- Against the backdrop of equity dividend cuts and a low yield environment, insurance bonds are considered a compelling source of reliable income for investors
- Despite some tightening since March 2020 wides, spreads on insurance bonds remain attractive
- Coupons are generally sustainable and are expected to continue to be paid during the current period of COVID-19-led stress Higher yielding but not high yield: the potential risk of insurance ‘fallen angels’ in 2020 looks very limited
- The new supply of bonds is expected to be manageable, supporting secondary market spreads, while the sector’s strong first call track record will be maintained
- However, credit risks are not uniform across the sector, reinforcing the importance of extensive fundamental analytics
