Ernst & Young, AEGON’s independent auditor, attended the discussion regarding the results for 2002. As usual, special meetings of the Supervisory Board were dedicated to AEGON’s budget for 2004, to the business strategy and to a management overview, in order to identify top managers within AEGON worldwide. The all-day meeting regarding AEGON’s business strategy was preceded and prepared by the Strategy Committee. Please refer to page 1 for AEGON’s strategy. Among the many topics discussed in our meetings in 2003 were embedded value and fair value, dividend policy, capital management and risk management. We discussed and supported the Executive Board’s intention to disclose the embedded value, after which the 2002 Embedded Value Report was published on August 7, 2003. Following the adoption of the Sarbanes-Oxley Act 2002 (SOX) by the United States Congress, risk management has become an even more important issue for AEGON and after an extensive presentation on this subject we discussed the measures that AEGON has taken on risk management. Attention was also devoted to joint ventures and divestitures. We approved AEGON’s participation in the management buy-out of Unirobe, a group of insurance intermediaries. We also approved the start of a greenfield insurance operation in Slovakia as well as the partnership between AEGON and Caja de Ahorros del Mediterráneo, one  of the largest savings banks in Spain. We also approved the Executive Board’s decision to divest the commercial finance and real estate tax services’ businesses of Transamerica Finance Corporation. We discussed the consequences of SOX for AEGON and  we amended in the light thereof the Rules and Regulations  for the Supervisory Board, the Audit Committee Charter and the Terms of Reference of the Nominating Committee, the Compensation Committee and the Strategy Committee. We also adopted, in line with the SOX requirements, a ‘Pre- approval Policy’ for the services of Ernst & Young. All these rules are available on AEGON’s corporate website: www.aegon.com. The Supervisory Board relies upon four committees to  prepare specific issues for decision-making by the Board.  Each committee has four members, all drawn from the Supervisory Board. The Audit Committee, established in 1983, has Mr. Eustace as chairman and Mrs. Rembe and Messrs. De Ruiter and Stevens as members. During the year, the Committee adopted a revised Audit Committee Charter to better reflect the Committee’s purpose and responsibilities in the light of SOX and other developments in corporate governance. In accordance with the revised Charter, the Committee has the authority to: recommend the appointment or replacement of The Compensation Committee, active since 1989, with Mr. De Wit as chairman and Messrs. De Ruiter, Stevens and  Van Wijk as members, held five meetings, attended also by  the Executive Board’s chairman. In the course of 2003, Mr. Tabaksblat stepped down as chairman, in compliance with the Dutch Corporate Governance Code. Discussions concentrated on the remuneration of the Executive Board members and revisions to the Remuneration Policy. The Committee also discussed the granting of stock appreciation rights (SARs) to AEGON employees worldwide in March 2003 and advised the Supervisory Board to approve a SAR Program The Committee endorsed AEGON’s decision to implement  an internal audit function at group level and to enhance the group compliance and risk management function. The Committee notes with satisfaction the appointment in 2003 of a new Group Compliance Officer, a Group Risk Officer and a Group Internal Auditor. It also discussed the consequences of SOX, especially the independence criteria, for AEGON, the Supervisory Board and its committees and for the independent auditor. Two meetings, in March and September, were devoted to AEGON’s filings with the Security and Exchange Commission (SEC), the annual report (Form 20-F) and the first six months results (Form 6-K). The Committee also discussed the SEC’s review following AEGON’s filings for a shelf registration.  The Committee held six meetings during 2003 attended by the Executive Board members and representatives from  Ernst & Young. The discussions were dominated by its permanent agenda: the quarterly results, annual accounts and the auditing of these by Ernst & Young, the actuarial analysis, AEGON’s Capital Plan and the report on currency exposure, accounting principles, internal control systems, the Risk Management Report as well as Ernst & Young’s independence and fees. The Committee continued its practice in 2003 of meeting with the internal and independent auditors from AEGON’s key operating countries. The Committee subsequently reported to the Supervisory Board on its findings and advised the Supervisory Board to recommend to the shareholders that Ernst & Young be reappointed as independent auditor. the independent auditor, pre-approve all services provided by the auditor and retain independent advisors, as it deems appropriate. The Charter also states that the company shall provide appropriate funding to the Audit Committee for the payment of compensation to the independent auditors and any advisor employed by the Audit Committee and that the Committee shall establish procedures for the receipt and retention of complaints relating to accounting and internal control issues. The Audit Committee is comprised of independent members of the Supervisory Board who are experienced and competent in financial accounting matters.  The chairman of the Committee, Mr. Eustace, is a financial expert, in accordance with the requirements of SOX. SUPERVISORY BOARD COMMITTEES AEGON GROUP ANNUAL REPORT 2003 10 REPORT OF THE SUPERVISORY BOARD