Initially, the deal – which represents sale of two thirds of Aegon’s UK annuity portfolio -was structured as a reinsurance contract.
It is expected to lead to a Part VII transfer of the underlying assets and liabilities to Rothesay Life subject to regulatory and court approval.
Rothesay’s shareholders, which include Goldman Sachs, Blackstone, and Singapore’s GIC, provided capital support.
The transaction covers approximately 187,000 policyholders who will remain customers of Aegon.
Rothesay in a statement said that customers will continue to be serviced by Aegon until the effective date of a Part VII Transfer.
Rothesay Life founder and CEO Addy Loudiadis said: "As a specialist provider of annuities, I am delighted that Aegon has chosen Rothesay Life to secure its policyholders’ pensions over the long term.
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"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."
"The prevalence of non-core businesses in multi-line insurers is creating opportunities for Rothesay Life. With the market set to expand and strong support from our shareholders, Rothesay Life is well positioned to pursue these opportunities in addition to our ongoing bulk annuity business."