"We're beginning to see huge rating agency arbitrage in the insurance business," he said. "In 2007, subprime was all about rating agency arbitrage."
"the lack of effective regulation"
"massive growth in small rating agencies ticking the box for compliance,"
"Colm is just wrong,"
"have most of the expertise right now in structured products."
UBS chairman Colm Kelleher warned that a lack of effective regulation and a proliferation of small rating agencies in the insurance industry create a looming systemic risk. He described growing rating-agency arbitrage in insurance and compared it to the 2007 subprime episode. Insurance companies have increased allocations to private credit, and private equity firms have established or partnered with captive insurance lenders such as Athene. Apollo CEO Marc Rowan disputed the characterization, noting that a large share of Athene's assets carry ratings from major agencies and that specialist agencies possess structured-product expertise.
Read at Business Insider
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