14 Long-term industry trends The financial crisis that began in 2008 brought a shift  in financial market and economic conditions. AEGON  initially focused on short-term measures designed to  combat the effects of the financial crisis. The company  transformed its approach, strengthening its balance  sheet, lowering costs and significantly improving its  overall risk profile. These measures enabled AEGON to  emerge from the financial crisis in a sound financial  position.  However, the insurance and pensions industry is  continuing to go through a period of significant change.  AEGON’s challenge is to understand the nature of this  change, and to adapt to it. There are several factors: ■ In many countries, people are living longer, healthier  lives. People are spending longer in retirement than  they used to, and there is a growing demand for life  insurance, private pensions and long-term investment  products. ■ Working populations in many countries are shrinking.  This means that there are fewer economically active  people to fund traditional pay-as-you-go state  pensions. As a result, governments, particularly in  Western Europe, are under pressure to reform  pensions systems. At the same time, individuals are  increasingly relying on private sector providers to help  them finance their retirement. ■ Emerging markets are becoming more important.  Economic growth and political reform have opened up  new markets in Central & Eastern Europe, Asia and  Latin America. In these markets, a new and ambitious  middle class is emerging, and with it a rise in demand  for life insurance, pensions and asset management.  The potential of these markets is large. China and  India account for 40% of the world’s population, but  currently only 7% of the global life insurance market. ■ Distribution patterns are changing due to new  technology. Customers are increasingly using the  internet and social media to locate and purchase  financial services. In some countries this has led to  the emergence of new competitors using online  ■ Terms on the remaining EUR 1.5 billion remain  unchanged, though the Ministry agreed to waive  rights to any accrued coupons.  ■ Terms were improved on an amount of EUR 500 million  repurchased in August 2010.  In December 2009, AEGON repurchased an initial  EUR 1 billion of convertible core capital securities  followed by another repurchase of EUR 500 million in  August 2010. AEGON is committed to repurchasing the  remaining amount in full by the end of June 2011, market  conditions permitting. As part of the European  Commission review process, the Dutch Ministry of Finance  agreed to amend the terms and conditions of the  convertible core capital securities provided to AEGON: The net effect of these measures was to improve the  total premium payable on the remaining EUR 2 billion  from 50% to approximately 40%. In December 2008, AEGON secured EUR 3 billion in  additional core capital from the Dutch State through  the issuance of convertible core capital securities to  Vereniging AEGON. This support was part of a broader  program of support for banks and insurance companies  in the Netherlands during the recent financial crisis. distribution models, or non-traditional suppliers such  as supermarkets and retailers. Established providers  are under increasing pressure to reduce costs and  adapt their systems of distribution. ■ Customer behavior is also changing. Customers are  more aware of financial risk and they want clear,  simpler products with greater guarantees. At the  same time, public trust in the financial sector has  diminished. In response, governments are introducing  new regulations to protect consumers. In 2010,  the United States, the United Kingdom and  the Netherlands all brought forward new fi nancial  sector legislation. The industry also faces the  challenge of further reforms to fi nancial regulations  and capital adequacy requirements. Repaying the Dutch State