REVIEW OF OPERATIONS INCOME BEFORE TAX  in EUR million 0 200 400 600 800 1,000 Life Accident & health General Banking 01 02 03 INCOME BEFORE TAX  LIFE INSURANCE  in EUR million 0 200 400 600 800 1,000 Traditional Account policyholders Fee business 01 02 03 THE NETHERLANDS INCOME BY  2003 2002 PRODUCT SEGMENT in in million million EUR EUR % Traditional life 548 552 (1) Life for account of policyholders 135 49 176 Fee business 13 0 — LIFE INSURANCE 696 601 16 Accident and health insurance 44 26 69 General insurance 11 24 (54) TOTAL INSURANCE ACTIVITIES 751 651 15 Banking activities 20 8 150 INCOME BEFORE TAX 771 659 17 Corporation tax (179) (136) 32 NET INCOME 592 523 13 INCOME BEFORE TAX REVENUES NET INCOME Income before tax from accident and health insurance increased by 69% to EUR 44 million. The favorable claims experience in the ‘absence due to illness’ portfolio had an effect of EUR 16 million and the positive run-off result of a reinsurance contract had a positive effect of EUR 9 million. Income was negatively affected by an amount of EUR 5 million, due to a change in the allocation of the investment portfolio and for an amount of EUR 4 million, due to higher pension expenses. General insurance income before tax was 54% below the 2002 level. Additional provisions were set up in the legal liability motor branch and the general liability branche for an amount of EUR 9 million and EUR 10 million respectively. In addition to this, EUR 5 million lower interest income and  EUR 2 million higher expenses impacted the results negatively. These effects were partly offset by positive run-off results of a reinsurance contract (EUR 3 million) and the increase of technical results in the fire branch (EUR 11 million). Income before tax from banking activities increased  EUR 12 million to EUR 20 million, mainly as a result of lower provisions for credit risks (EUR 20 million) and higher expenses (EUR 7 million). Income before tax for traditional life of EUR 548 million was 1% below 2002. Results were positively influenced by EUR 20 million of higher direct investment income, as well as EUR 47 million of higher indirect income and a EUR 40 million release of a provision for profit sharing. The lower results were mainly due to a change in the assumptions for mortality and longevity, which had a negative impact of EUR 93 million. Furthermore, lower expense loadings (EUR 20 million), due to lower production and higher expenses due to increased employee pension related costs, had a negative impact on income before tax. Commissions and expenses include both in 2002 and 2003 accelerated amortization of DPAC due to high lapse rates resulting from a change in the law relating to tax driven savings products. Income before tax in the life for account of policyholders business amounted to EUR 135 million, 176% above 2002. This increase is mainly due to EUR 116 million lower additions to the provision for guarantees. Fee business consists of the 2003 results of the distribution units Meeùs Groep, Elan and Spaaradvies.  The distribution units are consolidated into the AEGON  The Netherlands figures as from January 1, 2003. The increase in the effective tax rate from 21% to 23% was mainly due to the consolidation of the distribution units, leading to a 13% increase in net income, whereas income before tax increased by 17%. Revenues of EUR 5,953 million recorded in 2003 were slightly lower than in 2002. Premium income in the life insurance business was EUR 326 million lower, mainly because single premiums decreased by 24% from 2002. This was due to a lower level of business in group pensions.  Recurring premiums remained relatively stable, with higher premiums from the existing portfolio but also higher lapses of policies due to a change in law affecting tax driven savings products. Premium income in the accident and health and general insurance business showed increases of 1% and 3% respectively from 2002. This was due to the increase in premiums for a broad range of non-life products, as realized at the end of 2002 to cover increasing claims. This increase is AEGON GROUP ANNUAL REPORT 2003 26