Good morning everyone and thank you for joining this call on Aegon's First Quarter 2017 Results. As always we will keep today's presentation short leaving plenty of time to address all your questions. We would appreciate it if you take a moment to review our disclaimer on forward-looking statements which you can find at the back of this presentation. Our CEO, Alex Wynaendts will provide an overview of our performance and will then be joined by Matt Rider to answer your questions. Matt will formally appointed as our Group CFO at next week's AGM, subject to approval by our shareholders. I will now hand it over to Alex.

Thank you, Willem and good morning everyone. Thank you all for your continued interest in Aegon and for joining us for first quarter 2017 earnings call. I'm recognizing that many other companies are also reporting today, so thank you for being with us. So let me begin by providing you with a brief overview of the key developments this quarter. Underlying earnings increased 6% to EUR488 million, driven by the continued successful execution of our expense reduction program and by higher fee income resulting from growing our balances. Solvency II ratio remained stable at 157% as capital generation in the quarter offset the acquisition of Cofunds and the final 2016 dividend. Following the acquisition of Cofunds we became the largest retail platform in UK and the additional gross deposit generated by the new business contributed to an 11% sales increase in the quarter for the Group. Let's now take a closer look at our underlying earnings for the quarter of the next slide. Turning to Slide 3, we continued to see in the earnings momentum of our underlying businesses improve across our company as we increasingly benefit from the management actions we have taken. One of the main drivers for increased earnings is the continued successful execution by expense reduction program. Since the launch of the program last year, we have achieved run rate expensive saving of approximately EUR160 million and I will elaborate more on this program on the following slides. Another positive development for operating results is a continued growth of fee-based businesses which as a result of continued favorable equity markets and increased scale lead to higher fee income. These positives were only partly offset by adverse claims experienced in our US business, driven by adverse mortality, which was in line with our expectation with seasonality and…

[Operator Instructions] We will now take our first question from Robin van den Broek of Mediobanca. Please go ahead.

Thank you, good pronunciation as well. Unsurprisingly my first question is related to the capitalization of the Dutch units. As you indicate in your slides it seems that the market appreciation of your solvency II ratios predominately driven by the Netherlands. So I was wondering if you could give a pro-forma rate show for Q1. And connected to that you mentioned in your slides that group support could be a potential management action and I was wondering what could that be should we get worried about the potential dividend cuts or a capital market actions or do you think you can solve it without affecting that. And second, the US tax reform I think if that would go through there will be an impact on the DTA write offs and potentially a higher required capital in the US. What kind of actions can you do there apart from operating at a lower RBC rate shown potentially lowering the calibration rate show with the Dutch Central Bank? Those were my questions, thank you.

Yes, Robin van den Broek, I'm please I pronounced you. As I indicated in my words the Dutch ratio at the end of this first quarter of 2017 is around 140% and we have benefited from improved market conditions as you know rates in them are slightly higher and we've seen some positive developments as well. I would like to repeat here that we have committed to providing you with a comprehensive overview of where we are on our Dutch Capital position at Q2. We have to go through a process by the way also working closely with our regulator, there is a quite a number of outstanding issues and I mentioned one of them in my speech that is the LAC DT, where we are sure that we have the right interpretation. It is complicated and I've given you an overview of the three steps and actions which we are taking. The first one is to look at ourselves at where we can optimize ALM, where we can put hedging in place in a most effective way. We're also looking at our internal models, if they all reflect properly our risk, and as you can imagine that does take time and we have to ensure that we work closely with the regulator. Then the second point is that we also want to be looking at Aegon NL as part of a group and Aegon NL is not the standalone business and that's really what is what I meant by talking about overall group support. As you can imagine the way we look at Aegon NL as part of the group way the Netherlands reflects 20%. 25% of total would be very different than if Aegon NL would be standing on its own. In this context, we continue to be looking within our group, add all the piece of our portfolio and to ensure as I said earlier that they all meet our financial and strategic objectives and we also want to make sure that we are deploying our capital in the most effective way. So Matt would you please?

Yeah, on the tax reform, may be good to start with our current US RBC ratio is sitting at 440% or so at the top end of our range. I think you have it exactly right, if there was a reduction in tax rates then we would see a reduction in the amount of DTAs and clearly an increase in the amount of required capital that we would have to hold as that's done on an after-tax basis. I think it's a little bit preliminary to talk about the actual impacts on RBC ratio given that there aren't too many details around this yet in the market. Probably good to say that if there was a tax rate on plan, all US life insurance companies RBC ratios would come down, we would be no different than anybody else. I think there would be a level setting effectively of RBC ratios and what people think are adequate capitalization levels in the US and we would be no different, we would be no different than anybody else. I think importantly though if there was a tax reform plan that lowered taxes then ongoing capital generation would of course improves, that's good for the industry.

And then maybe the 100 million capital injunction in the Dutch unit, was that already included in the pro forma number - in the number at year-end? Or does it also affect the 140 you just mentioned?

The 140 is at the end of the first quarter of 2017. And by the way it's an approximate number, as you know we have said that we would not be giving any more Q1 and Q3 explicit details on all the solvency ratios, capital ratios of our business units. But a view of course of the ongoing discussion around the Dutch we felt that we should give you an indication.

We will now take our next question from Ashik Musaddi of J.P. Morgan. Please go ahead.

Just couple of question, one on the Dutch solvency I'm afraid again. So you mentioned that you give us a plan in the second quarter, but how should we think about Dutch ratio. First of all what's your hurdle there and secondly would you always look at the Dutch ratio with the UFR impact that is going to happen like from 420 basis point to 365 basis point or would you not care about the fully loaded UFR impact at the moment and that's how you look at it. So as a management team, how are you going to look at the Dutch ratio with UFR, without UFR, would be great to get some color on that. Secondly, on your - just going back to the DTA in the US. I mean you mentioned that the whole industry RBC ratio would come down, but I mean we have seen the same thing in the banking space as well because of lot of concerns around capital, I mean, SREP ratio et cetera. The Dutch - the banking sector also kind of suffered that everyone went down but because regulators have said that you need higher capital, we have seen the pain that the banking sector has gone through over past two, three years to recapitalize to a very, very strong level. So is it possible or you seeing any sort of scenario where because of ratios coming down you still need to take it back to a strong 400%, 450% ratio. Any sort of discussion that is going on would be great? Thank you.

Matt?

Yeah, I think just in terms of the solvency ratio and whether we look at the UFR and without UFR, yes, we do. Our target zones that we have for the legal entities we have 130 to 150. However, and that is of course with the UFR included in it. But we do look at it without the UFR as well and that's not something - that's something with the new release from EIOPA, we're going to have to carefully consider. On the DTA and let's say the impact on RBC ratios throughout the US. I think far too early to talk about what would be the impact of these things if tax reform did come into play.

Our next question comes from the line of Nadine van der Meulen of Morgan Stanley. Please go ahead.

Two questions from side please. Firstly, you mentioned, sorry again on the Netherlands, you mentioned the 140% at the end of the first quarter, the 100 million injection, did that take place during the first quarter that is first question. And on the capital generation in the Netherlands, would you might giving us an update. I think the last you said about that was sort of guiding around 225 million. I'm not sure if that has changed at all or not. And the second question I have is in the UK, you've previously guided to a different upstream from the UK this year. Would you mind giving some detail around the timing and the potential magnitude of these dividends to be upstreamed from the UK Thank you.

Hi Nadine, your question is the 100 million included in the 140% at the end of Q1, the answer is yes because we injected that in Q1. And as you remember, we've mentioned that we have in the Netherlands a number of legal entities, we have Aegon Leven into which we injected a 100 million. We have Aegon Schade that's nonlife business for the English speaking. We have Aegon Mortgages and we have Aegon TKP which is a pension unit and all of these three other entities actually are very well capitalized and allowed us in fact to take dividends out of it because they were overcapitalized. Now your capital generation in Netherlands, yes, I can confirm that 225 million normalized capital generations for the Netherlands is still the right number. And in terms of the UK dividend, I'll remind you that we indicated that we expect that the capital that was freed up from the two annuities is around 500 million that we would expect that the third of it roughly 30% of it would be available to be dividend-ed up to the group and I repeat what I said earlier, we expect this to take place at the end of this year.

The next question comes from the line of Albert Ploegh of ING. Please ego ahead.

Sorry, I'll have to come back to the Dutch business. I understand that the plans will be shared in detail in the second quarter. What I like to know is what kind of timelines on execution should we expect, is the working thesis really to be at your comfort zone levels by the end of this year? And in relation to that, just basically also embedded the question on what to expect in terms of paying up a dividend again from the Dutch units for 2018, is that still the working thesis currently? And I also had a question on, I saw also some changes to the reserving in Asia, which had positive impacts I think also in the quarter on solvency and offset with some non-admissibility of US DTAs, maybe you can give a little bit color around those too as well? Thank you.

Yeah. We intend really to provide you clarity at Q2 results, which is early August. I think it's too early to say now more about it and of course we would like to implement as soon as possible. We want to have a Dutch business on a sustainably wages capitalized and a business that is a mature business that has also been able to pay, and capable of paying dividends. In terms of Asia, I think this is very much in line with what I'd been saying for some time, we're looking at optimizing our portfolio and also how we employ capital, deploy capital in the most effective way. At the end of last year, I did inform you that we had put our direct marketing business in runoff. That means that we're trying to maximize now the cash flows that are being generated by the business. That's one of the elements of improving capital position in Asia. And a second element is that, we have to sign up with individual business, which is a business with branches in Singapore and Hong Kong, which operates out of Bermuda. It's a Bermuda based company and we've seen that we were able to actually avoid necessary use of capital because of multiple layers of regulation. As you can imagine, Bermuda, Hong Kong and Singapore and therefore as such created a position of excess capital in Asia. In terms of the DTA, Matt, would you like to -

Yeah. Let me take that one. So the Asia thing is a change in the reserving basis to better match the nature of the reserves with the way that we value the assets and that resulted in about a EUR265 million improvement. And then on the DTAs, there is a limit to the amount of DTAs that are admissible in the US. It's limited to about 15% of surplus and we had DTAs that moved into that zone and that lost us about $170 million in DTA admissibility. Q And maybe one just small follow-up on the DTAs, I mean if you look at the annual report, I think you split out tier 3 bucket is, I think, roughly 1.6 billion. You continue to confirm that that is 100% US DTAs, I'm assuming anything in there as well?

Can you repeat the question please? Q Yeah. So in the annual report, the tier 3 capital bucket is roughly 1.6 billion and I would like to know whether that is indeed 100% US DTAs?

That's majority, but we can follow up with details.

The next question comes from Farooq Hanif of Credit Suisse. Please go ahead.

Hi, everybody. On the 100 million in the Netherlands again, still just slightly confused. So you've moved money from one of your three companies essentially via the holding in to another. So did the solvency ratio actually change for NL because of that movement and what - and if it did, what was the actual percentage point impact on the 140. If you're able to give that now, that's question one. And question two, you mentioned looking at the portfolio, so you've done a lot of transformational things to shift the fee based business. Can you talk about other areas of your business you think you still need to do work from an M&A point of view and could you also talk about what you'd be willing to sort of give up in your portfolio to support capital? Thank you very much.

Hi, Farooq. Just to be absolutely clear, the capital that was injected was injected in Aegon Lev, which is a part of Aegon NL. So yes, it is in 140%, but it did not change the ratio because it moved from one part of Aegon NL to another part. It moved from the part that is over capitalized, which I mentioned earlier to Aegon Lev, which is the one where the ratio clearly is lower than it is for the rest of the businesses. So from Aegon NL point of view, you don't see a change on the consolidated basis, because we move from one to another one. And Aegon Lev is capitalized at the lower level than Aegon NL and it varies over time, but you could say that's around, right now, is around 15% points of difference. In terms of portfolio, your second question, we're looking on an ongoing basis at the portfolio as you know. You also know that we have our run off businesses that we've been very clear that we would be looking forward to exit, but only at the condition that we are able to achieve good proceeds, proceeds that we do believe reflect the value of the business and we've also said that when interest rates would start moving up, that the environment for looking at doing a transaction in such an improved interest rate clearly is improving. At the same time, I've always been and also very clear that we look at all our businesses and ensure that they have to meet our criteria also of scale. Scale is very important and is more important day-by-day in our businesses. So if we come to the conclusion that we're not able to achieve the necessary scale or that it will take too long to get there, then we will review the different options. And as you can imagine, there are various options there. And this is part of a process which we will continue to be doing and I think we've been pretty clear that those businesses on a scale clearly are those ones that we'll start reviewing first.

And may I just ask one follow-up question on the run-off businesses. Is a large part of your DTA in the US tied up in the runoff or is it a small proportion?

Yeah. We're going to have to come back to you on that with further detail.

Thank you. Our next question comes from the line of Nick Holmes of Societe Generale. Please go ahead.

Hi, there. Thank you very much. Couple of questions. First of all, just wondered whether access decision to IPO of US operations makes you want to consider whether your primary listing might perhaps be better in the US. I mean obviously there's a clear regulatory divergence between the US and Europe and I wonder what your thinking is there. Then just wanted to ask again on the US run-off business. You're clearly looking at the options here. Is there anything you can sort of tell us that might happen this year? Thank you.

On your first question, Nick, yes, it was an interesting development, which I think we all saw yesterday. Let me reassure you here that Aegon added US, our US business Transamerica is a truly core part of our business and has been contributing very significantly to our and continues to contribute in the future and we expect this to continue to be the case going forward. In terms of the run of business, I would have loved to give you more information and I'll promise you that as soon as we have information, we will share that with the market. But what I did say to you is that the environment has been improving, has been improving as a result of higher interest rates. So we're working in order to try to get a good outcome for all of us and our shareholders.

The next question comes from the line of William Hawkins of KBW.

Hi, there. Sorry to be coming back to the Netherlands, but it does seem to be setting a price through the call. I'm just interested, I know you've already talked about this slightly, but can you just be slightly clear about what you mean by group support when you're thinking about management actions. From my understanding is solvency 2 a simplest interpretation of group supports. Is that you raise leverage and downstream that the subsidiary as equity to support subsidiary solvency ratio. And from my assessment, you don't really have too much flexibility to be doing that, but maybe I've underestimated the flexibility of the overall group. But equally groups who could be accepted in a different way like because you've got the support of the group, you could be happier with a lower solvency ratio in one subsidiary because the group's all around it. I'm sorry to come back to it, but I think it is an important couple of words, could you just help me understand the definition of group support? And then secondly, I'm going to dare to ask if you'd tell us what the UK solvency 2 ratio was at the end of March, just to complete the chain of that. More importantly though, could you just remind us, you've given helpful comments about the dividend at the end of the year, but I just wondered if you could remind us the transactions that are still to come, what could be the percentage points impact of those the past seven transfers and the other things. I'm trying to get the timing on the other elements, affecting the UK solvency 2 ratio. Thank you.

Will, I think you're actually given a pretty good explanation yourself of what group support is. Actually, I was trying to say, we need to look at Aegon in Netherlands as part of a broader group, a well-diversified group with more sources of cash flows to the holding to support expense of the holding, including of course dividends, but also the payment of leverage. So we'll be looking in terms of group support in a broad way and again it's too early now to me to speculate about it, we will come back in Q2 and we promise we'll come back in Q2. In terms of the solvency, what I did say in the call was that our solvency in UK is just under 150% and this is the result or I should say or includes the fact that we have, including this number, the full acquisition of Cofunds, which was just over - just under GBP150 million at the end of last year. And the effect of cost reductions that is going to come because of the restructuring and the integration of Cofunds will come later this year as will come the impact of the Part 7s which we really hope will be concluded as somewhere in the third quarter. And the moment it get concluded in the third quarter, it will allow us to be in a position to pay a dividend and that will be in this case, a dividend related to the transactions of selling the annuities and that will be at the end of the year. By then, our base case assumption is Aegon UK is efficiently a well-capitalized that will be able to support paying a dividend on an ongoing basis going forward based on the cash flow that is generating from its business, which has now become very much a fee business and therefore much more predictable.

Okay. Thank you, I'm sorry I missed the 150 when you said in the call, so apologies for that. I'm sorry I'm still back on the group support. Could we actually be conceivably raising the leverage of the overall Aegon group or are we just talking about managing capital within the Aegon group.

Will, again, I said what I want to say about this right now. This is part of a broad process that we're looking. It's a broader process for the Netherland, for the group, but I was trying to make the point that we should not be looking at Aegon and Netherlands on an isolated basis. We should be looking in the context of the group, including also the strength of the group and we'll come back in the second quarter.

The next question comes from the line of Gordon Aitken of RBC. Please go ahead.

I've got three questions please. First, in the US, there is the mortality charge that will be higher than last year, just wanted to go at mortality you are using for reserves and doesn't reflect the latest pick up in tax that we've seen around the world? The second question in the UK, you recently acquired Cofunds. I see the gross flow number for Cofunds. Could you just tell us what the net flow figure was in the first quarter? And the final question is about capital in the UK. So the proceeds from the annuity book sale, you said were 500 million and I'm just wondering what the capital back in the annuity book was, because the usual guide that companies tell us here about the one in 200 generates about a 10% capital requirement and you're the 9 billion book. So 10% of that is 900. So if you can explain the difference between 900 and 500, that would be great. And also you've said that the 350 will remain in the UK and I just think - if you could just be clear as to what that will be used for? Thanks.

Maybe on US mortality, I think first of all, it's not a, let's say a standard, statutory published mortality table that we're using for our IFRS results. These are pricing mortality tables. These are based on our own expectations based on, for example, what we've seen in smoker, nonsmoker differences and preferred differences and those kind of things. So it's our own Aegon specific mortality table and that's why we look at it in terms of actual to be expected and not as a percentage of some other mortality table that's a standard publication that really is refined based on our underwriting standards.

Yeah. In terms of net flows in the UK, we had around 300 million of net flows. As I did say in my text, the big part of the inflows we've seen and the significant amount is related to institutional business and that can be lumpy as I mentioned. We've seen this to be lumpy. I think what is important is that we've seen net flows in our business start to gross flows, but also expected part of flows, which you see what is not abnormal when you do a transaction. So actually we are pretty pleased at the outflows that we see of go forwards, especially been lower than we were expecting, because at the moment of a transaction, so when it moved to a new owner under Aegon, it's usually a moment that you see accelerated outflows and we have seen less of that. So I hope that answers your question. In terms of the annuity book, let me take the question since I was close to it a year ago. What we gave you is a number of capital that we have generated from the sale of the annuity business. That's a 500 million of which we expect to have 350 million. It is very difficult to look at these businesses on an isolated basis, because it's part of the total portfolio. And if you want to get really much more detail then we'll have to go back longer and that's something we should be doing with best relationship currently.

But just on this point on what the 350 will be used for in the UK that you're keeping in there?

So the 150 will be paid in dividend and that means effectively that the 350 stays in the UK and that is part of our overall total capital position and that's why we have a higher level now in the UK than we've had for many years before. Actually, we have a pretty significantly higher level, which for a fee business only, which there is such as much less risk than the business we had before. It is this level that allows us to be comfortable about an ongoing dividend and I mentioned it to you earlier to British Ploegh's question that objectively UK is not only to pay once a dividend, but to ensure that pay them and have a sustainable basis for paying a dividend going forward.

Our next question comes from the line of Arjan van Veen of UBS. Please go ahead.

Thank you. Just a point of clarification on - at the end of last year, you moved EUR100 million to the Netherlands holding company. And at the time, you said you would upstream that to the group capital, subject to the outcome of the review of the new DNB guidance on that DT. So I'm just curious what specifically has changed since February that makes you move that down again and would it be correct to read that through that that will be adverse impact on your solvency ratio from the LAC DT review. So that's my first question. And as for the secondary part of that, your guidance for upstreaming from Netherlands has been 225, but obviously it would be fair to assume that it wasn't a case of 16 or so, we shouldn't be expecting anything at all in '17 and would you restate that when you give us the capital plan in August. And then one final question on the US and just more the capital plan as a whole. So you've had two rating agencies move your outlook for the US due to negative outlook in the last couple of months. So I'm just wondering whether your capital plan will also seek to address potentially some of their concerns to get those outlook revised back the other way? Thank you.

Yes. I guess on your first point, just to be clear we did upstream dividends out of the non-life Dutch companies into the holding company at year end 2016 and those were downstreamed in the life company for prudency reasons and not so much a part of an overall LAC DT review. We do know that we will get much clearer guidance and direction at 2Q when we resolve the issue with LAC DT with the Dutch Central Bank, but I think it's a little bit too early to talk about the actions that we would take in terms of not paying dividend out of the Dutch entity or those kinds of things. That's all come as a part of the overall plan when we release our figures for 2Q. Yes. Exactly. I think maybe importantly on the rating agency outlook, it sound like they have been concerned about earnings volatility and the like and not necessarily a capital concern. So we'll be working closely obviously with the rating agencies to relay these concerns in the coming months when we go to various committees.

Our next question comes from the line of Bart Horsten of Kempen and Company. Please go ahead.

I have a few questions as well on deposit margins in the US. Still impressed by the gross deposit growth you get in the US, but if I look to the net deposits also for regular frequent quarters, it's close to zero or negative. Could you give an outlook there or what's going on there. Secondly, on the margin development in some product lines for retirement plans, we saw margins creeping up to 14 basis points during '16 and it was now back to 12 in Q1. What's the outlook there and the same more or less for variable annuities, where the margins dropped from 60 to 48 basis points? And I was wondering what the outlook is there? And one final question in your run-off portfolio, you've been looking to dispose them besides running them off and you related also to the interest rates, so could you indicate whether the interest rate environment is now interesting enough for you to look - to be successful in a divestment or do you need higher rates for that? Thank you.

On your first questions, I'm pleased that you're recognizing at a very high level of gross deposits, which we're seeing in our US business. Example in our retirement plans, which as you know is debt business and we're really trying to develop, we've seen over 10 billion, which is actually very much in line with what we had the previous year. You're right to say that mutual funds and variable annuities as shown little bit at a lower level of new gross deposits. That's not surprising because you need to see this in the context of the uncertainty around the DOL. As you know, the DOL rules have not yet been implemented. There's been a 60-day extension period. And in that uncertainty, what you're seeing is most customers and distributors are just being a bit more hesitant. So this very much should be expected. In terms of margins, it is difficult to look at them only in terms of basis points because we see more and more that our business is now being a price on the basis of margin or revenue per participant. We've guided at the conference last year in New York that it's around $60 per plan participant that we expect for this business. And this is also very much in line with our strategy. As you know, we are trying to talk to you about moving the way we look at our pension business, now that's being an institutional asset management business, now we're looking at plan participants that have saved together a significant amount over 220 billion and there we know each individually will have to make choices that we're trying to get much closer to these plan participants. So the whole way we look at our business from an operational point, but also from…

Okay. And maybe as a final follow-up on reinvestment yields. First, the back book deals, could you give an update on where you stand there right now?

So the first quarter, we had a reinvestment yield of 4.25 compared to 3.77 the previous quarter. So over 50 basis points increase, which is very positive and the book value - the book yield is around 4.7. So you see we're getting pretty close to our book yield and then rates have dropped a little bit recently. So I would say the 435 for Q1 at this point in time is probably a little bit lower, it's around 4.2%.

And we will now take our last question in the queue from Farquhar Murray of Autonomous. Please go ahead.

Good morning, gentleman. Just two questions if I may. Firstly, coming back to slide 10 and the Dutch solvency position and you referred to restoring an adequate level of solvency for the Dutch business. Would that adequate level still be the 130 to 150 cent target level kind of previously established or is that part of the ongoing discussions with the DNB too? And then secondly, is there more to do in terms of optimizing between the Dutch subsidiaries and perhaps on that, would you be willing to give the solo positions of those [indiscernible]?

Yes. On your first point of - the first question again sorry. Yes. Sorry. The range is currently 130 to 150, but we're looking again at sensitivities in the capital. So that's part of the process that we're working through, but right now, we're not prepared to change those. We could potentially change some when we release our overall comprehensive plan in 2Q. And then in terms of optimizing the, sorry, yeah, you'll get information on the 19. We'll publish the solo entity solvency and financial condition reports on Friday the 19th. So you'll be able to see those in English in fact.

But then, do you think there's more to do in terms of optimizing, obviously, you've done the 100 million between the non-life and life. Is there more you can do there?

Yeah. Again, we'll come back in 2Q with an overall plan.