41 the other tax law changes impact the purchase of life insurance  and annuity products, as well as the participation of individuals in  qualified retirement savings plans, is as yet uncertain.  Aegon USA companies administer and provide both asset  management services and products used to fund defined  contribution plans, individual retirement accounts, 529 plans  and other savings vehicles. Changes to defined benefit plans  by sponsors in reaction to the financial economic environment  and the enactment of funding relief provisions may impact  the services Aegon USA companies provide to these plans. In  addition, legislative and regulatory proposals are considered  from time to time which relate to the disclosure and nature  of fees paid by defined contribution plan sponsors and their  participants. Other proposals that may be considered relate  to the nature of education, advice or other services Aegon  USA companies provide to defined contribution plan sponsors  and their participants. Finally, as noted above, proposals to  change the structure, or remove or decrease the US federal tax  preferences of pension and annuity products, either as part of  tax reform or pursuant to deficit reduction, would directly impact  the cost and competitiveness of pension and annuity products  and pension services sold to ensure Americans’ financial and  retirement security. Aegon USA companies also provide plans  used to administer benefits distributed upon termination of  defined benefit plans. Transamerica Life Canada (TLC) and Canadian Premier Life  (CPL) are organized and regulated pursuant to the federal  Insurance Companies Act (Canada). The primary regulator is  the Office of the Superintendent of Financial Institutions. In  addition, TLC and CPL are subject to the laws, regulations and  insurance commissions of each of Canada’s ten provinces and  three territories in which it carries on business. The laws of  these jurisdictions generally establish supervisory agencies with  broad administrative powers that include granting and revoking  licenses to conduct business, regulating trade practices, licensing  agents, establishing reserve requirements, determining permitted  investments, and establishing minimum levels of capital. TLC’s  ability to continue to conduct its insurance business depends  upon the maintenance of its licenses at both the federal  and provincial/territorial levels. It is also governed by policy  statements and guidelines established by the Canadian Life &  Health Insurance Association. Aegon Canada The mutual fund and investment management operations of  Aegon Canada are governed by the Securities Acts of each  province and territory. Any proposals that seek to either restrict fees and services to,  or investment advice in, employer plans, or change the manner  in which Aegon USA companies may charge for such services in  a way that is inconsistent with business practices, will adversely  impact the Aegon USA companies that provide administration  and investment services and products to employment based plans. The Aegon USA insurance companies are primarily subject  to regulation under the laws of the states in which they are  domiciled. Each state’s laws prescribe the nature, quality, and  percentage of various types of investments that may be made  by the companies. Such laws generally permit investments in  government bonds, corporate debt, preferred and common stock,  real estate, and mortgage loans. Limits are generally placed on  other classes of investments. The Patient Protection and Affordable Care Act does not directly  impact the business of life insurance. It is uncertain whether any  of the new regulations to implement this law, anticipated over  the next several years, will impact the nature or distribution of  any of Aegon USA’s supplemental products.  The American Taxpayer Relief Act (ATRA), enacted in January  2013, made permanent, with some modifications, many of  the tax cuts enacted in 2001 and 2003 during the Bush  administration. The ATRA provisions that are most significant  for the Aegon USA companies’ business include those: (a) on  the estate tax (setting the unified estate and gift tax exemption  threshold at USD 5 million (adjusted for inflation after 2011),  and the maximum tax rate at 40%); (b) on Roth conversions  (permitting participants in qualified retirement savings plans  to convert otherwise non-distributable 401(k) plan balances to  a Roth account if the plan so provides); and (c) increasing the  top individual income tax rates to 39.6% and capital gains rates  to 20%. Other provisions of ATRA, such as the phase-out of  personal exemptions and limitations on itemized deductions, as  well as the new 3.8% tax on net investment income (enacted by  the Patient Protection and Affordable Care Act and first effective  in 2013), will further increase the marginal income tax rate of  certain high income households. Making the estate tax permanent  will facilitate estate planning for Americans. The extent to which  The Aegon USA companies manage their asset liability matching  through the work of several committees. These committees  review strategies, define risk measures, define and review asset  liability management studies, examine risk-hedging techniques,  including the use of derivatives, and analyze the potential use of  new asset classes. Cash flow testing analysis is performed using  The key investment strategy for traditional insurance-linked  portfolios is asset liability management, whereby predominately  high-quality investment assets are matched in an optimal  way to the corresponding insurance liability. This strategy  takes into account currency, yield and maturity characteristics.  Asset diversification and quality considerations are also taken  into account, along with considerations of the policyholders’  guaranteed or reasonably expected excess interest sharing.  Investment-grade fixed income securities are the main vehicle  for asset liability management, and Aegon USA’s investment  personnel are highly skilled and experienced in these investments. Asset liability management