Topic · Core Finance & Asset Classes
← All topicsInsurance & Pensions
20 articles · 4 checkpoints · 12 deeper reads · 4 reference notes
A standalone topic: it is on no roadmap, so read it on its own terms.
Every article, in reading order
plant a flag as you finish eachRead these first
An insurer's balance sheet runs backwards from a normal company's: it sells a promise today, collects the cash, and only finds out decades later what the promise actually cost, everything about how insurers invest and report follows from that inversion.
Catastrophe bonds let insurers pass hurricane and earthquake risk directly to bond investors instead of reinsurers, investors collect a rich coupon for years, unless a disaster crosses a pre-agreed line, in which case their principal pays the claim instead of being returned.
A pension fund's liabilities move with interest rates just like a bond does, liability-driven investing hedges that by holding government bonds against the liabilities, and uses leverage to free up cash for other investments without giving up the hedge.
A UK government mini-budget spooked the gilt market, gilt yields spiked in days, and leveraged pension funds racing to meet collateral calls by selling gilts turned a policy shock into a near-doom-loop that the Bank of England had to step in and stop.
Then the rest