Aegon first Benelux firm to pay back its bail-out

AEGON will become the first Benelux-based financial firm to fully pay back its government bail-out after it agreed the $913 million (£555m) sale of its American reinsurance business to French firm, Scor SE.

The French group will be the second-largest life reinsurer in the US as a result of the deal to buy Transamerica Reinsurance.

Analysts said the sale price was on the "low side", but the deal allows the Netherlands-based Aegon to release $500m of capital, giving the deal a total post-tax value of $1.4 billion. The reinsurance business has a total book value of around $1.7bn, analysts said.

The deal paves the way for the group to pay off the last €1.125bn (1bn) tranche of state-aid owed to the Dutch government after it received a €3bn bail-out at the height of the banking crisis in 2008.

In February Alex Wynaendts, the firm's chief executive, vowed to pay down the debt by June. The firm also raised €600m in a share issue.

Aegon announced its plan to sell the North Carolina-based Transamerica Re in June last year, when it also said it would also embark on a 80m cost cutting exercise at its Edinburgh-based UK operations.

As a result of this transaction, which will complete in the third quarter, Scor will also acquire Transamerica International Reinsurance Ireland (TIRI), based in Dublin.

Aegon, which has owned the business since 1999 when it bought US insurer Transamerica for $9.7bn, put the reinsurance business up for sale last year.

Scor said it would take over Transamerica Re's mortality business, which had $2.2bn in gross written premiums last year, of which 87 per cent were generated in the US.

The deal excludes the reinsurer's $400m structured solutions and fixed and variable annuities business, which were not in line with its strategy, Scor said.

"Quite a smart financial transaction," said Cor Kluis, a Utrecht-based analyst at Rabo Securities. "Aegon is government-capital clean after this transaction, the first Benelux financial that fully paid back the government."