Aegon has announced an agreement to divest a block of life reinsurance business to French reinsurer SCOR, and also revealed that it is to dissolve a related captive insurance firm.
Under the agreement, Aegon’s Transamerica life subsidiaries will reinsure $750 million of liabilities to SCOR, which covers roughly 50% of the life reinsurance business Transamerica retained following the divesting of most of its life reinsurance business to SCOR in 2011.
The deal is expected to result in a one-time benefit of roughly $75 million on Transamerica’s capital position, as well as having a slight but positive impact on recurring capital generation.
The transaction is also expected to result in a pre-tax IFRS loss of $125 million (€105 million), and will be reported in other charges in the firm’s Q4 results.
Furthermore, the transaction includes the company dissolving a related captive insurance company in place to finance redundant reserves, and will redeem $475 million of operational leverage supporting that captive.
