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Transamerica, a U.S. unit of Aegon N.V., has completed the process of transferring responsibility for large blocks of life and annuity business to Wilton Re Ltd. through an administrative reinsurance arrangement, Aegon said today.

(Related: Transamerica Parent Makes U.S. Deal)

Wilton Re is a Norwalk, Connecticut-based unit of the Canada Pension Plan Investment Board.

Aegon, which is based in The Hague, in the Netherlands, and Wilton Re reported in May that the deal would involve blocks of payout annuity business, corporate-owned life insurance and bank-owned life insurance.

Wilton Re is assuming responsibility for insurance policies and annuity contracts associated with about $14 billion in general account and separate account liabilities, according to Wilton Re.

Aegon said today that the deal should let it release about $700 million of the capital that had been supporting the blocks of business.

Once Transamerica sends the freed-up capital to the parent company level, that should improve the Aegon group’s capitalization level under Europe’s Group Solvency II rules, Aegon says.

The Group Solvency II system is Europe’s equivalent of the U.S. risk-based capital ratio benchmarking system.

Regulators in Europe use Group Solvency II statistics to determine if insurers have enough of the right kinds of assets to support the insurance policies and annuity contracts they have sold. 

— Check out AXA Plans to Sell Part of U.S. Life Unit to Public on ThinkAdvisor.