Aegon, a provider of life insurance, pensions and asset management, has reached an agreement to sell its Central and Eastern European operations to Vienna Insurance Group AG Wiener Versicherung Gruppe (VIG) for €830 million.
The net proceeds represent a multiple of 2.6 times the book value on June 30th, 2020, and sees VIG acquire the firm’s insurance, pension, and asset management business in Hungary, Poland, Romania, and Turkey.
The €830 million proceed will lead to an increase in IFRS equity of €505 million of which €362 million will be recognised as book gain based on the balance sheet position as at June 30th, 2020.
For 2019, the net underlying earnings of Aegon’s operations in Central and Eastern Europe totalled €54 million, which implies a transaction multiple of 15 times net underlying earnings. Additionally, Aegon’s Group Solvency II ratio is expected to improve by roughly eight percentage points.
Lard Friese, Chief Executive Officer (CEO) of Aegon, commented: “This transaction will simplify Aegon’s footprint and strengthen our balance sheet.
“We are sharpening our strategic focus and are concentrating on those countries and business lines where Aegon can create most value. I would like to thank our employees in Hungary, Poland, Romania and Turkey for their significant contribution to Aegon over the years. We believe that our businesses will benefit greatly from the vast experience of VIG, a leading insurance group in the region.”
The company states that the proceeds from the deal will be upstreamed to the Group and increase Aegon’s financial flexibility as it looks to execute on its strategic priorities, including deleveraging.
The deal is subject to regulatory and antitrust approvals and is expected to close in the second half of next year.