AEGON Sells Spanish P/C Unit to Reale Mutua

AEGON, the Dutch insurance and financial services provider, announced that it has entered into an agreement to sell AEGON Seguros Generales, its general insurance subsidiary in Spain, to Italian mutual insurance company Reale Mutua Group, effective January 1, 2005.

The price of the sale is approximately 250 million euros ($340 million) and will be fixed at completion. AEGON said the sale would result in a book profit of approximately 130 million euros ($177 million) after tax, and is still subject to regulatory approval. It is expected to be completed in the second quarter of 2005. The proceeds will be used to redeem debt.

AEGON said its “general insurance activities in Spain generated gross premiums of 187 million euros [$255 million] and net income of 21 million euros [$29 million] in the first nine months of 2004.

“As part of the agreement, AEGON Seguros Generales’ distribution network in Spain, which in the transaction will be transferred to Reale Mutua Group, will continue to sell AEGON’s life and health insurance products. At the same time, AEGON will acquire the life portfolio of Reale Vida in Spain (with total premium of 10 million euros [$13.63 million] in the first nine months of 2004), which will give AEGON access to Reale Mutua’s existing agent distribution network. The distribution agreements are on an exclusive basis, valid for five years and renewable thereafter. ”

AEGON indicated that the transaction reinforces its “strategic focus on its core businesses of life insurance, pensions, savings and investment products.” It also noted plans to continue “to expand its life insurance business in Spain by further strengthening its own agent distribution capability, by enhancing its existing bancassurance partnership with Caja de Ahorros del Mediterráneo (CAM) and by pursuing new distribution opportunities.”

Topics Mergers & Acquisitions Property Casualty