PRESS RELEASES
For Release: IMMEDIATELY
AEGON AND TRANSAMERICA CREATE ONE OF THE
LARGEST LIFE INSURERS IN THE U.S.
MARKET: COMBINING STRENGTH WITH STRENGTH
THE HAGUE (THE NETHERLANDS), BALTIMORE, MARYLAND (U.S.) AND SAN
FRANCISCO, CALIFORNIA (U.S.) -- AEGON N.V. (NYSE: AEG), the parent
company of AEGON USA, Inc., and Transamerica Corporation (NYSE: TA),
signed an agreement providing for AEGON's acquisition of Transamerica
for cash and stock worth USD 9.7 billion. In addition, AEGON N.V. will
assume on a consolidated basis approximately USD 1.1 billion of
Transamerica's holding company debt. Transamerica's corporate and
insurance operations will merge with AEGON USA's operations immediately
after closing, which is expected to occur during the summer of 1999.
The transaction is the second largest in the U.S. life insurance
industry to date. Based on 1997 year-end figures, the combination of
AEGON and Transamerica will result in the third largest life insurance
group in the U.S. in terms of assets and premium written.
The payment of the USD 9.7 billion transaction will be 70% in stock and
30% in cash, representing a premium of 35.4% over New York's 17
February 1999 closing price of USD 57 5/8 for a Transamerica share. The
actual number of shares of AEGON N.V. will depend upon the
determination of the average AEGON share price for the 20 trading days
prior to the closing date of the transaction. The value of USD 9.7
billion equals USD 78 per Transamerica share, of which USD 23.40 per
share will be paid in cash. The USD 54.60 share value of the
consideration paid in AEGON shares will remain fixed for a 20% increase
or decrease in the AEGON share price of currently USD 95.20, between
the date of signing and the date of closing. For the next 15% increase
or decrease in the AEGON share price the effect of the increase or
decrease will be shared equally between AEGON and Transamerica
shareholders. Beyond a 35% positive or negative change in share price
the affected parties can fix the exchange ratio at the 35% level,
renegotiate or decide not to complete the transaction.
AEGON has priced this transaction to achieve an unleveraged return on
equity of 9%, reflecting the lower cost of capital in today's
environment. This is below AEGON's normal hurdle rate of 11% that will
be maintained for the longer term. AEGON has maintained the same spread
over risk free rates that existed at the time of the Providian
transaction.
It is expected that the positive effect on AEGON earnings per share in
the years 1999 and 2000 will result in an additional increase in
earnings per AEGON share of at least 3% in both years. In advance of
the publication of its 1998 results on 3 March, AEGON's outlook for the
full year 1999 is, assuming completion of the transaction at mid-year:
barring unforeseen exceptional circumstances such as adverse currency
and equity market movements and including the impact of Transamerica's
acquisition, we expect an increase in 1999 earnings between 18% and 20%
and in earnings per share between 12% and 15%.
OPPORTUNITIES
AEGON USA and Transamerica, both major life insurance and pension
providers in the USA, have complementary products and distribution
channels. Following the transaction, the combined operations will have
a more prominent position in the life insurance business and will be
the second largest life reinsurer in the U.S., based on in force
business. The addition of Transamerica's general agency distribution
channel, which is focused on high net worth individuals, and
Transamerica's Canadian operations, adds depth to AEGON USA's existing
distribution. The combined operations will be a leading U.S. provider
of long term care insurance products, insurance marketed at the
worksite, GIC's, structured settlements and 401(k) pension plans. The
acquisition will join Transamerica's well-established consumer brand
name and franchise in the U.S. with AEGON USA's wide array of
highly-ranked retirement and savings products and will unite both
companies' successful management teams. Additionally, Transamerica has
highly profitable and growing operations in commercial lending, leasing
and real estate information services, which do not overlap with any
AEGON USA businesses.
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The Transamerica businesses will find a stable platform for further
enhancement of their market position by combining with AEGON USA. In
addition to the growth opportunities that the transaction and combined
activities present, the companies expect to be able to achieve
approximately USD 150 million before tax in annual expense level
reduction, including the combining of corporate functions, after a
three year period.
KEY FIGURES
(in million USD) TRANSAMERICA
TRANSAMERICA INSURANCE AEGON AEGON
CORP. ONLY USA N.V.
1998 1998 1997 1997
Full year US GAAP USGAAP Dutch Principles
Accounting
Assets 58,503 46,186 63,691 135,205
Total 6,429 4,367 5,995 16,031
revenues (not
incl. annuities)
Premium 1,847 1,847 3,285 10,756
income
Annuity/GIC 3,873 3,873 5,280 5,280
deposits
Note: AEGON's 1998 figures will be published on 3 March 1999.
CHAIRMEN'S STATEMENTS
AEGON Chairman of the Executive Board Kees J. Storm said: "The
acquisition of Transamerica strengthens our already impressive
businesses in the United States and elevates us to a top three position
in that country, based on 1997 statutory assets. AEGON has a proven
track record of successfully integrating companies and people to create
superior value. We believe that shareholders, policyholders and
distributors of both companies will benefit from the great potential of
the combined operation."
Transamerica Chairman and CEO Frank C. Herringer said: "In a rapidly
consolidating and globalizing financial services industry, this
transaction unites Transamerica and its shareholders with one of the
most financially strong and successful companies in the worldwide
insurance industry. Furthermore, AEGON's and Transamerica's management
teams have a well-earned reputation for their focus on shareholder
value. We see this as a well-considered strategic move that will
benefit customers, employees, shareholders and business partners."
AEGON USA Chairman, President and CEO and member of AEGON N.V.'s
Executive Board Donald J. Shepard said: "The ac-
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quisition of Transamerica, with its well-regarded brand name and
franchise, simultaneously advances our objectives on a number of
fronts. It offers us the ability to leverage our skills and financial
strength into attractive new businesses; and it strengthens our
distribution capabilities and product depth in key areas, enabling us
to accelerate growth of our core operations. We look forward to working
together with Transamerica's CEO Frank C. Herringer and his team of
managers and employees."
BACKGROUND INFORMATION
AEGON is a leading international insurance group with its headquarters
in The Hague, the Netherlands and is quoted on the stock exchanges of
Amsterdam, New York (NYSE), London, Frankfurt, Zurich and Tokyo. AEGON
has a major presence in five key markets: the USA, the Netherlands, the
UK, Hungary and Spain.
AEGON USA, headquartered in Baltimore, Maryland, operates through three
groups: Agency, Alternative Markets and Pension. The separate divisions
within each group operate as decentralized businesses targeting
customers through focused marketing.
Transamerica is a leading U.S. financial services company, whose shares
are listed in New York (NYSE), at the Pacific Exchange, and in
Amsterdam, London, Frankfurt, Paris and Switzerland. Transamerica is
headquartered in San Francisco, California, and has life insurance
operations in the U.S., Canada and Asia, and financial services
businesses in the U.S. and throughout the world.
FINANCING THE TRANSACTION
Following the closing, Transamerica's shareholders in the aggregate
will be entitled to AEGON common shares valued at approximately USD 6.8
billion and USD 2.9 billion in cash. The actual number of shares will
be based upon an average AEGON share price for the 20 trading days
prior to the closing date. Approximately 80% of the AEGON shares
required for the transaction will be newly issued New York registered
shares, representing approximately a 10% increase in the total number
of AEGON common shares outstanding. In addition, AEGON will purchase
the remaining shares needed for the transaction from Vereniging AEGON
(Association AEGON), AEGON's largest shareholder. Vereniging AEGON has
also agreed to provide AEGON with a hedge, which will keep the purchase
price of the shares approximately the same. Immediately preceding, and
as a part of the agreement with Vereniging AEGON, new preferred shares
will be issued to Vereniging AEGON, to maintain its majority voting
rights in AEGON N.V. The transactions between
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AEGON and Vereniging AEGON will be priced on an arms' length basis. The
purchase of the common shares from Vereniging AEGON and the cash
payment to Transamerica shareholders will be funded with excess capital
and the proceeds from, as yet, unspecified capital market activities.
VERENIGING AEGON
Vereniging AEGON is an independent association, which has a voting
majority in AEGON N.V. through its common and preferred share holdings.
After completion of the transaction, Vereniging AEGON will buy common
shares of AEGON N.V. in the open market with the aim to eventually
regain a holding of approximately 40% of the common shares from the
approximately 30% it is expected to hold immediately after the closing.
Additional holdings will be accumulated gradually, so that extra
volatility on the AEGON share price will be avoided as much as
possible. Vereniging AEGON said it will refrain from market
transactions in AEGON shares while this transaction is pending. The
preferred shares to be issued will be gradually repurchased by AEGON
N.V. as Vereniging AEGON regains its 40% holding of common shares.
MANAGEMENT
Frank C. Herringer will be invited to become a member of AEGON N.V.'s
Executive Board. The Executive Board of AEGON N.V. would then consist
of Kees J. Storm, chairman, Paul van de Geijn, Frank C. Herringer,
Donald J. Shepard and Henk B. van Wijk. In the new combination - Frank
C. Herringer will have line responsibilities for the commercial
finance, leasing and real estate information operations, as well as
responsibility for certain corporate functions and the further
development of the Asia Pacific initiatives. Donald J. Shepard will
continue to have line responsibilities for the combined insurance
operations and related products in the U.S. and elsewhere in the
Americas. The headquarters of the combined U.S. operation will be in
San Francisco, California, although key executive and administrative
functions will continue in their current locations. The Transamerica
name and logo will be retained and be extended to the businesses of
AEGON USA where appropriate.
The transaction will be subject to customary conditions of closing,
including receipt of the usual approvals of regulatory bodies as well
as both parties' shareholders. The transaction has been approved by
AEGON's Supervisory Board and an explanation of the transaction will be
given at AEGON's Annual General Meeting of Shareholders on 29 April
1999. The Central Works Council in the Netherlands has reacted
positively.
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The Hague, Baltimore, 18 February 1999 / San Francisco, 17 February
1999
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INQUIRIES:
AEGON USA, Inc. AEGON N.V. Transamerica Corp.
Press and Public Group Communications Communications
Relations + 31 70 344 83 44 + 1 415 983 40 87
+ 1 410 576 45 76
+ 1 502 560 21 67 Investor Relations Investor Relations
+ 31 70 344 83 05 + 1 415 983 55 03
Attachments: Profile AEGON N.V.
Profile AEGON USA, Inc.
Profile Transamerica Corp.
Profile Vereniging AEGON
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As mentioned previously, the actual number of shares of AEGON N.V.
required for this transaction may vary depending upon the determination
of the average AEGON share price at the time of closing. Transamerica
shareholders will have the right to AEGON N.V. stock with a value of
USD 54.60 per Transamerica share, subject to adjustment if the average
AEGON share price over a specified period of time prior to the closing
exceeds USD 114.24 or is less than USD 76.16. In addition, to the
extent that the average AEGON share price is less than USD 61.88 or
more than USD 128.52, the agreement may be terminated unless the
parties agree to further adjust the number of shares of AEGON N.V.
stock to be received by Transamerica shareholders.
A registration statement relating to the common stock to be issued in
connection with the transaction has not yet been filed with the
Securities and Exchange Commission, nor has a proxy statement relating
to a vote of the stockholders on the transaction been filed with the
Securities and Exchange Commission. The common stock may not be
offered, nor may offers to acquire such stock be accepted, prior to the
time such registration statement becomes effective. This press release
shall not constitute an offer to sell or the solicitation of an offer
to buy any common stock or any other security, and shall not constitute
the solicitation of any vote with respect to the transaction.
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PROFILE AEGON N.V.
The AEGON Group has grown to become one of the world's leading
international insurance groups. Headquartered in The Hague in the
Netherlands, with assets totaling over USD 147 billion, approximately
86% of AEGON's business is life insurance, pensions and
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related savings and investment products. The remainder is in health
insurance and property and casualty insurance. With core operations in
the USA, the Netherlands, the United Kingdom, Hungary and Spain, AEGON
has five highly concentrated, sizable national units. Each unit is a
major competitor in its local market.
STRATEGY
AEGON operates as a 'multi-domestic' organization: highly
decentralized, locally managed business units frequently utilize local
brand names rather than the AEGON brand name. The Group has strong
emphasis on autonomous growth of its existing operations. Second come
selective acquisitions in countries where AEGON already has a presence.
In addition, the Group takes a very disciplined approach to further
internationalization into other geographic areas. In evaluating new
business ventures, appropriate ROI hurdles are applied, taking into
account the likely volatility of returns from the proposed investment.
AEGON has a clear emphasis on profitability and the Group focuses on
its core business, which is insurance, particularly life insurance,
pensions, savings and investment products.
ACTIVITIES
AEGON USA markets life and health insurance and annuity and investment
products. Each division specializes in a selected segment of the market
in which it has experience and knowledge of its customers' needs. AEGON
The Netherlands is active in both the life and non-life insurance
market and is the second largest provider of life insurance with in the
Netherlands a market share in group life of 20% and 12% in individual
life. It operates primarily through independent intermediaries. AEGON
UK in the United Kingdom is an acknowledged leader in the market for
pensions distributed through IFAs. It also provides asset management
services and markets third party investment management products.
AB-AEGON in Hungary offers a wide range of life and non-life products
through its own sales force and via professional intermediaries. AEGON
Spain offers individual and business customers specialized life and
non-life products through independent agents mainly. The AEGON Group is
also active in Belgium, Germany, Mexico, the Philippines and Taiwan and
has representative offices in China and India.
RANKINGS
Ranked by market capitalization AEGON is the world's third largest
listed insurance group.
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PROFILE AEGON USA
AEGON USA, headquartered in Baltimore, Maryland, accounts for over
fifty percent of AEGON's pre-tax income. Offering life and health
insurance and savings and retirement products, AEGON USA operates
through three groups: Agency, Alternative Markets and Pension. The
separate divisions in each group operate as independent businesses
targeting customers through focused marketing.
AGENCY GROUP
The EQUITY GROUP in St. Petersburg, Florida offers variable insurance
products and mutual funds through independent agents and other third
parties.
The INDIVIDUAL DIVISION in Cedar Rapids, Iowa offers traditional life
insurance, mutual funds, accident and health coverage and annuity
products through independent agents.
The MONUMENTAL LIFE DIVISION in Baltimore, Maryland offers traditional
insurance products through career and independent agents.
ALTERNATIVE MARKETS GROUP
The FINANCIAL MARKETS DIVISION in Cedar Rapids, Iowa, offers fixed and
variable annuity and life insurance products through banks and other
financial institutions.
The LONG TERM CARE DIVISION in Bedford, Texas, offers long-term care
insurance products through marketing organizations, independent agents
and brokers.
The SPECIAL MARKETS GROUP in Baltimore, Maryland, offers life,
supplemental health, credit and mortgage insurance products through
direct marketing channels.
The WORKSITE MARKETING DIVISION in Little Rock, Arkansas, offers
supplementary life and health insurance products through employer
payroll deduction.
PENSION GROUP
DIVERSIFIED FINANCIAL PRODUCTS in Louisville, Kentucky, offers
guaranteed savings and investment products sold directly to
institutional retirement and investment markets.
DIVERSIFIED INVESTMENT ADVISORS in Purchase, New York, offers
retirement plan investments and services for mid- and large-size
companies, state and local governments and non-profit organizations.
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PROFILE TRANSAMERICA CORPORATION
Transamerica, headquartered in San Francisco, is a financial services
company with approximately USD 58.5 billion in assets. The company's
two major business lines are life insurance and finance.
LIFE INSURANCE
The Transamerica Life Companies are headquartered in Los Angeles,
California with major operations in Charlotte, North Carolina; Kansas
City, Missouri; Purchase, New York and Toronto, Canada. Transamerica
Life is the sixth largest life insurer in North America based on life
insurance in force, and one of the top life reinsurers in the U.S.
based on new business and in force volume.
The Life Companies design, underwrite and service life insurance,
annuities, long term care insurance and other financial security
products that are sold in the U.S., Canada and Asia through general
agencies, banks, broker/dealers and special distributors and by
independent agents and financial planners. Transamerica Life also
provides reinsurance, risk management consulting and product
development services, and develops, manages and sells mutual funds,
retirement plans and other investment products such as investment
contracts for stable value funds, municipalities and structured
settlements.
FINANCE
Commercial Lending: Transamerica Commercial Finance is based in the
Chicago, Illinois area. It is one of the largest independent commercial
lending operations in the U.S., based on net finance receivables owned
and serviced. Transamerica Commercial Finance makes commercial loans
through three operations. Transamerica Distribution Finance provides
financing for manufacturers, distributors, retailers and consumers in a
wide range of industries. Transamerica Business Credit makes loans to
many types of businesses for a variety of needs. Transamerica Equipment
Financial Services provides equipment financing through loans and
leases to a wide variety of businesses and municipal entities.
Leasing: Transamerica Leasing is headquartered in Purchase, New York.
Its container fleet is the largest in the industry. The company leases,
manages and provides financing for intermodal transportation equipment
around the world. Its fleet includes standard containers, specialized
containers such as refrigerated and tank containers, rail trailers and
chassis.
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Real Estate Services: The Transamerica Real Estate Information
Companies are headquartered in Dallas, Texas. Transamerica Real Estate
Tax Service is the nation's largest servicer of mortgage loans. The
company obtains property tax information, monitors property payments
and provides tax payment processing. Transamerica Flood Hazard
Certification offers flood hazard determination services. Transamerica
Intellitech markets real estate information software.
PROFILE 'VERENIGING AEGON' (ASSOCIATION AEGON)
The association 'Vereniging AEGON' is the continuation of the former
AGO mutual life insurance company. After a restructuring in the
seventies, the insurance activities of the AGO group were held by AGO
Holding N.V. and the unlisted shares in AGO Holding N.V. were held by
the association. AGO Holding merged with the listed insurance company
ENNIA in 1983 and thus formed AEGON N.V. As a consequence Vereniging
AEGON now owns shares in AEGON N.V. The cooperation of Vereniging AEGON
optimizes the funding of the proposed transaction. It also eliminates
possible substantial financial downside risks involved for AEGON.
According to the articles of association of Vereniging AEGON its
primary purpose is to promote the interests of the companies forming
part of or are associated with the AEGON Group as well as those of
policyholders, employees, shareholders and other parties associated
with the AEGON Group. In accordance with the 1983 AEGON merger
agreement Vereniging AEGON is entitled to newly issued preferred shares
in the event that it would lose its majority voting rights in AEGON
N.V. For this reason Vereniging AEGON requested the issue of new
preferred shares which secure these rights.
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