Aegon and Banco Santander announced the expansion of their partnership following the latter's acquisition of Banco Popular in 2017


Image: Aegon Global Headquarters at The Hague, the Netherlands. (Credit Aegon)

Aegon has completed the expansion of its life and non-life insurance partnership in Spain with Banco Santander, nearly two years after announcing the agreement.

The two parties entered into the agreement after Banco Santander’s acquisition of Banco Popular in 2017. Part of the expanded partnership are inclusion of term life and certain lines of non-life insurance.

The deal was closed after meeting all closing conditions, including the scrapping of existing alliances of Banco Popular.

Background of the Aegon, Banco Santander agreement

Under the agreement signed in July 2018, Aegon agreed to make an upfront payment of €215m and up to €75m in additional payment to be made after five years for a 51% stake in the joint venture with Banco Santander. The additional payment will be based on the performance of the partnership.

However, the Dutch life insurance major paid a lesser upfront amount of €187m because of the results of the in-force portfolio which were accumulated to Banco Santander till the closing of the deal.

The insurer stated: “The transaction will have a negative impact of 3 percentage points on the Group Solvency II ratio.”

In December 2012, Aegon and Banco Santander signed a 25-year strategic partnership for distributing protection and general insurance products in Spain. As per the agreement, which was closed in mid-2013, the Dutch insurance group acquired a 51% stake each in a life insurance company and also in a non-life insurance company for a sum of €220m.

The joint ventures between the two parties have been distributing their life and general insurance products via Banco Santander’s branch network, while Aegon Spain had been handing the back-office services to the joint venture firms.

About a year ago Banco Santander reached an agreement with German insurance major Allianz to scrap their Spanish life insurance joint venture Allianz Popular. For this, the Spanish banking group agreed to buy out Allianz’ 60% stake in the joint venture for €936.5m.