A company owned by the Canada Pension Plan Investment Board has agreed to reinsure large blocks of Transamerica life insurance and annuity business
The reinsurer, part of Norwalk, Connecticut-based Wilton Re Ltd., could take responsibility for paying and administering a total of about $14 billion in Transamerica obligations through an administrative reinsurance agreement.
Aegon N.V., Transamerica’s Dutch parent, and Wilton Re announced the agreement today in separate press releases.
The companies predicted the deal would cause Aegon to record a $300 million accounting loss but help it free about $700 million in capital for other purposes. The deal should also help Aegon improve its performance under Europe’s Solvency II solvency ratio rules, the companies said.
The companies hope to complete the deal this summer.
The Wilton Re-Transamerica deal agreement includes a big, closed block of bank-owned life insurance and corporate-owned life insurance. A bank uses BOLI to protect itself against the loss of its employees. Companies other than banks use COLI to protect themselves against the loss of their employees. Transamerica discontinued BOLI and COLI sales in 2010.
The Wilton Re-Transamerica agreement also includes a block of payout annuities, or single-premium immediate annuities, that have been used to fund structured settlements for parties involved in lawsuits.
The Canada Pension Plan Investment Board acquired Wilton Re in 2014. The board manages the equivalent of about $250 billion in pension assets, in U.S. dollars, for 19 million Canadian workers and retirees.