Insurance (360) | Tier2/RT1s: Our Best Picks

Research evidence excerpt

Insurance (360) | Tier2/RT1s: Our Best Picks

Credit Research fromInsurance

RT1s have also recovered sharply, but spreads leave little room for error. Our in-house EUR RT1

index has returned 2.9% YTD, in line with CoCo/AT1s and ahead of HY ex Financials and

corporate hybrids. The path was volatile: RT1s fell from +2.3% at the February review date to

-1.9% at the late-March trough, before recovering to +2.9% by 15 June. Spreads tightened to

224bps from 253bps at the end of 2025, after widening to 293bps at the March peak. The

RT1/Insurance Tier2 multiple has compressed to 2.22x from 2.35x at the end of 2025, but

remains above 2x. RT1s therefore remain useful for long spread duration and non-bank

subordinated financial exposure but not as broad segment exposure at current spread levels.

We have also expanded our insurance coverage in this publication, adding BNP Cardif and

Sogecap to the monitored universe. We now cover 17 European insurers across senior,

Tier2, and RT1 instruments. For each issuer, investors will find a dedicated three-page

section at the end of the report, including the recommendation rationale, key credit

metrics, capital indicators, and relevant bond charts.

In Tier2, our stance is neutral-to-selective rather than directional. We favour selected

Allianz, AXA, and Sampo notes in the single-A bucket, and selected CNP, MACIF, Sogecap,

and BNP Cardif bonds in the triple-B bucket.

In RT1, we remain cautious where spreads have compressed too far relative to credit

quality, duration, or reset protection. The sector remains resilient, but at current spreads

the investment case is increasingly bond-specific. We maintain a Neutral stance at the

asset-class level but upgrade selected bonds, including Aegon 5.625% PNC29, La Mondiale