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RM-2.1.4

Credit risk is the risk that a counterparty will not meet its obligations in accordance with agreed terms, causing a financial loss. In the case of an insurance firm, credit risk will normally occur with:

(a) Reinsurance counterparties;
(b) Assets (e.g. stock, loans);
(c) Derivatives; and
(d) Insurance debtors (premiums due from insured persons and intermediaries).
Amended: January 2007
Amended: October 2007