The sale is part of the company’s plan to free up capital from non-core businesses. Aegon said it is exploring options to also divest the remainder of its UK annuity portfolio.
Aegon will reinsure £6 billion of liabilities to Rothesay Life under the terms of the agreement.
The firm expects annual operational free cash flows from its UK operations to be cut by about £35 million. The expected impact of the transaction on 2016 underlying earnings before tax is £20 million.
A company statement read: “Aegon has not been an active player in the UK annuity market since 2010. By selling the majority of the annuity portfolio, Aegon will be able to focus on its platform which enables workplace savers and consumers to build their savings across their working lives and then manage an income in retirement with the support of a financial adviser or directly online.
“As a result of the transaction, the benefit in the Solvency II own funds from transitional measures for Aegon’s UK annuity portfolio will be reduced. After the completion of the transaction, Aegon intends to upstream excess capital to the holding in line with Aegon’s capital management policy for its units.”
Alex Wynaendts, chief executive of Aegon, said: “This is an important step in the process to fully divest our UK annuity portfolio, and will enable us to focus on our fast-growing platform in the UK.
“We are confident that this transaction is also in the best interests of our annuity customers, as Rothesay Life is an established and respected specialist provider in the UK annuity market.”
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