SYDNEY, March 27 (Reuters) - Australian insurer Suncorp Group...

SYDNEY, March 27 (Reuters) - Australian insurer Suncorp Group (SUN) plans to raise around A$250 million ($191 million) of hybrid securities to strengthen its capital base, it said on Monday, with the bank hoping to tap piles of cash looking for a higher-yielding home.

The offer consists of additional tier 1 capital, a form of capital required by financial regulators to ensure banks have sufficient reserves to avoid the need for a taxpayer-funded bailout in the event of a financial crisis.

Banks sell subordinated debt and hybrids, a mix of debt and equity, because they are cheaper to issue than shares alone.

This would be the third such issue this year, following Commonwealth Bank of Australia (CBA)'s A$1.45 billion and financial institution Challenger Ltd's A$430 million.

Both transactions were significantly oversubscribed even after the issues were increased substantially.

At least A$1.6 billion of hybrid securities matured last year, leaving investors underweight in the sector.

Hybrid offers typically pay attractive margins because they are riskier than senior debt.

Price guidance of the Suncorp issue is 390 basis points to 410 basis points over the bank bill swap rate, according to the prospectus, or the equivalent of just below 6 percent. The final margin will be determined on April 3.

Steve Johnston, Suncorp's chief financial officer, said the issue was part of the bank's ongoing funding and capital management strategy.

The insurer said the proceeds are additional capital and won't be applied to a A$560 million hybrid issue callable in December.

The new offer consists of perpetual notes with a mandatory equity conversion date of June 17, 2024 and are callable in June 2022, according to the prospectus.

The offer will close on April 28 and start trading on May 11. Union Bank of Switzerland is the arranger and lead manager with Morgans Financial and National Australia Bank (NAB) also jointly leading the issue. ($1 = 1.3103 Australian dollars)