Aegon Transaction

Part VII transfer


Annuities are a capital-intensive business under Solvency II. We knew there was a competitive market, and saw an opportunity to de-risk. [Rothesay Life] was crystal clear about what it could and couldn’t do. It felt like they had thought everything through and showed real expertise on the risks of an insurance-to-insurance transfer under Solvency II.

Stephen McGee, Aegon UK’s chief financial officer

KEY FACTS

  • ‘Part VII transfer of £6.4bn of annuity policies to Rothesay Life involving 187,000 policy holders
  • The first Solvency II-compliant transaction approved by the UK PRA setting precedents for transitional arrangements
  • Significant amount of the longevity risk was reinsured pre-execution
  • Economic terms were locked in by agreeing the premium upfront and then converting to roll forward to lock-in capital release and terms

THE TRANSACTION

  • In September 2015, Aegon commenced a process to de-risk its UK annuity portfolio
  • On 11 April 2016, Aegon announced the sale of two-thirds of its UK annuity portfolio to Rothesay Life, equivalent to a premium of £6.4bn
  • The transaction was structured initially as a reinsurance contract pending the legal transfer process regulatory and court approvals

THE CONCLUSION

  • The Part VII Transfer was approved at a Hearing of the High Court 13 June 2017 and became effective at 00.01am BST on 30 June 2017

Rothesay Life News

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