Risk management company Aon has securitised $450m (£312.8) of investments to stabilise investment income and improve liquidity ahead of the spin-off of its insurance underwriting business.
The investments, limited partnership investments and associated limited partnership commitments, had been held by its insurance underwriting subsidiaries, Combined Insurance Company of America and Virginia Surety Company, as part of its general account-invested assets.
The Chicago-based company claims the deal, which closed on 31 December 2001, was the first-ever securitisation of an existing portfolio of limited partnership interests that received stand-alone credit ratings from Standard & Poor's (S&P).
Aon chairman and chief executive Patrick Ryan said: "We plan to spin-off our insurance underwriting businesses under Combined Specialty Corporation in spring of this year, and we believe the securitisation will be desirable to investors, rating agencies, and regulators.
"Importantly, the transaction enables a less variable investment income stream and increased liquidity. We will also retain a substantial interest in the economic potential of the investments, which we believe will be favourable over the long term."
The transaction saw Aon's underwriting subsidiaries sell 53 limited partnership interests to a newly created entity, Private Equity Partnership Structures I (PEPS I).
In return, the subsidiaries received approximately 40% of the $450m net asset value in cash, and the remainder in securities issued by PEPS I.
The world's largest reinsurance broker, Aon reported a 4% rise in revenue in 2000 to $7.4bn (£5.1bn).
