Howard Davies, chairman of the UK's financial services authority, has warned of the dangers of risk transfer between investment banks and insurance companies, particularly through collateralised debt obligations (CDOs).
Speaking at the Association of Insurance and Risk Managers' annual lecture in London on Tuesday, Davies noted the rapid growth in credit risk transfer between the banking or investment banking sectors and insurers or reinsurers. He highlighted the "more exotic forms" of risk transfer such as CDOs and synthetic CDOs.
