After more than a decade characterised by low, or even negative, interest rates, the sharp rise in bond yields has profoundly transformed the investment landscape for institutional investors. For insurers in particular, this new landscape presents both an opportunity – to rebuild returns – and a challenge, given increasingly stringent prudential, accounting and balance sheet management constraints.
Against this backdrop, repackaged structured products, and in particular SPIRE-type structures, have seen a marked resurgence in interest since 2024, from institutionnel investors and namely insurers. Far from being mere tactical instruments, these products are gradually establishing themselves as genuine financial engineering tools serving sophisticated asset-liability management.
A market in strong recovery driven by institutional needs
Following a slowdown in 2023, the repack market regained strong momentum in 2024 and 2025, with issue volumes reaching around €3 billion per quarter. This recovery reflects structural demand from institutional investors seeking solutions that balance returns, cash flow visibility and risk management.
Analysis of the issues shows a clear predominance of fixed-coupon and zero-coupon bonds, with the latter experiencing a notable resurgence since the second half of 2025.
This trend is indicative of insurers’ priorities: securing cash flows, precise duration management and consistency with prudential and accounting requirements. Variable, step or indexed coupons are still used, but in a targeted manner, to meet specific balance sheet needs.
Thus, the repack market is no longer limited to one-off structures. It is becoming a structured investment universe, fully integrated into institutional asset allocations.
Understanding the principle of a SPIRE-type REPACK
A SPIRE is a structured bond product, issued in the form of a note by a special purpose vehicle (SPV), the objective of which is to transform an existing underlying asset into an instrument that precisely meets the investor’s economic needs.
The structure is based on three main components.The investor first subscribes to a note issued by the SPV, generally at par. This security constitutes the instrument held in the portfolio, with contractually defined coupons and a redemption amount.
The SPV then holds, as collateral, a bond (or a basket of bonds). The cash flows from this collateral are exchanged via a structuring swap entered into with an arranging bank, enabling the payments received to be converted into coupons tailored to the desired profile: fixed rate, variable rate, inflation-linked, curve steepener exposure or a combination of these elements. Lastly, at maturity, the repayment of the note depends on the value of the collateral and the execution of the swap. The key structural feature lies in the “bankruptcy-remote” nature of the vehicle: the assets are legally isolated from the risk of the arranging bank’s bankruptcy, which strengthens legal certainty for the institutional investor.
Key points – The SPIRE-type REPACK in brief
A SPIRE is a structured bond note issued by an SPV. It is backed by bond collateral and enhanced by a structuring swap. The vehicle is legally isolated from the risk of bankruptcy of the issuer and the arranging bank (bankruptcy remote). It allows for the creation of bespoke cash flows (fixed rate, inflation-linked, CMS, bond forward, etc.). For the insurer, it is a simple bond to hold, with no margin calls.
The importance of the vehicle: SPIRE vs EMTN and other structures
For an insurer, the choice of vehicle is far from neutral.
EMTNs offer great flexibility and low structuring costs, but expose the investor directly to the credit risk of the issuing bank. The lack of legal isolation can be a limitation in terms of risk diversification and prudential management.
Conversely, SPIRE-type structures, issued by an SPV, offer a more robust framework: limited recourse to assets, potential diversification of banking counterparties, and the possibility, in certain cases, of novation of the swap in the event of default by the initial counterparty. The multi-bank model also facilitates access to the secondary market.
In practice, the SPIRE represents an effective compromise between the economic flexibility of an EMTN and the legal robustness expected by institutional investors, particularly insurers.
SPIRE and Solvency II: a framework suited to insurers’ prudential constraints
The appeal of SPIRE structures is further enhanced when analysed in the light of Solvency II requirements.
From the perspective of credit risk and the spread SCR, a SPIRE should not be treated as a simple bank exposure. The economic risk is borne by:
- the quality of the underlying collateral,
- the counterparty to the structuring swap.
In many cases, the capital requirement depends more on the overall quality of the structure than on the bank’s creditworthiness alone. This can lead to an optimisation of the SCR compared to an unsecured bank bond, particularly when the collateral is of high quality.
Furthermore, unlike on-balance-sheet derivatives, SPIREs do not generate any margin calls.
This characteristic is crucial for insurers, as it limits operational volatility and pressure on balance sheet liquidity, particularly during periods of market stress.
The transparency of cash flows is another key strength in relation to Solvency II. As coupons are contractually defined, integration into ALM models is facilitated, as is the management of economic duration and matching against long-term liabilities. Fixed-coupon or zero-coupon structures are particularly valued for their stabilising effect on the solvency ratio.
Lastly, like any structured product, SPIREs must operate within a robust governance framework: validation by the product committee, transparency regarding embedded optional risks, comprehensive documentation and auditability of the structure. When properly regulated, they are generally viewed by supervisors as prudential management tools, rather than speculative instruments.
Concrete use cases for asset-liability management
From an operational perspective, SPIREs meet several key needs of insurers.
Firstly, they serve as a lever for improving risk-adjusted returns, for example by converting inflation exposures into fixed-rate ones or by adding optional components in a measured manner. They also enable fine-tuned balance sheet management, notably through bond forward-type structures, which lock in today’s favourable market conditions for future investments.
SPIREs also offer a means of broadening the investment universe, by gaining access to certain issuers or currencies whilst neutralising unwanted risks, particularly currency risk. Finally, they facilitate the implementation of controlled variable income streams, indexed to long-term rate references (CMS, curve steepener exposure), without resorting to derivatives that are complex to manage from a balance sheet perspective.
Conclusion
In an environment where precise management of returns, risk and the balance sheet is becoming crucial, repackaged structured products such as SPIREs are gradually establishing themselves as fully-fledged management tools. Combining economic flexibility, legal robustness and Solvency II compliance, they illustrate the evolution of financial engineering to serve institutional investors, and more specifically insurers.
