AEGON N.V. AEG has recently completed the divestiture of its stake at La Mondiale Participations to La Mondiale. The transaction is valued at EUR 350 million.
The deal was announced in Nov 2014 and was pending regulatory approval. The sale was culminated as soon as the divestiture received approval from the French Competition Authority (Autorité de la Concurrence).
The proceeds from the transaction will supplement AEGON’s excess capital buffer and increase the Insurance Group Directive (IGD) solvency ratio by nearly 500 basis points.
AEGON had been associated with La Mondiale for 12 years. But after a strategic review of the prospects of the relationship, AEGON’s management concluded that its association with La Mondiale was not heading to the optimization of its portfolio, and was far from being in line with AEGON’s ambitions. Thus, the company decided to vend its 35% share at La Mondiale.
Divesting unprofitable ventures or units is a strategy undertaken by companies to enhance their financial flexibility and help themselves focus on core operations. We believe the aforementioned divestiture will help AEGON emphasize on its core portfolio of providing life insurance, pensions and asset management services.
AEGON has been working hard to optimize its portfolio, strengthen operational excellence, boost customer loyalty, and empower employees. Moving toward these goals should provide the necessary platform to the company to emerge as the most-popular life insurance and pension provider.
The company exited the fourth quarter of 2014 on a high note where its underwriting earnings and net income soared. Initiatives like the latest divestiture should help the company come up with more robust results going forward.
AEGON currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the multiline insurance space that look attractive at current levels include Assured Guaranty Ltd. AGO, MGIC Investment Corp. MTG and Cigna Corp. CI. While Assured Guaranty and MGIC Investment sport a Zacks Rank #1 (Strong Buy), Cigna holds a Zacks Rank #2 (Buy).
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