• European insurers saw a record surge in subordinated debt issuance in Q1 2025, led by over €7.5 billion in new deals in March, according to Twelve Securis.
• Despite rising supply, investor demand remained strong, highlighted by Aviva’s RT1 bond, which was nearly 10 times oversubscribed.

Record-Setting Q1 for European Insurers

European insurers significantly accelerated their use of subordinated debt markets in the first quarter of 2025, achieving their highest Q1 issuance volume in 14 years, according to specialist insurance-linked securities (ILS) manager Twelve Securis. The surge in activity was primarily driven by insurers seeking to address upcoming refinancing needs amid macroeconomic uncertainties and evolving Solvency II capital rules.

March Marks a Major Surge

Twelve Securis highlighted that March alone accounted for over €7.5 billion in new subordinated debt issuance across 12 deals, including three RT1 bonds. This marked a sharp contrast to the relatively slow start of the year, which saw just €1.3 billion in issuance during January and February. The surge in March issuance was attributed to insurers taking advantage of favorable market conditions.

Aviva’s RT1 Bond Stands Out

Among the notable deals, Aviva’s RT1 bond was a standout performer, attracting exceptionally strong demand with an order book nearly 10 times oversubscribed. This far exceeded the average oversubscription of 3.3x observed across other issuances, down from nearly 5x in the second half of 2024.

Strong Investor Interest Despite Market Challenges

Despite a higher supply of new bonds, investor interest remained robust, with average option-adjusted spreads of 143bps, significantly wider than Euro investment-grade spreads. Twelve Securis also noted that while bonds issued earlier in the year were affected by interest rate volatility, those issued in March demonstrated greater resilience, particularly in EUR and USD markets.

Positive Outlook for Subordinated Debt

Looking ahead, Twelve Securis expects continued growth in the insurance subordinated debt market, supported by feedback from Deutsche Bank’s recent European Fixed Income Financials Conference. The ILS manager emphasized that this segment continues to offer attractive opportunities for investors, providing both potential returns and diversification.

Also Read: Ethereum Holds $1,800 Zone: Is a Rally to $2,839 in Sight?

Twelve Securis, known for its expertise in catastrophe bonds and ILS strategies, also manages investment portfolios and funds focused on private and subordinated insurance debt, as well as insurance equities.