Aegon sells US run-off businesses to Wilton Re
Netherland-based insurance group Aegon has agreed to sell its two largest US run-off businesses, the pay-out annuity business and the Bank Owned / Corporate Owned Life Insurance business (BOLI/COLI), to Wilton Re.
The transaction is a part of company's stated strategic objective to reduce the amount of capital allocated to its run-off businesses, according to the statement.
Under the terms of the agreement, Aegon's Transamerica life subsidiaries will reinsure $14 billion of liabilities to affiliates of Wilton Re US Holding. The transaction and related management actions are expected to result in a capital release of approximately $700 million (€630 million) in 2017, the company said.
"I am very pleased that we have reached an agreement to divest the majority of our US run-off businesses," said Alex Wynaendts, CEO of Aegon. "This transaction is in line with our strategic objective of accelerating the release of capital allocated to these businesses and will further enhance the financial flexibility of the group. We are confident that this agreement is also in the best interests of our customers, as Wilton Re is a highly respected reinsurer in the market."
The company stated that as a result of the transaction, Aegon's group solvency II ratio is estimated to improve by approximately 6 percent-points in the second half of 2017. After completion of the transaction and the related management actions, the capital released from this transaction is expected to be upstreamed to the holding, which will improve Transamerica's return on capital by approximately 60 basis points.
Aegon expects annual capital generation from its US operations to be reduced by approximately $30 million (€27 million) following the transaction. As the businesses are classified as run-off businesses, their associated earnings are not included in underlying earnings before tax.
Aegon anticipates the reinsurance transaction will result in a book loss of approximately $300 million (€270 million), to be reported in 'Other Charges' at the time of closing. The transaction is subject to regulatory approvals and is expected to close in the summer of 2017.
Today’s stories
Beazley, Chaucer and Talbot launch political risk consortium in Asia
"Many African insurers lack stability" finds poll, yet execs in region are upbeat
Liberty hires Deutsche Bank exec to expand global financial risks
Higher claims hit Africa Re’s Q1 profits but GWP grows steadily
Assurant appoints non-executive director to UK board
QBE appoints negotiated lines head for Australia and New Zealand
Prudential hires head of product for annuities business
Did you enjoy reading this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
Already registered?
Login to your account
If you don't have a login or your access has expired, you will need to purchase a subscription to gain access to this article, including all our online content.
For more information on individual annual subscriptions for full paid access and corporate subscription options please contact us.
To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.
For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk
Editor's picks
Editor's picks
More articles
Copyright © intelligentinsurer.com 2024 | Headless Content Management with Blaze