Financial highlights
At a glance
Explanation VNB /IRR
Value of new business (VNB) is part of the embedded value reporting and is
considered an important supplemental measurement of the business performance. VNB is
widely used in the insurance industry to measure how profitable new policies will be.
VNB represents the present value of future, distributable earnings that will be
generated by these new policies, sold in a defined reporting period. The VNB reflects
how much profit can be expected from new business, discounted to its present-day value,
using various assumptions for changes in interest rates, economic circumstances and
other variables.
In addition AEGON discloses its internal rate of return (IRR) on the
value of new business. IRR represents the discount rate at which the present value of
the distributable earnings from new business equals the investment in new business; i.e.
the projected return on the initial investment in new business.
AEGON believes that the
information it publishes on the VNB, along with the other financial disclosures it
regularly makes, provides valuable, additional assistance to investors and shareholders
in helping them understand the nature of the company’s business.
VNB and IRR should not,
however, be viewed as a substitute for AEGON’s primary financial statements. The method
AEGON uses to calculate its VNB is consistent with European Embedded Value Principles
and is described in more detail in the Embedded Value disclosure document available on
AEGON’s website: www.aegon.com.