) announced a strategic alliance with Spain's largest financial
group Banco Santander, for a period of 25 years. This long-term
agreement is another attempt to strengthen its market position in
AEGON N V (AEG): Free Stock Analysis Report
CIGNA CORP (CI): Free Stock Analysis Report
PRUDENTIAL FINL (PRU): Free Stock Analysis
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Further, as part of the alliance the parties are forming a joint
venture (JV) company with life and non-life insurance businesses
wherein Aegon will acquire 51% stake in a life and a non-life
insurance company for EUR 220 million. Aegon has also
decided to reimburse an additional amount, depending on the
performance of the partnership over five years.
Moreover, Aegon's Spain business will serve the back-office
functions for the JV operations. Meanwhile, the JV will enable
Aegon to distribute its protection and general insurance products
through Banco Santander's widespread network of 4600 branches,
also tapping the latter's clientele base of 12 million.
Subject to regulatory approvals, this transaction is expected to
culminate in the first half of 2013. Moreover, Aegon held
operational free cash flow of EUR 448 million at the end of the
third quarter of 2012 primarily driven by model refinements and
hence sufficient to finance the transaction.
Aegon has been operating in Spain for last 30 years through
several bancassurance JVs in the region. The latest JV with the
leading bancassurer not only boosts its product portfolio but
also enhances the company's competitive position in the European
markets. Such efforts are also likely to be accretive to the
company's financials in the long run.
In order to expand its operations, the company engages in a
number of select merger and acquisition accomplishments. The
latest on the list was the announcement to acquire a 100% stake
in Fidem Life from Horizon Capital, a private equity firm in
Ukraine in December. The transaction is expected to close in the
first quarter of 2013.
Aegon currently holds a Zacks #2 Rank, which translates into
short term Buy rating. Its peers are
). Cigna shares the same Zacks Rank as Aegon and Prudential holds
a Zacks #3 Rank, translating into a short term Hold rating.