Insurers weigh home-loan investment as efficient source of yield

European insurers are exploring direct investment in residential mortgages due to the benign capital treatment of whole loans under Solvency II and the continued short supply of high-yielding assets, say bankers and consultants.

A number of top 10 European insurers are in preliminary discussions with banks about investing in mortgage whole loans, either by buying portfolios of loans or by partnering with banks to originate loans, according to advisers with knowledge of discussions.

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