Subordinated bonds issued by insurance companies are currently traded at considerable discounts. Thus, these instruments offer truly attractive current yield levels. In addition, the advent of Solvency II is expected to trigger the redemption of subordinated debt due to a lack of solvency recognition under the new regime. As such repayment of debt will be made at par, the transition to Solvency II creates additional return potential for subordinated debt.
Article in German in the Handelszeitung on September 8, 2011.
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