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Aegon plans further deals after GRE buy

AEGON, the Dutch insurance group, said it is looking to make further acquisitions in the UK after agreeing yesterday to buy the former Guardian Royal Exchange life insurance businesses for pounds 759m from Sun Life & Provincial.

"We have not exhausted the UK market yet," Aegon chairman Keen Storm said. He said further life sector buys would be "the natural choice," adding that the group was interested in both "large and small buys".

City sources have cited Aegon as a possible counterbidder for Scottish Widows, the mutual life insurer that in June agreed to be taken over by Lloyds TSB for pounds 7bn. Aegon already has a strong presence in UK life and pensions via Scottish Equitable, the Edinburgh company it bought five years ago.

Confirmation of the sale of GRE's life business, which has assets of pounds 9.5bn under management, was welcomed in the City where shares in Sun Life, the UK quoted offshoot of French insurance giant AXA, soared more than 5 per cent to 452.75p.

The shares were also boosted by a strong first-half financial performance. Group operating profits before tax jumped 32 per cent to pounds 162.6m, as a result of a pounds 21m contribution from GRE and a rise in new business.

Mark Wood, group chief executive of Sun Life, which bought GRE for pounds 3.4bn in March, said: "The main GRE life, pensions and unit-trust businesses are much smaller than those of AXA Sun Life and are concentrated on markets that are not Sun Life's primary markets. By selling at what we regard as an attractive price we have avoided the pain of another integration on the life side."

The group intends to use the proceeds of the sale to pay down some of the debt advanced by AXA to fund the GRE acquisition.