Aegon Frees Up Capital On Reinsurance Deal With JPMorgan

Aegon NV (AEG) has freed up $650 million in regulatory capital through a reinsurance deal for a portfolio of U.S. life insurance policies with JP Morgan Chase Bank (JPM), the Dutch insurer said Tuesday.

Aegon said the transaction, which will benefit the balance sheet of its U.S. operations, will have a duration of 10 years. Under the deal, JP Morgan will take over the management and risks of an existing book of life policies.

The total value of the transaction is $900 million, but the first portion of the deal was realized in 2008, Aegon spokesman Dick Schiethart said. He added that this "regular transaction" for which it pays an undefined fee is part of the insurer's strategic focus on increasing its capital buffer.

Between the third quarter of 2008 and the second quarter of 2009, Aegon had freed up EUR3.3 billion of capital and "is committed to exploring additional capital preservation initiatives."

"This transaction will further strengthen our overall capital position and enable us to manage our capital more effectively," Aegon Chief Financial Officer Jan Nooitgedagt said.

SNS Securities said it is "a positive signal" that Aegon has successfully completed the transaction with JPMorgan. SNS analysts said Aegon will likely continue to focus on additional operations for releasing capital.

Aegon's Schiethart said that Aegon still intends to make a EUR1 billion repayment before the end of the year to the Dutch government of a total state capital injection of EUR3 billion. The December payment will save Aegon EUR370 million charges tied to the state aid.

On August 13 Aegon said its excess capital buffer was EUR3.5 billion.

At 0815 GMT Aegon shares were up 0.5% at EUR6.07 on a 0.11% higher AEX.

- By Bart Koster; Dow Jones Newswires; [phone]; [e-mail]