Other risks [9]

Go to: Summary | Previous | Next   
Bullet points include: Type 1 tries to cover exposures that may not be diversified and where counterparty is likely to be rated, i.e. Reinsurance arrangements, securitisations and derivatives, any other risk mitigating contracts, cash at bank, deposits with ceding institutions, guarantees, letters of credit, letters of comfort which the undertaking has provided and which depend on the credit standing of a counterparty. Type 2 tries to cover exposures which are usually diversified and where counterparty is likely to be unrated, i.e. Receivables from intermediaries, policyholder debtors, deposits with ceding institutions. N.B. Treatment of capital, initial funds, letters of credit as well as any other commitments received by the undertaking which have been called up but are unpaid depends on whether number of independent counterparties exceeds a certain threshold.

Contents | Prev | Next | ERM Lecture Series

Desktop view | Switch to Mobile