Lower corporate bond and equity markets led to a decline in earnings from the United Kingdom. New life sales held up well with strong sales of group pensions, annuities and unit-linked bonds. Value of new business also continued its recent strong growth, a result primarily of a shift in business mix to higher margin products.

Underlying earnings before tax

Underlying earnings before tax declined in Q4 to GBP 13 million, due primarily to the impact of lower equity and corporate bond markets on fund related charges in AEGON's unit linked pension business.

- Earnings from Life & Protection decreased GBP 3 million to GBP 18 million as strong underlying growth was masked by a one-off benefit in the comparable quarter last year;

- A GBP 8 million loss from Pensions & Asset Management was the result mainly of lower fund related charges;

- Distribution activities saw an increase in earnings to GBP 3 million as a result of cost containment and a release of incentive payments reserves.

Net income

Lower underlying earnings, underperformance of fair value items and losses on investments are the main drivers of the net loss of GBP 8 million in Q4. The fair value increase of guarantees embedded in the 'Five-for Life' variable annuity product resulted, net of hedging, in a loss of GBP 15 million. In addition, losses on investments amounted to GBP 16 million, an accounting loss on a derivative instrument for which hedge accounting could no longer be applied.

Commissions and expenses

Total commissions and expenses were down 2% due to a change in business mix. Operating expenses increased by 5% to GBP 114 million, mainly as a result of investments in the business and restructuring costs. As part of the group- wide cost savings program, operating expenses are expected to be reduced in 2009.

Sales and deposits

In Q4 2008, AEGON had a 10% market share in the life market in the United Kingdom (9% for full year 2008). New life sales continue to be strong in Q4, up 5% at GBP 289 million. Higher sales of annuities and group pensions were partly offset by weaker individual pension sales.

- Life annualized premium production increased 35% to GBP 66 million, mainly as a result of continued strong sales of annuities in Q4, as AEGON continued its focus on the rapidly-growing at-retirement market;

- Sales of pensions declined 2% in Q4 to GBP 223 million, mainly due to lower individual pension sales. However, sales of group pensions and unit-linked bonds continued to be strong (see Financial Supplement for more detail).

Total deposits declined to GBP 152 million as continued turmoil on world financial markets resulted in lower sales of retail mutual funds and third party managed assets.

Value of new business

The value of new business (VNB) increased 25% to GBP 50 million, as margins showed further improvement in Q4. AEGON's strategy in the United Kingdom is to move more of its business to high-margin areas, such as annuities. As a result, the internal rate of return on new business in the United Kingdom rose to 14.0%.

   Please refer to page 28 for more detailed information on VNB.    Revenue generating investments  

At the end of December 2008, revenue generating investments totaled GBP 47.1 billion, a decline of 1% from GBP 47.6 billion at the end of Q3 2008. The decrease reflects mainly the weakness in equity markets.

   UNITED KINGDOM - EARNINGS    GBP millions             Notes     Q4     Q4    %       FY      FY      %                                    2008   2007          2008    2007    Underlying earnings before    tax byline of business *)   Life                               18     21   (14)     46      54    (15)   Life and protection                18     21   (14)     46      54    (15)   Pensions and asset    management                        (8)    36   N.M.     68     138    (51)   Distribution                        3    (10)  N.M.     (1)     (7)    86   Share in net results of    associates                         0      0     0       0       1    N.M.   Underlying earnings    before tax                        13     47   (72)    113     186    (39)   Over/(under) performance of    fair value items                 (15)     0   N.M.    (15)      0    N.M.   Operating earnings    before tax                        (2)    47   N.M.     98     186    (47)    Operating earnings before    tax by line of business   Life                               18     21   (14)     46      54    (15)   Life and protection                18     21   (14)     46      54    (15)   Pensions and asset    management                       (23)    36   N.M.     53     138    (62)   Distribution                        3    (10)  N.M.     (1)     (7)    86   Share in net results of    associates                         0      0     0       0       1    N.M.   Operating earnings    before tax                        (2)    47   N.M.     98     186    (47)    Gains/(losses) on    investments                      (16)     1   N.M.    (17)     (5)   N.M.   Impairment charges                  2     (2)  N.M.    (18)     (3)   N.M.   Other income/(charges)       9     28    (17)  N.M.    (14)      5    N.M.   Income before tax                  12     29   (59)     49     183    (73)   Income tax attributable to    policyholder return              (28)    18   N.M.     14      (5)   N.M.   Income before income    tax on shareholders    return                           (16)    47   N.M.     63     178    (65)   Income tax on    shareholders return                8     (3)  N.M.      1       5    (80)   Net income                         (8)    44   N.M.     64     183    (65)    Net underlying earnings            17     43   (60)    104     188    (45)   Net operating earnings              2     43   (95)     89     188    (53)    Commissions and    expenses                         173    177    (2)    662     647      2   of which operating    expenses                         114    109     5     414     391      6    For the amounts in euro see    the Financial Supplement.      UNITED KINGDOM - SALES    GBP millions             Notes     Q4     Q4     %      FY      FY     %                                    2008   2007          2008    2007    New life sales              10   Life single premiums            1,548  1,555    (0)  6,470   6,984    (7)   Life recurring premiums    annualized                       134    120    12     575     484    19   Total recurring plus    1/10 single                      289    276     5   1,222   1,183     3    Life                               66     49    35     251     210    20   Pensions                          223    227    (2)    971     973    (0)   Total recurring plus    1/10 single                      289    276     5   1,222   1,183     3    Gross deposits (on and off    balance) by line of business   Pensions and asset    management                       152    343   (56)    542     903   (40)   Total gross deposits              152    343   (56)    542     903   (40)    Net deposits (on and off    balance) by line of business   Pensions and asset    management                        11    144  (92)   (322)     282   N.M.   Total net deposits                 11    144  (92)   (322)     282   N.M.     REVENUE GENERATING INVESTMENTS                                        At       At                                     Dec.     Sep.                                       31       30                                     2008     2008    %   Revenue generating    investments (total)         6  47,122   47,565   (1)   Investments general    account                         4,964    4,678    6   Investments for account of    policyholders                  39,869   40,587   (2)   Off balance sheet investments    third parties                   2,289    2,300   (0)     For the amounts in euro see the   Financial Supplement.    

- Underlying loss before tax of EUR 17 million - including a DPAC charge of EUR 43 million

- Continued strong pension deposits in Central & Eastern Europe and retail mutual fund sales in China

Overview

Earnings from Other countries were affected by an accelerated DPAC amortization and equity impairments in Taiwan. Deposits rose sharply, a result of the new asset management joint venture in China and continued strong growth in the company's pension business in Central & Eastern Europe. Life sales were 34% lower, as declining equity markets impacted single premium unit-linked sales in Poland and sales in Asia.

Underlying earnings before tax

Underlying earnings before tax from Other countries declined to a negative of EUR 17 million in Q4.

- Earnings from Life & Protection were severely impacted by an accelerated amortization of deferred acquisition costs in Taiwan of EUR 43 million, a reflection of a decline in interest rates and equity markets. Central & Eastern Europe and Spain, however, contributed resilient positive results;

- The asset management joint venture in China performed well. As a result, earnings from mutual funds increased to EUR 2 million;

- Earnings from General insurance were higher because of lower claims and a EUR 2 million reserve release in Hungary;

- Earnings from associate companies declined as a higher contribution from CAM, AEGON's Spanish associate, were more than offset by additional start-up costs at AEGON's joint ventures in India and a lower contribution from La Mondiale, AEGON's French partner.

Net income

The net loss of EUR 66 million in Q4 for Other countries includes an equity impairment of EUR 45 million, more than offsetting positive results in Central & Eastern Europe and Spain. Sales of investments resulted in losses on investments of EUR 10 million.

   Commissions and expenses   Commissions and expenses rose 45% in Q4 to EUR 175 million.   

- Operating expenses increased 25% as a result of continued growth in AEGON's pension business in Central & Eastern Europe and further investment in the company's bank distribution operations in Spain;

- Commissions, meanwhile, were down 24%;

- Accelerated amortization of DPAC in Taiwan lead to an additional one- time amortization of EUR 43 million;

- Deferred expenses declined, primarily because of lower production in Taiwan.

Excluding the DPAC charge in Taiwan, commissions and expenses increased only 9% to EUR 132 million.

   Sales and deposits   New life sales in Q4 2008 declined 34% to EUR 58 million.   

- In Central & Eastern Europe, sales of recurring premium life insurance rose 13% thanks to particularly strong performances in the Czech Republic and Slovakia. Single premium sales in Poland were sharply lower, however, because of the declining equity market. Total new life sales in Central & Eastern Europe amounted to EUR 22 million, down 27%;

- In Spain, sales of life insurance rose to EUR 22 million, due primarily to the extraordinary activity in AEGON's Spanish life business, following changes in pension legislation;

- AEGON's largest bank partner in Spain, which is an associate and therefore not consolidated, tripled sales to EUR 77 million (on a 100% basis), as a result of a successful strategy to increase the insurance penetration ratio among their existing client base;

- In Asia, new life sales decreased to EUR 13 million as increased sales in China were more than offset by a decline in Taiwan.

Gross deposits rose 77% in Q4 2008 to EUR 394 million. Net deposits were, although down 24%, positive at EUR 90 million. The increase in gross deposits reflects:

- The continued strong performance of AEGON's asset management joint venture in China.

- Strong growth in the company's pension business in Central & Eastern Europe.

General insurance

Non-life sales in Hungary declined to EUR 11 million as a result of continued focus on writing profitable business in an increasingly competitive environment.

Value of new business

The value of new business (VNB) from Other countries decreased by 36% to EUR 36 million primarily as a result of lower sales. In Asia, the decrease in VNB was mainly a reflection of lower sales. In Central & Eastern Europe, VNB declined on the back of lower sales in Hungary and Poland, as weak equity markets continued to impact sales levels. In Spain, VNB increased mainly as a result of higher sales in CAM and positive changes in the business mix.

The internal rate of return in Asia rose to 15.8% as a result of a change in product mix. The reduction of the internal rate of return to 29.8% in Central & Eastern Europe is mainly a reflection of lower sales in Poland. In Spain, AEGON's bank distribution partnerships continued to deliver high rates of return.

   Please refer to page 28 for more detailed VNB information.   Revenue generating investments   

Continued strong growth of the underlying businesses resulted in 2008 year-end revenue generating investments of EUR 13.6 billion, a decline of 4% from the end of Q3 2008.

   OTHER COUNTRIES - EARNINGS    EUR millions               Notes     Q4      Q4    %    FY      FY     %                                      2008    2007       2008    2007    Underlying earnings before    tax by line of business *)   Life                                (41)     5   N.M.   11      53   (79)   Accident and health                   1      0   N.M.    5       4    25   Life and protection                 (40)     5   N.M.   16      57   (72)   Variable annuities                    0      0     0    (1)      0   N.M.   Saving products                       0      0     0     0      (1)  N.M.   Retail mutual funds                   3      2    50    13       4   N.M.   Individual savings and    retirement products                  3      2    50    12       3   N.M.   Pensions and asset    management                           2     (1)  N.M.   12      11     9   General insurance                    12      8    50    37      39    (5)   Share in net results    of associates                        6      8   (25)   16      32   (50)   Underlying earnings    before tax                         (17)    22   N.M.   93     142   (35)    Gains/(losses) on    investments                        (10)     1   N.M.  (10)     14   N.M.   Impairment charges                  (49)     0   N.M.  (68)      0   N.M.   Other income/(charges)                1      1     0     1       0   N.M.   Income before tax                   (75)    24   N.M.   16     156   (90)   Income tax                            9    (32)  N.M.  (25)    (83)   70   Net income                          (66)    (8)  N.M.   (9)     73   N.M.    Net underlying    earnings                           (10)   (10)    0    64      60     7   Net operating earnings              (10)   (10)    0    64      60     7    Commissions and    expenses                           175    121    45   494     372    33   of which operating    expenses                            66     53    25   211     177    19     *) In Other countries, underlying earnings equals operating earnings.      OTHER COUNTRIES - SALES    EUR millions               Notes     Q4     Q4     %     FY      FY     %                                      2008   2007         2008    2007    New life sales                10   Life single premiums                 69    199   (65)   445   1,013   (56)   Life recurring    premiums annualized                 52     69   (25)   189     252   (25)   Total recurring plus    1/10 single                         58     88   (34)   233     353   (34)    Life                                 58     88   (34)   232     352   (34)   Saving products                       0      0     0      1       1     0   Total recurring plus    1/10 single                         58     88   (34)   233     353   (34)    New premium production    accident and health insurance        2      1   100      6       6     0   New premium production    general insurance                   10     15   (33)    40      32    25    Gross deposits (on and    off balance)   Variable annuities                   10     18   (44)   126      22   N.M.   Retail mutual funds                 173     43   N.M.   779     154   N.M.   Pensions and asset    management                         211    162    30    737     579    27   Total gross deposits                394    223    77  1,642     755   117    Net deposits (on and   off balance)   Variable annuities                    5     17   (71)   113      20   N.M.   Retail mutual funds                 (56)    18   N.M.    59      93   (37)   Pensions and asset    management                         141     83    70    397     368     8   Total net deposits                   90    118   (24)   569     481    18    REVENUE GENERATING   INVESTMENTS                                          At       At                                       Dec.     Sep.