French insurance group CNP Assurances (CNP.FR) will pay up to EUR590 million for a 50% stake in Barclays PLC's (BCS) Spanish and Portuguese life insurance unit as the two groups set up an insurance partnership in southern Europe, the companies said Thursday.

The two groups will start new life insurance operations in Italy as part of a 25-year alliance which will cover the marketing and distribution of life insurance and pension products, according to statements from the two companies.

The products will be sold through Barclays' retail network in Spain, Portugal and Italy, Barclays said.

CNP will take management control of the joint venture and will pay Barclays EUR140 million in cash on completion of the deal for the 50% stake in Barclays Vida y Pensiones Compania de Seguros.

A further cash payment of up to EUR450 million will be payable to Barclays over a 12-year period and will depend on the performance of the joint venture and Barclays' branch openings, Barclays said.

The transaction won't have any "material impact" on CNP Assurances' solvency ratio, the insurer said.

Barclays said it will reinvest the proceeds from the deal in "developing its businesses in Spain, Portugal and Italy."

-By Jethro Mullen, Dow Jones Newswires; 33 1 4017 1738; jethro.mullen@dowjones.com