European insurers accelerated their use of subordinated debt markets in the first quarter of 2025, with issuance volumes hitting their highest Q1 level in 14 years, according to specialist insurance-linked securities (ILS) manager Twelve Securis.In a recent commentary, Twelve Securis noted that March alone saw more than €7.5 billion in new issuance across 12 deals, including three RT1 bonds, following a relatively quiet start to the year with just €1.3 billion of issuance in January and February.The uptick comes as insurers move to address upcoming refinancing needs while navigating macroeconomic uncertainty and evolving Solvency II capital constraints.“The increased supply of new bonds resulted in less crowded order books, with an average oversubscription of 3.3x, compared to nearly 5x in H2 2024,” Twelve Securis explained.

“However, Aviva’s RT1 bond stood out as an outlier, attracting exceptionally strong demand with a book nearly 10x oversubscribed.” Adding: “The increased supply of new bonds resulted in less crowded order books, with an average oversubscription of 3.3x, compared to nearly 5x in H2 2024.However, Aviva’s RT1 bond stood out as an outlier, attracting exceptionally strong demand with a book nearly 10x oversubscribed.” Twelve Securis highlighted that insurance subordinated debt continues to offer compelling value, with average option-adjusted spreads of 143bps, significantly wider than Euro investment-grade spreads.The firm also observed that average price tightening from initial price talk (IPT) to final terms remains near its historical average of 10%.

“While bonds issued earlier in the year were affected by interest rate movements, those issued in March showed greater resilience, particularly in EUR and USD markets,” Twelve Securis added.Additionally, the ILS manager explained that recent feedback from issuers and market participants at Deutsche Bank’s recent European Fixed Income Financials Conference, reinforces the firm’s expectation of continued market growth, which the company believes “provides investors with opportunities for both returns and diversification.” Alongside its perhaps better-known catastrophe bond and insurance-linked securities (ILS) strategies, Twelve Securis also manages investment portfolios and funds focused on private and subordinated insurance debt, as well as insurance equities..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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