Aegon sells £3bn annuity portfolio to Legal & General

Catherine Neilan
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Legal & General has acquired a £3bn annuity portfolio from Aegon, as part of the latter's major review of its UK operations.

The deal covers around 27,000 of in-payment policyholders, who will remain customers of Aegon until the transfer becomes effective, which is subject to regulatory and court approval.

Alex Wynaendts, chief executive of Aegon, said: "I am very pleased that we are able to announce this transaction. Achieving the divestment of our UK annuity portfolio is an important step in the strategic repositioning of our business in the United Kingdom.

"The divestment enables us to fully focus on growing our platform business. At the same time, I am pleased that we have found in Legal & General a good home for our annuity customers."

Aegon has been struggling of late, reporting drops in profit as a result of market volatility as well as a decline in annuity sales. In April it sold £6bn-worth of annuities from its UK subsidiary Scottish Equitable to Rothesay Life following a review of the business in the wake of George Osborne's changes to pension freedoms.

Kerrigan Procter, managing director of Legal & General Retirement, said: "We are delighted Aegon has chosen Legal & General to secure its policyholders' annuities. Back book annuity risk transfer deals can be executed efficiently under our post-Solvency II model.

"Our pricing of this transaction is consistent with achieving our cost of capital hurdle rate. In the UK there is an estimated £100bn of Individual Annuities in back books and we expect further consolidation of these back books."

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