Under European Solvency II insurance regulations which came into efect in 2016, 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: