Transamerica reinsures $1.4B universal life block with Wilton Re

Aegon NV U.S. unit Transamerica has reinsured $1.4 billion of universal life secondary guarantee reserves with Wilton Re Ltd.

Transamerica and Wilton Re struck the reinsurance agreement in December 2021, Aegon disclosed alongside its fourth-quarter 2021 earnings. Aegon previously said it was considering reinsurance to reduce the volatility of its U.S. mortality claims.

The reinsured portfolio is high-face-amount amount secondary guarantee universal life contracts, some of which is related to so-called stranger-owned life insurance contracts owned by institutional investors, Aegon CFO Matt Rider said on an earnings call. He said the reinsured business accounts for around 9% of the $42 billion face amount of Transamerica's universal life business with secondary guarantees.

In addition, Transamerica in the fourth quarter of 2021 funded a planned buyback of stranger-owned life insurance contracts from institutional investors, Rider said. In total, Aegon said actions taken to reduce U.S. mortality volatility had shaved 12 percentage points from the company's U.S. risk-based capital ratio in the fourth quarter of 2021, which fell 20 points to 426% compared to 446% a quarter earlier. Rider said the deal to acquire the life portfolios from investors accounted for around half of the 12-point hit.

Asked by an analyst if Aegon would also look to reinsure its U.S. long-term care book, Rider said there was "no appetite in the market to reinsuring a big block of long term care business," and that Aegon would be the owner of the business "for quite some years."

He said that the company had been "effective" in getting rate increases from state regulators in the U.S.

Aegon in its earnings presentation said it had obtained approval for $342 million of rate increases, 76% of its $450 million expectation.