Tag: securitization

Is life insurance a human capital derivatives business?

Mary Pat Campbell

Link: https://math.illinoisstate.edu/Krzysio/KO-JII-Invited.pdf

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Abstract:

Life and disability insurance, as well as annuities, traditionally have been analyzed as products providing protection against random losses. This article proposed that these products can be viewed as derivative instruments created to address the uncertainties and inadequacies of an individual’s human capital, if human capital is viewed as a financial instrument. In short, life insurance (including disability insurance and annuities) is the business of human capital securitization.

Author(s): Krzysztof M. Ostaszewski, PhD, MAAA, FSA, CFA

Publication Date: 2003 — vol 26, pp. 1-14

Publication Site: Journal of Insurance Issues

Greensill Faces Possible Insolvency After Credit Suisse Suspends Investment Funds

Mary Pat Campbell

Link: https://www.wsj.com/articles/credit-suisse-suspends-funds-tied-to-softbank-backed-greensill-11614599752

Excerpt:

Specialty finance firm Greensill Capital headed toward a rapid unraveling after Credit Suisse Group AG suspended $10 billion of investment funds that fueled the SoftBank Group Corp.-backed startup.

With a key source of financing frozen, Greensill appointed Grant Thornton to guide it through a possible restructuring, and it could file for insolvency, the U.K. equivalent of bankruptcy, within days, according to people familiar with the company.

….

U.K.-based Greensill is the brainchild of former Citigroup Inc. and Morgan Stanley financier Lex Greensill. Founded in 2011, Greensill specializes in an area known as supply-chain finance, a form of short-term cash advance that lets companies stretch out the time they have to pay their bills.

Greensill packages those cash advances into bondlike securities that give investors a higher return than they could get from bank deposits. Credit Suisse’s funds were a major buyer of those securities.

Author(s): Julie Steinberg, Duncan Mavin, Ben Dummett, Maureen Farrell

Publication Date: 1 March 2021

Publication Site: Wall Street Journal