Dutch insurer Aegon said on Monday it agreed to buy Merrill Lynch Life Insurance and ML Life Insurance of New York for $1.3 billion in cash to boost its sales of variable annuities and distribution in the United States.
Aegon also said it will form a strategic relationship with Merrill in insurance and investment products and that Aegon's Transamerica companies will support Merrill's financial adviser network.
The two companies being acquired had $800 million of variable annuity sales in 2006, and $10 billion of variable annuity assets at year-end 2006, Aegon said.
The transaction will place Aegon in the top ten of variable annuities sellers in the broker-dealer segment globally.
Aegon said it expects the acquisition to have a marginally positive effect on earnings per share and the deal is expected to close before the end of the fourth quarter.
"To have a strategic sales relationship with one of the most important distributors of insurance and savings products in the United States is obviously the main rationale," Pat Baird, president and CEO of Aegon USA said in an interview.
"But certainly, we are global and they are global -- and having a good strategic relationship with them, we'd certainly intend to pursue more global product sales with them," he added.
Merrill Lynch expects to record a significant gain on the sale during the fourth quarter of 2007 and anticipates the transaction will provide a slight boost to earnings per share.