Pensions  

Aegon sells off two thirds of annuity portfolio

Aegon sells off two thirds of annuity portfolio

Aegon 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 approximately £20m. The move will also reduce Aegon’s risk weighting under Solvency II.

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

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.”

To ensure a smooth transition for its customers, 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 that it is 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, adding that there will be no material impact on Aegon staff, as employees who currently service annuities are expected to be redeployed.

UK chief executive Adrian Grace added: “We’re committed to the UK see our future in offering advisers and employers with a platform that combines the best investment solutions, guarantees and service.

“The sale marks a huge milestone for Aegon and today’s deal gives us the impetus to continue growing our platform and protection business.”

ruth.gillbe@ft.com