PensionsApr 11 2016

Aegon sells 2/3 of UK annuity portfolio

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Aegon sells 2/3 of UK annuity portfolio

Aegon NV has sold two thirds of its UK annuity portfolio to Rothesay Life, in order to divert more resources to its adviser platform.

The provider will reinsure £6bn of liabilities under the terms of agreement, transferring a portfolio of contracts to Rothesay Life.

It expects the move to cut its annual operational free cash flows from its UK business by around £35m, with an impact on 2016 underlying earnings before tax of about £20m.

The move will also reduce Aegon NV’s risk weighting under Solvency II.

According to a statement from the provider, the sale will mostly benefit its rapidly growing investment platform, along with the protection business.

Alex Wynaendts, chief executive of Aegon NV, 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.”

Aegon and Rothesay Life will put a migration plan in place in which the administration of the annuity portfolio will be executed by Aegon until the completion of the transfer.

Aegon’s statement added it was exploring options to also divest the remainder of its UK annuity portfolio.

Rumours of a sale have circulated for some time, with both Rothesay Life and Legal & General touted as potential buyers.

Aegon has not been an active player in the UK annuity market since 2010, the provider pointed out.

Adviser view

Dan Farrow, director at SBN Wealth Management, said: “Aegon is just tidying up the business by selling this stake.

“Platforms need constant investment, and even if it diverted the £20m saving, it is a mere drop in the ocean in terms of overall commitment needed.”

ruth.gillbe@ft.com