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AEGON: A Strong Buy

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On Mar 19, Zacks Investment Research upgraded AEGON N.V. (AEG - Free Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

AEGON has successfully recorded year-over-year earnings growth in all the quarters of fiscal 2012.

On Feb 15, AEGON announced its fourth-quarter 2012 results. Reported earnings of 29 cents per share were significantly above the year-ago earnings of 1 cent per share. Effective cost containment measures as well as improvement in business drove the upside. Sales increased 29% year over year to $2.3 billion in the fourth quarter.

AEGON intends to increase its dividend to 15 cents (to €0.11 per share from €0.10 per share paid as the final dividend of 2011). The board will propose the increase at the annual general meeting scheduled on May 15, 2013.

Further, Vereniging Aegon, the company’s largest stakeholder agreed to cancel all preferred share holdings. If approved by shareholders, this move will simplify AEGON 's capital structure.

AEGON will end its life, health and pension joint venture with Unnim Banc. Consequently, it will divest its 50% holding to Unnim for $481.5 (EUR 353) million, resulting in an estimated book gain of approximately $143 (EUR 105) million before tax. This divestiture will also produce 12% annual return on investment.

Nevertheless, AEGON sticks to its long-term commitment to Spain. It partnered with Banco Santander to provide life and general insurance products via its 4,600 bank branches. Through this 25-year partnership, AEGON can gain access to a prospective 12 million clientele. Moreover, Aegon will buy 51% stake in both a life insurance company and non-life insurance company for $291.5 (EUR 220) million.

Further, in an effort to cement its foothold in the Central and Eastern European region, AEGON will acquire the life insurance and pension business of Eureko in Romania. Subsequent to the acquisition, Aegon Romania, with about 650,000 pension fund members, will emerge as the third largest pension provider, while its life insurance portfolio will become one of the 10th largest in the country. AEGON also purchased Fidem Life from Horizon Capital, a private equity firm in Ukraine.

The Zacks Consensus Estimate for 2013 and 2014 currently stands at 93 cents and 97 cents per share, respectively. The long-term expected earnings growth is 18.9%.

Other Stocks to Consider

Investors can also consider other multi-line insurers like Assured Guaranty Ltd. , Cigna Corp. (CI - Free Report) and CNO Financial Group Inc. (CNO - Free Report) . While  Assured Guarantee carries a Zacks Rank #1 (Strong Buy), Cigna Corp. and CNO Financial Group carry a Zacks Rank #2 (Buy).

In-Depth Zacks Research for the Tickers Above

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Aegon NV (AEG) - free report >>

Cigna Corporation (CI) - free report >>

CNO Financial Group, Inc. (CNO) - free report >>

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