50 Business overview  Results of operations – the Netherlands Regulation and supervision Competition Financial supervision of insurance companies 1 Source: DNB/CVS Reports 2012. 2 Source: Kadaster (ytd October 2013). 3 Source: DNB Statistisch Bulletin. Aegon the Netherlands faces strong competition in all of its  markets from insurers, banks and investment management  companies. The main competitors are ING Group, Eureko  (Achmea), ASR, SNS Reaal (including Zwitserleven) and  Delta Lloyd/OHRA. This market is, however, subject to quickly  changing market dynamics, including the growing use of online  channels and a slowly changing pensions landscape (PPI). for transparent and cost efficient pension products. As a result,  significant economies of scale will be required to service this  market effectively and the number of providers is expected to  shrink within a few years. Aegon the Netherlands has identified  this market as an opportunity for growth and plans to invest in  building a leadership position. Aegon the Netherlands has been a key player in the total life  market for many years and is ranked second based on gross  premium income in 2012, after ING. The life insurance market  in the Netherlands comprises pensions and life insurance. The  top six companies by gross premium income accounted for  approximately 90% of the total premium income in 2012 1 . Based  on gross premium income in 2012 1 , Aegon the Netherlands  ranks first in the pension market and sixth in the individual life  insurance market. Aegon the Netherlands is one of the smaller  players in the non-life market. Aegon the Netherlands’ non-life  market share is around 4% 1 , measured in premium income.  Two bodies are responsible for the supervision of financial  institutions in the Netherlands: DNB is responsible for safeguarding financial stability, and  supervising financial institutions and the financial sector.  Regulations for the supervision of financial institutions are  referred to as the “Wet op het financieel toezicht” (or Financial  Supervision Act). This law, which applies equally to banking and  insurance operations, introduced greater consistency to  requirements and supervision. In the mortgage loans market, Aegon the Netherlands’ market  share is growing and the company now holds a market share  of approximately 9,1% based on new sales 2 . Rabobank, ING  and ABN AMRO are the largest mortgage loan providers in this  market.  The AFM supervises the conduct of, and the provision of  information by, all parties in the financial markets in the  Netherlands. The objectives of the AFM are to promote an  orderly and transparent market process within the financial  markets, integrity of relations between market players, and  consumer protection. Aegon the Netherlands holds approximately 1.3% 3  of Dutch  households savings and is small in comparison to banks  Rabobank, ING, ABN AMRO and SNS Bank. The European Union Insurance Directives referred to collectively  as Solvency I are incorporated into Dutch law. The Directives  are based on the ‘home country control’ principle: an insurance  company with a license issued by the regulatory authorities in its  home country is allowed to conduct business in any country of  the European Union, either directly or through a branch. Separate  licenses are required for each branch of the insurance company  where it conducts business. The regulatory body that issued the  license (DNB in the Netherlands) is responsible for monitoring  the solvency of the insurer. In recent years, several changes in regulations have limited  opportunities in the Dutch insurance market, notably in the life  insurance market where the tax deductibility of certain products  has been reduced, such as for company savings plans.  Furthermore, low economic growth and financial market volatility  has made customers more reluctant to commit to long-term  contracts. These changes have increased competition, resulting in  a greater focus on competitive pricing, improved customer service  and retention, and product innovation. Since 2011, Aegon the  Netherlands has accelerated its response through organizational  restructuring accompanied by significant cost savings. In the pension market, funds face pressure on their coverage  ratios, and increased regulatory and governance requirements.  In response, pension funds are seeking to reduce risk exposure  by insuring the whole or part of a fund. This is an opportunity for  pension providers. The PPI market is to grow significantly due to the shift from  defined benefit plans to defined contribution plans, and demand  Under Dutch law, a company is not permitted to conduct both  life insurance and non-life insurance business within one legal  entity, nor is a company allowed to carry out both insurance and  banking business within the same legal entity. Every life and non-life insurance company licensed by, and falling  under the supervision of, DNB must file audited regulatory  Annual Report 2013 ■ De Nederlandsche Bank (the Dutch Central Bank) or DNB; ■ Autoriteit Financiële Markten (the Dutch Authority for the  Financial Markets) or the AFM.