Insurers eye contingent capital as solution to Solvency II volatility

Uncertain path

uncertain path

This year, interest in contingent convertible instruments (CoCos) has been limited. Despite some encouraging banking deals earlier in the year, a lack of regulatory clarity has left potential issuers hesitant. However, a recent issuance of the instruments by Munich-based insurer Allianz suggests that a market for insurer-issued CoCos could be on the horizon.

Prior to the Allianz deal, these loss-absorbing regulatory capital instruments, which could either be written down or converted to equity i