This page contains a Flash digital edition of a book.
Evolving Strategies


Different financial institutions and different carriers have varying appetites for risk when it comes to foreclosed properties.


“The property market will continue to evolve as reinsurance costs go up and loss prediction improves.”


Christopher Taylor, Zurich


Some financial institutions act conservatively, moving properties off their balance sheet as quickly as possible even if they have to take a big loss. Others hold onto distressed real estate, waiting that time will bring an opportunity for better recovery. The approach a bank takes depends on its size and its willingness to bear a loss.


A carrier’s appetite for risk is guided by standard factors, such as geographic dispersion, concentration of catastrophe risk and the cost of reinsurance. Risk modeling tools are improving the ability of carriers to make better predictions about the likelihood of losses of various types of construction in specific geographies. But one of the most important factors is the financial institution’s willingness to share risk and how well it mitigates its own exposure.


Copyright © 2012 by A.M. Best Company, Inc. All rights reserved. No part of this report may be reproduced, stored in a retrieval system or transmitted in any form or by any means; electronic, mechanical, photocopying, recording or otherwise.


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20