FINANCIAL INSTITUTIONS

CREDIT OPINION22 December 2017

Update

RATINGS

AEGON N.V.Domicile Netherlands

Long Term Rating A3

Type LT Issuer Rating

Outlook Stable

Please see the ratings section at the end of this reportfor more information. The ratings and outlook shownreflect information as of the publication date.

Contacts

Benjamin Serra 33-1-5330-1073VP-Sr Credit Officerbenjamin.serra@moodys.com

Nicolò Squercina 44-20-7772-1541Associate Analystnicolo.squercina@moodys.com

Giovanni Meloni 44-20-7772-1089Analystgiovanni.meloni@moodys.com

Antonello Aquino 44-20-7772-1582Associate ManagingDirectorantonello.aquino@moodys.com

CLIENT SERVICES

Americas 1-212-553-1653

Asia Pacific 852-3551-3077

Japan 81-3-5408-4100

EMEA 44-20-7772-5454

AEGON N.V.Update following outlook changed to stable

Summary Rating RationaleThe credit profile of Aegon N.V. (rated A3 for senior debt) reflects the aggregate creditstrength of its various operating companies as well as its geographically diversified sources ofcash flows.

Aegon N.V. is the Netherlands-based holding company of the Aegon insurance group. Aegonprimarily offers life insurance and pension products and its main operations are based in theUS, comprising three primary insurance entities which all carry an A1 Insurance FinancialStrength Rating (”IFSR”). The group has also significant and well established operations inthe Netherlands (Aegon Levensverzekering N.V.). Aegon's third largest operation is located inthe UK (Aegon UK) and the group is present in over 20 other countries worldwide. The G-20Financial Stability Board (FSB) has designated Aegon as one of the nine global systemicallyimportant insurers.

On 20 December 2017, we affirmed Aegon N.V.'s ratings and changed the outlook to stablefrom negative to reflect the good level of geographic diversification that the group hasmaintained over the past two years and that we expect the group to maintain. Aegon N.V.managed to gradually offset the earnings lost following the sale of its UK annuity business in2016 by growing its UK platform business through a series of acquisitions.

Credit Profile of Significant SubsidiariesAegon USA

Moody's A1 IFSR (stable outlook) of three operating life insurance companies in the AegonUSA Life Group (Aegon USA - i.e., Transamerica Life Insurance Company, TransamericaPremier Life Insurance Company, and Transamerica Financial Life Insurance Company) -is based on the group's leading position in the U.S. life insurance and asset accumulationmarkets, strong business line and distribution diversification. Aegon USA continues tomake progress in increasing profitability and leveraging its market positions to grow its lifeinsurance and retirement businesses in its core business lines while investing in programsto improve its back office operations and its worksite businesses and exit or de-emphasizenon-core, and/or underperforming businesses (i.e. institutional life insurance and payoutannuities).

Aegon USA's strengths are mitigated by lower than expected profitability for its rating level,precipitated by volatility in long-term care and life insurance results, and the interest rate,equity, and hedging risks of its variable annuity (VA) liabilities. Separately, the company’slevel premium term life (“XXX”) and no-lapse universal life insurance (“AXXX”) business

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extensively use captives, which weaken the quality of reserves, asset quality, and regulatory capital on a consolidated basis.

Please refer to Aegon USA Life Group (Cons) credit opinion for more details on the credit profile of Aegon's US operations.

Aegon The Netherlands

Aegon Levensverzekering N.V. enjoys a strong brand recognition and one of the leading positions in the Dutch life insurancemarket. The company is particularly strong in group pensions insurance but is also developing its banking business and its pensionadministration business. However, the Dutch market remains highly competitive and the company has been focusing on improvingcustomer service while reducing costs.

Underlying earnings before tax (€534 million in 2016) have remained broadly stable in the last three years. Life insurance sales tendto decline (minus 15% in 2016) but gross deposits continuously grow, reaching €6.7 billion in 2016 (2015: €5.1 billion), reflecting thegrowth of Aegon's online bank, named Knab, launched in 2012.

The insurer undertook pro-active hedging on equity and interest-rate risk in the early 2000s and consequently the earnings' sensitivityto changes in interest rates and equity markets is low compared to many Dutch peers. Nevertheless investment guarantees embeddedin many of the products continue to leave the company's profitability somewhat exposed to adverse market movements in times ofsharp market volatility and of low interest rates.

Aegon UK

Aegon is present in the UK life and pensions market and has become the leader in the UK platform segment, following the acquisitionof BlackRock’s UK defined contribution business and more importantly the acquisition of Cofunds, which significantly increasedthe scale of Aegon’s platform business to over £100 billion of assets from around £9 billion as of Q2 2016. Pensions are the largestbusiness in terms of sales. The company has sold its annuities business in 2016 and is now focusing on selected business lines (AtRetirement and Workplace savings), as well as progressively migrating its business to its own pension administration and investmentplatform.

Aegon’s UK profitability will largely depend on the level of assets under administration that it retains on its platform and the feesit charges its customers amid continued negative pressure on margins in the competitive UK platform market. Nonetheless, AegonUK reported good retention following the acquisition of Cofunds and favorable equity markets supported the growth in assets underadministration in the first half of 2017. Hence, Aegon UK is gradually replacing the earnings lost from the sale of the annuity businessand we expect the company to continue to grow its earnings as the synergies from acquisitions gradually materialize, although thesewill partly be offset by pressures on margins.

Credit Strengths

» Strongly focused strategy on wealth accumulation, life insurance and pension products

» Diversified business portfolio, with top tier positions in the US, in the Netherlands and in the UK platform segment

» Broad product offering and strong customer service capabilities

» Good liquidity and ALM management

Credit Challenges

» To maintain its competitive position and improve profitability, particularly in the UK, and to a lower extent in the Netherlands,following the shift in focus in new business

» Potential decline in VA and Individual Retirement Annuity (IRA) sales in the US

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

2 22 December 2017 AEGON N.V.: Update following outlook changed to stable

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» Relatively high total leverage and more broadly relatively high reliance on structured transactions such as the use of captives in theUS and the funding of mortgages through RMBS in the Netherlands

Rating OutlookThe outlook is stable, reflecting the stable outlook on its main operations (US operations) and our expectation that Aegon will be ableto maintain a good level of geographic diversification.

What Could Change the Rating - UPSenior debt ratings could be upgraded in the event of:

» Improvement in the credit profile of the US insurance operations, as evidenced by an upgrade of their insurance financial strengthratings

» Consolidated total leverage below 30% and earnings coverage consistently above 8x

What Could Change the Rating - DOWNSenior debt ratings could be downgraded in the event of:

» Reduced geographic diversification (i.e. increased reliance on the US business) that would lead to a reduction in the notchingdifferential between the IFSR of Aegon USA's entities and the senior debt rating of Aegon N.V.

» Weakening of the credit profile of Aegon USA, as evidenced by a downgrade of its ratings

» Weakening in the credit profile of the Dutch operations

» Consolidated group financial leverage above 40% and earnings coverage consistently below 4x

Key Indicators

Exhibit 1

AEGON N.V.[1][2] 2016 2015 2014 2013 2012

As Reported (Euro Millions)

Total Assets 425,935 415,729 424,902 351,767 364,884

Total Shareholders' Equity 24,734 26,493 28,129 22,626 28,519

Net income (loss) attributable to common shareholders' 453 (662) 1,034 603 1,327

Total Revenue 50,214 34,869 43,883 45,012 42,739

Moody's Adjusted Rat ios

Goodwill & Intangibles % Shareholders' Equity 58.0% 52.4% 47.4% 61.5% 55.8%

Financial Leverage 36.2% 28.2% 27.4% 31.1% 30.4%

Total Leverage 43.8% 37.5% 37.4% 44.1% 45.3%

Earnings Coverage (1 yr.) 2.3x -0.8x 3.6x 2.5x 3.8x

Cash Flow Coverage (1 yr.) NA NA NA NA NA

[1] Information based on IFRS financial statements as of Fiscal YE December 31[2] Certain items may have been relabeled and/or reclassified for global consistencySource: Company Reports, Moody's Investors Service

Structural ConsiderationsAegon N.V.'s senior debt rating is two notches lower than the A1 IFSR of the US operating companies, which is one notch narrowerthan Moody’s standard practice, which reflects the geographical diversity of the group. However the group's somewhat dependence onearnings from the US operations and predominant focus on life and retirement business compares less favourably to more diversifiedgroups with a similar notching level.

3 22 December 2017 AEGON N.V.: Update following outlook changed to stable

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Capital Structure and LiquidityAegon's consolidated shareholders' equity reduced to €24.7 billion in 2016 (2015: €26.5 billion) as a result of a DAC write off related tothe UK business as well as other accounting changes and further reduced to €23.9 billion as of 30 September 2017 due to FX effects. Atthe same time, total capital increased to €39.5 billion at 30 September 2017 (YE2016: €38.7 billion; YE2015: €34.3 billion), driven byadditional debt issued in 2016 and 2017.

As of 31 December 2016, €11.5 billion of debt was outstanding, of which €1.5 billion (13%) was recourse operational debt, €5.4 billion(46%) was senior debt or commercial paper and €4.7 billion (40%) was subordinated debt. As of year-end 2016, Aegon also had€6.4 billion of outstanding non-recourse debt (e.g., funding of mortgages through RMBS) that we include neither in financial debt,nor in operational debt in our calculations. The majority of the group's borrowings is traditionally either directly attributable to orguaranteed by Aegon N.V., but since 2016, senior debt includes borrowings to the Federal Home Loan Bank (FHLB), issued by someAegon’s subsidiaries in the US (YE2016: €2.8 billion and Aegon issued an additional €1.7 billion in the first nine months of 2017).

We view Aegon N.V.'s financial flexibility in line with a single A score. In 2016 financial leverage (excluding operational debts) materiallyincreased to around 36% (2015: 28%), and will further increase at year-end 2017, after several years of decline and of deleveragingactions, as a result of additional borrowings and the decline in shareholders’ equity. Additional debt notably includes more than €4billion of borrowings to the FHLB (€2.8 billion as of YE2016) that Aegon uses primarily to purchase long-term assets and increase theduration of its assets in its US life subsidiaries. New debt issued in 2016 also includes €500 million of senior debt issued to refinancedebt which matured in 2017, and €500 million of a 1-year senior debt in August 2017.

Nonetheless, in our financial leverage ratio, financial debt includes pension deficit which amounted to €4.5 billion at year-end 2016,while Aegon holds some assets backing these pension liabilities; if we take into consideration these assets, pension deficit significantlyimproves and financial leverage decreases by around 5 percentage points.

Total leverage, which includes recourse operational debt and does not incorporate equity credit for hybrid securities has increased toaround 44% in 2016 (2015: 38%), mostly explained by the increase in financial leverage. However, the group has repaid part of itsoutstanding recourse debt, which reduced to €1.5 billion in 2016 compared to €2.1 billion in 2015. The difference between the totalleverage and the financial leverage now mostly reflects the use of structured transactions to reduce new business strain and optimizecapital in its US operations.

Aegon's financial flexibility remains nonetheless constrained by a relatively low earnings coverage (around 2x on a 5-year averagebasis), mostly driven by a weak profitability. The group's consolidated return on capital was 1.7% on average in the last five years buthas been improving in recent quarters. The group reported a net income of €1,375 million in the first nine months of 2017, up from€116 million in the same period of 2016, reflecting lower one-off charges and improvements in underlying profitability.

Liquidity Profile

Moody's Prime-2 rating of Aegon N.V. and Aegon Funding Company LLC €2.5 billion commercial paper programs are based on thegroup's current ratings (long-term senior debt A3), and the availability of alternative sources of liquidity to assist the repayment ofoutstanding obligations. Aegon N.V. guarantees any notes issued under the program by its subsidiary Aegon Funding Company.

Total drawings under Aegon N.V.'s programs were €128 million as of 31 December 2016. At the same time, the amount of liquidassets at the holding Aegon N.V. (i.e., cash and equivalents) were €879 million at year-end 2016 (excluding collateral received fromcounterparties and liquidity managed on behalf of affiliated investment funds) and the group held a total balance of €1.5 billion inexcess cash as of year-end 2016 in the centrally managed holding companies, with net dividends upstreamed from the units (€1.1billion) and senior debt issuance (€0.5 billion) covering holding expenses (€0.3 billion),capital returns to shareholders (€0.9 billion), andcapital injections to units (€0.2 billion). Aegon is targeting to maintain a cash buffer at the holding between €1.0 and €1.5 billion. Thiscash position reduced to €0.9 billion as of 30 September 2017 following a capital injection in the Dutch operations. Nonetheless, thiscash position will gradually improve as Aegon will benefit from the capital surplus generated by the divestment of US portfolios andwill receive dividends from all its main operations.

4 22 December 2017 AEGON N.V.: Update following outlook changed to stable

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Aegon's liquidity profile has been enhanced in recent years by the continued issue of perpetual capital securities to refinance maturingand callable debt. In Moody's view, these issues have reduced the level of refinancing risk in the Aegon group. On aggregate, around €1billion of debts are maturing between 2018 and 2020.

In addition, Aegon maintains a number of banking relationships in the form of bilateral and syndicated committed credit facilities. Themain arrangements include a €2 billion syndicated revolving credit facility maturing in 2019 and a $2.6 billion LOC facility maturing in2021. No drawdowns had been made on this syndicated revolving credit facility as of 31 December 2016.

Ratings

Exhibit 2Category Moody's RatingAEGON N.V.

Rating Outlook STASenior Unsecured A3Senior Unsecured MTN (P)A3Commercial Paper P-2LT Issuer Rating A3Subordinate Baa1 (hyb)Junior Subordinate Baa1 (hyb)

AEGON FUNDING COMPANY LLC

Rating Outlook STABACKED Senior Unsecured A3BACKED Commercial Paper P-2

COMMONWEALTH GENERAL CORPORATION

Rating Outlook STABACKED Senior Unsecured A3

Source: Moody's Investors Service

5 22 December 2017 AEGON N.V.: Update following outlook changed to stable

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REPORT NUMBER 1099964

6 22 December 2017 AEGON N.V.: Update following outlook changed to stable

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CLIENT SERVICES

Americas 1-212-553-1653

Asia Pacific 852-3551-3077

Japan 81-3-5408-4100

EMEA 44-20-7772-5454

7 22 December 2017 AEGON N.V.: Update following outlook changed to stable