50 Solvency II  In Europe, new rules covering the insurance industry  have been proposed and are currently being debated.  The Solvency II frameworks will replace and enhance  the Solvency I framework, the currently applicable EU  rules on capital for insurers. Solvency II is expected to  come into force on January 1, 2013.  In broad terms, Solvency II will apply to insurance and  reinsurance companies in Europe and to groups with  European insurance and/or reinsurance businesses  and will redefine the rules under which insurers  calculate their capital. The amount of capital an  insurance company will be required to hold under the  rules of the Solvency II framework will be determined  in a more risk-sensitive way, and more by the type of  business it writes and the way it manages its risks  than under the current rules. In addition to a risk-based approach, the proposed  framework for Solvency II is intended to create a more  harmonized European framework of prudential  regulation of insurers and reinsurers. The main aims  of Solvency II include: ■ The introduction of more sophisticated,  comprehensive and risk-sensitive solvency  requirements, enabling a better coverage of the  risks run by a particular insurer. ■ Improved transparency through more extensive  disclosure of information (among other measures),  thus providing rating agencies, policyholders,  brokers, and investors a better understanding of  how individual insurance companies are run, the  risks they take and how they allocate their capital;  the aim is to allow market discipline to help ensure  the soundness and stability of insurers. ■ A uniform and enhanced level of policyholder  protection; the Solvency II framework should,  reduce the chance of any particular insurer failing. ■ Efficient allocation of capital across the industry,  resulting in reduced costs for consumers. ■ Increased competition between insurance  companies, leading to improved product  development and pricing. AEGON has been managing its business using  economic value metrics for a number of years, in  addition to using more traditional measures such as  embedded value and IFRS earnings. AEGON is  working hard with European regulators and  supervisors to see that Solvency II is implemented in  a way that will ensure the company’s ability to remain  competitive. A significant amount of AEGON’s  business is located in the United States, where the  company competes against US domestic companies  that are not subject to Solvency II requirements.  AEGON is coordinating its efforts with key European  decision makers across the industry to ensure the  best outcome for its businesses.  To support the introduction of Solvency II, AEGON  has put in place a global project team tasked with  implementing the framework across its businesses.  The project team includes a range of disciplines,  including Finance, Risk Management and Actuarial.  The team is presently setting the direction,  methodology and strategy for the company’s  implementation of Solvency II. It also supports teams  in each of the strategic business units that are  working on the company’s implementation of  Solvency II. 