AEGON NV reached an agreement to divest a block of its life reinsurance business in Transamerica Reinsurance to Scor SE, in line with its strategic objective to reduce the amount of capital allocated to run-off businesses.
The Dutch company's Transamerica life subsidiaries will reinsure about $750 million of liabilities to Scor, which covers about half of the life reinsurance business that Transamerica retained after it divested the majority of its life reinsurance business to the French reinsurer in 2011.
The transaction is expected to carry a one-time benefit of $75 million to Transamerica's capital position and will have a slight positive effect on recurring capital generation. It will not affect future underlying earnings but will result in a pretax loss under International Financial Reporting Standards of about $125 million, which will be reported under "other charges" in the fourth-quarter 2017 results.
Aegon will also dissolve a related captive insurance company used to finance redundant reserves — generally referred to as XXX term life insurance reserves — and will redeem $475 million of operational leverage that supports the captive.
The Aegon USA business includes Transamerica Life Insurance Co. and Transamerica Premier Life Insurance Co.