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Aegon (AEG) to Sell 50% Stake in Spanish Insurance JV, Up 4.9%

·3-min read

Shares of Aegon N.V. AEG rose 4.9% yesterday (Monday May 23) following its decision to dispose its stake in a Spanish insurance joint venture (JV). AEG intends to divest its 50% ownership in the insurance JV with Liberbank in Spain.

AEG started the insurance JV in 2008. Last year, Liberbank merged with a banking services provider based in Málaga, Unicaja Banco. The divestment plan comes after the change in control in its JV partner. The sale is expected to fetch Aegon €177 million (around $187 million) from Unicaja Banco.

The deal is expected to conclude in the second half of this year. Notably, the transaction value reflects 22X after-tax 2021 operating results of AEG’s stake in the JV. The share price appreciation might indicate investors’ approval of the deal with such a high premium. Aegon intends to push the net proceeds from the transaction to the Group. Earlier this year, Aegon closed its divestment of the Hungarian unit for €620 million to the Austrian insurance group named Vienna Insurance Group AG Wiener Versicherung Gruppe.

The Dutch insurer company intends to keep growing its businesses in Spain and Portugal via different JVs. Its partnership with Banco Santander can play a major role in its business expansion in the region. Aegon witnessed significant growth in profits in the region over the last few years.

The divestment might affect its profits in the short run but will allow AEG to focus on more profitable businesses in the long run. The Zacks Consensus Estimate for Aegon’s current-year earnings is pegged at 86 cents per share, indicating a 22.5% decline from the year-ago actuals.

Price Performance

Aegon has rallied 12.9% in the past year against an 18.2% decline of the industry it belongs to.

Zacks Investment Research
Zacks Investment Research

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Zacks Rank & Key Picks

Aegon currently has a Zacks Rank #3 (Hold). Some better-ranked stocks from the finance space are Cincinnati Financial Corporation CINF, Assurant, Inc. AIZ and Cigna Corporation CI, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Based in Fairfield, OH, Cincinnati Financial’s consistent cash flow and sufficient cash balance continue to boost liquidity. The Zacks Consensus Estimate for CINF’s 2022 bottom line has witnessed one upward revision with no downward movement. CINF’s earnings beat estimates in each of the last four quarters, the average being 32.6%.

Assurant’s Global Lifestyle segment has been putting up an impressive performance for a while, backed by its higher net premium, and fee and other income, which saw a CAGR of 13.1% from 2016 to 2021. The Zacks Consensus Estimate for AIZ’s 2022 bottom line has improved 6.4% in the past 60 days. AIZ’s earnings beat estimates in each of the last four quarters, the average being 18.3%.

Cigna has been growing its membership for many quarters now and we expect this trend to continue. The Zacks Consensus Estimate for CI’s 2022 bottom line indicates a 10.6% rise from the year-ago reported number. Headquartered in Bloomfield, CT, CI’s earnings beat estimates in each of the last four quarters, the average being 8.6%.

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Aegon NV (AEG) : Free Stock Analysis Report
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Cigna Corporation (CI) : Free Stock Analysis Report
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