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Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

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Rating Agencies Assessment of Insurance Hybrid Debt

Rating Agencies Assessment of Insurance Hybrid Debt

Gurdip Dhami

25 years: Treasury & ratings

While rating agencies are broadly aligned in how they assess insurance hybrid debt there can be some noticeable differences. Join Gurdip Dhami as he explores how Moody’s, Fitch Ratings and S&P treat hybrid debt.

While rating agencies are broadly aligned in how they assess insurance hybrid debt there can be some noticeable differences. Join Gurdip Dhami as he explores how Moody’s, Fitch Ratings and S&P treat hybrid debt.

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Rating Agencies Assessment of Insurance Hybrid Debt

13 mins 12 secs

Overview

As a general rule, the rating agencies follow the regulators and give more equity credit to Tier 1 (than to Tier 2 and Tier 3) in their calculations of capital and leverage because Tier 1 is more equity-like. Although the three rating agencies have the same general concept when considering the level of equity credit assigned to insurance hybrid debt (that the level of equity credit should reflect permanency and loss absorbency) they have different detailed eligibility criteria.

Key learning objectives:

  • Outline how each rating agency treats hybrid capital

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Summary

How do the three main rating agencies (Moody’s, S&P’s and Fitch Ratings) analyse hybrid capital with respect to capital adequacy and leverage?

The rating agency treatment of hybrid debt varies by agency. As a general rule, the rating agencies follow the regulators and give more equity credit to Tier 1 (than to Tier 2 and Tier 3) in their calculations of capital and leverage because Tier 1 is more equity-like.

Details on hybrid debt treatment can be found in the rating agency criteria which are published on their websites.

Although the three rating agencies have the same general concept when considering the level of equity credit assigned to insurance hybrid debt (that the level of equity credit should reflect permanency and loss absorbency) they have different detailed eligibility criteria. Therefore when structuring insurance hybrid debt, the rating criteria should be examined carefully and the classification agreed with the rating agencies before issuance.

 

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Gurdip Dhami

Gurdip Dhami

Gurdip has 25 years of experience in the financial services industry. He has had roles in corporate treasury, risk management, debt capital markets, debt advisory, ratings advisory and financial reporting. During this time, Gurdip has worked at Standard Chartered Bank, JPMorgan and RBS. He is currently a Non Executive Director, writer and trainer.

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