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Dutch insurer Aegon to repay some bailout funds

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THE HAGUE, Netherlands (Bloomberg)—Aegon N.V., the Dutch owner of U.S. insurer Transamerica Corp., will this month repay €500 million ($643 million) of government aid it received in 2008 as the European Union approved the company’s bailout.

Aegon received €3 billion ($3.86 billion) from the Dutch government and repaid a third of the money in November. It will repay the remainder by the end of June 2011 as part of an agreement with the European Commission, The Hague, Netherlands-based company said today in a statement.

Aegon, which traces its roots to 1759, is banned from making takeovers and paying dividends on common shares as conditions for gaining E.U. approval for the aid. Other requirements include a ban on the insurer becoming among the three most competitively priced providers of residential mortgages and internet savings accounts in the Netherlands.

“Most positive is that Aegon has European Commission approval without any significant consequences,” Cor Kluis, a Utrecht, Netherlands-based analyst at Rabobank Groep, wrote in a note to investors. “As Aegon was the only pure insurance company receiving state support, this was not a given fact,” said Mr. Kluis, who rates Aegon a “hold.”

Aegon advanced as much as 6.2% in Amsterdam trading, the biggest intraday gain in more than three months.

Aegon has agreed with the Dutch Ministry of Finance to amend the terms and conditions of the remaining repayments as part of the process to conclude the commission’s review. The total premium payable will be reduced to 40% from 50%, the insurer said.

“We see it as positive that Aegon is able to repay the first €500 million from internal resources given recent market rumors about a pending equity issue,” Albert Ploegh, an Amsterdam-based analyst at ING Groep NV, said in a note to investors. Mr. Ploegh rates Aegon a “buy.”

The rest of the repayment can be funded through several options, including generating cash from excess capital in its businesses, selling assets or raising money in capital markets, Aegon Chief Executive Officer Alex Wynaendts told reporters on a conference call today.

Mr. Wynaendts said he “can’t rule out any options at this point in time,” when asked about a possible share sale.