Aegon yesterday completed the divestment of its life reinsurance business, Transamerica Reinsurance, to SCOR, a global reinsurance company, following the final approval of the relevant regulatory authorities.
The agreement was announced on April 26, 2011. Under the agreement, Aegon has divested its global life reinsurance activities with the exception of select blocks of business. The retained businesses comprise mainly variable annuity guarantee business.
The decision to divest Transamerica Reinsurance is consistent with Aegon’s strategic focus on its core business of life insurance, pensions and asset management, while improving its risk-return profile.
The transaction, which consists of a number of reinsurance agreements, resulted in a total after-tax consideration of USD 1.4 billion, consisting of cash proceeds of USD 0.9 billion from SCOR and a further USD 0.5 billion of capital released. The transaction will result in an amortization of prepaid cost of reinsurance of approximately USD 40 million before tax per annum initially related to the business ceded. These costs are expected to trend down as the contracts mature. The transaction will have no meaningful impact on shareholder’s equity.