Aegon has signed an agreement to merge its Polish pension fund management company PTE Ergo Hestia SA with BRE Bank's PTE Skarbiec-Emerytura SA. Under the agreement, BRE Bank has granted Aegon an option to acquire BRE Bank's shareholding in the combined pension fund, once the merger process is complete. The purchase price shall be approximately EUR 100 million, increased by the net current asset value of PTE Skarbiec-Emerytura, the exact amount of which shall have been determined at the time of the merger of the companies.
This agreement will strengthen Aegon's position in the rapidly-growing Polish pension market and marks another step toward further expanding the Group's businesses in Central and Eastern Europe. Together, PTE Ergo Hestia and PTE Skarbiec-Emerytura will become the fifth largest pension fund management company in Poland, with a market share of approximately 5 percent. Combined, the two funds have more than 800,000 members and nearly EUR 1.7 billion assets under management*).
The agreement between Aegon and BRE Bank is subject to approval from Poland's Financial Supervision Commission (KNF) and the country's Office of Competition and Consumer Protection (OCCP).
Donald J. Shepard, Aegon's Chairman and CEO, said: "Our strong and expanding business in Poland is key to Aegon's Central and Eastern European growth strategy. Pensions are one of Aegon's core strengths and, as such, we welcome this opportunity with BRE Bank to further enhance Aegon's ability to provide quality and reliable retirement solutions to customers throughout Poland".
Jaroslaw Kubiak, Chief Executive Officer of PTE Ergo Hestia, added: "Combining our two funds will create a company that has enough scale and commercial reach to make a difference in the Polish market. Together, we will have an opportunity to increase our market share and make use of our considerable strengths in distribution and in asset management. In addition, we will be able to leverage Aegon's significant global resources and global expertise".
Mr. Kubiak will become Chief Executive Officer of the newly-combined pension fund, upon the merger's approval by the regulatory and supervisory authorities in Poland. The merger process is expected to take between 8 and 12 months.
Aegon currently has pension and life insurance operations in four countries in Central and Eastern Europe -the Czech Republic, Hungary, Poland and Slovakia. Aegon acquired PTE Ergo Hestia in April 2007. PTE Ergo Hestia will shortly be renamed PTE Aegon. In January 2007, Aegon also signed a joint venture agreement with Banca Transilvania to start a pension business in Romania later this year.
Aegon aims to expand its businesses in the region over the next several years, increasing its number of pension fund members from 1.2 million currently to 2 million members by 2010. Aegon also aims to double its assets under management in Central and Eastern European countries to EUR 8 billion.