The effects of contingent convertible (CoCo) bonds on insurers' capital requirements under Solvency II

  • The Liikanen Group proposes contingent convertible (CoCo) bonds as instruments to enhance financial stability in the banking industry. Especially life insurance companies could serve as CoCo bond holders as they are already the largest purchasers of bank bonds in Europe. The growing number of banks issuing CoCo bonds leads to a rising awareness of these hybrid securities among life insurers as they are increasingly looking for higher?yielding investments into bond?like asset classes during the current low interest rate period. Our contribution provides an insight for life insurance companies to understand the effects of holding CoCo bonds as implied by the Solvency II standards that will become effective by 2016.

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Author:Helmut GründlGND, Tobias Niedrig
Parent Title (English):SAFE policy letter series ; 45
Series (Serial Number):SAFE policy letter (45)
Publisher:SAFE, Sustainable Architecture for Finance in Europe
Place of publication:Frankfurt am Main
Document Type:Working Paper
Date of Publication (online):2015/08/11
Date of first Publication:2015/08/11
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2016/01/12
Tag:Coco bonds; Life insurance companies; Solvency II
Page Number:7
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Wissenschaftliche Zentren und koordinierte Programme / House of Finance (HoF)
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Wissenschaftliche Zentren und koordinierte Programme / Sustainable Architecture for Finance in Europe (SAFE)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht