Credit adaptation

Moving credit risk from the capital markets to the insurance market is no longer the preserve of the top reinsurers. But, as Mark Pelham reports, with more and more insurance companies discovering transformers, the most established players are weaning themselves from insurance contracts and increasingly dealing directly with banks using capital markets documentation.

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Reinsurance and insurance companies are not only involved in the credit derivatives market as investors through synthetic collateralised debt obligations (see Credit, March 2002), but they are also an ever-growing presence in the market in their own right. The predominant mechanism used to date for moving risk from the capital to the insurance markets and vice versa is the insurance transformer.

However as more and more insurance companies discover transformers, the pioneers of this business

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Credit risk & modelling – Special report 2021

This Risk special report provides an insight on the challenges facing banks in measuring and mitigating credit risk in the current environment, and the strategies they are deploying to adapt to a more stringent regulatory approach.

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