• Transaction funded mainly with the use of U.K. gilts
  • About 18.3 billion pounds of liabilities transferred in 2015

Pension Insurance Corp. agreed to insure 900 million pounds ($1.3 billion) of Aon Plc’s Retirement Plan in the U.K. as the world’s second-largest insurance broker seeks to reduce risk.

The agreement with Aon covers the majority of the pension fund’s liabilities, PIC said in a statement. Known as a buy-in, it’s the third such deal that the London-based insurer has signed with Aon since 2012. PIC, a London-based insurer of defined-benefit pensions, said the transaction was mainly funded with the use of U.K. gilts.

“We are very pleased to have been able to conclude this transaction at time of considerable market volatility,” David Burton, the independent chair of the pension trustees said in a statement. “We have taken a significant step in our long term de-risking plan.”

The insurer is among firms including Rothesay Life Ltd., competing in the so-called de-risking market as pension funds grapple with deficits and companies look to offload their capital-intensive insurance units. About 18.3 billion pounds of liabilities were transferred to insurers last year, according to a Hymans Robertson LLP report.

India’s Tata Steel Ltd. is said to be considering transferring its U.K. pension liabilities to an insurer in a bid to help sell its U.K. steel unit, Bloomberg reported earlier this week. Potential bidders, said to include Hebei Iron & Steel Group and JSW Steel Ltd., have indicated that they don’t want to be saddled with the pension fund, which is in deficit.

PIC said last week that it planned to tap existing shareholder Reinet Fund and new investor Hong-Kong based Legend Holdings Corp. to raise 250 million pounds of equity capital to fund future growth.

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