Business overview  Results of operations – the Netherlands 52 In 2012, Aegon the Netherlands partially offset the risk of future  longevity increases related to a part of its insurance liabilities  by buying a longevity index derivative from Deutsche Bank. This  will pay out if in twenty years the mortality rates have decreased  more than a predetermined percentage compared to the base  scenario at the moment of signing the contract. Either of  Aegon the Netherlands or Deutsche Bank may activate an early  termination clause to terminate the contract after ten years.  The pay-out is maximized at a predetermined percentage which  is higher than compared to the base scenario. This transaction  was the first transaction in Continental Europe to be based on  population data and it is the first longevity swap to be targeted  directly at capital markets.  Aegon the Netherlands implemented a second longevity hedge  in 2013, in line with its strategy of reducing longevity risk from  the balance sheet. This covers underlying longevity reserves in  the Netherlands of EUR 1.4 billion. It retains some risk around  the best estimate of the insurance liabilities of Aegon the  Netherlands, while offering protection for significant future  mortality improvements, thus lowering the required capital for  solvency II purposes. For non-life, Aegon the Netherlands reinsures its property,  marine and motor third-party liability business only. For  property insurance, an "excess of loss" contract is in place with  a retention level of EUR 3 million for each separate risk and  EUR 20 million for each windstorm event. For motor third party  liability insurance, Aegon the Netherlands has reinsurance in  place with a retention level of EUR 2.5 million for each event.  For marine insurance there is also an “excess of loss” contract in  place with a retention level of EUR 2 million for each event. Prior to 2011, Aegon the Netherlands reinsured its life exposure  through a profit-sharing contract between its subsidiary Aegon  Levensverzekering N.V. and a reinsurer. As of January 1, 2012,  Aegon the Netherlands has ended this reinsurance contract and  therefore retains the full mortality and disability risk. Like other Aegon companies around the world, Aegon the  Netherlands reinsures part of its insurance exposure with third- party reinsurers under traditional indemnity, and "excess of loss"  contracts. Reinsurance helps Aegon manage, mitigate and diversify  its insurance risks and limit the maximum loss it may incur. Reinsurance ceded Annual Report 2013