## ❏ CAPITAL AND LIQUIDITY MANAGEMENT 

AEGON aims to secure stable and strong capital adequacy for its businesses, strengthening its ability to withstand adverse market conditions and ensuring the company is able to meet long-term obligations toward its stakeholders. 

## Guiding principles 

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

■ Ensure AEGON’s business and operating units have strong capital adequacy. 

■ Manage and allocate capital as efficiently as possible, maximizing returns and supporting the company’s overall objective of sustainable, profi table growth. 

■ Maintain overall capital strength and an effi cient capital structure through management of the company’s capital base and leverage. 

■ Ensure sufficient liquidity to meet obligations at a reasonable cost to the company. 

■ Ensure AEGON’s continued access to international money and capital markets on competitive terms and thereby reduce the company’s overall cost of capital. 

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

## Governance 

Since October 2009, AEGON has been subject to group supervision by the Dutch Central Bank in accordance with the requirements of the European Union’s Financial Conglomerate Directive. AEGON’s Corporate Treasury manages and coordinates capital and liquidity management strategies and processes. The department acts under the authority of the Group Risk & Capital Committee (for further details on this Committee, please see pages 46 to 47). 

## Capital management 

## Strategic importance 

AEGON’s approach to capital management plays a vital role in the company’s broader strategy, which is based in part on ensuring more capital is directed toward those markets that offer strong growth prospects and higher returns. In recent years, AEGON has released a 

significant amount of capital from its existing businesses through a combination of risk reduction, greater capital efficiency and a more active capital management strategy. Given current uncertain economic and market conditions, AEGON intends to retain an adequate capital buffer for the foreseeable future. For an overview of AEGON’s strategy, please see pages 9 to 15. 

## Core capital from the Dutch State 

In December 2008, AEGON secured EUR 3 billion in core capital from the Dutch State through the issuance of convertible core capital securities. The core capital was part of a broader program of support for banks and insurance companies in the Netherlands during the recent financial crisis (see the Strategy section of this report on pages 14 to 15 for more detail). 

## Releasing capital 

In the thirty months from June 2008 to December 2010, AEGON released a total of EUR 6.7 billion in capital from its businesses, well above the company’s initial target of EUR 4 to EUR 5 billion. In combination with other measures (see the Strategy section of this report on pages 9 to 15), this capital release program ensured AEGON could withstand the sharp deterioration in economic and market conditions during the global financial crisis. 

## Improving risk-return profi le 

AEGON has taken measures to improve its risk-return profile and lessen its exposure to world financial markets. These measures, in turn, have had the effect of lowering the company’s overall capital requirements. 

In addition, AEGON has taken decisions in recent years that have led to an improved risk-return profile, including the sale of the company’s life insurance activities in Taiwan and the run-off of AEGON’s spread-based institutional business in the United States. Since mid- 2008, risk reduction measures have accounted for approximately 40% of AEGON’s efforts at preserving and releasing capital. 

