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ARCHIVE | Criteria | Financial Institutions | General: Equity Credit For Bank And Insurance Hybrid Capital, A Global Perspective Feb 06
Standard & Poors, Feb 2006
Abstract
Investors, issuers, and market intermediaries increasingly seek clarification of the value of specific hybrid securities in Standard & Poor's Ratings Services' analysis of a bank or insurance group's capital. Our approach closely resembles that of financial regulators, since they have the power to intervene in the operations of a financial services company, and determine whether to do so based on their own perceptions of capital adequacy, as reflected in their definitions of capital. Even so, Standard & Poor's has developed generalized guidelines that vary somewhat from regulators' to facilitate cross-border comparisons. We differentiate the capital value of hybrid securities by their equity-like characteristics, and classify them as follows: Category 1: High Equity Content Category 2: Intermediate Equity Content (divided into...
Companies mentioned in this report are: WestLB AG (Unsolicited Ratings),CNO Financial Group Inc.,Prudential PLC,COREALCREDIT BANK AG,Aviva PLC,Friends Life FPG Ltd.
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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