AEGON Agrees To Buy Merrill Lynch Life Companies

By Trevor Thomas

August 19, 2007 at 04:00 PM

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AEGON N.V. has agreed to pay $1.3 billion in cash for Merrill Lynch Life Insurance Company and ML Life Insurance Company of New York.

AEGON, The Hague, Netherlands, says it expects to complete the deal by Dec. 31.

Merrill Lynch & Company Inc., New York, issues variable annuities through the 2 companies.

The deal is part of a larger agreement between the firms to team up in selling insurance and investment products. Merrill Lynch will continue to sell its Merrill Lynch Investor Choice Annuity product through its financial advisor network, while the companies AEGON is acquiring will continue to produce the annuities, AEGON says.

In addition, AEGON's Transamerica subsidiaries will help Merrill Lynch advisors sell VAs.

"Merrill Lynch expects to record a significant gain on the sale during the fourth quarter of 2007," AEGON says.

Merrill Lynch Life and ML Life generated about $800 million of variable annuity sales in 2006. They held about $10 billion in variable annuity assets at the end of 2006.

With the acquired firms, Aegon USA's total VA assets would total over $40 billion, a company spokeswoman says.

In response to the deal, credit analyst Ovadiah Jacob of Standard and Poor's said the purchased operations "will likely become a core component of AEGON USA's strategy."

AEGON says the deal will not affect its ability to complete its recently announced $1.3 billion share repurchase program.

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