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Policymakers get quantifiable proof that banks are systemically riskier than insurers

Dec 11 2012 Alex Davidson, Regulatory Intelligence

The Geneva Association held up AIG as a demonstration that insurance is not systemically risky when it presented to policyholders first-time quantification of insurance systemic risk compared with banking. The cross sector analysis aims to give them a quantifiable basis for any designation of insurers as systemically risky, and the case of AIG has related lessons, according to John Fitzpatrick, chairman of the Geneva Association. "AIG made some mistakes, there is no doubt about it, but was able to change its spots. How could it be called systemically risky if it engaged in systemically risky activity but it wasn't in the nature of the firm itself to take on systemic risk? In banking, in comparison, there is systemic risk," Fitzpatrick said. If it is a new one to represent AIG in so sympathetic a light, Fitzpatrick backed this stance by pointing out the dramatic recent gross reduction of gross notional credit default swaps as on AIG's June 2012 balance sheet. The Geneva Association's

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