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The Actuary The magazine of the Institute & Faculty of Actuaries

Aegon Scottish Equitable securitises part of pension fund

Barclays Capital has completed the securitisation of a portion of Aegon’s unit-linked book. The deal monetises the embedded value of the securitised business providing a £250m injection of capital to Aegon Scottish Equitable and enhancing the business’ return on capital.

In addition, in each year for the fi rst three years, Aegon has the option to contribute new business to maintain the level of fi nancing outstanding. The transaction was rated single A by Fitch, and is the latest in the insurancelinked securitisations’ market. The market has grown steadily over the last 10 years, however, entry is limited to investors who have a sound understanding of the dynamics of the insurance “assets” underlying these contracts. Aegon is likely to use the new capital to expand its operations in emerging markets such as the Far East.