210 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF AEGON N.V.  NOTE 46 These assumptions are reviewed at each valuation date, and  updated based on historical experience and observable market  data, including market transactions such as acquisitions and  reinsurance transactions. AEGON utilizes different risk management strategies to  mitigate the financial impact of the valuation of these  guarantees on the results, including asset and liability  management and derivative hedging strategies to hedge certain  aspects of the market risks embedded in these guarantees.  Guarantees valued at fair value contributed a net gain before  tax of EUR 356 million (2009: loss of EUR 76 million) to  earnings. This net gain is attributable to a decrease in the total  guarantee reserves of EUR 109 million (2009: decrease of  EUR 2,505 million). The main drivers of this decrease are  EUR 360 million related to an increase in equity markets (2009:  EUR 911 million), EUR 80 million related to decreases in equity  volatilities (2009: EUR 344 million) and EUR 227 million related  to movements in the spread of credit risk (2009: EUR 187 million  loss) offset by EUR 1,328 million related to decreases in risk free  rates (2009: EUR 1,434 million gain). Hedges related to these  guarantee reserves contributed fair value gains of EUR 894  million to income before tax (2009: losses of EUR 2,581 million).  perpetual cumulative subordinated bonds) and 5% dated  subordinated and senior debt related to insurance activities.  Additionally, AEGON manages capital adequacy at the level of  its country units and their operating companies. The goal is to  ensure that AEGON companies maintain their financial strength.  AEGON maintains its companies’ capital adequacy levels at  whichever is the higher of local regulatory requirements and  the relevant local Standard & Poor’s requirements for very  strong capitalization, and any additionally self-imposed  economic requirements.  AEGON’s capital base reflects the capital employed in insurance  activities and consists of shareholders’ equity, convertible core  capital securities, perpetual capital securities and dated  subordinated debt and senior debt. AEGON targets its capital  base to comprise at least 70% core capital (excluding the  revaluation reserves), and targets 25% perpetual capital  securities (consisting of junior perpetual capital securities and  The table that follows reconciles total shareholders’ equity to  the total capital base: Group equity consists of core capital plus Other equity  instruments (see note 17) such as the junior perpetual capital  securities and the perpetual cumulative subordinated bonds as  well as other equity reserves. Group equity was EUR 23,425  million at December 31, 2010, compared to EUR 18,883 million  at December 31, 2009. Shareholders’ equity increased by EUR 5,046 million due to the  change in the revaluation reserve of EUR 2,667 million, net  income attributable to equity holders of AEGON N.V. of  EUR 1,759 million and a number of other effects, including  preferred dividend paid (EUR 90 million). Core capital, which consists of shareholders’ equity, excluding  revaluation reserve, and the convertible core capital securities  that were issued in 2008 (see below), was EUR 18,710 million  at December 31, 2010 compared to EUR 14,164 million at  December 31, 2009.  NOTE 46 CAPITAL AND SOLVENCY  2010 2009 Total shareholders’ equity 17,210 12,164  Convertible core capital securities 1,500 2,000  Junior perpetual capital securities 4,192 4,192  Perpetual cumulative subordinated bonds  453 453  Share options not yet exercised  59 64 Minority interest 11 10  Trust pass-through securities 143 130  Borrowings 8,518 7,485  Borrowings not related to capital funding of insurance activities  (7,331)  (6,527) TOTAL CAPITAL BASE 24,755 19,971  Currency revaluation perpetual capital securities  1 (160) (369) Reverse revaluation reserve (958) 1,709 TOTAL CAPITAL BASE EXCLUDING REVALUATION RESERVE 23,637 21,311  1  Capital securities that are denominated in foreign currencies are, for purpose of calculating the capital base, revalued to the period-end exchange rate.