk (market observable inputs).
An increase in expense spread, prepayment rates and/or prepayment assumptions, would decrease the fair value of the
mortgage loan portfolio.
The fair value of floating interest rate mortgage loans, policy loans and private placements used for disclosure purposes
is assumed to be approximated by their carrying amount, adjusted for changes in credit risk. Credit risk adjustments are based
on market observable credit spreads if available, or management\u2019s estimate if not market observable.
Derivatives
Where quoted market prices are not available, other valuation techniques, such as option pricing or stochastic modeling,
are applied. The valuation techniques incorporate all factors that a typical market participant would consider and are based
on observable market data when available. Models are validated before they are used and calibrated to ensure that outputs
reflect actual experience and comparable market prices.
Fair values for exchange-traded derivatives, principally futures and certain options, are based on quoted market prices in active
markets. Fair values for over-the-counter (OTC) derivative financial instruments represent amounts estimated to be received
from or paid to a third party in settlement of these instruments. These derivatives are valued using pricing models based on the
net present value of estimated future cash flows, directly observed prices from exchange-traded derivatives, other OTC trades,
or external pricing services. Most valuations are derived from swap and volatility matrices, which are constructed for applicable
indices and currencies using current market data from many industry standard sources. Option pricing is based on industry
standard valuation models and current market levels, where applicable. The pricing of complex or illiquid instruments
is based on internal models or an independent third party. For long-dated illiquid contracts, extrapolation methods are applied
to observed market data in order to estimate inputs and assumptions that are not directly observable. To value OTC derivatives,
management uses observed market information, other trades in the market and dealer prices.
Some OTC derivatives are so-called longevity derivatives. The payout of longevity derivatives is linked to publicly available
mortality tables. The derivatives are measured using the present value of the best estimate of expected payouts of the
derivative plus a risk margin. The best estimate of expected payouts is determined using best estimate of mortality
developments. Aegon determined the risk margin by stressing the best estimate mortality developments to quantify the risk
and applying a cost-of-capital methodology. Depending on the duration of the longevity swaps either the projected mortality
development or discount rate are the most significant unobservable inputs.
Aegon normally mitigates counterparty credit risk in derivative contracts by entering into collateral agreements where practical
and in ISDA master netting agreements for each of the Group\u2019s legal entities to facilitate Aegon\u2019s right to offset credit risk
exposure. Changes in the fair value of derivatives attributable to changes in counterparty credit risk were not significant.
Real estate
Valuations of Level III investments in real estate and real estate held for own use are conducted in full by independent external
appraisers at least every three to five years and reviewed at least once a year by qualified internal appraisers to ensure the
value correctly reflects the fair value at the reporting date. Appraisals are different for each specific local market but are
based on market guidelines such as International Valuation Standards, Uniform Standards of Professional Appraisal Practice
or guidelines issued by the Investment Property Databank. Valuations are mostly based on active market prices, adjusted for
any difference in the nature, location or condition of the specific property. If such information is not available, other valuation
methods are applied, considering the value that the property\u2019s net earning power will support, the value indicated by recent
sales of comparable properties and the current cost of reproducing or replacing the property. Discount rates used in the
valuation of real estate reflect the risk embedded in the projected cash flows for the asset being valued. Capitalization rates
represent the income rate for a real estate property that reflects the relationship between a single year\u2019s net operating income
expectancy and the total property price or value. For property held for own use, appraisers consider the present value of the
future rental income cash flows that could be achieved had the real estate been rented to a third party.
Trust pass-through securities and subordinated borrowings
Trust pass-through securities and subordinated borrowings are either carried at fair value (if they are designated as financial
liabilities at fair value through profit or loss) or amortized cost (with fair value being disclosed in the notes to the consolidated
financial statements). For the determination of the fair value of these instruments, the level hierarchy as described by EU-IFRS
is used. The preferred method of obtaining the fair value of the fair value option bonds is the quoted price (Level I). In case
markets are less liquid or the quoted prices are not available, Aegon\u2019s valuation policy utilizes a pricing hierarchy which dictates
that publicly available prices are initially sought from indices and third-party pricing services. The US trust pass-through
securities and subordinated borrowings are classified as Level II of the fair value hierarchy.
Investment contracts
Investment contracts issued by Aegon are either carried at fair value (if they are designated as financial liabilities at fair value
through profit or loss) or amortized cost (with fair value being disclosed in the notes to the consolidated financial statements).
These contracts are not quoted in active markets and their fair values are determined by using valuation techniques, such
as discounted cash flow methods and stochastic modeling or in relation to the unit price of the underlying assets. All models
are validated and calibrated. A variety of factors are considered, including time value, volatility, policyholder behavior, servicing
costs and fair values of similar instruments.
Certain investment products are not quoted in active markets and their fair values are determined by using valuation
techniques. Because of the dynamic and complex nature of these cash flows, stochastic or similar techniques under a variety
of market return scenarios are often used. A variety of factors are considered, including expected market rates of return, market
volatility, correlations of market returns, discount rates and actuarial assumptions.
The expected returns are based on risk-free rates, such as the current Secured Overnight Financing Rate (SOFR) swap
rates and associated forward rates, the Overnight Index Swap (OIS) curve or the current rates on local government bonds.
London Interbank Offered Rate (LIBOR) was replaced with SOFR in the second quarter of 2022. Market volatility assumptions
for each underlying index are based on observed market implied volatility data and/or observed market performance.
Correlations of market returns for various underlying indices are based on observed market returns and their interrelationships
over a number of years preceding the valuation date. Current risk-free spot rates are used to determine the present value
of expected future cash flows produced in the stochastic projection process.
Assumptions on customer behavior, such as lapses, included in the models are derived in the same way as the assumptions
used to measure insurance liabilities.
Summary of total financial assets and financial liabilities at fair value through profit or loss
The table that follows summarizes the carrying amounts of financial assets and financial liabilities that are classified as fair
value through profit or loss, with appropriate distinction between those financial assets and financial liabilities held for trading
and those that, upon initial recognition, were designated as fair value through profit or loss.
\n \n
2023
2022
Trading
Designated
Trading
Designated
Investments where Aegon bears the risk
9,386
2,526
8,079
1,940
Investments where the policyholder bears the risk
-
193,823
-
180,006
Derivatives with positive values not designated as hedges
1,238
-
2,445
Total financial assets at fair value through profit or loss
10,625
196,349
10,524
181,946
Investment contracts without DPF where the policyholder bears the
risk
-
65,044
-
55,631
Derivatives with negative values not designated as hedges
1,466
-
3,958
-
Total financial liabilities at fair value through profit or loss
1,466
65,044
3,958
55,631
Investments where Aegon bears the risk
Aegon has certain insurance and investment liabilities that are carried at fair value with changes in the fair value recognized
in the income statement. The Group has elected to designate the investments backing those liabilities at fair value through
profit or loss, as a classification of fair value through OCI would result in accumulation of unrealized gains and losses in a
revaluation reserve within equity while changes to the liability would be reflected in net result (accounting mismatch).
Investments where the policyholder bears the risk
Investments where the policyholder bears the risk comprise assets that are linked to various insurance and investment
contracts for which the financial risks are borne by the customer. Under the Group\u2019s accounting policies these insurance and
investment liabilities are measured at the fair value of the linked assets with changes in the fair value recognized in the income
statement. To avoid an accounting mismatch the linked assets have been designated as fair value through profit or loss.
In addition, the investment where the policyholders bears the risk include with profit assets, where Aegon manages these
assets together with related liabilities on a fair value basis in accordance with a documented policy of asset and liability
management. In accordance with the Group\u2019s accounting policies, these assets have been designated as fair value through
profit or loss.
Investment contracts without discretionary participating features where the policyholder bears the risk
With the exception of the financial liabilities with discretionary participating features that are not subject to the classification
and measurement requirements for financial instruments, all investment contracts without discretionary participating features
where the policyholder bears the risk that are carried at fair value or at the fair value of the linked assets are included in the
table above.
Derivatives
With the exception of derivatives designated as a hedging instrument, all derivatives are included in the table above.
Gains and losses on financial assets and financial liabilities classified at fair value through profit or loss
Gains and losses recognized in the income statement on financial assets and financial liabilities classified as fair value through
profit or loss can be summarized as follows:
\n \n
2023
2022
Trading
Designated
Trading
Designated
Net gains and (losses)
(1,244)
21,207
(4,431)
(35,205)
No loans and receivables were designated at fair value through profit or loss.
Changes in the fair value of investment contracts without discretionary participating features where the policyholders bears
the risk that are designated at fair value through profit or loss were not attributable to changes in Aegon\u2019s credit spread. There
are also no differences between the carrying amounts of these financial liabilities and the contractual amounts payable
at maturity (net of surrender penalties).", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f65422": { "value": "38 Fair value
The estimated fair values of Aegon\u2019s assets and liabilities correspond with the amounts that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When
available, Aegon uses quoted market prices in active markets to determine the fair value of investments and derivatives. In the
absence of an active market, the fair value of investments in financial assets is estimated by using other market observable
data, such as corroborated external quotes and present value or other valuation techniques. An active market is one in which
transactions are taking place regularly on an arm\u2019s length basis. Fair value is not determined based upon a forced liquidation
or distressed sale.
Valuation techniques are used when Aegon determines the market is inactive or quoted market prices are not available for
the asset or liability at the measurement date. However, the fair value measurement objective remains the same, that is,
to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between
market participants at the measurement date under current market conditions (i.e. an exit price at the measurement date
from the perspective of a market participant that holds the asset or owes the liability). Therefore, unobservable inputs reflect
Aegon\u2019s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including
assumptions about risk). These inputs are developed based on the best information available.
Aegon employs an oversight structure over valuation of financial instruments that includes appropriate segregation of duties.
Senior management, independent of the investing functions, is responsible for the oversight of control and valuation policies
and for reporting the results of these policies. For fair values determined by reference to external quotation or evidenced
pricing parameters, independent price determination or validation is utilized to corroborate those inputs. Further details of the
validation processes are set out below.
Valuation of assets and liabilities is based on a pricing hierarchy, in order to maintain a controlled process that will
systematically promote the use of prices from sources in which Aegon has the most confidence, where the least amount
of manual intervention exists and to embed consistency in the selection of price sources. Depending on asset type the pricing
hierarchy consists of a waterfall that starts with making use of market prices from indices and follows with making use of third-
party pricing services or brokers.
Fair value hierarchy
The following table sets out the fair values of financial instruments by the level of the fair value hierarchy into which each fair
value measurement is categorized. It does not include fair value information for cash and cash equivalents, receivables, and
payables, whose carrying amounts are a reasonable approximation of fair value, or for lease liabilities.
\n \n
2023
Fair value hierarchy
Level I
Level II
Level III
Total
Assets measured at FVOCI
Shares
5
-
4
10
Debt securities
5,644
41,031
516
47,191
Money market and other short-term investments
3,028
97
9
3,135
Other investments at fair value
-
29
-
29
8,678
41,157
530
50,364
Financial assets measured at fair value through profit or
loss
Shares
153
43
94
291
Debt securities
302
2,009
86
2,396
Money market and other short-term investments
4,041
173
-
4,215
Other investments at fair value
1
773
4,237
5,011
Derivatives
47
1,374
8
1,429
Investments in real estate
-
-
55
55
Investments in real estate for policyholders
-
-
433
433
Investments where the policyholder bears the risk
90,027
103,022
342
193,390
94,570
107,395
5,255
207,220
Revalued amounts
Real estate held for own use
-
-
61
61
Total financial assets measured at fair value
103,248
148,551
5,846
257,645
Financial liabilities carried at fair value
Investment contracts without DPF where the policyholder bears the
risk
-
65,044
-
65,044
Derivatives
39
2,434
6
2,479
Total financial liabilities measured at fair value
39
67,478
6
67,523
\n \n
2022
Fair value hierarchy
Level I
Level II
Level III
Total
Assets measured at FVOCI
Shares
5
-
4
10
Debt securities
6,353
45,073
181
51,607
Money market and other short-term investments
1,597
973
5
2,576
Other investments at fair value
-
31
-
31
7,956
46,077
191
54,223
Financial assets measured at fair value through profit or loss
Shares
160
61
127
348
Debt securities
282
1,722
35
2,040
Money market and other short-term investments
2,084
957
1
3,042
Other investments at fair value
1
537
4,050
4,588
Derivatives
33
2,728
11
2,771
Investments in real estate
-
-
59
59
Investments in real estate for policyholders
-
-
443
443
Investments where the policyholder bears the risk
87,362
91,799
402
179,563
89,922
97,804
5,128
192,855
Revalued amounts
Real estate held for own use
-
-
73
73
Total financial assets measured at fair value
97,878
143,881
5,392
247,151
Financial liabilities carried at fair value
Investment contracts without DPF where the policyholder bears the risk
-
55,631
-
55,631
Derivatives
51
5,111
12
5,175
Total financial liabilities measured at fair value
51
60,742
12
60,806
Significant transfers between Level I, Level II and Level III
Aegon\u2019s policy is to record transfers of assets and liabilities between Level I, Level II and Level III at their fair values from the
beginning of each reporting period.
The table below shows transfers between Level I and Level II for financial assets and financial liabilities recorded at fair value
on a recurring basis.
\n \n
2023
2022
Transfers Level I
Transfers Level II
Transfers Level I
Transfers Level II
Significant transfers between level I, level II and level III
to Level II
to Level I
to Level II
to Level I
Assets measured at FVOCI
Debt securities
-
141
23
5
Money market and other short-term investments
45
245
-
460
45
386
23
464
Financial assets measured at fair value through profit or
loss
Shares
-
-
10
128
Money market and other short-term investments
-
795
-
275
Investments where the policyholder bears the risk
1
-
-
28
1
795
10
431
Revalued amounts
Real estate held for own use
-
-
-
-
Total financial assets measured at fair value
46
1,182
34
895
Transfers are identified based on transaction volume and frequency, which are indicative of an active market.
Movements in Level III financial instruments measured at fair value
The following table summarizes the change of all assets and liabilities measured at estimated fair value on a recurring basis
using significant unobservable inputs (Level III), including realized and unrealized gains (losses) of all assets and liabilities and
unrealized gains (losses) of all assets and liabilities still held at the end of the respective period.
\n \n
Total unrealized
gains and losses
for the period
Total gains /
Total
Transfers
recorded in the P&L
Disposal
losses in
gains /
Net
from
Transfers
On
for instruments
Financial assets carried at
of a
income
losses in
Settle-
exchange
Reclas-
levels I
Transfers to
to disposal
December
held on December
fair value
2023
business
statement
1)
OCI
2)
Purchases
Sales
ments
difference
sification
and II
levels I and II
groups
31, 2023
31, 2023
3)
FVOCI
Shares
4
-
-
-
-
-
-
-
-
-
-
-
4
-
Debt securities
181
-
(1)
11
263
(124)
(15)
(12)
-
214
(1)
-
516
-
Money markets and other
short-term investments
5
-
-
4
-
-
-
-
-
-
-
-
9
-
191
-
(1)
15
263
(124)
(15)
(12)
-
214
(1)
-
530
-
FVPL
Shares
127
-
2
-
12
(47)
-
(4)
-
5
-
-
94
3
Debt securities
35
-
17
-
38
(43)
(4)
(2)
-
46
-
-
86
(8)
Money markets and other
short-term investments
1
-
-
-
-
-
-
-
-
-
(1)
-
-
-
Other investments at fair
value
4,050
-
(65)
-
652
(254)
-
(144)
-
-
-
-
4,237
(70)
Derivatives
11
-
(3)
-
-
(1)
-
-
-
-
-
-
8
(3)
Investments in real estate
59
-
2
-
2
(6)
-
(1)
-
-
-
-
55
-
Investments in real estate for
policyholders
443
-
(52)
-
42
(12)
-
11
-
-
-
-
433
(42)
Investments where the
policyholder bears the risk
402
-
(37)
-
37
(59)
-
(1)
-
-
-
-
342
-
5,128
-
(136)
-
782
(422)
(4)
(142)
-
51
(2)
-
5,255
(120)
Revalued amounts
Real estate held for own use
73
-
(3)
(2)
(1)
-
-
(2)
-
-
-
-
64
-
73
-
(3)
(2)
(1)
-
-
(2)
-
-
-
-
64
-
Total financial assets
measured at fair value
5,392
-
(141)
13
1,044
(546)
(19)
(157)
-
265
(3)
-
5,849
(120)
Financial liabilities
carried at fair value
Investment contracts without
DPF where the policyholder
bears the risk
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Derivatives
12
-
(6)
-
-
-
-
-
-
-
-
-
6
-
12
-
(6)
-
-
-
-
-
-
-
-
-
6
-
1
Includes impairments and movements related to fair value hedges. Gains and losses are recorded in the line item Results from financial transactions of the
income statement.
2
Total gains and losses are recorded in line items Gains / (losses) on financial assets measured at FVOCI and Gains / (losses) transferred to income statement on
disposal of financial assets measured at FVOCI of the statement of comprehensive income.
3
Total gains / (losses) for the period during which the financial instrument was in Level III.
\n \n
Total unrealized
gains and losses for
the period recorded
Total gains /
Total
Transfers
in the P&L for
Disposal
losses in
gains /
Net
from
On
instruments held on
Financial assets carried
of a
income
losses in
Settle-
exchange
Reclas-
levels I
Transfers to
Transfers to
December
December 31,
at fair value
2022
business
statement
1)
OCI
2)
Purchases
Sales
ments
difference
sification
and II
levels I and II
disposal groups
31, 2022
2022
3)
FVOCI
Shares
4
-
-
-
-
-
-
-
-
-
-
-
4
-
Debt securities
365
-
(1)
(73)
98
(47)
(16)
23
-
37
(207)
-
181
-
Money markets and other
short-term investments
28
-
-
(23)
-
-
-
-
-
-
-
-
5
-
398
-
(1)
(95)
98
(47)
(16)
23
-
37
(207)
-
191
-
FVPL
Shares
1,530
-
137
-
191
(365)
-
12
-
-
-
(1,378)
127
(41)
Debt securities
242
-
(11)
-
45
(3)
(5)
3
-
2
(140)
(98)
35
(12)
Money markets and other
short-term investments
-
-
1
-
-
-
-
-
-
-
-
-
1
1
Loans
22,727
-
(4,529)
-
1,802
(1,825)
-
-
-
-
-
(18,175)
-
-
Other investments at
fair value
3,548
-
247
-
627
(587)
(14)
229
-
-
-
-
4,050
159
Derivatives
1
-
10
-
-
-
-
-
-
-
-
-
11
10
Investments in real estate
2,643
-
(51)
-
42
(40)
-
3
7
-
-
(2,545)
59
1
Investments in real estate for
policyholders
563
-
(61)
-
10
(42)
-
(27)
-
-
-
-
443
(69)
Investments where the
policyholder bears the risk
895
-
43
-
(468)
876
-
(14)
-
2
-
(932)
402
(55)
32,149
-
(4,214)
-
2,249
(1,986)
(19)
205
7
4
(140)
(23,128)
5,128
(6)
Revalued amounts
Real estate held for own use
185
(23)
(3)
-
(1)
(8)
-
4
(5)
-
-
(76)
73
-
185
(23)
(3)
-
(1)
(8)
-
4
(5)
-
-
(76)
73
-
Total financial assets
measured at fair value
32,732
(24)
(4,218)
(95)
2,346
(2,042)
(34)
232
2
41
(347)
(23,203)
5,392
(7)
Financial liabilities
carried at fair value
Investment contracts without
DPF where the policyholder
bears the risk
(33)
-
(23)
-
(559)
721
-
-
-
1
-
(105)
-
-
Derivatives
41
-
(31)
-
-
-
-
3
-
-
-
(1)
12
-
Total financial liabilities
measured at fair value
8
-
(54)
-
(559)
721
-
3
-
1
-
(106)
12
-
1
Includes impairments and movements related to fair value hedges. Gains and losses are recorded in the line item Results from financial transactions of the income
statement.
2
Total gains and losses are recorded in line items Gains / (losses) on financial assets measured at FVOCI and Gains / (losses) transferred to income statement on disposal
of financial assets measured at FVOCI of the statement of comprehensive income.
3
Total gains / (losses) for the period during which the financial instrument was in Level III.
During 2022 and 2023, Aegon transferred certain financial instruments from Level I and II to Level III of the fair value hierarchy.
The reason for the change in level was that the market liquidity for these securities decreased, which led to a change in market
observability of prices. Prior to transfer, the fair value for the Level II securities was determined using observable market
transactions, internal models or corroborated broker quotes respectively for the same or similar instruments. Since the
transfer, all such assets have been valued using valuation models incorporating significant non market-observable inputs
or uncorroborated broker quotes.
Similarly, during 2022 and 2023, Aegon transferred certain financial instruments from Level III to Level I and II of the fair value
hierarchy. The change in level was mainly the result of a return of activity in the market for these securities and that for these
securities the fair value could be determined using observable market transactions or corroborated broker quotes for the same
or similar instruments.
Valuation techniques and significant unobservable inputs
The table below presents information about the significant unobservable inputs used for recurring fair value measurements for
certain Level III financial instruments.
\n \n
Range
Range
Significant
December
(weighted
December
(weighted
Valuation technique
1)
unobservable input
2)
31, 2023
average)
31, 2022
average)
Assets carried at fair value
Fair value through OCI
Shares
Net asset value
n.a.
-
n.a.
-
n.a.
Other
n.a.
4
n.a.
4
n.a.
4
4
Debt securities
Broker quote
n.a.
416
n.a.
33
n.a.
Constant
Discounted cash flow
Prepayment Rate
2
1.81%
2
40.53%
Constant
Discounted cash flow
Prepayment Rate
-
Other
n.a.
98
n.a.
147
n.a.
516
181
Other investments at fair value
Investment funds
Net asset value
n.a.
-
n.a.
-
n.a.
Other
Other
n.a.
9
n.a.
5
n.a.
9
5
On December 31
530
191
Fair value through profit or loss
Shares
Net asset value
n.a.
91
n.a.
126
n.a.
Shares
Broker quote
n.a.
4
n.a.
1
n.a.
Debt securities
Broker quote
n.a.
80
n.a.
5
n.a.
Constant prepay-
Debt securities
Discounted cash flow
ment rate
-
7.10%
-
7.80%
Debt securities
Other
n.a.
6
n.a.
30
n.a.
180
161
Other investments at fair value
Investment funds
Net asset value
n.a.
3,532
3,439
n.a.
Tax credit investments
Discounted cash flow
Discount rate
705
6.88%
610
7.10%
Other
Other
n.a.
-
-
n.a.
4,237
4,050
Total assets at fair value
3)
4,947
4,403
Liabilities carried at fair value
Derivatives
Embedded derivatives in insurance
contracts
Discounted cash flow
Own credit spread
3
n.a
8
0.45%
Other
Discounted cash flow
Other
3
n.a
4
n.a
Total liabilities at fair value
6
12
-
1
Other in the table above (column Valuation technique) includes investments for which the fair value is uncorroborated and no broker quote is received.
2
Not applicable (n.a.) has been included when the unobservable inputs are not developed by the Group and are not reasonably available. Refer to the section Fair
value measurement in this note for a detailed description of Aegon\u2019s methods of determining fair value and the valuation techniques.
3
Investments where the policyholder bears the risk are excluded from the table above and from the disclosure regarding reasonably possible alternative
assumptions. Assets where the policyholder bears the risk, and their returns, belong to policyholders and do not impact Aegon\u2019s net result or equity. The effect on
total assets is offset by the effect on total liabilities.
For reference purposes, the valuation techniques included in the table above are described in more detail on the
following pages.
Fair value information about assets and liabilities not measured at fair value
The following table presents the carrying values and estimated fair values of assets and liabilities, excluding assets and
liabilities which are carried at fair value on a recurring basis.
\n \n
Carrying
Total estimated
amount
fair value
December 31,
Estimated fair
December 31,
2023
value hierarchy
2023
Level I
Level II
Level III
Assets
Mortgage loans - held at amortized cost
10,157
-
1
9,024
9,025
Other loans - held at amortized cost
70
70
1
-
70
Liabilities
Subordinated borrowings - held at amortized cost
2,244
1,392
730
-
2,122
Trust pass-through securities - held at amortized cost
111
-
125
-
125
Borrowings \u2013 held at amortized cost
2,356
879
1,580
-
2,459
Investment contracts - held at amortized cost
10,222
-
-
8,755
8,755
\n \n
Carrying
Total estimated
amount
fair value
December 31,
Estimated fair
December 31,
2022
value hierarchy
2022
Level I
Level II
Level III
Assets
Mortgage loans - held at amortized cost
10,407
-
1
9,218
9,218
Other loans - held at amortized cost
46
39
7
-
46
Liabilities
Subordinated borrowings - held at amortized cost
2,295
1,372
663
-
2,035
Trust pass-through securities - held at amortized cost
118
-
133
-
133
Borrowings \u2013 held at amortized cost
4,051
1,289
2,825
-
4,114
Investment contracts - held at amortized cost
9,597
-
-
8,416
8,416
Certain financial instruments that are not carried at fair value are carried at amounts that approximate fair value, due to their
short-term nature and generally negligible credit risk. These instruments include cash and cash equivalents, short-term
receivables and accrued interest receivable, short-term liabilities, and accrued liabilities. These instruments are not included
in the table above.
Fair value measurement
The description of Aegon's methods of determining fair value and the valuation techniques are described on the
following pages.
Shares
When available, Aegon uses quoted market prices in active markets to determine the fair value of its investments in shares.
For Level III unquoted shares, the net asset value can be considered the best approximation to the fair value. Net asset value
is the value of an entity's assets minus the value of its liabilities and may be the same as the book value or the equity value
of the entity.
Also for unquoted shares, the fair value may be estimated using other methods, such as observations of the price/earnings
or price/cash flow ratios of quoted companies considered comparable to the companies being valued. Valuations are adjusted
to account for company-specific issues and the lack of liquidity inherent in an unquoted investment. Adjustments for lack
of liquidity are generally based on available market evidence. In addition, a variety of other factors are reviewed by management,
including, but not limited to, current operating performance, changes in market outlook and the third-party financing
environment.
Included in this category are shares in a Federal Home Loan Bank (FHLB) for an amount of EUR 82 million (2022:
EUR 124 million), which are reported as part of the line-item Net asset value. A FHLB has implicit financial support from the
United States government. The redemption value of the shares is fixed at par and they can only be redeemed by the FHLB.
Debt securities
The fair values of debt securities are determined by management after taking into consideration several sources of data.
When available, Aegon uses quoted market prices in active markets to determine the fair value of its debt securities. As stated
previously, Aegon\u2019s valuation policy utilizes a pricing hierarchy which dictates that publicly available prices are initially sought
from indices and third-party pricing services. In the event that pricing is not available from these sources, those securities are
submitted to brokers to obtain quotes, the majority of which are non-binding. As part of the pricing process, Aegon assesses the
appropriateness of each quote (i.e. as to whether the quote is based on observable market transactions or not) to determine the
most appropriate estimate of fair value.
When broker quotes are not available, securities are priced using internal cash flow modeling techniques. These valuation
methodologies commonly use the following inputs: reported trades, bids, offers, issuer spreads, benchmark yields, estimated
prepayment speeds, issue specific credit adjustments, indicative quotes from market makers and/or estimated cash flows.
To understand the valuation methodologies used by third-party pricing services Aegon reviews and monitors the applicable
methodology documents of the third-party pricing services. Any changes to their methodologies are noted and reviewed for
reasonableness. In addition, Aegon performs in-depth reviews of prices received from third-party pricing services on a sample
basis. The objective for such reviews is to demonstrate that Aegon can corroborate detailed information such as assumptions,
inputs and methodologies used in pricing individual securities against documented pricing methodologies. Only third-party
pricing services and brokers with a substantial presence in the market and with appropriate experience and expertise are used.
Third-party pricing services will often determine prices using recently reported trades for identical or similar securities. The
third-party pricing service makes adjustments for the elapsed time from the trade date to the reporting date to take into
account available market information. Lacking recently reported trades, third-party pricing services and brokers will use
modeling techniques to determine a security price where expected future cash flows are developed based on the performance
of the underlying collateral and discounted using an estimated market rate.
Periodically, Aegon performs an analysis of the inputs obtained from third-party pricing services and brokers to ensure that
the inputs are reasonable and produce a reasonable estimate of fair value. Aegon\u2019s asset specialists and investment valuation
specialists consider both qualitative and quantitative factors as part of this analysis. Several examples of analytical procedures
performed include, but are not limited to, recent transactional activity for similar debt securities, review of pricing statistics and
trends and consideration of recent relevant market events. Other controls and procedures over pricing received from indices,
third-party pricing services, or brokers include validation checks such as exception reports which highlight significant price
changes, stale prices or unpriced securities. In addition, Aegon performs back testing on a sample basis. Back testing involves
selecting a sample of securities trades and comparing the prices in those transactions to prices used for financial reporting.
Significant variances between the price used for financial reporting and the transaction price are investigated to explain the
cause of the difference.
Credit ratings are also an important consideration in the valuation of securities and are included in the internal process
for determining Aegon\u2019s view of the risk associated with each security. However, Aegon does not rely solely on external
credit ratings and there is an internal process, based on market observable inputs, for determining Aegon\u2019s view of the risks
associated with each security.
Aegon\u2019s portfolio of private placement securities (held at fair value under the classification of fair value through OCI or fair
value through profit or loss) is valued using a matrix pricing methodology. The pricing matrix is obtained from a third-party
service provider and indicates current spreads for securities based on weighted average life, credit rating, and industry sector.
Each month, Aegon\u2019s asset specialists review the matrix to ensure the spreads are reasonable by comparing them to observed
spreads for similar bonds traded in the market. Other inputs to the valuation include coupon rate, the current interest rate
curve used for discounting and a liquidity premium to account for the illiquid nature of these securities. The liquidity premiums
are determined based upon the pricing of recent transactions in the private placements market; comparing the value of the
privately offered security to a similar public security. The impact of the liquidity premium for private placement securities to the
overall valuation is insignificant.
Aegon's portfolio of debt securities can be subdivided into Residential mortgage-backed securities (RMBS), Commercial
mortgage-backed securities (CMBS), Asset-backed securities (ABS), Corporate bonds and Government debt. Below relevant
details of the valuation methodologies for these specific types of debt securities are described.
Residential mortgage-backed securities, commercial mortgage-backed securities and asset-backed securities
Valuations of RMBS, CMBS and ABS are monitored and reviewed on a monthly basis. Valuations per asset type are based on a
pricing hierarchy which uses a waterfall approach that starts with market prices from indices and follows with third-party pricing
services or brokers. The pricing hierarchy is dependent on the possibilities of corroboration of the market prices. If no market
prices are available, Aegon uses internal models to determine fair value. Significant inputs included in the internal models are
generally determined based on relative value analyses, which incorporate comparisons to instruments with similar collateral
and risk profiles. Market standard models may be used to model the specific collateral composition and cash flow structure
of each transaction. The most significant unobservable input is the liquidity premium which is embedded in the discount rate.
Aegon the Netherlands has mandated Aegon Asset Management to invest in RMBS transactions. Aegon Asset Management
uses its own proprietary cash flow tools to analyze and stress test RMBS transactions. The key input parameters are default
rates and loss given default assumptions, which are established based on historical pool characteristics and current
loan level data.
Corporate bonds
Valuations of corporate bonds are monitored and reviewed on a monthly basis. The pricing hierarchy is dependent on the
possibility of corroboration of market prices when available. If no market prices are available, valuations are determined by a
discounted cash flow methodology using an internally calculated yield. The yield is comprised of a credit spread over a given
benchmark. In all cases the benchmark is an observable input. The credit spread contains both observable and unobservable
inputs. Aegon starts by taking an observable credit spread from a similar bond of the given issuer, and then adjust this spread
based on unobservable inputs. These unobservable inputs may include subordination, liquidity and maturity differences.
During 2023, there were no corporate bonds that met the policy threshold to be internally modeled.
Government debt
When available, Aegon uses quoted market prices in active markets to determine the fair value of its government debt
investments. When Aegon cannot make use of quoted market prices, market prices from indices or quotes from third-party
pricing services or brokers are used.
Money market and other short-term investments and deposits with financial institutions
The fair value of assets maturing within a year is assumed to be approximated by their carrying amount adjusted for
credit risk where appropriate. Credit risk adjustments are based on market observable credit spreads if available,
or management\u2019s estimate if not market observable.
Tax credit investments
The Level III fair value of tax credit investments is determined by using a discounted cash flow valuation technique. This
valuation technique takes into consideration projections of future capital contributions and distributions, as well as future
tax credits and the tax benefits of future operating losses. The present value of these cash flows is calculated by applying
a discount rate. In general, the discount rate is determined based on the cash outflows for the investments and the cash inflows
from the tax credits and/or tax benefits (and the timing of these cash flows). These inputs are unobservable in the marketplace.
The discount rate used in valuation of tax credit investments was 6.9% (December 31, 2022: 7.1%).
Investment funds: Real estate funds, private equity funds and hedge funds
The fair values of investments held in non-quoted investment funds are determined by management after taking into
consideration information provided by the fund managers. Aegon reviews the valuations each month and performs analytical
procedures and trending analyses to ensure the fair values are appropriate. The net asset value is considered the best valuation
method that approximates the fair value of the funds.
Mortgage loans, policy loans and private loans
(held at amortized cost)
For private loans, fixed interest mortgage loans and other loans originated by the Group, the fair value used for disclosure
purposes is estimated by discounting expected future cash flows using a current market rate applicable to financial
instruments with similar yield and maturity characteristics. For fixed interest mortgage loans, the market rate is adjusted for
expenses, prepayment rates, lapse assumptions (unobservable inputs), liquidity and credit risk (market observable inputs).
An increase in expense spread, prepayment rates and/or prepayment assumptions, would decrease the fair value of the
mortgage loan portfolio.
The fair value of floating interest rate mortgage loans, policy loans and private placements used for disclosure purposes
is assumed to be approximated by their carrying amount, adjusted for changes in credit risk. Credit risk adjustments are based
on market observable credit spreads if available, or management\u2019s estimate if not market observable.
Derivatives
Where quoted market prices are not available, other valuation techniques, such as option pricing or stochastic modeling,
are applied. The valuation techniques incorporate all factors that a typical market participant would consider and are based
on observable market data when available. Models are validated before they are used and calibrated to ensure that outputs
reflect actual experience and comparable market prices.
Fair values for exchange-traded derivatives, principally futures and certain options, are based on quoted market prices in active
markets. Fair values for over-the-counter (OTC) derivative financial instruments represent amounts estimated to be received
from or paid to a third party in settlement of these instruments. These derivatives are valued using pricing models based on the
net present value of estimated future cash flows, directly observed prices from exchange-traded derivatives, other OTC trades,
or external pricing services. Most valuations are derived from swap and volatility matrices, which are constructed for applicable
indices and currencies using current market data from many industry standard sources. Option pricing is based on industry
standard valuation models and current market levels, where applicable. The pricing of complex or illiquid instruments
is based on internal models or an independent third party. For long-dated illiquid contracts, extrapolation methods are applied
to observed market data in order to estimate inputs and assumptions that are not directly observable. To value OTC derivatives,
management uses observed market information, other trades in the market and dealer prices.
Some OTC derivatives are so-called longevity derivatives. The payout of longevity derivatives is linked to publicly available
mortality tables. The derivatives are measured using the present value of the best estimate of expected payouts of the
derivative plus a risk margin. The best estimate of expected payouts is determined using best estimate of mortality
developments. Aegon determined the risk margin by stressing the best estimate mortality developments to quantify the risk
and applying a cost-of-capital methodology. Depending on the duration of the longevity swaps either the projected mortality
development or discount rate are the most significant unobservable inputs.
Aegon normally mitigates counterparty credit risk in derivative contracts by entering into collateral agreements where practical
and in ISDA master netting agreements for each of the Group\u2019s legal entities to facilitate Aegon\u2019s right to offset credit risk
exposure. Changes in the fair value of derivatives attributable to changes in counterparty credit risk were not significant.
Real estate
Valuations of Level III investments in real estate and real estate held for own use are conducted in full by independent external
appraisers at least every three to five years and reviewed at least once a year by qualified internal appraisers to ensure the
value correctly reflects the fair value at the reporting date. Appraisals are different for each specific local market but are
based on market guidelines such as International Valuation Standards, Uniform Standards of Professional Appraisal Practice
or guidelines issued by the Investment Property Databank. Valuations are mostly based on active market prices, adjusted for
any difference in the nature, location or condition of the specific property. If such information is not available, other valuation
methods are applied, considering the value that the property\u2019s net earning power will support, the value indicated by recent
sales of comparable properties and the current cost of reproducing or replacing the property. Discount rates used in the
valuation of real estate reflect the risk embedded in the projected cash flows for the asset being valued. Capitalization rates
represent the income rate for a real estate property that reflects the relationship between a single year\u2019s net operating income
expectancy and the total property price or value. For property held for own use, appraisers consider the present value of the
future rental income cash flows that could be achieved had the real estate been rented to a third party.
Trust pass-through securities and subordinated borrowings
Trust pass-through securities and subordinated borrowings are either carried at fair value (if they are designated as financial
liabilities at fair value through profit or loss) or amortized cost (with fair value being disclosed in the notes to the consolidated
financial statements). For the determination of the fair value of these instruments, the level hierarchy as described by EU-IFRS
is used. The preferred method of obtaining the fair value of the fair value option bonds is the quoted price (Level I). In case
markets are less liquid or the quoted prices are not available, Aegon\u2019s valuation policy utilizes a pricing hierarchy which dictates
that publicly available prices are initially sought from indices and third-party pricing services. The US trust pass-through
securities and subordinated borrowings are classified as Level II of the fair value hierarchy.
Investment contracts
Investment contracts issued by Aegon are either carried at fair value (if they are designated as financial liabilities at fair value
through profit or loss) or amortized cost (with fair value being disclosed in the notes to the consolidated financial statements).
These contracts are not quoted in active markets and their fair values are determined by using valuation techniques, such
as discounted cash flow methods and stochastic modeling or in relation to the unit price of the underlying assets. All models
are validated and calibrated. A variety of factors are considered, including time value, volatility, policyholder behavior, servicing
costs and fair values of similar instruments.
Certain investment products are not quoted in active markets and their fair values are determined by using valuation
techniques. Because of the dynamic and complex nature of these cash flows, stochastic or similar techniques under a variety
of market return scenarios are often used. A variety of factors are considered, including expected market rates of return, market
volatility, correlations of market returns, discount rates and actuarial assumptions.
The expected returns are based on risk-free rates, such as the current Secured Overnight Financing Rate (SOFR) swap
rates and associated forward rates, the Overnight Index Swap (OIS) curve or the current rates on local government bonds.
London Interbank Offered Rate (LIBOR) was replaced with SOFR in the second quarter of 2022. Market volatility assumptions
for each underlying index are based on observed market implied volatility data and/or observed market performance.
Correlations of market returns for various underlying indices are based on observed market returns and their interrelationships
over a number of years preceding the valuation date. Current risk-free spot rates are used to determine the present value
of expected future cash flows produced in the stochastic projection process.
Assumptions on customer behavior, such as lapses, included in the models are derived in the same way as the assumptions
used to measure insurance liabilities.
Summary of total financial assets and financial liabilities at fair value through profit or loss
The table that follows summarizes the carrying amounts of financial assets and financial liabilities that are classified as fair
value through profit or loss, with appropriate distinction between those financial assets and financial liabilities held for trading
and those that, upon initial recognition, were designated as fair value through profit or loss.
\n \n
2023
2022
Trading
Designated
Trading
Designated
Investments where Aegon bears the risk
9,386
2,526
8,079
1,940
Investments where the policyholder bears the risk
-
193,823
-
180,006
Derivatives with positive values not designated as hedges
1,238
-
2,445
Total financial assets at fair value through profit or loss
10,625
196,349
10,524
181,946
Investment contracts without DPF where the policyholder bears the
risk
-
65,044
-
55,631
Derivatives with negative values not designated as hedges
1,466
-
3,958
-
Total financial liabilities at fair value through profit or loss
1,466
65,044
3,958
55,631
Investments where Aegon bears the risk
Aegon has certain insurance and investment liabilities that are carried at fair value with changes in the fair value recognized
in the income statement. The Group has elected to designate the investments backing those liabilities at fair value through
profit or loss, as a classification of fair value through OCI would result in accumulation of unrealized gains and losses in a
revaluation reserve within equity while changes to the liability would be reflected in net result (accounting mismatch).
Investments where the policyholder bears the risk
Investments where the policyholder bears the risk comprise assets that are linked to various insurance and investment
contracts for which the financial risks are borne by the customer. Under the Group\u2019s accounting policies these insurance and
investment liabilities are measured at the fair value of the linked assets with changes in the fair value recognized in the income
statement. To avoid an accounting mismatch the linked assets have been designated as fair value through profit or loss.
In addition, the investment where the policyholders bears the risk include with profit assets, where Aegon manages these
assets together with related liabilities on a fair value basis in accordance with a documented policy of asset and liability
management. In accordance with the Group\u2019s accounting policies, these assets have been designated as fair value through
profit or loss.
Investment contracts without discretionary participating features where the policyholder bears the risk
With the exception of the financial liabilities with discretionary participating features that are not subject to the classification
and measurement requirements for financial instruments, all investment contracts without discretionary participating features
where the policyholder bears the risk that are carried at fair value or at the fair value of the linked assets are included in the
table above.
Derivatives
With the exception of derivatives designated as a hedging instrument, all derivatives are included in the table above.
Gains and losses on financial assets and financial liabilities classified at fair value through profit or loss
Gains and losses recognized in the income statement on financial assets and financial liabilities classified as fair value through
profit or loss can be summarized as follows:
\n \n
2023
2022
Trading
Designated
Trading
Designated
Net gains and (losses)
(1,244)
21,207
(4,431)
(35,205)
No loans and receivables were designated at fair value through profit or loss.
Changes in the fair value of investment contracts without discretionary participating features where the policyholders bears
the risk that are designated at fair value through profit or loss were not attributable to changes in Aegon\u2019s credit spread. There
are also no differences between the carrying amounts of these financial liabilities and the contractual amounts payable
at maturity (net of surrender penalties).", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f65423": { "value": "38 Fair value
The estimated fair values of Aegon\u2019s assets and liabilities correspond with the amounts that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When
available, Aegon uses quoted market prices in active markets to determine the fair value of investments and derivatives. In the
absence of an active market, the fair value of investments in financial assets is estimated by using other market observable
data, such as corroborated external quotes and present value or other valuation techniques. An active market is one in which
transactions are taking place regularly on an arm\u2019s length basis. Fair value is not determined based upon a forced liquidation
or distressed sale.
Valuation techniques are used when Aegon determines the market is inactive or quoted market prices are not available for
the asset or liability at the measurement date. However, the fair value measurement objective remains the same, that is,
to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between
market participants at the measurement date under current market conditions (i.e. an exit price at the measurement date
from the perspective of a market participant that holds the asset or owes the liability). Therefore, unobservable inputs reflect
Aegon\u2019s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including
assumptions about risk). These inputs are developed based on the best information available.
Aegon employs an oversight structure over valuation of financial instruments that includes appropriate segregation of duties.
Senior management, independent of the investing functions, is responsible for the oversight of control and valuation policies
and for reporting the results of these policies. For fair values determined by reference to external quotation or evidenced
pricing parameters, independent price determination or validation is utilized to corroborate those inputs. Further details of the
validation processes are set out below.
Valuation of assets and liabilities is based on a pricing hierarchy, in order to maintain a controlled process that will
systematically promote the use of prices from sources in which Aegon has the most confidence, where the least amount
of manual intervention exists and to embed consistency in the selection of price sources. Depending on asset type the pricing
hierarchy consists of a waterfall that starts with making use of market prices from indices and follows with making use of third-
party pricing services or brokers.
Fair value hierarchy
The following table sets out the fair values of financial instruments by the level of the fair value hierarchy into which each fair
value measurement is categorized. It does not include fair value information for cash and cash equivalents, receivables, and
payables, whose carrying amounts are a reasonable approximation of fair value, or for lease liabilities.
\n \n
2023
Fair value hierarchy
Level I
Level II
Level III
Total
Assets measured at FVOCI
Shares
5
-
4
10
Debt securities
5,644
41,031
516
47,191
Money market and other short-term investments
3,028
97
9
3,135
Other investments at fair value
-
29
-
29
8,678
41,157
530
50,364
Financial assets measured at fair value through profit or
loss
Shares
153
43
94
291
Debt securities
302
2,009
86
2,396
Money market and other short-term investments
4,041
173
-
4,215
Other investments at fair value
1
773
4,237
5,011
Derivatives
47
1,374
8
1,429
Investments in real estate
-
-
55
55
Investments in real estate for policyholders
-
-
433
433
Investments where the policyholder bears the risk
90,027
103,022
342
193,390
94,570
107,395
5,255
207,220
Revalued amounts
Real estate held for own use
-
-
61
61
Total financial assets measured at fair value
103,248
148,551
5,846
257,645
Financial liabilities carried at fair value
Investment contracts without DPF where the policyholder bears the
risk
-
65,044
-
65,044
Derivatives
39
2,434
6
2,479
Total financial liabilities measured at fair value
39
67,478
6
67,523
\n \n
2022
Fair value hierarchy
Level I
Level II
Level III
Total
Assets measured at FVOCI
Shares
5
-
4
10
Debt securities
6,353
45,073
181
51,607
Money market and other short-term investments
1,597
973
5
2,576
Other investments at fair value
-
31
-
31
7,956
46,077
191
54,223
Financial assets measured at fair value through profit or loss
Shares
160
61
127
348
Debt securities
282
1,722
35
2,040
Money market and other short-term investments
2,084
957
1
3,042
Other investments at fair value
1
537
4,050
4,588
Derivatives
33
2,728
11
2,771
Investments in real estate
-
-
59
59
Investments in real estate for policyholders
-
-
443
443
Investments where the policyholder bears the risk
87,362
91,799
402
179,563
89,922
97,804
5,128
192,855
Revalued amounts
Real estate held for own use
-
-
73
73
Total financial assets measured at fair value
97,878
143,881
5,392
247,151
Financial liabilities carried at fair value
Investment contracts without DPF where the policyholder bears the risk
-
55,631
-
55,631
Derivatives
51
5,111
12
5,175
Total financial liabilities measured at fair value
51
60,742
12
60,806
Significant transfers between Level I, Level II and Level III
Aegon\u2019s policy is to record transfers of assets and liabilities between Level I, Level II and Level III at their fair values from the
beginning of each reporting period.
The table below shows transfers between Level I and Level II for financial assets and financial liabilities recorded at fair value
on a recurring basis.
\n \n
2023
2022
Transfers Level I
Transfers Level II
Transfers Level I
Transfers Level II
Significant transfers between level I, level II and level III
to Level II
to Level I
to Level II
to Level I
Assets measured at FVOCI
Debt securities
-
141
23
5
Money market and other short-term investments
45
245
-
460
45
386
23
464
Financial assets measured at fair value through profit or
loss
Shares
-
-
10
128
Money market and other short-term investments
-
795
-
275
Investments where the policyholder bears the risk
1
-
-
28
1
795
10
431
Revalued amounts
Real estate held for own use
-
-
-
-
Total financial assets measured at fair value
46
1,182
34
895
Transfers are identified based on transaction volume and frequency, which are indicative of an active market.
Movements in Level III financial instruments measured at fair value
The following table summarizes the change of all assets and liabilities measured at estimated fair value on a recurring basis
using significant unobservable inputs (Level III), including realized and unrealized gains (losses) of all assets and liabilities and
unrealized gains (losses) of all assets and liabilities still held at the end of the respective period.
\n \n
Total unrealized
gains and losses
for the period
Total gains /
Total
Transfers
recorded in the P&L
Disposal
losses in
gains /
Net
from
Transfers
On
for instruments
Financial assets carried at
of a
income
losses in
Settle-
exchange
Reclas-
levels I
Transfers to
to disposal
December
held on December
fair value
2023
business
statement
1)
OCI
2)
Purchases
Sales
ments
difference
sification
and II
levels I and II
groups
31, 2023
31, 2023
3)
FVOCI
Shares
4
-
-
-
-
-
-
-
-
-
-
-
4
-
Debt securities
181
-
(1)
11
263
(124)
(15)
(12)
-
214
(1)
-
516
-
Money markets and other
short-term investments
5
-
-
4
-
-
-
-
-
-
-
-
9
-
191
-
(1)
15
263
(124)
(15)
(12)
-
214
(1)
-
530
-
FVPL
Shares
127
-
2
-
12
(47)
-
(4)
-
5
-
-
94
3
Debt securities
35
-
17
-
38
(43)
(4)
(2)
-
46
-
-
86
(8)
Money markets and other
short-term investments
1
-
-
-
-
-
-
-
-
-
(1)
-
-
-
Other investments at fair
value
4,050
-
(65)
-
652
(254)
-
(144)
-
-
-
-
4,237
(70)
Derivatives
11
-
(3)
-
-
(1)
-
-
-
-
-
-
8
(3)
Investments in real estate
59
-
2
-
2
(6)
-
(1)
-
-
-
-
55
-
Investments in real estate for
policyholders
443
-
(52)
-
42
(12)
-
11
-
-
-
-
433
(42)
Investments where the
policyholder bears the risk
402
-
(37)
-
37
(59)
-
(1)
-
-
-
-
342
-
5,128
-
(136)
-
782
(422)
(4)
(142)
-
51
(2)
-
5,255
(120)
Revalued amounts
Real estate held for own use
73
-
(3)
(2)
(1)
-
-
(2)
-
-
-
-
64
-
73
-
(3)
(2)
(1)
-
-
(2)
-
-
-
-
64
-
Total financial assets
measured at fair value
5,392
-
(141)
13
1,044
(546)
(19)
(157)
-
265
(3)
-
5,849
(120)
Financial liabilities
carried at fair value
Investment contracts without
DPF where the policyholder
bears the risk
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Derivatives
12
-
(6)
-
-
-
-
-
-
-
-
-
6
-
12
-
(6)
-
-
-
-
-
-
-
-
-
6
-
1
Includes impairments and movements related to fair value hedges. Gains and losses are recorded in the line item Results from financial transactions of the
income statement.
2
Total gains and losses are recorded in line items Gains / (losses) on financial assets measured at FVOCI and Gains / (losses) transferred to income statement on
disposal of financial assets measured at FVOCI of the statement of comprehensive income.
3
Total gains / (losses) for the period during which the financial instrument was in Level III.
\n \n
Total unrealized
gains and losses for
the period recorded
Total gains /
Total
Transfers
in the P&L for
Disposal
losses in
gains /
Net
from
On
instruments held on
Financial assets carried
of a
income
losses in
Settle-
exchange
Reclas-
levels I
Transfers to
Transfers to
December
December 31,
at fair value
2022
business
statement
1)
OCI
2)
Purchases
Sales
ments
difference
sification
and II
levels I and II
disposal groups
31, 2022
2022
3)
FVOCI
Shares
4
-
-
-
-
-
-
-
-
-
-
-
4
-
Debt securities
365
-
(1)
(73)
98
(47)
(16)
23
-
37
(207)
-
181
-
Money markets and other
short-term investments
28
-
-
(23)
-
-
-
-
-
-
-
-
5
-
398
-
(1)
(95)
98
(47)
(16)
23
-
37
(207)
-
191
-
FVPL
Shares
1,530
-
137
-
191
(365)
-
12
-
-
-
(1,378)
127
(41)
Debt securities
242
-
(11)
-
45
(3)
(5)
3
-
2
(140)
(98)
35
(12)
Money markets and other
short-term investments
-
-
1
-
-
-
-
-
-
-
-
-
1
1
Loans
22,727
-
(4,529)
-
1,802
(1,825)
-
-
-
-
-
(18,175)
-
-
Other investments at
fair value
3,548
-
247
-
627
(587)
(14)
229
-
-
-
-
4,050
159
Derivatives
1
-
10
-
-
-
-
-
-
-
-
-
11
10
Investments in real estate
2,643
-
(51)
-
42
(40)
-
3
7
-
-
(2,545)
59
1
Investments in real estate for
policyholders
563
-
(61)
-
10
(42)
-
(27)
-
-
-
-
443
(69)
Investments where the
policyholder bears the risk
895
-
43
-
(468)
876
-
(14)
-
2
-
(932)
402
(55)
32,149
-
(4,214)
-
2,249
(1,986)
(19)
205
7
4
(140)
(23,128)
5,128
(6)
Revalued amounts
Real estate held for own use
185
(23)
(3)
-
(1)
(8)
-
4
(5)
-
-
(76)
73
-
185
(23)
(3)
-
(1)
(8)
-
4
(5)
-
-
(76)
73
-
Total financial assets
measured at fair value
32,732
(24)
(4,218)
(95)
2,346
(2,042)
(34)
232
2
41
(347)
(23,203)
5,392
(7)
Financial liabilities
carried at fair value
Investment contracts without
DPF where the policyholder
bears the risk
(33)
-
(23)
-
(559)
721
-
-
-
1
-
(105)
-
-
Derivatives
41
-
(31)
-
-
-
-
3
-
-
-
(1)
12
-
Total financial liabilities
measured at fair value
8
-
(54)
-
(559)
721
-
3
-
1
-
(106)
12
-
1
Includes impairments and movements related to fair value hedges. Gains and losses are recorded in the line item Results from financial transactions of the income
statement.
2
Total gains and losses are recorded in line items Gains / (losses) on financial assets measured at FVOCI and Gains / (losses) transferred to income statement on disposal
of financial assets measured at FVOCI of the statement of comprehensive income.
3
Total gains / (losses) for the period during which the financial instrument was in Level III.
During 2022 and 2023, Aegon transferred certain financial instruments from Level I and II to Level III of the fair value hierarchy.
The reason for the change in level was that the market liquidity for these securities decreased, which led to a change in market
observability of prices. Prior to transfer, the fair value for the Level II securities was determined using observable market
transactions, internal models or corroborated broker quotes respectively for the same or similar instruments. Since the
transfer, all such assets have been valued using valuation models incorporating significant non market-observable inputs
or uncorroborated broker quotes.
Similarly, during 2022 and 2023, Aegon transferred certain financial instruments from Level III to Level I and II of the fair value
hierarchy. The change in level was mainly the result of a return of activity in the market for these securities and that for these
securities the fair value could be determined using observable market transactions or corroborated broker quotes for the same
or similar instruments.
Valuation techniques and significant unobservable inputs
The table below presents information about the significant unobservable inputs used for recurring fair value measurements for
certain Level III financial instruments.
\n \n
Range
Range
Significant
December
(weighted
December
(weighted
Valuation technique
1)
unobservable input
2)
31, 2023
average)
31, 2022
average)
Assets carried at fair value
Fair value through OCI
Shares
Net asset value
n.a.
-
n.a.
-
n.a.
Other
n.a.
4
n.a.
4
n.a.
4
4
Debt securities
Broker quote
n.a.
416
n.a.
33
n.a.
Constant
Discounted cash flow
Prepayment Rate
2
1.81%
2
40.53%
Constant
Discounted cash flow
Prepayment Rate
-
Other
n.a.
98
n.a.
147
n.a.
516
181
Other investments at fair value
Investment funds
Net asset value
n.a.
-
n.a.
-
n.a.
Other
Other
n.a.
9
n.a.
5
n.a.
9
5
On December 31
530
191
Fair value through profit or loss
Shares
Net asset value
n.a.
91
n.a.
126
n.a.
Shares
Broker quote
n.a.
4
n.a.
1
n.a.
Debt securities
Broker quote
n.a.
80
n.a.
5
n.a.
Constant prepay-
Debt securities
Discounted cash flow
ment rate
-
7.10%
-
7.80%
Debt securities
Other
n.a.
6
n.a.
30
n.a.
180
161
Other investments at fair value
Investment funds
Net asset value
n.a.
3,532
3,439
n.a.
Tax credit investments
Discounted cash flow
Discount rate
705
6.88%
610
7.10%
Other
Other
n.a.
-
-
n.a.
4,237
4,050
Total assets at fair value
3)
4,947
4,403
Liabilities carried at fair value
Derivatives
Embedded derivatives in insurance
contracts
Discounted cash flow
Own credit spread
3
n.a
8
0.45%
Other
Discounted cash flow
Other
3
n.a
4
n.a
Total liabilities at fair value
6
12
-
1
Other in the table above (column Valuation technique) includes investments for which the fair value is uncorroborated and no broker quote is received.
2
Not applicable (n.a.) has been included when the unobservable inputs are not developed by the Group and are not reasonably available. Refer to the section Fair
value measurement in this note for a detailed description of Aegon\u2019s methods of determining fair value and the valuation techniques.
3
Investments where the policyholder bears the risk are excluded from the table above and from the disclosure regarding reasonably possible alternative
assumptions. Assets where the policyholder bears the risk, and their returns, belong to policyholders and do not impact Aegon\u2019s net result or equity. The effect on
total assets is offset by the effect on total liabilities.
For reference purposes, the valuation techniques included in the table above are described in more detail on the
following pages.
Fair value information about assets and liabilities not measured at fair value
The following table presents the carrying values and estimated fair values of assets and liabilities, excluding assets and
liabilities which are carried at fair value on a recurring basis.
\n \n
Carrying
Total estimated
amount
fair value
December 31,
Estimated fair
December 31,
2023
value hierarchy
2023
Level I
Level II
Level III
Assets
Mortgage loans - held at amortized cost
10,157
-
1
9,024
9,025
Other loans - held at amortized cost
70
70
1
-
70
Liabilities
Subordinated borrowings - held at amortized cost
2,244
1,392
730
-
2,122
Trust pass-through securities - held at amortized cost
111
-
125
-
125
Borrowings \u2013 held at amortized cost
2,356
879
1,580
-
2,459
Investment contracts - held at amortized cost
10,222
-
-
8,755
8,755
\n \n
Carrying
Total estimated
amount
fair value
December 31,
Estimated fair
December 31,
2022
value hierarchy
2022
Level I
Level II
Level III
Assets
Mortgage loans - held at amortized cost
10,407
-
1
9,218
9,218
Other loans - held at amortized cost
46
39
7
-
46
Liabilities
Subordinated borrowings - held at amortized cost
2,295
1,372
663
-
2,035
Trust pass-through securities - held at amortized cost
118
-
133
-
133
Borrowings \u2013 held at amortized cost
4,051
1,289
2,825
-
4,114
Investment contracts - held at amortized cost
9,597
-
-
8,416
8,416
Certain financial instruments that are not carried at fair value are carried at amounts that approximate fair value, due to their
short-term nature and generally negligible credit risk. These instruments include cash and cash equivalents, short-term
receivables and accrued interest receivable, short-term liabilities, and accrued liabilities. These instruments are not included
in the table above.
Fair value measurement
The description of Aegon's methods of determining fair value and the valuation techniques are described on the
following pages.
Shares
When available, Aegon uses quoted market prices in active markets to determine the fair value of its investments in shares.
For Level III unquoted shares, the net asset value can be considered the best approximation to the fair value. Net asset value
is the value of an entity's assets minus the value of its liabilities and may be the same as the book value or the equity value
of the entity.
Also for unquoted shares, the fair value may be estimated using other methods, such as observations of the price/earnings
or price/cash flow ratios of quoted companies considered comparable to the companies being valued. Valuations are adjusted
to account for company-specific issues and the lack of liquidity inherent in an unquoted investment. Adjustments for lack
of liquidity are generally based on available market evidence. In addition, a variety of other factors are reviewed by management,
including, but not limited to, current operating performance, changes in market outlook and the third-party financing
environment.
Included in this category are shares in a Federal Home Loan Bank (FHLB) for an amount of EUR 82 million (2022:
EUR 124 million), which are reported as part of the line-item Net asset value. A FHLB has implicit financial support from the
United States government. The redemption value of the shares is fixed at par and they can only be redeemed by the FHLB.
Debt securities
The fair values of debt securities are determined by management after taking into consideration several sources of data.
When available, Aegon uses quoted market prices in active markets to determine the fair value of its debt securities. As stated
previously, Aegon\u2019s valuation policy utilizes a pricing hierarchy which dictates that publicly available prices are initially sought
from indices and third-party pricing services. In the event that pricing is not available from these sources, those securities are
submitted to brokers to obtain quotes, the majority of which are non-binding. As part of the pricing process, Aegon assesses the
appropriateness of each quote (i.e. as to whether the quote is based on observable market transactions or not) to determine the
most appropriate estimate of fair value.
When broker quotes are not available, securities are priced using internal cash flow modeling techniques. These valuation
methodologies commonly use the following inputs: reported trades, bids, offers, issuer spreads, benchmark yields, estimated
prepayment speeds, issue specific credit adjustments, indicative quotes from market makers and/or estimated cash flows.
To understand the valuation methodologies used by third-party pricing services Aegon reviews and monitors the applicable
methodology documents of the third-party pricing services. Any changes to their methodologies are noted and reviewed for
reasonableness. In addition, Aegon performs in-depth reviews of prices received from third-party pricing services on a sample
basis. The objective for such reviews is to demonstrate that Aegon can corroborate detailed information such as assumptions,
inputs and methodologies used in pricing individual securities against documented pricing methodologies. Only third-party
pricing services and brokers with a substantial presence in the market and with appropriate experience and expertise are used.
Third-party pricing services will often determine prices using recently reported trades for identical or similar securities. The
third-party pricing service makes adjustments for the elapsed time from the trade date to the reporting date to take into
account available market information. Lacking recently reported trades, third-party pricing services and brokers will use
modeling techniques to determine a security price where expected future cash flows are developed based on the performance
of the underlying collateral and discounted using an estimated market rate.
Periodically, Aegon performs an analysis of the inputs obtained from third-party pricing services and brokers to ensure that
the inputs are reasonable and produce a reasonable estimate of fair value. Aegon\u2019s asset specialists and investment valuation
specialists consider both qualitative and quantitative factors as part of this analysis. Several examples of analytical procedures
performed include, but are not limited to, recent transactional activity for similar debt securities, review of pricing statistics and
trends and consideration of recent relevant market events. Other controls and procedures over pricing received from indices,
third-party pricing services, or brokers include validation checks such as exception reports which highlight significant price
changes, stale prices or unpriced securities. In addition, Aegon performs back testing on a sample basis. Back testing involves
selecting a sample of securities trades and comparing the prices in those transactions to prices used for financial reporting.
Significant variances between the price used for financial reporting and the transaction price are investigated to explain the
cause of the difference.
Credit ratings are also an important consideration in the valuation of securities and are included in the internal process
for determining Aegon\u2019s view of the risk associated with each security. However, Aegon does not rely solely on external
credit ratings and there is an internal process, based on market observable inputs, for determining Aegon\u2019s view of the risks
associated with each security.
Aegon\u2019s portfolio of private placement securities (held at fair value under the classification of fair value through OCI or fair
value through profit or loss) is valued using a matrix pricing methodology. The pricing matrix is obtained from a third-party
service provider and indicates current spreads for securities based on weighted average life, credit rating, and industry sector.
Each month, Aegon\u2019s asset specialists review the matrix to ensure the spreads are reasonable by comparing them to observed
spreads for similar bonds traded in the market. Other inputs to the valuation include coupon rate, the current interest rate
curve used for discounting and a liquidity premium to account for the illiquid nature of these securities. The liquidity premiums
are determined based upon the pricing of recent transactions in the private placements market; comparing the value of the
privately offered security to a similar public security. The impact of the liquidity premium for private placement securities to the
overall valuation is insignificant.
Aegon's portfolio of debt securities can be subdivided into Residential mortgage-backed securities (RMBS), Commercial
mortgage-backed securities (CMBS), Asset-backed securities (ABS), Corporate bonds and Government debt. Below relevant
details of the valuation methodologies for these specific types of debt securities are described.
Residential mortgage-backed securities, commercial mortgage-backed securities and asset-backed securities
Valuations of RMBS, CMBS and ABS are monitored and reviewed on a monthly basis. Valuations per asset type are based on a
pricing hierarchy which uses a waterfall approach that starts with market prices from indices and follows with third-party pricing
services or brokers. The pricing hierarchy is dependent on the possibilities of corroboration of the market prices. If no market
prices are available, Aegon uses internal models to determine fair value. Significant inputs included in the internal models are
generally determined based on relative value analyses, which incorporate comparisons to instruments with similar collateral
and risk profiles. Market standard models may be used to model the specific collateral composition and cash flow structure
of each transaction. The most significant unobservable input is the liquidity premium which is embedded in the discount rate.
Aegon the Netherlands has mandated Aegon Asset Management to invest in RMBS transactions. Aegon Asset Management
uses its own proprietary cash flow tools to analyze and stress test RMBS transactions. The key input parameters are default
rates and loss given default assumptions, which are established based on historical pool characteristics and current
loan level data.
Corporate bonds
Valuations of corporate bonds are monitored and reviewed on a monthly basis. The pricing hierarchy is dependent on the
possibility of corroboration of market prices when available. If no market prices are available, valuations are determined by a
discounted cash flow methodology using an internally calculated yield. The yield is comprised of a credit spread over a given
benchmark. In all cases the benchmark is an observable input. The credit spread contains both observable and unobservable
inputs. Aegon starts by taking an observable credit spread from a similar bond of the given issuer, and then adjust this spread
based on unobservable inputs. These unobservable inputs may include subordination, liquidity and maturity differences.
During 2023, there were no corporate bonds that met the policy threshold to be internally modeled.
Government debt
When available, Aegon uses quoted market prices in active markets to determine the fair value of its government debt
investments. When Aegon cannot make use of quoted market prices, market prices from indices or quotes from third-party
pricing services or brokers are used.
Money market and other short-term investments and deposits with financial institutions
The fair value of assets maturing within a year is assumed to be approximated by their carrying amount adjusted for
credit risk where appropriate. Credit risk adjustments are based on market observable credit spreads if available,
or management\u2019s estimate if not market observable.
Tax credit investments
The Level III fair value of tax credit investments is determined by using a discounted cash flow valuation technique. This
valuation technique takes into consideration projections of future capital contributions and distributions, as well as future
tax credits and the tax benefits of future operating losses. The present value of these cash flows is calculated by applying
a discount rate. In general, the discount rate is determined based on the cash outflows for the investments and the cash inflows
from the tax credits and/or tax benefits (and the timing of these cash flows). These inputs are unobservable in the marketplace.
The discount rate used in valuation of tax credit investments was 6.9% (December 31, 2022: 7.1%).
Investment funds: Real estate funds, private equity funds and hedge funds
The fair values of investments held in non-quoted investment funds are determined by management after taking into
consideration information provided by the fund managers. Aegon reviews the valuations each month and performs analytical
procedures and trending analyses to ensure the fair values are appropriate. The net asset value is considered the best valuation
method that approximates the fair value of the funds.
Mortgage loans, policy loans and private loans
(held at amortized cost)
For private loans, fixed interest mortgage loans and other loans originated by the Group, the fair value used for disclosure
purposes is estimated by discounting expected future cash flows using a current market rate applicable to financial
instruments with similar yield and maturity characteristics. For fixed interest mortgage loans, the market rate is adjusted for
expenses, prepayment rates, lapse assumptions (unobservable inputs), liquidity and credit risk (market observable inputs).
An increase in expense spread, prepayment rates and/or prepayment assumptions, would decrease the fair value of the
mortgage loan portfolio.
The fair value of floating interest rate mortgage loans, policy loans and private placements used for disclosure purposes
is assumed to be approximated by their carrying amount, adjusted for changes in credit risk. Credit risk adjustments are based
on market observable credit spreads if available, or management\u2019s estimate if not market observable.
Derivatives
Where quoted market prices are not available, other valuation techniques, such as option pricing or stochastic modeling,
are applied. The valuation techniques incorporate all factors that a typical market participant would consider and are based
on observable market data when available. Models are validated before they are used and calibrated to ensure that outputs
reflect actual experience and comparable market prices.
Fair values for exchange-traded derivatives, principally futures and certain options, are based on quoted market prices in active
markets. Fair values for over-the-counter (OTC) derivative financial instruments represent amounts estimated to be received
from or paid to a third party in settlement of these instruments. These derivatives are valued using pricing models based on the
net present value of estimated future cash flows, directly observed prices from exchange-traded derivatives, other OTC trades,
or external pricing services. Most valuations are derived from swap and volatility matrices, which are constructed for applicable
indices and currencies using current market data from many industry standard sources. Option pricing is based on industry
standard valuation models and current market levels, where applicable. The pricing of complex or illiquid instruments
is based on internal models or an independent third party. For long-dated illiquid contracts, extrapolation methods are applied
to observed market data in order to estimate inputs and assumptions that are not directly observable. To value OTC derivatives,
management uses observed market information, other trades in the market and dealer prices.
Some OTC derivatives are so-called longevity derivatives. The payout of longevity derivatives is linked to publicly available
mortality tables. The derivatives are measured using the present value of the best estimate of expected payouts of the
derivative plus a risk margin. The best estimate of expected payouts is determined using best estimate of mortality
developments. Aegon determined the risk margin by stressing the best estimate mortality developments to quantify the risk
and applying a cost-of-capital methodology. Depending on the duration of the longevity swaps either the projected mortality
development or discount rate are the most significant unobservable inputs.
Aegon normally mitigates counterparty credit risk in derivative contracts by entering into collateral agreements where practical
and in ISDA master netting agreements for each of the Group\u2019s legal entities to facilitate Aegon\u2019s right to offset credit risk
exposure. Changes in the fair value of derivatives attributable to changes in counterparty credit risk were not significant.
Real estate
Valuations of Level III investments in real estate and real estate held for own use are conducted in full by independent external
appraisers at least every three to five years and reviewed at least once a year by qualified internal appraisers to ensure the
value correctly reflects the fair value at the reporting date. Appraisals are different for each specific local market but are
based on market guidelines such as International Valuation Standards, Uniform Standards of Professional Appraisal Practice
or guidelines issued by the Investment Property Databank. Valuations are mostly based on active market prices, adjusted for
any difference in the nature, location or condition of the specific property. If such information is not available, other valuation
methods are applied, considering the value that the property\u2019s net earning power will support, the value indicated by recent
sales of comparable properties and the current cost of reproducing or replacing the property. Discount rates used in the
valuation of real estate reflect the risk embedded in the projected cash flows for the asset being valued. Capitalization rates
represent the income rate for a real estate property that reflects the relationship between a single year\u2019s net operating income
expectancy and the total property price or value. For property held for own use, appraisers consider the present value of the
future rental income cash flows that could be achieved had the real estate been rented to a third party.
Trust pass-through securities and subordinated borrowings
Trust pass-through securities and subordinated borrowings are either carried at fair value (if they are designated as financial
liabilities at fair value through profit or loss) or amortized cost (with fair value being disclosed in the notes to the consolidated
financial statements). For the determination of the fair value of these instruments, the level hierarchy as described by EU-IFRS
is used. The preferred method of obtaining the fair value of the fair value option bonds is the quoted price (Level I). In case
markets are less liquid or the quoted prices are not available, Aegon\u2019s valuation policy utilizes a pricing hierarchy which dictates
that publicly available prices are initially sought from indices and third-party pricing services. The US trust pass-through
securities and subordinated borrowings are classified as Level II of the fair value hierarchy.
Investment contracts
Investment contracts issued by Aegon are either carried at fair value (if they are designated as financial liabilities at fair value
through profit or loss) or amortized cost (with fair value being disclosed in the notes to the consolidated financial statements).
These contracts are not quoted in active markets and their fair values are determined by using valuation techniques, such
as discounted cash flow methods and stochastic modeling or in relation to the unit price of the underlying assets. All models
are validated and calibrated. A variety of factors are considered, including time value, volatility, policyholder behavior, servicing
costs and fair values of similar instruments.
Certain investment products are not quoted in active markets and their fair values are determined by using valuation
techniques. Because of the dynamic and complex nature of these cash flows, stochastic or similar techniques under a variety
of market return scenarios are often used. A variety of factors are considered, including expected market rates of return, market
volatility, correlations of market returns, discount rates and actuarial assumptions.
The expected returns are based on risk-free rates, such as the current Secured Overnight Financing Rate (SOFR) swap
rates and associated forward rates, the Overnight Index Swap (OIS) curve or the current rates on local government bonds.
London Interbank Offered Rate (LIBOR) was replaced with SOFR in the second quarter of 2022. Market volatility assumptions
for each underlying index are based on observed market implied volatility data and/or observed market performance.
Correlations of market returns for various underlying indices are based on observed market returns and their interrelationships
over a number of years preceding the valuation date. Current risk-free spot rates are used to determine the present value
of expected future cash flows produced in the stochastic projection process.
Assumptions on customer behavior, such as lapses, included in the models are derived in the same way as the assumptions
used to measure insurance liabilities.
Summary of total financial assets and financial liabilities at fair value through profit or loss
The table that follows summarizes the carrying amounts of financial assets and financial liabilities that are classified as fair
value through profit or loss, with appropriate distinction between those financial assets and financial liabilities held for trading
and those that, upon initial recognition, were designated as fair value through profit or loss.
\n \n
2023
2022
Trading
Designated
Trading
Designated
Investments where Aegon bears the risk
9,386
2,526
8,079
1,940
Investments where the policyholder bears the risk
-
193,823
-
180,006
Derivatives with positive values not designated as hedges
1,238
-
2,445
Total financial assets at fair value through profit or loss
10,625
196,349
10,524
181,946
Investment contracts without DPF where the policyholder bears the
risk
-
65,044
-
55,631
Derivatives with negative values not designated as hedges
1,466
-
3,958
-
Total financial liabilities at fair value through profit or loss
1,466
65,044
3,958
55,631
Investments where Aegon bears the risk
Aegon has certain insurance and investment liabilities that are carried at fair value with changes in the fair value recognized
in the income statement. The Group has elected to designate the investments backing those liabilities at fair value through
profit or loss, as a classification of fair value through OCI would result in accumulation of unrealized gains and losses in a
revaluation reserve within equity while changes to the liability would be reflected in net result (accounting mismatch).
Investments where the policyholder bears the risk
Investments where the policyholder bears the risk comprise assets that are linked to various insurance and investment
contracts for which the financial risks are borne by the customer. Under the Group\u2019s accounting policies these insurance and
investment liabilities are measured at the fair value of the linked assets with changes in the fair value recognized in the income
statement. To avoid an accounting mismatch the linked assets have been designated as fair value through profit or loss.
In addition, the investment where the policyholders bears the risk include with profit assets, where Aegon manages these
assets together with related liabilities on a fair value basis in accordance with a documented policy of asset and liability
management. In accordance with the Group\u2019s accounting policies, these assets have been designated as fair value through
profit or loss.
Investment contracts without discretionary participating features where the policyholder bears the risk
With the exception of the financial liabilities with discretionary participating features that are not subject to the classification
and measurement requirements for financial instruments, all investment contracts without discretionary participating features
where the policyholder bears the risk that are carried at fair value or at the fair value of the linked assets are included in the
table above.
Derivatives
With the exception of derivatives designated as a hedging instrument, all derivatives are included in the table above.
Gains and losses on financial assets and financial liabilities classified at fair value through profit or loss
Gains and losses recognized in the income statement on financial assets and financial liabilities classified as fair value through
profit or loss can be summarized as follows:
\n \n
2023
2022
Trading
Designated
Trading
Designated
Net gains and (losses)
(1,244)
21,207
(4,431)
(35,205)
No loans and receivables were designated at fair value through profit or loss.
Changes in the fair value of investment contracts without discretionary participating features where the policyholders bears
the risk that are designated at fair value through profit or loss were not attributable to changes in Aegon\u2019s credit spread. There
are also no differences between the carrying amounts of these financial liabilities and the contractual amounts payable
at maturity (net of surrender penalties).", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f69615": { "value": "39 Commitments and contingencies
Investments contracted
In the normal course of business, the Group has committed itself through purchase and sale transactions of investments,
mostly to be executed in the course of 2024. The amounts represent the future outflow and inflow, respectively, of cash related
to these investment transactions that are not reflected in the consolidated statement of financial position.
\n \n
2023
2022
Purchase
Sale
Purchase
Sale
Real estate
-
2
-
1
Mortgage loans
421
-
468
-
Private loans
89
-
150
-
Other
1,292
-
1,408
-
Aegon has committed itself, through certain subsidiaries, to invest in real estate, private loans, mortgage loans and receivables
and investment funds.
Real estate commitments represent the committed pipeline of investments in real estate projects. The sale of real estate
relates to properties that are under contract to be sold as per December 31, 2023. Mortgage loan commitments represent
undrawn mortgage loan facilities provided and outstanding proposals on mortgages. The sale of mortgage loans relates to pre-
announced redemptions on mortgage loans. Private loans represent deals on Aegon's portfolio of private placement securities
that Aegon has committed to, but which have not yet settled and funded. Other commitments include future purchases
of interests in investment funds and limited partnerships.
Other commitments and contingencies
\n \n
2023
2022
Guarantees
773
611
Other guarantees
7
8
Guarantees include those guarantees associated with the sale of investments in low-income housing tax credit partnerships
in the United States, which can be called upon if there is a deficiency in the tax benefits delivered to the investor or if Aegon
is in default under a material provision of the contract. Standby letters of credit amounts reflected above are the liquidity
commitment notional amounts. In addition to the guarantees shown in the table, guarantees have been given for fulfillment
of contractual obligations such as investment mandates related to investment funds.
Amount of collaterals on financial guarantees is EUR 0 million on December 31, 2023 (EUR 0 million on December 31, 2022),
while other commitments have EUR 1 million collateral at the end of 2023 (EUR 1 million cash collateral at the end of 2022).
Contractual obligations
In March 2019, affiliates of Transamerica Corporation and Illumifin, entered into a series of agreements to which Transamerica
transferred to Illumifin the administration and claims management of its long term care insurance business line, enabling
Transamerica to accelerate the enhancement of its digital capabilities and modernize its long term care insurance platform.
Over the course of the multi-year contract, Transamerica will pay approximately USD 390 million to Illumifin. These fees
represent compensation for administering Transamerica\u2019s long term care product line including policyholder service, claims
processing and care management. The agreement also contains a termination clause in which Transamerica \u2013 subject
to certain limitations \u2013 agrees to compensate Illumifin, on a specified schedule, for early termination.
In April 2018, affiliates of Transamerica Corporation entered into a series of agreements with affiliates of Tata Consultancy
Services Limited (TCS) to administer the Company\u2019s US life insurance, voluntary benefits, and annuity business lines. The intent
of the relationship was for Transamerica to accelerate the enhancement of its digital capabilities and the modernization of its
platforms to service its customers in all lines of business. In May of 2023, due to the then current macro environment and the
parties\u2019 respective business priorities, Transamerica and TCS mutually agreed to end the administration arrangement for life,
annuity and voluntary benefits lines of business. Transamerica and TCS agreed to work together to ensure a smooth transition
of the administration to a new servicing model which aims to take approximately 30 months.
In November 2018, Aegon UK announced an extended partnership with Atos BPS Ltd. (Atos) to service and administer its
Traditional Products Business (non-Platform customers). The agreement is a 15-year contract under which Aegon UK pays
Atos to administer around 1.4 million customers, which took effect on June 1, 2019 as planned. At year-end 2022, outstanding
transition and conversion charges are estimated to amount to approximately GBP 10 million, which are expected to be recorded
over the next year, with fixed payments to Atos defined in the agreement and subject to completion of milestones which have
been agreed with Aegon UK.
An Aegon Ltd. indirect US life subsidiary has a net worth maintenance agreement with its subsidiary Transamerica Life
(Bermuda) Ltd., pursuant to which Transamerica Life Insurance Company, a US life insurance subsidiary, will provide capital
sufficient to maintain a S&P \"AA\" financial strength rating and capital sufficient to comply with the requirements of the countries
in which its branches are located.
Aegon has guaranteed and is severally liable for the following:
\u2022
Due and punctual payment of payables under letter of credit agreements applied for by Aegon as co-applicant with its captive
insurance companies that are subsidiaries of Transamerica Corporation and Commonwealth General Corporation. On
December 31, 2023, the letter of credit arrangements utilized by captives to provide collateral to affiliates amounted to EUR
526 million (2022: EUR 511 million); from that date no amounts had been drawn, or were due under these facilities;
\u2022
Due and punctual payment of payables by the consolidated group companies Transamerica Corporation, Aegon Funding
Company LLC and Commonwealth General Corporation with respect to fixed subordinated notes, bonds, capital trust
pass-through securities and notes issued under commercial paper programs amounting to EUR 1,007 million (2022: EUR
1,042 million); and
\u2022
Due and punctual payment of any amounts owed to third parties by the consolidated group company Aegon Derivatives N.V.
in connection with derivative transactions. Aegon Derivatives N.V. enters into derivative transactions with counterparties with
which ISDA master netting agreements, including collateral support annex agreements, have been agreed. Net (credit)
exposure on derivative transactions with these counterparties was therefore limited from December 31, 2023.", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f69616": { "value": "39 Commitments and contingencies
Investments contracted
In the normal course of business, the Group has committed itself through purchase and sale transactions of investments,
mostly to be executed in the course of 2024. The amounts represent the future outflow and inflow, respectively, of cash related
to these investment transactions that are not reflected in the consolidated statement of financial position.
\n \n
2023
2022
Purchase
Sale
Purchase
Sale
Real estate
-
2
-
1
Mortgage loans
421
-
468
-
Private loans
89
-
150
-
Other
1,292
-
1,408
-
Aegon has committed itself, through certain subsidiaries, to invest in real estate, private loans, mortgage loans and receivables
and investment funds.
Real estate commitments represent the committed pipeline of investments in real estate projects. The sale of real estate
relates to properties that are under contract to be sold as per December 31, 2023. Mortgage loan commitments represent
undrawn mortgage loan facilities provided and outstanding proposals on mortgages. The sale of mortgage loans relates to pre-
announced redemptions on mortgage loans. Private loans represent deals on Aegon's portfolio of private placement securities
that Aegon has committed to, but which have not yet settled and funded. Other commitments include future purchases
of interests in investment funds and limited partnerships.
Other commitments and contingencies
\n \n
2023
2022
Guarantees
773
611
Other guarantees
7
8
Guarantees include those guarantees associated with the sale of investments in low-income housing tax credit partnerships
in the United States, which can be called upon if there is a deficiency in the tax benefits delivered to the investor or if Aegon
is in default under a material provision of the contract. Standby letters of credit amounts reflected above are the liquidity
commitment notional amounts. In addition to the guarantees shown in the table, guarantees have been given for fulfillment
of contractual obligations such as investment mandates related to investment funds.
Amount of collaterals on financial guarantees is EUR 0 million on December 31, 2023 (EUR 0 million on December 31, 2022),
while other commitments have EUR 1 million collateral at the end of 2023 (EUR 1 million cash collateral at the end of 2022).
Contractual obligations
In March 2019, affiliates of Transamerica Corporation and Illumifin, entered into a series of agreements to which Transamerica
transferred to Illumifin the administration and claims management of its long term care insurance business line, enabling
Transamerica to accelerate the enhancement of its digital capabilities and modernize its long term care insurance platform.
Over the course of the multi-year contract, Transamerica will pay approximately USD 390 million to Illumifin. These fees
represent compensation for administering Transamerica\u2019s long term care product line including policyholder service, claims
processing and care management. The agreement also contains a termination clause in which Transamerica \u2013 subject
to certain limitations \u2013 agrees to compensate Illumifin, on a specified schedule, for early termination.
In April 2018, affiliates of Transamerica Corporation entered into a series of agreements with affiliates of Tata Consultancy
Services Limited (TCS) to administer the Company\u2019s US life insurance, voluntary benefits, and annuity business lines. The intent
of the relationship was for Transamerica to accelerate the enhancement of its digital capabilities and the modernization of its
platforms to service its customers in all lines of business. In May of 2023, due to the then current macro environment and the
parties\u2019 respective business priorities, Transamerica and TCS mutually agreed to end the administration arrangement for life,
annuity and voluntary benefits lines of business. Transamerica and TCS agreed to work together to ensure a smooth transition
of the administration to a new servicing model which aims to take approximately 30 months.
In November 2018, Aegon UK announced an extended partnership with Atos BPS Ltd. (Atos) to service and administer its
Traditional Products Business (non-Platform customers). The agreement is a 15-year contract under which Aegon UK pays
Atos to administer around 1.4 million customers, which took effect on June 1, 2019 as planned. At year-end 2022, outstanding
transition and conversion charges are estimated to amount to approximately GBP 10 million, which are expected to be recorded
over the next year, with fixed payments to Atos defined in the agreement and subject to completion of milestones which have
been agreed with Aegon UK.
An Aegon Ltd. indirect US life subsidiary has a net worth maintenance agreement with its subsidiary Transamerica Life
(Bermuda) Ltd., pursuant to which Transamerica Life Insurance Company, a US life insurance subsidiary, will provide capital
sufficient to maintain a S&P \"AA\" financial strength rating and capital sufficient to comply with the requirements of the countries
in which its branches are located.
Aegon has guaranteed and is severally liable for the following:
\u2022
Due and punctual payment of payables under letter of credit agreements applied for by Aegon as co-applicant with its captive
insurance companies that are subsidiaries of Transamerica Corporation and Commonwealth General Corporation. On
December 31, 2023, the letter of credit arrangements utilized by captives to provide collateral to affiliates amounted to EUR
526 million (2022: EUR 511 million); from that date no amounts had been drawn, or were due under these facilities;
\u2022
Due and punctual payment of payables by the consolidated group companies Transamerica Corporation, Aegon Funding
Company LLC and Commonwealth General Corporation with respect to fixed subordinated notes, bonds, capital trust
pass-through securities and notes issued under commercial paper programs amounting to EUR 1,007 million (2022: EUR
1,042 million); and
\u2022
Due and punctual payment of any amounts owed to third parties by the consolidated group company Aegon Derivatives N.V.
in connection with derivative transactions. Aegon Derivatives N.V. enters into derivative transactions with counterparties with
which ISDA master netting agreements, including collateral support annex agreements, have been agreed. Net (credit)
exposure on derivative transactions with these counterparties was therefore limited from December 31, 2023.
Legal and arbitration proceedings, regulatory investigations and actions
Aegon faces significant risks of litigation as well as regulatory exams and investigations and actions relating to its and its
subsidiaries\u2019 businesses. Aegon is also subject to compliance with regulations applicable to it as a corporate entity.
Due to the geographic spread of its business, Aegon Group may be subject to tax audits or litigation in various jurisdictions.
Although uncertainties are provided for adequately in the tax position, the ultimate outcome of tax audits or litigation may result
in an outcome that differs from the amounts provided for.
Insurance companies and their affiliated regulated entities are routinely subject to litigation, investigation and regulatory
activity by various governmental and enforcement authorities, individual claimants and policyholder advocate groups in the
jurisdictions in which Aegon does business, including the United States and the United Kingdom. These actions may involve
issues including, but not limited to, employment or distribution relationships; operational and internal controls and processes;
investment returns; sales practices; transparency and adequacy of product disclosures including regarding initial costs,
ongoing costs, and costs due on policy surrender as well as changes to costs over time; environmental and climate change
related matters; competition and antitrust matters; data privacy; information security; intellectual property; and anti-money
laundering, anti-bribery, and economic sanctions compliance.
Over time, Aegon has made a number of acquisitions and divestments around the world, including in the Netherlands,
Central and Eastern Europe, the United States, and the United Kingdom. Acquisitions and divestments involve risks, including
the risk of losses resulting from claims or litigation related to contractual terms such as representations, warranties, and
indemnifications.
Government and regulatory investigations may result in the institution of administrative, injunctive or other proceedings and/
or the imposition of monetary fines, penalties and/or disgorgement as well as other remedies, sanctions, damages, and
restitutionary amounts. Regulators may also seek changes to the way Aegon operates. In some cases, Aegon subsidiaries have
modified business practices in response to inquiries.
Customers of certain Aegon products bear significant investment risks with respect to those products, which are affected
by fluctuations in equity markets as well as interest rate movements. When investment returns disappoint, are volatile
or change due to changes in the market or other relevant conditions, customers may threaten or bring litigation against Aegon.
Disputes and investigations initiated by governmental entities and private parties may lead to orders or settlements including
payments or changes to business practices even if Aegon believes the underlying claims are without merit.
The existence of potential claims may remain unknown for long periods of time after the events giving rise to such claims.
Determining the likelihood of exposure to Aegon and the extent of any such exposure may not be possible for long periods
of time after Aegon becomes aware of such potential claims. Litigation exposure may develop over long periods of time; once
litigation is initiated, it may be protracted and subject to multiple levels of appeal, which can lead to significant costs of defense,
adverse publicity and other constraints.
In some jurisdictions, plaintiffs may seek recovery of very large or indeterminate amounts under claims of bad faith, which
can result in tort, punitive and/or statutory damages. Damages alleged may not be quantifiable or supportable or may have
no relationship to economic losses or final awards. As a result, Aegon cannot predict the effect of litigation, investigations
or other actions on its business.
Separate from financial loss, litigation, regulatory action, legislative changes or changes in public opinion may require Aegon
to change its business practices, which could have a material adverse impact on Aegon\u2019s businesses, results of operations,
cash flows and financial position.
Proceedings in which Aegon is involved
Several US insurers, including Aegon subsidiaries, have been named in class actions as well as individual litigation relating
to increases in monthly deduction rates (MDR) on universal life products. Plaintiffs generally allege that the increases were
made to recoup past losses rather than to cover the future costs of providing insurance coverage. Aegon\u2019s subsidiary
in the United States settled two such class actions that had been venued in California federal court. The settlement in the
first of these cases, approved in January 2019, arose from increases implemented in 2015-2016. In a second case,
Aegon\u2019s subsidiary agreed to settle a class action lawsuit arising out of MDR increases in 2017 and 2018. The court approved
that settlement in September 2020. A number of policyowners opted-out of the class settlements, with the settlement funds
reduced proportionally. By the end of 2023, all material opt-out lawsuits and disputes from both cases had been resolved, and
provisions adjusted accordingly. A third case was filed in October 2022 which relates to MDR increases in 2022 and 2023. That
case is venued in Iowa federal court. At this time, Aegon is unable to reliably estimate the potential exposure in this case.
Transamerica subsidiaries may face employment-related lawsuits from time to time. For example, several US-based Aegon
subsidiaries are defendants in a putative class action alleging that the subsidiaries mischaracterize agents as independent
contractors instead of employees. While the subsidiaries disagree with these allegations and have vigorously defended the
action, the parties have reached a settlement, subject to court approval, to avoid the cost, expense and risks associated with
litigation. Litigation provisions have been adjusted to account for this pending resolution. Depending on the outcome, legal
or regulatory claims like this against Transamerica subsidiaries and other companies could result in significant settlements
or judgments, and could necessitate a change in the distribution model, which would be costly and could have a material
impact on the financial results for that part of the Transamerica business.
A former subsidiary of Transamerica Corporation was involved in a contractual dispute with a Nigerian travel broker that
arose in 1976. That dispute was resolved in Delaware court for USD 235 thousand plus interest in 2010. The plaintiff took
the Delaware judgment relating to the 1976 dispute to a Nigerian court and alleged that it was entitled to approximately the
same damages for 1977 through 1984 despite the absence of any contract relating to those years. The Nigerian trial court
issued a judgment in favor of the plaintiff of the alleged actual damages as well as pre-judgment interest of approximately
USD 120 million. On appeal this decision was reversed on procedural grounds and remanded back to the trial court which ruled
to dismiss the case; however, the Plaintiff appealed the trial court\u2019s ruling. The appellate hearing, which was originally scheduled
for March 2022, as well as the hearing that was scheduled for January 12, 2023, on the request for substitution of Plaintiff\u2019s son
were both cancelled by the court and neither has been rescheduled. Aegon has no material assets located in Nigeria. ", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f69713": { "value": "Other commitments and contingencies \n \n
2023
2022
Guarantees
773
611
Other guarantees
7
8
Guarantees include those guarantees associated with the sale of investments in low-income housing tax credit partnerships
in the United States, which can be called upon if there is a deficiency in the tax benefits delivered to the investor or if Aegon
is in default under a material provision of the contract. Standby letters of credit amounts reflected above are the liquidity
commitment notional amounts. In addition to the guarantees shown in the table, guarantees have been given for fulfillment
of contractual obligations such as investment mandates related to investment funds.
Amount of collaterals on financial guarantees is EUR 0 million on December 31, 2023 (EUR 0 million on December 31, 2022),
while other commitments have EUR 1 million collateral at the end of 2023 (EUR 1 million cash collateral at the end of 2022).Legal and arbitration proceedings, regulatory investigations and actions
Aegon faces significant risks of litigation as well as regulatory exams and investigations and actions relating to its and its
subsidiaries\u2019 businesses. Aegon is also subject to compliance with regulations applicable to it as a corporate entity.
Due to the geographic spread of its business, Aegon Group may be subject to tax audits or litigation in various jurisdictions.
Although uncertainties are provided for adequately in the tax position, the ultimate outcome of tax audits or litigation may result
in an outcome that differs from the amounts provided for.
Insurance companies and their affiliated regulated entities are routinely subject to litigation, investigation and regulatory
activity by various governmental and enforcement authorities, individual claimants and policyholder advocate groups in the
jurisdictions in which Aegon does business, including the United States and the United Kingdom. These actions may involve
issues including, but not limited to, employment or distribution relationships; operational and internal controls and processes;
investment returns; sales practices; transparency and adequacy of product disclosures including regarding initial costs,
ongoing costs, and costs due on policy surrender as well as changes to costs over time; environmental and climate change
related matters; competition and antitrust matters; data privacy; information security; intellectual property; and anti-money
laundering, anti-bribery, and economic sanctions compliance.
Over time, Aegon has made a number of acquisitions and divestments around the world, including in the Netherlands,
Central and Eastern Europe, the United States, and the United Kingdom. Acquisitions and divestments involve risks, including
the risk of losses resulting from claims or litigation related to contractual terms such as representations, warranties, and
indemnifications.
Government and regulatory investigations may result in the institution of administrative, injunctive or other proceedings and/
or the imposition of monetary fines, penalties and/or disgorgement as well as other remedies, sanctions, damages, and
restitutionary amounts. Regulators may also seek changes to the way Aegon operates. In some cases, Aegon subsidiaries have
modified business practices in response to inquiries.
Customers of certain Aegon products bear significant investment risks with respect to those products, which are affected
by fluctuations in equity markets as well as interest rate movements. When investment returns disappoint, are volatile
or change due to changes in the market or other relevant conditions, customers may threaten or bring litigation against Aegon.
Disputes and investigations initiated by governmental entities and private parties may lead to orders or settlements including
payments or changes to business practices even if Aegon believes the underlying claims are without merit.
The existence of potential claims may remain unknown for long periods of time after the events giving rise to such claims.
Determining the likelihood of exposure to Aegon and the extent of any such exposure may not be possible for long periods
of time after Aegon becomes aware of such potential claims. Litigation exposure may develop over long periods of time; once
litigation is initiated, it may be protracted and subject to multiple levels of appeal, which can lead to significant costs of defense,
adverse publicity and other constraints.
In some jurisdictions, plaintiffs may seek recovery of very large or indeterminate amounts under claims of bad faith, which
can result in tort, punitive and/or statutory damages. Damages alleged may not be quantifiable or supportable or may have
no relationship to economic losses or final awards. As a result, Aegon cannot predict the effect of litigation, investigations
or other actions on its business.
Separate from financial loss, litigation, regulatory action, legislative changes or changes in public opinion may require Aegon
to change its business practices, which could have a material adverse impact on Aegon\u2019s businesses, results of operations,
cash flows and financial position.
Proceedings in which Aegon is involved
Several US insurers, including Aegon subsidiaries, have been named in class actions as well as individual litigation relating
to increases in monthly deduction rates (MDR) on universal life products. Plaintiffs generally allege that the increases were
made to recoup past losses rather than to cover the future costs of providing insurance coverage. Aegon\u2019s subsidiary
in the United States settled two such class actions that had been venued in California federal court. The settlement in the
first of these cases, approved in January 2019, arose from increases implemented in 2015-2016. In a second case,
Aegon\u2019s subsidiary agreed to settle a class action lawsuit arising out of MDR increases in 2017 and 2018. The court approved
that settlement in September 2020. A number of policyowners opted-out of the class settlements, with the settlement funds
reduced proportionally. By the end of 2023, all material opt-out lawsuits and disputes from both cases had been resolved, and
provisions adjusted accordingly. A third case was filed in October 2022 which relates to MDR increases in 2022 and 2023. That
case is venued in Iowa federal court. At this time, Aegon is unable to reliably estimate the potential exposure in this case.
Transamerica subsidiaries may face employment-related lawsuits from time to time. For example, several US-based Aegon
subsidiaries are defendants in a putative class action alleging that the subsidiaries mischaracterize agents as independent
contractors instead of employees. While the subsidiaries disagree with these allegations and have vigorously defended the
action, the parties have reached a settlement, subject to court approval, to avoid the cost, expense and risks associated with
litigation. Litigation provisions have been adjusted to account for this pending resolution. Depending on the outcome, legal
or regulatory claims like this against Transamerica subsidiaries and other companies could result in significant settlements
or judgments, and could necessitate a change in the distribution model, which would be costly and could have a material
impact on the financial results for that part of the Transamerica business.
A former subsidiary of Transamerica Corporation was involved in a contractual dispute with a Nigerian travel broker that
arose in 1976. That dispute was resolved in Delaware court for USD 235 thousand plus interest in 2010. The plaintiff took
the Delaware judgment relating to the 1976 dispute to a Nigerian court and alleged that it was entitled to approximately the
same damages for 1977 through 1984 despite the absence of any contract relating to those years. The Nigerian trial court
issued a judgment in favor of the plaintiff of the alleged actual damages as well as pre-judgment interest of approximately
USD 120 million. On appeal this decision was reversed on procedural grounds and remanded back to the trial court which ruled
to dismiss the case; however, the Plaintiff appealed the trial court\u2019s ruling. The appellate hearing, which was originally scheduled
for March 2022, as well as the hearing that was scheduled for January 12, 2023, on the request for substitution of Plaintiff\u2019s son
were both cancelled by the court and neither has been rescheduled. Aegon has no material assets located in Nigeria. ", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f69903": { "value": "40 Transfers of financial assets
Transfers of financial assets occur when Aegon transfers contractual rights to receive cash flows of financial assets or when
Aegon retains the contractual rights to receive the cash flows of the transferred financial asset but assumes a contractual
obligation to pay the cash flows to one or more recipients in that arrangement.
In the normal course of business Aegon is involved in the following transactions:
\u2022
Transferred financial assets that are not derecognized in their entirety:
\u2022
Securities lending; whereby Aegon legally (but not economically) transfers assets and receives cash and non-
cash collateral. The transferred assets are not derecognized. The obligation to repay the cash collateral is recognized as
a liability. The non-cash collateral is not recognized in the statement of financial position; and
\u2022
Repurchase activities; whereby Aegon receives cash for the transferred assets. The financial assets are legally (but
not economically) transferred but are not derecognized. The obligation to repay the cash received is recognized as a liability.
\u2022
Transferred financial assets that are derecognized in their entirety and Aegon does not have a continuing involvement
(normal sale);
\u2022
Transferred financial assets that are derecognized in their entirety, but where Aegon has a continuing involvement;
\u2022
Collateral accepted in the case of securities lending, reverse repurchase agreement and derivative transactions; and
\u2022
Collateral pledged in the case of (contingent) liabilities, repurchase agreements, securities borrowing and derivative
transactions.
The following disclosures provide details for transferred financial assets that are not derecognized in their entirety, transferred
financial asset that are derecognized in their entirety, but where Aegon has a continuing involvement and assets accepted and
pledged as collateral.
40.1 Transferred financial assets that have not been derecognized in their entirety
The following table reflects the carrying amount of financial assets that have been transferred to another party in such a way
that part or all the transferred financial assets do not qualify for derecognition. Furthermore, it reflects the carrying amounts
of the associated liabilities.
\n \n
2023
FVOCI financial assets
FVPL financial assets
Money
Money
market and
market and
other
Investments
other
Debt
short-term
Debt
where the PH
short-term
Shares
securities
investments
Other
securities
bears risk
investments
Other
Carrying amount of
transferred assets
-
2,068
-
-
5
15
-
-
Carrying amount of
associated liabilities
-
2,382
-
-
9
-
-
-
\n \n
2022
FVOCI financial assets
FVPL financial assets
Money
Money
market and
market and
other
Investments
other
Debt
short-term
Debt
where the PH
short-term
Shares
securities
investments
Other
securities
bears risk
investments
Other
Carrying amount of
transferred assets
-
2,200
-
-
16
72
-
-
Carrying amount of
associated liabilities
-
2,513
-
-
17
-
-
-
In transactions in which the Group neither retains nor transfers substantially all the risks and rewards of ownership of a
financial asset and it retains control over the asset, the Group continues to recognize the asset to the extent of its continuing
involvement, determined by the extent to which it is exposed to changes in the value of the transferred asset.
Securities lending and repurchase activities
The table above includes financial assets that have been transferred to another party under securities lending and
repurchase activities.
Aegon retains substantially all risks and rewards of those transferred assets, this includes credit risk, settlement risk, country
risk and market risk. The assets are transferred in return for cash collateral or other financial assets. Non-cash collateral is not
recognized in the statement of financial position. Cash collateral is recorded on the statement of financial position as an asset
and an offsetting liability is established for the same amount as Aegon is obligated to return this amount upon termination
of the lending arrangement. Cash collateral is usually invested in pre-designated high quality investments. The sum of cash
and non-cash collateral is typically greater than the market value of the related securities loaned. See note 40.3 Assets
accepted and note 40.4 Assets pledged for an analysis of collateral accepted and pledged in relation to securities lending and
repurchase agreements.
40.2 Transferred financial assets that are derecognized in their entirety, but where Aegon has continuing
involvement
Aegon has no transferred financial assets with continuing involvement that are derecognized in their entirety as per year-end
2023 and as per year-end 2022.
40.3 Assets accepted
Aegon receives collateral related to securities lending, reverse repurchase activities and derivative transactions. Non-cash
collateral is not recognized in the statement of financial position. To the extent that cash is paid for reverse repurchase
agreements, a receivable is recognized for the corresponding amount.
The following tables present the fair value of the assets received in relation to securities lending and reverse
repurchase activities:
\n \n
Securities lending
2023
2022
Carrying amount of transferred financial assets
2,063
2,190
Fair value of cash collateral received
2,357
2,417
Fair value of non-cash collateral received
16
74
Net exposure
(309)
(301)
\n \n
Reverse repurchase agreements
2023
2022
Cash paid for reverse repurchase agreements
442
312
Fair value of non-cash collateral received
467
335
Net exposure
(24)
(23)
The above items are conducted under terms that are usual and customary to standard securities lending activities, as well
as requirements determined by exchanges where the bank acts as intermediary.
For 2022 and 2023 there is no Non-cash collateral that can be sold or repledged in the absence of default and no Non-cash
collateral has been sold or transferred.
In addition, Aegon can receive collateral related to derivative transactions that it enters into. The credit support agreement
will normally dictate the threshold over which collateral needs to be pledged by Aegon or its counterparty. Transactions
requiring Aegon or its counterparty to post collateral are typically the result of over-the-counter derivative trades, comprised
mostly of interest rate swaps, currency swaps and credit swaps. See the credit risk section in note 4 Financial risks for details
on collateral received for derivative transactions.
40.4 Assets pledged
Aegon pledges assets that are on its statement of financial position in securities borrowing transactions, in repurchase
transactions, in derivative transactions and against long-term borrowings. In addition, in order to trade derivatives on the
various exchanges, Aegon posts margin as collateral.
These transactions are conducted under terms that are usual and customary to standard long-term borrowing, derivative and
securities borrowing activities, as well as requirements determined by exchanges where the bank acts as intermediary.
Non-cash financial assets that are borrowed or purchased under agreement to resell are not recognized in the statement
of financial position.
To the extent that cash collateral is paid, a receivable is recognized for the corresponding amount. If other non-cash financial
assets are given as collateral, these are not derecognized.
The following tables present the carrying amount of collateral pledged and the corresponding amounts.
\n \n
2023
2022
Where Aegon
Where the PH
Where Aegon
Where the PH
Assets pledged for general account and contingent liabilities
bears the risk
bears the risk
bears the risk
bears the risk
Contingent liabilities
2,290
-
3,559
-
Collateral pledged
4,171
-
5,745
-
Net exposure
(1,881)
-
(2,186)
-
For 2022 and 2023 there is no Non-cash collateral that can be sold or repledged by the counterparty.
\n \n
Assets pledged for repurchase agreements
2023
2022
Cash received on repurchase agreements
29
107
Collateral pledged (transferred financial assets)
25
99
Net exposure
3
8
In order to trade derivatives on the various exchanges, Aegon posts margin as collateral. The amount of collateral pledged for
derivative transactions was EUR 2.3 billion (2022: EUR 4.7 billion).", "dimensions": { "concept": "ifrs-full:DisclosureOfCollateralExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f70493": { "value": "41 Offsetting, enforceable master netting arrangements and similar agreements
The following table only includes financial positions for which there is a recognized corresponding position that could be offset
under a legally enforceable master netting arrangement or similar agreement. Aegon also enters into collateralized (reverse)
repo or security lending and borrowing transaction, for which the collateral is not recognized on the balance sheet. For further
information on the financial positions resulting from such transactions please see note 40 Transfer of financial assets. The
table provides details relating to the effect, or potential effect, of netting arrangements, including rights to set-off, associated
with the entity's recognized financial assets and recognized financial liabilities.
\n \n
Related amounts not set off in
the statements of financial
position
Gross amounts of
Net amounts of
Cash collateral
Financial assets subject to
Gross amounts
recognized financial
financial assets
received
offsetting, enforceable master
of recognized
liabilities set off in the
presented in the
(excluding
netting arrangements and
financial
statement of financial
statement of
Financial
surplus
Net
similar agreements
assets
position
financial position
instruments
collateral)
amount
2023
Derivatives
1,341
-
1,341
631
707
2
On December 31
1,341
-
1,341
631
707
2
2022
Derivatives
2,733
-
2,733
2,589
111
34
On December 31
2,733
-
2,733
2,589
111
34
\n \n
Related amounts not set off in
the statements of financial
position
Gross amounts of
Net amounts of
Cash collateral
Financial liabilities subject to
Gross amounts
recognized financial
financial liabilities
pledged
offsetting, enforceable master
of recognized
assets set off in the
presented in the
(excluding
netting arrangements and
financial
statement of financial
statement of
Financial
surplus
Net
similar agreements
liabilities
position
financial position
instruments
collateral)
amount
2023
Derivatives
2,361
-
2,361
1,245
1,026
90
On December 31
2,361
-
2,361
1,245
1,026
90
2022
Derivatives
5,115
-
5,115
3,359
1,668
89
On December 31
5,115
-
5,115
3,359
1,668
89
Financial assets and liabilities are offset in the statement of financial position when the Group has a legally enforceable right
to offset and has the intention to settle the asset and liability on a net basis, or to realize the asset and settle the liability
simultaneously. As shown in the second column there are no financial assets and liabilities offset in 2023 and 2022.
The line Derivatives includes both derivatives for general account and derivatives where the policyholder bears the risk.
Aegon mitigates credit risk in derivative contracts by entering into collateral agreements, where practical, and in ISDA master
netting agreements for each of the Aegon\u2019s legal entities to facilitate Aegon\u2019s right to offset credit risk exposure. The credit
support agreement will normally dictate the threshold over which collateral needs to be pledged by Aegon or its counterparty.
Transactions requiring Aegon or its counterparty to post collateral are typically the result of over-the-counter derivative trades,
comprised mostly of interest rate swaps, currency swaps and credit swaps. These transactions are conducted under terms
that are usual and customary to standard long-term borrowing, derivative, securities lending and securities borrowing activities,
as well as requirements determined by exchanges where the bank acts as intermediary.", "dimensions": { "concept": "ifrs-full:DisclosureOfOffsettingOfFinancialAssetsAndFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f70872": { "value": "42 Companies and businesses acquired and divested
Companies and businesses acquired
2023
There were no significant acquisitions in 2023.
2022
On February 28, 2022, Transamerica acquired 100% equity interest in TAG Resources, LLC (TAG). TAG aggregates small
to mid-market employer retirement plans (pooled-plan space) and provides administration and fiduciary oversight services
as a third-party administrator for such plans, including providing plan design, consulting, and compliance to plan sponsors.
The total consideration transferred amounted to EUR 33 million. Based on the purchase price allocation, the fair value of net
assets amounted to EUR 17 million, resulting in goodwill of EUR 16 million. The acquisition does not have a material impact
on Aegon\u2019s capital position or results.
Companies and businesses divested
2023
On April 4, 2023 Aegon announced the sale of its UK individual protection book to Royal London. Under the terms of the
agreement, Aegon UK will initially reinsure the portfolio to Royal London, followed by a Part VII transfer of the legal ownership
of the individual protection book in 2024. The transfer is subject to court approval. Aegon UK\u2019s individual protection business
is a portfolio of life, critical illness, and income protection policies for 400,000 high-net worth individual customers, which
was sold via independent financial advisers. The portfolio closed to new business on April 4, 2023. The sale does not have
a material impact on Aegon\u2019s capital position or results.
On June 1, 2023 Aegon announced the completion of the divestment of its businesses in Poland and Romania to Vienna
Insurance Group AG Wiener Versicherung Gruppe (VIG) for EUR 125 million. The book loss on the transaction is EUR 78 million
and is recorded in Aegon\u2019s 2023 results. This was the final step to complete the full sale of Aegon\u2019s insurance, pension and
asset management business in Central and Eastern Europe to VIG, following the closings of the divestments of the Hungarian
and Turkish businesses in 2022.
On July 4, 2023, Aegon announced the completion of the combination of its Dutch pension, life and non-life insurance, banking,
and mortgage origination activities with a.s.r., and the beginning of its asset management partnership with a.s.r. As part of the
transaction, Aegon received EUR 2.2 billion cash proceeds and almost a 30% stake in a.s.r., see note 45 Held for sale and
discontinued operations for more information.
On July 21, 2023 Aegon announced the sale of its 56% stake in its associate in India, Aegon Life Insurance Company,
to Bandhan Financial Holdings Limited, an Indian financial services company. The completion of the proposed transaction
is subject to customary regulatory approvals which have been received in 2023. The divestment does not have
a material impact on Aegon\u2019s capital position or results. See note \"46 Events after the reporting period\" on the close of the
sale in 2024.
2022
On March 23, 2022, and on April 21, 2022, Aegon completed the divestment of its Hungarian and Turkish businesses to Vienna
Insurance Group AG Wiener Versicherung Gruppe (VIG). The book gain amounted to EUR 288 million, which includes a loss
of EUR 177 million related to the recycling of the foreign currency translation reserve and revaluation reserve though the
income statement. As a result of this transaction, EU-IFRS equity has increased by EUR 465 million. The completion of this sale
is part of the full closing of the sale of Aegon\u2019s insurance, pension, and asset management businesses in Central and Eastern
Europe to VIG for EUR 830 million, as announced in November 2020. The sale of Aegon Poland and Aegon Romania was
completed on June 1, 2023.
On October 14, 2022, Aegon completed the divestment of its 50% stake in the Spanish insurance joint venture with Liberbank
to Unicaja Banco. As announced on May 23, 2022, the sale follows the change of control in Liberbank after its merger with
Unicaja Banco in 2021. The net proceeds of the transaction amount to EUR 176 million. The book gain on the transaction
is EUR 87 million and is recorded in Aegon\u2019s 2022 results.", "dimensions": { "concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f70937": { "value": "43 Group companies
Subsidiaries
The principal subsidiaries of the parent company Aegon Ltd. are listed by geographical segment. All are wholly owned, directly
or indirectly, unless stated otherwise, and are involved in insurance or reinsurance business, pensions, asset management
or services related to these activities. The voting power in these subsidiaries held by Aegon is equal to the shareholdings.
Americas
\u2022
Transamerica Casualty Insurance Company, Cedar Rapids, Iowa (United States)
\u2022
Transamerica Corporation, Wilmington, Delaware (United States)
\u2022
Transamerica Financial Life Insurance Company, Harrison, New York (United States)
\u2022
Transamerica Life Insurance Company, Cedar Rapids, Iowa (United States)
\u2022
World Financial Group Insurance Agency, LLC, Cedar Rapids, Iowa (United States)
United Kingdom
\u2022
Aegon Investment Solutions Ltd., Edinburgh
\u2022 Aegon Investments Ltd., London
\u2022 Cofunds Limited, London
\u2022 Scottish Equitable plc, Edinburgh
International
\u2022
Aegon Espa\u00f1a S.A.U. de Seguros y Reaseguros, Madrid (Spain)
\u2022
Transamerica Life (Bermuda) Ltd., Hamilton (Bermuda)
Asset Management
\u2022
Aegon Asset Management Holding B.V., The Hague (The Netherlands)
\u2022
Aegon Asset Management UK plc, Edinburgh (United Kingdom)
\u2022
Aegon Investment Management B.V., The Hague (The Netherlands)
\u2022
Aegon USA Investment Management, LLC, Cedar Rapids (United States)
\u2022
Aegon USA Realty Advisors, LLC, Des Moines (United States)
The legally required list of participations as set forth in articles 379 and 414 of Book 2 of the Dutch Civil Code has been
registered with the Trade Register in The Hague. Aegon Ltd. has issued a statement of liability as meant in article 403
of Book 2 of the Dutch Civil Code for its subsidiary company Aegon Derivatives N.V.
Joint ventures
The principal joint ventures are listed by geographical segment. The voting powers in these joint ventures is equal to the
shareholdings, unless stated otherwise.
International
\u2022
Santander Generales Seguros y Reaseguros, S.A., Madrid (Spain) (51%)
\u2022
Santander Vida Seguros y Reaseguros, S.A., Madrid (Spain) (51%)
\u2022
Aegon Santander Portugal N\u00e3o Vida \u2013 Companhia de Seguros S.A., Lisbon (Portugal) (51%)
\u2022
Aegon Santander Portugal Vida \u2013 Companhia de Seguros de Vida S.A., Lisbon (Portugal) (51%)
\u2022
Aegon THTF Life Insurance Co., Ltd., Shanghai (China) (50%)
\u2022
Mongeral Aegon, Seguros e Previdencia S.A., Rio de Janeiro (Brazil) (59.2%, where Aegon has 50% voting rights)
\u2022
Sicoob Seguradode de Vida e Previd\u00eancia S.A., Rio de Janeiro (Brazil) (29.6%)
Asset Management
\u2022
Aegon Industrial Fund Management Co., Ltd., Shanghai (China) (49%)
See note 21 Investments in joint ventures and associates for further details on these investments.
Investments in associates
The principal investments in associates are listed by geographical segment. The voting powers in these associates is equal
to the shareholdings, unless stated otherwise.
Holding
\u2022
ASR Nederland N.V., Utrecht (29.98%)
With respect to a.s.r., for a period of 5 years post closing. Aegon also has an exclusive right to nominate up to two members
of the Supervisory Board (if Aegon holds more than 20% of the shares it may nominate two members, if it holds 20% or less
but more than 10% of the shares it may nominate one member). In addition, Aegon has the right to designate its nominees for
the Audit and Risk Committee and the ESG Committee if certain conditions are met. Furthermore, in case the incumbent CEO
of a.s.r. does not serve the full term due to earlier resignation or dismissal, the appointment of the successor requires the
unanimous vote of all Supervisory Directors in office.
For as long as Aegon holds more than 20% of the shares, the affirmative vote of the non-independent Aegon nominee
is required for:
\u2022
significant changes to dividend policy (as per current stated a.s.r. policies);
\u2022
certain dilutive transactions (issuance of equity or debt instruments); and
\u2022
M&A transactions (acquisitions and divestments, joint ventures and long term co-operations) with a value exceeding
EUR 500 million.
Furthermore, for as long as Aegon holds more than 20% of the shares, the below needs the unanimous vote of all Supervisory
Directors in office and the affirmative vote of the non-independent Aegon nominee:
\u2022
material decisions on capital management, material reinsurance, and capital allocation / distribution, in each case to the
extent this would result in a material change to the characteristics of the risk profile of (the enterprise of) a.s.r. and other than
in the ordinary course of business.
Except for significant changes to the dividend policy, the same applies when Aegon holds 20% or less but more than 10%
of the shares.
Asset Management
\u2022
La Banque Postale Asset Management, Paris (France) (25%)
See note 21 Investments in joint ventures and associates for further details on these investments.", "dimensions": { "concept": "ifrs-full:DisclosureOfCompositionOfGroupExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f70940": { "value": "Subsidiaries
The principal subsidiaries of the parent company Aegon Ltd. are listed by geographical segment. All are wholly owned, directly
or indirectly, unless stated otherwise, and are involved in insurance or reinsurance business, pensions, asset management
or services related to these activities. The voting power in these subsidiaries held by Aegon is equal to the shareholdings.
Americas
\u2022
Transamerica Casualty Insurance Company, Cedar Rapids, Iowa (United States)
\u2022
Transamerica Corporation, Wilmington, Delaware (United States)
\u2022
Transamerica Financial Life Insurance Company, Harrison, New York (United States)
\u2022
Transamerica Life Insurance Company, Cedar Rapids, Iowa (United States)
\u2022
World Financial Group Insurance Agency, LLC, Cedar Rapids, Iowa (United States)
United Kingdom
\u2022
Aegon Investment Solutions Ltd., Edinburgh
\u2022 Aegon Investments Ltd., London
\u2022 Cofunds Limited, London
\u2022 Scottish Equitable plc, Edinburgh
International
\u2022
Aegon Espa\u00f1a S.A.U. de Seguros y Reaseguros, Madrid (Spain)
\u2022
Transamerica Life (Bermuda) Ltd., Hamilton (Bermuda)
Asset Management
\u2022
Aegon Asset Management Holding B.V., The Hague (The Netherlands)
\u2022
Aegon Asset Management UK plc, Edinburgh (United Kingdom)
\u2022
Aegon Investment Management B.V., The Hague (The Netherlands)
\u2022
Aegon USA Investment Management, LLC, Cedar Rapids (United States)
\u2022
Aegon USA Realty Advisors, LLC, Des Moines (United States)
The legally required list of participations as set forth in articles 379 and 414 of Book 2 of the Dutch Civil Code has been
registered with the Trade Register in The Hague. Aegon Ltd. has issued a statement of liability as meant in article 403
of Book 2 of the Dutch Civil Code for its subsidiary company Aegon Derivatives N.V.", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f71069": { "value": "44 Related party transactions
In the normal course of business, Aegon enters into various transactions with related parties. Parties are considered
to be related if one party has the ability to control or exercise significant influence over the other party in making financial
or operating decisions. Related parties of Aegon include, among other things, its associates, joint ventures, key management
personnel and the defined benefit and contribution plans. Transactions between related parties have taken place on an
arm\u2019s length basis. Transactions between Aegon and its subsidiaries that are deemed related parties have been eliminated
in the consolidation and are not disclosed in the notes.
Related party transactions include, among others, transactions between Aegon Ltd. and Vereniging Aegon.
On December 18, 2023, Aegon repurchased 112,619,440 common shares B from Vereniging Aegon for the amount
of EUR 14,804,951.58 based on 1/40th of the Value Weighted Average Price of the common shares of the five trading days
preceding this transaction. The repurchase of common shares B was executed to bring the aggregate holding of voting shares
by Vereniging Aegon in Aegon more in line with its special cause voting rights of 32.6% following the completion of the Share
Buy Back Programs, initiated by Aegon in July 2023 following the completion of the transaction with a.s.r.
On December 8, 2023, Aegon entered into a share repurchase agreement with Vereniging Aegon, pursuant to which the
Vereniging Aegon agreed to participate in the second and third tranche of the Aegon\u2019s current 1.5 billion Euro share buyback
program and Aegon agreed to repurchase a certain number of Common Shares from Vereniging Aegon for an aggregate
consideration equal to EUR 139.5 million Euro which will be equally distributed over the total number of trading days during
the remainder of the current share buy back program of Aegon. The number of Common Shares that Aegon will repurchase
from Vereniging Aegon will be determined based on the daily volume-weighted average price per common share on Euronext
Amsterdam on a weekly basis.
On August 16, 2023, the members of Vereniging Aegon voted to instruct the board of Vereniging Aegon, subject to the
board\u2019s fiduciary duties, to vote all of Vereniging Aegon\u2019s common shares and common shares B (based on one vote per
40 common shares B) at Aegon N.V.\u2019s extraordinary general meeting of September 29, 2023 and at Aegon S.A.\u2019s extraordinary
meeting of September 30, 2023 in favor the change in legal domicile of Aegon from The Netherlands to Bermuda by means
of the cross-border conversion of Aegon N.V. into Aegon S.A. and the subsequent cross-border conversion of Aegon S.A. into
Aegon Ltd (the \u201cRedomiciliation\u201d). Following such vote of the members of Vereniging Aegon, the board of Vereniging Aegon
is obligated, pursuant to the terms of a voting undertaking agreement, dated June 29, 2023, between Aegon N.V. and Vereniging
Aegon, and subject to the board\u2019s fiduciary duties, to vote all of such shares in favor of the Redomiciliation.
On December 15, 2022, Aegon repurchased 43,817,400 common shares B from Vereniging Aegon for the amount
of EUR 5,113,578.21 based on 1/40th of the Value Weight Average Price of the common shares of the five trading days
preceding this transaction. The repurchase of common shares B was executed to bring the aggregate holding of voting shares
by Vereniging Aegon in Aegon more in line with its special cause voting rights of 32.6% following the completion of the Share
Buy Back Programs, initiated by Aegon in April 2022, following the completion of the sale of the Hungarian business and
initiated in July and October 2022 to neutralize the dilutive effect of the distribution of the final dividend 2021 and the interim
dividend 2022 in stock.
On November 21, 2022, the members of Vereniging Aegon voted to instruct the board of Vereniging Aegon, subject to the
board\u2019s fiduciary duties, to vote all of Vereniging Aegon\u2019s common shares and common shares B (based on one vote per
40 common shares B) at Aegon Ltd.\u2019s next extraordinary general meeting in favor of Aegon divesting its business operations
in the Netherlands to A.S.R. Nederland N.V. for cash consideration and almost 30% share interest in A.S.R. Nederland N.V (the
\u201cTransaction\u201d). Following such vote of the members of Vereniging Aegon, the board of Vereniging Aegon is obligated, pursuant
to the terms of a voting undertaking agreement, dated October 27, 2022, between Aegon Ltd. and Vereniging Aegon, and
subject to the board\u2019s fiduciary duties, to vote all of such shares in favor of the Transaction.
Remuneration of the Executive Director, Non-Executive Directors and Key Management
The following table includes the expenses for remuneration, with amounts reflective of time spent on the Board.
Remuneration expenses
\n \n
2023
2022
Non-Executive Directors
1)
1.3
1.3
Executive Director
2)
0.9
n.a.
Executive Board
3)
4.3
5.2
Key Management
4)
27.9
27.7
in fixed compensation
13.8
16.0
in cash based variable compensation
4.6
4.0
in share based variable compensation
5.0
3.5
in pension contributions
3.1
3.0
in other benefits
1.3
1.2
1
Previously reported as \u2018Supervisory Board\u2019.
2
Classification established September 30, 2023. In 2023, this represents Mr. Lard Friese from October 1, 2023.
3
Classification ended September 30, 2023. In 2023, this represents Mr. Lard Friese and Mr. Matt Rider through September 30, 2023.
4
Key Management is inclusive of Non-Executive Directors, Executive Directors, also reported separately above and Executive Committee Members.
5
n.a. in above table should be read as \u201cnot applicable\u201d.
Key Management consisted of the Non-Executive Directors, the Executive Director, and all members of the Executive
Committee (see the chapter Composition of the Boards for more details).
Additional information on the remuneration of the Executive Director and Non-Executive Directors are disclosed in the
Remuneration report.
Interests in Aegon Ltd. held by the Executive Director
Shares held in Aegon on December 31, 2023 by Mr. Friese amount to 83,122 (2022: 72,081) and by Mr. Rider to 130,620 (2022:
120,962). The shares held in Aegon mentioned above do not exceed 1% of total outstanding share capital at the reporting date.
At the reporting date no loans with Aegon or outstanding balances such as guarantees or advanced payments exist for Mr.
Friese and Mr. Rider.
Common shares held by Non-Executive Directors
\n \n
Shares held in Aegon on December 31
2023
2022
Ben J. Noteboom
1)
-
23,500
Dona D. Young
13,260
13,260
Total
13,260
36,760
1
Mr. Ben J. Noteboom stepped down in May 2023
Shares held by the Non-Executive Directors are only disclosed for the period for which they have been part of the Board
of Directors. At the reporting date no loans with Aegon or outstanding balances such as guarantees or advanced payments
exist for the Non-Executive Directors.", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f71134": { "value": "Remuneration of the Executive Director, Non-Executive Directors and Key Management
The following table includes the expenses for remuneration, with amounts reflective of time spent on the Board.
Remuneration expenses
\n \n
2023
2022
Non-Executive Directors
1)
1.3
1.3
Executive Director
2)
0.9
n.a.
Executive Board
3)
4.3
5.2
Key Management
4)
27.9
27.7
in fixed compensation
13.8
16.0
in cash based variable compensation
4.6
4.0
in share based variable compensation
5.0
3.5
in pension contributions
3.1
3.0
in other benefits
1.3
1.2
1
Previously reported as \u2018Supervisory Board\u2019.
2
Classification established September 30, 2023. In 2023, this represents Mr. Lard Friese from October 1, 2023.
3
Classification ended September 30, 2023. In 2023, this represents Mr. Lard Friese and Mr. Matt Rider through September 30, 2023.
4
Key Management is inclusive of Non-Executive Directors, Executive Directors, also reported separately above and Executive Committee Members.
5
n.a. in above table should be read as \u201cnot applicable\u201d.
Key Management consisted of the Non-Executive Directors, the Executive Director, and all members of the Executive
Committee (see the chapter Composition of the Boards for more details).
Additional information on the remuneration of the Executive Director and Non-Executive Directors are disclosed in the
Remuneration report.", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f71290": { "value": "45 Held for sale and discontinued operations
This following disposal groups are classified as held for sale and/or discontinued operation.
45.1 Aegon the Netherlands
On October 27, 2022, Aegon announced it had reached an agreement with a.s.r. to combine its Dutch pension, life and non-life
insurance, banking, and mortgage origination activities with ASR Nederland N.V. (\"a.s.r\"). Aegon received EUR 2.2 billion in cash
proceeds, and a 29.99% strategic stake in a.s.r., with associated governance rights. On January 17, 2023, the Extraordinary
General Meeting of shareholders of Aegon has approved the proposed transaction. Furthermore, the works council of Aegon
rendered a positive advice in relation to the proposed transaction. The transaction has closed on July 4, 2023.
Up to the close of the transaction, Aegon the Netherlands qualified as held for sale and discontinued operations. This
paragraph provides information on the discontinued operations up to the point of combining Aegon's Dutch pension, life and
non-life insurance, banking and mortgage activities with a.s.r.
Income statement of discontinued operations
\n \n
EUR million
2023
2022
Discontinued operations
Insurance revenue
1,400
2,907
Insurance service expenses
(1,327)
(2,703)
Net expenses on reinsurance held
(20)
(15)
Insurance service result
52
189
Interest revenue on financial instruments calculated using the effective interest method
42
4
Interest revenue on financial instruments measured at FVPL
582
1,281
Other investment income
168
263
Results from financial transactions
614
(20,328)
Impairment (losses) / reversals
-
5
Insurance finance income / (expenses)
(1,110)
16,906
Net reinsurance finance income / (expenses) on reinsurance held
(6)
125
Insurance net investment result
289
(1,745)
Interest revenue on financial instruments calculated using the effective interest method
273
496
Interest revenue on financial instruments measured at FVPL
137
(340)
Other investment income
11
11
Results from financial transactions
(148)
164
Impairment (losses) / reversals
3
-
Investment contract income / (expenses)
(25)
136
Interest expenses
(10)
(2)
Other net investment result
240
465
Interest charges
(55)
(49)
Financing net investment result
(55)
(49)
Total net investment result
474
(1,329)
Fees and commission income
165
311
Other operating expenses
(288)
(474)
Other income / (charges)
96
20
Other result
(28)
(142)
Result before share in profit / (loss) of joint ventures, associates and tax
498
(1,283)
Share in profit / (loss) of joint ventures
4
37
Share in profit / (loss) of associates
15
15
Result before tax
518
(1,232)
Income tax (expense) / benefit
(77)
(65)
Net result from discontinued operations
441
(1,297)
Impairment loss on remeasurement of the disposal group
(458)
(449)
Net result from discontinued operations after remeasurement
(17)
(1,746)
Upon the completion of the transaction the difference between the carrying amount of the disposal group and the fair value
of the consideration received was a net gain of EUR 93 million recognized as a result from discontinued operations.
Statement of comprehensive income of discontinued operations
\n \n
Amounts in EUR millions
2023
2022
Net result from discontinued operations
(17)
(1,746)
Items that will not be reclassified to profit or loss:
Changes in revaluation reserve real estate held for own use
Remeasurements of defined benefit plans
51
948
Income tax relating to items that will not be reclassified
(13)
(245)
Items that may be reclassified subsequently to profit or loss:
Gains / (losses) on financial assets measured at FVOCI
16
(461)
(Gains) / losses transferred to income statement on disposal of financial assets measured at FVOCI
-
(5)
Equity movements of associates
(2)
2
Income tax relating to items that may be reclassified
(4)
120
Other
Total other comprehensive income / (loss) from discontinued operations
48
359
Total comprehensive income / (loss) from discontinued operations
31
(1,387)
Impairment loss
Upon classification as held for sale, as per December 31, 2022, the carrying amount of Aegon the Netherlands was compared
to the fair value less cost to sell, which is estimated by reference to the fair value of the consideration to which Aegon Ltd.
is entitled under the terms and conditions of the business combination agreement. The fair value less cost to sell is lower than
the carrying value and this impairment loss is recognized through a reduction of the carrying value of Aegon the Netherlands.
The impairment loss has been recalculated at the closing date of the transaction, as both the fair value of the consideration
to be received and the carrying value of Aegon the Netherlands where subject to change. The consideration to be received
includes a 29.99% stake in a.s.r. and was therefore contingent on the development of the a.s.r. share price. The carrying amount
of Aegon the Netherlands has continued to be updated for assets and liabilities which were not included in the measurement
scope of IFRS 5. The table includes the recalculated impairment loss per the closing date of the transaction.
The table below shows the calculated impairment loss under IFRS 9 and IFRS 17 as per December 31, 2022 and as per
December 31, 2023.
\n \n
2023
2022
(IFRS9/17)
(IFRS9/17)
Net cash receivable after costs to sell
2,184
2,175
Fair value of 29.99% share in a.s.r.
2,588
2,700
Fair value less costs to sell
4,772
4,875
Carrying amount of Aegon the Netherlands
5,230
5,324
Fair value less costs to sell minus carrying amount
(458)
(449)
Assets in scope for impairment
1,775
1,775
Cumulative Impairment loss recognized
907
449
The impairment loss takes into account contingent payables and receivables between Aegon Ltd. and Aegon the Netherlands
that have been recognized prior to the closing date. These are included in the carrying amount of Aegon the Netherlands.
Financial assets and liabilities in the scope of IFRS 9 \"Financial instruments\"
The adoption of IFRS 9 \u201cFinancial instruments\u201d by Aegon the Netherlands impacted the measurement category and carrying
amount of the financial assets and liabilities. The measurement category and the carrying amount of financial assets and
liabilities in accordance with IAS 39 and IFRS 9 on January 1, 2023 are detailed in the table below, together with a reconciliation
of the carrying amounts of financial assets, from their previous measurement category in accordance with IAS 39 to their new
measurement categories upon transition:
\n \n
Remea-
Remea-
Reconciliation of financial instruments,
IAS 39
IAS 39
Reclassifi-
surement
surement
IFRS 9
IFRS 9
January 1, 2023
category
amount
cation
- ECL
- Other
category
1)
amount
Financial assets:
FVPL
Shares
FVPL
8,256
37
-
-
(designated)
8,293
FVOCI
Shares
AFS
21
(21)
-
-
(designated)
-
Debt securities
AFS
14,109
(12,225)
-
-
FVOCI
1,884
FVPL
Debt securities
FVPL
9,609
12,209
-
-
(designated)
21,819
Loans
L&R
35,066
(20,004)
(82)
39
AC
15,019
FVPL
Loans
FVPL
-
20,068
-
(1,892)
(designated)
18,175
Deposits with financial institutions
L&R
1,527
-
-
-
AC
1,527
FVPL
Unconsolidated investment funds
FVPL
631
-
-
-
(designated)
631
FVPL
Other investments
FVPL
3,464
(64)
-
-
(designated)
3,400
Other investments
AFS
13
(13)
-
-
FVOCI
-
Cash and cash equivalents
L&R
3,557
-
-
-
AC
3,557
Other financial assets and receivables
L&R
1,520
114
-
-
AC
1,634
FVPL
(mandato-
Derivatives
FVPL
8,395
-
-
-
rily)
8,395
Total
86,169
103
(82)
(1,853)
84,336
Financial liabilities:
Investment contracts
AC
(12,179)
-
-
-
AC
(12,179)
FVPL
Investment contracts
FVPL
(1,396)
-
-
-
(designated)
(1,396)
Long-term borrowings and group loans
AC
(5,227)
-
-
-
AC
(5,227)
FVPL
(mandato-
Derivatives
FVPL
(9,239)
753
-
-
rily)
(8,486)
Other liabilities
AC
(1,663)
378
-
-
AC
(1,285)
Total
(29,704)
1,131
-
-
(28,573)
1
m: mandatorily; d: designated
From January 1, 2023, EUR 103 million has been reclassified out of financial assets, and EUR 1,131 million has been
reclassified out of financial liabilities which moved in scope of IFRS 17 and classified and measured as (re)insurance contracts
from January 1, 2022. Remeasurement impacts included the reversal of impairments of financial assets recognized under
IAS 39 in amount of EUR 39 million and the recognition of expected credit losses of EUR 82 million in line with the impairment
requirements of IFRS 9. An additional remeasurement loss of EUR 1,892 was the result of the designation of loans and
receivables in (previously measured at amortized cost) to measurement at fair value through profit or loss.
Cashflow from discontinued operations
\n\n \n
Amounts in EUR millions
2023
2022
Net cash inflow (outflow) from operating activities
(519)
4,646
Net cash inflow (outflow) from investing activities
(11)
(4)
Net cash inflow (outflow) from financing activities
(95)
(3,275)
Net cash inflow (outflow) from discontinued operations
(625)
1,367
\n
Held for sale assets and liabilities
\n
The below table shows the assets held for sale and liabilities held for sale on July 4, 2023 and December 31, 2022.
\n\n \n
Amounts in EUR millions
2023
2022
Assets
Cash and cash equivalents
4,460
5,085
Investments
72,345
71,767
Derivatives
8,107
8,395
Investments in joint ventures
382
382
Investments in associates
1,096
1,096
Reinsurance contract assets
395
365
Deferred tax assets
339
-
Other assets and receivables
1,216
1,185
Intangible assets
165
165
Total assets held for sale
88,505
88,440
Liabilities
Insurance contract liabilities
52,849
52,591
Investment contracts without discretionary participating features
13,239
13,575
Derivatives
7,700
8,486
Borrowings
5,333
5,227
Provisions
44
52
Defined benefit liabilities
2,412
2,462
Deferred tax liabilities
6
62
Other liabilities
1,951
1,286
Accruals
294
218
Total liabilities held for sale / disposal groups
83,828
83,959
\n
Insurance contracts
\n\n \n
Contracts not
Contracts
measured under
measured under
Insurance contracts
the PAA
the PAA
Total
Portfolios in an asset position
-
-
-
Portfolios in a liability position
52,215
633
52,849
Net balance, on June 30, 2023
52,215
633
52,849
Portfolios in an asset position
-
-
-
Portfolios in a liability position
52,037
554
52,591
Net balance, on December 31, 2022
52,037
554
52,591
\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Remaining coverage
Asset for Incurred claims
\u00a0
\u00a0
Excluding
Loss
\u00a0\u00a0\u00a0
\u00a0
loss recovery
recovery
Best estimate
Risk
\u00a0
Insurance contracts PAA - by type
component
component
liability
adjustment
Total
Opening assets
-
-
-
-
-
Opening liabilities
15
-
532
7
554
Net balance, on January 1, 2023
15
-
532
7
554
Insurance revenue
(167)
-
-
-
(167)
Incurred claims and other insurance service expenses
-
-
74
2
75
Amortization of insurance acquisition cash flows
4
-
-
-
4
Adjustments to liabilities for incurred claims
-
-
83
-
82
Insurance service expenses
4
-
156
2
162
Investment components
-
-
-
-
-
Insurance service result
(163)
-
156
2
(6)
Insurance finance (income) / expenses (P&L and OCI)
-
-
7
-
7
Cash flows
220
-
(143)
-
77
Net balance, on June 30, 2023
71
-
553
9
633
Closing assets
-
-
-
-
-
Closing liabilities
71
-
553
9
633
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Remaining coverage
Asset for Incurred claims
\u00a0
\u00a0
Excluding
Loss
\u00a0 \u00a0 \u00a0
\u00a0
loss recovery
recovery
Best estimate
Risk
\u00a0
Insurance contracts PAA - by type
component
component
liability
adjustment
Total
Opening assets
-
-
-
-
-
Opening liabilities
16
-
601
10
627
Net balance, on January 1, 2022
16
-
601
10
627
Insurance revenue
(330)
-
-
-
(330)
Incurred claims and other insurance service expenses
-
-
74
-
74
Adjustments to liabilities for incurred claims
-
-
235
(3)
233
Insurance service expenses
-
-
309
(3)
306
Investment components
-
-
-
-
-
Insurance service result
(330)
-
309
(3)
(24)
Insurance finance (income) / expenses (P&L and OCI)
-
-
(110)
-
(110)
Cash flows
329
-
(268)
-
61
Net balance, on December 31, 2022
15
-
532
7
554
Closing assets
-
-
-
-
-
Closing liabilities
15
-
532
7
554
\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Remaining coverage
\u00a0 \u00a0
\u00a0
Excluding loss
\u00a0 \u00a0 \u00a0
Insurance contracts - by type
component
Loss component
Incurred claims
Total
Opening assets
-
-
-
-
Opening liabilities
51,983
54
-
52,037
Net balance, on January 1, 2023
51,983
54
-
52,037
Insurance revenue
(1,232)
-
-
(1,232)
Incurred claims and other insurance service expenses
-
(2)
1,159
1,156
Amortization of insurance acquisition cash flows
2
-
-
2
Losses (and reversal of losses) on onerous contracts
-
7
-
7
Insurance service expenses
2
5
1,159
1,166
Investment components
(313)
-
313
-
Insurance service result
(1,543)
5
1,471
(67)
Insurance finance (income) / expenses (P&L and OCI)
1,104
(1)
-
1,103
Cash flows
614
-
(1,471)
(858)
Net balance, on June 30, 2023
52,158
58
-
52,215
Closing assets
-
-
-
-
Closing liabilities
52,158
58
-
52,215
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Remaining coverage
\u00a0 \u00a0 \u00a0
\u00a0
Excluding loss
\u00a0 \u00a0 \u00a0
Insurance contracts - by type
component
Loss component
Incurred claims
Total
Opening assets
-
-
-
-
Opening liabilities
71,041
-
-
71,041
Net balance, on January 1, 2022
71,041
-
-
71,041
Insurance revenue
(2,577)
-
-
(2,577)
Incurred claims and other insurance service expenses
-
(4)
2,316
2,311
Amortization of insurance acquisition cash flows
2
-
-
2
Losses (and reversal of losses) on onerous contracts
-
84
-
84
Insurance service expenses
2
79
2,316
2,397
Investment components
(736)
-
736
-
Insurance service result
(3,312)
79
3,052
(180)
Insurance finance (income) / expenses (P&L and OCI)
(16,770)
(26)
-
(16,796)
Cash flows
1,051
-
(3,052)
(2,001)
Contracts disposed during the period
(27)
-
-
(27)
\u00a0
-
-
-
-
Net balance, on December 31, 2022
51,983
54
-
52,037
Closing assets
-
-
-
-
Closing liabilities
51,983
54
-
52,037
\n
Income tax
The income tax of Aegon the Netherlands is calculated against the enacted applicable tax rate and includes a one-time
tax charge of EUR 454 million related to the settlement of a tax position in connection with the transaction with a.s.r.
Fair value
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Carrying amount June 30,
Total estimated fair value
\u00a0
2023
June 30, 2023
Assets
\u00a0 \u00a0
Mortgage loans - held at amortized cost
15,042
13,544
Private loans - held at amortized cost
389
393
Other loans - held at amortized cost
12
12
Liabilities
\u00a0 \u00a0
Borrowings \u2013 held at amortized cost
5,333
5,059
Investment contracts - held at amortized cost
11,736
11,448
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Carrying amount
Total estimated fair value
\u00a0
December 31, 2022
December 31, 2022
Assets
\u00a0 \u00a0
Mortgage loans - held at amortized cost
14,516
13,000
Private loans - held at amortized cost
500
446
Other loans - held at amortized cost
3
3
Liabilities
\u00a0 \u00a0
Borrowings \u2013 held at amortized cost
5,227
4,920
Investment contracts - held at amortized cost
12,179
11,826
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Total unrealized
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
gains and losses
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
for the period
\u00a0\u00a0
Total gains
\u00a0\u00a0\u00a0
recorded in the
\u00a0
On
/ losses in
\u00a0\u00a0\u00a0
P&L for
\u00a0
January 1,
income
\u00a0\u00a0
On June
instruments held
Financial assets carried at fair value
2023
statement
Purchases
Sales
30, 2023
on June 30, 2023
FVPL
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Shares
1,378
(17)
190
(120)
1,431
(17)
Debt securities
98
1
-
(45)
53
1
Loans
18,175
26
965
(617)
18,549
26
Investments where the policyholder bears the risk
932
2
157
(451)
639
2
\u00a0
20,583
11
1,312
(1,234)
20,672
11
Total financial assets measured at fair value
20,583
11
1,312
(1,234)
20,672
11
Financial liabilities carried at fair value
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Investment contracts without DPF where the
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
policyholder bears the risk
105
-
3
(19)
90
-
Derivatives
1
(1)
-
-
-
(1)
\u00a0
106
-
3
(19)
90
-
\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Total unrealized
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
gains and losses
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
for the period
\u00a0\u00a0
Total
\u00a0\u00a0\u00a0\u00a0\u00a0
recorded in the
\u00a0\u00a0
gains /
\u00a0\u00a0
Transfers
\u00a0
On
P&L for
\u00a0\u00a0
losses in
\u00a0\u00a0
from
Transfers
Decem-
instruments held
Financial assets carried
On January
income
\u00a0\u00a0
levels I
to levels I
ber 31,
on December 31,
at fair value
1, 2022
statement
Purchases
Sales
and II
and II
2022
2022
FVPL
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Shares
1,364
175
190
(350)
-
-
1,378
123
Debt securities
196
-
44
(3)
-
(140)
98
(7)
Loans
22,727
(4,529)
1,802
(1,825)
-
-
18,175
(4,529)
Investments where the policyholder
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
bears the risk
572
(62)
(562)
982
2
-
932
(53)
\u00a0
24,859
(4,415)
1,473
(1,196)
2
(140)
20,583
(4,466)
Total financial assets measured
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
at fair value
24,859
(4,415)
1,473
(1,196)
2
(140)
20,583
(4,466)
Financial liabilities carried
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
at fair value
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Investment contracts without DPF
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
where the policyholder bears the
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
risk
(33)
(23)
(559)
721
1
-
105
(18)
Derivatives
3
(2)
-
-
-
-
1
(2)
Total financial liabilities
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
measured at fair value
(31)
(25)
(559)
721
1
-
106
(19)
\n
45.2 Aegon UK
On April 04, 2023, Aegon announced the sale of its UK individual protection book to Royal London. Under the terms of the
agreement, Aegon UK will initially reinsure the portfolio to Royal London, followed by a Part VII transfer of the legal ownership
of the individual protection book in 2024. The transfer is subject to court approval. Up to the close of the sale, the UK individual
protection book is classified as held for sale.
As at 31 December 2023 the held for sale assets amount to EUR 432 million and consist of reinsurance contract assets.
The held for sale liabilities as at 31 December 2023 amount to EUR 389 million and consist of insurance-, and reinsurance
contract liabilities.", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f71291": { "value": "45 Held for sale and discontinued operations
This following disposal groups are classified as held for sale and/or discontinued operation.
45.1 Aegon the Netherlands
On October 27, 2022, Aegon announced it had reached an agreement with a.s.r. to combine its Dutch pension, life and non-life
insurance, banking, and mortgage origination activities with ASR Nederland N.V. (\"a.s.r\"). Aegon received EUR 2.2 billion in cash
proceeds, and a 29.99% strategic stake in a.s.r., with associated governance rights. On January 17, 2023, the Extraordinary
General Meeting of shareholders of Aegon has approved the proposed transaction. Furthermore, the works council of Aegon
rendered a positive advice in relation to the proposed transaction. The transaction has closed on July 4, 2023.
Up to the close of the transaction, Aegon the Netherlands qualified as held for sale and discontinued operations. This
paragraph provides information on the discontinued operations up to the point of combining Aegon's Dutch pension, life and
non-life insurance, banking and mortgage activities with a.s.r.
Income statement of discontinued operations
\n \n
EUR million
2023
2022
Discontinued operations
Insurance revenue
1,400
2,907
Insurance service expenses
(1,327)
(2,703)
Net expenses on reinsurance held
(20)
(15)
Insurance service result
52
189
Interest revenue on financial instruments calculated using the effective interest method
42
4
Interest revenue on financial instruments measured at FVPL
582
1,281
Other investment income
168
263
Results from financial transactions
614
(20,328)
Impairment (losses) / reversals
-
5
Insurance finance income / (expenses)
(1,110)
16,906
Net reinsurance finance income / (expenses) on reinsurance held
(6)
125
Insurance net investment result
289
(1,745)
Interest revenue on financial instruments calculated using the effective interest method
273
496
Interest revenue on financial instruments measured at FVPL
137
(340)
Other investment income
11
11
Results from financial transactions
(148)
164
Impairment (losses) / reversals
3
-
Investment contract income / (expenses)
(25)
136
Interest expenses
(10)
(2)
Other net investment result
240
465
Interest charges
(55)
(49)
Financing net investment result
(55)
(49)
Total net investment result
474
(1,329)
Fees and commission income
165
311
Other operating expenses
(288)
(474)
Other income / (charges)
96
20
Other result
(28)
(142)
Result before share in profit / (loss) of joint ventures, associates and tax
498
(1,283)
Share in profit / (loss) of joint ventures
4
37
Share in profit / (loss) of associates
15
15
Result before tax
518
(1,232)
Income tax (expense) / benefit
(77)
(65)
Net result from discontinued operations
441
(1,297)
Impairment loss on remeasurement of the disposal group
(458)
(449)
Net result from discontinued operations after remeasurement
(17)
(1,746)
Upon the completion of the transaction the difference between the carrying amount of the disposal group and the fair value
of the consideration received was a net gain of EUR 93 million recognized as a result from discontinued operations.
Statement of comprehensive income of discontinued operations
\n \n
Amounts in EUR millions
2023
2022
Net result from discontinued operations
(17)
(1,746)
Items that will not be reclassified to profit or loss:
Changes in revaluation reserve real estate held for own use
Remeasurements of defined benefit plans
51
948
Income tax relating to items that will not be reclassified
(13)
(245)
Items that may be reclassified subsequently to profit or loss:
Gains / (losses) on financial assets measured at FVOCI
16
(461)
(Gains) / losses transferred to income statement on disposal of financial assets measured at FVOCI
-
(5)
Equity movements of associates
(2)
2
Income tax relating to items that may be reclassified
(4)
120
Other
Total other comprehensive income / (loss) from discontinued operations
48
359
Total comprehensive income / (loss) from discontinued operations
31
(1,387)
Impairment loss
Upon classification as held for sale, as per December 31, 2022, the carrying amount of Aegon the Netherlands was compared
to the fair value less cost to sell, which is estimated by reference to the fair value of the consideration to which Aegon Ltd.
is entitled under the terms and conditions of the business combination agreement. The fair value less cost to sell is lower than
the carrying value and this impairment loss is recognized through a reduction of the carrying value of Aegon the Netherlands.
The impairment loss has been recalculated at the closing date of the transaction, as both the fair value of the consideration
to be received and the carrying value of Aegon the Netherlands where subject to change. The consideration to be received
includes a 29.99% stake in a.s.r. and was therefore contingent on the development of the a.s.r. share price. The carrying amount
of Aegon the Netherlands has continued to be updated for assets and liabilities which were not included in the measurement
scope of IFRS 5. The table includes the recalculated impairment loss per the closing date of the transaction.
The table below shows the calculated impairment loss under IFRS 9 and IFRS 17 as per December 31, 2022 and as per
December 31, 2023.
\n \n
2023
2022
(IFRS9/17)
(IFRS9/17)
Net cash receivable after costs to sell
2,184
2,175
Fair value of 29.99% share in a.s.r.
2,588
2,700
Fair value less costs to sell
4,772
4,875
Carrying amount of Aegon the Netherlands
5,230
5,324
Fair value less costs to sell minus carrying amount
(458)
(449)
Assets in scope for impairment
1,775
1,775
Cumulative Impairment loss recognized
907
449
The impairment loss takes into account contingent payables and receivables between Aegon Ltd. and Aegon the Netherlands
that have been recognized prior to the closing date. These are included in the carrying amount of Aegon the Netherlands.
Financial assets and liabilities in the scope of IFRS 9 \"Financial instruments\"
The adoption of IFRS 9 \u201cFinancial instruments\u201d by Aegon the Netherlands impacted the measurement category and carrying
amount of the financial assets and liabilities. The measurement category and the carrying amount of financial assets and
liabilities in accordance with IAS 39 and IFRS 9 on January 1, 2023 are detailed in the table below, together with a reconciliation
of the carrying amounts of financial assets, from their previous measurement category in accordance with IAS 39 to their new
measurement categories upon transition:
\n \n
Remea-
Remea-
Reconciliation of financial instruments,
IAS 39
IAS 39
Reclassifi-
surement
surement
IFRS 9
IFRS 9
January 1, 2023
category
amount
cation
- ECL
- Other
category
1)
amount
Financial assets:
FVPL
Shares
FVPL
8,256
37
-
-
(designated)
8,293
FVOCI
Shares
AFS
21
(21)
-
-
(designated)
-
Debt securities
AFS
14,109
(12,225)
-
-
FVOCI
1,884
FVPL
Debt securities
FVPL
9,609
12,209
-
-
(designated)
21,819
Loans
L&R
35,066
(20,004)
(82)
39
AC
15,019
FVPL
Loans
FVPL
-
20,068
-
(1,892)
(designated)
18,175
Deposits with financial institutions
L&R
1,527
-
-
-
AC
1,527
FVPL
Unconsolidated investment funds
FVPL
631
-
-
-
(designated)
631
FVPL
Other investments
FVPL
3,464
(64)
-
-
(designated)
3,400
Other investments
AFS
13
(13)
-
-
FVOCI
-
Cash and cash equivalents
L&R
3,557
-
-
-
AC
3,557
Other financial assets and receivables
L&R
1,520
114
-
-
AC
1,634
FVPL
(mandato-
Derivatives
FVPL
8,395
-
-
-
rily)
8,395
Total
86,169
103
(82)
(1,853)
84,336
Financial liabilities:
Investment contracts
AC
(12,179)
-
-
-
AC
(12,179)
FVPL
Investment contracts
FVPL
(1,396)
-
-
-
(designated)
(1,396)
Long-term borrowings and group loans
AC
(5,227)
-
-
-
AC
(5,227)
FVPL
(mandato-
Derivatives
FVPL
(9,239)
753
-
-
rily)
(8,486)
Other liabilities
AC
(1,663)
378
-
-
AC
(1,285)
Total
(29,704)
1,131
-
-
(28,573)
1
m: mandatorily; d: designated
From January 1, 2023, EUR 103 million has been reclassified out of financial assets, and EUR 1,131 million has been
reclassified out of financial liabilities which moved in scope of IFRS 17 and classified and measured as (re)insurance contracts
from January 1, 2022. Remeasurement impacts included the reversal of impairments of financial assets recognized under
IAS 39 in amount of EUR 39 million and the recognition of expected credit losses of EUR 82 million in line with the impairment
requirements of IFRS 9. An additional remeasurement loss of EUR 1,892 was the result of the designation of loans and
receivables in (previously measured at amortized cost) to measurement at fair value through profit or loss.
Cashflow from discontinued operations
\n\n \n
Amounts in EUR millions
2023
2022
Net cash inflow (outflow) from operating activities
(519)
4,646
Net cash inflow (outflow) from investing activities
(11)
(4)
Net cash inflow (outflow) from financing activities
(95)
(3,275)
Net cash inflow (outflow) from discontinued operations
(625)
1,367
\n
Held for sale assets and liabilities
\n
The below table shows the assets held for sale and liabilities held for sale on July 4, 2023 and December 31, 2022.
\n\n \n
Amounts in EUR millions
2023
2022
Assets
Cash and cash equivalents
4,460
5,085
Investments
72,345
71,767
Derivatives
8,107
8,395
Investments in joint ventures
382
382
Investments in associates
1,096
1,096
Reinsurance contract assets
395
365
Deferred tax assets
339
-
Other assets and receivables
1,216
1,185
Intangible assets
165
165
Total assets held for sale
88,505
88,440
Liabilities
Insurance contract liabilities
52,849
52,591
Investment contracts without discretionary participating features
13,239
13,575
Derivatives
7,700
8,486
Borrowings
5,333
5,227
Provisions
44
52
Defined benefit liabilities
2,412
2,462
Deferred tax liabilities
6
62
Other liabilities
1,951
1,286
Accruals
294
218
Total liabilities held for sale / disposal groups
83,828
83,959
\n
Insurance contracts
\n\n \n
Contracts not
Contracts
measured under
measured under
Insurance contracts
the PAA
the PAA
Total
Portfolios in an asset position
-
-
-
Portfolios in a liability position
52,215
633
52,849
Net balance, on June 30, 2023
52,215
633
52,849
Portfolios in an asset position
-
-
-
Portfolios in a liability position
52,037
554
52,591
Net balance, on December 31, 2022
52,037
554
52,591
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Remaining coverage
Asset for Incurred claims
\u00a0
\u00a0
Excluding
Loss
\u00a0\u00a0\u00a0
\u00a0
loss recovery
recovery
Best estimate
Risk
\u00a0
Insurance contracts PAA - by type
component
component
liability
adjustment
Total
Opening assets
-
-
-
-
-
Opening liabilities
15
-
532
7
554
Net balance, on January 1, 2023
15
-
532
7
554
Insurance revenue
(167)
-
-
-
(167)
Incurred claims and other insurance service expenses
-
-
74
2
75
Amortization of insurance acquisition cash flows
4
-
-
-
4
Adjustments to liabilities for incurred claims
-
-
83
-
82
Insurance service expenses
4
-
156
2
162
Investment components
-
-
-
-
-
Insurance service result
(163)
-
156
2
(6)
Insurance finance (income) / expenses (P&L and OCI)
-
-
7
-
7
Cash flows
220
-
(143)
-
77
Net balance, on June 30, 2023
71
-
553
9
633
Closing assets
-
-
-
-
-
Closing liabilities
71
-
553
9
633
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Remaining coverage
Asset for Incurred claims
\u00a0
\u00a0
Excluding
Loss
\u00a0 \u00a0 \u00a0
\u00a0
loss recovery
recovery
Best estimate
Risk
\u00a0
Insurance contracts PAA - by type
component
component
liability
adjustment
Total
Opening assets
-
-
-
-
-
Opening liabilities
16
-
601
10
627
Net balance, on January 1, 2022
16
-
601
10
627
Insurance revenue
(330)
-
-
-
(330)
Incurred claims and other insurance service expenses
-
-
74
-
74
Adjustments to liabilities for incurred claims
-
-
235
(3)
233
Insurance service expenses
-
-
309
(3)
306
Investment components
-
-
-
-
-
Insurance service result
(330)
-
309
(3)
(24)
Insurance finance (income) / expenses (P&L and OCI)
-
-
(110)
-
(110)
Cash flows
329
-
(268)
-
61
Net balance, on December 31, 2022
15
-
532
7
554
Closing assets
-
-
-
-
-
Closing liabilities
15
-
532
7
554
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Remaining coverage
\u00a0 \u00a0
\u00a0
Excluding loss
\u00a0 \u00a0 \u00a0
Insurance contracts - by type
component
Loss component
Incurred claims
Total
Opening assets
-
-
-
-
Opening liabilities
51,983
54
-
52,037
Net balance, on January 1, 2023
51,983
54
-
52,037
Insurance revenue
(1,232)
-
-
(1,232)
Incurred claims and other insurance service expenses
-
(2)
1,159
1,156
Amortization of insurance acquisition cash flows
2
-
-
2
Losses (and reversal of losses) on onerous contracts
-
7
-
7
Insurance service expenses
2
5
1,159
1,166
Investment components
(313)
-
313
-
Insurance service result
(1,543)
5
1,471
(67)
Insurance finance (income) / expenses (P&L and OCI)
1,104
(1)
-
1,103
Cash flows
614
-
(1,471)
(858)
Net balance, on June 30, 2023
52,158
58
-
52,215
Closing assets
-
-
-
-
Closing liabilities
52,158
58
-
52,215
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Remaining coverage
\u00a0 \u00a0 \u00a0
\u00a0
Excluding loss
\u00a0 \u00a0 \u00a0
Insurance contracts - by type
component
Loss component
Incurred claims
Total
Opening assets
-
-
-
-
Opening liabilities
71,041
-
-
71,041
Net balance, on January 1, 2022
71,041
-
-
71,041
Insurance revenue
(2,577)
-
-
(2,577)
Incurred claims and other insurance service expenses
-
(4)
2,316
2,311
Amortization of insurance acquisition cash flows
2
-
-
2
Losses (and reversal of losses) on onerous contracts
-
84
-
84
Insurance service expenses
2
79
2,316
2,397
Investment components
(736)
-
736
-
Insurance service result
(3,312)
79
3,052
(180)
Insurance finance (income) / expenses (P&L and OCI)
(16,770)
(26)
-
(16,796)
Cash flows
1,051
-
(3,052)
(2,001)
Contracts disposed during the period
(27)
-
-
(27)
\u00a0
-
-
-
-
Net balance, on December 31, 2022
51,983
54
-
52,037
Closing assets
-
-
-
-
Closing liabilities
51,983
54
-
52,037
\n
Income tax
The income tax of Aegon the Netherlands is calculated against the enacted applicable tax rate and includes a one-time
tax charge of EUR 454 million related to the settlement of a tax position in connection with the transaction with a.s.r.
Fair value
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Carrying amount June 30,
Total estimated fair value
\u00a0
2023
June 30, 2023
Assets
\u00a0 \u00a0
Mortgage loans - held at amortized cost
15,042
13,544
Private loans - held at amortized cost
389
393
Other loans - held at amortized cost
12
12
Liabilities
\u00a0 \u00a0
Borrowings \u2013 held at amortized cost
5,333
5,059
Investment contracts - held at amortized cost
11,736
11,448
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Carrying amount
Total estimated fair value
\u00a0
December 31, 2022
December 31, 2022
Assets
\u00a0 \u00a0
Mortgage loans - held at amortized cost
14,516
13,000
Private loans - held at amortized cost
500
446
Other loans - held at amortized cost
3
3
Liabilities
\u00a0 \u00a0
Borrowings \u2013 held at amortized cost
5,227
4,920
Investment contracts - held at amortized cost
12,179
11,826
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Total unrealized
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
gains and losses
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
for the period
\u00a0\u00a0
Total gains
\u00a0\u00a0\u00a0
recorded in the
\u00a0
On
/ losses in
\u00a0\u00a0\u00a0
P&L for
\u00a0
January 1,
income
\u00a0\u00a0
On June
instruments held
Financial assets carried at fair value
2023
statement
Purchases
Sales
30, 2023
on June 30, 2023
FVPL
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Shares
1,378
(17)
190
(120)
1,431
(17)
Debt securities
98
1
-
(45)
53
1
Loans
18,175
26
965
(617)
18,549
26
Investments where the policyholder bears the risk
932
2
157
(451)
639
2
\u00a0
20,583
11
1,312
(1,234)
20,672
11
Total financial assets measured at fair value
20,583
11
1,312
(1,234)
20,672
11
Financial liabilities carried at fair value
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Investment contracts without DPF where the
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
policyholder bears the risk
105
-
3
(19)
90
-
Derivatives
1
(1)
-
-
-
(1)
\u00a0
106
-
3
(19)
90
-
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Total unrealized
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
gains and losses
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
for the period
\u00a0\u00a0
Total
\u00a0\u00a0\u00a0\u00a0\u00a0
recorded in the
\u00a0\u00a0
gains /
\u00a0\u00a0
Transfers
\u00a0
On
P&L for
\u00a0\u00a0
losses in
\u00a0\u00a0
from
Transfers
Decem-
instruments held
Financial assets carried
On January
income
\u00a0\u00a0
levels I
to levels I
ber 31,
on December 31,
at fair value
1, 2022
statement
Purchases
Sales
and II
and II
2022
2022
FVPL
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Shares
1,364
175
190
(350)
-
-
1,378
123
Debt securities
196
-
44
(3)
-
(140)
98
(7)
Loans
22,727
(4,529)
1,802
(1,825)
-
-
18,175
(4,529)
Investments where the policyholder
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
bears the risk
572
(62)
(562)
982
2
-
932
(53)
\u00a0
24,859
(4,415)
1,473
(1,196)
2
(140)
20,583
(4,466)
Total financial assets measured
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
at fair value
24,859
(4,415)
1,473
(1,196)
2
(140)
20,583
(4,466)
Financial liabilities carried
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
at fair value
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
Investment contracts without DPF
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
where the policyholder bears the
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
risk
(33)
(23)
(559)
721
1
-
105
(18)
Derivatives
3
(2)
-
-
-
-
1
(2)
Total financial liabilities
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
measured at fair value
(31)
(25)
(559)
721
1
-
106
(19)
\n
45.2 Aegon UK
On April 04, 2023, Aegon announced the sale of its UK individual protection book to Royal London. Under the terms of the
agreement, Aegon UK will initially reinsure the portfolio to Royal London, followed by a Part VII transfer of the legal ownership
of the individual protection book in 2024. The transfer is subject to court approval. Up to the close of the sale, the UK individual
protection book is classified as held for sale.
As at 31 December 2023 the held for sale assets amount to EUR 432 million and consist of reinsurance contract assets.
The held for sale liabilities as at 31 December 2023 amount to EUR 389 million and consist of insurance-, and reinsurance
contract liabilities.", "dimensions": { "concept": "ifrs-full:DisclosureOfDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f74331": { "value": "46 Events after the reporting period
On February 26, 2024 Aegon announced the completion of the sale of its 56% stake in its joint venture in India, Aegon Life
Insurance Company, to Bandhan Financial Holdings Limited, an Indian financial services company. The sale was announced
in July 2023 and following the receipt of the relevant regulatory approvals, the transaction was closed on February 23, 2024.", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:O4QK7KMMK83ITNTHUG69", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } } } }