In this episode of the InsuranceAUM.com Podcast, host Stewart Foley is joined by Bill O'Neill, Principal Senior Portfolio Manager at Income Research and Management, to explore the often underappreciated yet highly versatile world of convertible bonds. Bill shares his deep knowledge of the asset class, explaining the hybrid nature of convertible bonds that offer bond-like characteristics with the potential for equity-like returns. The conversation delves into the history and structure of convertible bonds, highlighting their unique appeal in today's higher interest rate environment. Bill discusses the resurgence of the investment-grade convertible bond market, driven by factors such as the need for diversified capital access, favorable changes in regulatory accounting standards, and the current economic climate.

The discussion also touches on the specific advantages convertible bonds offer to insurance companies, particularly the blend of downside protection and upside potential they provide. Bill details Income Research and Management's long-standing experience managing convertible bonds, emphasizing their focus on "bond-like" convertibles that align well with the conservative, income-oriented investment strategies often favored by insurers. This episode offers valuable insights for insurance asset managers looking to explore the potential of convertible bonds in a diversified portfolio, especially given the evolving financial landscape and the renewed growth in this asset class.