Exhibit 99.1

Index	Page Number
Item 1: Interim Financial Statements
Condensed consolidated income statement		3
Condensed consolidated statement of comprehensive income		4
Condensed consolidated statement of financial position		5
Condensed consolidated statement of changes in equity		6
Condensed consolidated cash flow statement		8
Notes to the condensed consolidated interim financial statements		9
Item 2: Operating and financial review and prospects		38

2

Condensed consolidated income statement of Aegon N.V.

In million EUR			Six months ended June 30
	Note		2013 (unaudited)			2012 (unaudited)
Premium income		4		11,214			10,147
Investment income		5		4,061			4,228
Fee and commission income				967			913
Other revenues				4			5
Total revenues				16,246			15,293
Income from reinsurance ceded				1,364			2,024
Results from financial transactions		6		5,416			5,613
Other income		7		196			—
Total income				23,222			22,930
Benefits and expenses		8		22,200			21,651
Impairment charges / (reversals)		9		74			98
Interest charges and related fees				186			287
Other charges		10		117			18
Total charges				22,577			22,054
Share in net result of joint ventures				(3	)		2
Share in net result of associates				14			18
Income before tax				656			896
Income tax (expense) / benefit				(100	)		(122	)
Net income				556			774
Net income attributable to:
Equity holders of Aegon N.V.				555			774
Non-controlling interests				1			—
Earnings per share (EUR per share)		17
Basic earnings per common share				0.20			0.33
Basic earnings per common share B				0.01			—
Diluted earnings per common share				0.20			0.33
Diluted earnings per common share B				0.01			—

Amounts for 2012 have been restated for the changes in accounting policies as described in note 2.

3

Condensed consolidated statement of comprehensive income of Aegon N.V.

In million EUR
	June 30, 2013 (unaudited)			June 30, 2012 (unaudited)
Net income		556			774
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Changes in revaluation reserve real estate held for own use		1			3
Remeasurements of defined benefit plans		289			(523	)
Income tax relating to items that will not be reclassified		(109	)		142
Items that may be reclassified subsequently to profit or loss:
Gains/(losses) on revaluation of available-for-sale investments		(2,890	)		1,501
(Gains)/losses transferred to the income statement on disposal and impairment of available-for-sale investments		(157	)		(184	)
Changes in cash flow hedging reserve		(311	)		116
Movement in foreign currency translation and net foreign investment hedging reserve		(29	)		443
Equity movements of joint ventures		(6	)		(9	)
Equity movements of associates		7			19
Income tax relating to items that may be reclassified		981			(418	)
Other		(3	)		(5	)
Other comprehensive income for the period		(2,227	)		1,085
Total comprehensive income		(1,671	)		1,859
Total comprehensive income attributed to:
Equity holders of Aegon N.V.		(1,669	)		1,860
Non-controlling interests		(2	)		(1	)

Amounts for 2012 have been restated for the changes in accounting policies as described in note 2.

4

Condensed consolidated statement of financial position of Aegon N.V.

In million EUR	Note		June 30, 2013		December 31, 2012
			(unaudited)
ASSETS
Intangible assets		11		2,538		2,485
Investments		12		140,482		144,969
Investments for account of policyholders		13		155,893		152,968
Derivatives		14		15,889		21,134
Investments in joint ventures				1,427		1,568
Investments in associates				786		771
Reinsurance assets				11,537		11,965
Deferred expenses and rebates		16		12,111		11,644
Other assets and receivables				8,032		7,738
Cash and cash equivalents				8,069		9,590
Total assets				356,764		364,832
EQUITY AND LIABILITIES
Shareholders’ equity				21,174		23,449
Other equity instruments				4,990		5,018
Issued capital and reserves attributable to equity holders of Aegon N.V.				26,164		28,467
Non-controlling interests				11		13
Group equity				26,175		28,480
Trust pass-through securities				147		155
Subordinated borrowings				45		42
Insurance contracts				104,989		104,004
Insurance contracts for account of policyholders				79,399		76,169
Investment contracts				15,902		17,767
Investment contracts for account of policyholders				78,371		78,418
Derivatives		14		13,325		18,052
Borrowings		18		13,543		13,742
Other liabilities				24,868		28,003
Total liabilities				330,589		336,352
Total equity and liabilities				356,764		364,832

Amounts for 2012 have been restated for the changes in accounting policies as described in note 2.

5

Condensed consolidated statement of changes in equity of Aegon N.V.

In million EUR	Share capital1			Retained earnings			Revaluation reserves			Remeasurements of defined benefit plans			Other reserves			Other equity instruments			Issued capital and reserves 2			Non-controlling interests			Total
Six months ended June 30, 2013
At beginning of year (restated)		9,099			10,407			6,073			(1,085	)		(1,045	)		5,018			28,467			13			28,480
Net income recognized in the income statement		—			555			—			—			—			—			555			1			556
Items that will not be reclassified to the profit or loss:
Changes in revaluation reserve real estate held for own use		—			—			1			—			—			—			1			—			1
Remeasurements of defined benefit plans		—			—			—			289			—			—			289			—			289
Income tax relating to items that will not be reclassified		—			—			—			(109	)		—			—			(109	)		—			(109	)
Items that may be reclassified subsequently to profit or loss:
Gains/(losses) on revaluation of available-for-sale investments		—			—			(2,890	)		—			—			—			(2,890	)		—			(2,890	)
(Gains)/losses transferred to the income statement on disposal and impairment of available—for-sale investments		—			—			(157	)		—			—			—			(157	)		—			(157	)
Changes in cash flow hedging reserve		—			—			(311	)		—			—			—			(311	)		—			(311	)
Movement in foreign currency translation and net foreign investment hedging reserve		—			—			—			2			(31	)		—			(29	)		—			(29	)
Equity movements of joint ventures		—			—			—			—			(6	)		—			(6	)		—			(6	)
Equity movements of associates		—			—			—			—			7			—			7			—			7
Income tax relating to items that may be reclassified		—			—			1,007			—			(26	)		—			981			—			981
Transfer from / to other headings		—			(1	)		1			—			—			—			—			—			—
Other		—			—			—			—			—			—			—			(3	)		(3	)
Total other comprehensive income		—			(1	)		(2,349	)		182			(56	)		—			(2,224	)		(3	)		(2,227	)
Total comprehensive income / (loss) for 2013		—			554			(2,349	)		182			(56	)		—			(1,669	)		(2	)		(1,671	)
Shares issued and withdrawn		2			—			—			—			—			—			2			—			2
Treasury shares		—			31			—			—			—			—			31			—			31
Dividends paid on common shares		—			(113	)		—			—			—			—			(113	)		—			(113	)
Preferred dividend		—			(83	)		—			—			—			—			(83	)		—			(83	)
Coupons on non-cumulative subordinated notes		—			(9	)		—			—			—			—			(9	)		—			(9	)
Coupons on perpetual securities		—			(60	)		—			—			—			—			(60	)		—			(60	)
Cost of issuance of non-cumulative subordinated notes (net of tax)
Share options and incentive plans		—			27			—			—			—			(28	)		(1	)		—			(1	)
Repurchased and sold own shares		(400	)		(1	)		—			—			—			—			(401	)		—			(401	)
At end of period		8,701			10,753			3,724			(903	)		(1,101	)		4,990			26,164			11			26,175

6

Condensed consolidated statement of changes in equity of Aegon N.V.

In million EUR	Share capital1		Retained earnings			Revaluation reserves			Remeasurements of defined benefit plans			Other reserves			Other equity instruments		Issued capital and reserves 2			Non-controlling interests			Total
Six months ended June 30, 2012
At beginning of year (as previously stated)		9,097		9,403			3,464			—			(964	)		4,720		25,720			14			25,734
Changes in accounting policies relating to IFRS 10		—		(122	)		—			—			—			—		(122	)		—			(122	)
Changes in accounting policies relating to IFRS 11		—		—			17			—			(17	)		—		—			—			—
Changes in accounting policies relating to IAS 19		—		15			—			(979	)		—			—		(964	)		—			(964	)
At beginning of year (restated)		9,097		9,296			3,481			(979	)		(981	)		4,720		24,634			14			24,648
Net income recognized in the income statement		—		774			—			—			—			—		774			—			774
Items that will not be reclassified to the profit or loss:
Changes in revaluation reserve real estate held for own use		—		—			3			—			—			—		3			—			3
Remeasurements of defined benefit plans		—		—			—			(523	)		—			—		(523	)		—			(523	)
Income tax relating to items that will not be reclassified		—		—			(1	)		143			—			—		142			—			142
Items that may be reclassified subsequently to profit or loss:
Gains/(losses) on revaluation of available-for-sale investments		—		—			1,501			—			—			—		1,501			—			1,501
(Gains)/losses transferred to the income statement on disposal and impairment of available-for-sale investments		—		—			(184	)		—			—			—		(184	)		—			(184	)
Changes in cash flow hedging reserve		—		—			116			—			—			—		116			—			116
Movement in foreign currency translation and net foreign investment hedging reserve		—		—			—			(21	)		464			—		443			—			443
Equity movements of joint ventures		—		—			—			—			(9	)		—		(9	)		—			(9	)
Equity movements of associates		—		—			—			—			19			—		19			—			19
Income tax relating to items that may be reclassified		—		—			(400	)		—			(18	)		—		(418	)		—			(418	)
Transfer from / to other headings		—		(20	)		20			—			—			—		—			—			—
Other		—		(4	)		—			—			—			—		(4	)		(1	)		(5	)
Total other comprehensive income		—		(24	)		1,055			(401	)		456			—		1,086			(1	)		1,085
Total comprehensive income / (loss) for 2012		—		750			1,055			(401	)		456			—		1,860			(1	)		1,859
Treasury shares		—		2			—			—			—			—		2			—			2
Dividends paid on common shares		—		(79	)		—			—			—			—		(79	)		—			(79	)
Preferred dividend		—		(59	)		—			—			—			—		(59	)					(59	)
Issuance of non-cumulative subordinated loans		—		—			—			—			—			271		271						271
Coupons on non-cumulative subordinated notes		—		(10	)		—			—			—			—		(10	)		—			(10	)
Coupons on perpetual securities		—		(88	)		—			—			—			—		(88	)		—			(88	)
Cost of issuance of non-cumulative subordinated notes (net of tax)		—		(10	)		—			—			—			—		(10	)		—			(10	)
Share options and incentive plans		—		—			—			—			—			11		11			—			11
At end of period		9,097		9,802			4,536			(1,380	)		(525	)		5,002		26,532			13			26,545

^1.  For a breakdown of share capital please refer to note 17.

^2.  Issued capital and reserves attributable to equity holders of Aegon N.V.

Amounts for 2012 have been restated for the changes in accounting policies as described in note 2.

7

Condensed consolidated cash flow statement of Aegon N.V.

In million EUR	Six months ended June 30,
	2013 (unaudited)			2012 (unaudited)
Cash flow from operating activities		(732	)		(183	)
Purchases and disposals of intangible assets		(16	)		(14	)
Purchases and disposals of equipment and other assets		(26	)		(28	)
Purchases, disposals and dividends of subsidiaries and associates		151			19
Cash flow from investing activities		109			(23	)
Issuance and withdrawals of share capital		33			—
Dividends paid		(196	)		(138	)
Repurchase and sold own shares		(401	)		—
Issuances, repurchases and coupons of perpetuals		(80	)		(117	)
Issuances, repurchases and coupons of non cumulative subordinated notes		(12	)		257
Issuances and repayments of borrowings		(255	)		998
Cash flow from financing activities		(911	)		1,000
Net increase / (decrease) in cash and cash equivalents		(1,534	)		794
Net cash and cash equivalents at January 1		9,497			7,717
Effects of changes in foreign exchange rates		(17	)		52
Net cash and cash equivalents at end of period		7,946			8,563

	June 30, 2013			June 30, 2012
Cash and cash equivalents		8,069			8,646
Bank overdrafts		(123	)		(83	)
Net cash and cash equivalents		7,946			8,563

Amounts for 2012 have been restated for the changes in accounting policies as described in note 2.

8

Notes to the Condensed Consolidated Interim Financial Statements of Aegon N.V. (unaudited)

In million EUR, unless otherwise stated

Aegon N.V., incorporated and domiciled in the Netherlands, is a public limited liability company organized under Dutch law and recorded in the Commercial Register of The Hague under number 27076669 and with its registered address at Aegonplein 50, 2591 TV, The Hague, the Netherlands. Aegon N.V. serves as the holding company for the Aegon Group and has listings of its common shares in Amsterdam and New York.

Aegon N.V. (or “the company”) and its consolidated subsidiaries (“Aegon” or “the Group”) have life insurance and pensions operations in over twenty countries in the Americas, Europe and Asia and are also active in savings and asset management operations, accident and health insurance, general insurance and to a limited extent banking operations. It’s headquarters are located in The Hague, the Netherlands. The Group employs over 24,000 people worldwide.

1. Basis of presentation

The Condensed Consolidated Interim Financial Statements as at, and for the six months ended, June 30, 2013, have been prepared in accordance with IAS 34 “Interim financial reporting” as issued by the International Accounting Standards Board (IASB) (hereafter “IFRS”). They do not include all of the information required for a full set of financial statements prepared in accordance with IFRS and should therefore be read together with the 2012 consolidated financial statements of Aegon N.V. as included in Aegon’s Annual Report for 2012. Aegon’s Annual Report for 2012 is available on its website (aegon.com).

The Condensed Consolidated Interim Financial Statements have been prepared in accordance with the historical cost convention as modified by the revaluation of investment properties and those financial instruments (including derivatives) and financial liabilities that have been measured at fair value. Certain amounts in prior periods have been reclassified to conform to the current year presentation. These reclassifications had no effect on net income, shareholders’ equity or earnings per share. The condensed consolidated interim financial statements as at, and for the six months ended, June 30, 2013 were approved by the Executive Board on August 7, 2013.

The published figures in these Condensed Consolidated Interim Financial Statements are unaudited.

Other than for SEC reporting, Aegon prepares its Condensed Consolidated Interim Financial Statements under International Financial Reporting Standards as adopted by the European Union, including the decisions Aegon made with regard to the options available under International Financial Reporting Standards as adopted by the EU (IFRS-EU). IFRS-EU differs from IFRS in respect of certain paragraphs in IAS 39 ‘Financial Instruments: Recognition and Measurement’ regarding hedge accounting for portfolio hedges of interest rate risk. Under IFRS-EU, Aegon applies fair value hedge accounting for portfolio hedges of interest rate risk (fair value macro hedges) in accordance with the EU ‘carve out’ version of IAS 39. Under IFRS, hedge accounting for fair value macro hedges cannot be applied to mortgage loans and ineffectiveness arises whenever the revised estimate of the amount of cash flows in scheduled time buckets is either more or less than the original designated amount of that bucket.

This information is prepared by reversing the hedge accounting impacts that are applied under the EU ‘carve out’ version of IAS 39. Financial information under IFRS accordingly does not take account of the possibility that had Aegon applied IFRS as its primary accounting framework it might have applied alternative hedge strategies where those alternative hedge strategies could have qualified for IFRS compliant hedge accounting. These decisions could have resulted in different shareholders’ equity and net income amounts compared to those indicated in this Condensed Consolidated Interim Financial Statements on Form 6-K.

9

A reconciliation between IFRS and IFRS-EU is included in the table below:

	Shareholders’ Equity					Net income six month ended
In million EUR	30 June 2013			30 June 2012		30 June 2013			30 June 2012
In accordance with IFRS		21,174			21,530		556			774
Adjustment of EU ‘IAS 39’ carve out		(70	)		—		(145	)		—
Tax effect of the adjustment		—			—		36			—
Effect of the adjustment after tax		(70	)		—		(109	)		—
In accordance with IFRS-EU		21,104			21,530		447			774

2. Significant accounting policies

The accounting policies and methods of computation applied in the Condensed Consolidated Interim Financial Statements are the same as those applied in the 2012 consolidated financial statements, except for the newly applied accounting policies.

Adoption of new accounting policies

Aegon applies new and amended standards that require restatement of previous financial statements. These include IFRS 10 “Consolidated Financial Statements”, IFRS 11 “Joint Arrangements”, IAS 19 (revised 2011) “Employee Benefits” and IAS 1 “Presentation of Financial Statements”. Application of IFRS 13 “Fair Value Measurement” is required prospectively as of the beginning of the annual reporting period.

The nature and the impact of each new standard / amendment that has been applied for the first time in 2013 is described below:

• IFRS 7, “Financial Instruments: Disclosures – Offsetting Financial Assets and Financial Liabilities”: The amendments to IFRS 7 enable users of the financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognized financial assets and recognized financial liabilities, on the entity’s financial position. The amendment affects disclosure only and is included in note 19.

• IFRS 10, “Consolidated Financial Statements”: IFRS 10 replaces all the guidance on control and consolidation in IAS 27, “Consolidated and Separate Financial Statements”, and SIC-12, “Consolidation – special purpose entities”. The application of this new standard impacted the financial position of Aegon by consolidating one securitization vehicle that was previously not consolidated. In addition for several investment funds the consolidation conclusion has been revisited, resulting in changes compared to previous years. The impact of the adoption of IFRS 10 on the financial position of Aegon is described in note 2.1.

• IFRS 11, “Joint Arrangements”: IFRS 11 replaces IAS 31, “Interests in Joint Ventures” and SIC-13, “Jointly-controlled Entities – Non-monetary Contributions by Venturers”. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture under IFRS 11 must be accounted for using the equity method. The effect of this standard is that Aegon starts to account for its joint ventures on a net equity value basis. The impact of the adoption of IFRS 11 on the financial position of Aegon is described in note 2.1.

• IFRS 12, “Disclosure of Interests in Other Entities”: IFRS 12 imposes disclosure requirements on interests in subsidiaries, associates, joint ventures, and structured entities. This standard affects disclosure only and has therefore no impact on Aegon’s financial position or performance. Aegon will provide the disclosures in the annual report 2013 as required.

• IFRS 13, “Fair Value Measurement”: IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The application of IFRS 13 has not impacted the fair value measurements carried out by the Group, which are described in note 2.3. IFRS 13 also requires specific disclosures on fair values, some of which replace existing disclosure requirements in other standards, including IFRS 7, “Financial Instruments: Disclosures”. Some of these disclosures, specifically for financial instruments, are required in interim condensed consolidated financial statements. Aegon provides these disclosures in note 15.

• IAS 1, “Financial Statement Presentation – Presentation of Items of Other Comprehensive Income”: The amendments require the grouping of items within other comprehensive income that may be reclassified to the profit or loss section of the income statement. The amendments also reaffirm existing requirements that items in other comprehensive income and profit or loss should be presented as either a single statement or two consecutive statements. The amendment affects presentation only and changes are included in the condensed statement of comprehensive income.

10

• IAS 19, “Employee Benefits”: The revised standard eliminates the option to defer the recognition of actuarial gains and losses, known as the “corridor method”. The amendments streamline the presentation of changes in assets and liabilities arising from defined benefit plans, including requiring remeasurements to be presented in other comprehensive income, to immediately recognize all past service costs and to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability (asset). The impact of the adoption of the revised IAS 19 on the financial position of Aegon is described in note 2.2.

• IAS 27, “Separate Financial Statements”: IAS 27 was amended following the issuance of IFRS 10. The revised IAS 27 deals only with the accounting for subsidiaries, associates and joint ventures in the separate financial statements of the parent company. The application of the amendments has not impacted the financial position of the Group.

• IAS 28, “Investments in Associates and Joint Ventures”: IAS 28 was amended following the issuance of IFRS 10 and IFRS 11. The revised IAS 28 describes the application of the equity method to investments in joint ventures in addition to associates. The application of the amendments has not impacted the financial position of the Group.

Taxes

Taxes on income for the six months interim period, ending June 30, 2013, are accrued using the tax rate that would be applicable to expected total annual earnings.

Judgments and critical accounting estimates

Preparing the Condensed Consolidated Interim Financial Statements requires management to make judgments, estimates and assumptions, including the likelihood, timing or amount of future transactions or events, that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from the estimates made.

In preparing the Condensed Consolidated Interim Financial Statements, significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended December 31, 2012.

Exchange rates

Assets and liabilities are translated at the closing rates on the balance sheet date. Income, expenses and capital transactions (such as dividends) are translated at average exchange rates or at the prevailing rates on the transaction date, if more appropriate. The following exchange rates are applied for the Condensed Consolidated Interim Financial Statements:

Closing exchange rates

			USD		GBP
June 30, 2013	1	EUR		1.2999		0.8570
December 31, 2012	1	EUR		1.3184		0.8111

Weighted average exchange rates

			USD		GBP
First six months 2013	1	EUR		1.3124		0.8502
First six months 2012	1	EUR		1.2962		0.8217

Aegon Funding Company LLC

Aegon Funding Company LLC (AFC) is an indirect wholly owned subsidiary of Aegon that was established as a financing vehicle to raise funds for the US subsidiaries of Aegon. AFC has been fully consolidated in the financial statements of Aegon under IFRS. If AFC issues debt securities, Aegon will fully and unconditionally guarantee the due and punctual payment of the principal, any premium and any interest on those debt securities when and as these payments become due and payable, whether at maturity, upon redemption or declaration of acceleration, or otherwise. The guarantees of senior debt securities will constitute an unsecured, unsubordinated obligation of Aegon and will rank equally with all other unsecured and unsubordinated obligations of Aegon. The guarantees of subordinated debt securities will constitute an unsecured obligation of Aegon and will be subordinated in right of payment to all senior indebtedness of Aegon.

11

Other

Aegon N.V. is subject to legal restrictions on the amount of dividends it can pay to its shareholders. Under Dutch law the amount that is available to pay dividends consists of total shareholders’ equity less the issued and outstanding capital and less the reserves required by law. The revaluation account and legal reserves, foreign currency translation reserve and other reserves, cannot be freely distributed. In case of negative balances for individual reserves legally to be retained, no distributions can be made out of retained earnings to the level of these negative amounts.

In addition, Aegon’s subsidiaries, principally insurance companies, are subject to restrictions on the amounts of funds they may transfer in the form of cash dividends or otherwise to their parent companies. There can be no assurance that these restrictions will not limit or restrict Aegon in its ability to pay dividends in the future.

2.1 Changes in accounting policies for consolidation and joint arrangements

Aegon has adopted IFRS 10 – “Consolidated Financial Statements” on January 1, 2013. Aegon also adopted IFRS 11, “Joint Arrangements”, IFRS 12, “Disclosure of Interests in Other Entities”, and consequential amendments to IAS 27, “Separate Financial Statements” and IAS 28, “Investments in Associates and Joint Ventures”, at the same time.

a. Subsidiaries

IFRS 10 changes the definition of control such that an investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. To meet the definition of control in IFRS 10, all three criteria must be met, including: (a) an investor has power over an investee; (b) the investor has exposure, or rights, to variable returns from its involvement with the investee; and (c) the investor has the ability to use its power over the investee to affect the amount of the investor’s returns.

Aegon has applied the new standard retrospectively, in accordance with the transitional provisions of IFRS 10. The application of this new standard impacted the financial position of Aegon by consolidating one securitization vehicle that was previously not consolidated. In addition, for several investment funds the consolidation conclusion has been revisited which resulted in changes compared to previous years. The effect of the change in accounting policies for consolidation on the financial position, comprehensive income and the cash flows of Aegon at January 1, 2012 and December 31, 2012 are summarized together with the impact of IFRS 11 and revised IAS 19 in note 2.4.

b. Joint arrangements

IFRS 11 replaces IAS 31 “Interests in Joint Ventures” and SIC-13 “Jointly-controlled Entities—Non-monetary Contributions by Venturers”. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture under IFRS 11 must be accounted for using the equity method.

In general, joint arrangements are contractual agreements whereby the Group undertakes with other parties an economic activity that is subject to joint control. Joint control exists when it is contractually agreed to share control of an economic activity. Joint control exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

Aegon has adopted IFRS 11 – “Joint Arrangements”, on January 1, 2013. Under IFRS 11 investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations each investor has rather than the legal structure of the joint arrangement. Aegon has assessed the nature of its joint arrangements and determined them to be joint ventures. The joint ventures will be accounted for using the equity method and are no longer proportionately consolidated.

Aegon has applied the new policies for interests in joint ventures occurring on or after January 1, 2012, in accordance with the transition provisions of IFRS 11. The effects of the change in accounting policies for joint arrangements on the financial position of the Group are summarized in note 2.4.

12

2.2 Changes in accounting policies for assets and liabilities relating to employee benefits

Aegon adopted IAS 19 – “Employee Benefits”, on January 1, 2013. As a result, Aegon changed its accounting policies for the assets and liabilities relating to employee benefits.

Aegon has applied the new policies for employee benefits retrospectively in accordance with the transitional provisions of the revised IAS 19. Aegon’s accounting policies for assets and liabilities relating to employee benefits as set out below reflect the changes under the revised IAS 19.

a. Short-term employee benefits

Prior to January 1, 2013, short-term benefits were recognized based on the employee’s entitlement to the benefits. Under the revised IAS 19 a liability is recognized for the undiscounted amount of short-term employee absences benefits expected to be settled within one year after the end of the period in which the service was rendered. Accumulating short-term absences are recognized over the period in which the service is provided. Benefits that are not service-related are recognized when the event that gives rise to the obligation occurs. This change in accounting policies has no impact on Aegon’s financial position.

b. Post-employment benefits

The Group has issued defined contribution plans and defined benefit plans. A plan is classified as a defined contribution plan when the Group has no further obligation than the payment of a fixed contribution. All other plans are classified as defined benefit plans.

Defined contribution plans

The contribution payable to a defined contribution plan for services provided is recognized as an expense in the income statement. An asset is recognized to the extent that the contribution paid exceeds the amount due for services provided.

Defined benefit plans

Revised IAS 19 includes a number of amendments to the accounting for defined benefit plans, including actuarial gains and losses that are recognized in other comprehensive income and permanently excluded from profit and loss; expected returns on plan assets that are no longer recognized in profit or loss. Instead, there is a requirement to recognize interest on the net defined benefit liability (asset) in profit or loss, calculated using the discount rate used to measure the defined benefit obligation, and; unvested past service costs are recognized in profit or loss at the earlier of when the amendment occurs or when the related restructuring or termination costs are recognized. Other amendments include new disclosures, such as, quantitative sensitivity disclosures.

Upon transition to revised IAS 19, Aegon recognizes all actuarial gains and losses as they occur and therefore no longer applies the corridor approach. Furthermore, past service costs are recognized immediately if the benefits have vested directly after the introduction of, or changes to, a pension plan.

The effects of the change in accounting policies for assets and liabilities relating to employee benefits on the financial position of the Group are summarized in note 2.4.

2.3 Changes in accounting policies for fair value measurement relating to financial and non-financial assets and liabilities

Aegon adopted IFRS 13 – “Fair Value Measurement”, on January 1, 2013. This resulted in the Group changing its accounting policies for the fair value measurement of financial and non-financial assets and liabilities.

IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. Under IFRS 13, fair value is defined as the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions (i.e. an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability). A fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either:

(a) in the principal market for the asset or liability; or

(b) in the absence of a principal market, in the most advantageous market for the asset or liability.

13

The application of IFRS 13 has not impacted Aegon’s fair value measurements. The description of Aegon’s methods of determining fair value is included in the consolidated financial statements 2012 and has not changed under IFRS 13. IFRS 13 requires specific disclosures on fair values, some of which replace existing disclosure requirements in other standards, including IFRS 7 Financial Instruments: Disclosures. Some of these disclosures, specifically for financial instruments, are required in interim condensed consolidated financial statements. These disclosures are provided in note 15.

2.4 Impact of changes in accounting policies on the financial position

Impact of changes in accounting policies on condensed consolidated income statement

	YTD 2012 (previously reported)			Change in accounting policy IFRS 10/11			Change in accounting policy IAS 19			YTD 2012 (restated)
EUR millions
Total income		23,319			(389	)		—			22,930
Total charges		(22,436	)		353			29			(22,054	)
Share in net result of joint ventures		—			2			—			2
Share in net result of associates		18			—			—			18
Income before tax		901			(34	)		29			896
Income tax (expense) / benefit		(126	)		14			(10	)		(122	)
Net income		775			(20	)		19			774
Net income attributable to:
Equity holders of Aegon N.V.		775			(20	)		19			774
Non-controlling interests		—			—			—			—
Earnings per share (EUR per share)
Basic earnings per share		0.33			(0.01	)		0.01			0.33
Diluted earnings per share		0.33			(0.01	)		0.01			0.33
Earnings per common share calculation
Net income attributable to equity holders of Aegon N.V.		775			(20	)		19			774
Preferred dividend		(59	)		—			—			(59	)
Coupons on other equity instruments		(98	)		—			—			(98	)
Earnings attributable to common shareholders		618			(20	)		19			617
Weighted average number of common shares outstanding (in million)		1,883			—			—			1,883

14

Impact of changes in accounting policies on condensed consolidated statement of comprehensive income

	YTD 2012 (previously reported)			Change in accounting policy IFRS 10/11			Change in accounting policy IAS 19			YTD 2012 (restated)
EUR millions
Net income		775			(20	)		19			774
Items that will not be reclassified to profit or loss:
Changes in revaluation reserve real estate held for own use		3			—			—			3
Remeasurements of defined benefit plans		—			—			(523	)		(523	)
Income tax relating to items that will not be reclassified		(1	)		—			143			142
Items that may be reclassified to profit or loss:
Gains / (losses) on revaluation of available-for-sale investments		1,492			9			—			1,501
Changes in cash flow hedging reserve		113			3			—			116
Income tax relating to items that may be reclassified		(415	)		(3	)		—			(418	)
Movement in foreign currency translation and net foreign investment hedging reserves		464			—			(21	)		443
Equity movements of joint ventures		—			(9	)		—			(9	)
Other comprehensive income for the period		(170	)		—			—			(170	)
Total other comprehensive income for the period		1,486			—			(401	)		1,085
Total comprehensive income		2,261			(20	)		(382	)		1,859
Total comprehensive income attributable to:
Equity holders of Aegon N.V.		2,262			(20	)		(382	)		1,860
Non-controlling interests		(1	)		—			—			(1	)

15

Impact of changes in accounting policies on condensed consolidated statement of financial position

	January  1, 2012 (previously reported)		Change in accounting policy IFRS 10/11			Change in accounting policy IAS 19			January 1, 2012 (restated)		December  31, 2012 (previously reported)		Change in accounting policy IFRS 10/11			Change in accounting policy IAS 19			December 31, 2012 (restated)
EUR millions
Assets
Investments		144,079		(1,374	)		—			142,705		146,182		(1,213	)		—			144,969
Investments for account of policyholders		142,529		(866	)		—			141,663		153,670		(702	)		—			152,968
Investments in joint ventures		—		1,224			—			1,224		—		1,568			—			1,568
Defined benefit assets		303		—			(285	)		18		201		—			(179	)		22
Other assets		58,465		(299	)		—			58,166		66,013		(708	)		—			65,305
Total assets		345,376		(1,315	)		(285	)		343,776		366,066		(1,055	)		(179	)		364,832
Equity and liabilities
Shareholders’ equity		21,000		(122	)		(964	)		19,914		24,630		(154	)		(1,027	)		23,449
Other equity instruments		4,720		—			—			4,720		5,018		—			—			5,018
Issued capital and reserves attributable to equity holders of Aegon N.V.		25,720		(122	)		(964	)		24,634		29,648		(154	)		(1,027	)		28,467
Non-controlling interests		14		—			—			14		13		—			—			13
Group equity		25,734		(122	)		(964	)		24,648		29,661		(154	)		(1,027	)		28,480
Insurance contracts		104,974		(1,452	)		—			103,522		105,209		(1,205	)		—			104,004
Insurance contracts for account of policyholders		73,425		(866	)		—			72,559		76,871		(702	)		—			76,169
Investment contracts		20,847		(1	)		—			20,846		17,768		(1	)		—			17,767
Investment contracts for account of policyholders		71,433		—			—			71,433		78,418		—			—			78,418
Defined benefit obligations		2,184		—			1,147			3,331		2,222		—			1,328			3,550
Deferred tax liabilities		2,499		(27	)		(468	)		2,004		3,609		(33	)		(480	)		3,096
Other liabilities		44,280		1,153			—			45,433		52,308		1,040			—			53,348
Total liabilities		319,642		(1,193	)		679			319,128		336,405		(901	)		848			336,352
Total equity and liabilities		345,376		(1,315	)		(285	)		343,776		366,066		(1,055	)		(179	)		364,832

Impact of changes in accounting policies on condensed consolidated statement of changes in equity

	June  30, 2012 (previously reported)			Change in accounting policy IFRS 10/11			Change in accounting policy IAS 19			June 30, 2012 (restated)			December  31, 2012 (previously reported)			Change in accounting policy IFRS 10/11			Change in accounting policy IAS 19			December 31, 2012 (restated)
EUR millions
Share capital		9,097			—			—			9,097			9,099			—			—			9,099
Retained earnings		9,910			(142	)		34			9,802			10,504			(155	)		58			10,407
Revaluation reserves		4,510			26			—			4,536			6,082			(9	)		—			6,073
Remeasurement of defined benefit plans		—			—			(1,380	)		(1,380	)		—			—			(1,085	)		(1,085	)
Other reserves		(499	)		(26	)		—			(525	)		(1,055	)		10			—			(1,045	)
Shareholders’ equity		23,018			(142	)		(1,346	)		21,530			24,630			(154	)		(1,027	)		23,449

16

Impact of changes in accounting policies on condensed consolidated cash flow statement

	Q2 2012 (previously reported)			Change in accounting policy IFRS 10/11			Change in accounting policy IAS 19		Q2 2012 (restated)
EUR millions
Cash flow from operating activities		(228	)		45			—		(183	)
Cash flow from investing activities		(48	)		25			—		(23	)
Cash flow from financing activities		1,052			(52	)		—		1,000
Net increase / (decrease) in cash and cash equivalents		776			18			—		794
Net cash and cash equivalents at January 1		7,826			(109	)		—		7,717
Effects of changes in foreign exchange rates		52			—			—		52
Net cash and cash equivalents at end of period		8,654			(91	)		—		8,563

	June 30, 2012 (previously reported)			Change in accounting policy IFRS 10/11			Change in accounting policy IAS 19		June 30, 2012 (restated)
Cash and cash equivalents		8,737			(91	)		—		8,646
Bank overdrafts		(83	)		—			—		(83	)
Net cash and cash equivalents		8,654			(91	)		—		8,563

17

3. Segment information

3.1 Income statement

Six months ended June 30, 2013

In million EUR	Americas			The Netherlands			United Kingdom			New Markets			Holding and other activities			Eliminations			Segment Total			Associates elimination			Consolidated
Underlying earnings before tax geographically		672			159			51			114			(72	)		(1	)		923			(25	)		898
Fair value items		(379	)		36			(3	)		(11	)		(54	)		—			(411	)		28			(383	)
Realized gains / (losses) on investments		77			86			29			3			—			—			195			(1	)		194
Impairment charges		(55	)		(22	)		(16	)		(6	)		—			—			(99	)		—			(99	)
Impairment reversals		25			—			—			—			—			—			25			—			25
Other income / (charges)		(6	)		(27	)		(46	)		102			—			—			23			(1	)		22
Run-off businesses		(1	)		—			—			—			—			—			(1	)		—			(1	)
Income before tax		333			232			15			202			(126	)		(1	)		655			1			656
Income tax (expense) / benefit		(53	)		(45	)		(1	)		(29	)		29			—			(99	)		(1	)		(100	)
Net income		280			187			14			173			(97	)		(1	)		556			—			556
Inter-segment underlying earnings		(89	)		(28	)		(29	)		131			15			—
Revenues
Life insurance gross premiums		3,091			2,631			3,546			719			1			(38	)		9,950			(245	)		9,705
Accident and health insurance		896			172			—			95			4			(4	)		1,163			(8	)		1,155
General insurance		—			278			—			82			—			—			360			(6	)		354
Total gross premiums		3,987			3,081			3,546			896			5			(42	)		11,473			(259	)		11,214
Investment income		1,696			1,097			1,182			125			171			(172	)		4,099			(38	)		4,061
Fee and commission income		628			163			56			275			—			(121	)		1,001			(34	)		967
Other revenues		3			—			—			1			2			—			6			(2	)		4
Total revenues		6,314			4,341			4,784			1,297			178			(335	)		16,579			(333	)		16,246
Inter-segment revenues		10			—			1			149			175

18

3.1 Income statement (continued)

Six months ended June 30, 2012

In million EUR	Americas			The Netherlands			United Kingdom			New Markets			Holding and other activities			Eliminations			Segment Total			Associates elimination			Consolidated
Underlying earnings before tax geographically		652			155			56			152			(117	)		(2	)		896			(31	)		865
Fair value items		(15	)		168			(3	)		(5	)		85			—			230			21			251
Realized gains / (losses) on investments		63			28			34			5			—			—			130			—			130
Impairment charges		(93	)		(6	)		—			(4	)		(4	)		2			(105	)		—			(105	)
Impairment reversals		24			—			—			—			—			(2	)		22			—			22
Other income / (charges)		(2	)		(269	)		19			(18	)		(1	)		—			(271	)		(1	)		(272	)
Run-off businesses		5			—			—			—			—			—			5			—			5
Income before tax		634			76			106			130			(37	)		(2	)		907			(11	)		896
Income tax (expense) / benefit		(126	)		21			(10	)		(45	)		27			—			(133	)		11			(122	)
Net income		508			97			96			85			(10	)		(2	)		774			—			774
Inter-segment underlying earnings		(93	)		(33	)		(32	)		143			15
Revenues
Life insurance gross premiums		3,196			2,182			2,987			756			—			(34	)		9,087			(426	)		8,661
Accident and health insurance		900			152			—			104			2			(2	)		1,156			(9	)		1,147
General insurance		—			268			—			71			—			—			339			—			339
Total gross premiums		4,096			2,602			2,987			931			2			(36	)		10,582			(435	)		10,147
Investment income		1,820			1,143			1,189			175			188			(187	)		4,328			(100	)		4,228
Fee and commission income		579			166			66			257			—			(134	)		934			(21	)		913
Other revenues		1			—			—			1			3			—			5			—			5
Total revenues		6,496			3,911			4,242			1,364			193			(357	)		15,849			(556	)		15,293
Inter-segment revenues		16			—			1			154			186

Non-IFRS measures

For segment reporting purposes the following non-IFRS financial measures are included: underlying earnings before tax, income tax and income before tax. These non-IFRS measures are calculated by consolidating on a proportionate basis Aegon’s joint ventures and associated companies. Aegon believes that its non-IFRS measures provide meaningful information about the underlying results of Aegon’s business, including insight into the financial measures that Aegon’s senior management uses in managing the business.

Among other things, Aegon’s senior management is compensated based in part on Aegon’s results against targets using the non-IFRS measures presented here. While many other insurers in Aegon’s peer group present substantially similar non-IFRS measures, the non-IFRS measures presented in this document may nevertheless differ from the non-IFRS measures presented by other insurers. There is no standardized meaning to these measures under IFRS or any other recognized set of accounting standards. Readers are cautioned to consider carefully the different ways in which Aegon and its peers present similar information before comparing them.

Aegon believes the non-IFRS measures shown herein, when read together with Aegon’s reported IFRS financial statements, provide meaningful supplemental information for the investing public to evaluate Aegon’s business after eliminating the impact of current IFRS accounting policies for financial instruments and insurance contracts, which embed a number of accounting policies alternatives that companies may select in presenting their results (i.e. companies can use different local GAAPs to measure the insurance contract liability) and that can make the comparability from period to period difficult.

19

The reconciliation from underlying earnings before tax to income before tax, being the most comparable IFRS measure, is presented in the tables in this note.

Underlying earnings

Certain assets held by Aegon Americas, Aegon The Netherlands and Aegon United Kingdom are carried at fair value and managed on a total return basis, with no offsetting changes in the valuation of related liabilities. These include assets such as investments in hedge funds, private equities, real estate (limited partnerships), convertible bonds and structured products. Underlying earnings exclude any over- or underperformance compared to management’s long-term expected return on assets.

Based on current holdings and asset returns, the long-term expected return on an annual basis is 8-10%, depending on asset class, including cash income and market value changes. The expected earnings from these asset classes are net of deferred policy acquisition costs (DPAC) where applicable.

In addition, certain products offered by Aegon Americas contain guarantees and are reported on a fair value basis, including the segregated funds offered by Aegon Canada and the total return annuities and guarantees on variable annuities of Aegon USA. The earnings on these products are impacted by movements in equity markets and risk-free interest rates. Short-term developments in the financial markets may therefore cause volatility in earnings. Included in underlying earnings is a long-term expected return on these products and excluded is any over- or underperformance compared to management’s expected return. The fair value movements of certain guarantees and the fair value change of derivatives that hedge certain risks on these guarantees of Aegon The Netherlands and Variable Annuities Europe (included in New Markets) are excluded from underlying earnings, and the long-term expected return for these guarantees is set at zero.

Holding and other activities include certain issued bonds that are held at fair value through profit or loss (FVTPL). The interest rate risk on these bonds is hedged using swaps. The fair value movement resulting from changes in Aegon’s credit spread used in the valuation of these bonds are excluded from underlying earnings and reported under fair value items.

Fair value items

Fair value items include the over- or underperformance of investments and guarantees held at fair value for which the expected long-term return is included in underlying earnings. Changes to these long-term return assumptions are also included in the fair value items.

In addition, hedge ineffectiveness on hedge transactions, fair value changes on economic hedges without natural offset in earnings and for which no hedge accounting is applied and fair value movements on real estate are included under fair value items.

Realized gains or losses on investments

Includes realized gains and losses on available-for-sale investments, mortgage loans and other loan portfolios.

Impairment charges / reversals

Includes impairments and reversals on available-for-sale debt securities and impairments on shares including the effect of deferred policyholder acquisition costs, mortgage loans and loan portfolios on amortized cost and associates respectively.

Other income or charges

Other income or charges is used to report any items which cannot be directly allocated to a specific line of business. Also items that are outside the normal course of business are reported under this heading.

Other charges include restructuring charges that are considered other charges for segment reporting purposes because they are outside the normal course of business. In the condensed consolidated income statement, these charges are included in operating expenses.

20

Run-off businesses

Includes underlying results of business units where management has decided to exit the market and to run-off the existing block of business. Currently, this line includes the run-off of the institutional spread-based business, structured settlements blocks of business, Bank-Owned and Corporate-Owned Life Insurance (BOLI/COLI) business and life reinsurance business in the United States. Aegon has other blocks of business for which sales have been discontinued and of which the earnings are included in underlying earnings.

Share in earnings of joint ventures and associates

Earnings from Aegon’s joint ventures in Spain, China and Japan and Aegon’s associates in Spain, India, Brazil and Mexico are reported on an underlying earnings basis.

3.2 Investments geographically

At June 30, 2013

Investments

							amounts in million EUR (unless otherwise stated)
Americas USD		United Kingdom GBP			Americas		The Nether- lands		United Kingdom		New Markets		Holding and other activities		Elimi- nations			Total EUR
	1,899		46	Shares		1,461		450		53		22		—		(2	)		1,984
	80,800		8,756	Debt securities		62,158		19,599		10,217		2,725		—		—			94,699
	11,483		2	Loans		8,834		22,942		3		518		—		—			32,297
	11,899		135	Other financial assets		9,153		286		158		24		313		—			9,934
	958		—	Investments in real estate		737		830		—		1		—		—			1,568
	107,039		8,939	Investments general account		82,343		44,107		10,431		3,290		313		(2	)		140,482
	1,734		13,242	Shares		1,334		8,210		15,451		64		—		(6	)		25,053
	6,623		10,031	Debt securities		5,095		15,204		11,705		142		—		—			32,146
	84,079		19,803	Separate accounts and investment funds		64,681		—		23,107		5,644		—		—			93,432
	396		3,053	Other financial assets		305		425		3,563		12		—		—			4,305
	—		821	Investments in real estate		—		—		957		—		—		—			957
	92,832		46,950	Investments for account of policyholders		71,415		23,839		54,783		5,862		—		(6	)		155,893
	199,871		55,889	Investments on balance sheet		153,758		67,946		65,214		9,152		313		(8	)		296,375
	141,019		111	Off balance sheet investments third parties		108,485		1,021		130		59,855		—		—			169,491
	340,890		56,000	Total revenue generating investments		262,243		68,967		65,344		69,007		313		(8	)		465,866
				Investments
	88,822		8,896	Available-for-sale		68,330		19,836		10,380		2,740		13		—			101,299
	11,483		2	Loans		8,834		22,942		3		518		—		—			32,297
	98,608		46,170	Financial assets at fair value through profit or loss		75,857		24,338		53,874		5,893		300		(8	)		160,254
	958		821	Investments in real estate		737		830		957		1		—		—			2,525
	199,871		55,889	Total investments on balance sheet		153,758		67,946		65,214		9,152		313		(8	)		296,375
	—		—	Investments in joint ventures		—		825		—		602		—		—			1,427
	114		6	Investments in associates		88		21		7		666		4		—			786
	32,798		5,249	Other assets		25,231		22,016		6,125		3,340		34,362		(32,898	)		58,176
	232,783		61,144	Consolidated total assets		179,077		90,808		71,346		13,760		34,679		(32,906	)		356,764

21

3.2 Investments geographically (continued)

At December 31, 2012

Investments

									amounts in million EUR (unless otherwise stated)
Americas USD		United Kingdom GBP			Americas		The Nether- lands		United Kingdom		New Markets		Holding and other activities		Elimi- nations			Total
	1,833		42	Shares		1,390		412		51		16		—		(2	)		1,867
	83,964		8,975	Debt securities		63,686		19,256		11,066		2,817		—		—			96,825
	11,748		4	Loans		8,910		22,193		5		552		—		—			31,660
	15,434		175	Other financial assets		11,707		286		216		22		759		—			12,990
	1,009		—	Investments in real estate		766		860		—		1		—		—			1,627
	113,988		9,196	Investments general account		86,459		43,007		11,338		3,408		759		(2	)		144,969
	1,956		12,107	Shares		1,484		8,406		14,927		63		—		(6	)		24,874
	6,988		10,508	Debt securities		5,300		16,266		12,954		162		—		—			34,682
	77,824		19,136	Separate accounts and investment funds		59,029		—		23,593		5,778		—		—			88,400
	207		2,761	Other financial assets		157		422		3,404		21		—		—			4,004
	—		817	Investments in real estate		—		—		1,008		—		—		—			1,008
	86,975		45,329	Investments for account of policyholders		65,970		25,094		55,886		6,024		—		(6	)		152,968
	200,963		54,525	Investments on balance sheet		152,429		68,101		67,224		9,432		759		(8	)		297,937
	132,796		8	Off balance sheet investments third parties		100,725		1,052		10		59,301		—		—			161,088
	333,759		54,533	Total revenue generating investments		253,154		69,153		67,234		68,733		759		(8	)		459,025
				Investments
	95,282		9,155	Available-for-sale		72,271		19,717		11,286		2,826		19		—			106,119
	11,748		4	Loans		8,910		22,193		5		552		—		—			31,660
	92,924		44,549	Financial assets at fair value through profit or loss		70,482		25,331		54,925		6,053		740		(8	)		157,523
	1,009		817	Investments in real estate		766		860		1,008		1		—		—			2,635
	200,963		54,525	Total investments on balance sheet		152,429		68,101		67,224		9,432		759		(8	)		297,937
	—		—	Investments in joint ventures		—		854		—		714		—		—			1,568
	119		6	Investments in associates		90		21		8		648		4		—			771
	33,852		5,104	Other assets		25,586		27,508		6,284		3,318		37,926		(36,066	)		64,556
	234,934		59,635	Consolidated total assets		178,105		96,484		73,516		14,112		38,689		(36,074	)		364,832

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4. Premium income and premium to reinsurers

In million EUR
	2013		2012
Gross
Life		9,705		8,661
Non-Life		1,509		1,486
Total		11,214		10,147
Reinsurance
Life		1,365		1,624
Non-Life		182		201
Total		1,547		1,825

5. Investment income

In million EUR
	2013		2012
Interest income		3,396		3,711
Dividend income		606		459
Rental income		59		58
Total investment income		4,061		4,228
Investment income related to general account		2,797		2,949
Investment income for account of policyholders		1,264		1,279
Total		4,061		4,228

6. Results from financial transactions

In million EUR
	2013			2012
Net fair value change of general account financial investments at FVTPL other than derivatives		123			250
Realized gains and losses on financial investments		188			245
Gains and (losses) on investments in real estate		(26	)		(37	)
Net fair value change of derivatives		(334	)		364
Net fair value change on for account of policyholder financial assets at FVTPL		5,462			4,798
Net fair value change on investments in real estate for account of policyholders		(33	)		(19	)
Net foreign currency gains and (losses)		4			12
Net fair value change on borrowings and other financial liabilities		33			(6	)
Realized gains and (losses) on repurchased debt		(1	)		6
Total		5,416			5,613

Net fair value change on for accounts of policyholder financial assets at fair value through profit or loss are offset by amounts in the Claims and benefits line reported in note 8 – Benefits and expenses.

7. Other income

Other income in 2013 mainly reflects the recapture of certain reinsurance contracts (EUR 85 million) and a book gain of EUR 102 million related to the sale of the joint venture with Unnim. The book gain of EUR 102 million includes an amount of EUR 26 million which is recycled from equity through profit and loss.

23

8. Benefits and expenses

In million EUR
	2013			2012
Claims and benefits		20,777			20,203
Employee expenses		1,040			991
Administration expenses		549			512
Deferred expenses		(767	)		(725	)
Amortization expenses		601			670
Total		22,200			21,651

Claims and benefits paid to policyholders, includes claims and benefits in excess of account value for products for which deposit accounting is applied and the change in valuation of liabilities for insurance and investment contracts. In addition, commissions and expenses are included, as well as premium paid to reinsurers. Claims and benefits fluctuates mainly as a result of changes in technical provisions resulting from fair value changes on for account of policyholder financial assets included in Results from financial transactions (note 6).

9. Impairment charges/(reversals)

In million EUR
	2013			2012
Impairment charges/(reversals) comprise
Impairment charges on financial assets, excluding receivables1		103			116
Impairment reversals on financial assets, excluding receivables1		(25	)		(22	)
Impairment charges on non-financial assets and receivables		(4	)		4
Total		74			98
Impairment charges on financial assets, excluding receivables, from:
Shares		—			4
Debt securities and money market instruments		63			86
Loans		40			25
Other		—			1
Total		103			116
Impairment reversals on financial assets, excluding receivables, from:
Debt securities and money market instruments		(22	)		(17	)
Loans		(3	)		(5	)
Total		(25	)		(22	)

¹ Impairment charges / (reversals) on financial assets, excluding receivables, are excluded from underlying earnings before tax for segment reporting (refer to note 3).

10. Other charges

Other charges mainly includes EUR 81 million related to a further increase in reserves in connection with the company’s use of the Social Security Administration’s death master-file in the United States and the loss of EUR 22 million on the sale of national independent financial advisor Positive Solutions in the United Kingdom.

Other charges in 2012 mainly includes EUR 16 million related to the Hungarian bank tax. Due to regulation changes in Hungary, the bank tax has been replaced by a recurring insurance tax for which charges are recognized in operating expenses effective January 1, 2013.

24

11. Intangible assets

In million EUR
	June 30, 2013		December 31, 2012
Goodwill		271		266
VOBA		1,831		1,777
Future servicing rights		370		383
Software		58		50
Other		8		9
Total intangible assets		2,538		2,485

The increase in goodwill mainly reflects the acquisition of 100% of Fidem Life, a life insurance company in Ukraine. The increase in value of business acquired (VOBA) is mainly attributable to the net impact of regular amortization and shadow accounting.

In June 2013, the Polish government started a consultation process with regard to an overhaul of the existing state pension system. Although at this moment it is unclear what the outcome of this consultation process will be, any changes made to the state pension system in Poland may affect Aegon’s Polish pension business and the value Aegon has attributed to this business. At June 30, 2013, intangible assets capitalized on Aegon’s statement of financial position relating to Aegon’s Polish pension business amount to EUR 188 million.

12. Investments

In million EUR
	June 30, 2013		December 31, 2012
Available-for-sale (AFS)		101,299		106,119
Loans		32,297		31,660
Financial assets at fair value through profit or loss (FVTPL)		5,318		5,563
Total financial assets, excluding derivatives		138,914		143,342
Investments in real estate		1,568		1,627
Total investments for general account		140,482		144,969

Financial assets, excluding derivatives

	AFS		FVTPL		Loans		Total
Shares		846		1,138		—		1,984
Debt securities		93,166		1,533		—		94,699
Money market and other short-term investments		6,077		678		—		6,755
Mortgages		—		—		28,984		28,984
Private loans		—		—		991		991
Deposits with financial institutions		—		—		77		77
Policy loans		—		—		2,104		2,104
Other		1,210		1,969		141		3,320
At June 30, 2013		101,299		5,318		32,297		138,914

	AFS		FVTPL		Loans		Total
Shares		824		1,043		—		1,867
Debt securities		95,394		1,431		—		96,825
Money market and other short-term investments		8,687		1,084		—		9,771
Mortgages		—		—		28,298		28,298
Private loans		—		—		1,012		1,012
Deposits with financial institutions		—		—		96		96
Policy loans		—		—		2,103		2,103
Other		1,214		2,005		151		3,370
At December 31, 2012		106,119		5,563		31,660		143,342

25

European peripheral country exposure

Aegon’s exposure to central governments of European peripheral countries Portugal, Italy, Ireland, Greece and Spain amounts to EUR 349 million (December 31, 2012: EUR 330 million). Exposure to governments of Italy and Spain increased, being partially offset by a decrease of the exposure to the government of Ireland.

The following table provides the amortized cost and fair value of Aegon’s exposure to European peripheral countries. Investments held by joint ventures and associates are not included.

	Central Government				Banks				RMBS				Corporates and other				June 30, 2013 Total
	Amortized cost		Fair value		Amortized cost		Fair value		Amortized cost		Fair value		Amortized cost		Fair value		Amortized cost		Fair value
Portugal		1		1		—		—		28		25		47		46		76		72
Italy		62		62		84		84		31		29		573		560		750		735
Ireland		3		3		—		—		58		52		308		323		369		378
Greece		—		—		—		—		3		3		—		—		3		3
Spain		283		290		106		96		198		190		586		606		1,173		1,182
		349		356		190		180		318		299		1,514		1,535		2,371		2,370
	Central Government				Banks				RMBS				Corporates and other				December 31, 2012 Total
	Amortized cost		Fair value		Amortized cost		Fair value		Amortized cost		Fair value		Amortized cost		Fair value		Amortized cost		Fair value
Portugal		1		1		—		—		31		27		47		45		79		73
Italy		36		36		78		76		33		33		563		562		710		707
Ireland		18		18		—		—		160		140		295		324		473		482
Greece		—		—		—		—		4		2		23		25		27		27
Spain		275		268		118		107		183		171		574		601		1,150		1,147
		330		323		196		183		411		373		1,502		1,557		2,439		2,436

13. Investments for account of policyholders

In million EUR
	June 30, 2013		December 31, 2012
Shares		25,053		24,874
Debt securities		32,146		34,682
Money market and other short-term investments		962		1,480
Deposits with financial institutions		2,955		2,087
Separate accounts and unconsolidated investment funds		93,432		88,400
Other		388		437
Total investments for account of policyholders at FVTPL, excluding derivatives		154,936		151,960
Investments in real estate		957		1,008
Total investments for account of policyholders		155,893		152,968

14. Derivatives

There have been no material changes in the composition of the derivative portfolio during the first six months of 2013. The movements in derivative balances mainly result from changes in interest rates and other market conditions.

26

15. Fair value

The table below provides an analysis of financial instruments recorded at fair value on a recurring basis by level of the fair value hierarchy:

Fair value hierarchy EUR millions	Level I		Level II		Level III		Total
Financial assets carried at fair value Available-for-sale investments
Shares		212		289		345		846
Debt securities		22,075		68,386		2,705		93,166
Money markets and other short-term instruments		—		6,077		—		6,077
Other investments at fair value		21		306		883		1,210
June 30, 2013		22,308		75,058		3,933		101,299
Fair value through profit or loss
Shares		1,036		102		—		1,138
Debt securities		103		1,416		14		1,533
Money markets and other short-term instruments		300		378		—		678
Other investments at fair value		—		502		1,467		1,969
Investments for account of policyholders1		93,527		59,472		1,937		154,936
Derivatives		56		15,593		240		15,889
June 30, 2013		95,022		77,463		3,658		176,143
Total financial assets at fair value		117,330		152,521		7,591		277,442
Financial liabilities carried at fair value
Investment contracts for account of policyholders2		10,990		19,546		131		30,667
Borrowings3		524		500		—		1,024
Derivatives		42		11,616		1,667		13,325
Total financial liabilities at fair value		11,556		31,662		1,798		45,016

¹ The investments for account of policyholders included in the table above represents those investments carried at fair value through profit or loss.

²  The investment contracts for account of policyholders included in the table above represents those investment contracts carried at fair value.

³ Total borrowings on the statement of financial position contain borrowings carried at amortized cost that are not included in the above schedule.

Significant transfers between Level I and II

Aegon’s policy is to record transfers of assets and liabilities between Level I and Level II at their fair values as of the beginning of each reporting period. During the first six months of 2013, the amount of assets and liabilities transferred from Level II to Level I was EUR 457 million. Transfers are identified based on transaction volume and frequency, which are indicative of an active market.

The table below shows transfers between Level I and II for financial assets and financial liabilities recorded at fair value on a recurring basis during the six-month period ended June 30, 2013:

Fair value transfers EUR millions	Transfers Level I to Level II		Transfers Level II to Level I
Financial assets carried at fair value available-for-sale investments
Shares		—		1
Debt securities		—		232
June 30, 2013		—		233
Fair value through profit or loss
Investments for account of policyholders		—		224
June 30, 2013		—		224
Total financial assets at fair value		—		457

27

Movements in Level III financial instruments measured at fair value

The following table summarize the change of all assets and liabilities measured at estimated fair value on a recurring basis using significant unobservable inputs (Level III), including realized and unrealized gains (losses) of all assets and liabilities and unrealized gains (losses) of all assets and liabilities still held at the end of the respective period.

Roll forward of Level III financial instruments	January 1, 2013			Total gains / losses in income statement1			Total gains / losses in OCI2		Purchases			Sales			Settlements			Net exchange differences			Transfers from Level I and Level II		Transfers to Level I and Level II			June 30, 2013			Total gains or losses for the period included in the profit and loss for instruments held at June 30, 2013³
Financial assets carried at fair value available-for-sale investments
Shares		376			3			5		16			(50	)		(5	)		1			—		(1	)		345			—
Debt securities		2,643			5			81		550			(138	)		(236	)		17			180		(397	)		2,705			—
Other investments at fair value		883			(57	)		78		55			(20	)		(69	)		13			—		—			883			—
		3,902			(49	)		164		621			(208	)		(310	)		31			180		(398	)		3,933			—
Fair value through profit or loss
Shares
Debt securities		14			(1	)		—		—			—			—			—			1		—			14			—
Other investments at fair value		1,416			69			—		15			(132	)		—			20			95		(16	)		1,467			75
Investments for account of policyholders		1,715			131			—		189			(190	)		—			(9	)		120		(19	)		1,937			62
Derivatives		301			(43	)		—		3			(15	)		—			(6	)		—		—			240			(22	)
		3,446			156			—		207			(337	)		—			5			216		(35	)		3,658			115
Financial liabilities carried at fair value
Investment contracts for account of policyholders		(109	)		(19	)		—		(3	)		2			—			(2	)		—		—			(131	)		(19	)
Derivatives		(2,318	)		654			—		—			—			—			(5	)		—		2			(1,667	)		654
		(2,427	)		635			—		(3	)		2			—			(7	)		—		2			(1,798	)		635

¹  Includes impairments and movements related to fair value hedges. Gains and losses are recorded in the line item results from financial transactions of the income statement.

²  Total gains and losses are recorded in line items Gains/ (losses) on revaluation of available-for-sale investments and (Gains)/ losses transferred to the income statement on disposal and impairment of available-for-sale investment of the statement of other comprehensive income.

³  Total gains / (losses) for the period during which the financial instrument was in Level III.

Aegon’s policy is to record transfers of assets and liabilities between Level I, Level II and Level III at their fair values as of the beginning of each reporting period. During the second quarter of 2013, Aegon transferred certain financial instruments from Level I and Level II to Level III of the fair value hierarchy. The reason for the change in level was that the market liquidity for these securities decreased, which led to a change in market observability of prices. Prior to transfer, the fair value for the Level I and Level II securities was determined using observable market transactions or corroborated broker quotes respectively for the same or similar instruments. Since the transfer, all such assets have been valued using valuation models incorporating significant non market-observable inputs or uncorroborated broker quotes.

Similarly, during the second quarter in 2013, Aegon transferred certain financial instruments from Level III to other levels of the fair value hierarchy. The change in level was mainly the result of a return of activity in the market for these securities and that for these securities the fair value could be determined using observable market transactions or corroborated broker quotes for the same or similar instruments.

28

The table below presents information about the significant unobservable inputs used for recurring and non-recurring fair value measurements for certain Level III financial instruments.

Overview of significant unobservable inputs

EUR millions	Carrying amount June  30, 2013		Valuation technique1	Significant unobservable  input2		Range (weighted average)
Financial assets carried at fair value available-for-sale investments
Shares		205	Broker quote		n.a.		n.a.
		140	Other		n.a.		n.a.
		345
Debt securities
RMBS		223	Broker quote		n.a.		n.a.
		62	Other		n.a.		n.a.
CMBS		43	Broker quote		n.a.		n.a.
		—	Other		n.a.		n.a.
ABS		216	Discounted cash flow		Discount rate		3% – 8% (6.69%	)
		1,403	Broker quote		n.a.		n.a.
		183	Other		n.a.		n.a.
Corporate bonds		219	Discounted cash flow		Credit spread		0.3% – 3.7% (2.82%	)
		300	Broker quote		n.a.		n.a.
		35	Other		n.a.		n.a.
Sovereign debt		21	Broker quote		n.a.		n.a.
		2,705
Other investments at fair value
Tax credit investments		735	Discounted cash flow		Discount rate		8.2	%
Other		148	Net asset value		n.a.		n.a.
		—	Other		n.a.		n.a.
		883
June 30, 2013		3,933
Fair value through profit or loss
Debt securities		14	Other		n.a.		n.a.
Other investments at fair value
Real estate investments		733	Net asset value		n.a.		n.a.
Private equity investments		621	Net asset value		n.a.		n.a.
Hedge funds		113	Net asset value		n.a.		n.a.
		1,467
Derivatives		146	Discounted cash flow		Mortality		Aegon 2012-2062 mortality table
		7	Other		n.a.		n.a.
		153
June 30, 2013		1,634
Total financial assets at fair value		5,567
Financial liabilities carried at fair value
Derivatives
Embedded derivatives in insurance contracts		1,494	Discounted cash flow		Credit spread		0.65	%
Other		173	Other		n.a.		n.a.
Total financial liabilities at fair value		1,667

¹ Other in the table above (column Valuation technique) includes investments for which the fair value is uncorroborated and no broker quote is received.

² Not applicable (n.a.) has been included when no significant unobservable assumption has been identified and used.

29

Investments for account of policyholders are excluded from the table above and from the disclosure regarding reasonably possible alternative assumptions. Policyholder assets, and their returns, belong to policyholders and do not impact Aegon’s net income or equity. The effect on total assets is offset by the effect on total liabilities. Derivatives exclude derivatives for account of policyholders amounting to EUR 87 million.

The valuation techniques included in the table above are described in more detail below:

Shares

When available, Aegon uses quoted market prices in active markets to determine the fair value of its shares. Fair values for unquoted shares are estimated using observations of the price/earnings or price/cash flow ratios of quoted companies considered comparable to the companies being valued. Valuations are adjusted to account for company-specific issues and the lack of liquidity inherent in an unquoted investment. Illiquidity adjustments are generally based on available market evidence. In addition, a variety of other factors are reviewed by management, including, but not limited to, current operating performance, changes in market outlook and the third-party financing environment.

Available-for-sale shares include shares in the Federal Home Loan Bank for an amount of EUR 110 million that are measured at par, which are reported as part of Other. The bank has implicit financial support from the United States government. The redemption value of the shares is fixed at par and they can only be redeemed by the bank.

Residential mortgage-backed securities (RMBS), commercial mortgage-backed securities (CMBS) and asset-backed securities (ABS)

Valuations of RMBS, CMBS and ABS are monitored and reviewed on a monthly basis. Valuations are based on a pricing hierarchy and depending on the asset type the pricing hierarchy consists of a waterfall that starts with making use of market prices from indices and follows with making use of third-party pricing services or brokers. The pricing hierarchy is dependent on the possibilities of corroboration of the market prices. If no market prices are available Aegon uses internal models to determine fair value. Significant inputs included in the internal models are generally determined based on relative value analyses, which incorporate comparisons to instruments with similar collateral and risk profiles. Market standard models may be used to model the specific collateral composition and cash flow structure of each transaction. The most significant unobservable input is illiquidity premium which is embedded in the discount rate.

Corporate bonds

Valuations of corporate bonds are monitored and reviewed on a monthly basis. The pricing hierarchy is dependent on the possibility of corroboration of market prices when available. If no market prices are available, valuations are determined by a discounted cash flow methodology using an internally calculated yield. The yield is comprised of a credit spread over a given benchmark. In all cases the benchmark is an observable input. The credit spread contains both observable and unobservable inputs. Aegon starts by taking an observable credit spread from a similar bond of the given issuer, and then adjust this spread based on unobservable inputs. These unobservable inputs may include subordination, liquidity and maturity differences.

Tax credit investments

The fair value of tax credit investments is determined by using a discounted cash flow valuation technique. This valuation technique takes into consideration projections of future capital contributions and distributions, as well as future tax credits and the tax benefits of future operating losses. The present value of these cash flows is calculated by applying a discount rate. In general, the discount rate is determined based on the cash outflows for the investments and the cash inflows from the tax credits/tax benefits (and the timing of those cash flows). These inputs are unobservable in the market place.

Real estate investments, private equity investments and hedge funds

The fair values of investments held in non-quoted investment funds are determined by management after taking into consideration information provided by the fund managers. Aegon reviews the valuations each month and performs analytical procedures and trending analyses to ensure the fair values are appropriate.

Sovereign debt

When available, Aegon uses quoted market prices in active markets to determine the fair value of its sovereign debt investments. When Aegon cannot make use of quoted market prices, market prices from indices or quotes from third-party pricing services or brokers are used.

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Derivatives

Where quoted market prices are not available, other valuation techniques, such as option pricing or stochastic modeling, are applied. The valuation techniques incorporate all factors that a typical market participant would consider and are based on observable market data when available. Models are validated before they are used and calibrated to ensure that outputs reflect actual experience and comparable market prices.

Fair values for exchange-traded derivatives, principally futures and certain options, are based on quoted market prices in active markets. Fair values for over-the-counter (OTC) derivatives represent amounts estimated to be received from or paid to a third party in settlement of these instruments. These derivatives are valued using pricing models based on the net present value of estimated future cash flows, directly observed prices from exchange-traded derivatives, other OTC trades, or external pricing services. Most valuations are derived from swap and volatility matrices, which are constructed for applicable indices and currencies using current market data from many industry standard sources. Option pricing is based on industry standard valuation models and current market levels, where applicable. The pricing of complex or illiquid instruments is based on internal models or an independent third party. For long-dated illiquid contracts, extrapolation methods are applied to observed market data in order to estimate inputs and assumptions that are not directly observable. To value OTC derivatives, management uses observed market information, other trades in the market and dealer prices.

Aegon normally mitigates counterparty credit risk in derivative contracts by entering into collateral agreements where practical and in ISDA master netting agreements for each of the Group’s legal entities to facilitate Aegon’s right to offset credit risk exposure. Changes in the fair value of derivatives attributable to changes in counterparty credit risk were not significant.

Embedded derivatives in insurance contracts including guarantees

Certain bifurcated guarantees for minimum benefits in insurance and investment contracts are carried at fair value. These guarantees include guaranteed minimum withdrawal benefits (GMWB) in the United States, United Kingdom and Japan which are offered on some variable annuity products and are also assumed from a ceding company; minimum interest rate guarantees on insurance products offered in the Netherlands, including group pension and traditional products; and guaranteed minimum accumulation benefits on segregated funds sold in Canada.

Since the price of these guarantees is not quoted in any market, the fair values of these guarantees are calculated as the present value of future expected payments to policyholders less the present value of assessed rider fees attributable to the guarantees. Given the complexity and long-term nature of these guarantees which are unlike instruments available in financial markets, their fair values are determined by using stochastic techniques under a variety of market return scenarios. A variety of factors are considered including credit spread, expected market rates of return, equity and interest rate volatility, correlations of market returns, discount rates and actuarial assumptions. The most significant unobservable factor is credit spread.

The expected returns are based on risk-free rates. Aegon added a premium to reflect the credit spread as required. The credit spread is set by using the credit default swap (CDS) spreads of a reference portfolio of life insurance companies (including Aegon), adjusted to reflect the subordination of senior debt holders at the holding company level to the position of policyholders at the operating company level (who have priority in payments to other creditors). Aegon’s assumptions are set by region to reflect differences in the valuation of the guarantee embedded in the insurance contracts.

Assumptions are reviewed at each valuation date, and updated based on historical experience and observable market data, including market transactions such as acquisitions and reinsurance transactions. Assumptions regarding policyholder behavior, such as lapses, included in the models are derived in the same way as the assumptions used to measure insurance liabilities.

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Effect of reasonably possible alternative assumptions

EUR millions	Carrying amount June 30, 2013		Significant unobservable input		Note		Effect of reasonably possible alternative assumptions (+/-)
							increase		decrease
Financial assets carried at fair value available-for-sale investments
Debt securities
ABS		216		Discount rate		a		22		(21	)
Corporate bonds		219		Credit spread		b		19		(16	)
Other investments at fair value
Tax credit investments		735		Discount rate		c		13		(13	)
Fair value through profit or loss
Derivatives		146		Mortality		d		14		(14	)
Financial liabilities carried at fair value
Embedded derivatives in insurance contracts		1,494		Credit spread		e		97		(91	)

The table above presents the impact on a fair value measurement of a change in an unobservable input. The impact of changes in inputs may not be independent, therefore the descriptions provided below indicate the impact of a change in an input in isolation.

a) The primary unobservable assumptions used in fair value measurement of asset backed securities is in general a liquidity premium in the discount rate. Changing the liquidity premium changes the discount rate when using the discounted cash flow model. Increasing or decreasing the liquidity premium respectively decreases or increases the value of the investment. Aegon adjusted the discount rate with 100 basis points up or down for this input.

b) For corporate bonds the most significant unobservable input for the valuation of these securities is the credit spread. An increase in credit spread results in a lower valuation, while a decrease in credit spread results in a higher valuation. Aegon adjusted the discount rate by 50 basis points up or down for this input.

c) Tax credit investments are measured at fair value using an internal model. The most significant unobservable input for valuation of these tax credits is the discount rate. Increasing or decreasing the discount rate would result in respectively a lower or higher valuation. Aegon adjusted the discount rate by 50 basis points up or down for this input.

d) The derivative included is a longevity index derivative of Aegon The Netherlands. Most significant unobservable inputs are mortality tables. The mortality table used to determine the fair value of this derivative is the projected Aegon 2012-2062 table. Changing the mortality rates changes the cash flow expectations from this derivative. Increasing (decreasing) the mortality rates decreases (increases) the value of the investment. Aegon adjusted longevity with 2% up or down for this input, compared to the prospective mortality table in determining the value of this derivative.

e) To determine the fair value of the bifurcated embedded derivatives related to guarantees, a discount rate is used including credit spread. An increase in the credit spread results in lower valuation, while a decrease results in a higher valuation of the embedded derivatives. Aegon increased or decreased the credit spread by 20 basis points.

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Fair value information about financial instruments not measured at fair value

The following table presents the carrying values and estimated fair values of financial assets and liabilities, excluding financial instruments which are carried at fair value on a recurring basis.

Fair value information about financial instruments not measured at fair value

EUR millions	Carrying amount June  30, 2013		Total estimated fair value June 30, 2013
Assets
Mortgage loans – held at amortized cost		28,890		33,204
Private loans – held at amortized cost		991		1,087
Other loans – held at amortized cost		2,322		2,322
Liabilities
Trust pass-through securities – held at amortized cost		147		130
Subordinated borrowings – held at amortized cost		45		62
Borrowings – held at amortized cost		12,519		12,746

Financial instruments for which carrying value approximates fair value

Certain financial instruments that are not carried at fair value are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. These instruments include cash and cash equivalents, short-term receivables and accrued interest receivable, short-term liabilities, and accrued liabilities. These instruments are not included in the table above.

16. Deferred expenses and rebates

In million EUR
	June 30, 2013		December 31, 2012
DPAC for insurance contracts and investment contracts with discretionary participation features		11,171		10,681
Deferred cost of reinsurance		537		558
Deferred transaction costs for investment management services		403		405
Total deferred expenses and rebates		12,111		11,644

17. Share capital

In million EUR
	June 30, 2013			December 31, 2012
Share capital – par value		323			319
Share premium		8,378			8,780
Total share capital		8,701			9,099
Share capital – par value
Balance at January 1		319			310
Issuance		84			2
Withdrawal		(82	)		—
Share dividend		2			7
Balance		323			319
Share premium
Balance at January 1		8,780			8,787
Withdrawal		(400	)		—
Share dividend		(2	)		(7	)
Balance		8,378			8,780

On February 15, 2013, Aegon and Vereniging Aegon (‘the Association’) announced their agreement to cancel all of Aegon’s preferred shares, of which the Association was the sole owner. Following the approval of the new capital structure by the Annual General Meeting of Shareholders on May 15, 2013, Aegon has now exchanged all preferred shares for EUR 400 million in cash, the equivalent of EUR 655 million in common shares and EUR 83 million of dividends on the preferred shares.

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Based on the volume-weighted average price of Aegon common shares on Euronext Amsterdam of EUR 4.86, which was announced on March 1, 2013, the preferred shares were converted into 121 million common shares and 566 million common shares B. Following the conversion, the Association obtained a total of 293 million common shares and 566 million common shares B.

Vereniging Aegon exercised its option right to purchase 13 million common shares B for EUR 0.1275 to correct the dilution caused by the issuance of shares bringing the total of common shares B held by Vereninging Aegon at 579 million.

Basic and diluted earnings per share

In million EUR	Six months ended June 30
	2013			2012
Earnings per share (EUR per share)
Basic earnings per common share		0.20			0.33
Basic earnings per common share B		0.01			—
Diluted earnings per common share		0.20			0.33
Diluted earnings per common share B		0.01			—
Earnings per common share calculation
Net income attributable to equity holders of Aegon N.V.		555			774
Preferred dividend		(83	)		(59	)
Coupons on other equity instruments		(69	)		(98	)
Earnings attributable to common shares and common shares B		403			617
Earnings attributable to common shareholders		402			617
Earnings attributable to common shareholders B		1			—
Weighted average number of common shares outstanding (in million)		1,978			1,883
Weighted average number of common shares B outstanding (in million)		150			—

Diluted earnings per share is calculated by adjusting the average number of shares outstanding for share options. During the first six months ending June 30, 2013, and during 2012 the average share price did not exceed the exercise price of these options. As a result diluted earnings per share does not differ from basic earnings per share.

Interim dividend

The 2013 interim dividend amounted EUR 0.11 per common share. The interim dividend will be paid in cash or stock at the election of the shareholder. The Annual General Meeting of shareholders on May 15, 2013 approved a final dividend over 2012 payable in either cash or stock related to the second half of 2012, paid in the first half of 2013. The cash dividend amounted EUR 0.11 per common share, and the stock dividend amounts to one new Aegon common share for every 47 common shares held. The stock dividend and cash dividend are approximately equal in value.

18. Borrowings

In million EUR	June 30, 2013		December 31, 2012
Debentures and other loans		13,040		13,219
Commercial paper		362		413
Short term deposits		18		17
Bank overdrafts		123		93
Total borrowings		13,543		13,742

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Debentures and other loans

Included in Debentures and other loans is EUR 1,024 million relating to borrowings measured at fair value (2012: EUR 1,050 million).

On March 26, 2013, Aegon signed an agreement with a third party to sell class A mortgage backed securities (RMBS) amounting to EUR 750 million. These securities consist of two tranches:

• EUR 100 million of class A1 notes with an expected weighted average life of two years and priced with a coupon of three month Euribor plus 0.40%; and

• EUR 650 million of class A2 notes with an expected weighted average life of five years and priced with a coupon of three month Euribor plus 0.82%.

On June 3, 2013, Aegon redeemed USD 750 million senior notes (EUR 580 million), which matured.

Commercial paper, Short-term deposits and Bank overdrafts vary with the normal course of business.

19. Offsetting, enforceable master netting arrangements and similar agreements

The following table provides details relating to the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognized financial assets and recognized financial liabilities.

Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements

							Related amounts not set off in the statements of financial  position
EUR millions	Gross amounts of recognized financial assets		Gross amounts of recognized financial liabilities set off in  the statement of financial position		Net amounts of financial assets presented in the statement of financial position		Financial instruments		Cash collateral received (excluding surplus collateral)		Net amount
Derivatives		15,766		33		15,733		11,214		4,011		508
June 30, 2013		15,766		33		15,733		11,214		4,011		508

Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements

							Related amounts not set off in the statements of financial position
EUR millions	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial assets set off in the statement of financial position		Net amounts of financial liabilities presented in the statement of financial position		Financial instruments		Cash collateral pleged (excluding surplus collateral)		Net amount
Derivatives		11,739		33		11,706		11,299		64		343
June 30, 2013		11,739		33		11,706		11,299		64		343

Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements

							Related amounts not set off in the statements of financial position
EUR millions	Gross amounts of recognized financial assets		Gross amounts of recognized financial liabilities set off in  the statement of financial position		Net amounts of financial assets presented in the statement of financial position		Financial instruments		Cash collateral received (excluding surplus collateral)		Net amount
Derivatives		20,776		40		20,736		15,584		4,686		466
December 31, 2012		20,776		40		20,736		15,584		4,686		466

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Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements

							Related amounts not set off in the statements of financial position
EUR millions	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial assets set off in the statement of financial position		Net amounts of financial liabilities presented in the statement of financial position		Financial instruments		Cash  collateral pleged (excluding surplus collateral)		Net amount
Derivatives		15,471		40		15,431		15,099		2		329
December 31, 2012		15,471		40		15,431		15,099		2		329

Financial assets and liabilities are offset in the statement of financial position when the Group has a legally enforceable right to offset and has the intention to settle the asset and liability on a net basis, or to realize the asset and settle the liability simultaneously.

Aegon mitigates credit risk in derivative contracts by entering into collateral agreements, where practical, and in ISDA master netting agreements for each of the Aegon’s legal entities to facilitate Aegon’s right to offset credit risk exposure. The credit support agreement will normally dictate the threshold over which collateral needs to be pledged by Aegon or its counterparty. Transactions requiring Aegon or its counterparty to post collateral are typically the result of over-the-counter derivative trades, comprised mostly of interest rate swaps, currency swaps and credit swaps. These transactions are conducted under terms that are usual and customary to standard long-term borrowing, derivative, securities lending and securities borrowing activities, as well as requirements determined by exchanges where the bank acts as intermediary.

20. Commitments and contingencies

KoersPlan

On June 14, 2013, the Supreme Court denied Aegon’s appeal and confirmed the ruling of the Court of Appeal from 2011 in the KoersPlan case. Aegon will compensate the approximately 35.000 policyholders of KoersPlan-products who were plaintiffs in the litigation. To cover for this liability, Aegon set up a provision of EUR 25 million in Q2 2013. For policyholders of KoersPlan-products not plaintiffs in the litigation, the company is establishing whether any adjustment of the premium is appropriate.

There have been no other material changes in contingent assets and liabilities as reported in the 2012 consolidated financial statements of Aegon.

21. Acquisitions / Divestments

Fidem Life

On February 8, 2013, Aegon closed the acquisition of 100% of Fidem Life, a life insurance company in Ukraine. Fidem Life is rebranded ‘Aegon Ukraine’ and is integrated into the governance and management structure of Aegon CEE.

Strategic partnership with Banco Santander

Aegon has completed an exclusive 25-year strategic partnership with Banco Santander, Spain’s largest financial group, first announced last December. Under the terms of the agreement, Aegon has acquired a 51% stake in both a life insurance company as well as in a non-life insurance company for a consideration of EUR 220 million. The joint ventures will distribute life and general insurance products through Banco Santander’s extensive branch network. Aegon Spain will provide the back-office services to the joint venture companies.

Unnim

Aegon has finalized exiting its life, health and pension joint venture with Unnim and sold its 50% stake to Unnim for a total consideration of EUR 353 million. The sale resulted in a book gain of EUR 102 million before tax.

Positive Solutions

On June 12, 2013, Aegon UK announced the sale of national independent financial advisor (IFA) Positive Solutions to Intrinsic Financial Services. The loss on the sale amounts to EUR 22 mln. The sale is expected to complete in the third quarter.

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22. Events after the balance sheet date

CAM

On July 19, 2013, the sale of Aegon’s 50% stake in its life insurance partnership originally established with Caja de Ahorros del Mediterráneo (CAM) was closed. The consideration amounted to EUR 449.5 million and resulted in a book gain of approximately EUR 74 million which will be recorded in Q3 2013.

There were no events after the balance sheet date with a significant impact on the financial position of the company per June 30, 2013.

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ITEM 2: OPERATING AND FINANCIAL REVIEW AND PROSPECTS

2.1 Introduction

Aegon is committed to providing information on key factors that drive its business and affect its financial condition, results and value. Aegon’s disclosure practices have been developed over many years with due consideration of the needs and requirements of its stakeholders, including regulators, investors and research analysts. Aegon has substantive supplemental information in its annual and quarterly accounts to provide transparency of its financial results. Aegon has provided insight into its critical accounting policies and the methodologies Aegon applies to manage its risks. For a discussion of critical accounting policies see “Application of Critical Accounting Policies – IFRS Accounting Policies”. For a discussion of Aegon’s risk management methodologies see Item 11, “Quantitative and Qualitative Disclosure About Market Risk” as included in the Cross reference table Form 20-F in Aegon’s 2012 Annual Report on Form 20-F filed with the SEC on March 22, 2013.

2.2 Application of Critical Accounting Policies—IFRS Accounting Policies

The Operating and Financial Review and Prospects are based upon Aegon’s consolidated financial statements, which have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (IASB). Application of the accounting policies in the preparation of the financial statements requires management to apply judgment involving assumptions and estimates concerning future results or other developments, including the likelihood, timing or amount of future transactions or events. There can be no assurance that actual results will not differ materially from those estimates. Accounting policies that are critical to the financial statement presentation and that require complex estimates or significant judgment are described in the following sections.

i Valuation of assets and liabilities arising from life insurance contracts

General

The liability for life insurance contracts with guaranteed or fixed account terms is either based on current assumptions or on the assumptions established at inception of the contract, reflecting the best estimates at the time increased with a margin for adverse deviation. All contracts are subject to liability adequacy testing which reflects management’s current estimates of future cash flows (including investment returns). To the extent that the liability is based on current assumptions, a change in assumptions will have an immediate impact on the income statement. Also, if a change in assumption results in not passing the liability adequacy test, the entire deficiency is recognized in the income statement. To the extent that the deficiency relates to unrealized gains and losses on available-for-sale investments, the additional liability is recognized in the revaluation reserve in equity.

Some insurance contracts without a guaranteed or fixed contract term contain guaranteed minimum benefits. Depending on the nature of the guarantee, it may either be bifurcated and presented as a derivative or be reflected in the value of the insurance liability in accordance with local accounting principles. Given the dynamic and complex nature of these guarantees, stochastic techniques under a variety of market return scenarios are often used for measurement purposes. Such models require management to make numerous estimates based on historical experience and market expectations. Changes in these estimates will immediately affect the income statement.

In addition, certain acquisition costs related to the sale of new policies and the purchase of policies already in force are recorded as DPAC and VOBA assets respectively and are amortized to the income statement over time. If the assumptions relating to the future profitability of these policies are not realized, the amortization of these costs could be accelerated and may even require write offs due to unrecoverability.

Actuarial assumptions

The main assumptions used in measuring DPAC, VOBA and the liabilities for life insurance contracts with fixed or guaranteed terms relate to mortality, morbidity, investment return and future expenses. Depending on local accounting principles, surrender rates may be considered.

Mortality tables applied are generally developed based on a blend of company experience and industry wide studies, taking into consideration product characteristics, own risk selection criteria, target market and past experience. Mortality experience is monitored through regular studies, the results of which are fed into the pricing cycle for new products and reflected in the liability calculation when appropriate. For contracts insuring survivorship, allowance may be made for further longevity improvements. Morbidity assumptions are based on own claims severity and frequency experience, adjusted where appropriate for industry information.

Investment assumptions are either prescribed by the local regulator or based on management’s future expectations. In the latter case the anticipated future investment returns are set by management on a countrywide basis, considering available market information and economic indicators.

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Reserve for guaranteed minimum benefits

See Item 2.2.iii of this Form 6-K for further discussion on guaranteed minimum benefits in our insurance products.

DPAC and VOBA

A significant assumption related to estimated gross profits on variable annuities and variable life insurance products in the United States and some of the smaller country units, is the annual long-term growth rate of the underlying assets. The reconsideration of this assumption may affect the original DPAC or VOBA amortization schedule, referred to as DPAC or VOBA unlocking. The difference between the original DPAC or VOBA amortization schedule and the revised schedule, which is based on estimates of actual and future gross profits, is recognized in the income statement as an expense or a benefit in the period of determination.

Assumptions on future expenses are based on the current level of expenses, adjusted for expected expense inflation if appropriate.

Surrender rates depend on product features, policy duration and external circumstances such as the interest rate environment and competitor and policyholder behavior. For policies with account value guarantees based on equity market movements, a dynamic lapse assumption is utilized to reflect policyholder behavior based on whether the guarantee is in the money. Credible own experience, as well as industry published data, are used in establishing assumptions. Lapse experience is correlated to mortality and morbidity levels, as higher or lower levels of surrenders may indicate future claims will be higher or lower than anticipated. Such correlations are accounted for in the mortality and morbidity assumptions based on the emerging analysis of experience.

For the first half of 2013, Aegon kept its long-term equity market return assumption for the estimated gross profits on variable life and variable annuity products in the Americas at 9% (2012: 9%). On a quarterly basis, the difference between the estimated equity market return and the actual market return is unlocked.

In 2012, to reflecting the low interest rate environment, Aegon kept its long-term assumption for 10-year US Treasury yields at 4.75% (graded uniformly over the next five years) and the 90-day treasury yield at 0.2% for the next two years followed by a three year grade to 3%. In addition, Aegon’s assumed return for US separate account bond fund returns remains at 4% over the next five years, followed by a return of 6% thereafter. These assumptions, as well as Aegon’s assumptions on the long-term credit spread or default assumptions, remained unchanged during the first six months of 2013.

A 1% decrease in the expected long-term equity growth rate with regards to Aegon’s variable annuities and variable life insurance products in the United States and Canada would result in a decrease in DPAC and VOBA balances and reserve strengthening of approximately EUR 148 million (2012: EUR 160 million). The DPAC and VOBA balances for these products in the United States and Canada amounted to EUR 2 billion at June 30, 2013 (2012: EUR 2 billion).

For the fixed annuities and fixed universal life insurance products, the estimated gross profits (“EGP”) calculations include a net interest rate margin, which Aegon assumes will remain practically stable under any reasonably likely interest-rate scenario.

Applying a reasonably possible increase to the mortality assumption, which varies by block of business, would reduce net income by approximately EUR 50 million (2012: EUR 66 million). A relative 20% increase in the lapse rate assumption would increase net income by approximately EUR 42 million (2012: EUR 40 million).

Any reasonably possible change in the other assumptions Aegon uses to determine EGP margins (i.e. maintenance expenses, inflation and disability) would reduce net income by less than EUR 37 million (per assumption change) (2012: EUR 35 million).

DPAC

The movements in DPAC including deferred cost of reinsurance over the first six months of 2013 compared to the first six months of 2012 can be summarized and compared as follows:

In million EUR
	Six months ended June 30
	2013			2012
At January 1		11,239			10,989
Costs deferred/rebates granted during the year		747			701
Amortization through income statement		(499	)		(564	)
Shadow accounting adjustments		373			(169	)
Net exchange rate differences		(150	)		283
Other		(2	)		2
At June 30		11,708			11,242

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DPAC per strategic business unit is as follows per June 30, 2013 and December 31, 2012:

In million EUR
	Americas		The Netherlands		United Kingdom		New Markets		Total
Life		5,371		124		137		558		6,190
Individual savings and retirement products		1,489		—		—		34		1,523
Pensions		—		32		3,177		—		3,209
Run-off businesses		786		—		—		—		786
At June 30, 2013		7,646		156		3,314		592		11,708

	Americas		The Netherlands		United Kingdom		New Markets		Total
Life		4,960		141		155		505		5,761
Individual savings and retirement products		1,256		—		—		36		1,292
Pensions		—		37		3,365		—		3,402
Run-off businesses		784		—		—		—		784
At December 31, 2012		7,000		178		3,520		541		11,239

VOBA

The movement in VOBA over the first six months of 2013 compared to the first six months of 2012 can be summarized and compared as follows:

In million EUR	Six months ended June 30
	2013			2012
At January 1		1,777			2,000
Additions		5			2
Amortization / depreciation through income statement		(64	)		(75	)
Shadow accounting adjustments		129			(59	)
Net exchange differences		(16	)		44
At June 30		1,831			1,912

VOBA per strategic business unit is as follows per June 30, 2013 and December 31, 2012:

In million EUR
	Americas		The Netherlands		United Kingdom		New Markets		Total
Life		1,222		1		—		13		1,236
Individual savings and retirement products		131		—		—		—		131
Pensions		12		39		364		—		415
Distribution		—		23		—		—		23
Run-off businesses		26		—		—		—		26
At June 30, 2013		1,391		63		364		13		1,831

In million EUR
	Americas		The Netherlands		United Kingdom		New Markets		Total
Life		1,141		1		—		11		1,153
Individual savings and retirement products		138		—		—		—		138
Pensions		14		41		393		—		448
Distribution		—		24		—		—		24
Run-off businesses		14		—		—		—		14
At December 31, 2012		1,307		66		393		11		1,777

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ii Fair value of financial instruments, borrowings and derivatives determined using valuation techniques

Investment contracts issued by Aegon are either carried at fair value (if they are designated as financial liabilities at fair value through profit or loss) or amortized cost (with fair value being disclosed in the notes to the consolidated financial statements). These contracts are not quoted in active markets and their fair values are determined by using valuation techniques, such as discounted cash flow methods and stochastic modeling or in relation to the unit price of the underlying assets. All models are validated and calibrated. A variety of factors are considered, including time value, volatility, policyholder behavior, servicing costs and fair values of similar instruments. Credit spread is considered in measuring the fair value of derivatives (including derivatives embedded in insurance contracts), borrowings and other liabilities.

Fair value of financial assets and liabilities

The estimated fair values of Aegon’s financial assets and liabilities are presented in the respective notes to the statement of financial position together with their carrying values. The estimated fair values correspond with the amounts at which the financial instruments at Aegon’s best estimate could have been traded at the balance sheet date between knowledgeable, willing parties in arm’s length transactions. When available, Aegon uses quoted market prices in active markets to determine the fair value of investments and derivatives. In the absence of an active market, the fair value of investments in financial assets is estimated by using other market observable data, such as corroborated external quotes and present value or other valuation techniques. An active market is one in which transactions are taking place regularly on an arm’s length basis. A fair value measurement assumes that an asset or liability is exchanged in an orderly transaction between market participants, and accordingly, fair value is not determined based upon a forced liquidation or distressed sale.

Valuation techniques are used when Aegon determines the market is inactive or quoted market prices are not available for the asset or liability at the measurement date. However, the fair value measurement objective remains the same, that is, to arrive at the price at which an orderly transaction would occur between market participants at the measurement date. Therefore, unobservable inputs reflect Aegon’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). These inputs are developed based on the best information available.

Aegon employs an oversight structure over valuation of financial instruments that includes appropriate segregation of duties. Senior management, independent of the investing functions, is responsible for the oversight of control and valuation policies and for reporting the results of these policies. For fair values determined by reference to external quotation or evidenced pricing parameters, independent price determination or validation is utilized to corroborate those inputs. Further details of the validation processes are set out below.

Valuation of financial instruments is based on a pricing hierarchy, in order to maintain a controlled process that will systematically promote the use of prices from sources in which Aegon has the most confidence, where the least amount of manual intervention exists and to embed consistency in the selection of price sources. Depending on asset type the pricing hierarchy consists of a waterfall that starts with making use of market prices from indices and follows with making use of third-party pricing services or brokers.

Shares

When available, Aegon uses quoted market prices in active markets to determine the fair value of its shares. Fair values for unquoted shares are estimated using observations of the price/earnings or price/cash flow ratios of quoted companies considered comparable to the companies being valued. Valuations are adjusted to account for company-specific issues and the lack of liquidity inherent in an unquoted investment. Illiquidity adjustments are generally based on available market evidence. In addition, a variety of other factors are reviewed by management, including, but not limited to, current operating performance, changes in market outlook and the third-party financing environment.

The fair values of investments held in non-quoted investment funds (hedge funds, private equity funds) are determined by management after taking into consideration information provided by the fund managers. Aegon reviews the valuations each month and performs analytical procedures and trending analyses to ensure the fair values are appropriate.

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Debt securities

The fair values of debt securities are determined by management after taking into consideration several sources of data. When available, Aegon uses quoted market prices in active markets to determine the fair value of its debt securities. As stated previously, Aegon’s valuation policy utilizes a pricing hierarchy which dictates that publicly available prices are initially sought from indices and third party pricing services. In the event that pricing is not available from these sources, those securities are submitted to brokers to obtain quotes. The majority of brokers’ quotes are non-binding. As part of the pricing process, Aegon assesses the appropriateness of each quote (i.e., as to whether the quote is based on observable market transactions or not) to determine the most appropriate estimate of fair value. Lastly, securities are priced using internal cash flow modeling techniques. These valuation methodologies commonly use the following inputs: reported trades, bids, offers, issuer spreads, benchmark yields, estimated prepayment speeds, and/or estimated cash flows.

To understand the valuation methodologies used by third-party pricing services Aegon reviews and monitors the applicable methodology documents of the third-party pricing services. Any changes to their methodologies are noted and reviewed for reasonableness. In addition, Aegon performs in-depth reviews of prices received from third-party pricing services on a sample basis. The objective for such reviews is to demonstrate that Aegon can corroborate detailed information such as assumptions, inputs and methodologies used in pricing individual securities against documented pricing methodologies. Only third-party pricing services and brokers with a substantial presence in the market and with appropriate experience and expertise are used.

Third-party pricing services will often determine prices using recently reported trades for identical or similar securities. The thirdparty pricing service makes adjustments for the elapsed time from the trade date to the balance sheet date to take into account available market information. Lacking recently reported trades, third-party pricing services and brokers will use modeling techniques to determine a security price where expected future cash flows are developed based on the performance of the underlying collateral and discounted using an estimated market rate. Also included within the modeling techniques for RMBS, CMBS and CDO securities are estimates of the speed at which the principal will be repaid over their remaining lives. These estimates are determined based on historical repayment speeds (adjusted for current markets) as well as the structural characteristics of each security.

Periodically, Aegon performs an analysis of the inputs obtained from third-party pricing services and brokers to ensure that the inputs are reasonable and produce a reasonable estimate of fair value. Aegon’s asset specialists and investment valuation specialists consider both qualitative and quantitative factors as part of this analysis. Several examples of analytical procedures performed include, but are not limited to, recent transactional activity for similar debt securities, review of pricing statistics and trends and consideration of recent relevant market events. Other controls and procedures over pricing received from indices, third-party pricing services, or brokers include validation checks such as exception reports which highlight significant price changes, stale prices or un-priced securities. Additionally, Aegon performs back testing on a sample basis. Back testing involves selecting a sample of securities trades and comparing the prices in those transactions to prices used for financial reporting. Significant variances between the price used for financial reporting and the transaction price are investigated to explain the cause of the difference.

Credit ratings are also an important consideration in the valuation of securities and are included in the internal process for determining Aegon’s view of the risk associated with each security. However, Aegon does not rely solely on external credit ratings and there is an internal process, based on market observable inputs, for determining Aegon’s view of the risks associated with each security.

Aegon’s portfolio of private placement securities (held at fair value under the classification of available-for-sale or fair value through profit or loss) is valued using a matrix pricing methodology. The pricing matrix is obtained from a third-party service provider and indicates current spreads for securities based on weighted average life, credit rating, and industry sector. Each month, Aegon’s asset specialists review the matrix to ensure the spreads are reasonable by comparing them to observed spreads for similar bonds traded in the market. Other inputs to the valuation include coupon rate, the current interest rate curve used for discounting and an illiquidity premium to account for the illiquid nature of these securities. The illiquidity premiums are determined based upon the pricing of recent transactions in the private placements market; comparing the value of the privately offered security to a similar public security. The impact of the illiquidity premium for private placement securities to the overall valuation is insignificant.

Mortgages, policy loans and private loans (held at amortized cost)

For private loans, fixed interest mortgage loans and other loans originated by the Group, the fair value used for disclosure purposes is estimated by discounting expected future cash flows using a current market rate applicable to financial instruments with similar yield, credit quality and maturity characteristics.

The fair value of floating interest rate mortgages, policy loans and private placements used for disclosure purposes is assumed to be approximated by their carrying amount, adjusted for changes in credit risk. Credit risk adjustments are based on market observable credit spreads if available, or management’s estimate if not market observable.

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In 2012, Aegon The Netherlands changed the discount rate used in determining the fair value of its mortgage loan portfolio. One of the main changes in discount rate is the replacement of an entity specific funding spread by a more generic liquidity premium. As a result the disclosed fair value is better aligned with available market information. As the mortgage loan portfolio is measured at amortized cost, this change in fair value measurement does not impact net income or shareholders’ equity of Aegon The Netherlands.

Money market and other short-term investments and deposits with financial institutions

The fair value of assets maturing within a year is assumed to be approximated by their carrying amount adjusted for credit risk where appropriate. Credit risk adjustments are based on market observable credit spreads if available, or management’s estimate if not market observable.

Free standing financial derivatives

Where quoted market prices are not available, other valuation techniques, such as option pricing or stochastic modeling, are applied. The valuation techniques incorporate all factors that a typical market participant would consider and are based on observable market data when available. Models are validated before they are used and calibrated to ensure that outputs reflect actual experience and comparable market prices.

Fair values for exchange-traded derivatives, principally futures and certain options, are based on quoted market prices in active markets. Fair values for over-the-counter (OTC) derivative financial instruments represent amounts estimated to be received from or paid to a third party in settlement of these instruments. These derivatives are valued using pricing models based on the net present value of estimated future cash flows, directly observed prices from exchange-traded derivatives, other OTC trades, or external pricing services. Most valuations are derived from swap and volatility matrices, which are constructed for applicable indices and currencies using current market data from many industry standard sources. Option pricing is based on industry standard valuation models and current market levels, where applicable. The pricing of complex or illiquid instruments is based on internal models or an independent third party. For long-dated illiquid contracts, extrapolation methods are applied to observed market data in order to estimate inputs and assumptions that are not directly observable. To value OTC derivatives, management uses observed market information, other trades in the market and dealer prices. Controls and procedures regarding the fair values of free standing derivatives are similar to the controls as described for the debt securities.

Aegon normally mitigates counterparty credit risk in derivative contracts by entering into collateral agreements where practical and in ISDA master netting agreements for each of the Group’s legal entities to facilitate Aegon’s right to offset credit risk exposure. In the event no collateral is held by Aegon or the counterparty, the fair value of derivatives is adjusted for credit risk based on market observable spreads. Changes in the fair value of derivatives attributable to changes in counterparty credit risk were not significant.

Derivatives embedded in insurance contracts including guarantees

Certain guarantees for minimum benefits in insurance and investment contracts are carried at fair value. These guarantees include guaranteed minimum withdrawal benefits (GMWB) in the United States, United Kingdom and Japan which are offered on some variable annuity products and are also assumed from a ceding company; minimum interest rate guarantees on insurance products offered in the Netherlands, including group pension and traditional products; variable annuities sold in Europe and Japan; and guaranteed minimum accumulation benefits on segregated funds sold in Canada. The fair values of these guarantees are calculated as the present value of future expected payments to policyholders less the present value of assessed rider fees attributable to the guarantees. Given the complexity and long-term nature of these guarantees which are unlike instruments available in financial markets, their fair values are determined by using stochastic techniques under a variety of market return scenarios. A variety of factors are considered, including expected market rates of return, equity and interest rate volatility, credit spread, correlations of market returns, discount rates and actuarial assumptions.

The fair values of these guarantees are calculated as the present value of future expected payments to policyholders less the present value of assessed rider fees attributable to the guarantees. Given the complexity and long-term nature of these guarantees which are unlike instruments available in financial markets, their fair values are determined by using stochastic techniques under a variety of market return scenarios. A variety of factors are considered, including expected market rates of return, equity and interest rate volatility, credit spread, correlations of market returns, discount rates and actuarial assumptions.

The expected returns are based on risk-free rates. The credit spread is set by using the credit default swap (CDS) spreads of a reference portfolio of life insurance companies (including Aegon), adjusted to reflect the subordination of senior debt holders at the holding company level to the position of policyholders at the operating company level (who have priority in payments to other creditors). Aegon’s assumptions are set by region to reflect differences in the valuation of the guarantee embedded in the insurance contracts.

Since many of the assumptions are unobservable and are considered to be significant inputs to the liability valuation, the liability included in future policy benefits has been reflected within Level III of the fair value hierarchy.

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Investment contracts

Investment contracts issued by Aegon are either carried at fair value (if they are designated as financial liabilities at fair value through profit or loss) or amortized cost (with fair value being disclosed in the notes to the consolidated financial statements). These contracts are not quoted in active markets and their fair values are determined by using valuation techniques, such as discounted cash flow methods and stochastic modeling or in relation to the unit price of the underlying assets. All models are validated and calibrated. A variety of factors are considered, including time value, volatility, policyholder behavior, servicing costs and fair values of similar instruments.

Similar to embedded derivatives in insurance contracts, certain investment products are not quoted in active markets and their fair values are determined by using valuation techniques. Because of the dynamic and complex nature of these cash flows, stochastic or similar techniques under a variety of market return scenarios are often used. A variety of factors are considered, including expected market rates of return, market volatility, correlations of market returns, discount rates and actuarial assumptions.

The expected returns are based on risk-free rates, such as the current London Inter-Bank Offered Rate (LIBOR) swap rates and associated forward rates or the current rates on local government bonds. Market volatility assumptions for each underlying index are based on observed market implied volatility data and/or observed market performance. Correlations of market returns for various underlying indices are based on observed market returns and their inter-relationships over a number of years preceding the valuation date. Current risk-free spot rates are used to determine the present value of expected future cash flows produced in the stochastic projection process.

Assumptions on customer behavior, such as lapses, included in the models are derived in the same way as the assumptions used to measure insurance liabilities.

iii Guarantees in insurance contracts

For financial reporting purposes Aegon distinguishes between the following types of minimum guarantees:

1) Financial guarantees: these life contingent guarantees are treated as bifurcated embedded derivatives, valued at fair value and presented as derivatives;

2) Total return annuities: these guarantees are not bifurcated from their host contracts because they are valued at fair value and presented as part of insurance contracts;

3) Life contingent guarantees in the United States: these guarantees are not bifurcated from their host contracts, valued in accordance with insurance accounting (ASC 944, Financial Services—Insurance) and presented together with insurance liabilities; and

4) Life contingent guarantees in the Netherlands: these guarantees are not bifurcated from their host contracts, valued at fair value and presented together with the underlying insurance contracts.

In addition to the guarantees mentioned above, Aegon has traditional life insurance contracts that include minimum guarantees that are not valued explicitly; however, the adequacy of all insurance liabilities, net of VOBA and DPAC, are assessed periodically.

a. Financial guarantees

In the United States and the United Kingdom, a guaranteed minimum withdrawal benefit (GMWB) is offered directly on some variable annuity products Aegon issues and is also assumed from a ceding company. Variable annuities allow a customer to provide for the future on a tax-deferred basis and to participate in equity or bond market performance. Variable annuities allow a customer to select payout options designed to help meet the customer’s need for income upon maturity, including lump sum payment or income for life or for a period of time. This benefit guarantees that a policyholder can withdraw a certain percentage of the account value, starting at a certain age or duration, for either a fixed period or during the life of the policyholder.

In Canada, variable products sold are known as “Segregated Funds”. Segregated funds are similar to variable annuities, except that they include a capital protection guarantee for mortality and maturity benefits (guaranteed minimum accumulation benefits). The initial guarantee period is ten years. The ten-year period may be reset at the contractholder’s option for certain products to lock-in market gains. The reset feature cannot be exercised in the final decade of the contract and for many products can only be exercised a limited number of times per year. The management expense ratio charged to the funds is not guaranteed and can be increased by management decision. In addition, Aegon Canada sells a contract with a minimum guaranteed withdrawal benefit. The contract provides capital protection for longevity risk in the form of a guaranteed minimum annuity payment.

In The Netherlands, individual variable unit-linked products have a minimum benefit guarantee if premiums are invested in certain funds. The sum insured at maturity or upon the death of the beneficiary has a minimum guaranteed return (in the range of 3% to 4%) if the premium has been paid for a consecutive period of at least ten years and is invested in a mixed fund and/or fixed-income funds. No guarantees are given for equity investments only. The management expense ratio charged to the funds is not guaranteed and can be increased at management’s discretion, with a maximum cost ratio of 1.25% for normal unit-linked policies and 1.90% for policies with a guaranteed return due to the product improvements (‘Generieke Verbetermaatregelen’).

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The following table provides information on the liabilities for financial guarantees for minimum benefits:

In million EUR	United States1			Canada1			The Nether- lands2			New Markets		2013 Total3			United States1		Canada1			The Nether- lands2		New Markets		2012 Total3
At January 1		692			63			1,323			28		2,106			645		89			1,306		42		2,082
Incurred guarantee benefits		(401	)		(26	)		(215	)		—		(642	)		144		(8	)		45		—		181
Paid guarantee benefits		—			(1	)		—			—		(1	)		—		(3	)		—		—		(3	)
Net exchange differences		6			(2	)		—			—		4			18		2			—		—		20
At June 30		297			34			1,108			28		1,467			807		80			1,351		42		2,280
Balance at June 30
Account value		17,128			1,518			8,309			435		27,390			13,257		1,777			7,770		374		23,178
Net amount at risk4		459			38			1,171			12		1,680			551		63			1,483		42		2,139

¹  Guaranteed minimum accumulation and withdrawal benefits

²  Fund plan and unit-linked guarantees

³  Balances are included in the derivatives liabilities on the face of the balance sheet

⁴  The net amount at risk represents the difference between the maximum amount payable under the guarantees and the account value

In addition, Aegon reinsures the elective guaranteed minimum withdrawal benefit rider issued with a ceding company’s variable annuity contracts. The rider is essentially a return of premium guarantee, which is payable over a period of at least fourteen years from the date that the policyholder elects to start withdrawals. At contract inception, the guaranteed remaining balance is equal to the premium payment. The periodic withdrawal is paid by the ceding company until the account value is insufficient to cover additional withdrawals. Once the account value is exhausted, Aegon pays the periodic withdrawals until the guaranteed remaining balance is exhausted. At June 30, 2013, the reinsured account value was EUR 2.8 billion (December 2012: EUR 3.0 billion) and the guaranteed remaining balance was EUR 2.2 billion (December 2012: EUR 2.4 billion).

The reinsurance contract is accounted for as a derivative and is carried in Aegon’s statement of financial position at fair value. At June 30, 2013, the contract had a value of EUR 48 million (December 2012: EUR 90 million). Aegon entered into a derivative program to mitigate the overall exposure to equity market and interest rate risks associated with the reinsurance contract. This program involves selling equity futures contracts (S&P 500, Nasdaq, FTSE100 and NKY225 in accordance with Aegon’s exposure) to mitigate the effect of equity market movement on the reinsurance contract and the purchase of over-the-counter interest rate swaps to mitigate the effect of movements in interest rates on the reinsurance contracts.

b. Total return annuities

Total Return Annuity (TRA) is an annuity product in the United States which provides customers with a pass-through of the total return on an underlying portfolio of investment securities (typically a mix of corporate and convertible bonds) subject to a cumulative minimum guarantee. Both the assets and liabilities are carried at fair value, however, due to the minimum guarantee not all of the changes in the market value of the asset will be offset in the valuation of the liability. This product exists in both the fixed annuity and life reinsurance lines of business and in both cases represents closed blocks. The reinsurance contract is in the form of modified coinsurance, so only the liability for the minimum guarantee is recorded on Aegon’s books.

Product balances as of June 30, 2013 were EUR 415 million in fixed annuities (December 2012: EUR 432 million) and EUR 114 million in life reinsurance (December 2012: EUR 112 million).

c. Life contingent guarantees in the United States

Certain variable insurance contracts in the United States also provide guaranteed minimum death benefits (GMDB) and guaranteed minimum income benefits (GMIB). Under a GMDB, the beneficiaries receive the greater of the account balance or the guaranteed amount upon the death of the insured. The net amount at risk for GMDB contracts is defined as the current GMDB in excess of the capital account balance at the balance sheet date.

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The GMIB feature provides for minimum payments if the contractholder elects to convert to an immediate pay-out annuity. The guaranteed amount is calculated using the total deposits made by the contractholder, less any withdrawals and sometimes includes a roll-up or step-up feature that increases the value of the guarantee with interest or with increases in the account value.

The additional liability for guaranteed minimum benefits that are not bifurcated are determined (based on ASC 944) each period by estimating the expected value of benefits in excess of the projected account balance and recognizing the excess over the accumulation period based on total expected assessments. The estimates are reviewed regularly and any resulting adjustment to the additional liability is recognized in the income statement. The benefits used in calculating the liabilities are based on the average benefits payable over a range of stochastic scenarios. Where applicable, the calculation of the liability incorporates a percentage of the potential annuitizations that may be elected by the contract holder.

The following table provides information on the liabilities for guarantees that are included in the valuation of the host contracts as per June 30, 2013 and June 30, 2012:

In million EUR	GMDB1			GMIB2			2013 Total3,4			GMDB1			GMIB2			2012 Total3,4
At January 1		386			702			1,088			376			872			1,248
Incurred guarantee benefits		(3	)		(37	)		(40	)		19			8			27
Paid guarantee benefits		(35	)		(21	)		(56	)		(32	)		(26	)		(58	)
Net exchange differences		5			9			14			8			20			28
At June 30		353			653			1,006			371			874			1,245
Balance at June 30
Account value		36,008			6,118						32,264			6,317
Net amount at risk5		2,348			583						3,277			746
Average attained age of contractholders		68			68						68			68

¹  Guaranteed minimum death benefit in the United States

²  Guaranteed minimum income benefit in the United States

³  Note that the variable annuity contracts with guarantees may offer more than one type of guarantee in each contract; therefore, the amounts listed are not mutually exclusive

⁴  Balances are included in the insurance liabilities on the face of the statement of financial positions

⁵  The net amount at risk is defined as the present value of the minimum guaranteed annuity payments available to the contract holder determined in accordance with the terms of the contract in excess of the current account balance

d. Life contingent guarantees in the Netherlands

The group pension contracts offered by Aegon in the Netherlands include large group contracts that have an individually determined asset investment strategy underlying the pension contract. The guarantee given is that the profit sharing is the minimum of 0% or the realized return (on an amortized cost basis), both adjusted for technical interest rates ranging from 3% to 4%. If there is a negative profit sharing, the 0% minimum is effective, but the loss in any given year is carried forward to be offset against any future surpluses within the contract period. In general, a guarantee is given for the life of the underlying employees so that their pension benefit is guaranteed. Large group contracts also share technical results (mortality risk and disability risk). The contract period is typically five years and the premiums are fixed over this period. Separate account guaranteed group contracts provide a guarantee on the benefits paid.

The traditional life and pension products offered by Aegon in the Netherlands include various products that accumulate a cash value. Premiums are paid by customers at inception or over the term of the contract. The accumulation products pay benefits on the policy maturity date, subject to survival of the insured. In addition, most policies also pay death benefits if the insured dies during the term of the contract. The death benefits may be stipulated in the policy or depend on the gross premiums paid to date. Premiums and amounts insured are established at inception of the contract. The amount insured can be increased as a result of profit sharing, if provided for under the terms and conditions of the product. Minimum interest guarantees exist for all generations of accumulation products written, except for universal life type products for which premiums are invested solely in equity funds. Older generations contain a 4% guarantee; in recent years the guarantee has decreased to 3%.

These guarantees are valued at fair value and are included as part of insurance liabilities with the underlying host insurance contracts .

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The following table provides information on the liabilities for guarantees that are included in the valuation of the host contracts.

	2013			2012
	GMB1,2			GMB1,2
At January 1		3,684			3,254
Incurred guarantee benefits		(622	)		362
At June 30		3,062			3,616
Balance at June 30
Account value		14,339			15,243
Net amount at risk3		3,284			3,814

¹  Guaranteed minimum benefit in the Netherlands

²  Balances are included in the insurance liabilities on the face of the balance sheet

³  The net amount at risk represents the difference between the maximum amount payable under the guarantees and the account value

Fair value measurement of guarantees in insurance contracts

The fair values of guarantees mentioned above (with the exception of life contingent guarantees in the United States) are calculated as the present value of future expected payments to policyholders less the present value of assessed rider fees attributable to the guarantees. Given the long-term nature of these guarantees, their fair values are determined by using valuation techniques. Because of the dynamic and complex nature of these cash flows, Aegon uses stochastic techniques under a variety of market return scenarios. A variety of factors are considered, including expected market rates of return, equity and interest rate volatility, credit risk, correlations of market returns, discount rates and actuarial assumptions. Since the price of these guarantees is not quoted in any market, the fair value of these guarantees is computed using valuation models which use observable market data supplemented with the Group’s assumptions on developments in future interest rates, volatility in equity prices and other risks inherent in financial markets. All the assumptions used as part of this valuation model are calibrated against actual historical developments observed in the markets. Since many of the assumptions are unobservable and are considered to be significant inputs to the liability valuation, the liability has been reflected within Level III of the fair value hierarchy.

The expected returns are based on risk-free rates. Aegon added a premium to reflect the credit spread as required. The credit spread is set by using the credit default swap (CDS) spreads of a reference portfolio of life insurance companies (including Aegon), adjusted to reflect the subordination of senior debt holders at the holding company level to the position of policyholders at the operating company level (who have priority in payments to other creditors). Aegon’s assumptions are set by region to reflect differences in the valuation of the guarantee embedded in the insurance contracts. If the credit spreads were 20 basis points higher or lower respectively, and holding all other variables constant in the valuation model, income before tax for the first six months of 2013 would have been EUR 242 million and EUR 254 million higher or lower respectively (2012 full year: EUR 284 million and EUR 299 million higher or lower respectively).

Had Aegon used a long-term equity implied volatility assumption that was five volatility points higher or lower, the impact on income before tax would have been a decrease of EUR 103 million or an increase of EUR 103 million, respectively, in IFRS income before tax for the first six months of 2013 (2012 full year: EUR 118 million decrease and EUR 104 million increase).

These assumptions are reviewed at each valuation date, and updated based on historical experience and observable market data, including market transactions such as acquisitions and reinsurance transactions.

Aegon utilizes different risk management strategies to mitigate the financial impact of the valuation of these guarantees on the results including asset and liability management and derivative hedging strategies to hedge certain aspects of the market risks embedded in these guarantees. Guarantees valued at fair value contributed a net loss before tax of EUR 73 million (six months ended June 30, 2012: loss of EUR 255 million) to income before tax. This net loss is attributable to a decrease in the total guarantee reserves of EUR 1,464 million (six months ended June 30, 2012: decrease of EUR 542 million). The main drivers of this decrease are EUR 177 million related to an increase in equity markets (six months ended June 30, 2012: EUR 211 million), EUR 17 million related to a decrease in equity volatilities (six months ended June 30, 2012: EUR 59 million), EUR 1,213 million related to increases in risk free rates (six months ended June 30, 2012: EUR (703) million) and EUR 130 million related to the increase in the spread of credit risk (six months ended June 30, 2012: EUR 119 million). Hedges related to these guarantee reserves contributed fair value losses of EUR 1,358 million to income before tax (six months ended June 30, 2012: loss of EUR 607 million) and DAC offset and other contributed a gain of EUR 9 million (six months ended June 30, 2012: EUR 200 million gain).

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iv Additional information on credit risk, unrealized losses and impairments

Debt instruments

The amortized cost and fair value of debt securities, money market investments and other, included in Aegon’s available-for-sale (AFS) and held to maturity (HTM) portfolios, are as follows as of June 30, 2013:

June 30, 2013 In million EUR										Fair value of instruments with unrealized gains		Fair value of instruments with unrealized losses
	Amortized Cost		Unrealized gains		Unrealized losses			Total fair value
Debt securities
United States Government		5,878		449		(122	)		6,205		4,232		1,973
Dutch Government		3,467		258		(14	)		3,711		3,427		284
Other Government		12,877		1,149		(157	)		13,869		10,910		2,959
Mortgage backed securities		10,686		675		(333	)		11,028		7,364		3,664
Asset backed securities		6,744		424		(259	)		6,909		4,062		2,847
Corporate		48,347		3,997		(900	)		51,444		40,319		11,125
Money market investments		6,077		—		—			6,077		6,077		—
Other		1,086		156		(32	)		1,210		1,024		186
Total		95,162		7,108		(1,817	)		100,453		77,415		23,038
Of which held by Aegon Americas, NL and UK		92,509		6,965		(1,762	)		97,712		75,333		22,380

December 31, 2012 In million EUR										Fair value of instruments with unrealized gains		Fair value of instruments with unrealized losses
	Amortized cost		Unrealized gains		Unrealized losses			Total fair value
Debt securities
United States Government		5,066		779		(9	)		5,836		5,256		580
Dutch Government		3,471		447		(1	)		3,917		3,724		193
Other Government		12,707		1,949		(39	)		14,617		13,325		1,292
Mortgage backed securities		10,217		837		(320	)		10,734		8,561		2,173
Asset backed securities		7,035		475		(440	)		7,070		4,387		2,683
Corporate		47,389		6,399		(569	)		53,219		48,207		5,012
Money market investments		8,687		—		—			8,687		8,687		—
Other		1,147		123		(56	)		1,214		854		360
Total		95,719		11,009		(1,434	)		105,294		93,001		12,293
Of which held by Aegon Americas, NL and UK		93,066		10,793		(1,397	)		102,462		90,513		11,949

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Unrealized Bond Losses by Sector

The composition by industry categories of debt securities and money market investments that are included in Aegon’s available-for-sale and held to maturity portfolios in an unrealized loss position held by Aegon at June 30, 2013 and December 31, 2012 respectively, is presented in the following table:

	June 30, 2013					December 31, 2012
In million EUR	Carrying value of instruments with unrealized losses		Gross unrealized losses			Carrying value of instruments with unrealized losses		Gross unrealized losses
Residential mortgage backed securities (RMBSs)		2,527		(301	)		1,987		(397	)
Commercial mortgage backed securities (CMBSs)		1,756		(133	)		847		(102	)
Asset Backed Securities (ABSs)—CDOs backed by ABS, Corp. Bonds, Bank loans		1,027		(67	)		993		(86	)
ABSs—Other		1,090		(81	)		967		(162	)
Financial Industry – Banking		2,386		(326	)		1,414		(328	)
Financial Industry – Brokerage		63		(6	)		21		(3	)
Financial Industry—Insurance		917		(68	)		555		(58	)
Financial Industry—REITs		284		(20	)		148		(5	)
Financial Industry—Financial other		266		(23	)		175		(16	)
Industrial—Basic Industry		892		(61	)		179		(5	)
Industrial—Capital Goods		593		(34	)		240		(13	)
Industrial—Consumer cyclical		770		(42	)		332		(19	)
Industrial—Consumer non-cyclical		1,408		(77	)		425		(17	)
Industrial—Energy		571		(39	)		198		(14	)
Industrial—Technology		355		(19	)		187		(8	)
Industrial—Transportation		538		(37	)		304		(22	)
Industrial—Communications		687		(40	)		227		(14	)
Industrial—Industrial other		180		(13	)		51		(5	)
Utility—Electric		538		(40	)		278		(16	)
Utility—Natural gas		281		(18	)		97		(4	)
Utility—Utility other		3		—			2		—
Sovereign		5,062		(286	)		1,963		(47	)
Total Aegon Americas, NL and UK		22,194		(1,731	)		11,590		(1,341	)
Held by other units		658		(53	)		346		(37	)
Total		22,852		(1,784	)		11,936		(1,378	)

The information presented above is subject to rapidly changing conditions. As such, Aegon expects the level of securities with overall unrealized losses to fluctuate. The recent volatility of financial market conditions has resulted in increased recognition of both investment gains and losses, as portfolio risks are adjusted through sales and purchases.

As of June 30, 2013, there are EUR 6,805 million of gross unrealized gains and EUR 1,731 million of gross unrealized losses in the AFS debt securities portfolio of Aegon Americas, Aegon The Netherlands and Aegon UK. One issuer represents more than 4% of the total unrealized loss position. The unrealized loss is EUR 122 million and relates to the United States of America Treasuries.

Financial and credit market conditions were mixed in the first half of 2013. Developed-world growth remains below potential, frustrating attempts to generate a strong recovery. The credit crisis that began as a result of the subprime mortgage loan crisis continues to evolve into concerns about governmental borrowing and debt levels across much of the world. European sovereign debt has been under significant pressure, particularly in the second quarter of 2013, as concerns for default risk in the peripheral European countries have begun to expand to the larger nations. High governmental debt levels remain a concern in the U.S. as

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well, including those of state and local governments. Most world equity markets performed well during the early months of 2013, but have generally weakened during the remainder of the first half, and most markets outside the U.S. are generally mixed year-to-date. In the U.S., the Federal Reserve maintained a Fed Funds rate near zero. U.S. Treasury rates fell to yearly lows early in the second quarter only to rise sharply by mid-year as markets began to discount the end of Fed quantitative easing. Corporate default rates continued to be relatively low in 2013 due largely to readily available access to funding and strong corporate balance sheet fundamentals. Credit spreads, though, were mixed to higher in the first half of 2013. Commodity prices have generally trended lower early in the first half of 2013 as growth expectations weakened, though some, such as oil, rallied dramatically at the end of the first half.

Impairment of financial assets

Aegon regularly monitors industry sectors and individual debt securities for indicators of impairment. These indicators may include one or more of the following: 1) deteriorating market to book ratio, 2) increasing industry risk factors, 3) deteriorating financial condition of the issuer, 4) covenant violations of the issuer, 5) high probability of bankruptcy of the issuer, or 6) nationally recognized credit rating agency downgrades. Additionally, for asset-backed securities, cash flow trends and underlying levels of collateral are monitored. A security is impaired if there is objective evidence that a loss event has occurred after the initial recognition of the asset that has a negative impact on the estimated future cash flows and when it is determined that not all amounts due (both principal and interest) will be collected as contractually scheduled.

In the sections below a description is provided on the composition of the categories of debt securities and money market investments. Individual issuers rated below investment grade in any sector, which have unrealized loss positions greater than EUR 25 million, will be disclosed separately. Furthermore, quality ratings of investment portfolios are based on a hierarchy of S&P, Moody’s, Fitch, Internal and NAIC.

1. Residential mortgage-backed securities

Aegon Americas, Aegon The Netherlands and Aegon UK hold EUR 7,028 million of residential mortgage-backed securities (RMBS), of which EUR 5,039 million is held by Aegon USA, EUR 671 million by Aegon UK and EUR 1,318 million by Aegon The Netherlands. RMBS securities are securitizations of underlying pools of non-commercial mortgages on real estate. The underlying residential mortgages have varying credit characteristics and are pooled together and sold in tranches. The following table shows the breakdown of Aegon USA’s RMBS available-for-sale portfolio. Additionally, Aegon USA has investments in RMBS of EUR 72 million (2012: EUR 97 million), which are classified as fair value through profit or loss.

AFS RMBS by quality

In million EUR	AAA		AA		A		BBB		<BBB		Total amortized cost		Total fair value
GSE guaranteed		—		1,276		444		—		—		1,720		1,761
Prime Jumbo		—		8		3		14		243		268		268
Alt-A		—		39		11		10		553		613		706
Negative Amortization Floaters		—		33		—		38		727		798		889
Reverse Mortgage RMBS		—		—		—		213		73		286		204
Subprime mortgage1		106		241		95		97		602		1,141		1,143
Manufactured housing1		11		17		6		18		13		65		66
Other housing1		2		—		—		—		—		2		2
At June 30, 2013		119		1,614		559		390		2,211		4,893		5,039
Of which insured		—		164		12		14		271		461		443

¹  Reported as part of asset backed securities in the table on page 53.

AFS RMBS by quality

In million EUR	AAA		AA		A		BBB		<BBB		Total amortized cost		Total fair value
GSE guaranteed		—		1,336		193		—		—		1,529		1,632
Prime Jumbo		10		11		3		14		252		290		290
Alt-A		18		43		—		10		571		642		735
Negative Amortization Floaters		—		36		18		44		728		826		858
Reverse Mortgage RMBS		—		—		—		222		77		299		213
Subprime mortgage1		177		285		61		69		644		1,236		1,124
Manufactured housing1		22		15		12		24		7		80		80
Other housing1		46		—		—		—		—		46		47
At December 31, 2012		273		1,726		287		383		2,279		4,948		4,979
Of which insured		5		174		13		16		284		492		427

¹  Reported as part of asset backed securities in the table on page 53.

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RMBS of Aegon USA are monitored and reviewed on a monthly basis. Detailed cash flow models using the current collateral pool and capital structure on the portfolio are updated and reviewed quarterly. Model output is generated under base and stress-case scenarios. Aegon’s RMBS asset specialists utilize widely recognized industry modeling software to perform a loan-by-loan, bottom-up approach to modeling. Key assumptions used in the models are projected defaults, loss severities, and prepayments. Each of these key assumptions varies greatly based on the significantly diverse characteristics of the current collateral pool for each security. Loan-to-value, loan size, and borrower credit history are some of the key characteristics used to determine the level of assumption that is utilized. Defaults were estimated by identifying the loans that are in various delinquency buckets and defaulting a certain percentage of them over the near-term and long-term. Assumed defaults on delinquent loans are dependent on the specific security’s collateral attributes and historical performance.

Loss severity assumptions were determined by obtaining historical rates from broader market data and by adjusting those rates for vintage, specific pool performance, collateral type, mortgage insurance and estimated loan modifications. Prepayments were estimated by examining historical averages of prepayment activity on the underlying collateral. Quantitative ranges of significant assumptions within Aegon’s modeling process for Prime Jumbo, Alt-A and Negative Amortization RMBS are as follows: prepayment assumptions range from approximately 0.5% to 25% (2012: 0.5% to 25%) with a weighted average of approximately 4.9% (2012: 4.8%), assumed defaults on delinquent loans range from 50% to 100% (2012: 50% to 100%) with a weighted average of approximately 84.8% (2012: 84.6%), assumed defaults on current loans are dependent on the specific security’s collateral attributes and historical performance, while loss severity assumptions range from approximately 13.9% to 75% (2012: 13.9% to 75%), with a weighted average of approximately 54.4% (2012: 54.3%). Additionally, quantitative ranges of significant assumptions within Aegon’s modeling process for the RMBS subprime mortgage portfolio are as follows: prepayment assumptions range from approximately 2% to 6% (2012: 2% to 6%) with a weighted average of approximately 5.2% (2012: 5.2%), assumed defaults on delinquent loans range from 60% to 100% (2012: 60% to 100%) with a weighted average of approximately 87.1% (2012: 87.2%), assumed defaults on current loans are dependent on the specific security’s collateral attributes and historical performance, while loss severity assumptions range from approximately 62.5% to 103% (2012: 62% to 103%), with a weighted average of approximately 73.0% (2012: 72.9%).

Once the entire pool is modeled, the results are closely analyzed by Aegon’s asset specialists to determine whether or not Aegon’s particular tranche or holding is at risk for not collecting all contractual cash flows taking into account the seniority and other terms of the tranches held. Aegon impaired its particular tranche to fair value where it would not be able to receive all contractual cash flows.

The total gross unrealized loss on AFS RMBS of Aegon Americas, Aegon The Netherlands and Aegon UK amount to EUR 301 million (2012: EUR 397 million), of which EUR 271 million (2012: EUR 351 million) relates to positions of Aegon USA, and the total net unrealized gain on available-for-sale RMBS is EUR 251 million (2012: EUR 157 million), including a EUR 147 million (2012: EUR 31 million) net unrealized gain relating to positions of Aegon USA. The gross unrealized loss in the sector is primarily a result of the housing downturn the United States has experienced since 2007. Even with the stabilization over the past two years, fundamentals in RMBS continue to be weak, which impacts the magnitude of the unrealized loss. Delinquencies and severities in property liquidations remain at an elevated level, while prepayments remain at historically low levels. Due to the weak fundamental situation, reduced liquidity, and the requirement for higher yields due to market uncertainty, credit spreads remain elevated across the asset class.

The fair values of Aegon USA’s RMBS instruments are as follows:

In million EUR	Level II		Level III		June 30 2013		Level II		Level III		December 31 2012
RMBS		4,797		311		5,108		4,730		349		5,079

RMBS Reverse Mortgages by quality

In million EUR											Total		Total
											amortized		fair
Vintage year	AAA		AA		A		BBB		<BBB		cost		value
2005 & Prior		—		—		—		—		73		73		56
2006		—		—		—		60		—		60		43
2007		—		—		—		153		—		153		105
At June 30, 2013		—		—		—		213		73		286		204

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RMBS Reverse Mortgages by quality

In million EUR											Total		Total
											amortized		fair
Vintage year	AAA		AA		A		BBB		<BBB		cost		value
2005 & Prior		—		—		—		—		77		77		59
2006		—		—		—		65		—		65		46
2007		—		—		—		157		—		157		108
At December 31, 2012		—		—		—		222		77		299		213

RMBS – Subprime Mortgages

As part of Aegon’s AFS RMBS portfolio, Aegon holds EUR 1,143 million of securitized RMBS—Subprime mortgages, with net unrealized gains of EUR 2 million at June 30, 2013; fully owned by Aegon USA. RMBS—Subprime mortgages are secured by pools of residential mortgage loans primarily those which are categorized as subprime.

Aegon categorizes mortgage backed securities issued by a securitization trust as having subprime mortgage exposure when the average credit score (FICO) of the underlying mortgage borrowers in a securitization trust is below 660 at issuance. Aegon also categorizes mortgage backed securities issued by a securitization trust with second lien mortgages as subprime mortgage exposure, even though a significant percentage of second lien mortgage borrowers may not necessarily have credit scores below 660 at issuance. The table below summarizes vintage and quality of the AFS RMBS—Subprime mortgage portfolio of Aegon USA. Additionally, Aegon USA has investments in RMBS Subprime mortgages of less than EUR 0.1 million (2012: EUR 4 million), which are classified as fair value through profit or loss.

The table below summarizes the comparative information on vintage and quality of the AFS RMBS – subprime mortgage portfolio of Aegon USA.

RMBS Subprime mortgages by quality

In million EUR											Total				Total
											amortized		Of which		fair
Vintage year	AAA		AA		A		BBB		<BBB		cost		insured		value
2004 & Prior		37		34		40		37		64		212		33		208
2005		19		27		4		—		97		147		—		141
2006		33		33		8		11		48		133		9		162
2007		13		112		9		9		42		185		81		204
2008		—		32		—		—		—		32		32		28
Total Sub-prime Mortgages-		102		238		61		57		251		709		155		743
Fixed rate
2004 & Prior		3		1		3		—		34		41		26		30
2005		1		—		3		27		19		50		—		52
2006		—		—		—		5		65		70		7		59
2007		—		—		—		—		65		65		18		59
Total Sub-prime Mortgages-		4		1		6		32		183		226		51		200
Floating rate
2004 & Prior		—		—		24		8		6		38		17		35
2005		—		—		—		—		21		21		21		26
2006		—		—		4		—		46		50		50		53
2007		—		2		—		—		95		97		97		86
Total Second Lien Mortgages1		—		2		28		8		168		206		185		200
At June 30, 2013		106		241		95		97		602		1,141		391		1,143

¹ Second lien collateral primarily composed of loans to prime and Alt-A borrowers

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RMBS Subprime mortgages by quality

In million EUR											Total				Total
											amortized		Of which		fair
Vintage year	AAA		AA		A		BBB		<BBB		cost		insured		value
2004 & Prior		57		58		42		18		61		236		38		225
2005		25		30		4		—		106		165		—		153
2006		38		39		—		12		50		139		9		160
2007		28		118		—		—		41		187		85		197
2008		—		32		—		—		—		32		32		27
Total Sub-prime Mortgages-		148		277		46		30		258		759		164		762
Fixed rate
2004 & Prior		3		4		—		1		34		42		27		31
2005		3		—		3		26		22		54		—		48
2006		—		—		2		4		65		71		7		36
2007		—		—		—		—		83		83		18		54
2008		—		—		—		—		—		—		—		—
Total Sub-prime Mortgages-		6		4		5		31		204		250		52		169
Floating rate
2004 & Prior		23		2		5		8		6		44		19		40
2005		—		—		—		—		24		24		24		24
2006		—		—		5		—		50		55		55		55
2007		—		2		—		—		102		104		104		74
Total Second Lien Mortgages1		23		4		10		8		182		227		202		193
At December 31, 2012		177		285		61		69		644		1,236		418		1,124

¹ Second lien collateral primarily composed of loans to prime and Alt-A borrowers

There is one individual issuer rated below investment grade in this RMBS sector which have unrealized loss position greater than EUR 25 million.

										Aging of
In million EUR	Category		Fair Value		Unrealized Loss			Rating		Unrealized Loss
Soundview Hm Eq Ln 2006-OPT1		RMBS – Subprime Mortgage		16		(30	)		CC		> 24 months

For the RMBS—Subprime mortgage holding, the underlying collateral pool has experienced higher than expected delinquencies and losses, which was further exacerbated by the impact of declining home values on borrowers using affordability products. This has led to the underlying collateral pool having reduced cash flows in comparison to expectations at origination. Increased losses have eroded the subordination in this security, which in turn has led to a decline in the level of protection to Aegon’s tranche within the collateral pool. Despite the decline in the level of protection provided by the subordination for this security, cash flow modeling continues to indicate full recovery of principal and interest.

Securities are impaired to fair value when Aegon expects that it will not receive all contractual cash flows on Aegon’s tranches. As the remaining unrealized losses in the RMBS portfolio relate to holdings where Aegon expects to receive full principal and interest, Aegon does not consider the underlying investments to be impaired as of June 30, 2013.

2. Commercial mortgage-backed securities

Aegon Americas, Aegon The Netherlands and Aegon UK hold EUR 5,625 million of AFS commercial mortgage-backed securities (CMBS), of which EUR 5,162 million is held by Aegon USA, EUR 399 million by Aegon UK and EUR 44 million by Aegon The Netherlands. CMBS are securitizations of underlying pools of mortgages on commercial real estate. The underlying mortgages have varying risk characteristics and are pooled together and sold in different rated tranches. The Company’s CMBS includes conduit, large loan, single borrower, commercial real estate collateral debt obligations (CRE CDOs), collateral debt obligations (CDOs), government agency, and franchise loan receivable trusts.

The total gross unrealized loss on AFS CMBS of Aegon Americas, Aegon The Netherlands and Aegon UK amounts to EUR 133 million, of which EUR 132 million relates to positions of Aegon USA. The total net unrealized gain on CMBS is EUR 166 million, of which EUR 93 million (2012: EUR 247 million) relates to positions of Aegon USA. The commercial real estate market previously experienced a deterioration in property level fundamentals over 2008-2010, which led to an increase in CMBS loan-level delinquencies. The introduction of 30% credit enhanced tranches within the 2005-2008 vintage deals provide some offset to these negative fundamentals. Over the last year, the CMBS market experienced several positive factors as commercial real estate fundamentals have begun to display some signs of stabilization. The pace of credit deterioration appears to be moderating as property transactions have increased and there is greater availability of financing for commercial real estate. Liquidity has improved within the CMBS market, but a broad re-pricing of risk has kept credit spreads on legacy subordinate CMBS tranches at wide levels.

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The tables below summarize the credit quality of Aegon USA’s AFS CMBS portfolio. Additionally, Aegon USA has investments in CMBS of EUR 49 million (2012: EUR 62 million), which are classified as fair value through profit or loss.

CMBS by quality

In million EUR											Total		Total
											amortized		fair
	AAA		AA		A		BBB		<BBB		cost		value
CMBS		3,912		336		377		203		185		5,013		5,122
CMBS and CRE CDOs		—		—		—		11		45		56		40
At June 30, 2013		3,912		336		377		214		230		5,069		5,162

CMBS by quality

In million EUR											Total		Total
											amortized		fair
	AAA		AA		A		BBB		<BBB		cost		value
CMBS		3,678		354		394		212		168		4,806		5,095
CMBS and CRE CDOs		—		—		1		19		64		84		42
At December 31, 2012		3,678		354		395		231		232		4,890		5,137

The table below summarizes vintage and quality of the available-for-sale CMBS portfolio of Aegon USA.

CMBS (AFS) by quality

In million EUR Vintage year	AAA		AA		A		BBB		<BBB		Total amortized cost		Total fair value
2004 & Prior		188		86		34		11		40		359		361
2005		398		9		10		60		25		502		517
2006		880		37		28		3		53		1,001		1,045
2007		711		64		251		140		93		1,259		1,306
2008		113		76		54		—		19		262		278
2009		71		2		—		—		—		73		79
2010		300		—		—		—		—		300		317
2011		192		—		—		—		—		192		201
2012		572		20		—		—		—		592		559
2013		487		42		—		—		—		529		499
At June 30, 2013		3,912		336		377		214		230		5,069		5,162

CMBS (AFS) by quality

In million EUR Vintage year	AAA		AA		A		BBB		<BBB		Total amortized cost		Total fair value
2004 & Prior		338		134		38		10		58		578		565
2005		436		9		27		43		25		540		565
2006		941		45		34		6		68		1,094		1,161
2007		765		86		241		154		81		1,327		1,399
2008		113		76		54		19		—		262		275
2009		70		2		—		—		—		72		82
2010		297		—		—		—		—		297		332
2011		202		—		—		—		—		202		225
2012		516		2		—		—		—		518		533
At December 31, 2012		3,678		354		394		232		232		4,890		5,137

CMBS of Aegon USA are monitored and reviewed on a monthly basis. Detailed cash flow models using the current collateral pool and capital structure on the portfolio are updated and reviewed quarterly. Model output is generated under base and several stress-case scenarios by Aegon’s internal CMBS asset specialists. For conduit securities, a widely recognized industry modeling software is used to perform a loan-by-loan, bottom-up approach. For non-conduit securities, a CMBS asset specialist works closely with Aegon’s real estate valuation group to determine underlying asset valuation and risk. Both methodologies incorporate external estimates on the property market, capital markets, property cash flows, and loan structure. Results are then closely analyzed by the asset specialist to determine whether or not a principal or interest loss is expected to occur.

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Securities are impaired to fair value when Aegon expects that it will not receive all contractual cash flows on its tranches. As the remaining unrealized losses in the CMBS portfolio relate to holdings where Aegon expects to receive full principal and interest, Aegon does not consider the underlying investments to be impaired as of June 30, 2013.

The fair values of Aegon USA’s CMBS instruments were determined as follows:

In million EUR	Level II		Level III		June 30 2013		Level II		Level III		Total 2012
CMBS		5,167		43		5,210		5,145		54		5,199

3. Asset-backed securities

Aegon Americas, Aegon The Netherlands and Aegon UK hold EUR 4,965 million of AFS ABS instruments of which EUR 2,810 million is held by Aegon USA, EUR 970 million by Aegon UK and EUR 1,150 million by Aegon The Netherlands. The total gross unrealized loss on ABSs is EUR 148 million, of which EUR 66 million relates to positions of Aegon USA, and the total net unrealized gain on ABSs is EUR 86 million, including a EUR 0 million net gain/loss related to positions of Aegon USA. These are securitizations of underlying pools of credit card receivables, auto financing loans, small business loans, bank loans, and other receivables. The underlying assets of the asset backed securities have been pooled together and sold in tranches with varying credit ratings. The breakdown of quality of the available-for-sale ABS portfolio of Aegon USA is as follows:

ABS (AFS) by quality

In million EUR											Total amortized		Total fair
Vintage year	AAA		AA		A		BBB		<BBB		cost		value
CDOs backed by ABS, Corp. Bonds, Bank loans		317		321		27		13		46		724		722
Other ABS		886		323		365		237		275		2,086		2,088
At June 30, 2013		1,203		644		392		250		321		2,810		2,810

ABS (AFS) by quality

In million EUR											Total amortized		Total fair
Vintage year	AAA		AA		A		BBB		<BBB		cost		value
CDOs backed by ABS, Corp. Bonds, Bank loans		260		207		15		—		30		512		501
Other ABS		1,060		332		447		354		253		2,446		2,406
At December 31, 2012		1,320		539		462		354		283		2,958		2,907

The fair values of Aegon USA’s ABS instruments were determined as follows:

In million EUR	Level II		Level III		June 30 2013		Level II		Level III		Total 2012
ABSs		1,733		1,077		2,810		1,981		926		2,907

ABS – CDOs backed by ABS, corporate bonds, bank loans

The total gross unrealized loss on the CDOs backed by ABS, Corporate Bonds and Bank Loans amounts to EUR 67 million, of which EUR 14 million is held by Aegon USA. The net unrealized loss on these securities is EUR 47 million, of which EUR 2 million is held by Aegon USA. CDO’s are primarily secured by pools of corporate bonds and leveraged bank loans. The unrealized loss is a function of decreased liquidity and increased credit spreads in the market for structured finance. All of the individual debt securities have been modeled using the current collateral pool and capital structure. Assumed defaults on delinquent loans are dependent on the specific security’s collateral attributes and historical experience. Results are then closely analyzed by the asset specialist to determine whether or not a principal or interest loss is expected to occur. Securities are impaired to fair value when Aegon expects that it will not receive all contractual cash flows on its tranches. The remaining CDO portfolio positions are not considered impaired as of June 30, 2013.

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There is one individual issuer rated below investment grade in this ABS sector which has unrealized loss position greater than EUR 25 million.

In million EUR	Category		Fair Value		Unrealized Loss			Rating		Aging of Unrealized Loss
SVG Diamond Holdings II Limited		ABS – CDO		90		(28	)		BB, CCC		> 24 months

For the ABS—CDO holding, the underlying collateral pool contains exposure to roughly 40 private equity funds containing approximately 500 distinct investments in the underlying portfolio of companies. Due to the worsened economic climate the valuation of the underlying private equity investments has declined in comparison to expectations at origination. Increased collateral losses have reduced the subordination available as credit enhancement to this security, which in turn has led to a decline in the level of protection to Aegon’s tranche within the collateral pool. Despite the decline in the level of protection provided by the subordination for this security, cash flow modeling continues to indicate full recovery of principal and interest, Aegon does not consider the underlying investments to be impaired as of June 30, 2013.

Other ABSs

The total gross unrealized loss on AFS Other ABS amounts to EUR 81 million, of which EUR 52 million is held by Aegon USA. The net unrealized gain on Other ABSs is EUR 133 million, of which EUR 2 million is held by Aegon USA. ABS—other includes debt issued by securitization trusts collateralized by various other assets including credit cards, pooled aircraft loans, small business loans, student loans, timeshare loans, franchise loans and other asset categories.

The table below summarizes the comparative information on vintage and quality of the AFS Other ABS portfolio of Aegon USA.

ABS (AFS) by quality

In million EUR											Total amortized		Total fair
Vintage year	AAA		AA		A		BBB		<BBB		cost		value
Credit Cards		289		66		208		22		2		587		609
Autos		211		4		—		—		—		215		219
Small Business Loans		—		6		24		126		108		264		253
Other ABS		386		247		133		89		165		1,020		1,007
At June 30, 2013		886		323		365		237		275		2,086		2,088

ABS (AFS) by quality

In million EUR											Total amortized		Total fair
Vintage year	AAA		AA		A		BBB		<BBB		cost		value
Credit Cards		386		63		313		112		3		877		913
Autos		287		4		—		—		—		291		297
Small Business Loans		5		10		46		152		87		300		242
Other ABS		382		255		88		90		163		978		954
At December 31, 2012		1,060		332		447		354		253		2,446		2,406

The most significant of these sub-sectors from a gross unrealized loss perspective is student loans, small business loans and pooled aircraft loans. The unrealized losses are a function of decreased liquidity and increased credit spreads in the market. Where ratings have declined to below investment grade, the individual debt securities have been modeled. Assumed defaults on delinquent loans are dependent on the specific security’s collateral attributes and historical experience. Results are then closely analyzed by the asset specialist to determine whether or not a principal or interest loss is expected to occur. Securities are impaired to fair value when Aegon expects that it will not receive all contractual cash flows on its tranches. As the remaining unrealized losses in the ABS – other portfolio relate to holdings where Aegon expects to receive full principal and interest, Aegon does not consider the underlying investments to be impaired as June 30, 2013.

4. FINANCIAL

The Financial sector is further subdivided into banking, brokerage, insurance, REIT’s and financial other, with a vast majority of the gross unrealized losses in banking. Companies within Aegon’s financial sector are generally high in credit quality and, as a whole, represent a large portion of the corporate debt market.

Since the peak of the financial crisis, unrealized losses in the sector have declined materially as progress has been made toward reducing operational and systemic risk. Following on global Central Bank actions to provide liquidity and valuation support, regulators have now implemented a wide array of reforms designed to strengthen capital levels, reduce balance sheet risk and improve liquidity across the sector. Given significant progress, central banks have now begun preparing the market for less central bank support going forward. Capital and liquidity buffers will continue to be strengthened as required by Basel III and decisive steps in the Euro area toward a Banking Union, supervised by the ECB, should further increase confidence in the sector’s ability to weather economic headwinds and reduce future risk to taxpayers.

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Banking

The banking sub-sector in Aegon’s portfolio is relatively large, diverse, and of high quality. Aegon holds EUR 8,626 million (2012: EUR 8,319 million) of AFS bonds issued by banks. In aggregate, the gross unrealized loss on these bonds amounts to EUR 326 million and the net unrealized gain on these bonds amounts to EUR 91 million (2012: EUR 326 million). The gross unrealized losses in the banking sub-sector primarily reflect the size of Aegon’s holdings, low floating rate coupons on some securities, and credit spread widening in the sector due to the Sovereign debt crisis in Europe, residual impact from the U.S. financial crisis, and uncertainty around the impact of a global economic slowdown. Following the implementation of new, more stringent global legislation on bank capital and liquidity requirements, credit spreads in the sector have outperformed the broader corporate market in the first half of 2013. Decisive steps by EU leaders and world central banks continue to stabilize the euro and improve funding conditions for most banks. Globally, there remain pockets of concentrated risk on bank balance sheets, and ratings for some countries and banks remain under pressure, but the banking sub-sector has largely been strengthened and oversight increased.

The value of Aegon’s investments in deeply subordinated securities in the financial services sector may be significantly impacted if issuers of certain securities with optional deferral features exercise the option to defer coupon payments or are required to defer as a condition of receiving government aid. The deeply subordinated securities issued by non-US Banks are broadly referred to as capital securities which can be categorized as Tier 1 or Upper Tier 2 capital. Capital securities categorized as “Tier 1” are typically perpetual with a non-cumulative coupon that can be deferred under certain conditions. Capital securities categorized as “Upper Tier 2” are generally perpetual with a cumulative coupon that is deferrable under certain conditions. The deeply subordinated securities issued by US Banks can be categorized as Trust Preferred or Hybrid. Capital securities categorized as trust preferred typically have an original maturity of 30 years with call features after 10 years with a cumulative coupon that is deferrable under certain conditions. Capital securities categorized as hybrid typically have an original maturity of more than 30 years, may be perpetual and are generally subordinate to traditional trust preferred securities.

The following table highlights Aegon’s credit risk to capital securities within the banking sector:

In million EUR			The		United		New		Cost		Fair
	Americas		Netherlands		Kingdom		Markets		Price		Value
Hybrid		109		—		25		—		134		141
Trust preferred		460		—		17		—		477		411
Tier 1		219		—		223		17		459		437
Upper Tier 2		436		—		50		4		490		350
At June 30, 2013		1,224		—		315		21		1,560		1,339

			The		United		New		Cost		Fair
In million EUR	Americas		Netherlands		Kingdom		Markets		Price		Value
Hybrid		120		—		25		—		145		155
Trust preferred		453		—		17		—		470		400
Tier 1		217		—		240		20		477		451
Upper Tier 2		433		—		78		4		514		348
At December 31, 2012		1,223		—		360		24		1,606		1,354

There are three individual issuers rated below investment grade in the banking sub-sector which have unrealized losses greater than EUR 25 million.

	Fair value		Gross Unrealized Loss			Rating		Aging of Unrealized Loss
Belfius Bank & Insurance		59		(46	)		BB-		>24 months
Lloyds Banking Group PLC		56		(30	)		BB+/BB		>24 months
Royal Bank of Scotland Group PLC		54		(25	)		BB+/BB-		>24 months

Aegon’s available-for-sale debt securities for Belfius Bank SA have a fair value of EUR 59 million as of June 30, 2013. These below-investment-grade securities are Upper Tier 2 and had gross unrealized losses of EUR 46 million as of June 30, 2013.

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Belfius Bank SA was created subsequent to the restructuring of Dexia SA. Dexia’s reliance on short-term wholesale funding caused it to nearly collapse as funding markets froze in 2008 and 2009. Capital injections from Belgium, France and Luxembourg, along with guarantees on Dexia’s funding, provided sufficient access to funding markets until the Sovereign debt crisis in 2011 put too much strain on Dexia’s large funding needs. In November 2011, a new restructuring plan was put in place for Dexia SA and 100% of Dexia Bank Belgium was sold to the Belgian state. Aegon’s bonds now form part of the capital structure of that entity which was rebranded as Belfius Bank SA during the first half of 2012. Payments continue to be made on Aegon’s holdings in accordance with the original bond agreements. Aegon evaluated the near-term prospects of the issuer and it is believed that the contractual terms of these investments will be met and these investments are not impaired as of June 30, 2013.

Aegon’s available-for-sale debt securities for Lloyds Banking Group PLC have a fair value of EUR 56 million as of June 30, 2013, all of which relate to holdings rated below investment grade. The Upper Tier 2 securities are rated from BB+ to BB depending on the individual features of the debt securities. As of June 30, 2013 gross unrealized losses were EUR 30 million. Lloyds Banking Group PLC was created from the merger of Lloyds TSB and HBOS PLC in the fall of 2008 as the shutdown in capital markets threatened the sustainability of HBOS PLC’s wholesale funding and specialist lending model. Following an emergency capital injection, the UK Government currently owns 39.2% of the combined Lloyds Banking Group PLC. Today, Lloyds Banking Group PLC operates the largest retail bank in the UK as well as large commercial banking, wealth, asset management, and insurance businesses. The Group operates primarily in the UK and is heavily reliant on the UK for its core earnings. The strategic restructuring plan that Lloyds implemented in 2009 has materially reduced risk by improving the profitability level of its core businesses, improving capital ratios, reducing reliance on wholesale funding, and increasing liquidity reserves. Aegon evaluated the near-term prospects of the issuer and it is believed that the contractual terms of these investments will be met going forward and these remaining investments are not impaired as of June 30, 2013.

Aegon’s available-for-sale debt securities for Royal Bank of Scotland Group PLC (RBS) have a fair value of EUR 61 million as of June 30, 2013, of which EUR 54 million relates to holdings rated below investment grade. The Tier 1 and Upper Tier 2 securities are rated BB+ to BB-, depending on the individual features of the debt securities. As of June 30, 2013 gross unrealized losses were EUR 25 million, of which EUR 25 million related to holdings rated below investment grade. RBS is one of the world’s largest universal banks with historically prominent positions in both global wholesale banking and in UK financial services. The bank was impacted by the global financial market crisis in 2008 and, ultimately, the UK government was forced to take a majority equity stake in the bank to stabilize it. In addition, a large portion of RBS’ riskiest assets were placed under the UK’s Asset Protection Plan (APS), limiting the potential loss to RBS. RBS announced its exit from the APS program in October 2012, the culmination of several years of hard work to get its balance sheet and funding needs downsized to a sustainable level. RBS continues to make progress on its restructuring plan, showing improvement in the profitability levels of its core businesses, improving capital ratios, reducing reliance on wholesale funding, and increasing liquidity reserves. Aegon evaluated the near-term prospects of the issuer and it is believed that the contractual terms of these investments will be met and these remaining investments are not impaired as of June 30, 2013.

Insurance

The unrealized losses that exist in the insurance sub-sector primarily reflect general spread widening as a result of the financial crisis and other factors, including the ongoing low interest rate environment, which has been compounded in some cases by the structure of the securities (subordination or other structural features and duration). Aegon evaluated the near-term prospects of the issuers in relation to the severity and duration of the unrealized loss and does not consider those investments to be impaired as of June 30, 2013.

There are no individual issuers rated below investment grade in the Insurance sub-sector which have unrealized losses greater than EUR 25 million.

5. INDUSTRIAL

The Industrial sector is further subdivided into various sub sectors with a majority of its gross unrealized loss in Basic Industries, Consumer Cyclical, Consumer Non-Cyclical, Communications, and Energy.

Basic Industries

The Basic Industries sector encompasses various sub-sectors including metals and mining, chemicals and paper and forest products with the majority of the loss relating to metals and mining. Fundamentals for the metals and mining industry have been negatively impacted by falling prices for base metals, non-ferrous metals, precious metals, coal and steel. Disappointing economic data out of China has been the main driver of the pricing pressure for the base metals and bulk steel-making commodities as the country comprises from 40%-60% of the demand for most of these commodities. Rising interest rates have put pressure on precious metals as investors become less worried about inflation and look to put money to work in income generating assets. Chemicals have been positively impacted by continued low natural gas prices within the US, but given the global scale of most players in the industry, they have also been harmed by a slowdown in global growth as well as volatility in raw material costs and increasing competition from global peers. Paper and forest products have shown some improvement as

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the housing recovery takes hold in the United States, but more traditional paper products such as newsprint remains challenged. Aegon evaluated the near-term prospects of the issuers in relation to the severity and duration of the unrealized loss and does not consider those investments to be impaired as of June 30, 2013.

Consumer Cyclical

The most significant of these industries from an unrealized loss perspective is retailers, automotive and gaming. Retail experienced slow revenue growth on mixed economic fundamentals as the consumer benefited from an improvement in household wealth stemming from the stock and housing markets, partially offset by high unemployment, higher payroll taxes, and weak wage growth. The consumer remained focused on value in the highly competitive discretionary space, while retailers focused on balancing promotional activity and discounts (to drive traffic and market share) with tight cost controls and private label offerings. The underlying fundamentals driving sales and earnings performance of the automotive industry are being pressured by weak consumer demand in Europe, largely offset by improving consumer demand for autos in North America. Gaming has seen some weakness in the monthly revenue numbers, especially in the regional markets. Consumer discretionary spending has been down due to higher tax rates. Aegon evaluated the near-term prospects of the issuers and it is believed that the contractual terms of these investments will be met and these investments are not impaired as of June 30, 2013.

Consumer Non-Cyclical

The Consumer Non-Cyclical sub-sector encompasses various industries ranging from consumer products to supermarkets. The more significant of these sub-sectors from an unrealized loss perspective are pharmaceuticals and food and beverage. The Pharmaceutical sector continues to deal with patent cliff issues. As drugs roll off patent, generic competition takes market share and pulls down margins. Additionally, shareholder friendly activities in the form of increased dividends and share repurchases continue. Finally merger and acquisition activity is increasing in the sector, at times resulting in additional leverage. Fundamentals in the food and beverage industry continued to improve, albeit modestly, benefiting from previous price increases, declining commodity costs, and cost reductions/tight cost controls. The slow growth environment combined with improved balance sheets also resulted in an increase in M&A activity. Aegon evaluated the near-term prospects of the issuers and it is believed that the contractual terms of these investments will be met and these investments are not impaired as of June 30, 2013.

Communications

The Communications sub-sector can be further divided into the media cable, media non-cable, wireless and wirelines sub-sectors. Overall, the media cable, wireless and wirelines industries continue to be stable. Merger and acquisition speculation/activity created volatility in wireless and media cable during the quarter. Media non-cable continues to perform at a reasonable level with the print format under secular pressure. The Local Broadcast market has experienced an increase of merger and acquisition activity, as the industry consolidates. Aegon evaluated the near-term prospects of the issuers and it is believed that the contractual terms of these investments will be met and these investments are not impaired as of June 30, 2013.

Energy

The Energy sector can be further divided into the following key subsectors: integrated and E&P, refining, and pipelines. In the integrated and E&P subsector, aggregate credit fundamentals are supported by higher global oil prices and non-U.S. natural gas prices, allowing companies to continue to layer in hedges at attractive levels for the coming year and insulate cash flows. U.S. natural gas prices have modestly recovered, but still remain pressured by abundant new sources of U.S. supply. Refiners are seeing some margin pressure, as the increased supply of high quality shale oil has reduced the discounts available on the lower quality crudes favored by refiners able to process it. Pipeline fundamentals are stable, as volume growth from new infrastructure development associated with shale resources is offsetting resulting pressure on processing margins. Aegon evaluated the near-term prospects of the issuers and it is believed that the contractual terms of these investments will be met and these investments are not impaired as of June 30, 2013.

6. UTILITY

The Utility sector is further subdivided into electrical, natural gas and other sub-sectors with a majority of the gross unrealized losses in electrical.

Electric

Regulated electric utilities, which account for the majority of debt issuance in the sector, continue to produce predictable cash flow and credit trends have been stable to improving for most companies. The low natural gas price environment has been beneficial for regulated utilities because it has had the effect of decreasing the fuel component on customer’s bills. Lower cost to the customer generally enables increases in other operating costs to be passed through with less regulatory lag.

Unregulated merchant power generators have been negatively impacted by low natural gas prices and the corresponding low electricity prices. These companies have experienced margin pressure for their coal and nuclear generation assets. Absent a recovery in electricity prices, credit fundamentals for merchant generators could show further deterioration as hedges continue to roll-off.

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Aegon evaluated the near-term prospects of the issuers in relation to the severity and duration of the unrealized loss and does not consider those investments to be impaired as of June 30, 2013.

7. SOVEREIGN

Aegon Americas, Aegon The Netherlands and Aegon UK’s government issued available-for-sale debt securities including emerging market sovereign bonds, US Treasury bonds, agency and state bonds. All of the issuers in the sovereign sector continue to make payments in accordance with the original bond agreements. Aegon evaluated the near-term prospects of the issuers and it is believed that the contractual terms of these investments will be met and these investments are not impaired as of June 30, 2013.

There is one individual issuer rated below investment grade in the Sovereign sector which has unrealized loss position greater than EUR 25 million.

In million EUR	Category		Fair Value		Unrealized Loss			Rating		Aging of Unrealized Loss
Republic of Argentina		Sovereign		45		(28	)		B-/CC		> 24 months

Aegon’s available-for-sale debt securities for Republic of Argentina have a fair value of EUR 45 million as of June 30, 2013. These below investment grade securities had gross unrealized losses of EUR 28 million as of June 30, 2013. Argentina’s bonds have suffered from adverse technical aspects of a longstanding lawsuit by a group of holdout investors which have pursued a case against the sovereign even though over 92% of original bondholders have restructured their debts in the last decade. The case is complex, also involving questions of transmission of funds via the US banking system and sovereign restructuring worldwide, giving it more implications beyond just the Argentine situation. The Republic of Argentina has vowed to repay the restructured bonds and continues to do so, having both the ability and willingness to pay their debts. Aegon evaluated the near-term prospects of the issuer and it is believed that the contractual terms of these investments will be met and these investments are not impaired as of June 30, 2013.

European peripheral countries

	Americas				Netherlands				UK				New Markets				June 30, 2013 Total
	Amortized cost		Fair value		Amortized cost		Fair value		Amortized cost		Fair value		Amortized cost		Fair value		Amortized cost		Fair value
Portugal		16		16		43		37		16		18		1		1		76		72
Italy		172		165		321		326		226		213		31		31		750		735
Ireland		249		263		86		80		13		13		21		22		369		378
Greece		—		—		3		3		—		—		—		—		3		3
Spain		269		276		449		445		169		170		286		291		1,173		1,182
		706		720		902		891		424		414		339		345		2,371		2,370

	Americas				Netherlands				UK				New Markets				December 31, 2012 Total
	Amortized cost		Fair value		Amortized cost		Fair value		Amortized cost		Fair value		Amortized cost		Fair value		Amortized cost		Fair value
Portugal		16		16		46		38		16		18		1		1		79		73
Italy		182		181		262		270		238		226		28		29		710		706
Ireland		235		262		212		192		13		14		13		14		473		482
Greece		23		25		4		2		—		—		—		—		27		27
Spain		245		256		446		435		179		180		280		277		1,150		1,148
		701		740		970		937		446		438		322		321		2,439		2,436

The figures included in the tables are shown on a gross basis and do not reflect the effect of any hedging activities. Proportionate shares held by Aegon’s associates and joint ventures are not included in the table. The comparative numbers have been restated to reflect this. The highest concentration remains in Spain, which is a reflection of Aegon’s operations in that country. Aegon does not have credit protection against exposure in the countries included in the tables. Refer to note 12 for a sector breakdown of Aegon’s investments in European peripheral countries.

As of June 30, 2013, Aegon did not record any impairments on its exposure to the European peripheral countries (2012: nil).

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Unrealized loss by maturity

The table below shows the composition by maturity of all debt securities, both available-for-sale and held to maturity, in an unrealized loss position held by Aegon Americas, Aegon The Netherlands and Aegon UK.

In million EUR
	June 30, 2013					December 31, 2012
	Carrying value of securities with gross unrealized losses		Gross unrealized losses			Carrying value of securities with gross unrealized losses		Gross unrealized losses
One year or less		850		(15	)		939		(22	)
Over 1 thru 5 years		3,493		(158	)		2,938		(198	)
Over 5 thru 10 years		6,606		(400	)		2,251		(286	)
Over 10 years		11,245		(1,158	)		5,462		(835	)
Total		22,194		(1,731	)		11,590		(1,341	)

Unrealized loss by credit quality

The table below shows the composition by credit quality of debt securities, both available-for-sale and held to maturity, in an unrealized loss position held by Aegon Americas, Aegon The Netherlands and Aegon UK.

	June 30, 2013					December 31, 2012
In million EUR	Carrying value of securities with gross unrealized losses		Gross unrealized Losses			Carrying value of securities with gross unrealized losses		Gross unrealized Losses
Treasury Agency		4,689		(234	)		1,748		(18	)
AAA		2,108		(85	)		1,029		(17	)
AA		2,358		(122	)		1,417		(109	)
A		4,340		(277	)		2,079		(174	)
BBB		6,191		(519	)		3,031		(355	)
BB		1,353		(225	)		1,114		(228	)
B		651		(88	)		701		(207	)
Below B		504		(181	)		471		(233	)
Total		22,194		(1,731	)		11,590		(1,341	)

The table below provides the length of time a security has been below cost and the respective unrealized loss.

In million EUR	Investment grade carrying value of securities with gross unrealized losses		Below investment grade carrying value of securities with gross unrealized losses		Investment grade unrealized loss			Below investment grade unrealized loss
At June 30, 2013
0 – 6 months		14,237		964		(704	)		(32	)
6 – 12 months		1,464		61		(108	)		(5	)
> 12 months		3,967		1,501		(421	)		(461	)
Total		19,668		2,526		(1,233	)		(498	)

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In million EUR	Investment grade carrying value of securities with gross unrealized losses		Below investment grade carrying value of securities with gross unrealized losses		Investment grade unrealized loss			Below investment grade unrealized loss
At December 31, 2012
0 – 6 months		3,258		245		(104	)		(8	)
6 – 12 months		507		59		(21	)		(4	)
> 12 months		5,539		1,982		(548	)		(656	)
Total		9,304		2,286		(673	)		(668	)

The majority of the unrealized losses relate to investment grade holdings where credit spreads have widened in the near term in conjunction with concerns over the current macroeconomic conditions.

The table below provides the length of time a below investment grade security has been in an unrealized loss and the percentage of carrying value (CV) to amortized cost.

Aging and severity unrealized losses

	June 30, 2013					December 31, 2012
In million EUR	Carrying value		Unrealized losses			Carrying value		Unrealized losses
CV 70-100% of amortized cost		964		(30	)		243		(7	)
CV 40-70% of amortized cost		—		—			1		—
CV < 40 % of amortized cost		—		(2	)		1		(1	)
0-6 months		964		(32	)		245		(8	)
CV 70-100% of amortized cost		60		(4	)		59		(4	)
CV 40-70% of amortized cost		1		—			—		—
CV < 40 % of amortized cost		—		—			—		—
6-12 months		61		(4	)		59		(4	)
CV 70-100% of amortized cost		69		(11	)		164		(28	)
CV 40-70% of amortized cost		42		(25	)		3		(3	)
CV < 40 % of amortized cost		—		—			—		(2	)
12-24 months		111		(36	)		167		(33	)
CV 70-100% of amortized cost		1,161		(198	)		1,519		(273	)
CV 40-70% of amortized cost		199		(151	)		264		(224	)
CV < 40 % of amortized cost		30		(78	)		32		(126	)
> 24 months		1,390		(427	)		1,815		(623	)
Total		2,526		(499	)		2,286		(668	)

Realized gains and losses on debt securities of Aegon Americas, Aegon The Netherlands and Aegon UK

In million EUR	Gross realized gains		Gross realized losses
June 30, 2013
Debt securities		202		(49	)
June 30, 2012
Debt securities		364		(146	)

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The table below provides the length of time the security was below cost prior to the sale and the respective realized loss for assets not considered impaired.

Time period	Gross realized losses
In million EUR	0 -12 months			>12 months			Total
June 30, 2013
Debt securities		(25	)		(24	)		(49	)
June 30, 2012
Debt securities		(40	)		(106	)		(146	)

Impairment losses and recoveries

The composition of Aegon Americas, Aegon The Netherlands and Aegon UK’s bond impairment losses and recoveries by issuer for the period ended June 30, 2013 is presented in the table below. Those issuers with impairments or recoveries above EUR 25 million are specifically noted.

	June 30, 2013			June 30, 2012
	(Impairment) / Recovery			(Impairment) / Recovery
Impairments:
Other (none individually greater than EUR 25 for 2013)		(62	)		(85	)
Sub-total		(62	)		(85	)
Recoveries:
Total recoveries		22			17
Sub-total		22			17
Net (Impairments) and Recoveries		(39	)		(68	)

Net (impairments) and recoveries

Net impairments during the first half of 2013 totaled EUR 39 million (2012 full year: EUR 93 million), including EUR 32 million (2012: EUR 120 million) of gross impairments related to residential mortgage backed securities in the Americas.

During the first half of 2013, Aegon recognized EUR 22 million (2012 full year: EUR 54 million) in recoveries on previously impaired securities. In each case where a recovery was taken on structured securities, improvements in underlying cash flows for the security were documented and modeling results improved significantly. Recoveries on non-structured securities were supported by documented credit events combined with significant market value improvements.

Equity instruments classified as available-for-sale

Objective evidence of impairment of an investment in an equity instrument classified as available-for-sale includes information about significant changes with an adverse effect that have taken place in the technological, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered. A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost is also objective evidence of impairment. Significant or prolonged decline is generally defined within Aegon as an unrealized loss position for more than six months or a fair value of less than 80% of the cost price of the investment. Additionally, as part of an ongoing process, the equity analysts actively monitor earnings releases, company fundamentals, new developments and industry trends for any signs of possible impairment.

These factors typically require significant management judgment. The impairment review process has resulted in less than EUR 0.1 million of impairment charges for the period ended June 30, 2013 (2012: EUR 1 million) for Aegon Americas, Aegon The Netherlands and Aegon UK.

As of June 30, 2013, there are EUR 301 million of gross unrealized gains and EUR 17 million of gross unrealized losses in the equity portfolio of Aegon (2012: EUR 262 million of gross unrealized gains and EUR 18 million of gross unrealized losses). There are no securities held by Aegon with an unrealized loss above EUR 5 million. The table below represents the unrealized gains and losses on share positions held by Aegon Americas, Aegon The Netherlands and Aegon UK.

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In million EUR	Cost basis		Carrying value		Net unrealized gains/ (losses)		Carrying value of securities with gross unrealized gains		Gross unrealized gains		Carrying value of securities with gross unrealized losses		Gross unrealized losses
June 30, 2013
Shares		550		834		284		744		301		90		(17	)
December 31, 2012
Shares		568		812		244		731		262		81		(18	)

The composition of shares by industry sector in an unrealized loss position held by Aegon Americas, Aegon The Netherlands and Aegon UK at June 30, 2013 and December 31, 2012 is presented in the table below.

Unrealized losses–shares

	June 30, 2013					December 31, 2012
In million EUR	Carrying value of instruments with unrealized losses		Gross unrealized losses			Carrying value of instruments with unrealized losses		Gross Unrealized Losses
Communication		—		—			—		—
Consumer cyclical		17		—			17		—
Consumer non-cyclical		—		—			—		—
Financials		58		(15	)		42		(17	)
Funds		15		(2	)		7		(1	)
Other		—		—			15		—
Total		90		(17	)		81		(18	)

Impairment losses on shares

The table below provides the length of time the shares held by Aegon Americas, Aegon The Netherlands and Aegon UK were below cost prior to the impairment in 2013.

	0 - 6 months			Total
In million EUR
June 30, 2013
Shares		(2	)		(2	)
June 30, 2012
Shares		(2	)		(2	)

There were no issuers with impairments above EUR 25 million.

v Goodwill

Goodwill is reviewed and tested for impairment under a fair value approach. Goodwill must be tested for impairment at least annually or more frequently as a result of an event or change in circumstances that would indicate an impairment charge may be necessary. The recoverable amount is the higher of the value in use and fair value less costs to sell for a cash-generating unit. Impairment testing requires the determination of the value in use or fair value less costs for each of Aegon’s identified cash generating units.

The valuation utilized the best available information, including assumptions and projections considered reasonable and supportable by management. The assumptions used in the valuation involve significant judgments and estimates.

vi Valuation of defined benefit plans

The liabilities or assets recognized in the statement of financial position in respect of defined benefit plans is the difference between the present value of the projected defined benefit obligation at the balance sheet date and the fair value of plan assets, together with adjustments for unrecognized actuarial gains or losses and past service costs. The present value of the defined benefit obligation is determined by discounting the estimated future cash flows using interest rates of high-quality corporate

64

bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity that approximate the terms of the related pension liability. Actuarial assumptions used in the measurement of the liability include the discount rate, the expected return on plan assets, estimated future salary increases and estimated future pension increases. To the extent that actual experience deviates from these assumptions, the valuation of defined benefit plans and the level of pension expenses recognized in the future may be affected.

vii Recognition of deferred tax assets

Deferred tax assets are established for the tax benefit related to deductible temporary differences, carry forwards of unused tax losses and carry forwards of unused tax credits when in the judgment of management it is more likely than not that Aegon will receive the tax benefits. Since there is no absolute assurance that these assets will ultimately be realized, management reviews Aegon’s deferred tax positions periodically to determine if it is more likely than not that the assets will be realized. Periodic reviews include, among other things, the nature and amount of the taxable income and deductible expenses, the expected timing when certain assets will be used or liabilities will be required to be reported and the reliability of historical profitability of businesses expected to provide future earnings. Furthermore, management considers tax-planning strategies it can utilize to increase the likelihood that the tax assets will be realized. These strategies are also considered in the periodic reviews.

ix Recognition of provisions

Provisions are established for contingent liabilities when it is probable that a past event has given rise to a present obligation or loss, the settlement of the obligation will probably lead to an outflow of resources embodying economic benefits and the amount can be reasonably estimated. Management exercises judgment in evaluating the probability that a loss will be incurred. The estimate of the amount of a loss requires management judgment in the selection of a proper calculation model and the specific assumptions related to the particular exposure.

x Non-consolidated group companies

Group companies include subsidiaries. Subsidiaries are entities to which Aegon is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. All subsidiaries are consolidated. Transactions with non-contrilling interest are accounted for the transactions with equity holders.

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2.3 Results of Operations – first six months 2013 compared to first six months 2012

	Six months ended June 30
In million EUR	2013			2012			%
Net underlying earnings		684			684			—
tax on underlying earnings		239			212			13
Underlying earnings before tax		923			896			3
Americas		672			652			3
The Netherlands		159			155			3
United Kingdom		51			56			(9	)
New Markets		114			152			(25	)
Holding and other		(73	)		(119	)		39
Underlying earnings before tax		923			896			3
Net Fair value items		(411	)		230			—
Gains/(losses) on investments		195			130			50
Impairment charges		(74	)		(83	)		11
Other income/(charges)		23			(271	)		—
Run-off businesses		(1	)		5			—
Income before tax (excluding income tax from certain proportionately consolidated joint ventures and associates)		655			907			(28	)
Income tax from certain proportionately consolidated joint ventures and associates included in income before tax		(1	)		11			—
Income tax		(99	)		(133	)		26
Of which income tax from certain proportionately consolidated joint ventures and associates		1			(11	)		—
Net income		556			774			(28	)
Net income / (loss) attributable to:
Equity holders of Aegon N.V.		555			774			(28	)
Non-controlling interests		1			—			—
Commissions and expenses		2,908			2,939			(1	)
of which operating expenses		1,648			1,565			5
New life sales
Life single premiums		3,143			2,228			41
Life recurring premiums annualized		705			650			8
Total recurring plus 1/10 single		1,019			873			17
New life sales
Americas		234			246			(5	)
The Netherlands		88			55			60
United Kingdom		578			424			36
New Markets		119			148			(20	)
Total recurring plus 1/10 single		1,019			873			17
New premium production accident and health insurance		398			382			4
New premium production general insurance		28			27			4
Gross deposits (on and off balance sheet)
Americas		13,405			14,036			(4	)
The Netherlands		731			927			(21	)
United Kingdom		122			17			—
New Markets		8,418			5,820			45
Total gross deposits		22,676			20,800			9

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	Six months ended June 30
In million EUR	2013			2012			%
Net deposits (on and off balance sheet)
Americas		2,798			1,799			56
The Netherlands		(49	)		(251	)		80
United Kingdom		96			(2	)		—
New Markets		2,378			1,983			20
Total net deposits excluding run-off businesses		5,223			3,529			48
Run-off businesses		(1,717	)		(1,639	)		(5	)
Total net deposits		3,506			1,890			86

Revenues geographically first six months 2013

In million EUR	Americas		The Nether- lands		United King- dom		New Markets		Holdings and other activities		Elimina- tions			Non- IFRS Total		Joint venture & Associate elimina- tions			Total IFRS based
Total life insurance gross premiums		3,091		2,631		3,546		719		1		(38	)		9,950		(245	)		9,705
Accident and health insurance premiums		896		172		—		95		4		(4	)		1,163		(8	)		1,155
General insurance premiums		—		278		—		82		—		—			360		(6	)		354
Total gross premiums		3,987		3,081		3,546		896		5		(42	)		11,473		(259	)		11,214
Investment income		1,696		1,097		1,182		125		171		(172	)		4,099		(38	)		4,061
Fees and commission income		628		163		56		275		—		(121	)		1,001		(34	)		967
Other revenues		3		—		—		1		2		—			6		(2	)		4
Total revenues		6,314		4,341		4,784		1,297		178		(335	)		16,579		(333	)		16,246
Number of employees, including agent-employees		12,190		4,315		2,720		7,359		320		—			26,904		(3,061	)		23,843

Non-IFRS measures

For segment reporting purposes the following non-IFRS financial measures are included: underlying earnings before tax, income tax and income before tax. These non-IFRS measures are calculated by consolidating on a proportionate basis Aegon’s joint ventures and associated companies. Furthermore, this reports includes the non-IFRS financial measure: gross financial leverage ratio. This non-IFRS measure is calculated by deviding total financial leverage by Aegon’s total capitalization. Aegon believes that its non-IFRS measures provide meaningful information about the underlying results of Aegon’s business, including insight into the financial measures that Aegon’s senior management uses in managing the business.

Among other things, Aegon’s senior management is compensated based in part on Aegon’s results against targets using the non-IFRS measures presented here. While many other insurers in Aegon’s peer group present substantially similar non-IFRS measures, the non-IFRS measures presented in this document may nevertheless differ from the non-IFRS measures presented by other insurers. There is no standardized meaning to these measures under IFRS or any other recognized set of accounting standards. Readers are cautioned to consider carefully the different ways in which Aegon and its peers present similar information before comparing them.

Aegon believes the non-IFRS measures shown herein, when read together with Aegon’s reported IFRS financial statements, provide meaningful supplemental information for the investing public to evaluate Aegon’s business after eliminating the impact of current IFRS accounting policies for financial instruments and insurance contracts, which embed a number of accounting policies alternatives that companies may select in presenting their results (i.e. companies can use different local GAAPs to measure the insurance contract liability) and that can make the comparability from period to period difficult.

The reconciliation from underlying earnings before tax to income before tax, being the most comparable IFRS measure, is presented in the tables in this note.

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Net income

Net income decreased 28% to EUR 556 million as higher underlying earnings before tax, higher realized gains and higher other income were more than offset by losses from fair value items.

Underlying earnings before tax

Aegon’s underlying earnings before tax increased 3% compared to the first half of 2012 to EUR 923 million. Business growth and the positive effects of favorable equity markets more than offset the loss of earnings due to the sale of Prisma in the fourth quarter of 2012 and the company’s interests in partnerships in Spain (EUR 27 million), the impact of unfavorable currency exchange rates (EUR 14 million) and higher sales and performance related expenses (EUR 20 million).

Underlying earnings before tax from the Americas increased to EUR 672 million. The 3% increase compared to the first half of 2012 is mainly the result of growth in Variable Annuities and Pensions and an improved underwriting experience in Life & Protection, partly offset by lower fixed annuity earnings due to lower account balances and decreased spreads, as well as higher sales and employee related expenses.

In the Netherlands, underlying earnings before tax were up 3% to EUR 159 million as higher earnings in Life & Savings were partly offset by lower Pension earnings due to higher claims related to morbidity and lower investment income.

Underlying earnings before tax from Aegon’s operations in the United Kingdom declined by 9% to EUR 51 million compared to the first half of 2012. Earnings were negatively impacted by adverse persistency (EUR 18 million) following the implementation of the Retail Distribution Review. It is expected that the effects of adverse persistency will start to wear off in the second half of 2013. These effects were partly offset by favorable equity market movements, improved mortality and favorable claims experience.

Underlying earnings before tax from New Markets decreased 25% to EUR 114 million, mainly due to lower underlying earnings before tax from Central & Eastern Europe and Spain. Results in Spain were impacted by EUR 22 million as a result of the divestments of the joint ventures with Banca Cívica and Unnim, as well as the de-recognition of CAM, while earnings from Central & Eastern Europe were impacted by unfavorable claims experience and included a charge of EUR 5 million related to the recently introduced insurance tax in Hungary.

Total holding costs decreased 39% to EUR 73 million, mainly the result of lower net interest expenses following debt redemption.

Fair value items

The results from fair value items amounted to a loss of EUR 411 million. This was primarily caused by the loss on fair value hedges without an accounting match under IFRS, which amounted to EUR 348 million in the first half of 2013. The main drivers were rising equity markets, increased equity market volatility, but also higher interest rates.

Fair value hedging with an accounting match, which include the hedges on Aegon’s GMWB variable annuities block and the guarantees on general account products in the Netherlands, contributed a loss of EUR 72 million to earnings.

Fair value investments underperformed by EUR 47 million during the first half of 2013, mainly driven by alternative investments in the Americas and the residential rental real estate portfolio in the Netherlands.

The loss on other fair value items amounted to EUR 89 million, mainly driven by lower credit spreads impacting outstanding medium term notes, foreign currency movements and rising interest rates.

Realized gains on investments

In the first half, realized gains on investments increased 50% to EUR 195 million and were the result of normal trading activity in the investment portfolio and asset liability management.

Impairment charges

Impairment charges were declined by 11% to EUR 74 million. They were largely related to impairment charges on structured assets in the Americas and a single corporate exposure in the UK, as well as residential mortgage loans in the Netherlands and Hungary.

Other income/ (charges)

Other income amounted to EUR 23 million, a significant improvement compared to the first half of 2012. The gain on the sale of the joint venture with Unnim of EUR 102 million and a gain of EUR 85 million related to the recapture of certain reinsurance contracts in the United States, were partially offset by a charge of EUR 81 million related to increased accruals in connection with

68

the company’s use of the U.S. Social Security Administration’s death master-file, charges of EUR 51 million in the United Kingdom mainly related to business transformation costs and the divestment of Positive Solution, and a provision of EUR 25 million in the Netherlands following the KoersPlan court verdict in June. The 2012 other charges amounted to EUR 271 million mostly related to the acceleration of product improvements for unit-linked insurance policies in the Netherlands (EUR 265 million) to align to ‘best of class’ principles from the Ministry of Finance.

Run-off businesses

The results of run-off businesses amounted to a loss of EUR 1 million, which was primarily due to the reinsurance business. Aegon divested its life reinsurance business during 2011 through a reinsurance transaction and carries an intangible asset as a result. The buyer of the divested life reinsurance business transferred client contracts onto its own book faster than originally anticipated resulting in an acceleration of the amortization of the intangible asset during the first half of 2013 (EUR 19 million). This impact offset higher earnings from the institutional spread business and payout annuities.

Income tax

Income tax amounted to EUR 99 million in the first six months. The effective tax rate on underlying earnings before tax for the first half of 2013 was 26%. The effective tax rate on income before tax was 15% driven by the combined effects of negative fair value items taxed at nominal rates, tax credits and the tax exempt gains from the sale of the Unnim joint venture.

Operating expenses

In the first half, operating expenses increased 5% to EUR 1,648 million mainly as a result of higher sales and employee performance related expenses in the United States and business transformation costs.

Sales and deposits

Compared to the first half of 2012, Aegon’s total sales increased 10% to EUR 3.7 billion. New life sales were up by 17%, driven mainly by higher pension production as a result of strong market propositions in the Netherlands and the United Kingdom. In the Americas, new life sales declined by 5%, primarily driven by lower universal life sales due to product withdrawals and product redesign, resulting from the focus on value creation. Gross deposits were up 9% compared to the first half of 2012, mainly driven by variable annuity and retail mutual fund businesses in the United States and Aegon Asset Management. Net deposits, excluding run-off businesses, amounted to EUR 5.2 billion and were primarily driven by variable annuity and retirement deposits in the United States and third party inflow at Aegon Asset Management.

Capital management

Shareholders’ equity decreased EUR 2.3 billion compared to the end of 2012 to EUR 21.2 billion at June 30, 2013, as higher interest rates resulted in lower revaluation reserves. The revaluation reserve declined by EUR 2.3 billion to EUR 3.7 billion.

Aegon’s shareholders’ equity, excluding revaluation reserves and defined benefit plan remeasurements, amounted to EUR 18.6 billion. The gross financial leverage ratio declined to 30.5% in the first half, as a USD 750 million senior bond which matured in June was not refinanced. In combination with the net income for the period, this more than offset the cash outflow from the conversion of the preferred shares. Excess capital in the holding remained stable EUR 1.9 billion, as distributions to the holding and the proceeds on the sale of the joint venture with Unnim were more than offset by the cash used for the conversion of the preferred shares, the investment in the new joint venture with Santander and interest payments and operating expenses. During the first half of 2013 Aegon received EUR 0.6 billion net cash distributions from its operating units. The Americas contributed EUR 0.5 billion and, the Netherlands EUR 0.3 billion.

Shareholders’ equity per common share, excluding revaluation reserves and defined benefit plan remeasurements, amounted to EUR 8.72 (Shareholders’ equity per common share: EUR 8.72, Shareholders’ equity per common share B: EUR 0.22) at June 30, 2013.

At June 30, 2013, Aegon’s Insurance Group Directive (IGD) ratio slightly declined to 220%, including a 6% negative impact from the exchange of the preferred shares and a 13% negative impact from IAS 19. Measured on a local solvency basis, the Risk Based Capital (RBC) ratio in the United States decreased to ~465% as net income for the first six months was offset by the USD 0.6 billion distributions to the holding. The Pillar I ratio in the United Kingdom was ~170% at the end of the first half of 2013, reflecting favorable movements of interest rates. The IGD ratio excluding the benefit from the introduction of the ultimate forward rate and Aegon Bank in the Netherlands increased to ~235%, driven by the net income for the first six months and rising interest rates.

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ii AMERICAS

	Six months ended June 30
In million	2013			2012			%			2013			2012			%
	USD			USD						EUR			EUR
Net underlying earnings		631			611			3			481			472			2
tax on underlying earnings		251			235			7			191			180			6
Underlying earnings before tax by line of business		882			846			4			672			652			3
Life and protection		355			346			3			271			267			1
Fixed annuities		117			126			(7	)		89			97			(8	)
Variable annuities		206			184			12			157			142			11
Retail mutual funds		12			10			20			10			8			25
Individual savings and retirement products		335			320			5			256			247			4
Employer solutions & pensions		171			150			14			129			115			12
Canada		18			25			(28	)		14			19			(26	)
Latin America		3			5			(40	)		2			4			(50	)
Underlying earnings before tax		882			846			4			672			652			3
Net Fair value items		(497	)		(20	)		—			(379	)		(15	)		—
Gains/(losses) on investments		100			82			22			77			63			22
Impairment charges		(40	)		(89	)		55			(30	)		(69	)		57
Other income/(charges)		(8	)		(3	)		—			(6	)		(2	)		—
Run-off businesses		(1	)		6			—			(1	)		5			—
Income before tax (excluding income tax from certain proportionately consolidated joint ventures and associates)		436			822			(47	)		333			634			(47	)
Income tax from certain proportionately consolidated joint ventures and associates included in income before tax		1			1			—			1			1			—
Income tax		(69	)		(163	)		—			(53	)		(126	)		58
Of which income tax from certain proportionately consolidated joint ventures and associates		(1	)		(1	)		—			(1	)		(1	)		—
Net income		367			659			(44	)		280			508			(45	)
Net income / (loss) attributable to:
Equity holders of Aegon N.V.		367			659			(44	)		280			508			(45	)
Commissions and expenses		2,158			2,255			(4	)		1,644			1,740			(6	)
of which operating expenses		979			927			6			747			715			4
New life sales
Life single premiums		64			127			(50	)		48			98			(51	)
Life recurring premiums annualized		301			306			(2	)		229			236			(3	)
Total recurring plus 1/10 single		307			319			(4	)		234			246			(5	)
Life and protection		252			267			(6	)		193			207			(7	)
Canada		33			29			14			25			22			14
Latin America		22			23			(4	)		16			17			(6	)
Total recurring plus 1/10 single		307			319			(4	)		234			246			(5	)
New premium production accident and health insurance		471			456			3			359			352			2

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	Six months ended June 30
In million	2013 USD			2012 USD			%			2013 EUR			2012 EUR			%
Gross deposits (on and off balance sheet) by line of business
Life & protection		3			6			(50	)		3			4			(25	)
Fixed annuities		325			168			93			247			129			91
Variable annuities		3,873			2,518			54			2,951			1,943			52
Retail mutual funds		2,411			1,566			54			1,837			1,208			52
Individual savings & retirement products		6,609			4,252			55			5,035			3,280			54
Employer solutions & pensions		10,893			13,822			(21	)		8,300			10,664			(22	)
Canada		77			107			(28	)		59			82			(28	)
Latin America		11			7			57			8			6			33
Total gross deposits		17,593			18,194			(3	)		13,405			14,036			(4	)
Net deposits (on and off balance sheet) by line of business
Life & protection		(22	)		(20	)		(10	)		(16	)		(16	)		—
Fixed annuities		(1,161	)		(1,235	)		6			(885	)		(953	)		7
Variable annuities		2,003			812			147			1,526			626			144
Retail mutual funds		393			57			—			299			44			—
Individual savings & retirement products		1,235			(366	)		—			940			(283	)		—
Employer solutions & pensions		2,644			2,909			(9	)		2,014			2,245			(10	)
Canada		(190	)		(197	)		4			(145	)		(151	)		4
Latin America		6			6			—			5			4			25
Total net deposits excluding run-off businesses		3,673			2,332			58			2,798			1,799			56
Run-off businesses		(2,254	)		(2,125	)		(6	)		(1,717	)		(1,639	)		(5	)
Total net deposits		1,419			207			—			1,081			160			—

Exchange rates

	Weighted average rate			Closing rate as of
	Six months ended June 30			June 30,		Dec. 31,
Per 1 EUR		2013	2012		2013		2012
USD		1.3124	1.2962		1.2691		1.3184
CAD		1.3332	1.3031		1.3713		1.3127

Net income

Net income from Aegon’s businesses in the Americas declined to USD 367 million in the first half of 2013. Higher underlying earnings, higher realized gains and lower impairment charges were more than offset by a sharp decline in the results from fair value items.

Results from fair value items amounted to USD (497) million. The loss on fair value hedges without an accounting match under IFRS amounted to USD 437 million in the first half of 2013. The main drivers were rising equity markets, increased equity market volatility, but also higher interest rates. Fair value hedging with an accounting match, which include the hedges on Aegon’s GMWB variable annuities block contributed a loss of USD 29 million to earnings.

Alternative asset performance was USD 13 million below the expected long-term return, mainly driven by lower hedge fund returns.

Gains on investments of USD 100 million were realized as a result of normal trading activity. Impairment charges remained low in the current benign credit environment, declining to USD 40 million compared to USD 89 million in the same period last year. The results of run-off businesses amounted to a loss of USD 1 million, mainly driven by the acceleration of the amortization of the pre-paid cost of the reinsurance asset, as the buyer of the divested life reinsurance assets transferred client contracts onto its own book faster than originally anticipated. This impact offset higher earnings from the institutional spread business and payout annuities.

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Underlying earnings before tax

Underlying earnings before tax from the Americas amounted to USD 882 million in the first six months of 2013. Underlying earnings before tax growth in Life and Protection, Pension and Variable Annuities businesses were partially offset by lower Fixed Annuity earnings coupled with higher sales and employee related expenses of USD 26 million.

• Life & Protection underlying earnings before tax increased 3% to USD 355 million, as growth of the business was partially offset by lower reinvestment rates due to the low interest rate environment and adverse underwriting experience.

• Underlying earnings before tax from Individual Savings & Retirement were up 5% to USD 335 million. Variable annuities earnings increased by 12% to USD 206 million, primarily as a result of higher fee income from higher account balances, which is more than off-setting higher sales related expenses. Fixed annuity earnings declined to USD 117 million, driven by the reduction of the portfolio as the business is being de-emphasized and lower spreads. Underlying earnings before tax from retail mutual funds increased to USD 12 million, as the positive impact of higher account balances was partly offset by increased non-deferrable sales-related expenses.

• Employer Solutions & Pensions underlying earnings before tax increased 14% to USD 171 million, resulting from the positive effect of higher average account balances, partly offset by higher hedging costs for stable value solutions.

Operating expenses

Operating expenses increased 6% to USD 979 million, mainly due to higher sales and employee related expenses.

Sales and deposits

New life sales were down 4% to USD 307 million as growth, particularly in term life, was offset by lower universal life sales due to product withdrawals and product redesign as a result of focus on value creation. New premium production for accident and health insurance increase 3% to USD 471 million.

Gross deposits amounted to USD 17.6 billion. Gross deposits in variable annuities and retail mutual funds were both up by 54% compared to the first half of 2012. Higher variable annuities gross deposits were mainly driven by the competitive environment which continues to be affected by a number of large competitors scaling back as well as our continued focus on key distribution partners. Gross deposits in stable value solutions of USD 0.7 billion were down as stable value balances are targeted to be maintained around current levels.

Net deposits, excluding run-off businesses, grew strongly to USD 3.7 billion. Aegon’s core growth areas of variable annuities and pensions recorded net inflows of USD 2.0 billion and USD 2.6 billion respectively. Net flows into retail mutual funds improved to USD 0.4 billion, led by strong sales growth. Net deposits in stable value solutions remained negative as the business targeted maintaining stable value assets at current levels. Aegon is de-emphasizing sales of fixed annuities as part of a strategic repositioning and incurred net outflows of USD 1.2 billion.

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iii THE NETHERLANDS

	Six months ended June 30
In million EUR	2013			2012
Net underlying earnings		122			123		(1	)
tax on underlying earnings		37			32		16
Underlying earnings before tax by line of business		159			155		3
Life and Savings		126			109		16
Pensions		32			48		(33	)
Non life		(11	)		(15	)	27
Distribution		10			11		(9	)
Share in underlying earnings before tax of associates		2			2		—
Underlying earnings before tax		159			155		3
Net Fair value items		36			168		(79	)
Gains/(losses) on investments		86			28		—
Impairment charges		(22	)		(6	)	—
Other income/(charges)		(27	)		(269	)	90
Income before tax		232			76		—
Income tax		(45	)		21		—
Net income		187			97		93
Net income / (loss) attributable to:
Equity holders of Aegon N.V.		187			97		93
Commissions and expenses		506			532		(5	)
of which operating expenses		360			370		(3	)
New life sales
Life single premiums		735			391		88
Life recurring premiums annualized		15			16		(6	)
Total recurring plus 1/10 single		88			55		60
Life and Savings		24			30		(20	)
Pensions		64			25		156
Total recurring plus 1/10 single		88			55		60
New premium production accident and health insurance		17			13		31
New premium production general insurance		14			16		(13	)
Gross deposits (on and off balance sheet) by line of business
Life and Savings		731			927		(21	)
Total gross deposits		731			927		(21	)
Net deposits (on and off balance sheet) by line of business
Life and Savings		(49	)		(251	)	80
Total net deposits		(49	)		(251	)	80

Net income

Net income from Aegon’s businesses in the Netherlands increased to EUR 187 million. Realized gains on investments totaled EUR 86 million and were the result of normal trading activity and asset liability management in the portfolio. Results on fair value items amounted to a profit of EUR 36 million, mainly due to the positive impact of derivatives driven by increasing interest rates partly offset by the negative market value movements on the rental residential real estate portfolio and the effects of movements in interest rates, yield curves and credit spreads on fair value guarantees. Impairment charges of EUR 22 million were driven by the residential mortgage portfolio, although incurred losses on the mortgage portfolio continue to remain low. Other charges included a provision of EUR 25 million following the June verdict of the High Court on the KoersPlan case, compared to a one-time charge of EUR 265 million before tax in 2012 related to the acceleration of product improvements for unit-linked insurance policies in the Netherlands.

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Underlying earnings before tax

Underlying earnings before tax from Aegon’s operations in the Netherlands increased to EUR 159 million as higher earnings in Life & Savings offset lower earnings in Pensions.

• Underlying earnings before tax from Aegon’s Life & Savings operations in the Netherlands increased to EUR 126 million, up 16% compared to the first half of 2012. The positive effect of lower funding costs was partly offset by the impact of EUR 14 million of reduced policy charges on unit-linked products, as part of the acceleration of product improvements to unit-linked insurance policies.

• Underlying earnings before tax from the Pension business declined to EUR 32 million, mainly due to higher claims related to morbidity and lower investment income as a result of persistent low interest rates.

• Non-life recorded an underlying earnings before tax loss of EUR 11 million as an improvement in the profitability of disability products was offset by higher general insurance claims in the general insurance business.

• The distribution businesses recorded underlying earnings before tax of EUR 10 million slightly down from the comparable period in 2012.

Operating expenses

Operating expenses declined 3% to EUR 360 million, the result of the implementation of the cost reduction program.

Sales and deposits

New life sales improved to EUR 88 million. Pension sales more than doubled to EUR 64 million, as a result of a strong market proposition. Individual life sales declined 20% to EUR 24 million, primarily driven by a shrinking Dutch life insurance market as a result of the market wide switch to bank savings.

Production of mortgages decline 12% in the first half of 2013 compared to the same period in 2012 and amounted to EUR 1,186 million, as new production was intentionally scaled back.

Premium production for accident and health insurance increased to EUR 17 million. General insurance production declined 13% to EUR 14 million.

Gross deposits decreased to EUR 731 million, as customers in the Dutch savings market were less active in transferring their assets.

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iv UNITED KINGDOM

	Six months ended June 30
In million	2013 GBP			2012 GBP			%			2013 EUR			2012 EUR			%
Net underlying earnings		43			60			(28	)		50			72			(31	)
tax on underlying earnings		—			(13	)		—			1			(16	)		—
Underlying earnings before tax by line of business		43			47			(9	)		51			56			(9	)
Life		40			30			33			47			37			27
Pensions		5			18			(72	)		6			21			(71	)
Distribution		(2	)		(1	)		(100	)		(2	)		(1	)		(100	)
Share in underlying earnings before tax of joint ventures and associates		—			—			—			—			(1	)		—
Underlying earnings before tax		43			47			(9	)		51			56			(9	)
Net Fair value items		(3	)		(3	)		—			(3	)		(3	)		—
Gains/(losses) on investments		24			28			(14	)		29			34			(15	)
Impairment charges		(13	)		—			—			(16	)		—			—
Other income/(charges)1		(39	)		15			—			(46	)		19			—
Income before tax		12			87			(86	)		15			106			(86	)
Income tax attributable to policyholder return		(4	)		(16	)		75			(6	)		(19	)		68
Income before income tax on shareholders return		8			71			(89	)		9			87			(90	)
Income tax on shareholders return		4			8			(50	)		5			9			(44	)
Net income		12			79			(85	)		14			96			(85	)
Net income / (loss) attributable to:
Equity holders of Aegon N.V.		12			79			(85	)		14			96			(88	)
Commissions and expenses		331			286			16			389			348			12
of which operating expenses		166			129			29			195			157			24
New life sales2
Life single premiums		1,733			1,192			45			2,038			1,451			40
Life recurring premiums annualized		318			229			39			374			279			34
Total recurring plus 1/10 single		491			348			41			578			424			36
Life		30			34			(12	)		35			42			(17	)
Pensions		461			314			47			543			382			42
Total recurring plus 1/10 single		491			348			41			578			424			36
Gross deposits (on and off balance sheet) by line of business
Variable annuities		5			14			(64	)		6			17			(65	)
Pensions		99			—			—			116			—			—
Total gross deposits		104			14			—			122			17			—
Net deposits (on and off balance sheet) by line of business
Variable annuities		(15	)		(2	)		—			(18	)		(2	)		—
Pensions		97			—			—			114			—			—
Total net deposits		82			(2	)		—			96			(2	)		—

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Exchange rates

	Weighted average rate				Closing rate as of
	Six months ended June 30				June 30,		Dec. 31,
Per 1 EUR	2013		2012		2013		2012
GBP		0.8502		0.8217		0.8570		0.8111

Net income

Net income for the period amounted to GBP 12 million, driven by charges of GBP 27 million related to further restructuring as part of Aegon UK’s transformation into a platform-driven business, and an GBP 18 million book loss on the sale of Positive Solutions. The business transformation is expected to continue into 2014. Impairments were GBP 13 million, driven by a single corporate exposure. Realized gains amounted to GBP 24 million, resulting from the switch to high quality corporate credit from UK Gilts.

Underlying earnings before tax

Underlying earnings before tax from Aegon’s operations in the UK decreased to GBP 43 million in the first half of 2013.

• Underlying earnings before tax from Life increased to GBP 40 million, driven by improved mortality in annuities and favorable claims experience in individual protection. In addition, earnings benefited from lower expenses and higher interest income as allocated capital increased.

• Underlying earnings before tax from Pensions declined to GBP 5 million as the positive impact of higher equity markets was offset by the negative effect of adverse persistency, which the UK insurance industry is experiencing as a result of the implementation of the Retail Distribution Review (RDR).

• Underlying earnings before tax from Distribution are no longer reported separately. Positive Solutions has been sold and Origen was moved into the Pensions line of business, as it is being transformed into a tied agent network following the introduction of RDR.

Operating expenses

Operating expenses for the first half of 2013 increased 29% to GBP 166 million driven by exceptional business transformation costs.

Sales and deposits

New life sales were up 41% to GBP 491 million compared to the first half of 2012, reflecting the launch of income drawdown products on the platform, the benefit of auto-enrollment and strong sales in group pensions.

Gross deposits continued to grow and amounted to GBP 104 million as the platform gained momentum in the market. Aegon broadened its distribution network during the period by signing new agreements with Barclays Bank and Mercer, further highlighting the strong competitive positioning of the Aegon Retirement Choices platform.

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v New Markets

In million EUR	Six months ended June 30
	2013			2012			%
Net underlying earnings		77			103			(25	)
tax on underlying earnings		37			49			(24	)
Underlying earnings before tax		114			152			(25	)
Central & Eastern Europe		26			44			(41	)
Asia		15			14			7
Spain & France		21			42			(50	)
Variable Annuities Europe		3			—			—
Aegon Asset Management		49			52			(6	)
Underlying earnings before tax		114			152			(25	)
Net Fair value items		(11	)		(5	)		(120	)
Gains/(losses) on investments		3			5			(40	)
Impairment charges		(6	)		(4	)		(50	)
Other income/(charges)		102			(18	)		—
Income before tax (excluding income tax from certain proportionately consolidated joint ventures and associates)		202			130			55
Income tax from certain proportionately joint ventures and associates included in income before tax		(3	)		10			—
Income tax		(29	)		(45	)		36
Of which income tax from certain proportionately consolidated joint ventures and associates		3			(10	)		—
Net income		173			85			104
Net income / (loss) attributable to:
Equity holders of Aegon N.V.		172			85			102
Non-controlling interests		1			—			—
Commissions and expenses		462			427			8
of which operating expenses		318			297			7
New life sales
Life single premiums		322			288			12
Life recurring premiums annualized		87			119			(27	)
Total recurring plus 1/10 single		119			148			(20	)
Life		117			141			(17	)
Associates		2			7			(71	)
Total recurring plus 1/10 single		119			148			(20	)
Central Eastern Europe		54			56			(4	)
Asia		37			30			23
Spain & France		28			62			(55	)
Total recurring plus 1/10 single		119			148			(20	)
New premium production accident and health insurance		22			17			29
New premium production general insurance		14			11			27
Gross deposits (on and off balance sheet)
Central Eastern Europe		114			182			(37	)
Asia		255			71			—
Spain & France		8			21			(62	)
Variable Annuities Europe		232			229			1
Aegon Asset Management		7,809			5,317			47
Total gross deposits		8,418			5,820			45

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Net deposits (on and off balance sheet)
Central Eastern Europe	4		24		(83	)
Asia	222		67		—
Spain & France	(6	)	(37	)	84
Variable Annuities Europe	(16	)	35		—
Aegon Asset Management	2,174		1,894		15
Total net deposits	2,378		1,983		20

Exchange rates

Weighted average exchange rates for the currencies of the countries included in the New Markets segment, and which do not report in EUR, are summarized in the table below.

Per 1 EUR	Six months ended June 30,
	2013		2012
Czech Republic Krona (CZK)		25.6490		25.1325
Hungarian Forint (HUF)		295.5473		294.8926
Indian Rupee (INR)		71.8781		67.3947
New Turkish Lira (TRY)		2.3795		2.3345
Polish Zloty (PLN)		4.1743		4.2399
Ren Min Bi Yuan (CNY)		8.1215		8.2349
Romanian Leu (RON)		4.3895		4.3872

Net income

Net income from Aegon’s operations in New Markets increased to EUR 173 million, due primarily to the gain of EUR 102 million on the sale of the joint venture with Unnim. Impairments increased to EUR 6 million due to higher mortgage related impairment in Hungary.

Underlying earnings before tax

In New Markets, Aegon’s underlying earnings before tax declined 25% to EUR 114 million, driven mainly by divestments in Spain and a lower non-life result in CEE.

• Underlying earnings before tax from Central & Eastern Europe declined 41% to EUR 26 million, driven by a lower non-life result in Hungary as a result of adverse claim experience from storms and floods which occurred in Central Europe in the second quarter of 2013. In addition, the introduction of the insurance tax in Hungary had a negative impact of EUR 5 million.

• Underlying earnings before tax from Aegon’s operations in Asia increased 7% to EUR 15 million as a result of business growth, cost savings and favorable claim experience.

• Underlying earnings before tax from Spain & France decreased 50% to EUR 21 million due to the divestment of the joint ventures with Cívica and Unnim. Aegon’s new joint venture with Santander, completed in June 2013, has had a marginal impact on earnings to this point. Earnings from France partner La Mondiale increased to EUR 12 million.

• Underlying earnings before tax from Variable Annuities Europe amounted to EUR 3 million. The growth of the business more than compensated for costs to position the company for future growth.

• Underlying earnings before tax from Aegon Asset Management decreased 6% to EUR 49 million, as the positive impact of higher third party asset balances and performance fees was more than offset by the loss of earnings caused by the sale of its stake in US hedge fund manager Prisma in Q4 2012.

Operating expenses

Operating expenses increased 7% to EUR 318 million in the first half of 2013, due to the higher costs of investments to support future growth in Asia and Variable Annuities Europe, and the impact of the new insurance tax in Hungary.

Sales and deposits

New life sales declined 20% to EUR 119 million.

• In Central & Eastern Europe, new life sales declined 4% to EUR 54 million. Sales growth in Turkey and Slovakia due to improved distribution and in the Czech Republic due to product innovation was more than offset by lower sales in Poland.

• In Asia, new life sales increased 23% to EUR 37 million. This was mainly driven by the launch of a new universal life product in the first quarter of 2013 and the expanded cooperation with a number of private banks.

• New life sales in Spain & France declined to EUR 28 million driven by the divestment of partnerships in Spain. Sales from the new joint venture with Santander, which were included as from June 2013, accounted for EUR 2 million of the new life sales in the period.

78

New premium production from accident and health insurance business improved significantly to EUR 22 million, driven mainly by Aegon’s direct marketing unit in Asia. New premium production from Aegon’s general insurance business in Central & Eastern Europe was EUR 14 million.

Gross deposits in New Markets amounted to EUR 8.4 billion, 45% higher than the same period in 2012. Gross deposits in Aegon Asset Management strongly increased to EUR 7.8 billion. This development was driven by all geographies, of which especially institutional sales in the United States and the Netherlands were higher than the first half of 2012. Gross deposits in Asia increased significantly to EUR 255 million on strong variable annuity sales in Japan.

vi Subsequent events

Subsequent events are disclosed in note 22.

vii Capital and liquidity Management

Liquidity and capital resources

In line with its risk tolerance, the goal of Aegon’s capital and liquidity management is to promote stable and strong capital adequacy levels for its businesses on various capital metrics, to make sure the company is able to meet its obligations. Risk tolerance is an important element in Aegon’s Enterprise Risk Management Framework, and focuses on financial strength, continuity, steering of the risk preferences and desired risk culture. The core aim is to establish the organization’s tolerance for risk in order to assist management in carrying out Aegon’s strategy within the Group’s available resources.

Guiding principles

Aegon follows a number of guiding principles, which determine its approach to capital and liquidity management:

• Promote strong capital adequacy in Aegon’s businesses and operating units.

• Manage and allocate capital efficiently to maximize returns and support the strategy.

• Maintain an efficient capital structure with an emphasis on optimizing Aegon’s cost of capital.

• Ensure sufficient liquidity by enforcing strong liquidity risk policies for both business units and the Holding.

• Maintain continued access to international money and capital markets on competitive terms.

Taken together, Aegon believes these guiding principles strengthen the company’s ability to withstand adverse market conditions, enhance its financial flexibility and serve the long term interests of both the company and its stakeholders.

Governance

Aegon’s Corporate Treasury department manages and coordinates capital and liquidity management strategies and processes. The department acts under direction of the Group Risk & Capital Committee.

Capital management

Strategic importance

Aegon’s balanced approach towards capital management plays a vital role in supporting the execution of Aegon’s strategic priorities. These priorities include the shift of capital to markets that offer higher growth prospects and return prospects, and the shift from capital intensive spread business to capital light fee business. In addition, the company intends to further improve the risk profile by reducing financial leverage. Reduced capital volatility and disciplined capital management support Aegon’s aim to pay a sustainable dividend to its shareholders.

In recent years, Aegon has released a significant amount of capital from its existing businesses through a combination of risk reduction and greater capital efficiency. Given current economic and market uncertainty, Aegon intends to retain prudent capital and liquidity buffers in its operating units and the Holding for the foreseeable future.

Improving risk profile

Aegon continues to take measures to improve its risk-return profile, to reduce capital volatility and to lower overall capital requirements. These measures include, for instance, the continued run-off of Aegon’s spread-based institutional business in the United States and extensive asset-liability management and hedging programs. Examples of these programs include hedging the interest rate and equity risk from guarantees in the Netherlands and hedging the capital position in the Americas against adverse equity and fixed income market swings.

79

Capital requirements and leverage

Aegon’s goal is a strong financial position for all units, that is sustainable even through adverse business and market conditions. The company’s overall capital management strategy depends on the following factors:

• Capital adequacy

• Capital quality/Financial leverage

Capital adequacy

Capital adequacy is managed at the company, regional and reporting unit level, as well as at the level of individual legal entities within the organization. As a matter of policy, Aegon maintains operating companies’ capital adequacy at whichever is higher of the following:

• Regulatory requirements.

• Rating agency AA capital adequacy for rated entities.

• Any additional, self-imposed internal requirements.

Aegon’s Insurance Group Directive ratio – a common measure of capital adequacy in the European Union – was 220% per June 30, 2013, down from 228% at the end of 2012, driven mainly by the company’s positive operating performance.

Capital quality/Financial Leverage

Aegon NV applies financial leverage tolerances to its capital base consistent with its capital and liquidity management’s guiding principles. Aegon’s capital base, excluding revaluation reserves, consists of the following components:

• Core capital, which comprises shareholders’ equity (excluding the revaluation reserve and remeasurements of defined benefit plans).

• Hybrid capital securities (including currency revaluations).

• Dated subordinated and net senior debt.

Aegon defines Financial Leverage as debt senior to shareholders’ equity or any other obligation issued by Aegon to finance the capitalization and/or the on-going operation of the organization. Financial Leverage primarily includes hybrid securities and dated subordinated and senior debt. Aegon also monitors its Fixed Charge Coverage (FCC), i.e. the ratio of underlying earnings before tax to fixed charges (interest expense and coupons on Financial Leverage), a measure of the company’s ability to service its debt.

Aegon monitors the amount of non-core capital in its total capital base, excluding revaluation reserves and remeasurements of defined benefit plans. Currently, the company’s aim is to ensure that core capital comprises at least 70% of the capital base, excluding revaluation reserves and remeasurements of defined benefit plans, and that perpetual capital securities and dated subordinated and net senior debt account for no more than 25% and 5% respectively. In addition, Aegon targets ranges for Financial Leverage as well as FCC.

At June 30, 2013, Aegon’s total capital base, excluding revaluation reserves, consisted of 75.7% core capital and 20.5% hybrid capital securities. Dated subordinated and senior debt accounted for the remaining 3.7%.

At June 30, 2013, core capital amounted EUR 18.3 billion (December 31, 2012: EUR 18.6 billion) and the total capital base, excluding revaluation reserves, amounted to EUR 24.1 billion (December 31, 2012: EUR 24.2 billion). Financial Leverage stood at 30.5% at June 30th 2013, while FCC amounted to 4.5 for the full year 2012.

Debt funding and back-up facilities

Most of Aegon’s debt is issued by Aegon N.V., the parent company. A limited number of other Aegon companies have also issued debt securities, but for the most part these securities are guaranteed by Aegon N.V.

Aegon N.V. has regular access to international capital markets under a USD 6 billion debt issuance program. Access to United States markets is made possible by a separate US shelf registration.

Aegon also has access to domestic and international money markets through its USD 4.5 billion commercial paper programs. At June 30, 2013, Aegon had EUR 365 million outstanding under these programs.

To support its commercial paper programs, need for Letters of Credit (LOC’s) and enhance its liquidity position, Aegon maintains backup credit and LOC facilities with international lenders. The company’s principal arrangement is a EUR 2 billion syndicated revolving credit facility maturing in 2017 and additional LOC facilities of USD 2 billion, of which USD 1.5 billion matures in 2015 and USD 0.5 billion matures in 2017. In addition, Aegon also maintains various shorter-dated bilateral backup liquidity and LOC facilities in both committed and uncommitted format.

80

Operational leverage

Although operational leverage is not considered part of Aegon’s capital base, it is an important source of liquidity and funding. Operational debt relates primarily to financing Aegon’s mortgage portfolios through securitizations and warehouse facilities, and the funding of US Regulation XXX and Guideline AXXX redundant reserves.

Liquidity management

Strategic importance

Liquidity management is a fundamental building block of Aegon’s overall financial planning and capital allocation processes. Aegon aims to have sufficient liquidity to meet cash demands even under extreme conditions. The company’s liquidity risk policy sets guidelines for its operating companies in order to achieve a prudent liquidity profile.

Sources and uses of liquidity

Aegon’s subsidiaries are primarily engaged in the life insurance business, which is a long-term business with relatively illiquid liabilities and generally matching assets. Liquidity consists of both liquid assets held in investment portfolios, as well as inflows generated by premium payments and customer deposits. These are used primarily to purchase investments, as well as to fund benefit payments to policyholders, policy surrenders, operating expenses, and, if the subsidiary’s capital position so allows, to pay dividends to parent company Aegon N.V.. Liquidity is coordinated centrally and managed both at Aegon N.V. and at country unit levels.

Aegon maintains a liquidity policy that requires all operating units to project their sources and uses of liquidity over a two year period under normal and severe business and market scenarios. This policy ensures that liquidity is measured and managed consistently across the company and the liquidity stress management plans are in place.

Aegon’s liquidity position

The main drivers of liquidity at Aegon N.V. are dividends from subsidiaries and to shareholders, movements in debt, net expenses (including interest), funding operations and the balance of acquisitions and divestitures. At June 30, 2013, Aegon N.V. held, at group level, a balance of EUR 1.9 billion in excess cash compared with EUR 2.2 billion as at the end of 2012.

Aegon’s excess liquidity is invested in highly liquid, short-term assets in accordance with the company’s internal risk management policies.

External dividends

Aegon aims to pay out a sustainable dividend to allow equity investors to share in Aegon’s performance, which can grow over time if Aegon’s performance so allows. After investment in new business to generate organic growth, capital generation in Aegon’s operating subsidiaries is available for distribution to the holding company, while maintaining a capital and liquidity position in the operating subsidiaries in line with Aegon’s capital management and liquidity risk policies.

Aegon uses cash flows from its operating subsidiaries to pay holding expenses, including funding costs. The remaining cash flow is available to execute Aegon’s strategy and to fund dividends on its shares. When determining whether to declare or propose a dividend, Aegon’s Executive Board balances prudence with offering an attractive return to shareholders. This is particularly important during adverse economic and/or financial market conditions. Also, Aegon’s operating subsidiaries are subject to local insurance regulations which could restrict dividends to be paid to the holding company. There is no requirement or assurance that Aegon will declare and pay any dividends.

A final dividend to common shareholders for 2011 of EUR 0.10 per common share was announced on May 16, 2012, with an interim dividend for 2012 of EUR 0.10 subsequently announced on August 9, 2012. More recently, the 2013 interim dividend amounted EUR 0.11 per common share. The interim dividend will be paid in cash or stock at the election of the shareholder. The Annual General Meeting of shareholders on May 15, 2013 approved a final dividend over 2012 payable in either cash or stock related to the second half of 2012, paid in the first half of 2013. The cash dividend amounted EUR 0.11 per common share, and the stock dividend amounts to one new Aegon common share for every 47 common shares held. The stock dividend and cash dividend are approximately equal in value.

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Ratings

Agency	Aegon N.V.	Aegon USA	Aegon The Netherlands	Aegon UK
Standard & Poor’s	A-	AA-	AA-	A+
Moody’s Investor Service	A3	A1	Not rated	Not rated
Fitch Ratings	A	AA-	Not rated	Not rated

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Disclaimer

Cautionary note regarding non-IFRS measures

This document includes the non-IFRS financial measures: underlying earnings before tax, income tax and income before tax. These non-IFRS measures are calculated by consolidating on a proportionate basis Aegon’s joint ventures and associated companies. The reconciliation of these measures to the most comparable IFRS measures is provided in note 3 “Segment information” of Aegon’s Condensed Consolidated Interim Financial Statements. Aegon believes that its non-IFRS measures, together with the IFRS information, provide meaningful information about the underlying operating results of Aegon’s business including insight into the financial measures that senior management uses in managing the business.

Functional currencies

This report contains certain information about Aegon’s results and financial condition in USD for the Americas and GBP for the United Kingdom because those businesses operate and are managed primarily in those currencies. None of this information is a substitute for or superior to financial information about us presented in EUR, which is the currency of Aegon’s primary financial statements.

Forward-looking statements

The statements contained in this document that are not historical facts are forward-looking statements as defined in the US Private Securities Litigation Reform Act of 1995. The following are words that identify such forward-looking statements: aim, believe, estimate, target, intend, may, expect, anticipate, predict, project, counting on, plan, continue, want, forecast, goal, should, would, is confident, will, and similar expressions as they relate to Aegon. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Aegon undertakes no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which merely reflect company expectations at the time of writing. Actual results may differ materially from expectations conveyed in forwardlooking statements due to changes caused by various risks and uncertainties. Such risks and uncertainties include but are not limited to the following:

• Changes in general economic conditions, particularly in the United States, the Netherlands and the United Kingdom.

• Changes in the performance of financial markets, including emerging markets, such as with regard to:

• The frequency and severity of defaults by issuers in Aegon’s fixed income investment portfolios;

• The effects of corporate bankruptcies and/or accounting restatements on the financial markets and the resulting decline in the value of equity and debt securities Aegon holds; and

• The effects of declining creditworthiness of certain private sector securities and the resulting decline in the value of sovereign exposure that Aegon holds.

• Changes in the performance of Aegon’s investment portfolio and decline in ratings of Aegon’s counterparties.

• Consequences of a potential (partial) break-up of the euro.

• The frequency and severity of insured loss events.

• Changes affecting mortality, morbidity, persistence and other factors that may impact the profitability of Aegon’s insurance products.

• Reinsurers to whom Aegon has ceded significant underwriting risks may fail to meet their obligations.

• Changes affecting interest rate levels and continuing low or rapidly changing interest rate levels.

• Changes affecting currency exchange rates, in particular the EUR/USD and EUR/GBP exchange rates.

• Changes in the availability of, and costs associated with, liquidity sources such as bank and capital markets funding, as well as conditions in the credit markets in general such as changes in borrower and counterparty creditworthiness.

• Increasing levels of competition in the United States, the Netherlands, the United Kingdom and emerging markets.

• Changes in laws and regulations, particularly those affecting Aegon’s operations, ability to hire and retain key personnel, the products Aegon sells, and the attractiveness of certain products to its consumers.

• Regulatory changes relating to the insurance industry in the jurisdictions in which Aegon operates.

• Changes in customer behavior and public opinion in general related to, among other things, the type of products also Aegon sells, including legal, regulatory or commercial necessity to meet changing customer expectations.

• Acts of God, acts of terrorism, acts of war and pandemics.

• Changes in the policies of central banks and/or governments.

• Lowering of one or more of Aegon’s debt ratings issued by recognized rating organizations and the adverse impact such action may have on Aegon’s ability to raise capital and on its liquidity and financial condition.

• Lowering of one or more of insurer financial strength ratings of Aegon’s insurance subsidiaries and the adverse impact such action may have on the premium writings, policy retention, profitability and liquidity of its insurance subsidiaries.

• The effect of the European Union’s Solvency II requirements and other regulations in other jurisdictions affecting the capital Aegon is required to maintain.

• Litigation or regulatory action that could require Aegon to pay significant damages or change the way Aegon does business.

• As Aegon’s operations support complex transactions and are highly dependent on the proper functioning of information technology, a computer system failure or security breach may disrupt Aegon’s business, damage its reputation and adversely affect its results of operations, financial condition and cash flows.

• Customer responsiveness to both new products and distribution channels.

• Competitive, legal, regulatory, or tax changes that affect profitability, the distribution cost of or demand for Aegon’s products.

• Changes in accounting regulations and policies may affect Aegon’s reported results and shareholder’s equity.

• The impact of acquisitions and divestitures, restructurings, product withdrawals and other unusual items, including Aegon’s ability to integrate acquisitions and to obtain the anticipated results and synergies from acquisitions.

• Catastrophic events, either manmade or by nature, could result in material losses and significantly interrupt Aegon’s business.

• Aegon’s failure to achieve anticipated levels of earnings or operational efficiencies as well as other cost saving initiatives.

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Further details of potential risks and uncertainties affecting the company are described in the company’s filings with the Netherlands Authority Financial Markets and the US Securities and Exchange Commission, including the Annual Report. These forward-looking statements speak only as of the date of this document. Except as required by any applicable law or regulation, the company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

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