Aegon to divest additional block of US run-off businesses
December 28 2017 - 1:00AM
Business Wire
Regulatory News:
Aegon has agreed to divest a block of life reinsurance
business to SCOR and to dissolve a related captive insurance
company. The transaction is consistent with Aegon’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 approximately USD 750 million
of liabilities to SCOR. The transaction covers approximately half
of the life reinsurance business that Transamerica retained after
it divested the vast majority of its life reinsurance business to
SCOR in 2011. It is expected that the transaction has a one-time
benefit of approximately USD 75 million on Transamerica’s capital
position and a slightly positive effect on recurring capital
generation.
Future underlying earnings are not affected by this transaction
as earnings of this block of reinsurance business are part of
run-off businesses, which are not included in underlying earnings
before tax. The transaction is expected to result in a pre-tax IFRS
loss of approximately USD 125 million (EUR 105 million)
and will be reported in Other charges in the fourth quarter 2017
results.
As part of the transaction, the company will dissolve a related
captive insurance company in place to finance redundant reserves,
generally referred to as XXX term life insurance reserves, and will
redeem USD 475 million of operational leverage supporting that
captive.
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.
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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 public 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20171227005561/en/
AegonMedia relationsDick Schiethart070 344
8821gcc@aegon.comorInvestor relationsWillem van den Berg070
344 8405ir@aegon.com
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