National Western Life Insurance Co. agreed to cede about $1.7 billion of statutory reserve liabilities to Prosperity Life Assurance Ltd. on a coinsurance with funds withheld basis.

Under the agreement, the company will cede a specified quota share of certain liabilities related to a group of fixed and payout annuity contracts issued on or before Dec. 31, 2020, and certain supplementary contracts.

National Western transferred permitted assets approximating the ceded statutory reserve liabilities into a funds withheld account as consideration for the agreement.

The companies also established a trust account in which Prosperity Life will maintain certain assets and grant National Western a first-priority security interest.