A major global insurer has reached an agreement with another group to sell its $600 million Canadian life insurance operation.
A major global insurer has reached an agreement with another group to sell its $600 million Canadian life insurance operation.
International life insurance carrier Aegon announced that it will sell its Canadian operations to Wilton Re for $600 million. The transaction is expected to mean a loss of roughly $1.2 billion for the Netherlands-based insurer.
Aegon CEO Alex Wynaendts said the decision was made after a careful review of the Canadian market, where it operates under the brand name Transamerica Life Canada, and its own priorities as a company.
“We continually review the performance of our businesses to ensure that they support our ambition to become a leader in our chosen markets,” said Wynaendts. “We have concluded that our Canadian life insurance business does not support that goal.”
Aegon said the decision to sell its operations will lead to an improvement in the group’s return on equity of 40 basis points. It also stressed the sale will be a “good outcome for our customers and employees, as the company will continue to offer competitive choices for the middle market in Canada.”
As a result, Fitch Ratings has placed Transamerica Life Canada’s “AA-” rating on Rating Watch Negative. The agency says it does not yet know Wilton Re’s strategic intent nor operation plans with regard to the business.
Aegon plans to earmark the proceeds of the sale to reduce its outstanding debt through the redemption of a $500 million senior bond due December 2015. Aegon is also planning to redeem a $500 million EUR senior bond due in December of this year.
The combination of the sale of its Canadian operations and the non-refinancing of the bond is said ti improve Aegon’s return on equity by 40 basis points, while reducing net underlying earnings by less than 1 per cent.
It will also keep Aegon’s leverage ratio unchanged on a pro forma basis, while its fixed charge cover ratio will improve by 0.6 times.
The sale will amount to 23 times net underlying earnings over the past four quarters, which concluded at $26 million in June 2014.
International life insurance carrier Aegon announced that it will sell its Canadian operations to Wilton Re for $600 million. The transaction is expected to mean a loss of roughly $1.2 billion for the Netherlands-based insurer.
Aegon CEO Alex Wynaendts said the decision was made after a careful review of the Canadian market, where it operates under the brand name Transamerica Life Canada, and its own priorities as a company.
“We continually review the performance of our businesses to ensure that they support our ambition to become a leader in our chosen markets,” said Wynaendts. “We have concluded that our Canadian life insurance business does not support that goal.”
Aegon said the decision to sell its operations will lead to an improvement in the group’s return on equity of 40 basis points. It also stressed the sale will be a “good outcome for our customers and employees, as the company will continue to offer competitive choices for the middle market in Canada.”
As a result, Fitch Ratings has placed Transamerica Life Canada’s “AA-” rating on Rating Watch Negative. The agency says it does not yet know Wilton Re’s strategic intent nor operation plans with regard to the business.
Aegon plans to earmark the proceeds of the sale to reduce its outstanding debt through the redemption of a $500 million senior bond due December 2015. Aegon is also planning to redeem a $500 million EUR senior bond due in December of this year.
The combination of the sale of its Canadian operations and the non-refinancing of the bond is said ti improve Aegon’s return on equity by 40 basis points, while reducing net underlying earnings by less than 1 per cent.
It will also keep Aegon’s leverage ratio unchanged on a pro forma basis, while its fixed charge cover ratio will improve by 0.6 times.
The sale will amount to 23 times net underlying earnings over the past four quarters, which concluded at $26 million in June 2014.
