Aegon Sells Transamerica

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AMSTERDAM—Dutch life-insurance and pensions company Aegon NV said Tuesday it is selling its Transamerica Reinsurance business to French reinsurer Scor SE for $900 million—just a fraction of what Aegon paid for Transamerica 12 years ago—as part of its plan to repay state aid it received during the financial crisis.

The Hague-based Aegon said the deal will generate a total after-tax amount of $1.4 billion, consisting of $900 million in cash and a further $500 million in released capital. Aegon bought Transamerica in 1999 for $9.7 billion in a cash-and-shares deal.

“This transaction is consistent with our focus on Aegon’s core business and supports our aim to complete repayment to the Dutch state by the end of June and are pleased to have identified a good home for this highly regarded business,” Aegon’s Chief Executive Officer Alex Wynaendts said in statement.

Aegon said it expects the transaction to provide $1.1 billion for the repurchase of the remaining core capital securities it issued to the Dutch state.

In a separate statement, Scor said it will fund the acquisition mainly from its own funds. It said it may issue some debt but no new shares. Scor said the deal shouldn’t affect the company’s credit rating.

Scor said that acquiring Transamerica Re will make it the second-largest U.S. life reinsurer by recurring new business volume, while strengthening its positions in Asia and Latin America.

Denis Kessler, Scor’s Chairman and CEO, said the transaction was consistent with Scor’s strategy and risk appetite. “The rebalancing of the life reinsurance book between the United States, Asia and Europe, while enlarging the group’s footprint and significantly expanding our global franchise, will also provide additional stability to the group,” he said.

Transamerica Re’s 2010 gross written premiums were $2.2 billion, of which 87% were generated in the U.S. It operates in 11 countries and has 451 employees.

As of March 16, Aegon had repurchased €2.25 billion of core capital from the Dutch State, but has a further €750 million to pay plus a premium of €375 million.

Under the agreement with Scor, Aegon will keep blocks of Transamerica Re’s business with a book value of $400 million, mainly variable annuity guarantee business.

The transaction, which consists of a number of reinsurance agreements, is subject to final approval from regulators and is expected to close in the summer of this year, Aegon said.