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(From Reinsurance)
A new study from Swiss Re's research division, sigma, considers the role that reinsurers play in absorbing risk from insurers and questions whether they themselves become a risk.
The study uses the notion of systemic risk as a way of analysing the potential threat to reinsurers. This is defined as the danger of an event leading to a loss of economic value and/or of confidence in the financial system. This in turn would have grave consequences for the real economy.
The discussion assumes systemic risk in the following cases: the lack of reinsurance cover on the one hand, and bankruptcies of primary insurers and banks caused ...