Insurers seize opportunities in European corporate funding markets

As European insurers increasingly invest in illiquid corporate debt, credit funds and partnerships with banks are helping them overcome their lack of expertise and tap into a market that offers high-yields and a chance of diversification. But markets remain fragmented along country lines, as regulatory inconsistency hampers the emergence of a US-style private placement market in Europe.

A commonly held view in the aftermath of the financial crisis in Europe was that life insurers would quickly step into the shoes of the retrenching banks to finance credit-starved corporates.

To politicians, in particular, it came as a disappointment that the insurance industry did not take the plunge. While acknowledging the chance to diversify their investments and increase returns, insurers lacked the credit risk analysis skills and were held back by inconsistent regulatory and contractual