Under new European Solvency II insurance regulations, subordinated debt is included as own funds and is eligible as regulatory capital. Insurers in all lines of business and with a variety of ownership structures are eligible to issue subordinate debt, and a formal rating is not required.
All categories of insurer are eligible, including: non-life (e.g. motor, home, liability, pet), health, life and any ownership structure, i.e. listed, state owned, privately owned and mutuals. Subordinated debt can benefit a wide range of issuers with different levels of capital requirements.
Issuing sub debt is a quick and easy process with a simple loan note. Repayable after 10 years with no restrictions on its use.
Sub debt can be used to: