The transaction has been structured initially as a reinsurance contract and covers approximately 27,000 of in-payment policyholders who will remain customers of Aegon during this period. They will continue to be serviced by Aegon until the effective date of a Part VII Transfer which is subject to regulatory and court approval.

Kerrigan Procter, managing director of Legal & General Retirement, said: “We are delighted Aegon has chosen Legal & General to secure its policyholders’ annuities. Back book annuity risk transfer deals can be executed efficiently under our postSolvency 2 model. Our pricing of this transaction is consistent with achieving our cost of capital hurdle rate. In the UK there is an estimated £100bn of Individual Annuities in back books and we expect further consolidation of these back books.

“As well as this deal, other significant transactions in recent months include a further buy-in with ICI in excess of £300m, the UK’s largest medically underwritten contract for Kingfisher for £230m and our first two US PRT deals for $450m and $65m.”

Alex Wynaendts, CEO of Aegon, added: “I am very pleased that we are able to announce this transaction. Achieving the divestment of our UK annuity portfolio is an important step in the strategic repositioning of our business in the United Kingdom. The divestment enables us to fully focus on growing our platform business. At the same time, I am pleased that we have found in Legal & General a good home for our annuity customers.”