Aegon Annual Report 2012

Annual Report 201239a significant impact on the capital standards and sale of lifeinsurance and annuities in the United States.Federal laws and the rules of the Federal Trade Commission(FTC) and the Federal Communications Commission (FCC)prohibit telephone solicitations to customers who have placedtheir telephone numbers on the National Do Not Call Registry.Additionally, proposals to place restrictions on direct mail areconsidered by the US Congress and states from time to time.These restrictions adversely impact telemarketing efforts ofAegon USA, and new proposals, if enacted, will likely alsodirectly impact direct mail efforts. Finally, proposed FederalReserve Board disclosures regarding credit insurance provided inconnection with a loan, if enacted as proposed, would adverselyimpact the market for credit insurance.Many supplemental health insurance products, such as Medigap,offered by the Transamerica companies, are subject to bothfederal and state regulation as health insurance. The PatientProtection and Affordable Care Act (PPACA), enacted in 2011,significantly changes the regulation of health insurance anddelivery of health care in the United States, including in certainrespects, the regulation and delivery of supplemental healthinsurance products. Individual states are required to establishhealth care exchanges for the purchase of health care insuranceby individuals. The extent to which employers may discontinuetheir provision of supplemental health insurance products toretired employees and the extent to which supplemental healthinsurance products may be sold through state exchanges maysignificantly impact Aegon USA’s supplemental health productsbusiness.Additionally, certain policies and contracts offered by AegonUSA insurance companies are subject to regulation under thefederal securities laws administered by the SEC and under certainstate securities laws. The SEC conducts regular examinationsof the insurance companies’ variable life insurance and variableannuity operations, and occasionally makes requests forinformation from these insurers in connection with examinationsof affiliate and third party broker-dealers, investment advisersand investment companies. The SEC and other governmentalregulatory authorities, including state securities administrators,may institute administrative or judicial proceedings that mayresult in censure, fines, issuance of cease-and-desist orders orother sanctions. Sales of variable insurance and annuity productsare regulated by the SEC and the FINRA. The SEC, FINRA andother regulators have from time to time investigated certainsales practices involving variable annuities and transactions inwhich an existing variable annuity is replaced by, or exchangedfor, a new variable annuity. Certain separate accounts of AegonUSA insurers are registered as investment companies under theInvestment Company Act of 1940, as amended (the InvestmentCompany Act). Separate account interests under certain annuitycontracts and insurance policies issued by the insurancecompanies are also registered under the Securities Act of 1933,as amended (the Securities Act).Some of Aegon USA’s investment advisory activities are subjectto federal and state securities laws and regulations. Mutualfunds managed, issued and distributed by Aegon USA companiesare registered under the Securities Act, and the InvestmentCompany Act. With the exception of its investment accountswhich fund private placement investment options that areexempt from registration, or support fixed rate investmentoptions that are also exempt from registration, all of AegonUSA’s separate investment accounts that fund retail variableannuity contracts and retail variable life insurance productsissued by Aegon USA companies are registered both under theSecurities Act and the Investment Company Act. Institutionalproducts such as group annuity contracts, guaranteedinvestment contracts, and funding agreements are sold to taxqualified pension plans or to other sophisticated investors andare exempt from registration under both Acts. On July 21, 2010,the SEC proposed a framework to replace the requirements ofRule 12b-1 of the Investment Company Act with respect to howmutual funds and underlying funds of separate accounts collectand pay fees to cover the costs of selling and marketing theirshares. The proposed changes are subject to public commentand, following any enactment, would be phased in over severalyears. The impact of these proposals cannot be predicated atthis time.Some of the Aegon USA companies are registered as brokerdealerswith the SEC under the Securities Exchange Act of1934, as amended (the Securities Exchange Act) and areregulated by the FINRA. A number of Aegon USA companiesare also registered as investment advisers under the InvestmentAdvisers Act of 1940. Aegon USA insurance companies andother subsidiaries also own or manage other investment vehiclesthat are exempt from registration under the Securities Actand the Investment Company Act but may be subject to otherrequirements of those laws, such as anti-fraud provisionsand the terms of applicable exemptions. The Dodd-FrankAct reforms the regulatory structure of the financial servicesindustry in the United States, including providing for additionaloversight of “systemically significant” companies. In accordancewith the Dodd-Frank Act requirements, the SEC studied andrecommended a harmonized standard of care for brokerdealers,investment advisers and persons associated with thesefirms who are providing personalized investment advice. TheSEC has indicated that it intends to seek comments on thecosts and benefits of regulations establishing a harmonizedstandard of care; however, it has not set a date for enactmentof those regulations. Legislation was introduced in the House ofRepresentatives in the 112th congress that would establish aself-regulatory organization for the examination of investmentadvisers; however, no action was taken on the legislation at theend of that congress. Further proposals could come in this area