Life insurance and pension cover provider, AEGON, and wealth management, capital markets and advisory company, Merrill Lynch have announced that they will form a strategic business relationship in the areas of insurance and investment products.

As part of this relationship, an AEGON company has signed an agreement to acquire Merrill Lynch Life Insurance Company and ML Life Insurance Company of New York for $1.3 billion in cash including theexcess surplus of approximately $425 million.

The transaction is expected to close before the end of the fourth quarter of 2007, subject to customary regulatory approvals and closing conditions.

Merrill Lynch will continue to serve the insurance needs of its clients through its core distribution and advisory capabilities. Importantly, Merrill Lynch will continue to offer its flagship Merrill Lynch Investor Choice Annuity product through its financial advisor network. The companies AEGON is acquiring will issue products.

Both companies anticipate substantial benefits for clients arising from this partnership including increased breadth of product offerings and enhancements to existing products.

AEGON''s Transamerica companies will provide support to the Merrill Lynch financial advisor network. This acquisition is in line with Transamerica''s strategy to develop alliances with strong distribution partners. This new relationship will place Transamerica in a position of strength in the sales of variable annuities within the wirehouse distribution channel.

With approximately $800 million of variable annuity sales in 2006, and approximately $10 billion of variable annuity assets at year-end 2006, the acquisition of the two life insurance companies will place AEGON firmly in the top 10 of variable annuity sellers in the wirehouse and broker-dealer segment globally.

"By working with a world-class company like Transamerica, we will be able to focus on insurance product distribution and address the insurance, investment and retirement needs of our clients more broadly," said Robert J. McCann, president of Merrill Lynch''s global private client group.

"Not only will our clients benefit from Transamerica''s scale and risk management expertise, but this strategic relationship will also allow us to jointly develop innovative insurance and investment products as well as pursue new business and distribution opportunities," McCann added.

Pat Baird, president and CEO of AEGON USA, Inc, said, "This acquisition provides the framework for a strong strategic relationship with Merrill Lynch, creating a significant opportunity to grow the sales of the Merrill Lynch Investor Choice Variable Annuity while jointly building and branding new and innovative products for our clients."

AEGON expects the acquisition to have a marginally positive effect on earnings per share. AEGON will finance the transaction using existing excess capital. As a result, this acquisition will not impact AEGON''s ability to execute its recently announced €1 billion share repurchase program. Merrill Lynch expects to record a significant gain on sale during the fourth quarter of 2007 and anticipates the transaction to be slightly accretive to earnings per share and to have a positive effect on return on equity in 2008 after redeployment of proceeds.