NAIC ruling reopens US hybrids market

A temporary ruling from the US insurance regulator has reopened the hybrids market to US insurance firms after a six-month hiatus. A working group of the National Association of Insurance Commissioners (NAIC) decided in September to reclassify hybrids, thereby slashing the capital charges associated with them.

Preferred equity structures such as Yankee tier 1 securities will now be classified as debt instruments, giving them a capital charge of just 0.3%, instead of the 30% charged for equity

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