Convergence on credit
Spurred on by Solvency II, insurance companies are refining their approach to managing credit risk. As a result, some insurers' credit risk management methods are beginning to converge with those favoured by banks. By Rachel Wolcott
Insurance companies have been managing credit risk through the reinsurance market for more than 20 years. While the reinsurance market remains the primary means for insurers to insulate themselves against losses, some are now importing credit portfolio management techniques commonly used at banks to risk-manage loan portfolios - including the use of credit derivatives to hedge their positions.
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