The Work

April 26, 2011 4:35 PM

Dewey, Skadden Lead on $1.4 Billion Aegon Sale

Posted by Brian Baxter

Dutch insurance giant Aegon announced on Tuesday that it plans to sell its Transamerica Reinsurance arm to French reinsurer Scor.

The divestiture will have an after-tax value of $1.4 billion for Aegon based on the sale amount and capital freed up as a result of the divestiture. Aegon will receive roughly $900 million in cash from Scor and will benefit from the release of another $500 million in capital committed to Transamerica.

Aegon will use the proceeds to pay back the Dutch government for its 2008 bailout of the insurer. The transaction will make Scor the second-largest U.S. life reinsurer, Bloomberg reports.

John Schwolsky, global cochair of the capital markets and corporate finance groups at Dewey & LeBoeuf, is advising Aegon on the sale, along with M&A partner Gary Boss. Craig Vermie, general counsel of Aegon USA, is leading an in-house team working on the transaction.

Aegon has been a longtime client of Schwolsky and Dewey, having turned to the firm for counsel on its $9.7 billion merger with Transamerica in 1999 and subsequent $1.3 billion acquisition of several former life insurance units of Merrill Lynch in late 2007.

The Hague-based insurer was hit hard a year later by the global financial crisis, turning to the Dutch government in October 2008 for $3.7 billion in emergency funds. Aegon already repaid some of its economic rescue and the divestiture of Transamerica will result in the company clearing the roughly $1 billion it still owes in bailout funds. (Earlier this year Cecelia Kempler, a former chair of the life insurance practice at Dewey predecessor firm LeBoeuf, Lamb, Greene & MacRae, resigned from AEGON's supervisory board because of health reasons.)

Skadden, Arps, Slate, Meagher & Flom financial institutions cochair Robert Sullivan and corporate partner Armand Grumberg are advising Scor on its deal for Transamerica. The firm represented the Paris-based company on numerous transactions, such as the spin-offs of its European nonlife reinsurance and worldwide life reinsurance businesses. Scor's newly appointed group general counsel is Eric Sandrin.

Reuters reports that Scor's acquisition of Transamerica is the latest round of consolidation in the North American life reinsurance market, following Berkshire Hathaway's acquisition of Canadian insurer SunLife Financial's reinsurance business last year. Insurance companies rely on reinsurers to purchase liability for certain policy portfolios in order to reduce the risk they carry on their own books.

The sale of Transamerica to Scor is expected to close in the second quarter.

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