The HAGUE, Netherlands,
May 22, 2017 /PRNewswire/ --
Aegon has agreed to sell its two
largest US run-off businesses, the payout annuity business and the
Bank Owned / Corporate Owned Life Insurance business (BOLI/COLI),
to Wilton Re. The transaction is consistent with the
company's stated strategic objective to
reduce the amount of capital allocated to its run-off
businesses.
Under the terms of the agreement, Aegon's Transamerica life
subsidiaries will reinsure USD 14 billion of liabilities
to affiliates of Wilton Re US Holding Inc. The transaction and
related management actions are expected to result in a capital
release of approximately USD 700
million (EUR 630 million) in 2017.
"I am very pleased that we have reached an agreement to divest
the majority of our US run-off businesses," said Alex Wynaendts,
CEO of Aegon. "This transaction is in line with our strategic
objective of accelerating the release of capital allocated to these
businesses and will further enhance the financial flexibility of
the group. We are confident that this agreement is also in the best
interests of our customers, as Wilton Re is a highly respected
reinsurer in the market."
Group Solvency II ratio improves by 6%-points
As a result of the actions announced today, Aegon's Group
Solvency II ratio is estimated to improve by approximately
6%-points in the second half of 2017. After completion of the
transaction and the related management actions, the capital
released from this transaction is expected to be upstreamed to the
holding, which will improve Transamerica's return on capital by
approximately 60 basis points.
Aegon expects annual capital generation from its US operations
to be reduced by approximately USD 30
million (EUR 27 million)
following the transaction. As the businesses are classified as
run-off businesses, their associated earnings are not included in
underlying earnings before tax. Aegon anticipates the reinsurance
transaction will result in a book loss of approximately
USD 300 million
(EUR 270 million), to be reported in Other Charges at the
time of closing. The transaction is subject to normal regulatory
approvals and is expected to close in the summer of 2017.
About Aegon
Aegon's roots go back more than 170 years - to the first half of
the nineteenth century. Since then, Aegon has grown into an
international company, with businesses in more than 20 countries in
the Americas, Europe and
Asia. Today, Aegon is one of the
world's leading financial services organizations, providing life
insurance, pensions and asset management. Aegon's purpose is to
help people achieve a lifetime of financial security. More
information on aegon.com/about.
About Wilton Re
Wilton Re is a leading provider of In Force Solutions. Focusing
on the North American life insurance market, the Company provides
risk capital and related services including M&A. Their
administrative capabilities provide the industry with efficient and
effective runoff management of legacy blocks of life insurance and
annuity contracts.
The Company also partners with companies to implement new
business strategies for middle-market sales, with an emphasis on
worksite, senior market and simplified term products. Wilton Re
offers fully customized solutions that include private labeling
with supporting delivery and administrative systems.
Wilton Re is committed to creating solutions that enhance value
for its clients, their policyholders and shareholders. Their
approach is centered on building lasting relationships with our
business partners and sharing resources, industry knowledge and
experience in an open, transparent manner.
To find out more about the Wilton Re group of companies, please
go
to http://www.wiltonre.com, http://www.texaslife.com and http://www.ivari.ca.
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Disclaimer Forward-looking statements
The statements contained in this document that are not
historical facts are forward-looking statements as defined in the
US Private Securities Litigation Reform Act of 1995. The following
are words that identify such forward-looking statements: aim,
believe, estimate, target, intend, may, expect, anticipate,
predict, project, counting on, plan, continue, want, forecast,
goal, should, would, is confident, will, and similar expressions as
they relate to Aegon. These statements are not guarantees of future
performance and involve risks, uncertainties and assumptions that
are difficult to predict. Aegon undertakes no obligation to
publicly update or revise any forward-looking statements. Readers
are cautioned not to place undue reliance on these forward-looking
statements, which merely reflect company expectations at the time
of writing. Actual results may differ materially from expectations
conveyed in forward-looking statements due to changes caused by
various risks and uncertainties. Such risks and uncertainties
include but are not limited to the following:
- Changes in general economic conditions, particularly in
the United States, the Netherlands and the United Kingdom;
- Changes in the performance of financial markets, including
emerging markets, such as with regard to:
- The frequency and severity of defaults by issuers in Aegon's
fixed income investment portfolios;
- The effects of corporate bankruptcies and/or accounting
restatements on the financial markets and the resulting decline in
the value of equity and debt securities Aegon holds; and
- The effects of declining creditworthiness of certain private
sector securities and the resulting decline in the value of
government exposure that Aegon holds;
- Changes in the performance of Aegon's investment portfolio and
decline in ratings of Aegon's counterparties;
- Consequences of a potential (partial) break-up of the
euro;
- Consequences of the anticipated exit of the United Kingdom from the European Union;
- The frequency and severity of insured loss events;
- Changes affecting longevity, mortality, morbidity, persistence
and other factors that may impact the profitability of Aegon's
insurance products;
- Reinsurers to whom Aegon has ceded significant underwriting
risks may fail to meet their obligations;
- Changes affecting interest rate levels and continuing low or
rapidly changing interest rate levels;
- Changes affecting currency exchange rates, in particular the
EUR/USD and EUR/GBP exchange rates;
- Changes in the availability of, and costs associated with,
liquidity sources such as bank and capital markets funding, as well
as conditions in the credit markets in general such as changes in
borrower and counterparty creditworthiness;
- Increasing levels of competition in the United States, the Netherlands, the United Kingdom and emerging markets;
- Changes in laws and regulations, particularly those affecting
Aegon's operations' ability to hire and retain key personnel,
taxation of Aegon companies, the products Aegon sells, and the
attractiveness of certain products to its consumers;
- Regulatory changes relating to the pensions, investment, and
insurance industries in the jurisdictions in which Aegon
operates;
- Standard setting initiatives of supranational standard setting
bodies such as the Financial Stability Board and the International
Association of Insurance Supervisors or changes to such standards
that may have an impact on regional (such as EU), national or US
federal or state level financial regulation or the application
thereof to Aegon, including the designation of Aegon by the
Financial Stability Board as a Global Systemically Important
Insurer (G-SII);
- Changes in customer behavior and public opinion in general
related to, among other things, the type of products Aegon sells,
including legal, regulatory or commercial necessity to meet
changing customer expectations;
- Acts of God, acts of terrorism, acts of war and pandemics;
- Changes in the policies of central banks and/or
governments;
- Lowering of one or more of Aegon's debt ratings issued by
recognized rating organizations and the adverse impact such action
may have on Aegon's ability to raise capital and on its liquidity
and financial condition;
- Lowering of one or more of insurer financial strength ratings
of Aegon's insurance subsidiaries and the adverse impact such
action may have on the premium writings, policy retention,
profitability and liquidity of its insurance subsidiaries;
- The effect of the European Union's Solvency II requirements and
other regulations in other jurisdictions affecting the capital
Aegon is required to maintain;
- Litigation or regulatory action that could require Aegon to pay
significant damages or change the way Aegon does business;
- As Aegon's operations support complex transactions and are
highly dependent on the proper functioning of information
technology, a computer system failure or security breach may
disrupt Aegon's business, damage its reputation and adversely
affect its results of operations, financial condition and cash
flows;
- Customer responsiveness to both new products and distribution
channels;
- Competitive, legal, regulatory, or tax changes that affect
profitability, the distribution cost of or demand for Aegon's
products;
- Changes in accounting regulations and policies or a change by
Aegon in applying such regulations and policies, voluntarily or
otherwise, which may affect Aegon's reported results and
shareholders' equity;
- Aegon's projected results are highly sensitive to complex
mathematical models of financial markets, mortality, longevity, and
other dynamic systems subject to shocks and unpredictable
volatility. Should assumptions to these models later prove
incorrect, or should errors in those models escape the controls in
place to detect them, future performance will vary from projected
results;
- The impact of acquisitions and divestitures, restructurings,
product withdrawals and other unusual items, including Aegon's
ability to integrate acquisitions and to obtain the anticipated
results and synergies from acquisitions;
- Catastrophic events, either manmade or by nature, could result
in material losses and significantly interrupt Aegon's
business;
- Aegon's failure to achieve anticipated levels of earnings or
operational efficiencies as well as other cost saving and excess
capital and leverage ratio management initiatives; and
- This press release contains information that qualifies, or may
qualify, as inside information within the meaning of Article 7(1)
of the EU Market Abuse Regulation.
Further details of potential risks and uncertainties affecting
Aegon are described in its filings with the Netherlands Authority
for the Financial Markets and the US Securities and Exchange
Commission, including the Annual Report. These forward-looking
statements speak only as of the date of this document. Except as
required by any applicable law or regulation, Aegon expressly
disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained
herein to reflect any change in Aegon's expectations with regard
thereto or any change in events, conditions or circumstances on
which any such statement is based.
Contacts
Media relations
Debora de Laaf
+31(0)70-344-8730
gcc@aegon.com
Investor relations
Willem van den Berg
+31(0)70-344-8405
ir@aegon.com