IAIS To Write Reinsurance, Securitization Rules - UPDATED

The cases "raise questions with respect to the investment policy of these vehicles, and more generally, to their relation to the overall proposed return to investors," officials write. "It is to be noted that in both of these cases the challenges related to investment risk rather than underwriting risk."

The financial crisis "has put several risk transfer arrangements under stress, generating a very instructive body of evidence," officials write. "Perhaps a key finding emerging from the cases analysed is the inherent complexity of these kinds of transactions and the often unforeseen risks that complexity entails. Cross-sectoral risk transfer arrangements bring together a broad spectrum of players, interlinked by an intricate web of contractual arrangements, the soundness of which can be difficult to ascertain from the outset."

This year, the parties to new securitization arrangements seem to be taking a more conservative approach to investments and putting more emphasis on disclosure, officials write.

A copy of the full report is available here.