Good morning, everyone, and thank you for joining this Conference Call on Aegon’s Third Quarter 2021 Results. We would appreciate it, if you could take a moment to review our disclaimer on forward-looking statements, which you can find at the back of the presentation. With me today are Aegon CEO, Lard Friese; and CFO, Matt Rider, who will take you through the key points for this quarter. Let me now head over to Lard.

Thank you, Jan Weidema. Good morning, everyone. We appreciate that you are joining us on today's call and we look forward to updating you on our third quarter results. In my part of the presentation, I will take you through the strategic highlights and through the progress we have made on our strategic assets. Matt Rider will then go through the details of the results and our capital position. He will also summarize the actions we have taken to further strengthen our balance sheet and to manage the financial assets. Finally, I will conclude the presentation with a wrap-up, after which we will open the call for a question-and-answers. So let's move to slide 2. In the third quarter of 2021, we continue to drive our transformation forward by delivering on our financial and strategic commitments. And I am encouraged to see this reflected in our results. These results are supported by the benefit from expense savings initiatives. And we remain on track to deliver on the three-year target of €400 million expense savings. In our strategic assets and growth markets, we are benefiting from the growth initiatives that we have implemented. And our asset management business extended its track record of over nine years of positive third-party net deposits. We saw an improvement in performance across most of our businesses. This was offset by adverse claims experience in the US with COVID-19 and a higher average claim size being the most important drivers. As a consequence, the operating result decreased by 16%. We expect the impact from COVID-19 to abate over time. In addition, we want to reduce the volatility and mortality experienced in the US and are looking at management actions to mitigate this. In the third quarter, we remain proactive in managing our financial assets. We launched…

Thanks, Lard and good morning, everyone. Let me start with the financials on slide nine. Our operating results decreased compared with the third quarter of 2020 to €443 million. Increased fees from higher equity markets and positive contributions from growth were more than offset by adverse claims experience in the U.S., which was mainly attributable to COVID-19 and a higher average claim size. Our balance sheet remains strong, with the capital positions of all our three main units firmly above their respective operating levels and the group Solvency II ratio at 209%. Cash capital at the holding decreased to €961 as anticipated and now sits in the middle of the operating range. The decrease reflects the payment of dividends and use of cash for additional deleveraging. Since mid-2020, our gross financial leverage has reduced by €700 million, and now stands at €5.9 billion. This puts us on track to meet our target of reducing our gross financial leverage to €5 billion to €5.5 billion. We have also made good progress on the reduction of our economic interest rate exposure in the U.S. We have now almost fully executed the interest rate reduction plan, that we announced at the Capital Markets Day, by lengthening the duration of our asset portfolio and expanding the forward starting swap program. Together with the expansion of the dynamic hedging program for variable annuities, and favorable market movements, this has led to a 75% reduction in the targeted interest rate risk, since the third quarter of 2020. Let me now turn to slide 10. To go into more detail on the expense savings, in the last four years as we reduce addressable expenses by €253 million, compared with 2019, €248 million of these savings are driven by expense initiatives that are part of our operational improvement.…

Thanks, Matt. So the takeaway from today's presentation is that we continue to drive our transformation forward by delivering on our financial and strategic commitments through a disciplined execution of our operational improvement plan and active management of the enforced business. Adverse claims experience aside, the operating results developments encouraging and supported by the disciplines implementation of our operational improvement plan. We have reached important milestones for our financial assets as Matt, just laid out. We are benefiting from growth initiatives in our strategic assets and growth markets. And we have committed to net zero greenhouse gas emissions targets by 2050. In summary, I'm satisfied with how we continue to deliver on our financial and strategic commitments. And I would like to open the call now for your questions. In the interest of time, I kindly request you to limit yourself to two questions per person. Operator, please open the Q&A session.

[Operator Instructions] So first question comes from Andrew Baker from Citi. Please go ahead.

Great. Thanks, guys. Thanks for taking my questions. So, first roughly on capital generation. First specifically to the third quarter. Seems like there's quite a lot of moving pieces, are you able to give an update on your view of the normalized run rate? So I guess the comparable number to the previous €318 million pre-holding company costs that you provided and maybe just talk through some of the moving parts of the quarter? And then secondly, related to the medium term view, when can we expect an update to the €1.3 billion 2023 target? And then can you also just confirm whether that included an assumption for a 15 basis point reduction in the UFR? And if so, can you just remind me what the impact of that was? Thank you.

Matt? Thank you very much Andrew for your question. So Matt, can you take…

Yes. So maybe, maybe I can walk you through the operating capital generation guidance that we have now for the full year. And I can walk through some of the moving parts here. So if you take the 3Q operating capital generation, after the holding and funding expenses that was €327 million. Add back the holding and funding expenses and you get to €390 million operating capital generation again before holding in funding expenses. And then some of the puts and takes I mean, we had as I mentioned earlier, we had adverse claims experience on the mortality side, we had benefits on the morbidity side but if you back that out, that's -- it adds about €60 million to the run rate. And then we did have some good guys that you have to back out too. So in generally you can you can walk through it, but it's about €50 million, so that leaves you with a clean run rate for the quarter of about €400 million. And then as you look forward to the end of the year, we have we -- actually year to date operating capital within the business units before the holding and funding expenses amounted to about €1.1 billion. As a 400 cleaning from the run rate for the fourth quarter and then subtract out our expectations for COVID in the fourth quarter, which amounts to about €40 million, and then take about €10 out for the impact of the dynamic hedging. Remember, that does reduce the operating capital generation going forward. And you get sort of right around the midpoint of that €1.4 million to €1.5 billion range that we that we communicated last quarter and that – and we're going to retain that for the supporter. I hope that -- I hope that helps.

And the medium term view?

Yeah, and whether it includes – whether the target includes part reduction. So you are right, so at the Capital Markets Day, we had included a €1.3 billion targets for 2023, that does not by the way include any impact from the 15 basis points reduction that we would now anticipate not happening in 2023, which would actually add another about €100 million of operating capital generation. But there -- we always remind people that there are some headwinds here. We do have still continued low interest rates, credit impairments are likely to step up here. We're not changing the guidance at this moment in time. But in general, we're getting the benefit from headwinds, and you can see it coming through in our operating cash gen guidance for 2021.

Okay. Thank you very much. Very clear.

Michael Huttner from Berenberg. Please go ahead.

And thank you very much. And can you talk a little bit about the take-up rate expectation, which you're seeing where we are now at the end of October or actually mid November in terms of take-up? And what kind of impact this could have in terms of RBC, I think at September the 8% was 3.5%. And I was trying to gross it up, but I'm not very good at math. And then the other question is on the morbidities. I understood from your comments 23 million in Q3, including €16 million of reserve releases. And we kind of done with morbidity benefits, or is there potentially still more to come, or is the €300 million pricing you've spoken about when will we see that in the numbers? Thank you.

Yes. So let me your take-up rate question first. So indeed, the experience on the lump sum buyout program through September stood at 8%. If we looked at it yesterday, it was about 14%. And that's, you can't really extrapolate that going forward, because the program itself ended at the end of October. And as you might expect, a lot of the take-up came at the very last part of it. So as of right now, it's about 14%. Now, what we are going to do is extend that offer forward through the end of January in 2022. So that 14% will accumulate. It will get bigger, but probably a slower pace than what we saw in the first stage of the program. With respect to the morbidity experience, yes, indeed, we are still getting morbidity benefits. However, we see that the entrances to long-term care facilities are picking up in line with pre-COVID levels. We are going to be you saw that we released a portion of the IBNR reserve in the fourth quarter, -- sorry, in the third quarter, we'll release the remainder of the $44 million IBNR our reserve pretty much level throughout to 2Q of next year. On the rate increases, indeed, we had exceeded our expectations on the long-term care price increases to now we stand a little bit more than €300 million. And we are extending that and we now put a target out there €450 million, a €100 million of that is going to be reflected in what we say our premium deficiency reserve by the end of the year. And the balance of that will come in over time. You'll see it reflected in capital generation over time. The other question that you had was the also impact on RBC, in the -- so the overall program impact was 3.5%, so it improved ratio by 3.5%. And we would expect that again, it'll -- we're going to extend the program that again -- that was based on a -- based on the 8% take up rate. We would expect to get incremental improvements through the end of January. And we'll see that comes through in our RBC ratio by the end of the year and also in the first quarter of next year.

Okay. That’s helpful. Thank you.

David Barma from Exane BNP Paribas. Please go ahead.

Hi. Good morning. On US variable annuities, just to come back on that in light of your high expectations for the buyouts take up grade in your comments made on fee increases in some contracts. Can you remind us what you expect for the run rate capital generation on that lines of please? And then secondly, on US mortality, so quite high in the quarter, and I assume that splitting COVID-related from the rest is a bit difficult, but any color on underlying trends would be helpful there? And also you say you want to take actions to reduce the sensitivity to mortality, how do you plan to achieve that? Thank you.

Yes. Thanks, David. Matt, would like to...

Yes, so on the VA run rate capital generation. In the last quarter, we had said that we would reduce operating caption by about $50 million, as a consequence of implementing the both the also VA program and the -- or the lumpsum buyout program, and the dynamic hedging. And that we would be in a range of $200 million to $250 million to $300 million operating caption on an annual basis, and we're retaining that. So we came in pretty much exactly where we thought we were going to be. So the number is 250 to 300 on an annualized basis. Maybe on the mortality in the US, I mean, the way that we really think about this is that we did have you could say the impacts of direct and indirect COVID claims that represented about 1.5 of the adverse experience that we saw in the border. So if you work in US dollars, we had $111 million worth of adverse mortality experience. Part of it was directly related. So that, you know, that's the case where I think it was 46 million of that was related to COVID deaths, where we get a claim in and we get a death certificate, and it's written COVID-19 as the cause of death. But as I said, in the my opening remarks, we're also seeing elevated claims from things like respiratory illnesses, which are guiding us saying that there is a portion of other claims that are not directly COVID-related, that are more indirectly related. And then if you add those two components up, then it's like one half of the total amount of the deviation. The other part of it is we did have an increase in the overall average claim size during the course of the quarter, which contributed to about one quarter – one-fourth of the overall for mortality experience. This is just what I would call normal average size claims deviation. We did see a number of higher face amount contract claims that came in during the course of the quarter. You asked the question around management actions. And indeed we are going to try to take some steps here. This is typically done through reinsurance and we will be looking at that to minimize or to reduce the amount of let's say the claims volatility in terms of case size. And then the remainder of it is we would attribute it to just frequency. Number, you know, there were just a higher number of claims during the fourth quarter, which was quite consistent with what we've seen in the US industry. So I think that will come as no surprise. I think that covers your questions.

Thank you.

Fulin Liang, Morgan Stanley. Please go ahead.

Thank you. Two questions, please. The first one is about your deleveraging plan because if I look at the Holdco liquidity is like in the middle of your kind of target range. And -- but actually the total leverage is still above your long-term target, which apparently you still need to go to do another further half 1 billion deleveraging. Originally, I thought that was -- would be kind of with a CEE deal will be completed that would kind of give you the cash to do that. But now is the CEE deal kind of pending, would you actually can still going ahead with the delivering and target or your deleveraging is actually conditional on the CEE deal completion? So that is one first question. On the second one is, I'm still a little bit, just clarify that number you kind of indurated your €1.4 billion to €1.5 billion clean capital generation guidance kind of for 2021. But your original strategic plan was €1.34 billion for 2023. So this seems like the kind of disconnection there, could you kind of talk me through about what's the moving blocks between the current higher target versus a slightly lower target in two years time? Thank you.

Yes, certainly. So on the deleveraging side, so we are a hair below or the midpoint of the operating range for cash capital at the holding. But I would just remind you that we typically get relatively low dividends in remittances from the business units in the third quarter, a lot of the remittances come in, in the fourth quarter. So that's not a particular concern for us. With respect to the deleveraging target, we're committed to doing that 5 to 5.5 whether CEE closes or not. So we are going to continue with our deleveraging plan there. With respect to the capital generation. So what we're targeting here is a €1.4 billion to €1.5 billion operating capital generation in the business units for 2021. And that includes everything. So that includes the effects of adverse mortality, but it does include also the benefit that we are getting from tailwinds in the equity markets, to a certain extent the interest rate markets as well. Whereas when we came out with our capital markets guidance, back in December, we were anticipating some pretty nasty markets. So low equity markets, we were anticipating still the level of COVID claims, although they're coming in a little bit higher and longer than what we had anticipated. So I guess the point here is that there's going to be if we -- if market stay the way that they are, there will be a moment in time, we will have to adjust that longer term guidance, but for right now, we're not going to do that. We're going to stick with the guidance that we do for 2021 and go on.

Okay. That's clear. Thank you.

Thank you, Michele Ballatore from KBW. Please go ahead.

Yes. Thank you. So two questions. So, the first question is about the CEE, I mean, what is the status there? In terms of always proceeding I mean, there is a new probe on the [indiscernible], do you think there will be a point where the Insurance Group will say, well, you know, that's just not feasible. So, just an update there. And the second question is about solvency, and on solvency especially the – so you had the positive effect on the RBC coming from the better experience in mortgage – in mortgage foreclosure, given the negative impact in the Netherlands from inflation, I want to just have a sense of this trend. How will – this will evolve in becoming porters? Thank you.

Yes. Thanks, Michele. So on the Vienna Insurance Group, so we had to remind everybody we sold the business in Hungary, Poland, Romania and Turkey to Vienna – [Technical Difficulty]

We are experiencing momentarily interruption in Cisco. Please stand by. Ladies and gentlemen, we experienced a momentary interruption to this conference call. Please continue to standby. Please go ahead.

I apologize to everybody we had a little bit of a glitch in the line, I hope all of you are still there. So Michele, thank you very much for your questions. So again, Vienna Insurance Group is in the lead of getting all the required approvals. And, and they are busy doing that we are supporting them in that effort, of course. When it comes to Hungry, they are still in constructive dialogue with the Hungarian Government to try and find a way to resolve the situation. And we are just patiently awaiting the outcome of that. And then what it is – when we talk about the solvency et cetera. So Matt, can you take that piece of the question of Michele?

Yeah. So I think your first one here, you're thinking about how much of these – these points that you would raise with respect to the – the RBC ratio, for example, in the US related to that – that mortgage thing and the and the Dutch inflation expectations. On the first, the first one in the RBC ratio that that mortgage thing is really a one-off. So it doesn't have any, it's actually very small movement in the RBC ratio. On the Dutch inflation side, they ended up – they ended up the quarter at 172% solvency. And that was negatively impacted by increased inflation expectations that they have to reflect in the – in the value of liabilities, but after – but after the quarter ended in October, they did put on additional inflation hedges. So now the movement in their own funds related to future inflation is really immunized. So that has no further impact.

Thank you.

Our next question comes from Henry Heathfield from Morgan Star – Morningstar, sorry.

Good morning. Can you hear me?

Yes. We can hear you, Henry. Good morning.

Great. Good morning. Thank you very much for taking my question. I think, just one question, really on this just coming back to the VIG take up rates. There's been set at 15%. If we can really excuse my ignorance, it means done during this lesson. But 15% sounds like quite a low number. And so I'm wondering if you could kind of outline how you set that number, how you set that target? And what it really relates to in the grand scheme of things?

No, not quite. But could you please elaborate because our take up rates at the end of September was 8%. We have expressed that we believe that the 50% would be a real success. And by now so we're now close to quarter end, we're now since yesterday, we're at nearly 15% at 14%. And we are extending the program to the end of January. So we expect to actually to exceed the 15% rate that we internally regard a successor very successful one.

I'm not keeping, I'm not disputing that 15% wouldn't be a successful level. I'm just saying essentially in my very limited understanding 15% to me from the outside sounds like a low number in terms of your offering.

Okay.

But buyout a 15%, buyout of policyholders and then 15% of those policies, you're closing 50% of the policyholders taking out that buyout offer so just from an outside perspective, not understanding and suddenly what kind of levels with a normal expected 15% discount out but quite a low number. Overall, not saying that, that's an unsuccessful number anyway.

So yeah, I know understand you coming from, so let me start Henry and then Matt will expand on this. This is not our first rodeo. In fact, this is, this is a third time that we're doing also program like this. The Trans America is quite, let's experience in this. So we know how wood works. We know how to put kind of rate of cake we can expect. We know how in the entire process, the dynamic around the table works. So in that sense, in essence, we are experiencing this. But Matt, you may want to expand on what the financial benefit of this is because releasing economic value liabilities.

Yeah. I mean, maybe I just expand on what Lard said. He's obviously exactly right. So we have hit this book before with previous offers, so that many have taken it in the past and now we're the third time after this. And I think a 15% take rate would be a reasonable result. We think we can get beyond that by the way, but that's really based on the -- setting our expectations based on prior experience also with this block. That's how we kind of set our target. Maybe to put a little bit more specific maths around this, so the 8% take up rate resulted in capital generation of about US$80 million during the course of the third quarter. And that's generally pretty linear. So to the extent that we get a higher percentage than you would see commensurate levels of capital generation going forward, and I think we said earlier that they're currently we're standing at 14% on the road to 15% and will likely surpass.

Let's take a break is a percentage of policyholders offered accepting the offer essentially.

Yes, exactly. Exactly right.

Thank you very much.

Thank you, Henry.

Benoît Pétrarque from Kepler Cheuvreux. Please go ahead. Benoît Pétrarque: Yes, good morning everybody. My question is actually on the inflation. I mean, the US inflation figure, which was pretty high actually yesterday, and we could get more inflation in the US next year. So just wanted to understand, or that could play on your US business. Normally, there is a, kind of, offset with higher interest rates. But you've edge that a lot now. So the US inflation, higher inflation could play on metric, like operating capital generation. I wanted to understand what you are there in terms of assumptions? And also on the long-term care business, whether we should expect maybe some headwinds from that? And if actually, the price increase you've been getting this quarter is actually an offset to higher inflation going forward? So that's more broad question on -- or the US inflation could impact your business going forward? Thank you.

Yes, Benoît, I'll hand over to Matt. I mean, we all know there is debate in the market ongoing to whether this inflation is temporary in nature or not. But let's not speculate on that. Matt, the question that Benoît just had on inflation.

So maybe I can do inflation for, kind of, in a broader sense, but I'll come back specifically to the US in one second. So, on the first thing, I would say there are three main areas when we think about inflation risks that we have to think about. The first one relates to the expense savings program that we have out there. So we have a €400 million expense savings program, where we are going to be facing headwinds from increased inflation, we did embed inflation expectations into that overall savings. But that could be a potential area where we would have -- where we would be -- where -- if there's more than moderate levels of inflation, then we could be at a little bit of at risk. But I would say that, and you've seen it in the presentation that that we are on track to hit our target here with respect to that €400 million program. The other one relates and this is more to the Netherlands, and it relates to the inflation risk on the capital position. But as I said in an earlier answer, it looks like we have that one pretty much fully hedged, both from a standpoint of in the expense, inflation risk within the capital, but also with respect to the contract guarantees that we have for certain pension contracts, where it's been where a lot of that has been hedged from the very beginning, and we've expanded that program. So from a Dutch solvency ratio perspective, I think we've got that one covered off though. So, now to get to the US, you mentioned, particularly the long-term care business, and that's where we are the most exposed to inflation risk. I always have to remind people that in the long-term…

Next question Robin van den Broek, Mediobanca.

Yes. Hi. Good morning, everybody. Thank you for taking my questions. The first one is on remittances, year-to-date you perhaps close with €500 million, give a little bit when we look forward, before it's more of an interesting quarter when it comes to remittances. So given your RBC ratio is also at the very healthy level, but what should we expect there versus your target. And I was also wondering if you could include in that comments kind of regulatory movements that we can still expect? Are these assets are just changing? And changes are finally coming through in Q4? And secondly, I guess, Lard since you first started the CEO, you haven't had much opportunity to travel and visit the business units, but over last few months, I assume you had some opportunities to do so. And I was wondering if you want us to share your experience from that? Thank you.

Yes, of course, more than happy to do so. So Robin, thanks for your questions. Yes, indeed, I started as CEO in the middle of the pandemic. So I did not have a lot of chance to meet many people in person. So I've been spending a lot of my time like all of you, by the way, assuming my life away, if you will. But over the last month, certainly after the summer, I spent quite a number of weeks in the U.S., together with our new management team there. And, a couple of observations that I have there, number one, I went to see a lot of distribution, actually. And what I found is we're all want to get Transamerica back, right. I mean, Transamerica was a market leader in the U.S., has lost market share over the last year, so we want to improve it. So I buy the new team. We are having all kinds of plans to turn that business and make it much better performing and growing faster. And the good news that I found for all this conversation with distribution is that Transamerica is just a fantastic brand, that and many people wants Transamerica back at the top of the league tables. So, I think that's one thing that I would have as a takeaway. Secondly, I would have as a takeaway that the new team that we put in -- that we recruited that. So, Will Fuller as the CEO and Chris Ashe as the new CFO, but also, many other appointments that we have made. So, we have appointed a new -- well, let's say counterpart to Duncan Russell. So, it's for Duncan, the key person in the US to work with Chris Giovanni. And we've also appointed a number of…

Yes, just as a brief reminder here, the Capital Markets Day guidance we gave for gross remittances for 2021 was something in the €600 million to €700 million range. And you also remember that we're trying to tie our cash dividend to our sustainable free cash flows. And you remember from last quarter, we had increased our dividend -- interim dividends by €0.02 a share, which gives you a little bit of an inclination, where we think that free cash flow is going. So, in fact, it's right, so we are now -- the minimum amount of gross remittances that will get out as the units for the full year are, say, €750 million, again, at a minimum. I think, Robin, you also asked about any other regulatory movements, I would point out the one that you would call out, we still do have a change in the risk based capital factors for certain asset classes within the US. There's a negative impact on credit. It's a bit of a positive impact on real estate. But net, net, net, you're talking about perhaps 10 percentage points negative on the US RBC ratio, and that will be reflected in the fourth quarter results.

That's great, guys. Thanks.

And we'll now take our last question from Farquhar Murray from Autonomous Research. Please go ahead.

Just two questions for me. Firstly, on the inflation hedge that was put on, could just get a sense of what -- whether there was cost of that going forward, and particularly with regards to capital generation? And secondly, just into the - at the offer take-up, just to be precise. Should I take the essentially the RBC ratio struck on the 8% level, take-up that you had it to the point. And I think you kind of had to give some sensitivity, but I presume it's a couple of points on extra on top of that, given that we're going from 8% was 14% or something more. Is that fair? Thanks.

So, yes, on the inflation hedge in the Netherlands, what's the impact on capital generation negligible. On the take-up rate in the US? Yes, the take up rate was 8%. I think we did the math on that to say that 8% relates to about 3.5% on the solvency ratio a little bit over seven -- a little bit over $70 million in capital generation. It was struck at that moment, so that we would anticipate further positive impacts as that goes forward. One thing I would mention is that you remember that we did take a charge of about US$560 million related to the combination of the lump sum buyout program and the dynamic hedging. But on that one, we anticipated further movements in these kind of things. So you're not going to see that continue to bleed in over time. So we've taken all the impacts for any future take-up rate improvements, all in this quarter. So capital impacts come and then we've already taken the negatives on the IFRS I think.

All right. Thanks so much.

Thank you, Farquhar.

Thank you. With this, I will like to hand the call back over to Jan Weidema for any additional or closing remarks.

Thank you operator. This concludes today's Q&A session. On behalf of Lard and Matt, I thank you for your interest. Should you have any remaining questions, please do get in touch with us Investor Relations. We're happy to help. Have a good day and thank you for participation in today’s call.