Aegon, one of the world’s largest life insurance and pension companies, and Merrill Lynch announced they will form a strategic business relationship in the areas of insurance and investment products. As part of this relationship, an Aegon company has signed an agreement to acquire Merrill Lynch Life Insurance Company and ML Life Insurance Company of
The purchase price includes excess surplus of USD 425 mln. The transaction is expected to close before the end of the fourth quarter of 2007, subject to customary regulatory approvals and closing conditions.
Merrill Lynch will continue to serve the insurance needs of its clients through its core distribution and advisory capabilities. Importantly, Merrill Lynch will continue to offer its flagship Merrill Lynch Investor Choice Annuity product through its financial advisor network. Products will be issued by the companies Aegon is acquiring. Both companies anticipate substantial benefits for clients arising from this partnership including increased breadth of product offerings and enhancements to existing products.
Aegon‘s Transamerica companies will provide support to the Merrill Lynch financial advisor network. This acquisition is in line with Transamerica’s strategy to develop alliances with strong distribution partners. This new relationship will place Transamerica in a position of strength in the sales of variable annuities within the wirehouse distribution channel.
With USD 800 mln of variable annuity sales in 2006, and USD 10 bln of variable annuity assets at year-end 2006, the acquisition of the two life insurance companies will place Aegon in the top ten of variable annuities sellers in the wirehouse and broker/dealer segment globally.
“This acquisition provides the framework for a strong strategic relationship with Merrill Lynch, creating a significant opportunity to grow the sales of the Merrill Lynch Investor Choice Variable Annuity while jointly building and branding new and innovative products for our clients,” said Pat Baird, president and CEO of Aegon USA, Inc.
Aegon expects the acquisition to have a marginally positive effect on earnings per share. It will finance the transaction using existing excess capital. As a result, this acquisition will not impact Aegon’s ability to execute its recently announced EUR 1 bln share repurchase program. Merrill Lynch expects to record a significant gain on sale during the fourth quarter of 2007 and anticipates the transaction to be slightly accretive to earnings per share and to have a positive effect on return on equity in 2008 after redeployment of proceeds.
With headquarters in
