109 ANNUAL REPORT 2010 SHARPENING OUR FOCUS At December 31, 2010, other assumptions applicable to the  reversion to the mean assumptions for variable products,  primarily variable annuities, were as follows in the United States:  gross long-term equity growth rate of 9% (2009: 9%);  gross short- and long-term fixed security growth rate of 6%  (2009: 6%); and the gross short- and long-term growth rate  for money market funds of 3.5% (2009: 3.5%).  Assumptions on future expenses are based on the current level  of expenses, adjusted for expected expense inflation if  appropriate.  Surrender rates depend on product features, policy duration  and external circumstances such as the interest rate  environment and competitor and policyholder behavior.  Credible own experience, as well as industry published data,  are used in establishing assumptions. Lapse experience is  correlated to mortality and morbidity levels, as higher or lower  levels of surrenders may indicate future claims will be higher  or lower than anticipated. Such correlations are accounted for  in the mortality and morbidity assumptions based on the  emerging analysis of experience.  derivatives determined using valuation techniques Investment contracts issued by AEGON are either carried at fair  value (if they are designated as financial liabilities at fair value  through profit or loss) or amortized cost (with fair value being  disclosed in the notes to the consolidated financial statements).  These contracts are not quoted in active markets and their fair  values are determined by using valuation techniques, such as  discounted cash flow methods and stochastic modeling or in  relation to the unit price of the underlying assets. All models  are validated and calibrated. A variety of factors are considered,  including time value, volatility, policyholder behavior, servicing  costs and fair values of similar instruments. Credit spread is  considered in measuring the fair value of derivatives (including  derivatives embedded in insurance contracts), borrowings and  other liabilities. Fair value of financial instruments, borrowings and  Fair value of financial assets and liabilities The estimated fair values of AEGON’s financial assets and  liabilities are presented in the respective notes to the balance  sheet together with their carrying values. The estimated fair  values correspond with the amounts at which the financial  instruments at AEGON’s best estimate could have been traded  at the balance sheet date between knowledgeable, willing  parties in arm’s length transactions. When available, AEGON  Shares uses quoted market prices in active markets to determine the  fair value of investments and derivatives. In the absence of an  active market, the fair value of investments in financial assets  is estimated by using other market observable data such as  corroborated external quotes and present value or other  valuation techniques. An active market is one in which  transactions are taking place regularly on an arm’s length basis.  Although not necessarily determinative, indicators that a  market is inactive are lower transaction volumes, reduced  transaction sizes and, in some cases, no observable trading  activity for short periods. A fair value measurement assumes  that an asset or liability is exchanged in an orderly transaction  between market participants, and accordingly, fair value is not  determined based upon a forced liquidation or distressed sale.  Valuation techniques are used when AEGON determines the  market is inactive or quoted market prices are not available for  the asset or liability at the measurement date. However, the fair  value measurement objective remains the same, that is, to  arrive at the price at which an orderly transaction would occur  between market participants at the measurement date.  Therefore, unobservable inputs reflect AEGON’s own  assumptions about the assumptions that market participants  would use in pricing the asset or liability (including assumptions  about risk). These inputs are developed based on the best  information available.  AEGON employs an oversight structure over valuation of  financial instruments that includes appropriate segregation  of duties. Senior management, independent of the investing  functions, is responsible for the oversight of control and  valuation policies and for reporting the results of these policies.  For fair values determined by reference to external quotation or  evidenced pricing parameters, independent price determination  or validation is utilized to corroborate those inputs. Further  details of the validation processes are set out below.  Fair values for unquoted shares are estimated using  observations of the price / earnings or price / cash flow ratios  of quoted companies considered comparable to the companies  being valued. Valuations are adjusted to account for company- specific issues and the lack of liquidity inherent in an unquoted  investment. Illiquidity adjustments are generally based on  available market evidence. In addition, a variety of other factors  are reviewed by management, including, but not limited to,  current operating performance, changes in market outlook and  the third-party financing environment.