Embedded value securitization returns

Author: | Published: 1 Feb 2005

UK insurer Friends Provident's new financing proves the worth of embedded value securitization to the life insurance industry.

The deal, which closed in mid-December, allowed Friends Provident to raise £380 million ($711 million) of core regulatory capital at a much lower cost than alternative Tier 1 capital-raising techniques, such as the issuance of new equity or complex perpetual bonds.

Embedded value deals seek to monetize surplus value contained in a defined...