Notes to the consolidated financial statements of Aegon N.V.  Note 2 148 c. Impairment of equity instruments d. Impairment of reinsurance assets 2.17 Equity 2.18 Trust pass­through securities, subordinated borrowings and other borrowings  Annual Report 2013 For equity instruments, a significant or prolonged decline in fair value below initial cost is considered objective evidence of impairment  and always results in a loss being recognized in the income statement. Significant or prolonged decline is defined as an unrealized loss  position for generally more than six months or a fair value of less than 80% of the cost price of the investment. Equity investments are  impaired to the asset’s fair value and any unrealized gain or loss previously recognized in shareholders’ equity is taken to the income  statement as an impairment loss. The amount exceeding the balance of previously recognized unrealized gains or losses is recognized  in the income statement.  Impairment losses on equity instruments cannot be reversed. Reinsurance assets are impaired if there is objective evidence, as a result of an event that occurred after initial recognition of  the reinsurance asset, that not all amounts due under the terms of the contract may be received. In such a case, the value of  the reinsurance asset recoverable is determined based on the best estimate of future cash flows, taking into consideration  the reinsurer’s current and expected future financial conditions plus any collateral held in trust for Aegon’s benefit. The carrying value  is reduced to this calculated recoverable value, and the impairment loss recognized in the income statement.  Financial instruments that are issued by the Group are classified as equity if they represent a residual interest in the assets of  the Group after deducting all of its liabilities and the Group has an unconditional right to avoid delivering cash or another financial asset  to settle its contractual obligation. In addition to common shares, the Group has issued perpetual securities. Perpetual securities have  no final maturity date, repayment is at the discretion of Aegon and for junior perpetual capital securities Aegon has the option to defer  coupon payments at its discretion. The perpetual capital securities are classified as equity rather than debt, are measured at par and  those that are denominated in US dollars are translated into euro using historical exchange rates. Non-cumulative subordinated notes are identified as a compound instrument due to the nature of this financial instrument. For these  non-cumulative subordinated notes, Aegon has an unconditional right to avoid delivering cash or another financial asset to settle  the coupon payments. The redemption of the principal is however not at the discretion of Aegon and therefore Aegon has a contractual  obligation to settle the redemption in cash or another financial asset or through the exchange of financial assets and liabilities at  potentially unfavorable conditions for Aegon. Compound instruments are separated into liability components and equity components.  The liability component for the non-cumulative subordinated notes is equal to the present value of the redemption amount and  carried at amortized cost using the effective interest rate method. The unwinding of the discount of this component is recognized in  the income statement. The liability component is derecognized when the Group’s obligation under the contract expires, is discharged  or is cancelled. The equity component is assigned the residual amount after deducting the liability component from the fair value of  the instrument as a whole. The equity component in US dollars is translated into euro using historical exchange rates. Incremental external costs that are directly attributable to the issuing or buying back of own equity instruments are recognized in  equity, net of tax. For compound instruments incremental external costs that are directly attributable to the issuing or buying back of  the compound instruments are recognized proportionate to the equity component and liability component, net of tax. Dividends and other distributions to holders of equity instruments are recognized directly in equity, net of tax. A liability for non- cumulative dividends payable is not recognized until the dividends have been declared and approved. Treasury shares are shares issued by Aegon N.V. that are held by Aegon, one of its subsidiaries or by another entity controlled by  Aegon. Treasury shares are deducted from Group equity, regardless of the objective of the transaction. No gain or loss is recognized  in the income statement on the purchase, sale, issue or cancellation of the instruments. If sold, the difference between the carrying  amount and the proceeds is reflected in retained earnings. The consideration paid or received is recognized directly in shareholders’  equity. All treasury shares are eliminated in the calculation of earnings per share and dividend per common share. A financial instrument issued by the Group is classified as a liability if the contractual obligation must be settled in cash or another  financial asset or through the exchange of financial assets and liabilities at potentially unfavorable conditions for the Group.  Trust pass-through securities, subordinated borrowings and other borrowings are initially recognized at their fair value including  directly attributable transaction costs and are subsequently carried at amortized cost using the effective interest rate method, with 