REINSURANCE AMOUNT CEDED AEGON GROUP ANNUAL REPORT 2003 101 This provision includes variable annuities, variable universal life, unit-linked insurance contracts, separate investment funds group life, insurance-linked savings deposits and the liabilities of AEGON UK with-profit funds (EUR 23,180 million). The amount of EUR 14,141 million debited to the income statement is the total of premium receipt and benefits of EUR 1,283 million and the investment income for account of policyholders amounting to EUR 12,858 million. The provisions are generally shown at book value of the related investments.  The provisions include an amount of EUR 1,465 million (2002: EUR 1,239 million) for pension provisions regarding own employees, primarily in the Netherlands and the United Kingdom. As some products have a minimum guaranteed benefit amount, a provision for this benefit is accumulated during the term of the related portfolio and has been included in the technical provisions life insurance. Reinsurance premiums, commissions and claims settlements, as well as technical provisions relating to reinsurance, are accounted for in the same way as the original contracts for which the reinsurance was concluded. Reinsurers’ share in technical provisions resulting from reinsurance agreements are deducted from the liabilities relating to the original insurance contracts. At December 31, 2003, there were no reinsurance receivables associated with a single reinsurer with a carrying value in excess of 5% of total assets. AEGON insurance subsidiaries cede premiums to other insurers under various agreements that cover individual risks, group risks or defined blocks of business, on a coinsurance, yearly renewable term, quote share, excess or catastrophe excess basis. These reinsurance agreements spread the risk and reduce the effect of losses. The amount of each risk retained depends on its evaluation of the specific risk, subject, in certain circumstances, to maximum limits based on characteristics of coverages. Under the terms of the reinsurance agreements, the reinsurer agrees to reimburse the ceded amount in the event the claim is paid. However, AEGON insurance subsidiaries remain liable to their policyholders with respect to ceded insurance if any reinsurer fails to meet the obligations assumed by it. To limit this risk, reinsurance treaties are entered into with only well capitalized, highly rated reinsurers. Where deemed appropriate additional protection is arranged through letters of credit or trust arrangements. AEGON UK also uses reinsurance to offer pension contract holders access to a number of external fund management organizations. Under these contracts, which relate to unit-linked business, the unit liability is reinsured to the third party organization. The credit risk relating to the investments is borne by the pension contract holders while AEGON UK retains ultimate credit risk relating to the external fund managers. The following amounts on account of reinsurance ceded have been deducted from the technical provisions: 2003 2002 Life insurance 2,075 2,193 Unearned premiums and unexpired risks 318 322 Claims outstanding 421 475 2,814 2,990 Exchange Increase rate Balance at debited to fluctuations Balance at January 1, the income and other December 2003 statement changes 31, 2003 Provisions gross 95,904 102,176 Ceded to reinsurers (1,176) (2,087) PROVISIONS FOR INSURANCE OF WHICH THE POLICYHOLDER BEARS THE INVESTMENT RISK AND FOR INSURANCE-LINKED SAVINGS DEPOSITS 94,728 14,141 (8,780) 100,089 15 TECHNICAL PROVISIONS WITH INVESTMENTS FOR ACCOUNT OF POLICYHOLDERS