Global financial services provider Aegon has reportedly announced its decision to sell its Poland, Hungary, Turkey, and Romania-based business to VIG. The €830 million transaction will include the divestment of Aegon’s pension, insurance, and asset management businesses to Vienna Insurance Group AG Wiener Versicherung Gruppe.
Aegon CEO, Lard Friese has apparently stated that the transaction is aimed at strengthening the balance sheet and simplifying the footprint of the company. According to Friese, the firm is honing its strategic focus and targeting regions and business avenues that will stand to gain the most value from Aegon.
He further expressed his gratitude towards the company’s employees in Romania, Turkey, Hungary, and Poland, and commended them on their contribution to the business over the years. He also claimed that Aegon stands to gain significant benefits from the diverse experience of VIG, which is an industry-leading insurance business in the region.
The proceeds of the sale, which amount to nearly €830 million, represent a multiple of around 2.6 times the firm’s book value on 30th June 2020. This will, in turn, lead to a rise of €505 million in IFRS equity, of which €362 million will be identified as book gain, as per the balance sheet position on June 30th, 2020.
Aegon’s total net underlying earnings from its businesses in Eastern and Central Europe were valued at €54 million for 2019, which indicated a transaction multiple of almost 15 times the net underlying earnings. This transaction is therefore estimated to improve the Group Solvency II ratio by nearly 8 percentage points.
These proceeds, which will be upstreamed to the Group, will increase the financial flexibility of Aegon, in executing its strategic objectives, such as deleveraging.
The transaction is expected to conclude in the 2nd half of 2021, subject to the antitrust and regulatory approvals mandated for these transactions.