Insurers hungry for safer investments.

With the subprime mortgage crisis roiling the economy, insurers and reinsurers are turning from collateralized debt obligations to less risky structures to replace lost investment income and boost portfolio performance.

With that in mind, French bank Societe Generale is among the leaders in offering principal-protected structures and other capital guarantee products. These instruments provide an alternative to fixed-income notes and are generating a lot of interest on Wall Street.

"The idea is to provide a different engine for performance," said Samuel Rosenberg, a managing director with Societe Generale's New York-based subsidiary, SG Americas Securities LLC.

"Traditionally, what we've seen is a tremendous amount of assets from the insurance company side going into credit-linked type transactions, and massively into collateralized debt obligations (CDOs)," Rosenberg said. "That market has pretty much blown up over the summer, so they're obviously rethinking their approach and attitude and general exposure to these types of products."

Marie-Laure Chandumont, vice president of the securities equity derivatives unit at SG Americas, said the first objective for insurers that invest in these structured products is diversification.

"They may have a large fixed-income investment portfolio," Chandumont said. "Or a lot of equity exposure through their annuities business. Now, they're looking at decorrelated asset classes, such as hedge funds or commodities."

Another motivation is investing to produce so-called "alpha generation," or above-normal returns, she said. Insurance companies normally resort to high-yield investments to boost performance of their portfolios, particularly during soft market cycles.

Income replacement is the third major driver, said Chandumont, and thanks to losses on CDO portfolios with subprime mortgage exposure, there's plenty of demand for alternative investments with that feature.