The best of both worlds

Hybrid capital has become the weapon of choice in an insurer's armoury of capital management techniques. But as regulatory bodies pay increasing attention to what actually constitutes a mid-point between debt and equity, will insurers' balance sheets come under attack? Aaron Woolner reports

Hybrid debt has become a standard tool in the capital management strategy of insurers, enabling those holding the financial purse strings to plot the most capital efficient course across the markets. Swiss Re is a prime example of this trend. According to its latest annual report, 7.3% of its Sfr477 billion available Tier 1 capital was in the hybrid format. The Zurich-based insurer issued £1 billion alone in the 12 months preceding the 2007 report - but what actually is hybrid capital?

According