Dutch insurance major Aegon has agreed to sell the last substantial block of its US life reinsurance business to French life reinsurance provider SCOR Global Life.
Image: SCOR to buy the last block of US life reinsurance business of Aegon. Photo: courtesy of Aegon.
As per the terms of the deal, Transamerica life subsidiaries of Aegon will reinsure nearly $700m of liabilities through the French company.
Aegon said that the sale is in line with its strategic objective to decrease the amount of capital allocated to its run-off businesses.
The transaction involves the last substantial block of life reinsurance business retained by Transamerica following its divestments of the vast majority of its reinsurance business to SCOR Global Life in 2011 and 2017.
Aegon said that the transaction is expected to provide a one-time benefit of about $50m on the capital position of Transamerica along with a slightly positive effect on recurring capital generation.
According to the Dutch insurer, underlying earnings for the future will not be impacted by the transaction as earnings of the block of reinsurance business come under run-off businesses, which are not included in underlying earnings before tax.
Also, the transaction is anticipated to yield a pre-tax IFRS loss of about $105m (€90m) which will be included in Other charges in the second half 2018 results.
The company, in a statement, said: “As a result of the transaction, Aegon will significantly reduce the size of a related captive insurance company and the related letter of credit facility in place to finance redundant reserves, generally referred to as XXX term life insurance reserves.”
Last month, Aegon agreed to acquire a 95% stake in Robidus, a Dutch income protection service provider, from Avedon Capital Partners for an undisclosed price.
Robidus offers a comprehensive variety of income protection services to employers that include employee reintegration services, outsourcing services in the field of social security management. It also offers social security legislation advisory services.
The deal to take stake in Robidus is part of the insurance giant’s strategic objective to grow its position in the income protection value chain and expand its fee based businesses.