The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Credit derivatives: Fitch says AIG dominates protection

Market dismisses concentration risk claims.

Fitch’s latest annual survey of the leading players in the credit derivatives market revealed a 40% increase in the amount of credit protection bought by banks in 2004. AIG Financial Products drove an increase in net protection selling by insurance companies.

Banks were net buyers of $427 billion of credit protection. Insurers and financial guarantors sold $556 billion of protection. The global insurance industry sold $319 billion net, with AIG contributing $269 billion, just over 84%, of that total.

“Being late to the table has worked in AIG’s favour,” says Ian Linnell, managing director, Fitch Ratings. “Lots of insurers moved in just at the wrong time and were exposed to the record US defaults of 2001 to 2003. AIG has sold when spreads were high, and now spreads have come in 60%.” This suggests that other insurers and reinsurers could be ready to return to the market. “AIG made a lot of money,” says Linnell. “Swiss Re and others exited.

Take out a complimentary trial

Take out a 7 day trial to gain unlimited access to Euromoney.com and Asiamoney.com analysis and receive expertly-curated updates direct to your inbox.

 

Already a user?

Login now

 

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree