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Aon launches innovative use of surety bonds for pension schemes

LONDON 9 June 2014 – Aon Risk Solutions, the global risk management business of Aon plc (NYSE: AON), today announced that it has closed a five and a half year, £400 million transaction, which allows a FTSE100 company to offer surety bonds to its pension scheme as part of the funding strategy.

Mark Holt, team leader of Aon Risk Solutions Surety & Guarantee, said:

"This exciting transaction follows months of close collaboration between Aon Hewitt and Aon Risk Solutions.  It is an innovative solution which is a market first and has brought together eight major insurance companies in the largest syndication the UK surety market has ever seen.

Surety bonds are rapidly replacing bank guarantees in many other areas and can play a crucial role in providing alternative off balance-sheet credit for a range of clients, transactions and industries."

Lynda Whitney, partner at Aon Hewitt, added:

"Around half of our UK pension scheme clients already have some form of non-cash funding, contingent asset or guarantee, such as a letter of credit.  But surety bonds offer a new opportunity – one which does not put a strain on working capital and which is with providers who offer excellent security.”

A surety bond is an undertaking from an insurance company to pay a specified sum to a pension scheme on certain specified conditions such as company insolvency, or non-compliance with the scheme’s deficit recovery plan.

The innovative approach of using surety bonds as alternative financing solutions can be employed in other circumstances such as:

• Providing security to lengthen or back-end load a recovery plan

• Managing the risk of trapped surplus

• Facilitating trustees to take more investment strategy risk

• Facilitating corporate restructuring

• Facilitating pension scheme merger

• Providing security to a public sector pension scheme

 

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About Aon

Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services.  Through its more than 66,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise.  Aon has been named repeatedly as the world’s best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources.  Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited to learn

About Aon Hewitt

Aon Hewitt empowers organisations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organisational and personal performance and growth, navigate retirement risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness.  Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide.  For more information on Aon Hewitt, please visit www.aonhewitt.com.
 

Media Contacts

Sarah Booker
Aon Risk Solutions
+44(0)2070864872
+44(0)7841865675
sarah.booker@aon.co.uk

Colin Mayes
Aon Hewitt
+44(0)1372733689
+44(0)7801748138
colin.mayes@aonhewitt.com

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