Aegon Scottish Equitable completes Barclays Capital securitisation

by Gill Montia

Story link: Aegon Scottish Equitable completes Barclays Capital securitisation

Barclays Capital, the investment arm of Barclays bank, has completed a £250 million securitisation from Aegon Scottish Equitable (ASE), the UK division of Dutch registered insurer, Aegon.

The transaction means that Barclays Capital has acquired some of the profits of ASE’s pension fund.

While raising capital for ASE, the deal has also been seen as a new investment direction for Barclays Capital, away from banking shares or asset-backed securities, such as mortgages.

The securitisation represents less than 10% of the £2.3 billion estimated embedded value of the business (the margins on the ASE pension fund business) and has been rated single-A by Fitch.

In the past decade, the market for insurance-linked securitisations (ILS) has been growing worldwide, although access to the market is limited to investors with a sound understanding of the insurance sector.

The deal with Barclays Capital represents the first time that pension payments from an open fund have been sold in this way.

The arrangement has been made privately and allows ASE to add new business to the pension book over the next three years.

Aegon says it will use the funds raised for working capital and to invest in growing markets such as India and the Far East.