46 Business overview  Results of operations – the Netherlands Results 2012 the Netherlands Net income Production Underlying earnings before tax Commissions and expenses Net income from Aegon’s businesses in the Netherlands  amounted to EUR 267 million and included a charge of  EUR 265 million before tax related to the acceleration of product  improvements for unit-linked insurance products. Realized gains  on investments totaled EUR 138 million for the year and were  mainly the result of asset liability management related trading  activity and selective de-risking. Results on fair value items  amounted to a gain of EUR 123 million and impairments  amounted to EUR 29 million. New life sales decreased by 3% in 2012 to EUR 246 million. The  decline in Individual life sales to EUR 46 million, primarily driven  by a shrinking Dutch life insurance market, more than offset the  16% increase in pension sales. Production of mortgages in 2012  amounted to EUR 2.7 billion down from EUR 3.3 billion in 2011. Higher underlying earnings before tax in the Netherlands were driven by improved  Life & Savings earnings and lower operating expenses following implemented cost reduction initiatives in 2011. Aegon’s business in the Netherlands realized  EUR 89 million of the targeted EUR 100 million reduction in operating expenses.  Net income was impacted by a one-off charge of EUR 265 million related to the  acceleration of product improvement for unit-linked insurance products. Underlying earnings before tax from Aegon’s operations in the  Netherlands increased 9% in 2012 to EUR 325 million as higher  earnings in Life & Savings more than offset lower earnings in  Pension and Non-life. Recurring charges for Corporate Center  expenses amounted to EUR 16 million. Premium production for accident & health amounted to EUR 21 million, down from EUR 27 million in 2011. Sales in  income insurance products were negatively impacted by strong  competition and price increases to maintain margins. General  insurance production amounted to EUR 30 million, up 11% for  the year, resulting from successful new distribution initiatives. Gross deposits declined to EUR 1,484 million, driven by strong  competition on the Dutch savings market and a reduction of the  rate offered on savings accounts to protect margins. Commissions and expenses decreased by 8% in 2012 compared  to 2011 driven by lower operating expenses. Operating expenses  decreased by 9%, to EUR 746 million, as realized cost savings  and the non-recurrence of restructuring charges offset  investments in new distribution capabilities and recurring charges  for Corporate Center expenses. Aegon was on track to reduce operating expenses by EUR 100  million in comparison to the cost base for 2010, of which the  majority was in 2012. Over the years, Aegon has implemented  cost savings of EUR 89 million. ■ Underlying earnings before tax from Aegon’s Life & Savings  operations in the Netherlands increased to EUR 267 million,  up 44% compared to 2011. This increase was driven by cost  savings, a higher contribution from Aegon’s growing  mortgage portfolio on lower funding costs, the non- recurrence of certain expenses and a benefit in the fourth  quarter resulting from updated mortality tables of  EUR 24 million. ■ Underlying earnings before tax from the Pension business  declined to EUR 67 million as the benefit of cost savings and  the wind up of several contracts were more than offset by  lower interest income, the non-recurrence of a employee  benefit release in 2011 and a charge in 2012 of  EUR 17 million resulting from updated mortality tables.  ■ Non-life recorded an underlying loss before tax of  EUR 27 million in 2012 as a result of adverse claim  experience on disability and general insurance products.  Losses on these products led to the implementation of  actions to improve future results with disability insurance  products already showing improvements in 2012. ■ In 2012, the distribution businesses recorded underlying  earnings before tax of EUR 16 million, an improvement  compared to 2011 due to cost savings and lower amortization  of value of business acquired following an impairment  in 2011. Annual Report 2013