AEGOF Aegon Ltd (PK)

RISK FACTORS

Your investment in the Subordinated Notes entails risks. You should carefully consider the risk factors below, as well as the other information contained in this prospectus supplement and the accompanying prospectus, and the documents incorporated by reference in this prospectus supplement and the accompanying prospectus, including our annual report on Form 20-F for the year ended December 31, 2018 (our “Annual Report”), before investing in the Subordinated Notes. As part of making an investment decision, you should make sure you thoroughly understand the terms of the Subordinated Notes and the agreement by you to be bound by the exercise of any Dutch Bail-in Power by the relevant resolution authority. The following discusses risk factors related to an investment in the Subordinated Notes, key risk factors that may affect our businesses and operations, as well as other risk factors that are particularly relevant to us in periods of significant economic uncertainty. Other factors besides those discussed below could adversely affect our business and operations, and the following risk factors should not be considered a complete list of potential risks that may affect us and our subsidiaries. If any of the risks described below materializes, our business, financial condition and results of operations could suffer, the Subordinated Guarantee or the Substituted Subordinated Notes (as applicable) could be subject to the Dutch Bail-in Power, and the trading price and liquidity of the relevant instrument could decline, in which case you could lose some or all of the value of your investment.

Risks Relating To Our Business

Disruptions in the global financial markets and general economic conditions may affect, and could have materially adverse effects on, our businesses, results of operations, cash flows and financial condition.

Our results of operations and financial condition may be materially affected from time to time by uncertainty, fluctuations or negative trends in general economic conditions, such as economic growth, levels of unemployment, consumer confidence, inflation and interest rate levels in the countries in which we operate. The global financial crisis has shown that financial markets can experience extreme volatility and disruption.

Any disruptions or downturns in the global financial markets or general economic conditions may result in reduced demand for our products as well as impairments and reductions in the value of the assets in our general account, separate account, and company pension schemes, among other assets. We may also experience a higher incidence of claims and unexpected policyholder behavior such as unfavorable changes in lapse rates. Our policyholders may choose to defer or stop paying insurance premiums, which may impact our businesses, results of operations, cash flows and financial condition, and we cannot predict with any certainty if or when such actions may occur.

Governmental action in the United States, The Netherlands, the United Kingdom, the European Union and elsewhere to address any of the above may impact our businesses. We cannot predict the effect that these or other government actions as well as actions by the European Central Bank or the U.S. Federal Reserve may have on the financial markets or on our businesses, results of operations, cash flows and financial condition.

Declines in value and defaults in our debt securities, private placements and mortgage loan portfolios held in our general and separate accounts, or the failure of certain counterparties, may adversely affect our profitability and shareholders’ equity.

Credit risk is the risk of loss resulting from the default by, or failure to meet contractual obligations of issuers and counterparties. We also consider credit risk to include spread risk, that is, the value of a bond declines due to a general widening of credit spreads. For general account products, we typically bear the risk for investment performance equaling the return of principal and interest. We are exposed to credit risk on our general account fixed-income portfolio (debt securities, mortgages and private placements), over-the-counter (“OTC”) derivatives and reinsurance contracts. In addition, financial institutions acting as a counterparty on derivatives may not fulfil their obligations. Default by issuers and counterparties on their financial obligations may be due

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to, among other things, bankruptcy, lack of liquidity, market downturns or operational failures, and the collateral or security they provide may prove inadequate to cover their obligations at the time of the default. Losses in excess of predicated losses due to any such default or series of defaults by issuers or counterparties may have a material adverse effect on our results of operations and financial position.

Additionally, we are indirectly exposed to credit risk on the investment portfolios underlying separate account liabilities. Changes to credit risk can result in separate account losses, which increase the probability of future loss events. In the United States and The Netherlands separate account products can include guarantees which protect policyholders against some or all of the downside risks in their separate account portfolio. Reduced separate account values also decrease fee income and may accelerate deferred policy acquisition costs (“DPAC”) amortization. Reconsideration of assumptions might also affect the DPAC amortization schedule. These factors may have a material adverse effect on our results of operations and financial position.

Our investment portfolio contains, among other investments, Dutch government bonds, U.S. Treasury, agency and state bonds, other government issued securities and corporate bonds. Especially in a weak economic environment, we may incur significant investment impairments due to defaults and overall declines in the capital markets. Further excessive defaults or other reductions in the value of these securities and loans may have a materially adverse effect on our businesses, results of operations, cash flows and financial condition.

A decline in equity markets may adversely affect our profitability and shareholders’ equity, sales of savings and investment products and the amount of assets under management.

We and our customers run the risk that the market value of our equity investments declines. Exposure to equity markets exists in both assets and liabilities. Asset exposure exists through direct equity investment where we bear all or most of the volatility in returns and investment performance risk. Equity market exposure is also present in policyholders’ accounts for insurance and investment contracts (such as variable annuities, unit-linked products and mutual funds) where funds are invested in equities. Although most of the risk remains with the policyholder, guarantees within certain products may transfer some or all of this risk to us. Lower investment returns also reduce the asset management fee that we earn on the asset balance in these products and prolonged investment under-performance may cause existing customers to withdraw funds and potential customers not to grant investment mandates.

Some of our insurance and investment contract businesses have minimum return or accumulation guarantees, which require us to establish reserves to fund these future guaranteed benefits when equity market returns do not meet or exceed these guarantee levels. Our reported results under International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) are also at risk if returns are not sufficient to allow amortization of DPAC, which may impact the reported net income as well as shareholders’ equity. Volatile or poor market conditions may also significantly reduce the demand for some of our savings and investment products, which may lead to lower sales and net income.

Interest rate volatility or sustained low interest rate levels may adversely affect our profitability and shareholders’ equity.

We are exposed to interest rate risk as both our assets and liabilities are sensitive to movements in the long- and short-term interest rates as well as to changes in the volatility of interest rates.

During periods of decreasing interest rates or sustained low interest rates, as experienced in recent years, we may not be able to preserve margins due to the existence of minimum interest rate guarantees and minimum guaranteed crediting rates provided in policies. Also, investment earnings may be lower because the interest earnings on new fixed-income investments are likely to have declined with the market interest rates. A prolonged low interest rate environment may also result in a lengthening of maturities of the policyholder liabilities from initial estimates, due to lower policy lapses and longer duration of annuities.

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In-force life insurance and annuity policies may be relatively more attractive to consumers due to built-in minimum interest rate guarantees, resulting in increased premium payments on products with flexible premium features and a higher percentage of insurance policies remaining in force year-to-year. The majority of assets backing the insurance liabilities are invested in fixed-income securities.

We manage our investments and derivative portfolio, considering a variety of factors, including the relationship between the expected duration of our assets and liabilities. However, if interest rates remain low, the yield earned upon reinvesting interest payments from current investments, or from their sale or maturation, may decline. Reinvestment at lower yields may reduce the spread between interest earned on investments and interest credited to some of our products and accordingly net income may decline. In addition, borrowers may prepay or redeem fixed maturity investments or mortgage loans in our investment portfolio in order to borrow at lower rates. We can lower crediting rates on certain products to offset the decrease in spread. However, our ability to lower these rates may be limited by contractually guaranteed minimum rates or competition.

Depending on economic developments, interest rates for securities with shorter maturities may remain at low or even negative levels for a prolonged period. In such an environment, an anchored expectation of low inflation or deflation could further push down the longer end of the interest rate curve which could have significant implications for our operations and financial results.

The profitability of our spread-based businesses depends in large part upon the ability to manage interest rate risk, credit spread risk and other risks inherent in the investment portfolio. We may not be able to successfully manage interest rate risk, credit spread risk and other risks in the investment portfolio or the potential negative impact of those risks.

Rapidly rising interest rates may adversely affect Aegon’s profitability and available liquidity.

In periods of rapidly increasing interest rates, policy loans, surrenders and withdrawals may and usually do increase. Premiums in flexible premium policies may decrease as policyholders seek investments with higher perceived returns. This activity may result in cash payments by us requiring the sale of invested assets at a time when the prices of those assets are affected adversely by the increase in market interest rates. This may result in realized investment losses.

These cash payments to policyholders also result in a decrease in total invested assets and net income. Early withdrawals may also require accelerated amortization of DPAC, which in turn reduces net income. Hedging against interest rate movements may change these effects significantly. Hedging programs are in place that are designed to manage the risks within the limits as defined as part of the financial risk management policies within our Group’s risk strategy. The actual impact of the hedging programs is dependent on the effectiveness of the design of those programs as well as real time movements of financial markets. If hedging programs are not effective, our results of operations, cash flow and financial position could be materially and adversely affected.

In general, if interest rates rise, there will be unrealized losses on assets carried at fair value that will be recorded in other comprehensive income (available-for-sale investments) or as a charge to negative income (investments at fair value through profit or loss) under IFRS. This is inconsistent with the IFRS accounting on much of our liabilities, where corresponding economic gains from higher interest rates do not affect shareholders’ equity or income in the shorter term. Over time, the short-term reduction in shareholders’ equity and income due to rising interest rates would be offset in later years, all else being equal.

Increased withdrawals and the need to post margin in relation to interest rate swaps when rates risk rapidly will put a strain on our available liquidity. We accept this risk and take it into account in our liquidity risk strategy and stress tests.

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We may not be able to successfully manage risks associated with the reform and replacement of benchmark rates effectively.

The reform and expected replacement of IBORs (the “Interbank Offered Rates”) such as EURIBOR, EONIA and LIBOR with alternative benchmark rates introduces a number of risks for us, our clients, and the financial services industry more widely. This includes, but is not limited to:

Various supranational institutions, central banks, regulators, benchmark administrators and industry working groups play a role in the benchmark reform and the preparation for the replacement of IBORs. At this moment there is still considerable uncertainty around a timetable and mechanisms for implementation. Accordingly, it is not currently possible to determine whether, or to what extent, any such changes would affect us. However, the implementation of alternative benchmark rates may have a material adverse effect on our business, financial condition, customers and operations.

Fluctuations in currency exchange rates may affect our reported results of operations.

As an international group, we are subject to foreign currency translation risk. Foreign currency exposure also exists when policies are denominated in currencies other than our functional currency. Currency risk in the investment portfolios backing insurance and investment liabilities are managed using asset liability matching principles. Assets allocated to equity are kept in local currencies to the extent shareholders’ equity is required to satisfy regulatory and our self-imposed capital requirements. Therefore, currency exchange rate fluctuations may affect the level of our consolidated shareholders’ equity as a result of translation of the equity of our subsidiaries into euro, our reporting currency. We hold the remainder of our capital base (capital securities, subordinated and senior debt) in various currencies in amounts that are targeted to correspond to the book value of our business units. This balancing is intended to mitigate currency translation impacts on equity and leverage ratios. We may also hedge the foreign exchange component of expected dividends from our principal business units that maintain their equity in currencies other than the euro.

To the extent the foreign exchange component of expected dividends is not hedged or actual dividends vary from expected, our net income and shareholders’ equity may fluctuate. As we have significant business segments in the Americas and in the United Kingdom, the principal sources of exposure from currency fluctuations are from the differences between the U.S. dollar and the euro and between the pound sterling and the euro. We may experience significant changes in net income and shareholders’ equity because of these fluctuations.

Illiquidity of certain investment assets may prevent us from selling investments at fair prices in a timely manner.

We must maintain sufficient liquidity to meet short-term cash demand under normal circumstances, as well as in crisis situations. Liquidity risk is inherent in much of our businesses. Each asset purchased and liability sold has unique liquidity characteristics. Some liabilities can be surrendered, while some assets, such as privately placed loans, mortgage loans, real estate and limited partnership interests, are to some degree illiquid. In depressed markets, we may be unable to sell or buy significant volumes of assets at quoted prices.

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Any security we issue in significant volume may be issued at higher financing costs if funding conditions are impaired. The necessity to issue securities can be driven by a variety of factors, for instance we may need liquidity for operating expenses, debt servicing and the maintenance of capital levels of insurance subsidiaries. Although we manage our liquidity position for extreme events, including greatly reduced liquidity in capital markets, if these conditions were to persist for an extended period of time, we may need to sell assets substantially below prices at which they are currently recorded to meet our insurance obligations.

We make use of (bilateral and syndicated) credit facilities to support repayment of amounts outstanding under our commercial paper programs and to serve as additional sources of liquidity. An inability to access these credit facilities, for example due to non-compliance with conditions for borrowing or the default of a facility provider under stressed market circumstances, could have an adverse effect on our ability to meet liquidity needs and to comply with contractual and other requirements.

Many of our derivatives transactions require us to grant collateral against declines in the fair value of these contracts. Volatile financial markets may significantly increase requirements to grant collateral and adversely affect our liquidity position. Further, a downgrade of our credit ratings may also result in additional collateral requirements and affect our liquidity, or even enable counterparties to terminate such derivative transactions.

Underwriting risk relates to the products sold by our insurance entities. The underwriting process requires, among others, the setting of assumptions. Our reported results of operations and financial condition may be affected by differences between actual claims experience and underwriting and reserve assumptions both due to incurred gains/ losses and from potential changes in best estimate assumptions that are used to value insurance liabilities.

There is a risk that the pricing of our products turns out to be inadequate if the assumptions used for pricing do not materialize. Our earnings depend significantly upon the extent to which actual claims experience is consistent with the assumptions used in setting the prices for our products and the extent to which the established technical provisions for insurance liabilities, both under IFRS and Solvency II reporting, prove to be sufficient. If actual claims experience is less favorable than the underlying assumptions used in establishing such liabilities, our income would be reduced. Furthermore, if less favorable claims experience became sustained, we may be required to change its best estimate assumptions with respect to future experience, potentially increasing the technical provisions for insurance liabilities, which may reduce our income and solvency ratio. In addition, certain acquisition costs related to the sale of new policies and the purchase of policies already in force have been recorded as assets on the balance sheet and are being amortized into income over time. If the assumptions relating to the future profitability of these policies (such as future claims, investment income and expenses) are not realized, the amortization of these costs may be accelerated and may require write-offs should there be an expectation that the costs are not fully recoverable. This may have a materially adverse effect on our results of operations and financial condition.

Sources of underwriting risk include policyholder behavior (such as lapses or surrender of policies), policy claims (such as mortality and morbidity) and expenses. For some product lines, we are at risk if policy lapses increase, as sometimes we are unable to fully recover up-front sales expenses despite the presence of commission recoveries or surrender charges and fees. In addition, some policies have embedded options which at times are more valuable to the client if they stay (lower lapses) or leave (higher lapses), which may result in losses to our businesses. We sell certain types of policies that are at risk if mortality or morbidity increases, such as term life insurance and accident insurance. We also sell certain other types of policies, such as annuity products, that are at risk if mortality decreases (longevity risk). For example, certain current annuity products, as well as products sold in previous years, have seen their profitability deteriorate as longevity assumptions have been revised upward. If the trend toward increased longevity persists, our annuity products may continue to experience adverse effects due to longer expected benefit payment periods. We are also at risk if expenses are higher than assumed.

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Valuation of our investments, allowances and impairments is subjective, and discrepant valuations may adversely affect our results of operations and financial condition.

The valuation of many of our financial instruments is based on methodologies, estimations and assumptions that are subject to different interpretations. Changes to investment valuations may have a materially adverse effect on our results of operations and financial condition. In addition, the determination of the amount of allowances and impairments taken on certain investments and other assets is subjective and based on assumptions, estimations and judgments that may not reflect or correspond to our actual experience any of which may materially impact our results of operations or financial position.

Among other things, changes in assumptions, estimations, judgments or in actual experience may require us to accelerate the amortization of DPAC and value of business acquired, establish a valuation allowance against deferred income tax assets, or to recognize impairment of other assets, any of which may materially adversely affect our results and financial condition.

Certain of our products have guarantees that may adversely affect our results, financial condition or liquidity.

Certain products, particularly our variable annuity products and defined benefit pension business in The Netherlands, include death benefit guarantees, guarantees of minimum surrender values or income streams for stated periods or for life, which may be in excess of account values. These guarantees are designed, among other things, to protect policyholders against downturns in equity markets and interest rates. As a result, a drop in the value of underlying assets or more volatile markets could result in an increase in the valuation of our liabilities associated with these products. An increase in these liabilities may decrease our net income. We use a variety of hedging and risk management strategies to mitigate these risks. However, these strategies may not be fully effective and hedging instruments may not fully offset the costs of guarantees or may otherwise be insufficient in relation to our obligations. Estimates and assumptions we make in connection with hedging activities may fail to fully reflect or correspond to the actual (longer term) exposure in respect of guarantees. Further, unexpected policyholder behavior may cause our hedging to be less effective. The factors set forth above could have a material adverse effect on our results of operations, financial condition or liquidity.

We may be unable to manage our risks successfully through derivatives.

We are exposed to changes in the fair value of our investments, the impact of interest rate, equity markets and credit spread changes, currency fluctuations and changes in mortality and longevity. We use common financial derivative instruments, such as swaps, options, futures and forward contracts to hedge some of the exposures related to both investments backing insurance products and company borrowings. We may not be able to manage the risks associated with these activities successfully through the use of derivatives. In addition, a counterparty may fail to honor the terms of its derivatives contracts with us. Clearing members and clearing houses may terminate their derivatives contracts with us. Our inability to manage risks successfully through derivatives, a counterparty’s failure to honor our obligations or the systemic risk that failure is transmitted from counterparty to counterparty may each have a material adverse effect on our businesses, results of operations and financial condition.

Currently, the possible impact of the United Kingdom (“UK”) leaving the European Union (“Brexit”) on clearing houses located in the United Kingdom is unknown. We use London Clearing House (“LCH”) as a central counterparty to clear most of our derivatives transactions. In December 2018, the European Commission declared the system of supervision in the United Kingdom to be equivalent to that of the European Union for 12 months following Brexit. If following this period, and LCH has not been granted recognition as a third-party country central counterparty by the European Securities Market Authority (“ESMA”), new and existing derivatives cleared through LCH and executed by EU27 entities, may not comply with central counterparties and trade repositories (“EMIR”) regulations. If this situation materializes, then it is possible that existing trades will have to be terminated and replaced by new trades to be cleared by an authorized clearing house located in the EU27. This could lead to additional costs and may impair the effectiveness of our hedging programs.

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Inaccuracies in econometric, financial or actuarial models, or differing interpretations of underlying methodologies, assumptions and estimates, could have a significant adverse effect on our business, results of operations and financial condition.

We use econometric, financial and actuarial models to measure and manage multiple types of risk, to price products and to establish and assess key valuations and report financial results. All these functions are critical to our operations. If these models, their underlying methodologies, assumptions and estimates, or their implementation and monitoring prove to be inaccurate, this could have a significant adverse effect on our business, financial condition and results.

Many of our business units offer investment products that utilize quantitative models, algorithms or calculations that could experience errors or prove to be incorrect, incomplete or unsuccessful resulting in losses for clients who have invested in such products and possible regulatory actions and/or litigation against us and/or our affiliates.

Our business units may utilize quantitative models, algorithms or calculations (whether proprietary or supplied by third parties) (“Models”) or information or data supplied by third parties (“Data”) for the management of, or to assist in the management of, investment products offered to clients. Examples of such investment products include, volatility-controlled funds, mutual funds, separately managed accounts, and other types of advisory accounts. Models and Data are used to construct sets of transactions and investments, to provide risk management insights, and may be used to assist in hedging investments. If Models and Data prove to be incorrect or incomplete, any decisions made, in whole or part, in reliance thereon expose the investment product to additional risks. For example, by utilizing Models or Data, certain investments may be bought at prices that are too high, certain other investments may be sold at prices that are too low, or favorable opportunities may be missed altogether. Similarly, any hedging based on faulty Models and Data may prove to be unsuccessful. The applicable investment product bears the risk that Models or Data used will not be successful and the product may not achieve its investment objective. Models can be predictive in nature. The use of predictive Models has inherent risks. For example, such Models may incorrectly forecast future behavior, leading to potential losses on a cash flow and/or a mark-to-market basis. In addition, in unforeseen or certain low-probability scenarios (often involving a market disruption of some kind), such Models may produce unexpected results, which can result in losses for an investment product. Furthermore, the success of relying on or otherwise using Models depends on a number of factors, including the validity, accuracy and completeness of the Models’ development, implementation and maintenance, the Models’ assumptions, factors, algorithms and methodologies, and the accuracy and reliability of the supplied historical or other Data. Models rely on, among other things, correct and complete Data inputs. If incorrect Data is entered into even a well-founded Model, the resulting information will be incorrect. However, even if Data is input correctly, Model prices may differ substantially from market prices, especially for securities with complex characteristics. Investments selected with the use of Models may perform differently than expected as a result of the design of the Model, inputs into the Model or other factors. There can be no assurance that the use of Models will result in effective investment decisions for an investment product. Additionally, if investment products offered by our affiliates experience Model errors or use erroneous Data, this could result in regulatory actions and/or litigation brought against us and/or our affiliates.

We may be required to increase our technical provisions and/or hold higher amounts of regulatory capital as a result of changes in the regulatory environment or changes in rating agency analysis, which may decrease our returns on our products.

Prudential regulatory requirements such as with respect to the calculation of technical provisions, capital requirements, the eligibility of own funds and the regulatory treatment of investments may change, resulting in increased technical provisions, higher amounts of regulatory capital, more stringent requirements with respect to investments and/or the qualification of own funds. We cannot predict specific proposals that might be adopted, or what impact, if any, such proposals or, if enacted, such laws, may have on our businesses, results of operations, or financial condition.

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For example, the European Union, the National Association of Insurance Commissioners (“NAIC”) in the U.S. or U.S. state regulators may adopt revisions to applicable risk-based capital formulas and local regulators in other jurisdictions in which our subsidiaries operate may increase their capital requirements. On September 6, 2019, the U.S. Federal Reserve proposed a new risk-based capital framework, termed the Building Block Approach (“BBA”), under which depository institution holding companies that are significantly engaged in insurance activities would be required to aggregate their state-based capital requirements into a consolidated requirement. Under the proposed BBA, the capital positions of insurance subsidiaries, which are already subject to state-based standards, would be aggregated to determine how much additional capital must be held to meet the holding company standard.

Prudential regulatory requirements may not only apply to the individual entities in the Group, but may additionally apply at sub-group or group level. Important examples of such requirements are Solvency II group supervision, as well as consolidated requirements resulting from the Capital Requirements Directive (“CRD”) and Capital Requirements Regulation (“CRR”), as applied to groups containing undertaking bank and/or asset management activities.

The manner in which such requirements are applied to groups like us, has an impact on the Group’s capital position, as well as on the availability of capital at group level and changes thereto may have an impact, depending on the nature of the change, on our competitive position to competitors that are not subject to these or similar requirements at group level. As an example, as part of the Solvency II group calculation, we use, at a group level, a specific methodology for our US insurance and reinsurance subsidiaries, in addition to the requirements these subsidiaries are subject to under each of their local prudential regimes. This methodology is approved by our Group supervisor, the Dutch Central Bank (De Nederlandsche Bank N.V., “DNB”), but remains subject to annual review. Changes to this methodology might have an impact on our capital position, as calculated under Solvency II group requirements and/or the manner in which DNB otherwise exercises group supervision on us (such as more stringent requirements with respect to intra-group transactions, risk concentrations and reporting).

Furthermore, we and our Group may be impacted by further changes to the capital adequacy requirements it is subject to as a result of the development of the Insurance Capital Standard (“ICS”) as part of the Common Framework for the Supervision of Internationally Active Insurance Groups (“ComFrame”) (a set of international regulatory standards focusing on the effective group-wide supervision of internationally active insurance groups (“IAIGs”)).

In addition, since November 3, 2015, we have been classified as a Global Systematically Important Insurer (“G-SII”). While the qualification is reviewed by the Financial Stability Board (“FSB”) yearly, the FSB, in consultation with the International Association of Insurance Supervisors (“IAIS”) and national authorities, decided not to publish a new list of G-SIIs for 2017 or 2018. The policy measures set out in the FSB’s 2016 communication on G-SIIs will continue to apply to the firms listed in the 2016 communication.

In November 2018, IAIS published a consultation document for a holistic Framework for Systemic Risk in the Insurance Sector. As expressed in the consultation document, IAIS is of the view that the implementation of a holistic framework should remove the need for an (annual) G-SII identification by the FSB and national authorities and be replaced by an enhanced set of policy measures and supervisory powers of intervention that might be applied to a broader set of insurers than are currently on the FSB-list.

In this respect, the development of ComFrame as well as any additional requirements or standards applicable to either systemic entities or activities could lead to enhanced capital requirements applicable to IAIGs, even if the FSB-list will be discontinued. This could adversely affect our ability to compete with other insurers that are not subject to those capital requirements. These requirements may lead us to engage in transactions that affect capital, constrain our ability to pay dividends or repurchase its own shares. Furthermore, such requirements may constrain our ability to provide guarantees and increase the cost to us of offering certain

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products resulting in price increases, discontinuance of offering of certain products or reducing the amount of risk we take on. We may consider structural and other business alternatives in light of requirements or standards applicable with respect to systemic entities or activities, of which the impact on shareholders cannot be predicted.

In addition to requirements imposed directly through regulatory requirements and/or supervisory authorities rating agencies may incorporate higher capital thresholds into their quantitative analyses, thus requiring additional capital for our regulated subsidiaries in order for our Group and/or its regulated subsidiaries to maintain their desired credit ratings.

In the United States, the NAIC has taken an initiative to better align the risk-based capital (“RBC”) charges with the appropriate risk for invested assets. This may lead to higher risk charges for such assets.

Furthermore, the NAIC model, Regulation XXX, requires insurers in the United States to establish additional statutory reserves for term life insurance policies with long-term premium guarantees. In addition, Actuarial Guideline XXXVIII (“AG38”), which is intended to clarify Regulation XXX, requires insurers to establish additional statutory reserves for certain universal life insurance policies with secondary guarantees. Virtually all of our newly issued term and universal life insurance products in the United States are affected by Regulation XXX and AG38, respectively.

Subsequently, the NAIC adopted regulations to monitor and provide transparency for insurer-affiliated captive reinsurers. Captive reinsurance structures have been used to manage “economically redundant” reserves for term and secondary guarantee universal life policies. Since the January 1, 2017 enactment of U.S. principle-based reserves for new business, new captive reinsurance structures are no longer required for new issuances of these term and secondary guarantee universal life products and we do not anticipate entering into any new captive reinsurance arrangement for such products. The new reserves requirements for U.S. life insurance products are intended by regulators to represent a more economically supported view of the resources required to honor the promises to policyholders. For existing business held in a captive, we may continue to be subject to the risks of adverse publicity and changes in regulations related to captive reinsurance.

We utilize affiliated captive insurance companies to manage risks of various insurance policies, including universal life with secondary guarantees and level term life insurance. Through these structures, we finance certain required regulatory reserves at a lower cost. To the extent that state insurance departments restrict our use of captives, and regulatory reserve requirements remain unchanged, this could increase costs, limit the ability to write these products in the future or lead to increased prices to consumers on those products. The NAIC continues to consider changes to corporate governance and insurers’ use of captives. Due to the uncertainty of the proposals it is not possible to provide an estimate of the effects at this time.

Regulatory restrictions and failure to comply with regulations may impact our ability to do business, our financial position or financial results.

We and our subsidiaries are subject to laws and regulations in numerous jurisdictions in some cases including enforcement and supervision by different regulators with overlapping jurisdictions. We may not be able to comply fully with, or obtain appropriate exemptions from, the wide variety of laws and regulations applicable to insurance companies, holding companies, groups of insurance companies and/or other financial undertakings and/or financial conglomerates. Failure to comply with or to obtain appropriate exemptions under any applicable laws and regulations may result in restrictions on our ability to do business in one or more of the jurisdictions in which we operate and may result in fines and other sanctions, which may have a materially adverse effect on our businesses, financial position or results of operations.

Restrictions on underwriting criteria and the use of data may affect our ability to do business, our financial position or financial results.

Some countries impose restrictions on particular underwriting criteria, such as gender, or use of genetic test results, for determination of premiums and benefits of insurance products. To date, we have not observed

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negative financial or business impact due to these restrictions. However, future restrictions could adversely impact our operations or financial results. Further developments in underwriting, such as automation and use of additional data, may also be affected by future regulatory developments regarding privacy and use of personal data.

A downgrade in our ratings may increase policy surrenders and withdrawals, adversely affect relationships with distributors and negatively affect our results.

Claims-paying ability and financial strength ratings are factors in establishing the competitive position of insurers. A rating downgrade (or a change in outlook indicating the potential for such a downgrade) of us or any of our rated insurance subsidiaries may, among other things, materially increase the number of policy surrenders and withdrawals by policyholders of cash values from their policies. These withdrawals may require the sale of invested assets, including illiquid assets, at a price that may result in realized investment losses. These cash payments to policyholders would result in a decrease in total invested assets and a decrease in net income. Among other things, early withdrawals may also cause us to accelerate amortization of deferred policy acquisition costs (“DPAC”), reducing net income.

We have experienced downgrades and negative changes to our outlook in the past, and may experience rating and outlook changes in the future. A downgrade or potential downgrade, including changes in outlook, may result in higher funding costs and/or affect the availability of funding in the capital markets. In addition, a downgrade may adversely affect relationships with broker-dealers, banks, agents, wholesalers and other distributors of our products and services, which may negatively impact new sales and adversely affect our ability to compete. A downgrade of our credit ratings will have a small effect of increased fees on credit facilities but may result in higher funding costs on future long-term debt funding transactions and may affect our ability to obtain reinsurance contracts at reasonable prices or at all.

We cannot predict what actions rating agencies may take, or what actions we may take in response to the actions of rating agencies. As with other companies in the financial services industry, our ratings may be downgraded at any time and without notice by any rating agency.

Changes in government regulations in the countries in which we operate may affect profitability.

Our regulated businesses, such as insurance, banking and asset management, are subject to comprehensive regulation and supervision, specific to these businesses. The primary purpose of such regulation is to protect clients of these operating companies (i.e., policyholders), rather than holders of our shares, capital securities and debt instruments. Changes in existing laws and regulations may affect the way in which we conduct our businesses, the profitability of our businesses and the products offered. Additionally, the laws or regulations adopted or amended from time to time may be more restrictive or may result in higher costs than currently is the case, such as regarding the calculation of capital needs, storage, processing and transmission of personal and other information, treatment of own funds, rules or guidance with respect to the modelling of insurance, investment and other risks.

Regulatory changes include or may include capital standards and prudential standards for non-bank companies deemed to be systemically important financial institutions (“SIFIs”) that are more stringent than the standards applicable to non-SIFIs. While as indicated above, Aegon was designated in 2015 by the FSB as a G-SII, Aegon has not been designated a SIFI in the United States. In addition, U.S. state insurance regulators are developing group capital standards. The U.S. Federal Reserve’s recently proposed BBA, built on the existing state-based insurance standards, seeks to establish minimum capital requirements that are specific to the business of insurance. The scope of application of these standards has not yet been determined. The current U.S. administration is reviewing aspects of the Dodd-Frank Act and this review may result in changes in laws and regulations that may impact Aegon’s U.S. or global operations.

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Other initiatives, such as the development of International Capital Standards (“ICS”) by the IAIS, may lead to regulations that would increase capital needs and other requirements that would, if not adopted in whole or in part in the relevant markets in which we are active, not be applicable to all insurance and reinsurance carriers and create an uneven competitive playing field.

In The Netherlands, DNB provided guidance with regard to assumptions underlying our factor for the loss absorbing capacity of deferred taxes (“LAC-DT”). Reduction of this factor would impact the Group Solvency II ratio. The factor of LAC-DT taken into account in Aegon The Netherlands’ Solvency II ratio remained unchanged at 75%. The factor is reassessed quarterly. The treatment of LAC-DT under the Solvency II framework is also one of the elements of the Solvency II review and resulted in some changes with respect to the internal governance requirements, regarding the determination of the LAC-DT. A further review of the Solvency II framework has received comments. While details on possible change are yet unknown, the outcomes of this review (referred to as the Solvency II 2020 review) and potential changes to the relevant regulations, guidelines or opinions, or their application by national supervisory authorities may have an impact on the determination of the LAC-DT that may be taken into account by us going forward.

In the United States, the Patient Protection and Affordable Care Act (“PPACA”) has not been amended following the change in control of the U.S. House of Representatives. There may, however, be additional changes in laws and regulations that may impact the U.S. health insurance industry. The extent to which employers or individuals may discontinue their purchase of supplemental health insurance products as a result of any such changes may significantly impact Aegon USA’s supplemental health insurance products business. The extent of any such changes or the corresponding impact on Aegon USA’s supplemental health insurance business cannot be determined at this time

The U.S. Department of Labor (“DOL”) issued a “Conflict of Interest” or “Fiduciary” rule in April 2016 (the “DOL Rule”) which substantially broadened the definition of “fiduciary” with respect to retirement savings and investment plans and products (“qualified assets”). The final rule, which was to fully take effect on July 1, 2019, was vacated in its entirety by the Fifth Circuit Court of Federal Appeals on July 21, 2018.

We believe the court’s invalidation of the DOL Rule will not materially impact prospective sales of Aegon America’s retirement plan and annuity businesses. However, any new DOL proposal or promulgation of a heightened standard of care by the SEC, NAIC or any state may have a material adverse impact on Aegon America’s business.

For example, on July 18, 2018, the New York Department of Financial Services (“NYDFS”) amended Regulation 187 which adopts a best interest standard in the sale of life insurance and annuities.

The NYDFS regulation could have a material adverse impact on annuity sales; however, the bigger impact could be with life sales by firms conducting business in the state of New York. It is expected that other states will propose similar regulations impacting the sale of annuities and life insurance products.

In addition, in April 2018, the SEC proposed a best interest standard of conduct regulation applicable to broker-dealers and their registered representatives. The proposed regulation requires additional disclosures to clients and imposes heightened mitigation requirements with respect to conflicts of interest. In addition to the proposed Regulation Best Interest, the SEC proposed the use of a written relationship disclosure with investment advisor clients and an interpretation of the standard of conduct applicable to investment advisors.

Changes in pension and employee benefit regulation, social security regulation, financial services regulation, taxation and the regulation of securities products and transactions may adversely affect our ability to sell new policies or claims exposure on existing policies. For example, in Hungary, the mandatory pension business has been nationalized and therefore in Hungary we have liquidated our mandatory pension business.

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Similarly, in December 2013, the Polish Parliament approved legislation to overhaul the existing state pension system, which was a reason for us to write down our intangible assets.

In general, changes in laws and regulations may materially increase our direct and indirect compliance costs and other ongoing business expenses and have a materially adverse effect on our businesses, results of operations or financial condition.

An abandonment of the euro currency by one or more members of the European Monetary Union may affect our results of operations in the future.

It is possible that the euro may be abandoned as a currency in the future by countries that have already adopted its use. This may lead to the re-introduction of individual currencies in one or more European Monetary Union member states, or in more extreme circumstances, the dissolution of the European Monetary Union. It is not possible to predict the effect on the European and global economies of a potential dissolution of the European Monetary Union or the exit of one or more European Union member states from the European Monetary Union. Any such event may have a materially adverse effect on our future financial condition and results of operations.

The United Kingdom leaving the European Union (“Brexit”) may affect our results and financial condition.

On June 23, 2016, the United Kingdom voted in a national referendum to withdraw from the European Union. With continuing uncertainty on if and in what form a “Brexit-deal” will be reached and approved, the implications of Brexit remain unclear, with respect to the European integration process, the relationship between the United Kingdom and the European Union, and the impact on economies and businesses. For this purpose, we have assessed the risks and possible contingency measures specifically related to a hard Brexit (no-deal) scenario. Despite these efforts, we could be adversely impacted by unexpected developments and market developments such as increased exchange rate movements of the UK pound versus the euro and higher financial market volatility in general due to increased uncertainty, any of which could reduce the value or results of our operations. We could also be adversely impacted should Brexit result in the United Kingdom moving away from agreed and implemented EU legislation like, but not limited to, Solvency II regulations.

Risks of application of intervention measures may adversely affect our business, results of operations and financial position.

On January 1, 2019, the Dutch Act on Recovery & Resolution for Insurers (“R&R Act”) came into force in The Netherlands, replacing the previously applicable intervention regime for insurance companies in The Netherlands faced with financial difficulties. The R&R Act allows DNB to intervene in situations where a Dutch insurer or reinsurer, is facing financial difficulties. The powers under the R&R Act may also extend to the level of the Group and to entities, other than in insurance or reinsurance entities in The Netherlands, which are part of the Group, such as AFC.

In addition, the R&R Act will allow DNB to require a Dutch insurance or reinsurance company or a group to remove, ex ante, impediments to effective resolution of a Dutch insurance or reinsurance undertaking (such as the revision of financing arrangements, the reduction of exposures, the transfer of assets, the termination or limitation of business activities, or the prohibition to start certain business activities, change the legal or operational structure of the Group, or securing certain critical business lines). The use of this tool may adversely affect our business, results of operations and financial position.

Furthermore, the framework of the EU Directive on the recovery and resolution of credit institutions and investments firms (the “Bank Recovery and Resolution Directive”) is applicable to parts of our Group, in particular Aegon Bank N.V. The Bank Recovery and Resolution Directive also contains provisions that, in certain specific circumstances, where both Aegon Bank N.V. and Aegon fail or are likely to fail, could be applied to mixed financial holding companies such as Aegon, including the right of bail-in of creditors.

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In addition, under Part 6 of the Dutch Financial Supervision Act, the Dutch Minister of Finance may intervene immediately, when the stability of the financial system is threatened by the situation of a financial institution, in which case legal or statutory provisions, applicable to the financial institution, might be surpassed. The intervention measures available to the Dutch Minister of Finance, include in particular the right to expropriate assets of the financial institution, as well as securities and/or other financial instruments issued by or with the cooperation of the financial instruments. The exercise of this power may significantly impact the rights of the owners or holders of these assets, securities and/or financial instruments.

There is a risk that the possible exercise of powers, or any perceived exercise of powers, by DNB or the Dutch Ministry of Finance could have a material adverse effect on the performance by the failing institution, including us, of its obligations (of payment or otherwise) under contracts of any form, including the expropriation, write-off, write-down or conversion of securities such as shares and debt obligations issued by the failing institution.

Legal and arbitration proceedings and regulatory investigations and actions may adversely affect our business, results of operations and financial position.

We face significant risks of litigation as well as regulatory investigations and actions relating to our and our subsidiaries’ insurance, pensions, retirement administration, securities, investment management, investment advisory and annuities businesses as well as our corporate compliance, including compliance with employment, sanctions, anti-corruption and tax regulations.

Our subsidiaries regularly receive inquiries from local regulators and policyholder advocates in various jurisdictions, including the United States, The Netherlands, and the United Kingdom. Regulators may seek fines or penalties, or changes to the way we operate. In some cases, our subsidiaries have modified business practices in response to inquiries.

Insurance companies and their affiliated regulated entities are routinely the subject of litigation, investigation and regulatory activity by various governmental and enforcement authorities, individual claimants and policyholder advocate groups, involving issues such as, but not limited to, employment or distribution relationships; operational and internal controls and processes; disclosures; environmental matters; competition and antitrust matters; data privacy; information security; intellectual property; and anti-money laundering, anti-bribery and economic sanctions compliance.

Government and regulatory investigations may result in the institution of administrative, injunctive or other proceedings and/or the imposition of monetary fines, penalties and/or disgorgement as well as other remedies, sanctions, damages and restitutionary amounts. There can be no assurance that government and regulatory investigations will not have a material and adverse effect on our reputation, financial position, results of operations or liquidity.

Many of our products are affected by fluctuations in equity markets as well as interest rate movements, which may prove to be volatile or disappointing to customers. Significant investment risks are often borne by the customer. The existence of potential claims may remain unknown for long periods of time after the events giving rise to such claims. Determining the likelihood of exposure to us and the extent of any such exposure may not be possible for long periods of time after we become aware of such potential claims. Once litigation is initiated, it may be protracted and subject to multiple levels of appeal.

We cannot predict the effect of litigation, investigations or other actions on its businesses or the insurance industry. In some jurisdictions, plaintiffs may seek recovery of very large or indeterminate amounts under claims of bad faith, resulting in punitive or treble damages. Damages alleged may not be quantifiable or supportable or may have no relationship to economic losses or final awards. Separate from financial loss, litigation, regulatory action, legislative changes or changes in public opinion may require us to change our business practices, which could have a material adverse impact on our businesses, results of operations, cash flows and financial position.

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Insurance companies and their affiliated regulated entities are also routinely subject to litigation, investigation and governmental review concerning product fees and costs, including transparency and adequacy of disclosure of initial costs, ongoing costs, and costs due on policy surrender as well as changes to costs over time. Disputes and investigations initiated by governmental entities and private parties may lead to orders or settlements including payments or changes to business practices even if we believe the underlying claims are without merit. Several U.S. insurers, including one of our subsidiaries, have also been named in class actions as well as individual litigation relating to increases in monthly deduction rates (“MDR”) on universal life products. Plaintiffs generally allege that the increases were made to recoup past losses rather than to cover the future costs of providing insurance coverage. In one such class action against our subsidiary is pending in the U.S. federal district court for the Central District of California, the parties agreed to settle the case. In January 2019, a court approved the aforementioned settlement. While less than 1% of policyholders opted out, they represent approximately 43% of the value of the settlement fund. In the first individual case against our subsidiary to reach trial (in 2017), a jury found that the increase was improper.

In addition, insurance companies and their affiliated regulated entities may face lawsuits that threaten their business models. For example, several U.S.-based Aegon subsidiaries have been named in two purported class actions alleging that the business model inappropriately characterizes distributors as independent contractors instead of employees. Depending on the outcome, these lawsuits, along with similar claims against other companies, as well as regulatory action could necessitate a change in the distribution model and could result in significant settlements or judgments.

In The Netherlands, unit linked products (beleggingsverzekeringen) have been controversial and the target of litigation since 2005. Allegations include excessive cost, unfair terms, inadequate disclosure, and failure to perform as illustrated. Consumer groups have formed to address these issues and initiate mass claims against insurers. Regulators as well as the Dutch Parliament have been involved ever since, with the principal goal of achieving an equitable resolution. We have made improvements across our product lines, including after settlements reached in 2009 with Stichting Woekerpolis and Stichting Verliespolis. In 2013, we took a charge of 25 million euros after the Dutch Supreme Court ruled adversely in litigation concerning premium amounts charged in the KoersPlan product. Some of the unit linked products are still involved in ongoing litigation. In September 2014, consumer interest group Vereniging Woekerpolis.nl filed a claim against us in court. The claim related to a range of unit linked products that we sold in the past, including our products involved in the earlier litigation. In June 2017, the court issued a verdict which upheld the principle that disclosures must be evaluated according to the standards at the time when the relevant products were placed in-force. Most of the claims of Vereniging Woekerpolis.nl were dismissed under this standard, although the court found that we did not adequately disclose certain charges on a limited set of policies. The district court did not decide on the reasonableness of the cost levels and whether the previous compensation arrangements provide sufficient compensation. This court decision has been appealed by both parties. We expect the claims and litigation, whether collective or on an individual basis and in court or through alternative dispute resolution mechanisms, on unit linked products to continue for the foreseeable future. Developments in similar cases against other Dutch insurers currently before regulators and courts may also affect us.

Lawsuits have also been brought against providers of securities leasing products (aandelenlease producten). Although sales of securities leasing products ended more than a decade ago, litigation relating to these products has resurfaced. In 2016, the Dutch Supreme Court ruled on a case involving a securities leasing product sold by one of our competitors. It decided that the financial institution was liable if a broker (remisier) that advised on the sale of the institution’s products was not properly licensed. It also upheld the ruling of the Court of Appeals that a higher compensation might be payable in those circumstances, regardless of the financial position of the customer at the time of entering into the securities leasing contract. Although the last securities leasing products were sold more than a decade ago, and the ruling is related to a specific case, it cannot be excluded that this ruling might have a material adverse effect on other providers of securities leasing products, such as the issuer. In July 2016, consumer interest group Platform Aandelenlease filed a mass claim against Aegon Bank regarding securities leasing product Sprintplan. Allegations include, among other things, insufficient information provision

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by Aegon Bank and a lack of a proper license of the brokers involved. In October 2017, the district court of The Hague ruled in our favor that the Sprintplan liability had been conclusively determined in earlier proceedings and there were no grounds to hold further collective proceedings. The plaintiff appealed. The case is now pending at the court of appeal of The Hague. There can be no assurances that this matter will not ultimately result in a material adverse effect on our business, results of operations and financial position. In Poland, owners of unit-linked policies continue to file claims in civil court against us over fees payable upon purchase or surrender of the product. Plaintiffs claim that these fees are not contractually supported. For reasons of commercial necessity as well as at the instigation of regulatory authorities, we decided to modify the fee structure.

In addition, we are involved in claims for compensation and the cancellation or nullification of contracts concerning the Vliegwiel product, a variation on securities leasing products (without a built-in guarantee) of which a total of 63,000 contracts have been offered by our subsidiary in The Netherlands in the period between 1997 and 2002. All of the Vliegwiel contracts have been expired. Currently, proceedings are pending before the Dutch courts and the Complaint Institute for Financial Services (“Klachteninstituut Financiële Dienstverlening”), with a few hundred cases having been initiated by Leaseproces B.V., a company that represents approximately 3,200 claimants.

There can be no assurances that these matters will not ultimately result in a material adverse effect on our business, results of operations and financial position.

Our risk management policies and processes may leave us exposed to unidentified or unanticipated risk events, adversely affecting our businesses, results and financial condition.

We have devoted significant resources to the implementation and maintenance of a comprehensive enterprise risk management framework in all aspects of the business. Nevertheless, its risk measurements make use of historic and public data that may be inaccurate or may not predict future exposures. Further, operational and legal risks involve high volumes of transactions and are affected by frequent changes in our businesses and their environments, and the risk management framework may not evolve at the same pace. As a result, there is a chance that risks present in our business strategies and initiatives may not be fully identified, monitored and managed.

Local statutes and regulators may limit the aggregate amount of dividends payable by our subsidiaries and AFC, thereby limiting our ability to make payments on debt obligations.

Our ability to make payments on debt obligations and pay some operating expenses is dependent upon the receipt of dividends from subsidiaries. Some of these subsidiaries have regulatory restrictions that can limit the payment of dividends. In addition, local regulators, acting to represent the interests of local policyholders, are taking an increasingly restrictive stance with respect to permitting dividend payments, which may affect our ability to satisfy our debt obligations or pay our operating expenses.

Changes in accounting standards may affect our reported results, shareholders’ equity and dividend.

Since 2005, our financial statements have been prepared and presented in accordance with IFRS. Any future changes in these accounting standards may have a significant impact on our reported results, financial condition and shareholders’ equity. This includes the level and volatility of reported results and shareholders’ equity. New accounting standards that are likely to have a significant impact on our reported results, financial condition and shareholders’ equity include but are not limited to IFRS 9 – Financial Instruments and IFRS 17 – Insurance Contracts.

Tax law changes may adversely affect our profitability, as well as the sale and ownership of our products.

We are subject to the substance and interpretation of tax laws in all countries in which we operate or invest. Tax risk is the risk associated with changes in tax laws, or the interpretation of tax laws, later jurisprudence or

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case law, or the introduction of new taxes or tax laws. This tax risk includes, for example, the risk of changes in tax rates, changes in loss carry-over rules and new rules restricting the tax deductibility of interest expenses.

Tax risk also includes the risk of consequences arising from failure to comply with procedures required by tax authorities. Failure to manage tax risks may lead to increased tax charges, including financial or operating penalties. This tax risk may have a direct materially adverse effect on our profits, capital and financial condition.

Any changes in tax laws, interpretation of tax laws, later jurisprudence or case law, or the introduction of new taxes or tax laws in all countries in which we operate or invest, which affects our products, may also have a materially adverse effect on our businesses, results of operations, capital and financial condition.

Most insurance products enjoy certain tax advantages, particularly in the United States, the United Kingdom and The Netherlands, which permit the tax deferred accumulation of earnings on the premiums paid by the holders of annuities and life insurance products under certain conditions and within certain limits. Taxes on this inside build-up of earnings may not be payable at all and, if payable, generally are due only when the earnings are actually paid.

Legislators have, from time to time, considered possible legislation that may make our products less attractive to consumers, including legislation that would reduce or eliminate the deferral of taxation on the accretion of value within certain annuities and life insurance products. This may have an impact on insurance products and sales in the United States and other jurisdictions.

Legislators also consider from time to time tax law changes that may increase the amount of taxes due by us or may even introduce new taxes. For example, in the U.S., effective January 1, 2018, the Tax Cuts and Jobs Act lowered the corporate tax rate from 35% to 21%. There is a risk the U.S. Congress could increase that corporate tax rate in the future, which would increase the amount of tax that we are required to pay.

Competitive factors may adversely affect our market share.

Competition in our business segments is based on service, product features, price, commission structure, financial strength, claims paying ability, ratings and name recognition. We face intense competition from a large number of other insurers, as well as non-insurance financial services companies such as banks, broker-dealers and asset managers, for individual customers, employers, other group customers, agents and other distributors of insurance and investment products. Consolidation in the global financial services industry can enhance the competitive position of some of our competitors by broadening the range of their products and services, and increasing their distribution channels and their access to capital. In addition, development of alternative distribution channels for certain types of insurance and securities products, including using digital technologies and platforms, may result in increasing competition as well as pressure on margins for certain types of products. Traditional distribution channels are also challenged by the ban on sales-based commissions in some countries. These competitive pressures may result in increased pricing pressures on a number of products and services, particularly as competitors seek to win market share. This may harm our ability to maintain or increase profitability.

Adverse market and economic conditions can be expected to result in changes in the competitive landscape. Financial distress experienced by financial services industry participants as a result of weak economic conditions and newly imposed regulation may lead to acquisition opportunities. Our ability or that of our competitors to pursue such opportunities may be limited due to lower earnings, reserve increases, capital requirements or a lack of access to debt capital markets and other sources of financing. Such conditions may also lead to changes by us or our competitors in product offerings and product pricing that may affect us and our relative sales volumes, market shares and profitability. Additionally, the competitive landscape in which we operate may be affected by government-sponsored programs or actions taken in response to, for instance, dislocations in financial markets.

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We may be unable to adapt to and apply new technologies.

New technologies are transforming the insurance industry. New technologies include, but are not limited to, communication channels, automation, artificial intelligence, data analytics and blockchain. These technologies are changing the way insurance is distributed and sold. They are also changing the way insurers manage their businesses and the skills they need in their workforces. Furthermore, the new technologies are influencing customer and consumer demands. Technology makes it easier to move into new markets. This increases competition, not just among peers, but also from new competitors and disruptors. Inability to adapt quickly enough to and apply these new technologies may impact our competitive position and our ability to maintain profitability, and adversely affect our future financial condition and results of operations.

We may experience difficulties in distributing and marketing products through our current and future distribution channels.

Although we distribute our products through a wide variety of distribution channels, our ability to market our products could be affected if key relationships would be interrupted. Distributors may elect to reduce or terminate their distribution relationship with us due to adverse developments in our business. Further, key distribution partners may also merge, change their business models in ways that affect how our products are sold, or new distribution channels could emerge and adversely impact the effectiveness of our current distribution efforts.

When our products are distributed through unaffiliated firms, we may not always be able to monitor or control the manner of their distribution despite our significant training and compliance programs. If our products would be distributed by such firms in an inappropriate manner, or to customers for whom they are unsuitable, we may suffer reputational and other harm to our business.

The default of a major market participant may disrupt the markets and may affect our business, financial condition, liquidity, operations and prospects.

The failure of a sufficiently large and influential financial institution, or other market participant including a government issuer, may disrupt securities markets or clearing and settlement systems in our markets. This may cause market declines or volatility. Such a failure may lead to a chain of defaults that may adversely affect us and our contract counterparties. In addition, such a failure may impact future product sales as a potential result of reduced confidence in the insurance industry. The default of one or more large international financial institutions, which may result in disruption or termination of their cash, custodial or and administrative services, may also have a material adverse impact on our ability to run effective treasury and asset management operations.

Even the perceived lack of creditworthiness of a government or financial institution (or a default by any such entity) may lead to market-wide liquidity problems and losses or defaults by us or by other institutions. This risk is sometimes referred to as “systemic risk” and may adversely affect financial intermediaries, such as clearing members or futures commissions merchants, clearing houses, banks, securities firms and exchanges with whom we interact on a daily basis and financial instruments of governments in which we invest. Systemic risk could have a material adverse effect on our ability to raise new funding and on our business, financial condition, results of operations, liquidity and/or prospects. In addition, such distress or failure could impact future product sales as a potential result of reduced confidence in the financial services industry.

We may be unable to retain personnel who are key to the business.

As a global financial services enterprise, we rely, to a considerable extent, on the quality of local management and personnel in the various countries in which we operate. The success of our operations is dependent, among other things, on our ability to attract and retain highly qualified professional personnel. Competition for key personnel in most countries in which we operate is intense. Our ability to attract and retain

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key personnel, in particular senior officers, experienced portfolio managers, mutual fund managers and sales executives, is very much dependent on the competitiveness of the compensation package for employees in the market in which we compete. As a part of the governmental response in Europe and, to a certain extent, the United States to the financial crisis in 2008, there have been various legislative initiatives that have sought to give guidance or regulate the structure of remuneration for personnel, in particular senior management, with a focus on performance-related remuneration and limiting severance payments. With differences in interpretation of these regulations by local regulators on how the guidelines need to be applied, as well as to the question of whether they apply to insurance industries at all, these restrictions create an uncertain playing field and may adversely affect our ability to compete for qualified employees, as well as our ability to transfer employees between regions.

Reinsurers to whom we have ceded risk may fail to meet their obligations.

Our insurance subsidiaries cede premiums to other insurers under various agreements that cover individual risks, group risks or defined blocks of business, on a co-insurance, yearly renewable term, excess or catastrophe excess basis. The purpose of these reinsurance agreements is to spread the risk and minimize the effect of losses. The amount of each risk retained depends on an evaluation of the specific risk, which is subject, in certain circumstances, to maximum limits based on the characteristics of coverage. Under the terms of the reinsurance agreements, the reinsurer agrees to reimburse for the ceded amount in the event a covered claim is paid. However, our insurance subsidiaries remain liable to their policyholders for ceded insurance if any reinsurer fails to meet the obligations assumed by it. A bankruptcy or insolvency or inability of any of our reinsurance counterparties to satisfy its obligations may have a materially adverse effect on our financial position and results of operations.

Reinsurance may not be available, affordable or adequate to protect us against losses.

As part of our overall risk and capital management strategy, we purchase reinsurance for certain risks underwritten by our various business segments. Market conditions beyond our control determine the availability and cost of the reinsurance protection we purchase. In addition, interpretations of terms and conditions may differ over time as contracts extend for decades. Accordingly, we may be forced to incur additional expenses for reinsurance or may not be able to obtain or enforce sufficient reinsurance on acceptable terms, which may adversely affect our ability to write future business and realize planned value for current business.

We may have difficulty managing our expanding operations, and we may not be successful in acquiring new businesses or divesting existing operations.

In recent years, we have made a number of acquisitions and divestitures around the world and it is possible that we may make further acquisitions and divestitures in the future. Growth by acquisition involves risks that may adversely affect our operating results and financial condition. These include: the potential diversion of financial and management resources from existing operations; difficulties in assimilating the operations, technologies, products and personnel of the acquired company; significant delays in completing the integration of acquired companies; the potential loss of key employees or customers of the acquired company; potential losses from unanticipated litigation, and tax and accounting issues. In addition, expansion into new and emerging markets may involve heightened political, legal and regulatory risks, such as discriminatory regulation, nationalization or expropriation of assets, price controls and exchange controls.

Our acquisitions may result in additional indebtedness, costs, contingent liabilities and impairment expenses related to goodwill and other intangible assets. Divestitures of existing operations may result in us assuming or retaining certain contingent liabilities. We may not be able to divest assets within the time or at the price planned. All of these factors may adversely affect our businesses, results of operations and financial condition. Future acquisitions may also have a dilutive effect on the ownership and voting percentages of existing shareholders. There can be no assurance that we will successfully identify suitable acquisition candidates or that we will

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properly value acquisitions made. We are unable to predict whether or when any prospective acquisition candidate will become available, or the likelihood that any acquisition will be completed once negotiations have commenced.

We may not be successful in managing our exposure to climate risk and adequately adapting investment portfolios for the transition to a low-carbon economy.

Climate change is a long-term risk associated with high uncertainty regarding timing, scope and severity of potential impacts. The risks for insurers can be grouped into physical risks and transition risks. Physical risks relate to losses from climate trends (i.e., changing weather patterns and sea level rise) and climate events (i.e., extreme weather and natural disasters). These physical risks impact property & casualty (“P&C”) insurance, but also life insurance, for instance through higher than expected mortality rates. Losses can also follow from credit risk and collateral linked to the mortgage portfolio. We are exposed to mortality risk and mortgage underwriting risks and has limited exposure to P&C risk, including catastrophic risk. Beyond insured losses from physical climate damages, climate change can increase uninsured damages and losses and may have disrupting and cascading effects on the wider economy and across the financial system. The second category of risks is associated with the transition to a low-carbon economy. These transition risks can affect the value of assets and impact the investments portfolios of insurers. Furthermore, it cannot be ruled out that we, ourselves, are unable to adjust to environmental and sustainability goals. The transition risks are determined by largely uncertain factors such as policy and regulatory changes, political, social and market dynamics and technological innovations. Linked to both the physical and the transition risks, there could be litigation and reputational risks following from not fully considering or responding to the impacts of climate change, or not providing appropriate disclosure of current and future risks. The risks can relate both to us and the companies in which we invest.

We take actions on all mentioned aspects of climate risks. We seek to reduce its exposure to the physical risks through risk selection, risk monitoring, and purchasing reinsurance. Furthermore, we assess and take action on the transition risks of climate change with respect to its businesses and through its responsible investment activities and disclosures. Despite these actions and given the significant uncertainties related to climate change and the long-term nature of the issue, it cannot be ruled out that climate change may lead to losses to our businesses, the investment portfolios we manages and to our corporate reputation.

Catastrophic events, which are unpredictable by nature, may result in material losses and abruptly and significantly interrupt our business activities.

Our operating results and financial position may be adversely affected by volatile natural and man-made disasters such as hurricanes, windstorms, earthquakes, terrorism, riots, fires and explosions, pandemic disease and other catastrophes. Over the past several years changing weather patterns and climatic conditions have added to the unpredictability and frequency of natural disasters in certain parts of the world and created additional uncertainty as to future trends and exposure. Generally, we seek to reduce our exposure to these events through individual risk selection, monitoring risk accumulation and purchasing reinsurance. However, such events may lead to considerable financial losses to our business. Furthermore, natural disasters, terrorism, civil unrest, military actions and fires may disrupt our operations and result in significant loss of property, key personnel and information about us and our clients. If our business continuity plans have not included effective contingencies for such events, we may experience business disruption and damage to corporate reputation and financial condition for a substantial period of time.

We regularly develop new financial products to remain competitive in our markets and to meet the expectations of our customers. If customers do not achieve expected returns on those products, we may be confronted with legal claims, advocate groups and negative publicity.

We may face claims from customers, both individual claimants as well as policyholder advocate groups, and negative publicity if our products result in losses or fail to result in expected gains, regardless of the suitability of

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products for customers or the adequacy of the disclosure provided to customers by us and by the intermediaries who distribute our products. New products that are less well understood and that have less of a historical performance track record may be more likely to be the subject of such claims. Any such claims may have a materially adverse effect on our results of operations, corporate reputation and financial condition.

We may not be able to protect our intellectual property and may be subject to infringement claims.

We rely on a combination of contractual rights with third parties and copyright, trademark, patent and trade secret laws to establish and protect our intellectual property. Third parties may infringe on or misappropriate our intellectual property, and it is possible that third parties may claim that we have infringed on or misappropriated their intellectual property rights. Any resulting proceedings in which we would have to enforce and protect our intellectual property, or defend itself against a claim of infringement of a third-party’s intellectual property, may require significant effort and resources and may not prove successful. As a result of any proceeding in which we would have to enforce and protect our intellectual property, we may lose intellectual property protection, which may have a materially adverse effect on our businesses, results of operation, financial condition and our ability to compete. As a result of any proceeding in which we would have to defend itself against a claim of infringement of a third-party´s intellectual property, we may be required to pay damages and provide injunctive relief, which may have a materially adverse effect on our businesses, results of operations and financial condition.

Inadequate or failed processes or systems, human factors or external events may adversely affect our profitability, reputation or operational effectiveness.

Operational risk is inherent in our businesses and may manifest itself in many ways, including business interruption, poor vendor performance, information systems malfunctions or failures, regulatory breaches, cyber intrusions, failure to protect data, processing errors, modelling errors, and/or internal and external fraud. These events may result in financial loss, harm our reputation, or hinder our operational effectiveness. Further, employee error, unethical behavior and/or misconduct may be difficult to detect and prevent under all circumstances and may result in significant losses.

Operational risk is part of the business environment in which we operate, and is inherent in our size and complexity, as well as our geographic diversity, and the scope of the businesses we operate. Our risk management activities cannot anticipate every circumstance, and economic and financial outcome, or the specifics and timing of such outcomes. Furthermore, if the contractual arrangements put in place with any third-party service providers are terminated, including contractual arrangements with providers of information technology, administrative or investment management services, we may not be able to find an alternative provider on a timely basis or on equivalent terms. We may incur significant losses due to these types of risks.

As we continue to focus on reducing expenses necessary to support our business, a key part of our operating strategy has been to outsource certain services that are important to our business. We outsource certain information technology, finance and actuarial services, investment management services and policy administration operations to third-party providers and may do so increasingly in the future. If we fail to maintain an effective outsourcing strategy or if third-party providers do not provide the core administrative, operational, financial, and actuarial services we require and anticipate, or perform as contracted, such as compliance with applicable laws and regulations or suffer a cyber-attack or other security of privacy breach, we may not realize the productivity improvements or cost efficiencies or customers might experience lower service levels. In addition, we may not be able to find an adequate alternate provider and instead experience financial loss, reputational harm, operational difficulties, increased costs, a loss of business and other negative consequences, all of which could have a material adverse effect on our results of operations. In addition, our reliance on third-party providers does not relieve us of our responsibilities and requirements. Any failure or negligence by such third-party providers in carrying out their contractual duties may result in us being subjected to liability and litigation. Any litigation relating to such matters could be costly, expensive and time-consuming, and the outcome of which is uncertain. Moreover, any adverse publicity arising from such litigation, even if the litigation

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is not successful, could adversely affect our reputation and distribution of our products. Finally, our ability to receive services from third-party providers based in different countries might be impacted by political instability, cultural differences, unanticipated regulatory requirements or policies inside or outside of the countries within which we have operations. As a result, our ability to conduct our business might be adversely affected.

Our operations support complex transactions and are highly dependent on the proper functioning of information technology and communication systems. Any failure of our information technology or communications systems may result in a material adverse effect on our results of operations and corporate reputation.

Any failure of or gap in the systems and processes necessary to support complex transactions and avoid systems failure, fraud, information security failures, processing errors, cyber intrusion, loss of data and breaches of regulation may lead to a materially adverse effect on our results of operations and corporate reputation. In addition, we must commit significant resources to maintain and enhance our existing systems in order to keep pace with applicable regulatory requirements, industry standards and customer preferences. If we fail to maintain secure and well-functioning information systems, we may not be able to rely on information for product pricing, compliance obligations, risk management and underwriting decisions. In addition, even though back-up and recovery systems and contingency plans are in place, we cannot assure investors that interruptions, failures or breaches in security of these processes and systems will not occur, or if they do occur, that they can be timely dedicated and remediated. The occurrence of any of these events may have a materially adverse effect on our businesses, results of operations and financial condition.

A computer system failure or security breach may disrupt our business, damage our reputation and adversely affect our results of operations, financial condition and cash flows.

We rely heavily on computer and information systems and internet and network connectivity to conduct a large portion of its business operations. This includes the need to securely store, process and transmit confidential information, including personal information, through a number of complex systems. In many cases this also includes transmission and processing to or through commercial customers, business partners and third-party service providers. The introduction of new technologies, computer system failures, cyber-crime attacks or security or privacy breaches may materially disrupt our business operations, damage our reputation, result in regulatory and litigation exposure, investigation and remediation costs, and materially and adversely affect our results of operations, financial condition and cash flows.

The information security risk that we face includes the risk of malicious outside forces using public networks and other methods, including social engineering and the exploitation of targeted offline processes, to attack our systems and information. It also includes inside threats, both malicious and accidental. For example, human error and lack of sufficiently automated processing can result in improper information exposure or use. We also face risk in this area due to its reliance in many cases on third-party systems, all of which may face cyber and information security risks of their own. Third-party administrators or distribution partners used by us or our subsidiaries may not adequately secure their own information systems and networks, or may not adequately keep pace with the dynamic changes in this area. Potential bad actors that target us and our applicable third parties may include, but are not limited to, criminal organizations, foreign government bodies, political factions, and others.

In recent years information security risk has increased sharply due to a number of developments in how information systems are used by companies such as us, but also by society in general. Threats have increased as criminals and other bad actors become more organized and employ more sophisticated techniques. At the same time companies increasingly make information systems and data available through the internet, mobile devices or other network connections to customers, employees and business partners, thereby expanding the attack surface that bad actors can exploit.

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Large, global financial institutions such as us have been, and will continue to be subject to information security attacks for the foreseeable future. The nature of these attacks will also continue to be unpredictable, and in many cases may arise from circumstances that are beyond our control. If we fail to adequately invest in defensive infrastructure, technology and processes or to effectively execute against its information security strategy, it may suffer material adverse consequences.

To date the highest impact information security incidents that we have experienced are believed to have been the result of e-mail phishing attacks targeted at our business partners and commercial customers. This in turn led to unauthorized use of valid our website credentials to engage in fraudulent transactions and improper data exfiltration. Additionally, we have also faced other types of attacks, including but not limited to other types of phishing attacks and distributed denial of service (DDoS) attacks. Although to our knowledge these events have thus far not been material in nature, our management believes that significant investment will be required to establish and maintain adequate information security systems that are capable of addressing the possibility of these types of attacks, as well as for the possibility of more significant and sophisticated information security attacks, in the future. There is no guarantee that the measures that we take will be sufficient to stop all types of attacks or mitigate all types of information security or privacy risks.

We maintain cyber liability insurance to help decrease the impact of cyber-attacks and information security events, subject to the terms and conditions of the policy, however such insurance may not be sufficient to cover all applicable losses that we may suffer.

A breach of data privacy and security obligations may disrupt our business, damage our reputation and adversely affect financial conditions and results of operations.

Pursuant to applicable laws, various government agencies and independent administrative bodies have established numerous rules protecting the privacy and security of personal information and other confidential information held by us. For example, certain of our businesses are subject to laws and regulations enacted by U.S. federal and state governments, the European Union or other non-U.S. jurisdictions and/or enacted by various regulatory organizations relating to the privacy and/or security of the information of customers, employees or others. Effective May 25, 2018, the General Data Protection Regulation (“GDPR”) took effect in the European Union. Compared to the previous directive, the GDPR, among other things, increased compliance obligations, impacted our businesses’ collection, processing and retention of personal data and reporting of data breaches, and provides for significantly increased penalties for non-compliance. The NYDFS, pursuant to its cybersecurity regulation (23 NYCRR 500), requires financial institutions regulated by the NYDFS, including certain of our subsidiaries, to, among other things, satisfy an extensive set of minimum cyber security requirements, including but not limited to governance, management, reporting, policy, technology and control requirements. Numerous other U.S. laws also impose various information security and privacy related obligations with respect to various of our subsidiaries operating in the U.S., including but not limited to the Gramm-Leach-Bliley Act and related state laws (“GLBA”), and the Health Insurance Portability and Accountability Act (“HIPAA”), among many others. Other legislators and regulators with jurisdiction over our businesses are considering potential enhanced information security risk management and privacy rules and regulations. A number of our subsidiaries are also subject to contractual restrictions with respect to the information of our clients and business partners. We, and numerous of our systems, employees and business partners have access to, and routinely process, the personal information of consumers. We rely on various processes and controls to protect the confidentiality, integrity and availability of personal information and other confidential information that is accessible to, or in the possession of, us, our systems, employees and business partners. It is possible that an employee, business partner or system could, intentionally or unintentionally, inappropriately disclose or misuse personal or confidential information. Our data or data in our possession could also be the subject of an unauthorized cyber intrusion or cybersecurity attack. If we fail to maintain adequate processes and controls or if we or our business partners fail to comply with relevant laws and regulations, policies and procedures, misappropriation or intentional or unintentional inappropriate disclosure or misuse of personal information or other confidential information could occur. Such control inadequacies or non-compliance could cause disrupted

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operations and misstated or unreliable financial data, materially damage our reputation or lead to increased regulatory scrutiny or civil or criminal penalties or litigation, which, in turn, could have a material adverse effect on our business, financial condition and results of operations. In addition, we analyze personal information and customer data to better manage our business, subject to applicable laws and regulations and other restrictions. It is possible that additional regulatory or other restrictions regarding the use of such techniques may be imposed. Additional privacy and security obligations have been imposed by various governments with jurisdiction over us or our subsidiaries in recent years, and more such obligations are likely to be imposed in the near future. Such restrictions and obligations could have material impacts on our business, financial conditions and/or results of operations.

Judgments of U.S. courts are not enforceable against us in Dutch courts.

There is no treaty between the United States and The Netherlands providing for the reciprocal recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. Judgments of U.S. courts, including those predicated on the civil liability provisions of the U.S. federal securities laws, may not be enforceable in Dutch courts. Therefore, our investors that obtain a judgment against us in the United States may not be able to require us to pay the amount of the judgment unless a competent court in The Netherlands gives binding effect to the judgment. It may, however, be possible for a U.S. investor to bring an original action in a Dutch court to enforce liabilities against us, our affiliates, directors, officers or any expert named therein who resides outside the United States, based upon the U.S. federal securities laws.

Risks Relating to the Subordinated Notes

You may be required to bear the financial risks of an investment in the Subordinated Notes for a significant period of time beyond the Scheduled Maturity Date.

You may be required to bear the financial risk of an investment in the Subordinated Notes beyond the Scheduled Maturity Date. Subordinated Notes may only be redeemed (whether before, on or after the Scheduled Maturity Date) or purchased by us (in the open market or otherwise) provided that (a) no Mandatory Deferral Event has occurred and is continuing on the relevant date for redemption or purchase; (b) such redemption or purchase would not itself cause a Mandatory Deferral Event; and (c) as long as enforced by the Supervisory Authority, no Insolvent Insurer Liquidation has occurred and is continuing on the relevant date for redemption or purchase or in each case, as otherwise permitted by the Supervisory Authority and subject to Aegon having received the prior approval of the Supervisory Authority if required pursuant to the Capital Adequacy Regulations in order for the Subordinated Notes to qualify as tier 2 basic own funds of the Group. If on the relevant date for redemption (a) a Mandatory Deferral Event has occurred and is continuing, (b) a redemption would itself cause a Mandatory Deferral Event, or (c) as long as enforced by the Supervisory Authority, an Insolvent Insurer Liquidation has occurred and is continuing, then the Subordinated Notes may only be redeemed on any day thereafter on which no Mandatory Deferral Event is continuing, the redemption would itself not cause a Mandatory Deferral Event and, as long as enforced by the Supervisory Authority, no Insolvent Insurer Liquidation is continuing or the applicable condition has been waived, subject to certain conditions, by the Supervisory Authority.

We are subject to capital adequacy requirements and breach of these requirements will cause interest payments under Subordinated Notes to be deferred and, in other circumstances, interest payments under Subordinated Notes may be deferred at our election.

At Group level, we are subject to multiple regulatory frameworks that include capital adequacy requirements, including those pursuant to the Solvency II regime and the EU Financial Conglomerates Directive. For us, the dominant capital adequacy requirements result from the Solvency II regime.

Pursuant to Solvency II, we are subject to certain solvency capital requirements. See above “—We may be required to increase our technical provisions and/or hold higher amounts of regulatory capital as a result of

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changes in the regulatory environment or changes in rating agency analysis, which may decrease our returns on our products.”

In addition to the SCR, insurance and reinsurance companies should also calculate a minimum capital requirement (“MCR”). The level of eligible own funds held by the insurance or reinsurance company is not allowed to drop below the MCR.

The Group Solvency Ratio should be at least equal to 100%. This calculation includes, as part of the Group SCR, local capital requirements for insurance and reinsurance undertakings in non-EU countries that are deemed (provisionally) equivalent. Due to the relative proportion of these activities, the treatment of our U.S. insurance activities is of particular relevance to us. We use a combination of the two aggregation methods defined within the Solvency II framework to calculate the Group Solvency Ratio, the accounting consolidation method (“method 1”) and the deduction and aggregation method (“method 2”).We apply the accounting consolidation method as the default method. However, for insurance entities domiciled outside the European economic area for which provisional or full equivalence applies, such as the United States, we use the deduction and aggregation method, with local regulatory requirements to bring these into the Group solvency position. U.S. insurance and reinsurance entities are included in our Group solvency calculation in accordance with local U.S. RBC requirements. We use 150% of the local company action level RBC as the solvency ratio equivalent.

Undertakings that are part of an insurance group but active in other financial sectors, such as banks, are generally taken into account using capital requirements applicable to them specifically. These undertakings are included in the calculation of the capital requirements using method 2, as opposed to method 1. However, subject to certain conditions, entities in other financial sectors may be included in accordance with method 1. In particular, this may be the case where DNB, as Group supervisor, is satisfied as to the level of integrated management and internal control regarding these entities. Furthermore, DNB may require groups to deduct any participation from the own funds eligible for the Group solvency. Accordingly, we deduct our participation in Aegon Bank N.V. from our Group SCR.

When calculated in accordance with method 1, the Group SCR should be at least equal to the consolidated group solvency capital requirement as referred to in the second subparagraph of Article 230(2) of the Solvency II Directive (which is composed in particular of the sum of the minimum capital requirements of the EU insurance and reinsurance undertakings in the Group). When calculated in accordance with a combination of method 1 and method 2, the minimum of the Group SCR is at least equal to the minimum consolidated group solvency capital requirement as referred to in Article 341 of the Solvency II Delegated Regulation. This absolute floor of the Group SCR is usually referred to as the group minimum capital requirement or Group MCR. While the Group MCR generally represents a solvency requirement that is below the Group SCR, these ratios have different limitations concerning tiers of own funds eligibility.

Insurance and reinsurance companies are required to hold eligible own funds against the SCR and MCR. The capital is divided into three tiers in accordance with the quality of the own funds. The lower tiers of own funds (tier 2 and tier 3), as well as certain items (as described in Article 82(3) of the Solvency II Delegated Regulation) that form part of tier 1 own funds, may only represent a certain part of the eligible own funds. Furthermore, the SCR may be covered up to limited amounts with off-balance sheet own funds (‘ancillary own funds’ such as letters of credits or guarantees). The MCR should be covered entirely by on-balance sheet items (‘basic own funds’).

The classification or ‘tiering’ of our capital is based on distinct tier limits for the part of the Group covered by the accounting consolidation method (where tier limits are based on the SCR of this part of the Group, i.e., the consolidated group solvency capital requirement) and for the part of the Group covered by the deduction and aggregation method. If a prudential regime of an equivalent or provisionally equivalent third country (such as the regulatory regimes in the United States) does not categorize own funds into tiers or defines tiers that are significantly different from those established under the Solvency II Directive, then, in line with the European

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Insurance and Occupational Pensions Authority’s opinion of January 27, 2016 (EIOPA-BoS-16-008), the own funds brought in by the deduction and aggregation method are allocated to tiers according to the principles laid down in Articles 87 to 99 of the Solvency II Directive for each individual third-country insurance undertaking.

DNB may intervene if the Group SCR or Group MCR, as applicable, is no longer complied with. Moreover, DNB has supervisory powers to intervene in a situation even where the Group SCR and Group MCR are still met, but their level or the buffer levels set by us (pursuant to the Group’s capital management policy), are potentially under threat. This may lead to us having to execute a recovery plan that should bring the own funds back in line with an acceptable buffer in excess of the Group SCR. Intervention by DNB may lead to us being required to defer interest payments on the Subordinated Notes.

Pursuant to Solvency II and the terms and conditions of the Subordinated Notes, we will be obliged to defer interest payments on Subordinated Notes upon the occurrence of a Mandatory Deferral Event and any such unpaid interest shall, as long as it remains unpaid, constitute Arrears of Interest, and shall not bear interest. In other circumstances, such as when we opt to replenish the buffer in excess of the Group SCR to stay in compliance with our Group capital management policy, interest payments under Subordinated Notes may be deferred at our election. See further “Description of the Subordinated Notes—Deferral of Interest Payments.”

Any deferral of interest payments or actual or perceived increase in the likelihood that interest payments are deferred will likely have an adverse effect on the market price of the Subordinated Notes. In addition, as a result of the possibility of deferral of interest on the Subordinated Notes, the market price of the Subordinated Notes may be more volatile than the market prices of other debt securities on which interest accrues and which are not subject to such deferrals, and may be more sensitive generally to adverse changes in our and our Group’s financial condition.

The U.S. tax treatment of the Subordinated Notes is uncertain, and any recharacterization of the Subordinated Notes as equity for U.S. federal income tax purposes may result in adverse tax consequences.

The proper characterization of instruments such as the Subordinated Notes for U.S. federal income tax purposes is not clear. We intend to treat the Subordinated Notes as debt instruments for such purposes. However, our treatment is not binding on the IRS. If the Subordinated Notes are recharacterized as equity for U.S. federal income tax purposes, the tax consequences to an investor in Subordinated Notes may be materially different from the consequences described in this Prospectus Supplement under “Taxation in the United States.” For example, because for U.S. federal income tax purposes AFC is treated as a disregarded entity, in the event of recharacterization, the Subordinated Notes would be treated as equity interests in a partnership. In that case, the timing, amount and character of income inclusions with respect to the Subordinated Notes may be affected and in certain circumstances, U.S. investors could be required to include in income amounts in excess of actual payments on the Subordinated Notes during any particular interest period. In addition, if the Subordinated Notes were recharacterized as equity for U.S. federal income tax purposes, non-U.S. investors would be subject to withholding at 30% (or such lesser rate specified in an applicable tax treaty). Prospective investors are urged to consult their tax advisers regarding the U.S. tax consequences of investing in the Subordinated Notes, including under any alternative recharacterization.

The Subordinated Notes may be subject to the rules governing original issue discount or contingent payment debt instruments for U.S. federal income tax purposes, which may have adverse tax consequences to U.S. investors.

We have the option, and under certain circumstances may be required, to defer interest payments on the Subordinated Notes, and in such case, the arrears of interest would not bear interest. The existence of the deferral option or requirement could potentially cause the Subordinated Notes to be considered issued with original issue discount (“OID”) or treated as a contingent payment debt instrument (“CPDI”) for U.S. federal income tax purposes. However, we believe that the likelihood of the occurrence of such deferral is “remote” for purposes of

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the U.S. Treasury regulations governing OID. This belief is based on the facts and expectations as of the date hereof and does not constitute any promise or statement about whether we will in fact exercise our right to defer under the Indenture. Based on such belief and other relevant facts, although the matter is not free from doubt, we intend to treat the Subordinated Notes as not issued with OID and as not subject to the CPDI rules for U.S. federal income tax purposes.

There is no assurance that the IRS will agree with our treatment. If the IRS successfully challenged our treatment, the Subordinated Notes could be subject to the OID rules and/or potentially treated as a CPDI, in which case U.S. investors may be required to accrue OID on the Subordinated Notes without regard to the timing and the receipt of cash, and in the case of CPDI, to treat any gain on a sale or other disposition of the Subordinated Notes as ordinary income for U.S. federal income tax purposes.

Although, as discussed under “Taxation in the United States” in this prospectus supplement, we believe that for purposes of the U.S. Treasury regulations governing OID the likelihood of optional deferral of interest is “remote,” no reliance should be placed on that statement in forming an expectation of whether we will in fact exercise our rights to defer interest. We retain all the rights to exercise such deferral and there can be no assurance that interest will not be deferred pursuant to such rights.

Prospective U.S. investors should seek the advice of their tax advisors as to the proper characterization and treatment of the Subordinated Notes for U.S. federal income tax purposes, including in the event that payments of interest on the Subordinated Notes are deferred.

Upon the occurrence of certain regulatory or bankruptcy events, an Issuer Substitution may occur, and upon the occurrence of certain tax, regulatory disqualification or rating methodology events, the Subordinated Notes may be substituted or their terms varied, any of which may be treated as a taxable exchange for U.S. federal income tax purposes.

Subordinated Notes may be substituted, without the consent or approval of the holders, for Substituted Subordinated Notes issued by Aegon upon the occurrence of certain regulatory or bankruptcy events (see “Description of the Subordinated Notes—Issuer Substitution”). In addition, the Subordinated Notes may be substituted or their terms varied, without the consent or approval of the holders, so that they remain Qualifying Securities, upon the occurrence of certain tax, regulatory disqualification or rating methodology events (see “Description of the Subordinated Notes—Maturity, Redemption, Substitution, Variation and Purchases—Substitution and Variation of the Subordinated Notes”). Depending on the circumstances, an Issuer Substitution will likely, and a substitution or variation of the terms of the Subordinated Notes may, be considered a taxable disposition of the holder’s Subordinated Notes for “new” Subordinated Notes, potentially resulting in the recognition of gain or loss for U.S. federal income tax purposes. In the event of an Issuer Substitution, stated interest income (and OID, if any) on “new” Subordinated Notes generally will constitute foreign source income and generally will be considered “passive category income” in computing the foreign tax credit allowable to U.S. holders under U.S. federal income tax laws. If the Issuer Substitution or a substitution or variation of the terms of the Subordinated Notes gives rise to a taxable exchange of old Subordinated Notes for “new” Subordinated Notes, the substitution or variation may result in holders being deemed to have been issued the “new” Subordinated Notes with at least a de minimis amount of OID for U.S. federal income tax purposes, which may require holders to include in gross income (as ordinary income) such OID as it accrues, generally in advance of the receipt of cash payments attributable to such income, under a constant-yield method. Holders should consult their tax advisors regarding the tax consequences of an Issuer Substitution or a substitution or variation of the terms of the Subordinated Notes, including the possible application of rules that could prevent recognition of loss on the deemed exchange and the possible application of rules pertaining to OID. See “Taxation in the United States—Issuer Substitution and Substitution or Variation of Terms of a Subordinated Note.”

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Subordinated Notes may be redeemed before maturity. Redemption of Subordinated Notes is subject to certain conditions, which, if not met, may require redemption to be deferred.

Upon the occurrence of certain specified events, including, but not limited to, tax, regulatory and rating events, the Subordinated Notes may be redeemed at their principal amount or they may be substituted or their terms may be varied as provided in “Description of the Subordinated Notes—Maturity, Redemption, Substitution, Variation and Purchases.” We may also redeem the Subordinated Notes in whole or in part at our option on or after December 15, 2024 or on any Interest Payment Date thereafter.

Subordinated Notes may only be redeemed (whether before, on or after the Scheduled Maturity Date) or purchased by us provided that (i) no Mandatory Deferral Event has occurred and is continuing on the relevant date for redemption, (ii) such redemption or purchase would not itself cause a Mandatory Deferral Event and (iii) as long as enforced by the Supervisory Authority, no Insolvent Insurer Liquidation has occurred and is continuing on the relevant date for redemption, or in each case, as otherwise permitted by the Supervisory Authority. Furthermore any redemption or purchase of the Subordinated Notes is subject to Aegon having received the prior approval of the Supervisory Authority if required pursuant to the Capital Adequacy Regulations in order for the Subordinated Notes to qualify as tier 2 basic own funds of the Group.

If we redeem the Subordinated Notes for any reason, you may only be able to reinvest the redemption proceeds in securities with a lower interest rate. In addition, if we exercise our right to partially redeem the Subordinated Notes in connection with an optional redemption, the limited liquidity of the trading market for the Subordinated Notes may adversely affect the trading price of the Subordinated Notes remaining outstanding thereafter and/or require that investors hold such Subordinated Notes until maturity or an earlier redemption, if any.

Furthermore, our exercise of optional early redemption rights in respect of the Subordinated Notes will, among other things, depend on the interest rate environment at that time and on an economic assessment conducted by AFC. Therefore, during any period when we have the option to elect to redeem the Subordinated Notes early, or if there is an actual or perceived increase in the likelihood that we will exercise our optional early redemption right, the market value of the Subordinated Notes may be volatile because of the optional redemption feature. This may also be true prior to any redemption period. Potential investors should consider reinvestment risk in light of other investments available at that time. Notwithstanding market expectations as to the exercise of the optional early redemption rights in respect of the Subordinated Notes, we would not expect to redeem or repurchase Subordinated Notes prior to the final maturity date unless it were in our interest to do so.

The Dutch tax risks related to the Tax Plan 2020 may have adverse tax consequences to Aegon.

On 17 September 2019, the Dutch Ministry of Finance published its Tax Plan 2020 (Pakket Belastingplan 2020). The Tax Plan 2020 includes two measures that in particular may become relevant within the context of the Dutch tax treatment of the guarantor, the Subordinated Guarantee, and/or payments in respect of the Substituted Subordinated Notes: (i) the introduction of a conditional withholding tax on interest and royalties and (ii) the introduction of a thin capitalisation rule for banks and insurers.

With respect to the first measure, the Tax Plan 2020 proposes to introduce a conditional withholding tax on interest and royalties that will apply from 2021. The conditional withholding tax is an anti-abuse measure and will apply to interest and royalty payments by a Dutch entity (which is broadly defined under the Tax Plan 2020) directly or, if certain requirements are met, indirectly, to a related entity or permanent establishment of such entity (i) in a low-tax jurisdiction or (ii) in cases of abuse. An entity is related if it can directly or indirectly control the decisions made by the other entity on its activities (a qualifying interest). For example, this is the case if it has more than 50% of the voting rights. The controlling entity can either be the paying or the receiving entity. Furthermore, an entity is related, if a third-party has a qualifying interest in both the paying and receiving entity. An entity is also related if it has an interest, but not a qualifying interest in the Dutch entity, but it is part of a cooperating group of entities which as a total has a qualifying interest in the Dutch entity that makes the payment.

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Another policy intention presented in the Coalition Agreement is a withholding tax on interest payments made to beneficiaries in low-tax jurisdictions or countries that are included in the EU list of non-cooperative jurisdictions as of 2021. No definition of what is considered to be a “low-tax jurisdiction” has been provided, nor is it clear whether the withholding tax obligation will extend to publicly listed bonds. If the envisaged withholding tax on interest payments is implemented in Dutch tax law, we will, pursuant to the provision in “Description of the Subordinated Notes—Taxation; Additional Amounts,” not be required to pay any additional amounts to holders of the Subordinated Notes pursuant to the Parent Guarantee or to holders of the Substituted Subordinated Notes who are a tax resident of a low-tax jurisdiction (as defined in any Dutch tax law implementing the policy intention presented in the Coalition Agreement) or a non-cooperative jurisdiction to compensate them for such withholding tax.

In relation to the second measure, the Tax Plan 2020 proposes to introduce a thin capitalization rule for banks and insurers restricting deductibility of interest as of 1 January 2020. The rules would apply to licensed banks and insurers with a registered office in the Netherlands and foreign banks and insurers with a permanent establishment in the Netherlands. In short, the rule would apply to insurance companies with an equity of less than 8% of the balance sheet total (to be determined on the basis of a set of specific provisions which refer, amongst others, to Solvency II). If the rule is implemented in Dutch law in accordance with this draft legislation, the thin capitalization rule may have an adverse impact on the amount of interest that Aegon in its capacity as issuer of the Substituted Subordinated Notes can deduct for Dutch corporate income tax purposes and thus on its financial position.

We may substitute the Subordinated Notes or vary their terms without holder consent.

If a Tax Event, a Capital Disqualification Event or a Rating Methodology Event has occurred and is continuing, then we may, without consent or approval of the holders of Subordinated Notes (but always subject to the Trust Indenture Act of 1939 (the “Trust Indenture Act”)), at any time either substitute the Subordinated Notes in whole (but not in part) for, or vary the terms of the Subordinated Notes so that they remain or become, Qualifying Securities, as provided in “Description of the Subordinated Notes—Substitution and Variation of the Subordinated Notes.” In the case of a substitution or variation of the terms of the Subordinated Notes, while the “new” substituted or modified notes must have terms that are not materially less favorable to an investor than the Subordinated Notes, there can be no assurance that, whether due to the particular circumstances of each holder of Subordinated Notes or otherwise, such substituted or modified notes will be as favorable to each holder of Subordinated Notes in all respects. In addition, a substitution or variation of the terms of the Subordinated Notes may be considered a taxable exchange of the holder’s Subordinated Notes, potentially resulting in the recognition of gain or loss for U.S. federal income tax purposes. See “Taxation in the United States—Issuer Substitution and Substitution or Variation of Terms of a Subordinated Note.”

An investor in Subordinated Notes assumes an enhanced risk of loss in the event of our insolvency.

Our obligations under Subordinated Notes will be unsecured and subordinated and will rank equally among themselves. In the event of certain bankruptcy events with respect of AFC or the bankruptcy, winding up or moratorium (faillissement, vereffening na ontbinding or surseance van betaling) of Aegon, our payment obligations under the Subordinated Notes and the Subordinated Guarantee will rank in right of payment after each of AFC’s and Aegon’s unsubordinated unsecured creditors, but at least equally with all each of their other subordinated obligations that are not expressed by their terms to rank junior to the Subordinated Notes, and in priority to the claims of AFC’s and Aegon’s shareholders. Therefore, although Subordinated Notes may pay a higher rate of interest than comparable notes that are not subordinated, there is a real risk that an investor in Subordinated Notes will lose all or some of such investor’s investment should Aegon become insolvent.

As of June 30, 2019, Aegon’s total Senior Debt was €1.8 billion, and Aegon’s total Indebtedness and obligations ranking equally with the Subordinated Notes was €1.4 billion, whereas AFC’s sole other debt obligation comprised its $500.0 million Senior Notes due 2020 (which benefit from a senior guarantee from Aegon).

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AFC is a finance subsidiary and, as such, has limited assets and operations.

AFC is a finance subsidiary and, as such, has limited assets and operations. AFC has been organized under the laws of Delaware and serves as a finance subsidiary of Transamerica Corp. and, indirectly, of Aegon and has no assets, operations or revenues other than those related to the issuance, administration and repayment of its debt securities that are guaranteed, on a senior or subordinated basis, by Aegon. As a finance subsidiary, to meet AFC’s obligations under the Subordinated Notes, AFC is dependent upon payment or contribution of funds and/or repayment of outstanding loans from Transamerica Corp. and/or Aegon’s other subsidiaries. Therefore, AFC’s ability to make payments on the Subordinated Notes may be limited. Accordingly, any recoveries by holders in a Winding-Up or in event of non-payment may be limited to funds available under the Subordinated Guarantee by Aegon as further described under “Description of the Subordinated Notes—Subordinated Guarantee.”

You will be deemed to have waived all rights of set-off.

Subject to applicable law, you may not exercise or claim any right of set-off in respect of any amount we owe you arising under or in connection with the Subordinated Notes and the Subordinated Guarantee and you will be deemed, by virtue of holding the Subordinated Notes, to have waived all such rights of set-off. See “Description of the Subordinated Notes—Status—Waiver of Set-off.”

Under the terms of the Subordinated Notes and the Subordinated Guarantee, you have agreed to be bound by the exercise of any Dutch Bail-in Power by the relevant resolution authority.

AFC is the original issuer under the Subordinated Notes and Aegon is the guarantor. Furthermore, pursuant to an Issuer Substitution as described under “Description of the Subordinated Notes—Issuer Substitution,” under certain circumstances such as upon the occurrence of a Capital Disqualification Event, a Loss of Regulatory Treatment Event, a Resolution Event in respect of Aegon or a Winding up of AFC or Aegon, Aegon may be substituted for AFC as issuer under the Subordinated Notes (such securities referred to as the Substituted Subordinated Notes) either in the discretion of Aegon or automatically. The Subordinated Guarantee is, and the Substituted Subordinated Notes, if so substituted pursuant to an Issuer Substitution, will be, subject to Dutch Bail-in Power by the relevant resolution authority.

By acquiring any Subordinated Notes (or any Substituted Subordinated Notes), each holder and beneficial owner of a Subordinated Note (or a Substituted Subordinated Note) or any interest therein and the Subordinated Guarantee acknowledges, accepts, agrees to be bound by, and consents to the exercise of, any Dutch Bail-in Power by the relevant resolution authority that may result in the (i) reduction or cancellation of all, or a portion, of the principal amount of, or interest on, the Substituted Subordinated Notes and/or the conversion of all, or a portion, of the principal amount of, or interest on, the Substituted Subordinated Notes into shares or other securities or other of Aegon’s obligations or obligations of another person, including by means of a variation to the terms of the Substituted Subordinated Notes and the Subordinated Guarantee or any expropriation of the Substituted Subordinated Notes or (ii) a reduction or cancellation of all, or a portion, of the payment obligations under the Subordinated Guarantee, in each case, to give effect to the exercise by the relevant resolution authority of such Dutch Bail-in Power. Each holder and beneficial owner of a Subordinated Note (or a Substituted Subordinated Note) or any interest therein and the Subordinated Guarantee further acknowledges, accepts and agrees that the rights of the holders and beneficial owners of the Substituted Subordinated Notes or any interest therein and the Subordinated Guarantee are (or will be) subject to, and will be varied, if necessary, so as to give effect to, the exercise of any Dutch Bail-in Power by the relevant resolution authority. In addition, by acquiring any Subordinated Notes (or any Substituted Subordinated Notes), each holder and beneficial owner of a Subordinated Note (or a Substituted Subordinated Note) or any interest therein and the Subordinated Guarantee further acknowledges, accepts, agrees to be bound by, and consents to the exercise by the relevant resolution authority of, any power to suspend any payment in respect of the Substituted Subordinated Notes or the Subordinated Guarantee for a temporary period , and acknowledges and agrees that the exercise of the Dutch Bail-in Power by the relevant resolution authority with respect to such Subordinated Guarantee or Substituted Subordinated Notes (as applicable) shall not give rise to a default for purposes of Section 315(b) (Notice of Default) and Section 315(c) (Duties of the Trustee in Case of Default) of the Trust Indenture Act.

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Accordingly, any Dutch Bail-in Power may be exercised in such a manner as to result in you and other holders or beneficial owners losing all or a part of the value of your or its investment in the Subordinated Notes (or the Substituted Subordinated Notes) and the Subordinated Guarantee or receiving a different security from the Subordinated Notes (or the Substituted Subordinated Notes) and the Subordinated Guarantee, which may be worth significantly less than the Subordinated Notes (or the Substituted Subordinated Notes) and the Subordinated Guarantee and which may have significantly fewer protections than those typically afforded to the Subordinated Notes (or the Substituted Subordinated Notes) and the Subordinated Guarantee. See also “—Risks of application of the Dutch Intervention Act.” In addition, if there is an actual or perceived increase in the likelihood that any Dutch Bail-in Power may be exercised, the volatility of the market value of the Subordinated Notes (or the Substituted Subordinated Notes) may increase. Moreover, the relevant resolution authority may exercise its authority to implement the Dutch Bail-in Power without providing any advance notice to the holders. Furthermore, the occurrence of a Resolution Event in respect of Aegon will result in a Mandatory Issuer Substitution Event. For more information, see “Description of the Subordinated Notes—Agreement and Acknowledgment with Respect to the Exercise of Dutch Bail-in Power.”

The circumstances under which the relevant resolution authority would exercise its proposed Dutch Bail-in Power are currently uncertain.

Despite there being proposed pre-conditions for the exercise of the Dutch Bail-in Power, there remains uncertainty regarding the specific factors that the relevant resolution authority would consider in deciding whether to exercise the Dutch Bail-in Power with respect to the Subordinated Guarantee or the Substituted Subordinated Notes (as applicable).

Moreover, as the existing and future criteria that the relevant resolution authority would consider in exercising any Dutch Bail-in Power may provide it with considerable discretion, holders may not be able to refer to publicly available criteria in order to anticipate a potential exercise of any such Dutch Bail-in Power and consequently its potential effect on the Group and the Subordinated Notes (or the Substituted Subordinated Notes) and the Subordinated Guarantee.

The rights of holders to challenge the exercise of any Dutch Bail-in Power by the relevant resolution authority are likely to be limited.

Holders may have no or only limited rights to challenge, to demand compensation for losses and/or seek a suspension of any decision of the relevant resolution authority to exercise its Dutch Bail-in Power or to have that decision reviewed by a judicial or administrative process or otherwise.

Aegon may, without consent of the holders or the trustee, substitute Aegon for AFC as issuer of the Subordinated Notes.

Under the terms of the Subordinated Notes, if an Issuer Substitution Event has occurred and is continuing, subject to the provisions set out in “Description of the Subordinated Notes—Issuer Substitution” and subject to Aegon having received the prior approval of the Supervisory Authority if required pursuant to the Capital Adequacy Regulations, (i) with respect to a Voluntary Issuer Substitution Event, Aegon may in its sole discretion and without the consent of the holders or the trustee, substitute Aegon for AFC as issuer under the Subordinated Notes in whole (but not in part) and (ii) with respect to a Mandatory Issuer Substitution Event, without the consent of the holders of the Subordinated Notes or the trustee, Aegon will be automatically substituted for AFC as issuer under the Subordinated Notes in whole (but not in part). This means that, upon the occurrence of an Issuer Substitution, Aegon will succeed to, and be substituted for, and may exercise every right and power of, AFC under the Subordinated Notes (including, but not limited to, optional redemption rights) and the Indenture with the same effect as if Aegon had and been named as issuer under the Indenture and the Subordinated Notes, and Subordinated Guarantee would be released and extinguished. See “Description of the Subordinated Notes—Issuer Substitution.”

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A Mandatory Issuer Substitution Event will occur upon a Winding-up of AFC or Aegon or the commencement of Resolution Event in respect of Aegon following the exercise of Dutch Bail-in Power. A Voluntary Issuer Substitution Event will occur upon the occurrence of a Capital Disqualification Event or a Loss of Regulatory Capital Treatment Event. Such an event could occur, among other things, in connection with the introduction of group capital calculation metrics in the United States being developed by regulatory bodies, which may also impact the U.S. operations of Aegon. See “Description of the Subordinated Notes—Issuer Substitution.”

As Aegon is incorporated under the laws of The Netherlands and has its operational headquarters in The Netherlands, which is subject to applicable EU insolvency regulations, any insolvency proceedings in relation to Aegon may be based on Dutch insolvency laws. Dutch insolvency proceedings differ significantly from insolvency proceedings in the United States and may not be as favorable to your interests as creditors as the laws of the United States or other jurisdictions with which you may be familiar. In addition, an Issuer Substitution may be considered a taxable exchange of the holder’s Subordinated Notes, potentially resulting in the recognition of gain or loss for U.S. federal income tax purposes. See “Taxation in the United States—Issuer Substitution and Substitution or Variation of Terms of a Subordinated Note.”

Future changes related to capital adequacy requirements.

The Subordinated Notes are expected to qualify as Solvency II Tier 2 qualifying capital instruments pursuant to the rules of the Solvency II Directive as implemented in the Dutch Act on financial supervision (Wet op het financieel toezicht, the “Wft”), as well as in the Solvency II Delegated Regulation. We are subject to capital adequacy requirements and breach of these requirements will cause interest payments under Subordinated Notes to be deferred and, in other circumstances, interest payments under Subordinated Notes may be deferred at our election. The capital adequacy regulations, such as the Solvency II Directive and Solvency II Delegated Regulation may change from time to time. Furthermore, the Solvency II framework consists of a substantial number of implementing technical standards. Also these may change from time to time and new standards may be introduced.

Furthermore, the capital adequacy requirements for us and our Group may be subject to further changes, for example pursuant to initiatives such as ComFrame, and particular requirements or standards that may be imposed on global systemically important insurers, G-SII’s, in the future. See “—We may be required to increase our technical provisions and/or hold higher amounts of regulatory capital as a result of changes in the regulatory environment or changes in rating agency analysis, which may decrease our returns on our products.”

Any changes in capital adequacy requirements could result in a higher overall valuation of liabilities or capital requirements for us and our Group, or a lower overall recognition of own funds than is currently the case or may currently be foreseen. This may result in the occurrence of a Capital Adequacy Event, which definition also covers a breach of any capital adequacy requirements pursuant to future rules and regulations to which we and/or our Group is subject. As a result of the occurrence of a Capital Adequacy Event, payment of principal and interest under the Subordinated Notes would be deferred as further described in “—We are subject to capital adequacy requirements and breach of these requirements will cause interest payments under Subordinated Notes to be deferred and, in other circumstances, interest payments under Subordinated Notes may be deferred at our election.”

Payments made under some junior or equally ranking instruments will not trigger an obligation for us to make payments on the Subordinated Notes.

Pursuant to the provisions of “Description of the Subordinated Notes—Deferral of Interest Payments—Mandatory Interest Payments,” interest payments on the Subordinated Notes will in any event, but subject to certain exceptions as further described therein, become mandatorily due and payable on an Interest Payment Date if during a period of six months prior to such Interest Payment Date a dividend (including any distribution from

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reserves) was declared payable in respect of any of Aegon’s common shares in Aegon’s general meeting of shareholders or Aegon has repurchased or otherwise acquired any common shares in its own capital (subject to restrictions as set forth under “Description of the Subordinated Notes—Deferral of Interest Payments—Mandatory Interest Payments”). Potential investors in the Subordinated Notes should therefore note that holders of instruments ranking junior to or equally with the Subordinated Notes may receive payments from us in priority to the holders of Subordinated Notes, even though their claims rank junior to or equally with those of holders of Subordinated Notes. In addition, with the exception of payments on or repurchase of Aegon’s common shares, payments on instruments ranking junior to or equally with the Subordinated Notes will not trigger a Mandatory Interest Payment Event.

At as of the date of this prospectus supplement, it is the intention of the Executive Board of Aegon to consider the relative ranking of the common shares, junior securities and any tier 2 own funds or other equivalent regulatory capital under the Capital Adequacy Regulations in issue (including the Subordinated Notes) in the capital structure whenever exercising its discretion as to whether or not to declare dividends or pay interest. However, the Executive Board is not under any obligation to do so and may depart from this approach at any time in its sole discretion.

Subject to an Issuer Substitution as set forth under “Description of the Subordinated Notes—Issuer Substitution,” the obligations represented by the Subordinated Notes will be unsecured subordinated obligations of AFC ranking equally without any preference among themselves and will, in the event of bankruptcy of AFC, be subordinated in right of payment to the prior payment in full of all of AFC’s Senior Debt present and future, but will rank senior to all of AFC’s classes of share capital and to indebtedness, if any, expressly subordinated to the Subordinated Notes.

There are limitations on the remedies available to you and the trustee should we fail to pay amounts due on the Subordinated Notes and the Subordinated Guarantee and there is no right of acceleration in the case of a default in the payment of principal of or interest on the Subordinated Notes or payment in respect of the Subordinated Guarantee.

The Events of Default and rights to accelerate described, and certain remedies provided for, in the accompanying prospectus under “Description of Debt Securities—Events of Default” do not apply to the Subordinated Notes and the Subordinated Guarantee.

The Subordinated Notes, the Subordinated Guarantee and the Indenture provide for acceleration of payment of the principal amount of the Subordinated Notes and interest then accrued thereon and payment in respect of the Subordinated Guarantee, if any (including any Arrears of Interest), only upon a Winding Up, as described under “Description of the Subordinated Notes—Non-Payment When Due; Limitation of Remedies.” See also above “—An investor in Subordinated Notes assumes an enhanced risk of loss in the event of our insolvency.”

In addition, if a Non-Payment Event occurs and is continuing, holders of the Subordinated Notes and the Subordinated Guarantee have the absolute and unconditional right to institute suit for the enforcement of any Interest Payment that we do not timely elect to defer or are not obliged to defer, or any payment of principal that we are not required to postpone. The trustee may not, however, in the case of a Non-Payment Event in respect of an Interest Payment (and, with respect to a Mandatory Interest Payment Date and any Arrears of Interest) declare the principal amount of any outstanding Subordinated Note or Subordinated Guarantee (when and as the same shall be required pursuant to its terms) to be due and payable.

In addition, the exercise of the Dutch Bail-in Power by the relevant resolution authority with respect the Subordinated Notes and the Subordinated Guarantee will not constitute an Event of Default or Non-Payment Event under the Subordinated Notes, the Subordinated Guarantee or the Indenture. By acquiring any of the Subordinated Notes and the Subordinated Guarantee, each holder and beneficial owner of the Subordinated Notes or any interest therein and the Subordinated Guarantee acknowledges and agrees that exercise of the Dutch

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Bail-in Power by the relevant resolution authority with respect to the Subordinated Notes and the Subordinated Guarantee will not give rise to a default for purposes of Section 315(b) (Notice of Default) and Section 315(c) (Duties of the Trustee in Case of Default) of the Trust Indenture Act. See “Description of the Subordinated Notes—Agreement and Acknowledgment with Respect to the Exercise of Dutch Bail-in Power” for more information with respect to exercise of the Dutch Bail-in Power.

General market conditions and other factors could adversely affect market prices for the Subordinated Notes.

Market prices for the Subordinated Notes can be expected to vary with changes in market and economic conditions, including changes in credit spreads and the market for similar securities, our financial condition and prospects, changes in our credit ratings (whether real or anticipated), the Dutch Bail-in Power and other factors that generally influence the market prices of securities.

The Subordinated Notes are a new issue of securities, and there is no assurance that a trading market will exist or that it will be liquid.

The Subordinated Notes are a new issue of securities and have no established trading market. Although application will be made to list the Subordinated Notes on the New York Stock Exchange, there can be no assurance regarding the liquidity of the trading market for the Subordinated Notes or that an active public market for the Subordinated Notes will develop. If an active public trading market for the Subordinated Notes does not develop, the market price and liquidity of the Subordinated Notes may be adversely affected. Even if an active trading market does develop, no one, including the underwriters, is required to maintain its liquidity. The underwriters have advised us that they currently intend to make a market in the Subordinated Notes. The underwriters, however, are not obligated to do so, and any market making with respect to the Subordinated Notes may be discontinued at any time without notice. You should be aware that there may be a limited number of buyers if you decide to sell your Subordinated Notes. This may affect the price you receive for your Subordinated Notes or your ability to sell your Subordinated Notes at all.

In the event of Aegon’s Winding Up and the occurrence of an Issuer Substitution, the amount of your recovery, if any, may be denominated in euro and may therefore be exposed to currency exchange rate fluctuations.

If you are entitled to any recovery with respect to the Subordinated Notes upon Aegon’s Winding Up, and an Issuer Substitution occurs as described under “Description of the Subordinated Notes—Issuer Substitution,” as Aegon will be substituted for AFC as issuer under the Subordinated Notes offered hereby or in relation to payments made under the Subordinated Guarantee, you might not be entitled to a recovery in U.S. dollars and might be entitled only to a recovery in euro or any other lawful currency of The Netherlands. In addition, under current Dutch law, Aegon’s liability to holders of the Subordinated Notes (or Substituted Subordinated Notes) or under the Subordinated Guarantee would have to be converted into euro or any other lawful currency of The Netherlands on a date close to the commencement of insolvency proceedings against us, and you would be exposed to currency exchange rate fluctuations between that date and the date you receive proceeds pursuant to such proceedings, if any.

Credit ratings may not reflect all risks of an investment in the Subordinated Notes. Changes in our credit ratings may adversely affect your investment in the Subordinated Notes.

The credit ratings of our indebtedness are an assessment by rating agencies of our ability to pay our debts when due. A credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time. The credit ratings assigned to the Subordinated Notes may not reflect the potential impact of all risks related to structure and other factors on any trading market for, or trading value of, the Subordinated Notes. In addition, real or anticipated changes in our credit ratings will generally affect the trading market for, or the trading value of, the Subordinated Notes. Accordingly, you should consult your own financial and legal advisors as to the risks entailed by an investment in the Subordinated Notes and the suitability of investing in the Subordinated Notes in light of your particular circumstances.

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Limitation on gross-up obligation under the Subordinated Notes.

Our obligation, if any, to pay additional amounts in respect of any withholding or deduction in respect of taxes under the terms of the Subordinated Notes applies only to payments of interest due and paid under the Subordinated Notes and not to payments of principal.

As such, we would not be required to pay any additional amounts under the terms of the Subordinated Notes to the extent any withholding or deduction applied to payments of principal. Accordingly, if any such withholding or deduction were to apply to any payments of principal under the Subordinated Notes, Holders of Subordinated Notes may receive less than the full amount due under the Subordinated Notes, and the market value of the Subordinated Notes may be adversely affected. In addition, any payment of additional amounts may be subject to optional or mandatory deferral by us. Furthermore, the obligation to pay such additional amounts is subject to customary carve-outs, and no additional amounts are payable with respect to any withholding or deduction imposed by the United States or any political subdivision thereof. See further “Description of the Subordinated Notes—Deferral of Interest Payments.”

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