NOTES TO THE CONSOLIDATED BALANCE SHEETS Amounts in EUR millions The following table presents provisions for guaranteed investment contracts and funding agreements by withdrawal regulation: 2003 2002 Book value out 1 Putable: 90 days’ put 1,281 1,650 180 days’ put 634 764 364 days’+ put 2,835 3,310 Total putable 4,750 5,724 Market value out 2 90 days’ notice 953 1,370 180 days’ notice 173 120 Total market value out 1,126 1,490 Not putable or surrenderable 15,667 17,541 Total GICs and funding agreements 21,543 24,755 $^{1 }$Book value out: the amount equal to the sum of deposits less withdrawals with interest accrued at the contractual interest rate. $^{2 }$Market value out: the amount equal to the book value out plus a market value adjustment to adjust for changes in interest rates. The municipal/governmental funding agreements generally include downgrade pursuant to which, should various downgrade events be triggered, one of the following four options must be followed: - transfer contract to a higher rated party - purchase a credit enhancement - collateralize the underlying position - pay the contract out at book value These options are negotiated with the customer at contract issuance but AEGON unilaterally retains the ultimate decision-making capability in the event of a downgrade. Available collateral is monitored to ensure the company would be able to utilize this option at its discretion. As of December 31, 2003, the contractual maturities for all contracts with defined maturities were for 2004: EUR 3,733 million;  for 2005: EUR 3,289 million; for 2006: EUR 2,855 million; for 2007: EUR 2,031 million; for 2008: EUR 940 million; and thereafter EUR 3,917 million. 2003 2002 DEFERRED POLICY ACQUISITION COSTS Balance at January 1 14,089 15,264 Deferred during the year 1,847 2,486 Amortization charged to the income statement 1 (1,455) (1,520) Other changes 2 (2,034) (2,141) BALANCE AT DECEMBER 31 12,447 14,089 Of which value of business acquired life (VOBA) 3,706 4,968 $^{1 }$Of which accelerated amortization is EUR 129 million (2002: EUR 450 million). $^{2 }$Mainly caused by currency exchange rate differences. These policy acquisition costs are costs that are directly or indirectly related to the acquisition of new or renewal life insurance contracts. Such costs consist principally of commissions, certain marketing, underwriting and contract issue expenses. Policy acquisition costs are deferred (DPAC) to the extent that they are recoverable from future expense charges in the premiums or from expected gross profits, depending on the nature of the contract. Acquisition costs are also deferred for certain non-insurance investment type products related to 401(k) plans in the United States. DPAC are deducted from the technical provision life insurance.  For  fixed premium products , DPAC are amortized to the income statement in proportion to the premium revenue recognized. The amortization of DPAC is based on management’s best estimate assumptions established at policy issue, including assumptions for mortality, lapses, expenses and investment returns. A margin for adverse deviation is included in the assumptions. DPAC are tested by country unit and product line to assess recoverability at least annually. The portion of DPAC that is determined to be not recoverable will be recognized as an expense in the income statement in the period of determination.  For  flexible premium products , including fixed and variable annuities, variable universal life and unit-linked contracts, amortization of DPAC is based on expected gross profits, which are determined based on management’s best estimates as to future expectations. These estimates include but are not limited to: an economic perspective in terms of long-term bonds and equity returns, mortality, disability and lapse assumptions, maintenance expenses, and future expected inflation rates. DPAC for flexible premium insurance contracts and investment type contracts are amortized in proportion to the emergence of estimated gross profits over the life of the contracts.  AEGON GROUP ANNUAL REPORT 2003 98