ECONOMIC ASPECTS OF SECURITIZATION OF RISK

摘要: This paper explains securitization of insurance risk by describing its essential components and economic rationale. We use examples describe recent transactions. explore the key ideas without abstract mathematics. Insurance-based securitizations improve opportunities for all investors. Relative to traditional reinsurance, provide larger amounts coverage more innovative contract terms. with an emphasis on risks that are usually considered insurable risks. discuss rationale assets liabilities we each type securitization. also axguments continued future insurance-risk activity. An appendix indicates some issues involved in pricing securitizations. do not develop specific results. Pricing techniques complicated fact that, general, based securities have unique prices axbitrage-free considerations alone. The technical reason this is most interesting reside incomplete markets. A market said be complete if every pattern cash flows can replicated portfolio traded market. payoffs from insurance-based securities, whose may depend