Biological insecticides based on Spodoptera exigua multiple nucleopolyhedrovirus (SeMNPV) can efficiently control S. exigua larvae on field and greenhouse crops in many parts of the world. Spanish wild populations and laboratory colonies of S. exigua are infected by two iflaviruses (SeIV-1 and SeIV-2). Here we evaluated the effect of iflavirus co-infection on the insecticidal characteristics of SeMNPV occlusion bodies (OBs). Overall, iflavirus co-inoculation consistently reduced median lethal concentrations (LC50) for SeMNPV OBs compared to larvae infected with SeMNPV alone. However, the speed of kill of SeMNPV was similar in the presence or absence of the iflaviruses. A reduction of the weight gain (27%) associated with iflavirus infection resulted in a 30% reduction in total OB production per larva. Adult survivors of SeMNPV OB inoculation were examined for covert infection. SeMNPV DNA was found to be present at a high prevalence in all SeIV-1 and SeIV-2 co-infection treatments. Interestingly, co-inoculation of SeMNPV with SeIV-2 alone or in mixtures with SeIV-1 resulted in a significant increase in the SeMNPV load of sublethally infected adults, suggesting a role for SeIV-2 in vertical transmission or reactivation of sublethal SeMNPV infections. In conclusion, iflaviruses are not desirable in insect colonies used for large scale baculovirus production, as they may result in diminished larval growth, reduced OB production and, depending on their host-range, potential risks to non-target Lepidoptera.