AEGON selling Transamerica Reinsurance unit

Dutch insurer AEGON, with significant operations in Cedar Rapids, on Tuesday said it has reached an agreement to sell its Transamerica Reinsurance unit for $1.4 billion to SCOR, a French global reinsurance company.

AEGON will receive $900 million in cash and $500 million in released capital. The company plans to use $1.1 billion to repurchase the remaining core capital securities issued to the Dutch State when AEGON received a $3.86 billion loan in October 2008.

AEGON has committed to repurchasing the securities by the end of June.

SCOR, which also sells property and casualty reinsurance, said it would pay for the deal through its own funds and a potential debt issue of about $292.5 million, without issuing any new shares of stock.

Under its agreement with SCOR, AEGON will divest its global life reinsurance activities with the exception of select blocks of business that it will retain. The retained businesses with a book value of $400 million comprise mainly variable annuity guarantee business.

The deal, which will make SCOR the largest life insurance reinsurer in the United States, is subject to various regulatory approvals. AEGON and SCOR, with 55 offices worldwide, expect to complete the transaction in the summer of this year.

Since June 2008, AEGON has taken a number of actions to strengthen its capital position, reduce its exposure to financial market risks, lower costs and improve operational efficiencies. It discloseed plans in June 2010 to shed its Transamerica Reinsurance unit.

“We are pleased to have successfully concluded our discussions with SCOR on the divestment of our life reinsurance business,” said Alex Wynaendts, AEGON chief executive officer. “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.”