Canada Life Reinsurance has entered into a long-term longevity reinsurance agreement with financial services firm Aegon, covering €12 billion of in-force liabilities in the Netherlands.
Close to 200,000 of in-payment and deferred pensioners will be reinsured by Canada Life Re under this agreement, representing about one quarter of Aegon’s longevity exposure in the country.
The contract is set to commence on December 31, 2019, and will continue until the portfolio runs off.
“This transaction is the result of a great effort by both our team and Aegon’s team and highlights Canada Life Reinsurance’s strength as a partner for reinsurance longevity transactions globally,” said Jeff Poulin, Global Head of Canada Life Reinsurance.
Derek Popkes, Chief Operating Officer at Canada Life Reinsurance, also commented: “We are delighted to grow and diversify our global longevity portfolio by working with Aegon to deliver a transformational longevity transaction tailored to their specific requirements.”
“We will continue to innovate and work in partnership with our valued clients to deliver the best risk transfer solutions matching their objectives.”
Aegon expects the deal to reduce required capital and improve its capital position, while having no impact on the services and guarantees that it provides to policyholders.
The company also anticipates a benefit to its Solvency II ratio of 10 to 12 percentage points in the Netherlands, and 5 to 6 percentage points for the group.
However, underlying earnings before tax will decrease by approximately €25 million per year.
“This longevity reinsurance agreement is in line with our strategy to release capital from mature, spread‑based businesses,” said Alex Wynaendts, CEO of Aegon.
“Through this transaction we are freeing-up significant capital from our Dutch life insurance activities. This underscores our commitment to maintain a strong capital position in the interest of all our stakeholders.”
