French reinsurer will pay USD 913 million for a major stake in Aegon’s Transamerica Reinsurance operations. This should allow Scor to become America’s second largest life reinsurer.
Aegon said on Tuesday the disposal would help it repay outstanding state aid of 1.125 billion euros ($1.6 billion).
The deal is the latest in a round of consolidation in the North American life reinsurance market, as companies try to position themselves for a rebound after the financial crisis.
Last October, Warren Buffett’s Berkshire Hathaway bought Canadian insurer Sun Life Financial’s reinsurance business.
Europe is Scor’s biggest market and Transamerica will boost its market share in the United States, where it currently earns less than 30 percent of its global life reinsurance premiums.
“With the acquisition of a major mortality risk reinsurance portfolio in the United States, Scor aims to further increase its geographical diversification,” it said.
Scor, which also sells property and casualty reinsurance, eclipsed Reinsurance Group of America as the lead bidder for Transamerica in March, according to sources familiar with the matter.
Aegon said the deal consisted of cash proceeds of $0.9 billion with a further $0.5 billion in capital released. Aegon expected to transfer $1.1 billion to the holding company to support the repurchase of the remaining Dutch state aid.
The Dutch insurer, which got a total of 3 billion euros state aid from the Netherlands in 2008, still needs to pay back 750 million plus a 50 percent premium — 1.125 billion in total. It expects to pay it back by the end of June.
Scor said it would pay for the deal through its own funds and a potential debt issue of around 200 million euros, without the issuance of any new shares.
Scor said it would take over Transamerica Re’s mortality business, which had $2.2 billion in gross written premiums last year, of which 87 percent was generated in the United States.
The deal excludes Transamerica Re’s structured solutions and fixed and variable annuities, which were not in line with its strategic orientations, Scor said.
The transaction is expected to close this summer.
Source : Reuters
