Transamerica Stable Value Solutions' rich history as an industry leader
and innovator began more than a quarter of a century ago when two large U.S. insurance
groups -- Capital Holding and Transamerica -- began selling institutional products
to their respective clients in the early 1980s. The initial products sold were typically
funding agreements and guaranteed investment contracts (GICs) in which the insurers
would guarantee a certain rate of return on the institution's investment over a
period of time before paying back the principal. The insurers would invest the borrowed
money at a higher rate of return, and profit from the "spread" between
what the insurers earned and what they paid out under the terms of the
GICs. Some of these GICs provided a fixed-income like, "stable" return
to pension and savings vehicles such as 401(k) plans.
In 1991, to meet institutions' demand for a guaranteed return without shifting assets
into the insurers' accounts, Capital Holding pioneered the synthetic or
Trust GIC®, becoming the first insurer to provide this unique "wrap"
contract. This product, the precursor of what Transamerica Stable Value Solutions provides
today, offered the credit-backing of an insurance company (the "wrap")
and a smoothed rate of return on a pool of assets, all for a fee as opposed
to the spread-arbitrage model of the traditional GIC.
Aegon acquired Providian (formerly Capital Holding) in 1997 and Transamerica in
1999, and in 2000 merged their respective institutional products businesses into
a new unit, Aegon Institutional Markets. For the next nine years, Aegon Institutional
Markets grew its stable value business to become the industry's largest provider
of synthetic GICs.
In 2009 Aegon made a strategic decision to scale back its institutional spread
business and re-position Aegon Institutional Markets' synthetic GIC team as Aegon
Stable Value Solutions Inc. Rebranded in 2012 as Transamerica Stable Value Solutions Inc.,
it is one of several units now operating under Transamerica’s Investments & Retirement group.
Today, Transamerica Stable Value Solutions remains a leading provider of synthetic
GICs, "wrapping" approximately $60 billion in the stable value offerings
held by savings/retirement plans of major corporations and stable value pooled funds.