NOTES TO THE CONSOLIDATED BALANCE SHEETS Amounts in EUR millions Exchange Balance Increase rate Balance at charged to fluctuations at January 1, the income and other December 2003 statement changes 31, 2003 LIFE INSURANCE: Life insurance 49,245 2,257 (5,312) 46,190 Fixed annuities 40,063 1,798 (6,306) 1 35,555 GICs and funding agreements 24,755 676 (3,888) 2 21,543 114,063 4,731 (15,506) 103,288 Deferred policy acquisition costs (14,089) (12,447) Unamortized interest rate rebates (389) (361) SUBTOTAL LIFE INSURANCE 99,585 90,480 NON-LIFE INSURANCE: Unearned premiums and unexpired risks 1,782 168 (269) 1,681 Deferred policy acquisition costs (1,109) (947) 673 734 Claims outstanding 1,840 156 (173) 1,823 SUBTOTAL NON-LIFE INSURANCE 2,513 2,557 PROFIT SHARING AND REBATES 304 306 OTHER 512 0 16 528 TOTAL 102,914 5,055 93,871 14 TECHNICAL PROVISIONS LIFE INSURANCE $^{1 }$Of which the balance of deposits and withdrawals is EUR 625 million. $^{2 }$Of which the balance of deposits and withdrawals is EUR 170 million. The provision for  life insurance represents the present value of future benefits to be paid to, or on behalf of policyholders and related expenses less the present value of future net premiums. The provision is calculated using actuarial methods that include assumptions such as estimates of premiums, mortality, investment performance, lapses, surrenders and expenses. These assumptions are initially based on best estimates of future experience at policy inception date, in some instances taking into account a margin for the risk of adverse deviation. The assumptions used are regularly reviewed, compared to actual experience and, if necessary and depending on the type of products, updated. Included in premiums is a loading for expenses. When the premiums are actually received or become receivable, the loadings emerge and are available to offset actual expenses, including maintenance expenses, non-deferrable acquisition expenses and amortization of the deferred policy acquisition costs (DPAC).  For products that have guaranteed benefits over the lifetime of the policy or at maturity, the premiums also include loadings for the expected cost of the guarantee. The pricing of the guarantee is based on assumptions for future investment performance, including reinvestment assumptions. Part of the risk is covered by reinsurance contracts. The provision for life insurance comprises also the provision for unexpired risks as well as the provision for claims outstanding. In case the premium-paying period is shorter than the lifetime of the policy, a provision for future expenses is set up to cover any estimated future expenses after the premium-paying period. Future costs in connection with benefit payments are also provided for. The technical provision for life reinsurance assumed is included in this provision as well, and amounts to EUR 2,404 million (2002: EUR 2,966 million). The average interest rate used is 5.18% (2002: 5.04%). Taking into account the capitalized interest rate rebates, the average interest rate used is 5.38% (2002: 5.25%). In various countries products are sold that contain minimum guarantees. For these products the regular technical provision is recognized under technical provisions with investments for account of policyholders. The technical provision life insurance includes provisions for guaranteed minimum benefits related to contracts where the policyholder otherwise bears the investment risk. The main guarantees are summarized below: Amounts in millions 2003 2002 PROVISIONS Guaranteed minimum benefits on variable products in the United States USD 285 269 Guaranteed minimum accumulation benefits on segregated funds in Canada CAD 166 126 Guaranteed return on certain ‘fund plan’ and group life products in The Netherlands EUR 278 236 AEGON GROUP ANNUAL REPORT 2003 96