AEGON selling Canadian insurance unit

AEGON has reached an agreement to sell its Canadian life insurance operations to Wilton RE of Wilton, Conn., for $535.5 million.

The Netherlands-based insurer, owner of Transamerica with significant operations in Cedar Rapids, said the transaction is expected to close in the first quarter of 2015, pending regulatory approval. The company said it will result in book loss of about $1.1 billion.

AEGON said the net underlying earnings for its Canadian operations were $23 million over the trailing four quarters ending June 2014. The company said sale price represents a multiple of 23 times net underlying earnings.

AEGON plans to use the proceeds from the sale to further reduce outstanding debt through the redemption of a $500 million 4.625 percent senior bond, due December 2015. The insurer already plans to redeem a $445.6 million 4.125 percent senior bond, due December 2014.

Alex Wynaendts, CEO of AEGON, said the company continually reviews the performance of its businesses to ensure that they support the company's ambition to become a leader in its chosen markets.

'We have concluded that our Canadian life insurance business does not support that goal,” Wynaendts said in a statement announcing the sale. 'The decision to divest these activities will lead to an improvement in the group's return on equity of 40 basis points.

'At the same time, we believe this is a good outcome for our customers and employees, as the company will continue to offer competitive choices for the middle market in Canada.”

Wilton Re focuses on the North American life insurance market where the company provides risk capital and related services including merger and acquisition, reinsurance and longevity risk management. The company had $14.5 billion of total assets and $1.4 billion of annual operating revenues as of Sept. 30.