Aegon Magyarország Általános Biztosító Zártkörűen Működő Részvénytársaság (Aegon Hungary Composite Insurance Co.);
Aegon Towarzystwo Ubezpieczeń na Życie Spółka Akcyjna (Aegon Poland Life);
Aegon Powszechne Towarzystwo Emerytalne Spółka Akcyjna (Aegon Poland Pension Fund Management Co.);
Aegon Emeklilik ve Hayat A.Ş. (Aegon Turkey);
Aegon Pensii Societate de Administrare a Fondurilor de Pensii Private S.A (Aegon Romania Pension Administrator Co.);
Aegon Pojišťovna, a.s (Aegon Czech Life);
Aegon Životná poisťovňa, a.s. (Aegon Slovakia Life); and
Aegon, d.s.s., a.s (Aegon Slovakia Pension Management Co.).
Overview of sales and distribution channels
Aegon operates through a number of different sales channels in Central & Eastern Europe. In the Czech Republic and in Slovakia, Aegon distributes mostly unit-linked and term life insurance policies with the help of broker sales partners.
In Poland and Romania, unit-linked and different types of traditional life insurance products are distributed by tied agents and bank partners respectively. In Turkey, the most important sales channels are insurance brokers and tied agents, in addition to bank partners, which distribute savings and term life insurance products. As Aegon Hungary Insurance is a composite insurance entity, owning several subsidiaries that also operate in the financial services sector, the Group’s products are marketed via a broad range of channels. The most important of these are tied agents and insurance brokers, in addition to bank partners, call centers, key account managers and its online channel.
Overview of business lines
Life & SavingsAegon companies in Central & Eastern Europe offer a range of life insurance and personal protection products. These include traditional life and unit-linked products. Unit-linked products cover all types of life insurance, including pension, endowment and savings.
Traditional general account life insurance mainly consists of index-life products that are not unit-linked but have guaranteed
Preferred life is an individual term life insurance product that offers insurance protection. The product distinguishes between whether an individual is a smoker or non-smoker, and uses standard and preferred pricing dependent on the respective health of customers.
Group life contracts are renewable each year and carry optional accident and health cover.
In Poland, Aegon focuses on unit-linked as well as traditional life products. In line with the local regulatory and market developments, the products marketed have been modified in recent years.
In Hungary, Aegon offers a wide range of life insurance products:
including term life, whole life, group life insurance, accidental life and traditional saving type products, in addition to unit-linked policies, which are frequently accompanied with riders.
These riders provide customers – in addition to the main coverage – with additional financial support in the event of, for instance:
having an accident, becoming disabled, or being hospitalized.
Aegon is a significant market player in Hungary in the unit-linked segment9.
In both the Czech Republic and Slovakia, Aegon focuses on the unit-linked segment, in addition to offering term life products and offering a wide range of riders that cover, among others, accidental death, disability, critical illness risks, and providing a daily hospitalization allowance to insured clients.
In Turkey, Aegon provides only traditional life insurance products, the most important of which are pure term life with several riders, term life with premium refund on maturity, and saving-type endowment products. Aegon’s insurance portfolio is growing significantly in Turkey due to the country's high growth rate.
In Romania, Aegon undertakes life insurance business via a branch of Aegon Poland Life Insurance Company.
The Romanian branch sells unit-linked, term life and endowment insurance policies.
Also in Hungary, Aegon Hungary Home Savings and Loan Association provides a saving product combined with
Business overview Results of operations – Central & Eastern Europe
68Mortgage loans
Aegon Hungary first offered mortgage loans to retail customers in 2006 via Aegon Hungary Mortgage Finance Co., a subsidiary of Aegon Hungary Composite Insurance Company. After its launch, the mortgage loan business was affected by several legislative changes. On March 17, 2014, Aegon Hungary Mortgage Finance Company suspended the acceptance of new loan applications for an indefinite period of time.
Pensions
Aegon’s pension business in Central & Eastern Europe was impacted by reforms to the pension system in several countries in the region during recent years. Aegon is currently active in the (formerly mandatory) private pension market in Slovakia, Poland and Romania. In the voluntary pension market, Aegon is active in Hungary, Turkey and Romania.
As of December 31, 2017, Aegon managed the savings
of 3.1 million pension fund members in Central & Eastern Europe.
In terms of assets under management, Aegon’s private pension funds in Poland, Slovakia and Romania, and its voluntary pension fund in Hungary, are significant market players in the respective countries. In terms of numbers of members, Aegon has a significant market presence in Poland, Romania, and Hungary.
On September 1, 2017 Aegon took over the management of Nordea's Pillar 2 pension fund in Poland. The deal brought economies of scale and helped further improve the quality of services that Aegon provides to its customers. By end of May 2017, the pension fund under Aegon PTE S.A.'s management had assets of PLN 6.93 billion (EUR 1.6 billion) and 890,000 members, whereas the fund managed by Nordea had assets of PLN 8.06 billion (EUR 1.9 billion) and 980,000 members. The merger of the two funds created the fourth largest Pillar 2 pension fund in the market10.
Non-life
Aegon Hungary offers non-life cover (mainly household and car insurance, in addition to some wealth and liability industrial risk and travel insurance). Aegon is the leading insurance company in the Hungarian household market11. In recent years, margins on non-life insurance in Hungary have been attractive. Moreover, household insurance provides considerable opportunities for the cross-selling of life insurance.
As part of Aegon’s regional expansion, Aegon Hungary has operated branch offices selling household insurance policies in Slovakia since 2010 and Poland since 2011.
Competition
In 2016, Aegon was the third largest life insurance provider in Hungary, based on annual standardized premium income, and the third largest provider in the non-life insurance market12. In Turkey, Aegon was ranked tenth in the life insurance market based on written premium at the end of Jul 201713. Aegon is a
less significant market participant in Poland, Slovakia, the Czech Republic and Romania.
Aegon was ranked third in terms of both the number of participants and managed assets in 2016 in the voluntary pension fund market in Hungary14. In December 2017, Aegon was ranked fifth in terms of managed assets and fourth in terms of number of participants in the Slovakian private pension market15. Based on May 2017 data, Aegon combined with Nordea was ranked fourth in terms of both the number of participants and managed assets in Poland16. In November 2017, Aegon was the fourth largest provider in the Romanian mandatory private pension market, both in terms of net assets under management and number of participants17.
Regulation and supervision
In the European Union, a single insurance company may only be licensed for and conduct either a life insurance business or a non-life insurance business – not both. In Hungary, however, insurance companies established before 1995 are exempt from this rule. This exemption therefore applies to Aegon Hungary, which is a composite insurance company.
State supervision and oversight of the insurance industry is conducted by the following bodies and institutions:
The Central Bank of Hungary (MNB);
National Bank of Slovakia (NBS);
Czech National Bank (CNB);
Polish Financial Supervisory Authority (KNF);
Authority for Financial Supervision (ASF) (Romania); and
Undersecretariat of Treasury (Turkey).
The authorities mentioned above promote consumer protection and have the right to investigate prudential activities and conduct, financial position and solvency, and compliance with all relevant laws.
In addition to legal regulation, insurance companies are members of a number of self-regulatory groups in their respective countries. These self-regulatory groups are the main forums for discussion among insurance companies. Their specialized departments (for example, actuarial, financial, and legal) meet periodically.
Solvency II
The Solvency IIinsurance solvency regime, became effective in European Economic Area (EEA) countries on January 1, 2016.
Aegon’s EU-domiciled entities in Central & Eastern Europe use the Standard Formula to calculate the solvency position of their insurance activities. The activities in Turkey have been included through Deduction & Aggregation on a Solvency II Standard Formula basis.
The foundation and operations of voluntary pension funds are regulated in Hungary by the country's Voluntary Mutual Pension Funds Act (XCVI. 1993). Activity in this area is also
Notices Act (43/2004). The private pension business is under the supervision of the National Bank of Slovakia (NBS). In Romania, the private and voluntary pension system is regulated and supervised by the Authority for Financial Supervision (ASF). The mandatory pension system is subject to the Privately Administered Pension Funds Act (411/2004) and the voluntary pension system is subject to the Voluntary Pension Law (204/2006), both complemented by individual regulations (as secondary legislation). In Poland, this activity is supervised by the KNF and governed by the Organization and Operation
and the companies are subject to Individual Retirement Saving and Investment System Law No. 4632.
In Hungary, the Credit Institutions and Financial Enterprises Act (2013) stipulates the foundation, operation and reporting obligations of the country's financial institutions (including Aegon Hungary Mortgage Finance Company).
In addition, Aegon Hungary Mortgage Finance Company is under the supervision of the MNB, in exactly the same way as Aegon Hungary Home Savings and Loan Association.