Serco is in talks with AEGON to provide a wide range of outsourced services over a 10-year period, which will mark the group's entrance into the life and pensions market.
Under the partnership, which is expected to commence in the fourth quarter of this year, Serco will operate primarily out of AEGON's office in Lytham St Annes and also take on 330 members of its staff.
Serco will be managing all aspects of AEGON's contact with a customer, which will include initial underwriting through to claims management for its Individual Protection suite.
Research director, John O'Brien, at analyst firm TechMarketView described the deal as a "shot across the bows at life and pensions BPS market leaders Capita and Diligenta/TCS".
Serco will also look after all aspects of policy servicing and claims for small 'closed books' of pension and life assurance policies that are no longer sold but require on-going management.
"Our strategy with the UK business, which is line with AEGON's global strategy, is to develop our protection business to be one of the leading UK protection providers," said Adrian Grace, UK CEO of AEGON.
"We are committed to providing first class customer service with cost-efficient operations, and partnering with Serco will provide this for us. We remain committed to building our UK business focusing on our chosen markets of workplace savings and at-retirement, of which our individual protection business is a core part."