UPDATE 3-Baloise says solvency improves, issues bond

* Convertible bond maturing 2016 worth around 240 mln Sfr

* Equivalent to 4 pct of share capital, coupon 1.5 pct

* Says solvency improved "substantially" in Q3

* Conversion price at 121.26 Sfr, UBS bookrunner

* Shares end 1.4 pct down

(Adds details on conversion price, coupon)

By Jason Rhodes

ZURICH, Nov 10 (Reuters) - Swiss insurer Baloise (BALN.VX) said its solvency margin had improved "substantially" owing to strong investment performance in the third quarter as it issued a convertible bond to repay existing debt.

"On the back of the strong performance across almost all asset classes in the third quarter 2009, Baloise's already high solvency margin of 209 percent as at 30 June 2009 further improved substantially," Switzerland's fifth-largest insurer said on Tuesday.