Is There Still Life in Securitisation?

At the end of last year, Barclays Life securitised the embedded value of the whole of its life insurance business. This followed the merger of Barclays Life and Woolwich Life and the transfer of the business of Barclays Life to Woolwich Life (subsequently renamed Barclays Life Assurance Company Limited ("BLAC")) using the Part VII transfer regime.

It was the first time that a European bank had used the capital markets to refinance an investment in a life subsidiary, and it was only the second securitisation of life insurance in the UK, the first being that undertaken by NPI in 1998. At the time of the NPI transaction, it was widely thought that this type of capital raising might prove a useful tool for life companies, providing an immediate and efficient source of funding and a reduction in the risk that the future surplus does not emerge. Indeed the Swiss Re sigma report of the time suggested that securitisation lent itself to the financing of new business. Nevertheless credit