Aegon offloads $4.4 billion of annuities to Legal & General

(Bloomberg) — Aegon NV, the Dutch owner of U.S. insurer Transamerica Corp., divested the final 3 billion pounds ($4.4 billion) of annuities from its U.K. portfolio to Legal & General Group Plc.

The transaction, which covers 27,000 policyholders, will release another 275 million pounds of capital that had been set aside under Solvency II regulations, the company said in a statement on Monday. Aegon will initially reinsure the liabilities to L&G followed by a so-called Part VII transfer that will boost its capital ratio by about 20 percentage points.

The divestment “is an important step in the strategic repositioning of our business in the U.K.,” Aegon CEO Alex Wynaendts said in the statement. “The divestment enables us to fully focus on growing our platform business.”

The transaction follows the 6 billion-pound U.K. annuity deal that Aegon struck with Rothesay Life Ltd. in April as the company seeks to free up capital from non-core parts of the business. The Dutch insurer said it will still have about 1 billion pounds of annuity liabilities on its balance sheet from a so-called inward reinsurance deal.

Aegon said the capital generated from the U.K. operations will be reduced by about 30 million pounds, while earnings will fall by about 16 million pounds a year. The deal will also lead to a one-time loss of about 215 million pounds, which will be reported in the second quarter.

Aegon fell for the first time in four days and was down 2.3 percent to 4.40 euros by 9:12 a.m. in Amsterdam. The stock is down 16 percent this year.