Has insurance credit risk transfer been overplayed?

Don’t worry about insurers being huge buyers of credit risk, says the IMF. But do be aware that they are increasingly becoming sellers of credit guarantees.

It may have been a fuss about nothing. Concerns about the transfer of credit risk to the insurance industry – highlighted by reports by the UK’s Financial Services Authority and rating agency Fitch Ratings – may have been overplayed. According to the International Monetary Fund (IMF), some insurers have started to reduce their credit default swap positions, selling credit guarantees to move their credit risk on to the liability side of their books.

Hung Tran, director of international capital