Insurance Linked Securities: The Role of the Banks

Insurance Linked Securities: The Role of the Banks

Language: English

Pages: 355

ISBN: 3834928607

Format: PDF / Kindle (mobi) / ePub

Insurance Linked Securities: The Role of the Banks

Language: English

Pages: 355

ISBN: 3834928607

Format: PDF / Kindle (mobi) / ePub


Securitisations of insurance risk as new methods of risk transfer have been emerging in the global financial market during the recent twenty years. Christoph Weber analyses the techniques of traditional methods in comparison with securitisations for life- and non-life insurance risk. During his stay for expert interviews in the USA of October 2008 the investment bank Lehman Brothers defaulted triggering one of the deepest global economic crisis in history. Strengths and weaknesses of the different products became obvious. In addition, an online survey about the market status and the banks' role is analyzed. Readers get an insight into the drivers and obstacles the different stakeholder groups face.

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reinsure. Tbe insurer's total obligatory capacity can be increased by adding successive surplus layers with different reinsurers. Tbe layers are defined as multiples of the primary insurer's retained line. Tbe .teOM dimension of the treaty defines the capacity in terms of the number of lines or units covered. The primary insurer, next 10 the increase of capacity, benefits from the homogenisation of its portfolio since he will always participate in the losses up to the retention limit only. This

preferred shares which can or must be repurchased by the corporation prior to any conversion. 80 Pul prolecled equity enables a company to put its own stock in the aftermath of a loss event which normally results in a decline of the stock price. This exactly forms the eredit event, the company likes to protect itself. The company is able to generate an economic gain against the seiler of the pul The put is bought by an intermediary at predefined conditions usual for put options incl. the number

100% credit) regular payment of non-rcfundablc upfront fee; cheaper thao post-loss finnocing reinsurers, banks treated os po1icy holder's surplus rather thao as liability (US) ter trigger event is treatcd as equity Contiogmt CapitaI amount issued af· reinsurancc hedge funds, portmanagers, folio IOinsurers finite risk period up to 3 years premium depending on risk and term credit if adequate collateralisation is provided full lies reduction of liabili- res""", deductioo (similar to

exchanging the bonds. It has to be kept in mind that, even if this may be allowed, the collatetai banks at cnrrent da not have the resources or systems 10 manage margin ca1ls or exchange collateral on a frequent basis.82 76INT-6-ASO [05.09.20081 nINT_8_LAW [1O.09.2OO81;INT-IO-RAT [12.09.20081 "INT4BNK [04.09.2008] "INT4BNK [04.09.2OO8];INT-I4-SUP [19.09.2008] "'INT-7-RE1 [OS.09.2OO81;INT-14-SUP [19.09.20081 81INT-29-INV [14.11.2008] "INT-25-BNK [29.10.2008] 164 CHAPTER 6. 1HE PERSPECTIVES OF

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