Credit risk
(as defined under Paragraph 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 to the insurance firm. In the case of an insurance firm, credit risk will normally relate to exposures to:
(a) Reinsurance counterparties;
(b) Assets (e.g. stock, loans);
(c) Derivatives; and
(d) Insurance debtors (premiums due from insured persons and intermediaries).