Reuters: Regulatory News: Reinsurers retreat from credit default swaps - IAIS

Reuters: Regulatory News Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

Reinsurers retreat from credit default swaps - IAIS Oct 2nd 2012, 19:00 LONDON | Tue Oct 2, 2012 3:00pm EDT LONDON Oct 2 (Reuters) - The reinsurance industry has pulled back from protecting investors against non-payment of debt, reducing its exposure by 80 percent over the past nine years, industry regulators said on Tuesday. Reinsurers sold $3.8 billion of protection through the credit default swap (CDS) market last year, down sharply from a peak of $20.3 billion in 2003, the International Association of Insurance Supervisors (IAIS) said in a report. Swiss Re, the world's No. 2 reinsurer, and AIG , the fifth-biggest primary insurer, absorbed heavy losses on credit default swaps during the 2008 financial crisis. AIG was forced to accept a $182 billion taxpayer bailout as a result, while Swiss Re took a $3 billion loan from billionaire investor Warren Buffett. IAIS in May said that insurers involved in "non-traditional" activities such as writing credit default swaps could pose a risk to the financial system and may be forced to hold extra capital or meet tougher reporting requirements. The curbs could be imposed as part of a drive by the G20 group of countries to tighten financial regulation and prevent a repeat of the 2008 crisis. Last year reinsurers bought $3.9 billion of default protection through the CDS market, making them net buyers overall, IAIS said. Insurers and reinsurers combined bought $227 billion of CDS protection in 2011, easily outstripping the $70 billion of protection they sold. Switzerland-based IAIS also said that the insurance and reinsurance industry held up well last year despite a spate of costly natural catastrophes and "uneven" global economic activity. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions