insurance securitization a ripe market.pdfVIP

November 2012 Published by the CPCU Society Insurance Securitization: A Ripe Market? by Harvey Powers Great Expectations Abstract The financial markets have proven he global insurance market is estimated to have earned $4.1 trillion in written extremely efficient in distributing Tpremiums in 2011, of which, $170 billion of premiums were funneled into a wide range of investments reinsurance (Datamonitor). However, the value of annual issuances of insurance and risk to a broad pool of securitizations was $15.5 billion dollars in 2007, a mere fraction of the available market, investors, especially during the and issuances dropped to $4.1 billion in the 2008 recession (International Association late 20th and early 21st centuries. of Insurance Supervisors). For comparison, of the $10.3 trillion U.S. mortgage market, MBSs and other asset-backed about two-thirds of the value is securitized; credit card, auto, and student loans are also securities are multi-trillion dollar securitized en masse, providing liquidity and diversification to investors (Federal Reserve). products, and market-traded options, credit default swaps, What is the fundamental source of disparity between the highly securitized asset and other d