LONDON, Feb 17 (Reuters) - Dutch life insurer Aegon (LSE: AGN.L - news) has struck a 12 billion euro ($15.65 billion) deal with Deutsche Bank (Xetra: 514000 - news) to protect itself against the financial impact of customers living longer than expected, the biggest such transaction in Europe (Chicago Options: ^REURUSD - news) .

Under the deal, Deutsche Bank is taking a fee to cover the cost of unforeseen increases in the lifespan of Aegon customers accounting for 12 billion euros of reserves, about one third of the insurer's Dutch business, the two companies said on Friday.

Deutsche Bank has in turn passed on most of the risk to capital market investors through private bond and swap placements.

Such deals are tipped for strong growth as unexpected increases in pensioner lifespans, fuelled by medical advances and lifestyle changes, inflict potentially crippling extra costs on insurers and pension funds.

"We believe this market will continue to grow as insurance companies and pension funds look at new ways to manage their liabilities while investors seek diversified investment opportunities," said Clare Hennings, Deutsche Bank's head of structured insurance solutions.

In November, Deutsche Bank provided protection from longevity increases on 3 billion pounds ($4.72 billion) of liabilities in British aero engine maker Rolls Royce (LSE: RR.L - news) 's pension fund.

British life insurer Legal & General (LSE: LGEN.L - news) and reinsurer Hannover Re last month agreed a 1 billion pound longevity transfer deal for British glass maker Pilkington's staff pension scheme.

Britain's pension risk transfer market, where companies pay insurers or banks to shoulder some of the investment risk associated with their retirement schemes, reached a record 9 billion pounds last year, according to pension consultants Hyman Robertson.

Separately on Friday, Aegon said it missed fourth-quarter profit estimates after taking several one-off charges and expected the euro zone crisis to continue to affect the economy and financial markets. ($1 = 0.7668 euros) ($1 = 0.6350 British pounds) (Reporting by Myles Neligan; Editing by Jon Loades-Carter)

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Aegon clinches record longevity protection deal