Condensed consolidated interim financial statements
for the periods ended
September 30, 2022
2.2 Future adoption of new EU-IFRS accounting standards and amendments
For a complete overview of IFRS standards and amendments issued before
January 1, 2022, which will be applied in future years and were not early adopted by the Group, please refer to Aegons Integrated Annual Report for 2021.
After January 1, 2022, the IASB issued the following amendment:
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Lease Liability in a Sale and Leaseback (Amendments to IFRS 16 Leases). |
This amendment was not early adopted by Aegon and are not expected to have significant impact on Aegons financial position or condensed consolidated interim
financial statements.
IFRS 17 - Insurance contracts
Aegon will adopt IFRS 17 Insurance Contracts, including any consequential amendments to other standards, with a date of initial application of January 1,
2023 and a transition date of January 1, 2022. Aegon will not use the optional exemption provided under EU-IFRS and will, instead, apply a quarterly cohort to all groups of contracts that are in scope of IFRS 17.
The Standard represents a fundamental change to current measurement and presentation of insurance and reinsurance contracts and the implementation effort is significant.
An implementation project is being executed and finalization of methodology and policy choices is expected in the second half of 2022 which will also form the basis of parallel runs. The impact of the initial application on Aegons financial
statements is expected to be significant. Aegon will communicate to the market, once results are reliable, final methodology and policy choices with related impact. Initial communication is expected in the fourth quarter of 2022. Aegon has scheduled
an educational webinar on IFRS 17 on December 14, 2022.
2.3 Judgments and critical accounting estimates
Preparing the condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions, including the likelihood, timing or
amount of future transactions or events, that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. These estimates are inherently subject to change and actual results could differ from
those estimates.
Macro-economic context
In the first
nine-month period of 2022, the Russian invasion of Ukraine caused a humanitarian crisis and also impacted global financial markets and caused significant economic turbulence. Aegon closely monitors financial and wider economic developments to
understand our exposure to potential shocks in the markets where we invest, and Aegon work proactively to mitigate related risks. The inflation rates for the main economies that Aegon is exposed to increased significantly. As disclosed in our 2021
Integrated Annual Report, Aegon have implemented an inflation hedge covering liabilities with conditional indexation rights in the Netherlands to address the uncertainty around the rise in inflation. In the United States, the inflation risk within
long-term care claims derives primarily from wage inflation, which Aegon mitigate by offering customers downgrades of the maximum daily benefit as an alternative to premium rate increases. In addition, Aegons expense savings program helps to
mitigate the impact of rising inflation.
High inflation has prompted central banks to start raising interest rates significantly. As a consequence, interest rates
have increased significantly in Aegons main markets compared to December 31, 2021. Equity markets in Aegons three main markets decreased in the first nine months of 2022 compared to an increase of equity markets in 2021.
Additionally, credit spreads have widened compared to December 31, 2021 and affected Aegons results negatively.
Uncertainty resulting
from COVID-19
In the first nine-month period of 2022 the COVID-19 pandemic
continued to cause disruption to business, markets, and the industry. Progress on vaccinations has reduced the spread of COVID-19 and will likely continue to reduce the effects of the public health crisis on
the economy. However, the pace of vaccinations has slowed down, and new strains of the virus and reduced availability of healthcare remain risks.
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Unaudited |
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