Can you comment generally on “business culture” differences between life insurers and the capital markets?
I don’t think it’s a difference in culture as much as in business goals. Insurers want guaranteed long-term reserve funding that is economical, efficient and results in appropriate capital and rating agency treatment. They also want to limit the number of conditions under which the lending facility could be accelerated. The capital markets want to have securities that they can sell quickly and easily. They want the transaction to be easy to understand and without credit risk. In most non-recourse deals, this means going to a financial guarantor that is willing to assume what is essentially the true risk of the business by guaranteeing timely payment on the policy-backed securities. A parent or affiliate provides similar protection to the lender in recourse deals. How do these different objectives affect the execution of deals? The guarantors really have one goal in mind – to underwrite the bond and the security for its repayment (the insurance policies) to a zero loss ratio. To do so t
Can you comment generally on “business culture” differences between life insurers and the capital markets?