Aegon splashed out £140 million yesterday to acquire the Cofunds investment platform from Legal & General (L&G), completing the Dutch insurer’s “journey” away from being a pure life and pensions business.
The deal – creating the UK’s largest platform business, including ISAs, equities and general investments as well as pensions – follows Aegon’s recent acquisition of BlackRock’s UK platform and the sale of its £3 billion UK annuities portfolio to L&G in May.
Alex Wynaendts, group chief executive of Aegon, which employs about 2,000 staff in Edinburgh, said: “The acquisition of Cofunds is a unique opportunity to further accelerate the execution of our UK strategy.
“It enables us to create substantial value as the number one provider in the fast-growing UK platform market.”
Aegon UK chief executive Adrian Grace added: “From a standing start a few short years ago we have transformed our business beyond all recognition.
“Aegon is now well on the journey from a traditional life and pensions provider to the largest workplace and retail platform business.”
Talking to The Scotsman, Grace likened the Cofunds acquisition to “moving into the platform premiership and champions’ leagues”.
He said that when he took the helm at Aegon UK five years ago there were “huge rumours” the Dutch parent was going to pull out of the country. But he added that the scale of investment and commitment shown means “I hope never to hear those rumours again”.
Cofunds has more than 750,000 customers and assets under administration of £77.5 billion. That compares with Aegon UK’s existing platform assets of some £9bn.
Cofunds, based in Essex and with operations staff in Sussex, will continue to be led by its chief executive, David Hobbs.
The acquisition came as Aegon also posted a near-14 per cent fall in second-quarter underlying profits to €435m (£373.8m) as higher earnings from Europe were outweighed by a poorer performance in the Americas.
The company blamed the lacklustre American numbers on “adverse claims experience, low interest rates and lower variable annuity earnings”. By contrast, European Q2 profits lifted €21m to €160m.
Aegon made an overall net loss of €385m (£331m), mainly due to a book loss on the sale of its annuity book to L&G.
On the UK performance, Grace noted: “In the second quarter we delivered earnings of nearly £9m and for the second consecutive quarter added a further £1bn of assets on to the platform.
“The protection business also performed strongly with sales up 9 per cent,” he added.
Grace said the transformation to the platform model had made the group an “agile capital-light business”.