Home ListingMay 23, 2016

Legal & General Inks £3B Annuity Deal with Aegon

The UK insurer’s American investment arm meanwhile will dive into risk-premia strategies with a new multi-asset team.

Reported by Featured Author

Legal & General (L&G) has bought £3 billion ($4.35 billion) in annuity liabilities from Dutch insurer Aegon.

The transaction covers nearly 27,000 policyholders who will remain Aegon’s customers until the transfer is completed, the UK-based insurer announced. L&G said it will not reinsure the longevity risk related to this risk transfer.

“Achieving the divestment of our UK annuity portfolio is an important step in the strategic repositioning of our business in the United Kingdom,” said Alex Wynaendts, Aegon’s CEO. “The divestment enables us to fully focus on growing our platform business.”

Legal & General Retirement also said this transaction’s pricing was “consistent with achieving our cost of capital hurdle rate.”

According to the release, Legal & General Retirement has taken on nearly £550 million in total annuities year-to-date. Globally, L&G manages an annuity book of £45.5 billion.

The insurer recently inked a $65 million deal with the Diocese of Palm Beach, marking its second US pension buyout. L&G entered the US market last October, when it split Philips’ $1.1 billion bulk annuity with Prudential and OneAmerica.

Furthermore, L&G’s American investment arm announced Monday it has newly created a multi-asset portfolio management team as part of a move to “deliver differentiated, customized, and value-added services to the US institutional market.”

The multi-asset team will focus on risk premia, active derivative overlays, and cash-equitization strategies, Legal & General Investment Management America (LGIMA) said.

“We are especially excited about the enthusiasm we have seen in risk-premia strategies,” said LGIMA’s Head of US Solutions Jodan Ledford, “which strongly align with our clients’ objectives and provide an opportunity for growth.”