Eurozone insurers eye CLNs as ECB easing hits bond yields

With the ECB’s quantitative easing programme driving yields on eurozone government bonds to record lows, French insurers have begun to explore the possibility of using hybrid credit and equity-linked notes as a way of bolstering returns

Lionel Fournier, Citi

In the space of a year, yields on 10-year French government bonds fell from 200 basis points to a record low of 54bp by the end of January, so it's no surprise French insurers are leading the search for alternatives to their huge - but suddenly low-yielding - sovereign bond portfolios.

That might sound easy enough, but any candidate must avoid the punitive capital burden associated with direct stock market investments under Solvency II, the new prudential regime for insurers that is due to take