Alexander Rijn Wynaendts - Chairman of The Executive Board, Chairman of The Management Board and Chief Executive Officer Darryl D. Button - Chief Financial Officer, Member of The Executive Board and Member of The Management Board

Farquhar Murray - Autonomous Research LLP Farooq Hanif - Citigroup Inc, Research Division David T. Andrich - Morgan Stanley, Research Division Albert Ploegh - ING Groep N.V., Research Division Benoit Petrarque - Kepler Cheuvreux, Research Division William Hawkins - Keefe, Bruyette & Woods Limited, Research Division William Elderkin - Goldman Sachs Group Inc., Research Division Maarten Altena Nick Holmes - Societe Generale Cross Asset Research Francois Boissin - Exane BNP Paribas, Research Division

Welcome to the Aegon Third Quarter 2013 Results Conference Call on the 7th of November, 2013. [Operator Instructions] I will now hand the conference over to Mr. Alex Wynaendts. Please go ahead, sir.

Thank you, and good morning, everyone. We appreciate that you've joined us today for this call of Aegon third quarter's result, and we're well aware that it is a busy day for you. With me today is Darryl Button, our CFO, and also present is Willem Vanda den Berg, Head of Investor Relations. As always, we welcome your questions after the presentation in a usual Q&A session. This is the first quarter for which we have combined the analyst and media earnings call, but we'll still keep the 2 Q&A sessions separate and we'll start with the analysts. Before we begin, I'd like to remind you to take a moment to review our disclaimer on forward-looking statements. This quarter, we saw again that our strategy is yielding positive results as we experienced continued sales momentum, particularly in our accumulation and At-Retirement products. Notably, we saw a significant increase in the market consistence value of new business, confirming the strength of our distribution capabilities, and that we continue to sell the right products at the right price. In addition to rates in profitable sales, our underlying earnings increased by 7% to EUR 531 million. Our net income amounted to EUR 227 million, despite the significant negative impact of changes made to our long-term economic assumptions to align this better with current market conditions. Our capital positions remain strong, while our cash flow this quarter was adversely impacted by movements in the financial markets and several onetime items. Our performance this year versus our target is shown on the next slide, that's Slide 3. As you can see on this slide, we are well on track to double our fee-based earnings to between 30% and 35% of underlying earnings and to increase our operational free cash flows to EUR 1.3 billion to EUR 1.6 billion by 2015. We expect to grow underlying earnings from the 2012 base to 2015 by at least 7%, and we are on a trajectory of 8% to 10% ROE. As we shared with you in June, to reach an ROE of 10% to 12%, additional management actions are required. We therefore continue to critically review businesses that do not meet our strategic objectives. An example of this, albeit a small transaction, is a sale of a check pension business where we lacked scale. At the same time, we continue to invest in product opportunities in all our markets, and in particular, our digital proposition. We maintain our focus on the innovative ways to distribute our products to our customers. One such example is the Aegon Retirement Choices platform in the U.K., which just recently serviced GBP 1 billion of assets under management. The review of our various accounting methods across our businesses is ongoing, and we will inform you as soon as we have a full picture of which actions need to be taken and the impact these actions will have on our businesses and results. Let's now turn to the next page and to the continued sales momentum we are experiencing. In Slide 4, you can see that overall sales increased by 9% to EUR 1.7 billion. New life sales were up and mainly benefited from higher pension production in the U.K., the after effect of RDR, and the continued sales growth on a new platform. Additionally, we've seen strong results from our new joint venture with Santander in Spain We were particularly pleased with the EUR 11 billion of gross deposits and EUR 3.4 billion of net deposits for the quarter. Gross deposits for both pensions and variable annuities in the U.S. increased substantially. Net deposits increased even more, U.S. variable annuity deposits tripled, and net pension inflows quadruped this quarter. And in the next slide, I will cover our U.S. fee business in more detail. Accident, health and general insurance, however, were 9% lower, as a few partnerships in the U.S. were terminated earlier this year. Overall, we continue to experience strong customer demand for our core products and services, a clear reflection of the strength of our franchise, the depth of our distribution, and our focus on offering the right products to our customers. On Slide 5, I want to briefly highlight our strategic focus on one of our core growth areas, the At-Retirement segment in the U.S. In this segment, we enjoy a leading presence, thanks to strong brands, an expanding distribution network and a suite of innovative products and services. As you can see here, our variable annuity, pensions and mutual funds businesses have each generated on average double-digit annualized growth in 2009, while at the same times, margins have improved. This is a result of product and service innovations, economies of scales, expanding distribution, as well as market dynamics. In addition, this quarter, 42% of our variable annuity deposits and 53% of our retail mutual funds went into Aegon Asset Management funds. Our strategy is to retain our clients' assets through the entire cycle, helping them accumulate as they prepare for retirement and also helping them manage the drawdown of their assets during retirement. And we believe that this strategy will be key driver of long-term growth going forward. The products and services we offer must meet our strict profitability hurdles. Meaning, that we can be confident that the strong sales growth we see today will also result in strong future earnings. And this is evident in higher market-consistent value for new business as illustrated on the next slide. Here on Slide 6, as you're well aware, we are committed to offering products and services that provide value to our customers and to the company. And this is clearly reflected in the significant increase in market-consistent value of new business we achieved this quarter. In the Americas, the value of new business has more than doubled. Variable annuities were a key driver of this increase as a consequence of higher volumes and higher margins supported by increasing interest rates. The improvement in the U.S. life business is a result of active repricing and the withdrawal products that did not meet our profitability hurdles. In the Netherlands, the market-consistent value of new business increased significantly on a solid contribution from higher mortgage production. And as the slide indicates, the MCVNB in the U.K. was impacted by lower margins on annuities and auto enrollments. And in our new markets, MCVNB benefited from a strong sales in Asia. As you can see, shifting demographics and aging populations are particularly pronounced in Asia and generate significant amount for our products and services. In addition to increasing sales, our profitability is supported by improving efficiency, and therefore, we continue to look with a critical eye at every possibility to further improve these efficiencies. Now turning to Slide 7. On a comparable basis and at constant currencies, operating expenses were up 4% compared to the third quarter last year, mostly due to higher sales and employee performance-related expenses that resulted from strong business growth. In the Americas, operating expenses were higher, mainly due to increased sales rate expense as a result of strong sales of variable annuities and mutual funds. However, we continue to work towards our stated objective of keeping costs flat while growing the business. An important step towards achieving this is by implementing a significant reorganization by which we'll consolidate our support functions in the Americas into one shared service center called Enterprise Business Services. At the same time, we're are also taking a critical look at parts of our operations that could effectively be outsourced. The total number of positions to be eliminated over the next 6 to 9 months is expected to be approximately 150. In the U.K., the ongoing transformation of our business into a platform model required additional investment. We are now in the process of creating a fully digital interface for the non-advised clients group in order to facilitate the upgrade to the platform. Significant cost savings have been realized in U.K. over the past few years and these efforts will continue. This year, we have closed sales offices and we are now working to improve the efficiency of our back office. And these efforts should lead to total reduction of approximately 530 FTEs in 2013. I will now turn it over to Darryl for more information on our earnings and financial position. Darryl? Darryl D. Button: Thank you, Alex. Here on Slide 8, I would like to take a closer look at underlying earnings, which, I am pleased to say, rose by 7% including onetime items of EUR 27 million and favorable mortality of EUR 15 million. In the Americas, higher earnings were driven by pensions and variable annuities, as well as favorable mortality in Life & Protection, and a positive impact of assumption changes and model refinements. This growth was partly offset by unfavorable currency exchange rates. In U.S. dollars, earnings were up 8%. Underlying earnings in the Netherlands were stable at EUR 85 million. Pension earnings increased and we saw improved results in Non-Life. This, however, was offset by lower Life & Savings earnings due mostly to the previously announced reduction in policy charges. In the U.K., reported underlying earnings decreased 4%. At constant currency, results increased as our pension business benefited from higher equity markets. Earnings from our new markets increased 6% due mostly to the benefit of actuarial assumption changes and onetime items in Asia. Holding results improved by EUR 25 million, mainly the result of lower interest expenses, following debt redemptions and reduced operating expenses. On Slide 9, you can see that the fair value loss of EUR 493 million have a large impact on net income. I will adjust this further in the next 2 slides. Realized gains were mainly driven by portfolio adjustments in the Netherlands to bring it in line with the new regulatory yield curve, as well as normal trading activity. Impairments remained low at EUR 45 million and were related to impairments on structured assets in the Americas, a single corporate exposure in the U.K., and residential mortgage loans in the Netherlands and Hungary. Impairments in our Dutch residential mortgage portfolio reduced to EUR 8 million this quarter, or an annualized 14 basis points. Other income amounted to a loss of EUR 42 million, proceeds from the exit of our joint venture with CAM were received in the third quarter. This, along with the gain from the recapture of certain reinsurance contracts in the Americas, was more than offset by the write-down of intangibles to our -- related to our Polish pension business and restructuring charges in the U.S. Income tax amounted to a benefit of EUR 73 million, mainly driven by the U.K., where the corporate tax rate reduced from 23% to 20%. Slide 10 provides more detail on the impact of fair value items. The results from fair value investments were positive for the quarter. And fair value hedging programs, where we largely have an accounting match, continue to be effective. Fair value hedging without an accounting match resulted in a loss of EUR 116 million, in line with expectations. Strong equity market performance drove losses on both the equity collar hedge, as well as on the macro hedge. As you may recall, our guidance for the macro hedge is a quarterly loss of USD 70 million if markets move in line with our assumptions. Now that we have adjusted these assumptions, we expect the macro hedge run rate to move closer to a loss of USD 60 million to USD 65 million per quarter. The main driver of the other fair value items was the impact of the changes that we made to our long-term economic assumptions. More information on these assumption changes is on the next slide. Here on Slide 11, you can see that we made more prudent changes to our economic assumptions, resulting in a loss of EUR 405 million. Our annual equity markets total return assumption, which includes the dividends, has been lowered from 9% to 8%, accounting for EUR 135 million of the total impact. The long-term assumption for 10-year U.S. Treasury yields was lowered by 50 basis points to 4.25%, and we have extended the grading period from 5 to 10 years. The assumed return for separate account bond funds, which mainly relates to variable annuities, is now 4% for 10 years, and 6% thereafter. These interest rate-related adjustments accounted for the other EUR 270 million of the total impact. The updated assumptions are now more in line with the current market conditions, our economic framework, as well as the assumptions used for our regulatory framework. More alignment between the various assumptions creates less discrepancies in, for example, our hedging programs. Please be aware that these changes relate to our IFRS results and do not impact our cash flows, which I will discuss on the next slide. On Slide 12, you can see that operational free cash flows for the quarter were negatively impacted by various market impacts and onetime items. Market impacts include the effect of lower credit spreads in the U.K., and the tax impact of hedging losses in the U.S. seen this year due to higher equity markets. Several items impacted our capital position in the third quarter that we consider nonrecurring. The primary drivers include increases in required capital, mostly in the U.S., and a few exceptional tax-related items. Excluding these exceptional items, the company's normalized operational free cash flows were EUR 291 million for the quarter. Turning now to Aegon's capital position at the end of the third quarter here on Slide 13. Our group IGD ratio decreased to 208%. This was driven mostly by our move to the swap curve when calculating the IGD ratio for the Netherlands and the payment of our interim dividend. S&P excess capital in the Americas increased by approximately USD 100 million, as quarterly earnings were partially offset by tax impacts and onetime increases in required capital. The IGD ratio in the Netherlands, excluding the bank, was stable at 245%. This ratio and this Q2 comparative shown reflect our move from the ECB AAA curve to the DNB swap curve. Three weeks ago, the DNB provided an update on the progress of Solvency 1.5, and we do not expect this to impact our capital management framework. We are now managing the U.K. capital position using the Pillar 1 ratio, including the with-profit fund. This ratio was 140% at the end of the third quarter, up from 130%, reflecting an additional GBP 150 million of capital we have injected into the business. We are currently working to quantify our internal target and buffer capital levels based on this metric. Aegon's financial leverage ratio improved to 30.1%, as you can see on Slide 14. This improvement was driven mostly by a reduction in short-term leverage of approximately EUR 200 million, which followed the USD 750 million senior bond redeemed last quarter. Holding excess capital decreased to EUR 1.8 billion in Q3, as the proceeds from our CAM divestment were more than offset by the cash used to fund the interim dividend and capital projection -- capital injections into our business. Alex, back to you.

Thank you, Darryl. And before taking your questions, ladies and gentlemen, let me reiterate. Our third quarter was, again, a strong quarter in terms underlying earnings, sales and market-consistent value of new business, with net income and cash flows impacted by onetime adjustments. We are seeing that the actions we are taking to reshape our business are creating value for all stakeholders. And looking ahead, we are confident that the continued execution of our strategy and our strong capital position will enable us to achieve our ambitions. We're happy to take your questions now.

[Operator Instructions] Our first question comes from Farquhar Murray. Farquhar Murray - Autonomous Research LLP: It's Farquhar Murray from Autonomous Research. Two questions, if I may, all related to the cash flow figures on Slide 12. Firstly, could you decompose the EUR 112 million onetime items just between the regulatory agreement change and the tax items there? And specifically, on the regulatory requirement change, could you just explain what this was? I presume it's the S&P change, but some additional color there would be helpful. And then secondly, even adding back the market and onetime items, the normalized figure of EUR 291 million was a bit weak relative to recent quarters. I just wondered whether -- what was driving that and whether there were any other onetime items that we should think -- bear in mind within that figure. Darryl D. Button: Farquhar, it's Darryl. Yes, let me take your cash flow questions. Specifically, there were a couple of things impacting the cash flows this quarter, with some what I would call market related and some non-market related. On the non-market related, I think that was maybe more your question, it was really a number of small items across the group. We had some effects coming through from some of the required capital calculations in the U.S. related to variable annuities. Some of that has [Audio Gap] way we do the smoothing calculation on the required capital. There were some impacts coming in the Netherlands related to the bank. We had brought the bank in underneath our internal capital framework this quarter. Also, back in the U.S., a little bit of strain coming up from the life business because of the captive reviews that are going on in the U.S. we're -- have not been doing our normal financing of the XXX and AXXX reserves. So that's been postponed in the interim, and so that has a little higher strain than normal on the life products. So it's a number of, I would say, small onetime items that are adding up to give that impact. On the market-related impacts, I'm not sure if you had a question on that, but it was really broadly 2 categories. The spreads in the U.K., these would be improving credit markets that actually have the perverse and inverse relationship on the U.K. Pillar 1 ratio. And then in the U.S., because of the tax -- because of the losses that we've had on the hedge programs, that does create some tax friction in our statutory and regulatory accounts and that caused an impact this quarter as well, so quite a few number of smaller negative items that added up this quarter. Farquhar Murray - Autonomous Research LLP: And just to confirm, all of those items you've mentioned there, they are within the EUR 203 million onetime impacts. Darryl D. Button: Yes. And so those are all in there. And then, of course, what's not in there is just the impact of a weaker dollar. That has an impact on the overall cash flows as you measure them in euro. That's not inside the onetime items. And so that's what also impacted the number this quarter, a little bit soft.

The next question comes from Farooq Hanif. Farooq Hanif - Citigroup Inc, Research Division: Farooq from Citi. First question, could you just talk about some of the rationales for the change in approach in the U.K. Pillar 1? And does this -- is this likely to affect your previous kind of forecast of when the U.K. could be cash generative to the holding? Secondly, could you give us a little bit more of a view of the market dynamics in the VA right now, the U.S. So for example, what your market position is and what you're seeing in terms of competition. And lastly, any brief update you can give on timing of some kind of decision on Omnibus II and Solvency II, and what you think is going on there?

Farooq, thank you. Darryl will take the first question, and I will cover the second and the third question. Darryl D. Button: Sure. Yes, Farooq, on the first question, U.K. Pillar 1, really, it's evolving conversations with the PRA. We had been looking at a capital ratio on the, excluding the with-profits funds on the -- yes, excluding the with-profits funds in the past. Through our conversations with the PRA. It's very clear that they look at a combined ratio that includes the with-profits funds. It's an interesting ratio, the surplus of the with-profit fund is included in both the numerator and the denominator, so it draws the ratio back down towards 100% by definition. I'm not convinced it's necessarily the best way economically to look at the capital, but that is the ratio that they're monitoring and managing to. We're obviously looking at other aspects of the business, too. It's not just a singular ratio in terms of how we look at capitalization and look at risk in the U.K. and our conversations with the PRA. But suffice to say, it's through conversations with them that we've decided to convert over to here. As I mentioned back in June, we're quite happy with the strength of the U.K. -- of the U.S. and the Netherlands' balance sheet, but the U.K., we were not. And we were on a path to organically strengthen that balance sheet. And what's happened here is that we've decided to accelerate that strengthening in that balance sheet. And again, that's through conversations with the PRA that led us there. In terms of your second part of that question, impact on future dividends, I think the trajectory and the path remains intact. The cash flow positions, as I've mentioned in June, of U.K. do get much stronger as we get to the back end of '14 and into '15. And that's when we expect to receive some dividends from the U.K., but we've had to accelerate the capital amount to stay on that trajectory.

Thanks, Darryl. Yes, Farooq, on the VA dynamics, I would say it is the same story as the previous quarters. What you're seeing here is the work we've been doing on expanding the solution, focusing on that segment of the market that we are -- that we want to be focused on, which is really the living benefit segment. Which fits well in our strategy of helping our customers not only to generate assets, but to be able to drawdown these assets during retirement, which is, of course, becoming more and more important with baby boomers retiring. With all parts, you see the results of that strategy right now. At the same time, we had expanded towards a number of distributors. We've shared a few with you, names last time. I think the last one I'm happy to share is that we're also now the provider of products for Voya Life, formerly ING. This is one example of the expansion of the distribution in a segment that we think is the right segment, and that puts us into the right position. As you can also see, and I mentioned that this -- the market-consistent revenue business increased, and particularly also in the areas of VA. I think it's not surprising with interest rates creeping up a little bit that gives more room and that explains also why the margins are improving. In addition to the fact that we're increasing our scale and that has a positive impact on expenses. Now on Solvency II, yes, what's my view? I have the sense, Farooq, and I think that's shared now with my colleagues in here, in Europe, is that we have probably never been as close as to be able to reach -- to come to an agreement. I think there is a very clear determination right now from the European institutions, and you have many that are involved, the parliament, the commission, the member states, EIOPA, they want to come to an agreement. And I think we're getting very close to what is an agreement that would potentially be acceptable to the different parties involved. I'm also, therefore, more optimistic now about the date of the 1st of January 2016, although, even if we see an agreement being reached right now in the month of November, it still is and it will be a big challenge to get everything done in time for the 1st of November 2016. I also believe that the discussions in the IAIS around ComFrame and creating more of a global framework for International Active Insurance Groups. The IAIG, since they are well known, is probably also putting a bit more pressure now on the European institutions to come to an agreement, so at least there is one agreement here in Europe, and it will make the discussions, in the context of a global framework, will make these discussions easier. So I will remain cautious. This is very political, but I do believe that we have never been as close as we've been to reaching agreement there.

Next question comes from David Andrich. David T. Andrich - Morgan Stanley, Research Division: David Andrich from Morgan Stanley. Just 2 questions on my side. First of all, I was just wondering in terms of the FTE reductions both in the U.S. and U.K., maybe if you could just give us an idea of kind of a, maybe the quantum impact on costs going forward. And then, just in terms of the strong deposits in sales in the U.S., I was wondering, before in the past, you've discussed on the focus on the At-Retirement and retention of assets. And I was just wondering if maybe you could kind of give a bit more granularity in terms of the split between new sales versus retention and how we should expect to see it develop?

David, I'll get your second question. Would you mind to repeat your first one? The line wasn't good. David T. Andrich - Morgan Stanley, Research Division: Sorry, apologies. I'm just wondering about that FTE reductions in the U.S. and the U.K., particularly some of the consolidation of the shared service center and what impact that might have on expenses going forward.

Yes, okay. Well, let me take the first question. As I did say in my introduction, we are seeing strong growth in the U.S., and what we're seeing as a result of that is that sales related expansion -- expenses are increasing especially in the areas of variable annuities and mutual funds. A lot of our expenses are variable and are related to sales there. Nevertheless, we have very clearly stated our ambition of keeping our expenses flat over -- in the coming years. And obviously, that would require, in order to achieve that, that we achieve further efficiencies. And that's what we announced here, a first step in the shared services, the EBS Enterprise Business Services, in the U.S., which is a creation where we're bringing together, in particular in first step, finance and IT functions. And that is what is allowing us to reduce expenses through the reduction of headcount. And I think the first step we have clearly provided on this right now was 150 heads to be -- effectively to be eliminated. This is an ongoing process, and it will, as such, have a significant impact on expense going forward, and it will allow us to meet our ambition of keeping expenses flat. So that should give you a pretty clear idea as to where we believe these expense reductions will come from in the future. Now in the U.K., I mean, again, this is -- it's an ongoing story. For us, it has been very clear that we need to adjust our expense base to the new reality. And if you look at the new realities, we have margins that are lower in the platform world, post-RDR. We have to ensure that our expenses are aligned to this new reality of lower margins. And that's why you will see a continuation of expense reductions in the U.K. So we had a first round of 25%, which was completed by the end of 2012. And I think I made it very clear that we will continue to see significant reductions going forward. And we will announce them and share them with you when we also announce them internally. You will understand that it's important that we continue to manage the company, that we also continue to keep the people focused on the right things. But I think that in 2013, 530 FTEs is quite a big number. These were mostly related in our sales network. As you know, we have sales networks all over U.K. with branches with quite a lot of staff, we've taken that down. And the next focus is more on the back office where not only where we try to improve service levels, but at the same time, doing this more efficiently. An ongoing story, it is part of our ambition to get the expenses to the level that we need to have in the new world. Your first question on deposits, yes, I'm pleased that you recognized strong deposits we've seen here in the U.S. This is at the core of our strategy. We've said very clearly for you -- to you previously that we are making choices in which business we want to be and business we do not want to be. We've taken action on those that we do not want to be, and that now means that we are focusing all our efforts in building this, call it, At-Retirement segment. And why is this important? Because we accumulate assets through different forms through our customers. They can do it individually. They can do this through life insurance. They can do it through mutual funds. But also, a lot of them do that through corporate plans, the 401(k) plans, or 403(b) plans. And what we have seen is 2 things. First of all, that a significant part of those employees that are part of the corporate pension plan, effectively, were not getting adequate service at the time of retirement. And this is exactly where we are now focusing our efforts on, is to make sure that those employees that are part of our corporate pension plans, when they retire, they stay with us in the system. And that is what you see here also very much reflected. The second thing, and I think it's equally important, is that a lot of people that have saved in the corporate pension plans have assets, accumulated assets, which is not significant or sufficient for them to be serviced properly by face-to-face agents. And just to give you an idea, we believe that for those that have assets below $1 million, they will not be targeted by agents, life planners, financial planners, just because with the complexity of regulation and compliance requirements, it's just not worth it. So there's s increasingly -- a growing segment of people that saved in their life that retired, and at the time of retirement, effectively are totally underserved. We believe this is explicitly the segment where we can be successful. It's the segment where we have the products. We have all the products already. It's now about making sure that we connect with those customer at an early stage, that we offer them the service, and increasingly, we're doing this fully electronically or through digital channels. Because that is the most cost-efficient way of doing that. And so this is at the heart of our strategy. And you will continue to see us focusing on it. And I am actually therefore very pleased with the very strong development on the accumulation side, but also on the dis-accumulation side. This trend in the U.K. -- sorry, in the U.S. is what we're seeing increasingly in the U.K. We shared with you in the U.K. that we are going to launch a fully digital capability for our individual customers, very much focused on those customers that are part of our corporate pension plans now and that retire, and that need the services and products which we have available.

The next question comes from Albert Ploegh. Albert Ploegh - ING Groep N.V., Research Division: Albert Ploegh from ING. A few questions on, let's say, the gross leverage and also the accounting consistency refuel in the U.S. data has been flat earlier on, which is more a full year event. Can you maybe give a bit more feeling of whether or not you changed your views on that consistency change, and what the impacts might be? In the past you've flagged maybe 10% potential impairment on U.S. debt balances. And related to that, in case your gross leverage as a result will be above 30% by year end, is that a concern to you, or do you think that's manageable in relation to what the rating agencies might expect from you? Second, I have 2 questions on the Dutch business, first of all on KoersPlan. You already have taken a charge earlier this year following a court ruling, I think there are still some discussions ongoing with associations. Can you maybe give us an update on that? How that is progressing and second question on the Dutch business is that one of your peers has basically have an unfavorable ruling in a disability case, or several -- or similar cases also pending with Aegon.

Darryl, would you take the second -- the first and the second question and I'll take... Darryl D. Button: Yes, I will. Really on the accounting change, I think I will do is repeat what Alex said in his opening remarks, which is the review is ongoing, and we will inform you as soon as we have something. I'd say nothing, Albert, has changed in any way from the messaging and the guidance that I gave you back in the summertime. So I'd say we're still on track with that and no change there. In terms of how we look at that in relation to the leverage ratios, we are tracking right around the 30% now. If it was to lead to a higher leverage ratio at the end of the year, would that be a problem? No, I don't think so. I think we would look to calendar year 2014 to bring it back in line. So we'll still maintain those leverage ratio targets, but in terms of discussions with rating agencies, it's never a point-in-time discussion, it is a forward-looking discussion. And we've already signaled that we intend to do more deleveraging in 2014. So I think you can look at that as a package, and we're still on track with that. Alex?

Thanks, Darryl. On the Dutch business, Albert, yes, KoersPlan. As you're aware, we have settled with the existing association, which represent around 35,000 customers. We've also, I think, issued a press release which was pretty clear in the sense that the association and Aegon were pleased with the way this was dealt with, and it stayed within the provision which we had shared with you earlier, the EUR 25 million. [indiscernible]. Albert Ploegh - ING Groep N.V., Research Division: More with the, let's say, the other cases, a lot of people that are not part of this settlement, what are you -- will you do anything with them?

Well, what we have said when we settled this case is that, obviously, we would be looking at all the other policyholders, and we would want to make sure -- ensure that they have adequate levels of premiums and that we will review that. You can imagine these are over 500,000 policies, and that will take some time. On the Dutch business, you are referring to the disability case of another company. Let me just say one thing. It will not impact -- we don't expect it to have any impact on us for the simple reason is that we are -- have only been increasing premiums, on the contract-by-contract basis, upon renewal. And we have not raised an unblock [ph] increase in premiums and therefore, it's a very different situation for Aegon, and that's why I don't expect any of that.

Next question comes from Benoit Petrarque. Benoit Petrarque - Kepler Cheuvreux, Research Division: It's Benoit Petrarque from Kepler Cheuvreux. Yes, 3 questions. The first one is on the IGD ratio in the Netherlands 245%, a good level, obviously. But given that you moved to the swap curve, what can we expect in terms of new sensitivity of the ratio going forward. Understand that the swap curve is -- the forward [ph] curve is a little bit more volatile. So could you talk a little bit about the sensitivity there? And in the Netherlands, clearly, solvency ratio of pension funds have been improving recently, what do you see to the pension pipeline currently? And could you talk a bit about margins on this pension business? I've seen you've allocated some more mortgages to the pension book, but how much margin could we expect, and percentage of AUMs will be useful. And then, last question is on the holding expenses. It's just EUR 25 million this quarter, it came down a lot in the past 2 years. How much of the EUR 25 million is kind of recurring? Is that a good level to forecast '14?

Darryl, the IGD and the holding expenses? Darryl D. Button: Yes, let me jump in with those 2. In terms of the NL IGD ratio at 245%, you're right, I'll concur with you, it is at a good, strong level, we're happy with that. In terms of volatility going forward, that's actually why we incurred quite a few realized gains this quarter. We have been retrading the asset portfolio to have a better match with the underlying swap curve on the liability side to actually take that volatility down. So we were a net seller of German and French sovereigns this quarter and reinvesting in something that gives us a little bit better match with the underlying swap curve. So that's something that we will continue to manage, and manage that volatility down by making our ALM decisions. On the holding, the holding expenses -- the holding costs are down. They're down really on the debt redemptions that we did last year, as well as cost reductions that we've been taking here at the holding as well. And Alex, I'll turn it...

Yes, thank you, Darryl. You see on the holding, I think we need to be clear that we are expecting from our country units and business units the increased efficiency. And we are implementing that in all our country units, and therefore, it's also very fair that we have the same approach here to the holding, and that's what you see reflected here. And I'm pleased to see that result. On the pension market, as you know, this is always a bit of a lumpy business. So it's difficult to look at quarters -- sorry, our sales in the quarter-by-quarter basis. You're absolutely right, ratios have improved, and that means it is now going to be easier for pension funds to transfer the liability to insured solutions. Therefore, we expect also going forward, that our strong brand name in the market, combined with a strong capital position, which I think is really important here, because these decisions are long-term decisions where you're transferring the liabilities of a pension fund. For many years an insurance company will drive more of the business coming -- going to us. What is important, and as you know, we've been very consistent there, what's really important is that we maintain our pricing discipline. And therefore, with a relatively small number of players, and us being the one with clearly the strongest capital position, we will maintain our pricing discipline, and with the pipeline that is now close to come to us, we'll see, in my opinion, in the coming quarters good sales development at attractive margins. Because we are not interested as you know in taking big tickets on our book if we're not able to get the right margins. And with the number of providers diminishing, it is clear that margins will be better for a company like Aegon. Benoit Petrarque - Kepler Cheuvreux, Research Division: And just on the holding cost, so the EUR 25 million per quarter, is that a good run rate for '14? Darryl D. Button: Yes. I think it's pretty close, maybe a little bit -- might be a little bit higher, but I think it's close. It represents the new cost base, where we are right now, and the debt redemptions that we've had.

The next question comes from William Hawkins. William Hawkins - Keefe, Bruyette & Woods Limited, Research Division: It's William Hawkins at KBW. In the context of how the markets are moving and how you just changed your assumptions, how are you feeling about rolling the collar hedge that you've got for U.S. variable annuities next year? And then, secondly, could you explain a little bit more about this reinsurance recapture that you've done. I understand vaguely that it's to do with Life & Protection in the U.S. but I'm trying to make my mind up about whether, long-term, this is a good or a bad thing. Often, when you recapture reinsurance, there can be an upfront profit, and then there's a lot of losses that follow afterwards. Can you explain the context and then the future financials of that reinsurance recapture? Darryl D. Button: Yes. I'll take those 2 questions. How are we feeling about the collar hedge? Actually, really the collar hedge itself is a macro hedge in addition to the macro hedge we had before. So we're actually going to step back and take a look at both hedges and look at restructuring both of those and probably execute that in the first quarter. So in the interim, while -- so we are working on that now. So in the interim, we're going to just continue to roll the delta of the 2 hedges forward until we complete that restructure. So I think in terms of giving any kind of forward look or guidance from the restructured hedge up, that will have to wait until Q1. We are of the opinion though, I mean, the markets have done very well this year. We think that's largely the wrong time to be taking a lot of hedges off. So we're really not in the market-timing game. So we'll roll the existing deltas forward and restructure both hedges in the first quarter. Reinsurance capture, yes. No, you're right. It was a negotiation between us and a reinsurer. We did recapture the business. We did receive an upfront premium to do that, and that's what got booked through in the -- below the line, below the underlying earnings. It was a relatively, I would say, economically neutral transaction for us. So unfortunately, the accounting is not great on this. I think better accounting would have been to defer that gain over the life of the business. And then I would have been able to say no change. Because we did have to upfront some of that profit because of the cash payment, it was an economically neutral transaction. That means that, that effectively creates some headwinds spread over into the -- over the next 25 years, if you will. It's probably the best way to think about that gain that came through. William Hawkins - Keefe, Bruyette & Woods Limited, Research Division: Over the next 25 years. So this is effectively some kind of royalty recapture, is it? Darryl D. Button: Correct, correct, yes.

The next question comes from William Elderkin. William Elderkin - Goldman Sachs Group Inc., Research Division: Will Elderkin from Goldman. A couple of questions on the U.K. business, please. First of all, in terms of all of the expense reductions you've put through this year in the U.K. operation, to what extent does the third quarter profit that we can see reflect those expense benefits. In other words, some stuff you've already done on the further benefits to flow in? Secondly, in terms of the U.K. tax rate, historically, the U.K. tax rate has been very volatile in the business. Can you just give a sense of what we should be using in our models going forward, reference to that U.K. corporate rate of 20%. And finally, in terms of auto-enrollment, can you just give a sense of -- is that developing as you expect and do you have any sort of broader thoughts on the opportunity for you there?

In terms of expense reductions, as you know, it has to do with timing. Secondly, what you also have to look at, William, is what type of expense reductions there are? Is it maintenance expense or acquisition expenses? And I did here make the point that we have focused on sales-related expenses or acquisition expenses. Which means that you only see a partial impact in your earnings because the other part has been deferred. And so I think you need to see a couple of quarters before you get a very clear understanding of what extent the expense reduction is fully impacted because there a number of factors playing a role. What is important is that it's clear to us, and we need to take our expenses further down. We will take them further down. We've now focused on acquisition expenses. Going forward, we'll now be focusing more and more on the administrative expenses, which are maintenance expenses, which will have a bigger impact -- immediate impact in -- on underlying earnings. In terms of auto-enrollment, I do think it's a bit early right now. As you know, there's many discussions around it in terms of what margins we can apply, in terms of commissions, because obviously, it has very much to do with commissions. And so I think we are in -- it's too early now to say that we have a clear view as to how auto-enrollment is going to work out for us. One good thing clearly is that you get more assets, that is clear. And the other question is, at what conditions? And there's now a new debate as you know, going on about, from the regulator, to what extent we are indeed -- sorry, what do we have here? We have to pay commissions on that part of the business, which obviously will affect the profitability there. In terms of the tax rates, Darryl? Darryl D. Button: I -- it'll be a very short answer, I don't have a better number than the 20%. So I have no insight beyond that. So if it was me, I guess I'd use 20%. William Elderkin - Goldman Sachs Group Inc., Research Division: May I ask one follow-up I should've asked at the start? In terms of this broader debate about a 75 basis points charging cap on pensions in the U.K., does that have any particular implications for the U.K. pension operation?

Well, as you know, we have a book, which is quite an old book, because we've been in the business for a long time. We have a lot of corporate business, we have individual business. What we've given you is the total -- for the total book that we have, for the old book, we have 110 basis points. But there is a mix of corporate pension plan which is clearly lower, and individual pension and other products that -- where margins are higher. So I don't expect this to have a big impact on the big book, certainly, if it's 100 basis points or potentially, 75. But again here, it has to do with the discussion I mentioned earlier about commission, is it backwards looking? Is it going to be forward-looking, and to what extent is forward-looking only, will that have an impact on the back book? Too early to say, but what we are now assuming, that it's mostly going to be forward-looking and to be applied at that pension, which is new business on the books.

The next question comes from Maarten Altena.

It's Maarten Altena from Mediobanca speaking. Three questions from my side. The first is on the economic assumptions. You seem quite conservative with your 10-year assumption instead of 5-year to now reach 4.25% for U.S. Treasury. However, in order to be really conservative, could you give us a ballpark figure, what the impact will be if we assume the current interest rate levels over 10 years as some kind of sensitivity. The second one is on the U.S. pensions. As your U.S. pension balances and margins both develop favorably, and according to the well-known baby boomer story, the balances are likely to continue to increase, but what further room do we have to sustain the beneficial margin trend? Maybe some color on that. And briefly on the Netherlands, as you talk about impairments on residential mortgage loans in the Netherlands of 14 bps, could you elaborate in the trend there whether it's accelerating, decelerating, stabilizing or maybe rather protected by the government guarantee?

Yes. Darryl, you take the first question. Darryl D. Button: Yes. Let me jump on the first one. You asked for a sensitivity on the -- I think if interest rates remain flat. Yes, first of all, on your conservative comment, what this does do is it brings our IFRS assumptions almost on top of the forward curve. So for the first time, I think in a long time, we've had really market assumptions inside the IFRS numbers. Which I think, is a real positive for the organization in many ways in taking that disconnect -- discontinuity down between our different assumptions that we work within. In terms of a sensitivity, I think the best I can do is just break the EUR 405 million impact, which really came across 3 different pieces: the equity change from 9% to 8%; the change on the interest rate curve; and then the separate account bond fund return. When I look at the interest-rate-only component of that, which is the, I think the sensitivity you're looking for, that was about 1/2 of the EUR 405 million. So when you map it out and draw it out and look at the change we made, the piece from dropping by 50 basis points and flattening out the long-term curve, that was EUR 200 million. I don't have another or better sensitivity that I can give you at this time. Pension margins in the U.S.?

Yes. Obviously, we are pleased with the pension margins, 26 basis points, that is above our target of 25 basis points. It's a combination of strong sales, but also continued efficiency improvements, and we'll continue to see that. We are continuously looking at ways of reducing our expenses. As you know, we are bringing our businesses together, we have -- call it, the big ticket, diversified and the smaller cases, Transamerica, all under 1 pension business. And in terms of margins, what we are seeing is that in the big cases, margins compression, margins are still under pressure, it's in line with what we see in the market. On the smaller cases, let's say up to EUR 100 million, there is less margin pressure. However, I think we should take into account the fact that more and more of our competitor will also be focusing on that part of the market where we see less margin pressure. And that therefore, you could expect more pressure coming in, in the future. Which only reconfirms our position and strategy, which is about being more efficient in taking expenses down, and we will continue to take expenses down so that we can maintain our margins at this level. The second element to it which is not included in the margins, and I raised that in the previous question, is that we are more and more focusing now on retaining these assets that mature with an employee retiring in our system. So that we'll be looking at the total chain much more than the individual pieces. So we'll have the accumulation piece where we believe that we only today have the very small parts of these assets that mature, that stay with Aegon. And that more and more we're focusing on keeping this, these assets with us which will effectively, as you can imagine, strengthen the value chain and allow us to take a bigger part of the total value chain, particularly, in areas where margins are higher.

If I can comment on that one. Would you be able to come up with a ratio, which number of clients are retained now and how that developed over the last, well, let's say, 10 years, and where you expect it to go to?

Yes. It's difficult to say where we expect it to go to. I can tell you that we are working very hard in developing plans on increasing that. Today, the percentage is relatively low, it's single-digit, I mean that's where it is. It is not much more than that. The reason also being, we've never so much focused on it. And with our strategy of focusing on the retirement segment and within, as you know, our purpose of helping customers securing financial futures. We're much more focusing now on an integrated basis. And we see by increasing that percentage, we'll rather like to update you when we have a strategy session in June as to where ambitions are there. And clearly, it is possible to increase the amount we retain significantly compared to where we are today. In terms of mortgages, you mentioned 14 basis points. Keep in mind that we have a very significant part of our book in mortgages with a Dutch government guarantee, this famous NHG. That clearly helps. We've seen mortgages with very low impairments, 14 -- 1 4 basis points, very low. We should take into account obviously, with the environment not being as good as we would like it to be, and that could trend very slowly up, but still well within our pricing assumptions.

Next question comes from Nick Holmes. Nick Holmes - Societe Generale Cross Asset Research: It's Nick Holmes of SocGen. I have just a couple more questions on the economic assumption changes. First one is, how conservative do you think you are compared with the U.S. peer group? And secondly, can you give us a split of the EUR 270 million between the 3 elements?

Darryl? Darryl D. Button: Yes, Nick, I'll take that. How conservative are we now relative to U.S. peer group? The answer is very conservative. So we actually see some -- I see some statistics on that, so I can say that fairly confidently that we're top quartile on terms of our -- on that metric. In terms of a split, I can give you a split on the equity market component of the EUR 405 million, it was EUR 130 million, EUR 135 million, a little under EUR 200 million for the interest component, and about EUR 70 million on the bond fund component. Nick Holmes - Societe Generale Cross Asset Research: Right. And yes, just coming back to the U.S., so I mean, you feel that you are significantly -- well, you are more conservative and therefore -- I mean, is this a source of debate within the U.S. industry that you are kind of moving away from the peer group in consensus? Do you find other companies raising questions about what you may be doing? Darryl D. Button: Well, I don't know, I guess, that's really -- I can't comment too much on the other companies, so I'll stay with ours. I would add a couple of other proof points to that too. Sometimes, you'll find just total separate account return assumptions. We do break ours between the equity and the bond fund components. And our bond funds return are down at 4%. And you have about -- on the annuities, in particular, we have about a 50-50 split between equity and bond fund. So when you start to factor in that, that's what really pushes us down on a level of conservatism. On the interest rate assumptions, same as well, we're towards the lower end now with this new assumption set. So all I can do, Nick, is comment on where we are. And I feel good about where we are, and I feel good about lining these assumptions up with, as I said before, with the market, which gives us impacts, gives us, I would say, beneficial impacts as we go and do things like hedge programs and capital market transactions. So I feel good about our position.

Next question comes from Francois Boissin. Francois Boissin - Exane BNP Paribas, Research Division: Francois Boissin from Exane BNP Paribas. Two questions, please. The first one really is on the value of new business has been increasing quite significantly year-on-year. Could you comment on how much will it be? On order of magnitude of how much of the increase comes from better market conditions, and how much comes from a more efficient operating costs. And a comment on the sustainability of this level of value of new business would be quite useful. The second question, regard to investment strategy, can you comment on your current investment yield on your back book, in your reinvestment yield? And also, a kind of break down of your new investments would be quite useful.

On the value of new business, I think what we see here is the implementation, execution of our strategy. We said very clearly that the strategy as a company, we want to sell the right products to the right customers at the right price. They have to create value for both customers, and they have create value for us. Otherwise, it's not a sustainable business model in which we're operating in. So the improvement has, and mostly, to do with the fact that we have priced our products in line with the market realities. And as you know, for a variable annuities, for example, our guarantees, we hedged the delta, and we hedge in straight, most important here is that we have repriced products. We have taken products off the shelf where we're not able in this environment to make them work. We've taken our expenses down. So the answer to your question is that most of the impact is management decisions to reprice the products, not sell products that are not meeting our hurdle rate and being prepared and being courageous enough to take whole product lines off the shelf, because we just don't see how they work in this environment. So it's a lot of negatives which you don't see coming up again, which is true in this number 2 [ph] positive number. And it also means that, therefore, we believe that these levels are sustainable going forward because we will continue and maintain our strategy. And Darryl... Francois Boissin - Exane BNP Paribas, Research Division: And sorry, just to follow up on that, do you think there's more to come, i.e. are you able to further increase margins? Or do you think that at some point in time you might see pressure from competitors?

What you see is that margins, this specific quarter have -- clearly, have had the benefit from increased margins of variable annuity. Market conditions there have helped a bit, that's clear, because when rates go up and volatility goes down, you get more room in pricing for the guarantees. So we will continue with our strategy of only selling products that add value to our customers and add value to us. We have effectively taken a lot of measures already in the past. The most important measures, we have taken them. I'd been very clear in previous quarters about universal life, repricing and regrowing products. What I can say today is that in the value of new business, which is as presented, most of all the negatives on those items and those product lines that created negative value have now been eliminated. So therefore, this is a sustainable level, but you should not be expecting the same rate of increases. It will now very much depend on the volume of sales. Darryl, you have? Darryl D. Button: Yes. On the, let me give you, on the 2 big general accounts in the U.S., our back book yields are above 4.70 [ph] right now. And new money yields going on the books is somewhere in the 4.25% to 4.5% range. In the Netherlands back book yield is 370, it's about 1 point lower. And new money yields going into the Netherlands is right on top of that, about 3.70 [ph]. Francois Boissin - Exane BNP Paribas, Research Division: Okay. And in terms of the breakdown, maybe in the U.S. in terms of your new investments? Darryl D. Button: It's high-grade corporate credit. It's also some long sovereign, long U.S. treasuries, high-grade corporate credit, a little bit of structured assets as well. I would say the new money mix looks very similar to the in-force portfolio.

So I'd like to thank you for attending this conference call. Again, I know it's a busy day. Thank you very much, and I'd like to open the floor now to the press for any remaining questions you may have.

We will now take questions from the media. [Operator Instructions] Our first question comes from the line of Ward Vengle [ph].

This is Maud van Gaal from Bloomberg News. I had a question with regards to your comments on Solvency II and also your remark on Solvency 1.5 in the press release. I was wondering, what comments have you submitted to the consultation, if any, and if you are more optimistic on Solvency II, would that make you urge the Dutch government not to go ahead with 1.5, or the Central Bank?

Let me start with Solvency II. As I just said in the call, and as you know, I'm pretty closely involved in the whole process with the industry. I believe that we are at the point that we have never been closer to having the different parties that need to be involved, come to a conclusion. There's still a number of outstanding points. But I think everybody now knows that, if by the end of November, there is no agreement, then the deadline of -- sorry, I would say the target date of the 1st of January 2016 becomes really impossible. Even if in November, an agreement is reached on the big items, there still is a lot of work to be done. And it is questionable to what extent it can be done within the time frame. But I believe that there is now a very clear desire and determination from all the parties involved to come to an agreement, to set this aside and to move forward. Darryl, you've been involved with Solvency I and the Dutch Central Bank, so? Darryl D. Button: Yes. Solvency 1.5 applies to our Dutch business only. It is a stopgap measure, if you will, that here in the Netherlands are implementing while we are waiting for Solvency II. It works off the Solvency I framework. It basically stress tests the Solvency I framework, and then creates a corridor approach where the DNB, the regulator here in Holland, has approval rights over whether companies can pay dividends or not. We've been working with them on the stress testing. We've submitted all of that, they've come back here recently, they went through a calibration exercise, to calibrate it. Their intention is not to change the overall capitalization for the industry as a whole, but it may have individual impacts. We are fairly confident we come out on the strong end in the local market. So in terms of that recalibration prices, we fared pretty well. So that's leaving behind the comments where we do not expect Solvency 1.5 to have a unique impact to Aegon.

[Operator Instructions] Thank you, I'd like to hand the call back to the hosts. There appear to be no further other questions.

Many thanks to all of you that have attended and wish you a good day. Goodbye.

Thank you, ladies and gentlemen, this concludes today's Aegon Third Quarter 2013 Results Conference Call. Thank you for participating, you may now disconnect.