51 Most of the liabilities of Aegon the Netherlands, insurance  or otherwise, are nominal and long-term. Based on their  characteristics, a long-term liability-driven benchmark is derived.  Scenarios and optimization analyses are conducted for fixed  income, equities and real estate asset classes. The result is an  asset allocation and hedges representing the desired risk-return  profile. Constraints, such as the minimum return on equity and  the minimum desired solvency ratio, are also taken into account.  Most of Aegon the Netherlands’ investments are managed by  Aegon Asset Management. Risk-based restrictions are in place to  monitor and control actual portfolio allocations against strategic  portfolio allocations. An internal framework limits investment  exposure to any single counterparty. Solvency II will likely be effective from January 1, 2016. In  anticipation of Solvency II, the Dutch Ministry of Finance and  DNB have taken measures for a more risk-based and forward- looking supervision of insurance companies. Before Solvency  II is in force, the most important change in the supervision of  insurance companies will be the introduction of the Theoretical  Solvency Criteria (TSC) for medium and large life insurers. The  TSC is effective from January 1, 2014. The TSC requires that  several important “Solvency II” scenarios are calculated for an  insurer, thus giving information about the sensitivity of these  scenarios on the available solvency under the current regime in  the Financial Supervision Act. The TSC is not comparable with  the Solvency Capital Requirement (SCR) under Solvency I, as it  is not a capital requirement. It will be used by DNB in the ladder  of intervention to prevent breaches of solvency requirement as  defined by the Financial Supervision Act. General insurance companies are required to maintain  shareholder equity of equal to or greater than 18% of gross  written premiums a year, or 23% of the three-year average of  gross claims. Aegon the Netherlands Risk & Capital Committee, which meets  every two months, determines and monitors the balance sheet  and profit and loss. The focus of these meetings is, among  other activities, to ensure an optimal strategic asset allocation,  to decide on interest rate hedging strategies to reduce interest  rate risks, to manage and possibly hedge actuarial risks, and to  decide on the need for securitizations of residential mortgage  portfolios to improve the liquidity and funding position of Aegon  the Netherlands. Under Solvency I, life insurance companies are required to  maintain certain levels of shareholders’ equity in accordance with  EU directives. Currently this level is approximately 4% of general  account technical provision or, if no interest guarantees are  provided, approximately 1% of technical provisions with  investments for the account of policyholders and an additional  0.3% charge for value at risk. DNB may request additional information it considers necessary  and may conduct an audit at any time. DNB may also make  recommendations for improvements and publish these  recommendations if the insurance company does not follow  them. Finally, DNB may appoint a trustee for an insurance  company or, ultimately, withdraw the insurance company’s  license. reports on at least an annual basis. These reports, primarily  designed to enable DNB to monitor the solvency of the insurance  company, include a (consolidated) balance sheet, a (consolidated)  income statement, extensive actuarial information, and detailed  information on the investments of the insurance company. DNB’s  regulatory reporting is based on a single entity focus and is  designed to highlight risk assessment and risk management. DNB also supervises pension funds, including premium pension  institutions (PPIs), and investment companies. PPIs are required  to maintain shareholders’ equity of at least EUR 0.2 million.  Aegon Bank N.V. is under DNB supervision and required to file  monthly regulatory reports and an audited Annual Report.  Credit institutions are required to maintain solvency and liquidity  ratios in line with the requirements of the “Wet op het financieel  toezicht”. The "Wet op het financieel toezicht" incorporates the  requirements of Directive 2006/48/EC, Directive 2006/49/ EC (together referred to as CRD II), and Directive 2010/76/EU  (CRD III). These directives are the European translation of the  Basel accord for prudential supervision of credit institutions and  investment firms. Based on these rules, credit institutions in the  Netherlands are required to maintain a minimum total capital  ratio (BIS ratio), currently 8%, pursuant to guidance issued by  DNB. The level of capital is subject to certain requirements and is  reviewed against its on- and off-balance sheet assets, with these  assets being weighted according to their risk level. The Basel III  accord, the new regulatory framework for the banking sector, has  been finalized and is currently being translated into European  legislation through the CRD IV framework. The CRD IV framework  was implemented in the Netherlands in the Financial Supervision  Act as of January 1, 2014. Asset liability management Financial supervision of credit institutions  The following insurance entities of Aegon the Netherlands are  subject to the supervision of DNB: ■ Aegon Levensverzekering N.V. ■ Aegon Schadeverzekering N.V. ■ Aegon Spaarkas N.V. ■ Optas Pensioenen N.V.