Dutch insurer Aegon to sell UK Guardian life insurance to Cinven for £275mn

Dutch life insurance and pensions company Aegon NV, yesterday agreed to sell its UK Guardian life and pension unit to European buyout firm Cinven Ltd, for £275 million ($449 million) in cash as it tries to cut costs in Britain - its third-largest market.

The sale confirms recent media speculation that The Hague, Netherland-based Aegon, one of the world's largest life insurance and pension groups, may divest Guardian and use the funds to recapitalise its other UK unit Scottish Equitable.

Guardian, which manages over 300,000 life insurance policies in the UK, has been closed to new business since 2001. Its book value was £271 million at the end of June, while its embedded value, which includes the present value of future profit, amounted to £322 million. Underlying earnings before tax totalled £23 million in 2010.

Aegon Asset Management has entered into a long-term agreement with Cinven and will continue to manage Guardian's assets worth £7.4 billion.

''Consistent with actions over the past three years to dispose of, or run-off, certain businesses deemed non-core, Aegon has concluded that managing the closed business of Guardian companies no longer fits with our strategic objectives,'' said Jan Nooitgedagt, Aegon's CFO. ''We remain committed to the UK and to maximising the opportunities of Aegon's chosen markets.''

Cinven said the deal, its third in the financial services sector, would provide an attractive foothold in the market and an opportunity to consolidate life funds.

"Cinven's Financial Services team has invested considerable time into developing its strategy for the closed life market and believes it represents an excellent investment opportunity with attractive returns,'' Caspar Berendsen, a partner at Cinven.