Standard Life has signed a deal to acquire Aegon UK, the UK insurance and pensions business of Aegon Europe, in a transaction valued at £2bn ($2.7bn).
The deal will be financed through a mix of debt, existing cash and the issuance of new Standard Life ordinary shares to Aegon at completion.
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Those shares will account for around 15.3% of the enlarged company’s share capital, making Aegon a shareholder and asset management partner.
After the deal closes, the combined group is expected to serve 16 million customers and oversee approximately £480bn of assets under administration.
In a statement to Life Insurance International, Moody’s Ratings VP-senior credit officer Brandan Holmes said: “Standard Life’s acquisition of Aegon UK is credit positive, propelling it to second place in the UK workplace pensions (WP) market.
“The combined entity will benefit from improved economies of scale, stronger distribution and access to large corporate mandates, while its enlarged member base presents compelling growth opportunities across the full retirement and savings life cycle.
“The UK workplace pension market is consolidating rapidly around platforms backed by large, well-capitalised insurance groups. We estimate that the top four WP providers now control around 70% of total WP assets under administration in the UK. With assets potentially reaching £2tn by 2035 and incoming regulatory scale requirements accelerating the exit of smaller providers, the largest players are well-positioned to capture a disproportionate share of one of the UK’s most significant long-term growth markets.”
Standard Life said the acquisition would add £160m of operating cash generation and growth in line with its mid-single digit percentage guidance.
It also said the group would remain at the upper end of its Solvency II coverage ratio range.
The company expects the deal to contribute £190m in International Financial Reporting Standards adjusted operating profit and be mid-single-digit accretive to adjusted operating earnings per share by 2029.
Standard Life Group CEO Andy Briggs said: “Our agreement to acquire Aegon UK significantly accelerates our vision to be the UK’s leading retirement savings and income business.
“Together, we will not only be stronger, we will be better – helping our customers achieve better outcomes and greater financial security in later life. I look forward to welcoming everyone at Aegon UK to Standard Life in due course and working together to capture the huge potential in front of us.”
Once the shares are issued, Aegon will hold 15.3% of the enlarged group. That stake will be subject to a lock-up period ending either 18 months after completion or after the re-domiciliation of Aegon’s ultimate holding company to the US, which is expected on 1 January 2028, whichever is earlier.
Aegon’s UK asset management operations will stay within Aegon’s global asset management business and will continue to work with the merged company as an asset management partner, the company added.
The transaction remains subject to regulatory approvals and is due to complete towards the end of 2026.
In workplace pensions, the acquisition will add £74bn of assets under administration and 2.1 million customers to Standard Life’s existing £71bn workplace business.
In retail pensions and savings, the deal will bring in £86bn of assets under administration and 1.8 million customers.
Standard Life said the combination would also widen its administration and distribution reach among corporate advisers and adviser-led employer segments in the UK defined contribution market, while adding digital tools and Amazon Web Services-enabled data capabilities for customers and advisers.
Aegon CEO Lard Friese commented: “Standard Life is the right owner for Aegon UK: we share the same values and a strong commitment to customers, and together the businesses will create the UK’s largest retirement savings and income provider. The businesses are complementary and the combination offers an excellent outcome for Aegon UK’s customers and colleagues.”
After the transaction is completed, Aegon said its financial guidance for 2026 and 2027 would be revised to reflect the disposal of Aegon UK.
