On 11 December 2012, the Geneva Association, a think-tank for the insurance industry, published a cross-industry analysis comparing the 28 Global Systemically Important Banks (G-SIBs) to 28 of the world’s largest insurers on indicators of systemic risk.
The analysis studied 17 indicators that are regarded as being comparable between insurers and banks to provide an analysis of the size of each activity. The conclusions drawn were that:
Insurers are significantly smaller than banks
- The average bank’s assets are 3.9 times larger than the average insurer;
- The largest insurer would rank only 22nd in the list of G-SIBSs by size.
Insurers write considerably less CDS than banks
- The average bank writes 158 times the value of gross notional Credit Default Swaps (CDS) than the average insurer;
- The lowest ranked banks on average have 12.5 times the CDS sold by the average insurer.
Insurers utilise substantially less short-term funding than banks
- Short-term funding as a percentage of total banks assets is 6.5 times higher than short-term funding as a percentage of insurer assets.
Insurers are less interconnected to other financial services providers than banks
- Banks carry 219 times more gross derivative exposure than the insurer average;
- The lowest ranked banks carrying 66 times more gross derivative exposure than the average insurer;
- At the measurement date, banks owed on average 68 times more than insurers in gross negative derivatives;
- Banks are owed 70 times more from derivatives counterparties through derivatives exposure than insurers.