Aegon has reached an agreement to exit its life, health and pension joint venture with Unnim Banc and sell its 50% stake to Unnim for a total consideration of € 353m. The sale is expected to result in a book gain of approximately € 105m before tax, and to generate an average annual return of 12% on investment.
Closing of the transaction is expected in 2Q13E. Aegon's share in underlying earnings before tax of the joint venture totalled € 20m in 2012.
This anticipated divestment by Aegon is a consequence of the consolidation underway within the Spanish banking sector. Aegon maintains a long-term commitment to Spain.
Aegon has been active in Spain for over thirty years and has established a reputation as a preferred provider of protection products through its network of bancassurance joint ventures.
Aegon is in the process of terminating some strategic distribution partnerships with some of its (financially troubled) partners in Spain (E.g. Civica/CAM). The LT strategic partnership with Banco Santander to distribute life and general insurance products through its extensive network of 4,600 bank branches, allows to replace them and maintain a strong footprint in Spain.
We maintain our Buy rating and € 6.50 target.