Aegon N.V. today 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 EUR 250 million and will be fixed at completion.
The transaction will result in a book profit of approximately EUR 130 million after tax. The sale is subject to regulatory approval and is expected to be completed in the second quarter of 2005. The proceeds will be used to redeem debt.
Aegon's general insurance activities in Spain generated gross premiums of EUR 187 million and net income of EUR 21 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 EUR 10 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.
This transaction reinforces Aegon's strategic focus on its core businesses of life insurance, pensions, savings and investment products. Aegon will 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.