Good day and welcome to the Aegon's Second Quarter 2017 Results Conference Call. Today conference is being recorded. At this time, I would like to turn the conference over to MR. Willem van den Berg, Aegon's Head of Investor Relations. Please go ahead sir.

Thank you. Good morning, everyone, and thank you for joining this conference call on Aegon's Second Quarter 2017 Results and Special Capital Update. 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. Today's presentation will be longer than normal, but we will leave plenty time at the end to address your questions. Our CEO, Alex Wynaendts will first cover the second quarter results, followed by CFO, Matt Rider, who will walk will through our capital plans. I will now hand it over to Alex.

Good morning, everyone, and thank you all for your continued interest in Aegon and for joining us for today's earnings call. Let me begin by providing you an overview of the three key items that we will be discussing today. First, we have taken significant measures to strengthen the capital position of our Dutch business. These measures include injecting EUR 1 billion of capital from the Group before the end of September 2017. Selling UMG for EUR 295 million as announced earlier this week. And reaching an agreement with our regulator, Dutch Central Bank on the methodology for calculating the loss absorbing capacity of deferred taxes, as a result of which LAC-DT set a 75% as of the second quarter of 2017. The combined effect of these actions will bring our Dutch solvency ratio to approximately 175% on a pro forma basis for the second quarter of 2017. Second, as we reached an agreement with DNB regulator on amendment a conversion methodology used to translate the RBC ratio of our U.S. business into the Group Solvency II position. This amended methodology result in a 15 percent point increase in the Group solvency ratio, in addition to a 13 percentage points improvement on the comparable basis. This brings the Group solvency ratio to 185% at the end of the second quarter. And third, I'm pleased to announce stronger earnings for our second quarter results and our interim dividend of EUR 0.13 for the first half of 2017. This is part of our commitment to return EUR 2.1 billion to shareholders of the period 2016 to 2018. I would now to move to Slide 3 and take you further through our strong operational results for the quarter. I am pleased with the clear improvement in operating results with underlying earnings increasing 23%…

Thanks Alex and good morning everyone. I'm on Slide 9 of the presentation and in this section I'd like to take you through the steps that we have taken to strengthen our capital position. As you can see these fall under two main categories. First, we have taken a range of management actions to strengthen the Dutch capital position, this one able management to focus on executing its strategy to grow capital generation and resume dividend payments to the group in 2018. Second, we also reached an agreement with DNB to revise the way and which the capitalization of our U.S. business is reflected in the group solvency ratio. The revised conversion methodology for our U.S. business leads to an improved comparability with our European peers and better reflects the capital strengths of our U.S. business and increases our group ratio to 185%. All of these actions have been taken in close cooperation with our regulator. And by removing uncertainty about the solvency ratio of our Dutch business and by significantly improving our overall capital position we're able to reconfirm our target to return EUR 2.1 billion to shareholders over a three year period. Let me now show you how we plan to increase the capitalization level of our Dutch business on the next slide. As promised that our first quarter results conference call, we are today presenting a comprehensive plan to increase the Solvency II ratio of our Dutch business. The plan consists of the sale of UMG, risk profile enhancement at the Dutch level and a capital injection from the group. Together these actions add around forty percentage points to the Dutch ratio and as a result the pro-forma ratio amounts to 175 as of the second quarter well within our new target range of 150% to 190%.…

Thank you. [Operator Instructions] And our first question comes from the line of Farooq Hanif from Credit Suisse. Please go ahead.

Hi there, thanks very much to taking my questions. Firstly, could you explain the kind of variability of the LAC-DT methodology that you're suggesting, and whether this is going to be a big impact quarter-to-quarter? And secondly, when you talk about in the Netherlands opportunities for capital deployment above the 190%, what do you mean by that? And lastly can you explain the nature of your illiquid investments in Netherlands? Thank you.

Yeah sure, Farooq, maybe the first on the volatility of the LAC-DT factor, I think that, so first of all we are going to recalculate the number on a quarterly basis. We actually come up with a number that we could rationalize is even a bit higher than 75%, so I think that that would be I think that that would be reasonably stable, but again we have to recalculate it every quarter. With respect of the new capital zones for the Netherlands the 190% top is basically opportunity to pay additional dividends. And the third question…

Nature of the illiquid investments.

Nature of the illiquid investments, yes probably in three main categories, I would say continued investment in Dutch mortgages, infrastructure debt and private lending, direct lending.

Thank you very much, okay.

The next question comes from the line of Robin van den Broek of Mediobanca. Please go ahead.

Yes, good morning, gentlemen. Thank you for taking my question. Firstly, I appreciate kind of levered you've given on the capital generation for each business unit. I was just wondering if you could share some more lights on remittances per units because I think Slide 17, shows that for 2018 for example for the Netherlands you will be eating into yourselves to ratio if you remit more than EUR 50 million. So from the EUR 300 million could get you maybe share some lights on the remittance ratio expected in the mid-term and maybe the same for Americas, United Kingdom and in Asia? Sorry I was dropping a pause there, but secondly I was wondering at it seems that the capital plan for the Netherlands has triggered you to do a lot more portfolio focus in the last quarter. I was wondering is that going to be an ongoing process and could we expect more or are you basically done with reevaluating your total portfolio?

Yeah, I think on your first one remittances from the group, you're correct so we would expect to generate approximately EUR 50 million of capital in the Netherlands, we're also absorbing obviously the UFR decrease as well as the increase in required capital for an illiquid investments. But we did feel that it was important to fund the Netherlands to support its illiquid assets strategy and importantly to start paying dividends as quickly as possible. We also funded it fully so that it could absorb these changes in the UFR going forward. So given where we expect in the set within the capital management zones at year-end, they should be able to pay a EUR 100 million dividend in the first half of 2017 over the 2017 performance year, but they will need to work through their normal governance. After that, if they can execute their strategy and with dividends subject to market circumstances while hearing to their capital management policy, we would expect them to pay a normal pattern of interim and final dividends.

Let me take the second question, Robin, I think we have been extremely consistent in saying that we are reviewing our portfolio on an ongoing basis. And clearly how long it's taken us to execute on the BOLI/COLI and the structured settlement deal, these portfolio changes that we have recently announced we were actually pleased that we are able to do them in a way that we have clearly showing that we are not leaving value on the table, we have refocus on achieving the right value. And from a timing point of view, it was clearly fortunate that we were able to not to just before or even on the day of these important results. So this process will be ongoing and I think we've been very clear in saying that we look at all of businesses and if they don't fit our strategic objectives, we will take action, and also if we see that we are not able to achieve scale, we will also act on it, I will continue to do so and that means an ongoing process. I also want to remind you of that is not only been about selling activities which also acquired pension business in the U.S. with Mercer expanding our franchise as you know we have done a significant move in the UK with Cofunds where we are leveraging our platform and adding customers and you will continue to see these kind of activities going forward.

And so thank you. Maybe I coming back on the first question do you actually expect the EUR 1.4 billion of normalize capital generation to be remitted to the holding? Or do you expect in the lower number in 2018?

We have to recognize that the normalized capital generation is more of a longer let's say medium term thing and that we are having to absorb the UFR impact in 2018, as well as the increase in required capital for the illiquid investment strategy and that's highlighted in sort of the notes on Slide 17.

Okay. But you're not willing to give any guidance there?

I think Slide 17, gives the guidance we'd like to give.

Okay. Thank you.

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

Yes, good morning, thank you very much for taking my questions. First question I have the planned EUR 100 million dividends upstream from Netherlands. Why are you doing this if you're at the same time increasing your debt by EUR 500 million, I believe that's one year facility whereas you have to pay that back one off first pay to that back or raise less that, it sounds little bit like your funding one thing with the other. And then the second question is perhaps on the new money yield for Aegon versus the back book yield in the U.S. if you could to let us know what those are and how this has developed and what your expectation is there? Thank you very much.

Thanks, Nadine. Yeah in terms of the EUR 100 million dividend out of the Netherlands, like I said before we felt that it was important that they start to resume paying dividends and to act like a normal insurance company taking normal risk paying normal dividends and this is part of the hygiene factor frankly. With respect to the EUR 500 million debt issuance this is more it's actually funding entire amount of the capital injection with cash as of September 30 so we don't have to keep talking about Dutch capitalization for the next three quarters. So we just wipe it completely off the table. But the EUR 100 million is a hygiene factor and I would stress that that would be of it evaluated using their normal governance under normal market circumstances we would expect it to come, but they have to work through their governance as well. I'm sorry, your second question for new money yields, to new money yields in the U.S. for the for the second quarter were 3.5%, this is down from 4.35% in the first quarter, but this is a consequence of just adding additional treasuries to manage interest rate risk. The third quarter outlook be just what we're seeing so far is about 4.1%. Book yields are down about 0.1% down to down 4.6% as a consequence of the COLI/BOLI and payout annuity transaction.

Thank you very much.

Our next question comes from the line of William Hawkins of KBW. Please go ahead.

Hello, gentlemen, thank you very much. I appreciate the hard work you guys have done year-to-date. Could you help me a bit with some Slide 21, the capital generation outlook you've given 2018 normalized. Could you just help us be clear about what is the expected in 2018 relative to the EUR 1.4 billion, because you've been very clear that the EUR 300 million for the Netherlands could be EUR 50 million because of the issues you've talked about. I'm just want to get clear for the UK and the Americas can we hang on hats on those normalized being the same as expected should we make similar adjustments? And then secondly, that EUR 1.4 billion by 2020 to pick a number you've been very clear that the figure should grow, you've been clear that the Netherlands could be at EUR 325 million. Could you try and give us an indication of the growth potential in the other areas, I mean you threw out for example USD 300 million of cost savings mostly in Americas, but I'd be surprised if you want to opt out of USD 850 million so if could just give us an indication of how much they can grow that would be helpful? Thank you.

Thank you, William. So I think you have it exactly right, so we have EUR 1.4 billion in normalized capital generation and in terms of expected capital generation haircut that for the UFR change as well as the additional required capital for the illiquid assets in the Netherlands and then you then you come to what our expectation is. Of course and you see it every quarter there's going to be market movements, but that's basically the capital generation going forward.

So you want to adjust?

No.

Let me add on your second point Will, that in the U.S. yes, you are right to identify cost savings that will have a positive effect on the cash flows. I also would like to remind the growth we are growing our fee based businesses in the U.S. and that means that we are effectively moving towards more capital light business that should also support cash flows. In the U.K., we have the integration of Cofunds that is going to be a significant boost and what you see there is there not only are we growing our business, but we also having very good retention actually on the Cofunds funds better retention that we originally thought. And I'm also pleased to mention here that the Asia capital generation as you will have noticed has had a significant turn into a positive by looking at the management actions we could take the balance sheet of in particular in the high net worth business to Bermuda and Hong Kong, Singapore business. And by also taking actions on the way we price and the way we design our products in that area and that has turned into effectively saying that we moving from a negative capital generation to positive capital generation and that going to continue going forward. Furthermore, I've been clear in the previous question that we continue to look at those businesses that meet our requirements and we have a number of businesses that have negative capital generation, one of them we announced this morning and all of that should by stopping the negatives that will also lead to a positive on the - from the 1.4. I'm not going to give you exact numbers, but I think all these elements should give you more than enough comfort.

Thanks gentlemen, thank you.

Thank you. Our next question comes from the line of Ashik Musaddi of J.P. Morgan. Please go ahead.

Hi good morning everyone, this is Ashik Musaddi. Just two, three questions, first of all Alex as you've flagged about Asia your capital generation, which was negative is now kind of zero, I mean are positive, so first of all, what is driving that, is it your - the way you're thinking about that business i.e. let's not invest and waste money in Asia or is it some structural change that is happening, which is improving the capital generation. The reason why I'm asking this is I mean if I look at your earnings profile from Asia it's around EUR 25 million, which is like 1% of the Group. So and if you're not injecting any capital in Asia probably is it worth really thinking about that business from a disposable perspective, because you always mention that if it's not scale, it's not for you, so how should we think about your Asian operations? The second thing is your capital generation in UK is going up pretty much EUR 25 million to EUR 100 million, now that's again a big number for the platform business, so how should we think about that capital generation, how much of that is earnings related, how much of that is capital release related, so how much you have confidence in that EUR 100 million? And thirdly is your updated numbers adjusted for the recent currency moves, which is the euro has moved quite a bit to versus U.S. dollar et cetera, so any thoughts on that would be really helpful? Thank you, thanks for all the hard work you've done over the past six months? Thank you.

Thank you for asking the question on Asia. I think we have taken quite as number of steps in Asia. First of all we announced last year that we have put our affinity business in run-off, now putting our affinity business in run-off effectively meant that we went from the capital utilize to capital generator and that's quite a pattern we're not in our annuity business in Asia. We've come to the conclusion in line by the way with the decisions we've taken in the U.S., in the UK that the affinity business is not the business, we believe we want to be in for the long term. We do not believe that's strategically important for us, nor is it really attractive from a customer value for our customers. So this is step one. The bigger changes really on our high net worth individual business to Bermuda business is we have seen that by taking a number of actions, ALM Driven, redesigning our products, we have been able actually to free up capital and I think we shared it with you in the previous quarter and that has been translated into dividend of EUR 200 million. We also continue to grow our business, so we have maintained more than enough capital in that business to fund and itself the growth of the business, so when you look at the business in Asia you should be looking at a number of specific businesses that we actually see growing successfully and high net worth individual business is growing successfully and is well funded to effectively fund its own growth, but because of the changes we've made we need less capital. In the UK, yes you point to the significant improvement, we have been very clear about the steps that we are taking…

That's very clear. Thank you.

Thank you. Our next question comes from the line of Mark Cathcart of Jefferies. Please go ahead.

Yeah, hello. Taking Aegon hygiene to new levels, do you think there's an argument that Aegon continues to restructure, but a much more significant level in other words you go longer lines of acts will prove with some sort of U.S. quote. I guess my question is given the outcome at the holding company over the past few years, what is it that you do for the U.S. operations that they couldn't actually do for themselves, I'm just trying to work out what is the advantage to the European shareholder of having the majority of dividends coming through in dollars, I just wondered what your thoughts on that please?

Mark, first of all I appreciate your recognized hard work, which we have been doing in restructuring the company, and as you know this has taken sometime, we have to take into account market conditions. We have to ensure that we look for companies of parties that take over our businesses that we believe are better getting somewhere else. We need to ensure our customers and our employees really very important find a new home, and I think we have been able to find quite significant new homes for these companies. The second thing you're asking me is more explicitly about the U.S. I can only remind you that the U.S. is a significant part of our business, it has been a key contributor as you point out to the success of Aegon and I really expect this to be the case for the future.

So you don't think there's an argument for more efficient shareholder structure for Aegon with the set for U.S. quote. You don't believe in the argument at all?

I'm just repeating that the U.S. is a significant part of a business key contributor in dividends and cash flows, but I also would like to say that with the steps we have now been taking Aegon the Netherlands will be and again a normal contributor of dividends, the UK will be a contributor and as you will just if heard even we have had a significant dividend from Asia, so it is important that we indeed have a balanced portfolio of which is U.S. because of the nature of the market and our presence will continue to remain an important part.

Yeah, so my second question, you mentioned about the balanced portfolio, your aim when you first became CEO was to have 50% of earnings actually coming from outside of the U.S. you've done a particularly like the dependency on the U.S. What has changed since for you not to be pushing for less dependency on the U.S., I mean do you think that's the efficient for the shareholder to have 70% or even 90% of the dividend stream in U.S. dollars?

As I just mentioned and Matt also explained, going forward it's there will be much better balance from where we're going to get our dividends, I mentioned in Netherlands will be paying a dividends going forward, the UK have paid a dividend Asia, so the balance actually has improved and what is important for us is to have a company that is well balanced. But also to recognize that the U.S. is today ever continue to remain the largest market in the world and we have very pleased with the very strong presence we have in the UK and U.S in the sector they performed very well.

So my third question as you can say categorically that you're not considering in any shape pro forma potential U.S. quote for your U.S. business?

Mark, I don't think I need to repeat my answer. Thank you.

Thank you, thank you.

Thank you. Our next question comes from the line of Andy Hughes of Macquarie. Please go ahead.

Hi guys, couple of questions if I could. The first one is on the cost savings, so I just to be clear that I kind of understand how much of the cost savings are in the 2018 numbers and how much is kind of still to come through in terms of maybe on top of that, especially in the Netherlands because I remember you had the risk margin effect on the expense inflation coming through. So I thought any kind of cross savings you put in the Netherlands would be material for the capital generation. I just want to check your comments on the Americas cash generation where you're saying cash generation in Americas not really get me from run-off businesses, it's going to be some organic in growing businesses. Are you kind of saying that the 850 million from the Americas you expect to grow over time as the fee businesses grow or is the kind of two books in there one is running-off, one is growing? Thanks.

So on the first one on the cost savings, especially in the Netherlands we'd expect the run rate savings to come through by the end of 2018. With respect to cash generation, I think this has been really a highlight of the Americas business, I mean to see so much of it coming from businesses that we're currently active and rather than run-off businesses I think is an extremely healthy thing. And as long as we continue to grow our presence and fee based businesses, capital light businesses and those types of things, I think that we could grow that capital generation modestly in the future. Definitely the cost savings that you mentioned earlier are contributing to cash flows in 2018.

Okay. And then not a one-off benefit they come through thereafter like presented in Netherlands you might have a capitalization effect in the year end and the drop-off. And can I just ask question about the Americas how much is of the 850 million, how much is roughly run-off and how much is ongoing, is mostly ongoing and growing or is it sort of into the relative mix please? Thanks.

I mean very little of it is from close blocks, I mean the COLI/BOLI payout annuity transaction that we did arise something on the order of EUR 14 billion of liabilities and there was some capital generation that was coming through on that one. But for the vast majority, now it's just part of the normal operations open businesses ones that we're currently active, and so I think that one is actually pretty encouraging.

I'm just have a quick question on Netherlands of course to ask actually, the EUR 100 million illiquid asset strain, that is quite a lot of money and roughly how much illiquid assets to acquit to and what kind of return on capital to go on the EUR 100 million because I'm guessing it must be quite a lot of illiquid assets buying or quite a high yield because otherwise you wouldn't bother I mean you just running for cash in the short term. Can you just clarify what exactly?

Yeah, certainly I mean it's a joint balance sheet so when you want to make portfolio restructurings have be in magnitude, so the illiquid strategy is going to be on the order of EUR 3 billion to EUR 4 billion euro over the next couple of years. But in terms of let's say a return on capital, we think this is a pretty good trade-off where we would expect something on the order of perhaps even 15% something like that. So it's actually this is one that's a good as this is one a good trade-off.

Thank you very much.

Thank you. Our next question comes from the line of Steven Haywood of HSBC. Please go ahead. Your lines open.

Good morning. Just following-up on that the illiquid investment, you say it leads to EUR 50 billion increase in your capital generation, I seen as already in your normalized capital generation plan so without this investment in illiquid investments the Dutch business would have been a zero capital generative business in the next couple of years. And then if you look at the group normalized business capital generation for the next couple of years that comes down to around EUR 850 million so that is just covering your dividend and your holding company expenses for the next couple of years. What additional flexibility do you have over the next couple of years with your cash flow forward here? And then secondly, on your Dutch dividend, you say you're going to resume a normal pattern of internal final dividends in the Netherlands, considering the last few years have been not really normal. What would a normal level of dividends be and what is a normal pattern please can you go into more detail here. And then and finally I think you've mentioned that you said that the Aegon Leven Dutch life business has a target range of 145% to 175%. Can you confirm this so did I get this from? Thank you very much.

So maybe I take the last one first, so I can confirm the 145% to 175% and I think you didn't take it out of remarked that in the presentation. So maybe on the illiquid investments, yes, we expect that the illiquid investments will return about EUR 50 million in additional capital or in capital generation over the coming years. But it's important to reflect the capital generation and in 2018 and 2019 also reflects the fact that we're having to put up additional capital for them. So you can't really say, if we didn't do the illiquid is that there would be zero, if we didn't do illiquid we wouldn't have the strain either, so I think it's I think you have to take that into account. In terms of the group normalized capital generation, I think that importantly here we wanted over the next several years to grow the Netherlands to a point where it could be good where it could remit reasonably significant dividends, and yes you're absolutely right that there has been an over the past several years of spend a pattern of non-normal market circumstances and whatsoever. But that's exactly the reason why we increased the target level of capitalization, so that we could absorb some of these shocks while continuing to pay a normal dividend that is a critical element to the new capital management policy. We want to capitalize them at a level where they can continue to pay dividends in normal market circumstances and even when there are shocks we don't force them to the derisk in order to increase the capitalization putting them at a higher flying level is critically important to the strategy.

Okay. Thanks very much.

Thank you. Our next question from the line of Bart Horsten of Kempen & Company. Please go ahead.

Yes. Good morning. Thank you for taking my questions as well. I have a follow-up question on capital generation in Netherlands. Just if I understand it correctly, in the table on Slide 17, you deduct EUR 150 million for the lowering of the UFR by 15 basis points. Do I understand correctly that if you would deduct this take the impact of the UFR lowering through your Solvency II ratio your capital generation would then increase by EUR 150 million or am I misunderstanding something and what would have been happen if the actual UFR would go down to do 3.7 target? My second question is on your capital return strategy. You said that in the period 2016 to 2018 your return EUR 2.1 billion and that you're on track, which your revised outlook on free capital generation and free cash flow generation. Is it fair to assume that beyond that you will also expect to increase that capital return targets? And lastly, coming back on the reinvestment yields, you've reported quite a significant drop and if I translate that and I thought you earlier said you have a reinvestment portfolio of around $6 billion annually that could impact your free cash flow from the U.S. by approximately USD 50 million to USD 100 million on an annual basis. Is that already included in your forecasted free capital generation going forward? Thank you.

So on the UFR you have it correct in that the 15 basis point reduction in each year as we go down to 365 is the EUR 150 million reduction in cash flow generation. If we went all the way down to 365 initially it would have an impact of its basically linear take three to four times the EUR 150 million and that would be the impact immediately on capital. But if you went immediately down the 365 it doesn't mean that cash flow generation goes up by EUR 150 million a year it's actually spread out over a longer period of time in that. So I think it's important that as you start to think about the way that - let's say the way that we define normalized capital generation. It's important that you should haircut one of the other either capital generation or the normalized free cash flow. So only do it one time reduce it by EUR 150 million for the UFR decrease and by EUR 100 million for the illiquid stream.

Okay. Thank you.

And I'll take your question on the EUR 2.1 billion by 2018. I'm appreciate your question what we'll do after 2018 and obviously you have a right to us that based on the outlook which you're providing, but I really want to say here. Let's first deliver in 2018 it's a commitment we want to deliver on and we'll see thereafter.

And then your last one with respect to the reinvestment yields. I think this was a bit of an odd quarter I mean it really was a quarter marked by significant investments and U.S. Treasuries to manage more interest rate more interest rate risk going forward, but we already see new money yields for the third quarter up to 4.1%. So this is not a material thing, this is just the normal course of business, managing a portfolio prudently and making sure that we have interest rate risk manage well.

Okay, thanks very much.

Thank you. Our next question comes from line of Matthias de Wit of KBC Securities. Please go ahead.

Yes, good morning and thanks for taking my questions. Just on the Dutch capital generation you were previously guiding for EUR 200 million to EUR 250 million, you raised just to EUR 300 million for 2018, just wonder what's driving that EUR 50 million to EUR 100 million increase in 2018 I understand that the derisking will help, but presumably not immediately, so any additional color would be helpful in that respect? And then just secondly on the Dutch business the capital generation as well on the amortization of that UFR benefits it's a large negative component of EUR 200 million. I guess it will go down partially because of the cut in UFR, but secondly because the amortization of that benefits overtime because I guess you do to not write that much new business with subject to the UFR, so could you say anything on how you would expect that to evolve in years ahead please? Thank you.

On the first one with respect to the Dutch capital generation, yes, we had previously guided for a lower number, but I would say there are quite a number of moving parts here. So on one side we've sold UMG that had a small amount of capital generation that gets deducted off. We fine-tuned a lot of our thinking around capital generation you can imagine as we've gone through this portfolio rebalancing. We've taken a sharper pen to the way that we analyze the stuff. But importantly the illiquid strategy adds that an amount of capital generation going forward, so this is a bit resetting the bar in line with a new portfolio and so you can take our guidance as right here. With respect to the amortization of the UFR, I think maybe to some one point we have a normal UFR amortization, and it's about EUR 200 million a year and then we have this special one-off EUR 150 for the coming let's say three to four years, and it's - when the UFR goes down it means that ultimately capital generation will go up, so maybe detail questions on this one you could refer to the IR.

Yeah, okay that would be helpful. If I could just follow up the results in that Dutch capital generation and SCR release of on the regular basis of EUR 100 million. Is that expected to continue for many years or is just linked through to individual life run-off which will yeah maybe continue for a few more years and then wear off, anything you can say on that?

Yeah, just that it would be continuing to come off in the sort of a medium term.

Okay, thank you.

Our next question comes from the line of Albert Ploegh of ING. Please go ahead. Your line is open.

Yes, good morning all, thank you for taking my questions. The first question I have is given to disposal so far have done and all the other management actions as well. Can you help us also a little bit on the underlying earnings before tax what is more or less the normalized impact from all of these actions? And the second question I still have - I'm sorry to come back to that Slide 17 again on the Dutch capital generation, and I've taken notes of your remark on the flow and stock in twice for the UFR et cetera? But I would like to understand a little bit better your thinking between that said UFR drag unless had a target range of the 150% to 190%, so if look at let's say the flow on the chart the EUR 15 million probably for 2018 and 2019 that same kind of level, if not correct your stock for the UFR as well. But that still means if you're going to pay out let's say a meaningful dividend your Solvency II ratio in the end will go down. So let's say if three years from here in 2020 with UFR at EUR 365 million, are you then basically still wanted to be in the middle of the target range or we happy to be operating at the low end of that 150% TO 190% range send out to be better? Thank you.

Albert, thank you for your questions, I think maybe on the first one with respect to the earnings before tax, UMG was contributing about EUR 20 million and Ireland was effectively nil, so this is not - these are not material things for the underlying earnings. With respect to the Dutch capital, yeah so in terms of our - in terms of the way that we think about the capital generation capability going forward, we do of course factor in what let's say the normal UFR drag is going to be and then we're also taking into account, let's say the special nature of the reduction in the UFR in the coming three years. Now as we take a look at it going forward and again under kind of current market circumstances and this is quite an important one. We would expect that the Netherlands could pay a normal dividend and stay within its target zone that's in fact why we've capitalized them at this particular level. But markets can change of course and they will evaluate dividend payment by dividend payment their ability to do so based on everything that they see in their balance sheet in the markets, and in accordance with their capital management policy.

Okay, thank you.

Thank you. Our next question comes from the line of Farquhar Murray of Autonomous. Please go ahead.

Morning gentlemen and congratulations on most of have been a lot of work and a couple of questions if I may. Firstly, on capital generation, I think I have to come back to Slide 21. On the U.S. could you just explain how the EUR 1 billion from the U.S. has unchanged given that you've done disposals over the period and not presumably in the background the fixed annuity book has been running off for quite a long period of time which I presume would if it was supporting cash as well? And then on the Netherlands, I know you kind of suggest that you just fine tune the numbers, but as far as I can see we've gone from EUR 225 million EUR 300 million, and I think it would be legitimate to get just a bit more detail on what's driving on in particular, how much of the EUR 50 million from illiquid investment strategy is facing through? And then also in the Netherlands, you mentioned the kind of risk profile in Huntsman, which seems to involve some hedging is not it is the cost of our hedging also being flipped it into the EUR 300 million just the point of details. And then secondly on leverage and 29.4% is unlikely to change near term given you're now refinancing the senior. That keeps you kind of relatively high within the leverage target, which I presume is unchanged at 26% to 30%, is there a timeframe and which you'd like to get deeper into that target range given the most of the capital metrics now you are extremely really quite comfortable? Thanks.

I could just say maybe quickly on the first one, the EUR 1 billion is number that included a very small element, I think we shared with you EUR 30 million impact and meantime of course another management actions are being taken of course which more than offset of the decline. So the difference is more difference relates to the currency when you translate the back into euros. Matt would you like to add?

Yes, so maybe on the Netherlands capital generation, again I think you have an exactly right, so let's say that's the liquid strategy will add EUR 50 million and the rest of it is frankly properly recognizing the way that the run off or let's say the back book is running off together with other modeling improvements that have allowed us to be able to track this a bit more closely. So that I think that's all I can really say on that one. You've had mentioned the cost of hedging is that factored and yes, absolutely that is factored in. And with respect to leverage as I think as Alex have said in his presentation, we'll continue to work that leverage number down overtime, but even with this so we'll refinance the senior, but also we're going to be, but also we're going to be issuing EUR 500 million to be able to satisfy our obligation inject capital into Aegon Leven, but that's going to be only one - it's going to be only one year senior and we would expect to still remain below are the top end of our range of 30%, but I would expect to work that down overtime.

Just a quick question then on the Dutch number actually, I mean you're saying the full EUR 50 million per annum is effectively in that for 2018 then and why is that coming through so quickly and particularly given that you seem to be then suggesting the strain of EUR 100 million per annum for the next three years?

So let's say that the EUR 50 million is not in there for all of 2018 and the reason is that it does take time to put these assets on our books. So it's really after we have the assets in place that will improve the capital generation, but importantly there is a strain for the illiquid assets program in 2018 and 2019 and of course these are rounded numbers so yeah I just leave it there.

But then if there's only a small contribution in 2018 from the illiquid asset program, again what's the bulk of the EUR 75 million coming from?

Not sure I didn't understand the question well?

Well, if we go from EUR 225 million to EUR 300 million, so it's a EUR 75 million increase. Let's say the EUR 50 million is faced in over three years. So that's a smaller relatively small number. There's more than say EUR 50 million coming through from somewhere else in 2018 and it's a question of where that coming from?

I think we can get and give more detail on this later, but it's really a bit of a methodology change and there is we've got more insight and more granularity into our projection of cash was going forward, but I think we can provide you more detail offline.

Okay. Thanks so much.

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

Okay. Thank you, couple of questions if I may. Can I just ask one more follow-up question I apologize first on the Netherlands the guidance given around capital generation to the EUR 325 million in 2020, if I understand your answers right now includes the EUR 50 million fully for illiquid assets. My question is the reduction to the UFR down to 3.65 which obviously has that as you've indicated what the drag is as you move down, but as you said and future cash will go up. So my question is a EUR 325 million does that include the benefits of the reduced UFR obviously drag in the future, post that date is going to be lower? And then secondly, just again reiterating you've done a lot in a very short space of time and I'm impressed with what you've done in terms of filling in that whole in the Netherlands and fixing the balance sheets. And lot of things obviously could have been done earlier as well, and then maybe some more as you've indicated before things you can do in the future to improve it further. When I look in same thing with the guidance and with some of your assumptions you still tend to be a little bit on the aggressive side, you assume insights going up, as you make remark returns 7%, 8%, you are showing capital generation that hadn't yet materialized, so I'm just curious in terms of going forward. Will you look to continue doing that and trying move to some guidance numbers that kind of more stable overtime, because now in the space of 12 months we've seen your capital numbers change three or four times. So ideally obviously I don't want to take away from the positive things you've done, but I just want some how you think about going forward and trying to get to a status core that is more sustainable is more stable over time and that you don't you can sort of hit every period and get that confidence in that obviously it's a long answer, but let's clear?

So with respect to the first one on the guidance for the capital generation in the Netherlands you talk about 2020, yes the EUR 325 million does include the contribution from the illiquid assets and at that point in time of course the additional strain from putting those assets on the books has gone and that's why it all comes through in that. That's included.

So the question what specific on the EUR 325 million does include the lower UFR, that assumed a day for the drag from UFR haven't gone down to 3.65?

Yeah that was your second one, so yes.

Sorry.

It's alright. Yes it does include that one, so that's fully baked in. And in terms of the and by the way thank you we have done quite a few changes to the balance sheet. We do make assumptions going forward on interest rates and on equity market movements fully in line with peers, but I'd like to think that we can get into a little bit more stable period and frankly we refine our techniques for being able to estimate the stuff going forward, especially on a Solvency II environment that we always have to remember it's a principles based framework and we're still trying and I think the industry as well as regulators are still trying to work out the exact application of this stuff. So we have to work through this, but it's actually quite comforting that we've been able to close a lot of these methodological issues with the DNB not to say that there couldn't be more we have EIOPA reviews coming in 2018 and 2020. So there will be bumps in the road, but I would like to get in a position where our capital generation can become a little bit more stable and we can communicate that more effectively of course, but we need to get a newer pattern of let's say under promising and over delivering.

Okay. Great. Thanks, Matt.

Thank you. And we'll now take our final question from Benoît Petrarque of Kepler Cheuvreux. Please go ahead. Your line is open. Benoît Petrarque: Yes. Good morning, guys. Just two questions on my side. The first one just on the assumptions, are you planning any review in the third quarter. Could you share something with us on that at this stage? And the last one would be can on the capital generation so a couple of 1.4 net of holding cost I get to roughly 14 percentage point of Solvency II capital generation organic obviously you will pay dividend so that you will come down so UFR drag is not that huge at group level, but you have 185 you my get close to 180 maybe at the year-end and normal market circumstances. So makes sure we might get above the 180. So how do you think about kind of the 180 figure, do you want to stay a couple of quarters above 180 before taking actions there, how do you think about opportunities above 180? Thank you.

So maybe on the first one, I think everyone knows we do our normal assumption review in the third quarter and so the results will come out in 3Q and that's all I can really say now.

So let me say something on the Solvency II ratio been appreciate it you are looking forward indeed we would end up at the closer to a higher end of the range. We have a range of EUR 150 million to EUR 200 million, but I think in this environment being at the upper end of the range is setting up negative, and as I said earlier we have committed to EUR 2.1 billion return to shareholders by 2018, I will review obviously thereafter situation change and they're required a different outcome. Benoît Petrarque: Okay. Thank you. Bye, bye.

Thank you.

Thank you. I would like now to turn the call back to our speakers for any additional or closing remarks.

Thanks a lot everybody for joining in. I noticed we had a long one unusual, so thank you and have a great day. Bye, bye.