Reinsurers face risk on car, card, student ABS-Buba - News

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Reinsurers face risk on car, card, student ABS-Buba

By: AFX | 16 Nov 2009 | 05:28 AM ET

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FRANKFURT, Nov 16 (Reuters) - The reinsurance industry faces risks from structured finance products based on credit card, car and student loans that are a concern for regulators, Germany's Bundesbank president, Axel Weber, said on Monday. Asset-backed securities (ABS) covering these types of loans had been robust so far, compared with more volatile mortgage-related ABS, and regulators had already seen how they performed in economic up and downswings, Weber said. "These segments are more of a problem for the reinsurance system, which insures the default risks, in my view," Weber said in response to a question from the audience at the Euro Finance Week conference. Regulators are aware that reinsurers are facing a strong increase from insurance payouts for credit defaults as a result of the subprime crisis, he added. "Therefore we must very closely observe this market. We see risks here that we have to keep an eye on," Weber said. In the wake of the crisis, Germany's coalition government plans to increase the Bundesbank's powers to oversee the country's banking and financial system, which may also include a role in insurance supervision. (Reporting by Jonathan Gould and Eva Kuehnen; Editing by Greg Mahlich) Keywords: BUBA/REINSURERS (Reuters Messaging: jonathan.gould.reuters.com@reuters.net; +49 69 7565 1242) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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