Aegon has agreed to sell a block of its reinsurance business to SCOR and dissolve a related captive insurance company.
As part of the agreement, Aegon’s Transamerica life subsidiaries will reinsure approximately $750 million of liabilities to SCOR.
Aegon will also dissolve a related captive insurance company in place to finance redundant reserves and will redeem $475 million of operational leverage supporting that captive.
The agreement is consistent with Aegon’s strategic objective to reduce the amount of capital allocated to its run-off business.
Approximately half of the life reinsurance business that Transamerica retained after divesting the majority of its reinsurance business to SCOR in 2011 is covered in the transaction.
The transaction is expected to have a one-time benefit of approximately $75 million on Transamerica’s capital position and a marginally positive effect on recurring capital generation.
Future underlying earnings aren’t affected by the deal because earnings of this block of reinsurance business are part of run-off businesses, which aren’t included in underlying earnings before tax.
A pre-tax International Financial Reporting Standards loss of approximately $125 million is expected as a result of the transaction and will be reported in its Q4 2017 results.
