ROLE OF THE SUPERVISORY BOARD
The duties of the Supervisory Board, which currently has ten non-executive members, consist of the supervision of the Executive Board’s management and providing consultation and advice to the Executive Board. With the assistance of its four specialized committees, the Supervisory Board makes nominations to the Executive Board, deliberates and decides on compensation levels of Executive Board members and recommends terminations of the Executive Board when appropriate. The Supervisory Board also proposes to shareholders candidates for membership to its own body. Additionally, the members of the Board discuss quarterly results, accounting principles, dividends, AEGON’s capital position, internal control procedures as well as risk management. Together with the Executive Board, the Supervisory Board regularly reviews AEGON’s corporate strategy. The Supervisory Board held a total of eight meetings in 2004. Meetings were typically preceded or followed by meetings of the various committees.

CORPORATE GOVERNANCE
During several Supervisory Board meetings, the Dutch Corporate Governance Code, which became effective on January 1, 2004, and the implications for AEGON’s corporate governance were discussed.

During the annual General Meeting of Shareholders (AGM) held on April 22, 2004, the Supervisory Board discussed with the shareholders its views and intentions relating to corporate governance. The chapter on Corporate Governance in this annual report will be on the agenda of the AGM to be held on April 21, 2005 and at that time proposals will be made to amend the Articles of Incorporation that are intended to bring AEGON’s corporate governance further in line with the best practice provisions of the Dutch Corporate Governance Code. This annual report provides a section on AEGON’s corporate governance that describes the views and intentions of the Supervisory Board and the Executive Board in this regard.

SUPERVISORY BOARD MEETINGS
In accordance with the Supervisory Board Rules, preparatory meetings preceded the regular meetings, attended by the chairman and vice-chairman of the Supervisory Board as well as the chairman and the chief financial officer of the Executive Board. All Executive Board members attended the regular meetings, held in March, June, August, November and December 2004. In December 2004, the Supervisory Board discussed the Executive Board’s and its own composition and performance, in the absence of the Executive Board members.

The meetings, during which the Supervisory Board discussed the quarterly and annual results and the press releases, were also attended by the director of the Group Finance department. Representatives from Ernst & Young, AEGON’s independent auditor, attended the discussion regarding the results for 2003. As usual, special meetings of the Supervisory Board were dedicated to AEGON’s budget for 2005 and to the Group Management Overview.

In June, a meeting of the Board was devoted to AEGON’s business strategy. This meeting was preceded and prepared by the Strategy Committee. The meeting was hosted by AEGON UK and the occasion proved a good opportunity for AEGON UK’s management and board to exchange a broad range of information about AEGON in general and AEGON UK in particular. The Supervisory Board intends to pursue further opportunities to engage AEGON’s international senior management and the board members of the various country units.

Included among the many topics discussed during Supervisory Board meetings in 2004 were embedded value, dividend policy, capital management and risk management.

With the support of the Board, AEGON’s 2003 Embedded Value Report was disclosed on June 7, 2004. Recognizing the increasing importance of effective risk management, the Audit Committee discussed this issue and reviewed the measures that AEGON has implemented. The conversion to International Financial Reporting Standards (IFRS) was also discussed as well as the process initiated by AEGON to ensure compliance beginning with the 2005 financial year.

Attention was also devoted to partnerships and divestitures. The Supervisory Board approved an increase in AEGON’s participation in La Mondiale Participations from 20% to 35%; the establishment of a pension fund management company in Slovakia; the launch of a greenfield operation in the Czech Republic and the expansion of the activities of AEGON USA’s Direct Marketing Services to other countries. The Supervisory Board also approved the divestiture of AEGON Spain’s non-life business as well as the sale of most of the remaining non-core businesses of Transamerica Finance Corporation (the maritime container business and the European trailer business).

Topics of particular interest to the Supervisory Board included equity lease in the Netherlands as well as regulatory and other legal issues in the USA and in Europe. Following the adoption of the United States Sarbanes-Oxley Act (SOX), and the Dutch Corporate Governance Code, the Board amended the Supervisory Board Rules, the Audit Committee Charter, the Pre-approval Policy relating to the services of AEGON’s independent auditor, Ernst & Young, and the Rules on Inside Information. The Supervisory Board also adopted a Financial Control Complaints Procedure, which establishes a whistleblower arrangement according to SOX, in addition to the whistleblower procedure in the Code of Conduct, as well as the Executive Board Rules.

SUPERVISORY BOARD COMMITTEES
The Supervisory Board relies on four committees to prepare specific issues for decision-making by the Board. The members of the Committees are selected from the Supervisory Board. In accordance with its Charter, each Committee reports its findings to the Supervisory Board during a subsequent Supervisory Board meeting.

The Audit Committee held six meetings during 2004, which were also attended by members of the Executive Board as well as the Group Finance Director, the Group Internal Auditor and representatives of Ernst & Young. The discussions in the Audit Committee were dominated by its permanent agenda: the quarterly results, the annual accounts and the auditing of those by Ernst & Young; the accounting principles; the financial reports as filed with the Securities and Exchange Commission (SEC), AEGON’s Capital Plan, in addition to reports on currency exposure, internal control systems as well as Risk Management and Ernst & Young’s independence and fees. The Committee advised the Supervisory Board to recommend to the shareholders that Ernst & Young be reappointed as independent auditor for the financial year 2004.

The Committee also discussed the consequences of SOX and the Dutch Corporate Governance Code, as well as the role of the independent auditor. The Committee confirmed that Mr. Eustace and Mr. Voser qualify as financial experts within the meaning of the relevant provisions of SOX and the Dutch Corporate Governance Code. In accordance with legal requirements, the Committee approved and recommended to the Supervisory Board the adoption of amendments to the Audit Committee Charter and the Pre-approval Policy. Among other things, the Charter states that the Audit Committee shall be directly responsible for the compensation and oversight of the work of the independent auditor and that the company shall provide appropriate funding, as determined by the Audit Committee, for the payment of compensation to the independent auditors and to any advisor employed by the Audit Committee.

Furthermore, it was determined that the Committee shall establish procedures for the receipt and retention of complaints relating to accounting and internal control issues. The Committee also approved the Financial Control Complaints Procedure. Two meetings, in March and September, were devoted to AEGON’s filings with the SEC, the annual report (Form 20-F) and the results for the first six months (Form 6-K).

Each quarter, the Committee was updated on the activities of the Group internal auditor and on AEGON’s worldwide compliance with SOX as well as on general compliance issues. The Committee also engaged in a discussion of AEGON’s Risk Management Report, as presented by the Group Risk Manager, and subsequently reported on this to the Supervisory Board.

The Strategy Committee held two meetings, which were also attended by the Executive Board members. The purpose of this Committee is to review the major features of AEGON’s business strategy, in addition to considering alternative strategies and the consideration of material aspects relating to the implementation of the strategy. The Committee discussed AEGON’s business strategy and prepared the agenda for the meeting of the Supervisory Board held in Edinburgh in June 2004.

The Nominating Committee held three meetings in 2004. These meetings were also attended by the Executive Board’s chairman. The Committee discussed the composition of the Supervisory Board and its Committees and existing and forthcoming vacancies. In addition, introduction programs for new members were planned and a retirement schedule for members of the Executive Board was prepared.

The Compensation Committee is responsible for the design, development, implementation and review of the Remuneration Policy that outlines the terms and conditions of employment of the members of the Executive Board and of the remuneration of the members of the Supervisory Board. The Committee makes its recommendations to the Supervisory Board. The Committee held one meeting in 2004, attended also by the Executive Board’s chairman, during which the implementation of the Remuneration Policy 2004-2006 for the Executive Board as adopted by the shareholders during the AGM on April 22, 2004, was discussed.

PRINCIPAL POINTS OF THE REMUNERATION REPORT
The Compensation Committee has reported on its activities in 2004. Please click here for the full text of this report as well as of the Remuneration Policy and for financial details. The Short Term and Long Term Incentive plans were adopted by the Supervisory Board in line with the company’s current Remuneration Policy. The base salaries of the members of the Executive Board and the remuneration of the Supervisory Board members were not changed in 2004.

SUPERVISORY BOARD COMPOSITION
In 2004, Mr. de Ruiter reached the retirement age of 70 years and stepped down at the end of the AGM on April 22, 2004. Mr. De Wit, whose four-year term of office ended in 2004, served as a member of the Board for a total of 14 years. In accordance with the Dutch Corporate Governance Code, Mr. De Wit stepped down as a member of the Supervisory Board at the end of that same AGM. The members of the Supervisory Board extended their gratitude to Messrs. De Ruiter and De Wit for their long and distinguished service to the company.

The four-year terms of office of both Mrs. Rembe and Mr. Olcay also ended in 2004. The Supervisory Board nominated Mrs. Rembe and Mr. Olcay for reappointment and they were subsequently reappointed during the AGM in 2004. In the same meeting shareholders appointed Messrs. Dahan, Bailey and Voser as members of the Board.

In 2005, the four-year terms of office of Messrs. Eustace, Stevens and Tabaksblat will expire. Messrs. Eustace and Stevens are eligible for reappointment and the Supervisory Board has decided to nominate them for reappointment for another term. In compliance with the Dutch Corporate Governance Code, Mr. Tabaksblat is not eligible for reappointment and as such will step down at the end of the AGM to be held on April 21, 2005. The Supervisory Board has appointed Mr. Eustace to succeed Mr. Tabaksblat as chairman, subject to his reappointment by shareholders during the AGM on that same date. Mr. Olcay will have served the Board for 12 years in 2005 (the maximum term according to the Dutch Corporate Governance Code). The Supervisory Board, however, has asked Mr. Olcay to remain on the Board given his extensive experience and due to the relatively large number of recent changes in the composition of the Board as a result of retirements. Mr. Olcay has agreed to continue his service on the Board for the duration of his current term, which expires in 2008.

In order to fill the vacancies, the Supervisory Board has on the advice of the Nominating Committee decided to nominate Mr. Shemaya Levy for appointment by the AGM. Details of Mr. Levy will be provided together with the agenda for the AGM on April 21, 2005.

EXECUTIVE BOARD COMPOSITION
In compliance with the Dutch Corporate Governance Code, the members of the Executive Board will henceforth be appointed for a term of four years, subject to possible reappointments by the AGM. According to the retirement schedule (which has been posted on AEGON’s corporate website) the term for Messrs. Shepard and Streppel will end in 2005. The Supervisory Board has decided to nominate them for reappointment for a four-year term.

ANNUAL ACCOUNTS AND DIVIDEND
This annual report includes the annual accounts for 2004, as deliberated and proposed by the Audit Committee, and subsequently submitted by the Executive Board. The Supervisory Board recommends that shareholders adopt these accounts. A total dividend for 2004 of EUR 0.42 per common share is proposed. Since an interim dividend payment of EUR 0.21 per common share was made in September 2004, this entails a proposed final dividend payment of EUR 0.21 per common share.

ACKNOWLEDGEMENT
The members of the Supervisory Board wish to commend the Executive Board and all members of the worldwide AEGON community for their strong commitment to growing AEGON’s business. The Board wishes to extend its appreciation for the dedication and professionalism they continuously demonstrate in responding to ever-changing market conditions and an increasingly challenging regulatory environment.


The Hague, March 2, 2005
On behalf of the Supervisory Board,
Morris Tabaksblat, chairman