Insurers embrace innovative hybrid capital structures
Contingent capital bonds are becoming increasingly attractive, writes Louie Woodall. But regulatory reforms mean firms must ensure they have a firm grip on the inner workings of these products
Hybrid capital is occupying an ever-larger segment within insurers’ and reinsurers’ capital structures. Swiss Re reported a hybrid and contingent capital ratio of 9.4% in 2012, up from 6.6% in 2011, while Aviva’s stock of subordinated debt made up 20% of its capital structure on a market consistent embedded value basis in 2012, compared with 17.5% in 2010 (22% in 2011). Similarly, Zurich’s subordinated debt has increased over the past two years from 16.5% to 17%.
This year has witnessed a marked
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Capital
Bundesbank’s Buch slams lower capital for insurers in infrastructure
Deputy president says the use of prudential regulations to achieve economic policy objectives is “highly problematic”
Insurers weigh benefits of multi-asset funds
Asset managers promise high returns with low capital charges
Systemic insurers to delay structural reform
Systemically important insurers will stop short of committing to plans
Tail-risk hedging – Improving the return on capital
Sponsored feature: Pimco
Own funds rule will reduce reported solvency ratios, say insurers
Industry says European Commission proposal will have negative side effects
Cuts to securitisation capital charges too small, say experts
But European Commission proposals can stop insurers becoming forced sellers of low-risk securitisations
The economic view
Insurers are using the delays to Solvency II to improve their economic capital models
Insurers explore new risk metrics in bid to refine economic capital models
European insurers are refining their internal economic capital models as regulators’ efforts to define statutory solvency requirements grind to a standstill. Louie Woodall reports
