Aegon has sold a £6bn UK annuity portfolio to Rothesay Life in a bid to focus on expanding its investment platform.
The purchase represents two-thirds of Aegon's annuity portfolio - representing some 187,000 policyholders.
The transaction has been structured initially as a reinsurance contract and is expected to lead to a transfer of the underlying assets and liabilities to Rothesay Life subject to regulatory approval.
Aegon, which hasn't been an active player in the UK annuity market since 2010 - said it aims to sell the remainder of its annuity book in due course.
The purchase is Rothesay Life's third reinsurance transaction in the past twelve months, including the company having reinsured £1.2bn of annuities from Zurich in 2015. It also completed a £3bn bulk annuity business from MetLife in February 2014.
It is also the first substantial annuity transfer since Solvency II came into force in January 2016.
Aegon chief executive Adrian Grace said selling the annuity portfolio would enable the company to continue expanding its platform and protection business.
Rothesay Life chief executive and founder Addy Loudiadis (pictured) said: "This transaction represents a significant step for Rothesay Life taking total assets under management to over £20bn and total lives insured to over 400,000."zuric
Commenting on the deal, Hymans Robertson partner and head of buy-out solutions James Mullins said the introduction of Solvency II, the regime under which insurance companies use to determine their reserves, meant insurance companies who did not regard annuities as a key business line were keen to sell their annuity back books to other insurers."
Aon Hewitt risk settlement adviser Dominic Grimley added: "There is scope for more deals on annuity back-books as insurers are reviewing their business models and some are looking to streamline them. With the government also set to launch the secondary annuity market in 2017, this gives plenty of options for annuity providers to look for business in material volumes."
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