Beleaguered Bermuda life reinsurer Annuity and Life will hand its remaining life and annuity reinsurance treaties to seven-month-old Bermuda-based life reinsurer Wilton Re.

The companies announced yesterday that Annuity had entered into an agreement with Wilton Re?s US arm Prudential Select Life Insurance Company of America and Wilton Reinsurance Bermuda Limited.

Annuity will pay Wilton Re?s subsidiaries a $91.6 million settlement which will include funds withheld held by the cedents under certain reinsurance treaties.

Annuity?s troubles, which are largely linked to a contract it had with Transamerica Reinsurance, saw it delisted from the New York Stock Exchange last year after shareholder lost confidence and pushed down the company?s share price to prolonged trading below $1.

Under the agreement with Wilton Re, Annuity remains subject to certain third party claims, including an outstanding claim by Transamerica for $6 million related to a life reinsurance agreement novated to Transamerica effective as of December 31, 2004.

Jay Burke, Annuity?s chief executive officer said the agreement is a ?win win? for both companies as well as the cedents as it provides them with a well capitalised and well rated reinsurance partner. While the agreement will give Wilton Re a ?good jumpstart?, for his own company and its shareholders, it represents a significant step forward as it will free Annuity from active reinsurance agreements and leave it only with leftover potential claims from old treaties.

?Wilton Re on one hand has a good size starting block of business and from our perspective because we are shrinking and they are growing it takes the volatility that would normally potentially comes from those kinds of contracts off of our income statement,? he said.

Chris Stroup, chairman of Wilton Re Holdings, Ltd. said: ?We are very pleased to have entered into this agreement with Annuity and Life Re. These transactions exemplify the creative reinsurance solutions that Wilton Re has to offer. We look forward to working with our new cedents through a smooth transition and providing them with ongoing reinsurance support.?

The agreement puts Annuity in a position to pursue alternatives that it might not otherwise have been able to pursue, the company said in its press release.

When pressed on whether this meant the company would be winding down, Mr. Burke said the company had a number of strategic options such as merging with another company that wants a Bermuda presence or putting itself on the market.

Annuity was the first life reinsurer to incorporate here while Wilton Re Holdings Ltd. is the newest one to do so. It only started up on January 1 this year after first raising more than $600 million from investors including Marsh & McLennan Cos.? investment arm and buyout firms Vestar Capital Partners and Friedman Fleischer & Lowe.

The Wilton Re group was formed in order to provide a new source of life reinsurance capacity to life insurers in response to the continuing consolidation in the US life reinsurance industry.