European insurers return to peripheral sovereign debt markets

High yields and low volatility driving comeback from core-Europe firms

Insurers are staging a cautious return to peripheral eurozone debt markets, four years after they were forced to dramatically expunge their sovereign bond holdings amid fears of a eurozone collapse.

Companies have been buying investment-grade Italian and Spanish bonds, and firms with more flexible investment rules are eyeing opportunities in Ireland and Portugal, as these countries emerge from gruelling three-year bailouts.

Relative high yields and a steady reduction in volatility over the past