Willem van den Berg - Head of Investor Relations Alex Wynaendts - Chief Executive Officer Darryl Button - Chief Financial Officer.

Ashik Musaddi - JPMorgan Arjan van Veen - UBS Gordon Aitken - RBC Capital Markets Matthias de Wit - KBC Securities Andy Hughes - Macquarie Group Nick Holmes - Société Générale. Nadine van der Meulen - Morgan Stanley William Hawkins - KBW.

Good day, and welcome to the Aegon Third Quarter Results Analyst and Investor Conference Call. Today's conference is being recorded. And at this time, I would like to turn the conference over to Willem. Please go ahead..

Thank you. Good morning, everyone, and thank you for joining this conference call on Aegon’s third quarter 2016 results. As always, we will keep this presentation short, leaving plenty of time to address your questions.

We would appreciate it if you take a moment to review our disclaimer on forward-looking statements, which is at the back of our presentation. After the prepared remarks, our CEO, Alex Wynaendts will be joined by our Chief Financial Officer, Darryl Button, to answer your questions. I’ll now hand it over to Alex..

Thank you, Willem, and good morning to everyone. Thank you for joining us for our 2016 third quarter earnings call. So overall we are pleased with the progress we made this quarter, and I would like to begin by providing you with a brief overview of the key elements.

As you're aware, we review our actuarial and economic assumptions annually in the third quarter. This year, the review led to a charge of €81 million, which was primarily related to our long-term care business in the U.S. Given this limited impact, we report a strong net income of €358 million.

Our underlying earnings were supported by the benefits coming through from our successful expense savings program. These were however offset by the impact of adverse U.S. mortality experience and the impact of low interest rates. Despite volatile markets, our Solvency II ratio remains stable, within our guided target range and estimated 156%.

At the same time, we continued to strong sales from our deposit businesses. Let's now look at our underlying earnings for the quarter in more detail on Slide 3. As you can see, underlying earnings before tax amounted to €461 million.

Earnings were positively impacted by growth in a number of our fee-based businesses and the continued strong progress on our expense savings program, as expenses in the U.S. decreased by approximately 8% year-on-year. These positives were however more than offset by adverse claimed experience, lower reinvestment yields and the divestment of our U.K.

annuity book. Claims experienced in the Americas, was driven by adverse mortality experience in our universal life business, and I will discuss our recent mortality results in greater detail later in our presentation.

Turning now to last quarter, we experienced lower reinvestment rates, which impacted earnings by €23 million as interest rates declined further. As you can see, earnings from Asia and Asset Management were lower.

The results last year included a favorable intangible adjustment in Asia, and in Asset Management, expenses were up this quarter as we’re investing in the future growth of our business. And finally, earnings were impacted by the strategic disposal of our U.K. annuity book.

Let me now run you through how we successfully reduced our expenses in the first nine month of this year.

I'm pleased to share with you today that we have already achieved annualized expense reductions of €87 million, exceeding our full-year target 2016 of €56 million, and that we’re accelerating our efforts towards reaching our target of €200 million by the end of 2018.

In the U.S., we continue to see the benefits of our voluntary separation incentive plan, which contributed to the significant savings achieved this quarter. The result, the run rate savings in the U.S. increased to $75 million or €67 million for 2016.

In the Netherlands, and at the holding, we are also well on track to achieve the planned expense savings and we continued to make good progress towards our 2018 targets.

Here, I would like to stress again that our expense savings program is being executed in such a way that we maintain our high customer service levels, while continue to invest in digital solutions. I would now like to turn to Slide 5, which illustrates the development of our recent claimed experience.

As I mentioned earlier, this quarter we experienced adverse mortality in our U.S. universal life business. This quarter’s adverse result is close to a two standard deviation events, in which the frequency and especially the severity of claims of over US$5 million were much higher than we would normally expect.

As you can see on this slide, the severity of claims below US$5 million has been relatively stable over recent quarters. I would like to remind you here that some volatility in our mortality results is to be expected, which is the result of lower insurance coverage following the recaptures in 2014 and 2015.

As we have indicated before, mortality results are expected to fluctuate by two standard deviations, which equates to plus or minus US$50 million in one out of every 10 quarters. I would now like to move on to the next slide and discuss our net income.

I'm pleased with our net income of €358 million this quarter, a significant improvement over the same quarter last year. As I've just highlighted, we reported underlying earnings of €461 million, while non-underlying earnings in Q3 totaled a positive €48 million.

Fair value items, which amounted to an €84 million gain, benefited from credit spread tightening and favorable alternative investments in the U.S., as well as positive real estate revaluations in the Netherlands. Credit markets continued to be benign, resulting in net recoveries of €6 million for the quarter.

Other charges, which amounted to €72 million, include assumption changes, model updates and other items. And I will now provide you with more details on these in the following slides. This quarter’s assumption changes and model updates amounted to an €81 million loss.

These items were previously reported across underlying earnings, fair value items and other charges. As of this quarter, we report all assumption changes and model updates in other charges. We have made this change to improve the transparency of our results.

The main driver for the loss following the annual assumption review was our long-term care business in the U.S., where we recorded a loss of €100 million.

While we continue to take a number of management actions in this line of business, the review led to a charge driven by experience updates including morbidity, termination rates and utilization assumptions.

For the other businesses lines in the U.S., assumption changes and model updates largely offset each other, while in the Netherlands, model updates related to the guarantee provision resulted in a benefit of €28 million. From a capital perspective, the positive effects from assumption change in the U.K.

and the Americas were offset by the implementation of updated longevity assumptions in the Netherlands. Overall these have an immaterial impact on our Solvency II ratio, as well as on our capital generation going forward. Let me now turn on Slide 8 to our capital position for the Group.

Since Solvency II came into force, our ratio has been well within the target range of 140% to 170%, and at the end of the third quarter stood at an estimated 156%. The capital generation this quarter contributed 2% to our Solvency II ratio. This increase was offset by 2016 interim dividends.

Assumption changes and model updates had a material effect on the capital position of the Group as I highlighted on the previous slide. Market impacts were negative this quarter, which was mainly due to the impact of low interest rates, and credit spreads on Aegon’s own employee pension plans.

In the Netherlands, a lower benefit from the volatility adjuster, which declined from 18 basis points to 10 basis points, also negatively impacted the ratio. This was offset by management actions. Let me now turn to our holding excess capital position, which remained stable at €1.1 billion for the quarter.

The holding received €300 million in dividends, as the Americas accelerated part of the final 2016 dividends in addition to regular quarterly dividend for Asset Management. This remittance offset the neutralization of the 2015 final stock dividends and the payment of the 2016 interim cash dividend of €0.13 per share paid in the third quarter.

Let me now turn to Slide 10 where we discuss our sales for the quarter. We are pleased with our strong gross deposits in retirement plans and asset management, which increased 19% year-on-year to nearly €25 billion. Retirement plans gross deposits increased mainly as a result of higher takeover and recurring deposits in U.S.

In Asset Management, gross deposits were also higher as a result of strong sales at our Chinese joint-venture, as well as higher inflows in the Netherlands and Americas. Net outflows however amounted to €2.3 billion, mainly driven by the book of business acquired from Mercer.

These outflows are in line with anticipated lapse behavior of the acquisition from Mercer’s retirement business and are reflected in the purchase price. Elevated outflows on the acquired business are expected to continue until early 2018 as the business is being converted onto our platform.

Customers that have transferred to the America platform have provided very positive feedback, both in terms of the technology after disposal and the customer service received.

The result of this acquisition and ongoing global partnership with Mercer, we are very pleased that Transamerica’s recordkeeping business has just been named as Dip-Core [ph] record-keeper with new Mercer defined contribution offering in the U.S.

and we anticipate that this partnership will add a meaningful number of retirement plan customers to our DC platform, driving both scale and efficiency. Accident & health new premium production declined €280 million, mainly as a result of our decision to exit certain products in the Americas.

Finally, new life sales were down 15%, reflecting our continued focus on profitability of sales in the current low interest rate environment. This is also, in part, a reflection of our strategic shift of focus of fee-based business, which I'd now like to take you through on Slide 11.

As you can see on this slide, since 2010, we have nearly tripled the percent of earnings derived from fee-based businesses from 16% to around 44%. Together, these businesses now manage or administer over €650 million of assets.

Focusing more on fee-based business makes Aegon less vulnerable to the current low interest rate environment, increases our return on equity and allows for more efficient capital management. This is evidenced by the growth of our free cash flows from our fee businesses, which has significantly increased over recent years.

And good examples of our increased focus on fee businesses are the acquisition of Mercer’s DC business in the U.S. and the transformation of operations in the U.K., and there we divested our annuity book and acquired Cofunds and BlackRock’s pension business to become the market-leading platform.

To close on Slide 12, I would like to summarize the key elements for this quarter. So far, we have achieved run rate expense savings of €87 million, which is significantly ahead over 2016 target.

At the same time, despite volatile market conditions, we have maintained a stable capital position with an estimated Solvency II ratio of 156%, and we've also been able to maintain stable holding excess capital position, while returning €950 million to shareholders in 2016.

I remain confident that we will continue to make significant progress towards our 2018 targets. As I'm sure you all know this is the last results call that Darryl and I are doing together before he leaves Aegon at the end of the month.

Darryl has made a huge contribution to our company over the past 17 years, for which I would like to really thank him as being a particular pleasure to serve with him on the Executive Board. So fortunately for the last time together, Darryl and I are now ready to take your questions. Thank you..

Thank you. [Operator Instructions]. We will now take our first question Ashik Musaddi from JPMorgan. Please go ahead..

Hi, good morning, Alex. Good morning, Darryl. Just a couple of questions I have.

One, can you just give us some indication about the Solvency ratio for the local unit? I guess you're not giving the exact numbers, but any sort of indication what has volatility adjusted and done? I mean, is your - what is the longevity impact on Netherlands et cetera, so some color on that.

And secondly, can you give us a bit more color on what sort of assumption changes you have done in long-term care, and what is it leading to? I mean, is it just IFRS or should we be expecting any sort of further assumption changes, or do you think it's more or less done, because we saw this spike in the mortality as well recently.

So how should we square up things? Are there more to come or do you think it's good, because for example last year you clearly flagged that this model updates, most of them were done, and clearly today, we haven't seen any negative impact from that. So any sort of indication like that for this long-term care business would be good as well. Thank you.

And by the way, really well done today. It was a good set of numbers. Thank you..

Thanks Ashik. It’s Darryl. I'll try and take those questions. Solvency II, we aren’t disclosing the local unit capital ratios on the quarters anymore, so I'm going to try to stick to that.

But just to give you a general feel, the Group ratio was down 2 points, that was largely due to the Netherlands and it was - the predominant issue was in fact the tightening of the EIOPA volatility adjuster. I would put it broadly in the range of 5 points to 10 points, and that's probably as much detail as I am prepared to give.

On the long-term care assumption changes, it was really just claims strengthening. And so we have done a lot of work to take a look and break down the long-term care claims analysis by sight of care.

A lot more analysis and detailed analysis went into this year's assumption changes, and it was really the trend that we saw on predominantly termination rates for people that were already on claim. That was the biggest driver, and we were to break that down by sight and that led to about €100 million charge on US$110 million charge on long-term care.

In terms of the rest of it, you're right, I’ll just acknowledged the rest of the model updates and assumption changes have come in pretty low and we're pleased with that..

So with respect to this long-term care, should we be not expecting any more going forward based on your current knowledge or there could be more coming in coming quarters or?.

No, I mean, we make - we did a detailed review. These are long-term assumptions. We've really put in place claims assumptions now that track with the experience we've been seeing, so I'm not expecting to have to reopen those. There are other assumptions obviously that make up the book.

I think, as you’re aware that we are rate increasing that book and we continue to rate increase that. As long as we continue to get the momentum that we are seeing on the rate increases, I don't see a need to reopen those assumptions..

Okay. That's very clear. Thank you..

Yes..

Thank you. We will now take our next question from Arjan van Veen from UBS. Please go ahead..

Thank you. If I just may follow-up on the Netherlands solvency position. Darryl, you were very confident at the second quarter to upstream the €225 million reduced target for the Netherlands.

I'm just curious given the solvency ratio is 154% at June and you're indicating it's probably reduced 5 points to 10 points because of the volatility adjuster changes, whether you still have that confidence? And if you maybe also could give some color or reaffirmation of guidance as to your total upstreaming of dividends from your various divisions is now €1.2 billion reduced from €1.3 billion at the beginning of the year.

So just if you can reaffirm you’re still on track for that? Thank you..

Yes, so as it relates to dividends for the Netherlands, I'll repeat what I said last quarter. I'm expecting a dividend from the Netherlands this year but it will be lower than what we are deeming our capital generation to be around that €225 million level, as you mentioned.

So expecting a dividend, but it's going to be lower than what I would see as our annual capital generation..

And just on that, Darryl, so the total target you’re happy with - is this going to come from other divisions?.

Yes, we’re still on target to meet the US$1 billion dividend upstreaming for the U.S. Actually we are at about the 80% mark on that. We did upstream and bring some remittances from the U.S. in the third quarter, so that's where the largest dividends for the Group obviously will continue to come from.

We also brought up some remittance from Asset Management and then there are still CEE and Spain that I'm expecting some dividends in the fourth quarter as well..

So it's fair to say that 150 or the 200 was U.S.?.

The U.S. upstream in the third quarter about US$270 million..

Okay. Thank you..

Yes..

Thank you. We will now take our next question from Gordon Aitken from RBC Capital Markets. Please go ahead..

Good morning. Three questions please. First, the Mercer net outflows. I mean, you mentioned there your expectation thought this is 18% annualized and for the quarter seems high.

What was your expectation when you bought that business? And if you could say if these have continued into the fourth quarter? And the U.S., I mean have we reached the trough on VA sales, and is there any impact on the in-force book of the Department of Labor ruling? And the final question is, in the U.K., the result with three legacy platforms in the U.K.

these all started as fund supermarkets rather than wrap platforms, and one of them is now so significant charged due to basically upgrading and basically moving from a fund supermarket to a wrap. Do you think you need to spend significantly on Cofunds? Thanks you..

Hi Gordon, let me say something on Mercer. So when we acquired Mercer, we were well aware of the fact that a number of customers would not be effectively moving to our platform.

Actually in the whole due diligence, it was already clear from the beginning that quite a number of customers were already in the process of leaving, and therefore it is really what we said, anticipated. Now these are often customers with a lot of assets - large customers with significant assets.

So what you see is as you get assets leaving the business, but taking into account also that we have reflected this in our pricing and our pricing is adjusted based on the amount of customers that’s staying with us, we are comfortable that this is an attractive transaction going forward.

What it also brings to us is that we are now also into an environment where we can pitch for the much bigger cases. Before Mercer, we did not have this capability. We are now pitching and we are now in final rounds for significant larger cases than we had before.

And finally, as I said in my introduction, we had been chosen by Mercer also as their record-keeper for their - they have also their own proposition, DC proposition, which means we are going to see a lot of business coming.

So you have to look at the thing as a whole, and as such, this acquisition remains very attractive for us and also continues to meet our own hurdle from a financial point of view. I think in terms of VA sales, it's - not much has changed really since last time.

What we see is that the distributors are all starting to gear up and getting prepared for the life I would say in a new world where they, in most cases with one or two exceptions as we understand, are preparing to offer on one side the commission proposition and another one a fee-based proposition. And we’re well ready for that.

And as you know, actually Transamerica has a fee-based proposition already for some time and that means that we are well prepared for entering into this new environment with a proposition, which is both commission-based and a fee-based proposition. Having said that, it does take some time.

It is being for - many of our distributors - it has been a distraction in the sense they need to work out exactly how this is all going to work and that has been reflected in an overall lower volume of sales in the market.

So, on the platforms in the U.K., Darryl, would you like to add something about what we expect in terms of our integration expenses?.

Yes. Well, I think on the generic question of are we going to invest in Cofunds? I mean the first and foremost, we are going to be converting that business over onto our platform and that was the thesis behind the acquisition.

But there will be integration costs associated with that, and we - I think we disclosed that at the time of the acquisition around £60 million is what we are anticipating from that integration exercise..

On the point on the USD, is there any - Department of Labor, is there any impact at all so far in the in-force bid, please?.

Well, I think we are going to stick to our guidance on that. On the qualified sales, we are going to see upward to a neighborhood of up to 30% sales reduction. We think that that comes across the industry as a whole, and we think we'll have our - sort of our fair share on that qualified sales.

When you take that as a percentage of our total sales that means you could see a 20% reduction in the sales in the book..

But the question is not about new business, it’s about in-force business, please?.

On the in-force?.

Yes..

Sorry, I missed that first part of your question. Do I expect an impact? You mean an impact in terms of additional lapses from the in-force? Is that what you’re….

That’s right, yes..

No, I don't think so. At the end of the day, I don't expect the business to - well, I think if anything the business is perhaps a little bit stickier on the in-force because of the restrictions that will be on any attempt to trying to turn the business, but other than that, I don't think that will be immaterial..

Thank you very much..

Yes..

Thank you. We will now take our next question from Matthias de Wit from KBC Securities. Please go ahead..

Hi, good morning. Three questions please from my side. The first is on the Dutch business. Is it possible to provide more color on the nature and the quantum of the management actions you implemented during the quarter? Linked to that, you also referred to longevity impacts.

Could you also maybe quantify the impacts it had on Solvency? And wondering in this respect whether your hedges absorbed any of this updated longevity assumptions impact? Second question is on the U.K. pension deficit.

Is it possible to provide an update on where we are today, and also wonder if there is any need from your side or already you see any need to fund the plan going forward, or could this have an impact on dividend for example? And my last question is on the holding. IFRS expenses, they are trending down currently at €35 million for the third quarter.

Wonder whether this is a good run rate for the future and whether we should expect any further decrease? Then for example also in efficiency program running at the holding company currently on top of the €200 million program you have for the U.S. and Dutch business, please? Thank you..

Okay, that was a lot. I'm going to try and take those in order. Let's see. The first one I think was on the Netherlands on the management actions. The management actions were actually we implemented some additional spread hedges.

We do find that under Solvency II, a lot of the capital we end up holding is for sovereign spread risk actually and overall spread risk. So we put some hedges in place that actually help bring down the IR1 component of our Solvency II capital.

That did offset the impact that we had from strengthening our longevity assumptions, and those were - I don't have the exact numbers but they were in the neighborhood of 5 points on the capital ratio, plus and minus, that offset each other. Let's see. You asked also about whether the hedges absorbed some of that longevity? Yes, they help.

Although keep in mind some of that - a lot of the hedges we have are for some of the more severe shocks that we see in the future on longevity, so it helps, but it doesn’t certainly mitigate the longevity exposure that we have. On the pension deficit, I think I'll probably just defer you to IR to get the actual numbers.

What I would say is that IAS 19 deficit numbers are all inside the solvency ratios. So as we talk about it and disclose our solvency ratios, those deficits are all accounted for their upfront. So I think that’s the answer that I’ll leave you with there. And the last one was on holding expenses I think if I wrote that down right.

Yes, I think it is a decent run rate on what you're seeing. The expenses do represent and reflect the US$5 million cost reduction that we've been putting through the hole and the only thing I would guide maybe a little bit differently is we do have a senior maturity bond that's going to mature in next summer.

So we are possibly looking at the refinancing that in the near-term and that could have a temporary effect of increasing holding funding cost for a short period of time..

Okay. And on the - I think in terms of cash holding operating financial expense, you’ve been guiding for €300 million annual impact.

Is that still the right number to look for?.

Yes, that's still a pretty good number, if - with the possible exception of pre-funding debt maturity next summer, but other than, that's a good run rate number..

Okay. Thanks a lot..

Thank you. We will now take our next question from Andy Hughes from Macquarie Group. Please go ahead..

Hi guys. Just quick questions if I could. First one is coming back on the universal life changes. I guess I was a bit surprised given the higher mortality in the quarter, which obviously has been one-off, but also the comments you’ve made previously about lapse rates, so there wasn’t a kind of bigger charge for the universal life in the U.S.

Is this partly because the price rise is coming through or could you explain what’s kind of going on there, please? And I guess the second question is on the U.S. - sorry, the Dutch solvency move, 5% to 10%.

If I understand the essence of the previous question, you were talking about minus 5% for Dutch longevity and something else on market conditions.

Is that right? Is that in the 5% to 10% move? And in Dutch solvency, I presume if it was done today given what’s happened to Dutch mortgage spreads, it would be higher than where it was at the end of the quarter. Can you give us color on that? And then finally, just trying to get a feel about U.S. interest rate sensitivity for the business.

Are you reserving at the 3.75% the same as full-year? I can see the 4.25% for IFRS ultimate rate. Just wondering what the U.S. reserving rate is and how I should think about US rate sensitivity, please? Thanks..

Yes. Okay, [indiscernible] I'll take those. On the UL, I think your first question was why were there not larger charges in the assumption change process? There we did have some offsetting items. We did take - we did increase provisions for persistency experience that we are seeing on secondary guarantee products.

That's where we are continuing to see people exercising those guarantees in a more efficient way than what we had anticipated. But we were able to actually offset that with a couple of offsetting items.

We had some additional management actions in there in terms of increasing monthly deductions, and in addition to that, we actually had some very conservative modeling assumptions for our index universal life crediting rates and we were able to bring that back in with our normal practice.

And so those all kind of offset each other and resulted in a fairly small number for the quarter. I think your second question was on the Netherlands Solvency II, just asking for a little more color behind my comments on the 5 points to 10 points.

The 5 point to 10 point reduction in the Dutch solvency ratio was primarily related to the spread movements that we've seen. We've seen - we do have a basis risk in our solvency position. That is the risk that overall the EIOPA volatility adjuster corporate spreads. The risk is that those tighten.

Those are the - what's used for the discount rate on the liabilities. And the bonds and assets that we actually hold widened, and that's exactly what happened in this quarter. So we have that basis risk was the biggest impact and then a smaller impact from the longevity that I mentioned before offset by the management actions.

So all in all, if you put that all together, I would expect somewhere between a 5 point and 10 point reduction on the Dutch solvency ratio. Your last question was on the interest rate assumption used in our - I think our statutory results in the U.S. It is in line with our IFRS assumption at the 4.25% level.

That's a 10-year assumption on the 10-year Treasury..

Okay.

And that hasn't been reviewed down with - in line with what some of the people are doing at the moment?.

Actually we did revise it downward two years ago and what we are seeing is a movement in the U.S. There are few people that are reducing the rates, but generally there they are reducing them to the level that we are at now, particularly on the IFRS side and that's what we’re seeing now.

So we find ourselves very much now in the middle of the pack, whereas two years ago, we were probably one of the more conservative rates..

Great. Thanks so much..

Yes..

Thank you. We will now take our next question from Nick Holmes from Société Générale. Please go ahead. Your line is open..

Hi there. Thank you very much. Just couple of questions. I wonder if you could give us an update on the U.S. run-off portfolio. I'm just wondering whether the rise in bond yields might make disposal candidates more promising within that portfolio.

And then second point is returning to the DOL, just wondered whether you think the Republicans might be a little bit more forgiving on the DOL and whether there might be therefore a sort of positive change for the industry? Thank you..

Nick, let me take the question on the run-off portfolio. Yes, we have consistently said that so when higher interest rates would make a disposal more attractive, would allow us to get a more - price more aligned with what we believe it's worth economically.

So the rising interest rates certainly helps, but I would like to remind you that it's not only about the price but it's also about the structure of the transaction. This is not a legal entity that is would be for sale. It is effectively liabilities that we would have to transfer it to the buyer with assets.

And therefore, it is extremely important that we have a good counterparty risk. In other words, it would make no sense in transferring assets and bringing that to an entity that would require us to hold quite a lot of capital for counterparty risk.

So therefore it’s more complicated than just the interest rates but certainly interest rates will help in this direction. Yes. On the Department of Labor, it's an interesting question which we have asked ourselves too. It's obviously too early now to make any statements and any changes in expectations.

I believe also the first step is really to see to what extent the new government will - the new President will appoint people to raise governance. There is a name circulating but nothing has been done. And I think it's only after we see who is key cabinet members will be then we’ll have a better picture about the implementation of this rule.

I would say to you that my personal feeling - and this is very much personal is that this has been very much within the minds of the people as was also seen as a positive for the care of protecting the interest of our customers, of customers in general.

And therefore I would believe, but it's a personal view, that it’s more likely that this will stay in the form it is than it would change really very much..

Okay. Thank you very much. Very clear answer..

Thank you. We will now take our next question from Nadine van der Meulen from Morgan Stanley. Please go ahead..

Good morning. I was wondering if you could give a little bit more detail on the capital generation for the Group. It says on Slide 26 that it's around €0.2 billion. That was the same as 1H.

Could you be a little bit more specific there? Has it gone up, has it gone down, is it more towards the 1.6 or 2.4 level? So if you could give some more details there, that would be appreciated.

And I suppose second question is with regard to - yes, if you can comment on what you think the implications are of potential increased consolidations in the Dutch insurance space for Aegon’s Dutch insurance business? Thank you very much..

Hi Nadine. I'll take the first one. On capital generation, on a normalized level, we’re showing that - if you exclude the markets and the one-timers, we’re at €0.3 billion, the €300 million. Just to put a little bit more detail behind that.

I have talked about the €1.3 billion as our target generation and that's €325 million to be more specific per quarter.

What we are seeing is with the annuity sale in the U.K., that drops down a little bit in more around the €300 million level, and then will come back as we integrate Cofunds and as we showed you at the time of that acquisition as we get the U.K. cash generation back up to the £70 per year level that we expect to coming out of the integration.

So it was €325 million, down to about €300 million right now and will be hopefully quickly back up with the €325 million level per quarter. The second question….

Yes, on the consolidation. I mean I would say that the Dutch market will benefit from consolidation, and at the same time, I'd like to remind what we said all along is that, in the Netherlands, Aegon is very clearly focusing on organic growth.

We believe that a lot of the growth will come from the whole area and environment on the work side [ph] so it's about saving to employers, saving for pensions for the future and that's where we see most of the growth.

And as you know, we had a very strong market position, even leading market position that we will certainly maintain and that's where we will be focusing all our efforts on growing this further organically..

Thank you very much..

Thank you. We will now take our next question from William Hawkins from KBW. Please go ahead..

Hi guys. Thank you. In the January Investor Day, you talked about the health profit signature having an 8.7% premium, in fact a 22 basis points reserve factor.

Given all the changes that have happened this year and now your assumption change, what should we be plugging in for where those margins are going in the future? Obviously a number would be great, if not, I'm just trying to get a feel, after this change, are we restoring the earnings power you expected in January, or is it going to be lower or maybe even higher? And then second, just briefly the timing change in the U.S.

dividend. Is that something that will occur now regularly or are we going to expect more U.S. dividends in the third quarter? And just broadly speaking, why is that? Thank you..

Hi Will, it’s Darryl. Let's see. On the model for the health earnings, actually the U.S. as you know, we are going to be - sorry, I won't be here. But in New York in December, it will be a focus on the U.S. business, and in fact, they will be coming with some updates to their earnings model.

But I think what I can - so I will defer their earnings model till December. But what I can tell you is based on the assumption changes, we actually - going forward, I actually expect a small positive run rate impact on the health earnings coming out of those assumption changes going forward.

So we'll be able to sustain, if not, mildly improve those results. And that's a directional comment and U.S. will fill in the details in December. The second question was on the timing. No, that was unusual.

We did some holding company restructurings in the third quarter and that led to actually some capital naturally flowing back to some parent holding in the third quarter. That's the source of the 275 million. I would not expect that to continue in the future. We'll probably fall back into our twice-a-year second quarter and fourth quarter for U.S.

remittances..

Thanks. Thanks, Darryl, for your help over the years. Cheers..

Yes. Thank you..

Thank you. We will now take our final question from Steven Haywood from HSBC. Please go ahead..

Hi, good morning. Thank you for taking my question. It's to do with potential debt refinancing, 2017 senior bond here. Is there - because you're getting fairly close to the gross leverage ratio, maximum targets 26% to 30%, would you consider redeeming the debt fully next year, and is there a need to redeem this bond because of the sale of your U.K.

annuity book, or would you just consider refinancing it in whole? And then if you could just discuss your sort of capacity you have on tier-2 debt and restricted tier-1 debt under the Solvency II framework, please? Thank you..

Hi Steven. Yes, we've done some thinking in this area. Right now we’re leaning towards just simply refinancing the senior maturity next summer and not letting that redeem. And frankly, we are looking at fairly favorable market conditions right now to do that.

So I think it would be reasonable to assume that we’ll refinance it and we’ll refinance it with the senior. I think that there isn't really a lot of appetite to do tier-2 issuance at this point.

Keep in mind the capacity for things like tier-2 are a function of your underlying SCR as we continue to migrate towards more fee business going forward and the reduction of the sale of the annuities in the U.K. is an example of that. We continue to look ways to bring our SCR down.

So I think refinancing at a senior right now, maintaining the liquidity is the most optimal position for us and that's what I would look for the company to do in the coming months..

Thank you very much..

Yes..

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

Well, I'd like to thank you. And again I would like to thank you, Darryl. This was a great call. Thank you for all the work and commitment, and the way you answer the question, we’ll miss you. And we wish you obviously a lot of success in your new life in the U.S.

And I would like to say that I’ll see some of you this evening for dinner, so look forward in seeing you tonight. Thank you very much..

Thank you, ladies and gentlemen. That will conclude today's call. And you may now all disconnect..