UBS and Aegon Collaborate on Pension Buyout Business

May 21, 2007 ( - U.K. companies with more than £300 million in pension liabilities will soon be able to hand the administration of their liabilities over to someone else, Bloomberg reported.

Investment bank UBS AG and insurer Aegon NV have teamed up to offer a pension buyout service to U.K. companies, perhaps making the companies more appealing to private equity operations looking to buy.

UBS and Aegon said they will combine insurance, administration, asset management and risk management and that Aegon will provide a bulk annuity service, Bloomberg reported.

The U.K. has so far been leading the march in buying out the liabilities of companies’ DB plans. The latest project between the bank and the Dutch insurer is called Project Catfish and is similar to the April 2006 collaboration between Goldman Sachs Group Inc. and Paternoster Ltd. (See  UK Firm to Buy DB Plans ).

In  June 2006, Duke Street Capital founder, Edmund Truell gained the approval of the Financial Services Authority for his new corporation and has raised an amount of money that would allow the company to take on an estimated £4 billion of pension liabilities (See  UK Company Garners £400M to Take On Final Salary Plans ).

One in four attendees at a Watson Wyatt conference in March in the U.K. said they would consider transferring their pension liabilities to insurance companies in the next five years (See  DB Sponsors See to Transfer Liabilities ).

The topic of pension liability buyouts was also among the topics discussed at PLANSPONSOR’s 2006 DB Summit, where panelists predicted that the strategy would gain speed in the U.S. and not only include insurers taking on the administration of the plans, but becoming the new sponsor as well (See  Is Sponsorship Transfer Next Frozen DB Plan Solution? ).