Aegon unveils sale of Irish and Dutch ops as it posts results

Aegon, the Netherlands-based insurer, has unveiled plans to sell two of its operations, as its management continues to make changes to the business aimed at boosting efficiencies.

The company said today that it has agreed to sell Aegon Ireland plc, its Dublin-based insurance business, to AGER Bermuda Holding Ltd, the holding company of US-based Athene Holding Ltd’s European group companies. This came after the announcement two days ago that it is selling UMG, a “top three” independent advisory group it owns in the Netherlands, to Aon Groep Nederland, for €295m (US$347m, £267m).

AGER’s principal operating subsidiary is Germany-based Athene Lebensversicherung AG, which had around €5bn in invested assets as of 31 December.

No earnings impact seen

In its statement today, Aegon said that the proceeds from the divestment of its Irish business, which specialises in offshore bonds and similar types of investment products, would be equal to 81% of the operation’s Own Funds at the end of 2017; these stood at approximately £200m (€220m) at the end of June.

It noted that the deal would result in a book loss of approximately £115m (€125m), subject to certain closing and market conditions, but was not expected to have a material impact on the group’s future earnings.

Aegon SEI

Aegon Ireland formerly was known as Aegon Scottish Equitable International, or Aegon SEI, and before that, simply as SEI. It moved to Dublin from Luxembourg in 2001, when it took the strategic decision to focus on the UK market for offshore bonds. (What remained of the Luxembourg company, SEI SA, closed to new business in 2004, and was subsequently sold to La Mondiale Europartner in 2006.)

By 2007 Aegon SEI was writing some £81m annual premium equivalent of predominantly single-premium business, making it the third-largest player in the IFA market, according to an Acuity Consultants report in 2008.

‘Run-off specialist’

In a statement out of Bermuda announcing the sale today,  AGER noted that Athene Leben “has been in run-off since 2010, and since that time has developed the experience and efficiencies critical to succeed as a run-off specialist”.

Athene floated in New York in December, and is reported to have said it is looking to make acquisitions in Europe, where insurance companies are currently under pressure and there are thought to be insurance run-off business opportunities to be had.

Wilton Re divestment completed

Also today, Aegon announced that it had completed the divestment of its two largest US run-off businesses to Wilton Re, which it noted had enabled it to “achieve its objective to reduce the amount of capital allocated to its run-off businesses by US$1bn before the end of 2018”.

On its website today, Aegon  posted answers to a series of questions policy-holders of its Irish business might be likely to have about the acquisition, including “What about my bond or plan?” (“There are no changes to your bond or plan…we’ll continue to service our existing customers and advisers and provide the same level of post-sale service, [and] we’ll keep you updated on developments within the business, on our website or by contacting you directly.”)

Results

News of Aegon’s plans to divest itself of the Irish and Dutch businesses came as the company announced its first half results, which saw underlying profit increase 23%, to €535m, helped by fewer claims, and a rise in fee income from stronger equity markets.

New life sales were reported to have declined by 8% to €224m, due to lower sales in US and exit from UK annuities.

Aegon’s acquisition of the Cofunds platform business from Legal & General, which completed in January, gave a boost to Aegon’s results , as net platform inflows were reported to have surpassed £3bn in the three months to the end of June.

Aegon aquired Cofunds from L&G for £140m, and is now said to be the UK’s largest advised platform provider.

In a statement accompanying the results and news of the planned sale of the two Aegon divisions, Aegon chief executive Alex Wynaendts, pictured above, noted that the various measures being unveiled by the company today, “together with the recently announced strategic divestments, increase our financial flexibility, strengthen our capital position and improve the outlook for capital generation – all of which give us confidence in our ability to return €2.1bn to shareholders over the period 2016 to 2018.”

Aegon NV’s shares, which have a primary listing on the Euronext Amsterdam stock exchange and are also listed on the New York Stock Exchange, closed in Amsterdam today at €5.11, up 5.3% from their close on Wednesday, and 32.7% ahead of a year ago.

ABOUT THE AUTHOR
Helen Burggraf
Helen Burggraf is the editor of International Investment. A US-trained journalist, she has worked in Rome, New York City and London, covering everything from the fashion and retailing industries to the global drinking water and water-treatment sector, private equity, and most recently, the international cross-border financial services/advice industry.

Read more from Helen Burggraf

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