Default insurance is a kind of credit insurance, that is, taking the credit of the insured as the insurance liability. If the insured violates the credit, the insurance company will assume the liability.The party of default insurance is called the buyer, and the party bearing the risk is called the seller.Both parties agree that if there is no default, the buyer will pay "insurance premium" to the seller on a regular basis, and in case of default, the seller will bear the loss of the buyer's assets.
Default insurance is a kind of credit insurance, that is, taking the credit of the insured as the insurance liability. If the insured violates the credit, the insurance company will assume the liability.
Credit default swapIt is a financial derivative product initiated by JPMorgan Chase in 1995. It can be regarded as a default insurance for financial assets.
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The party of default insurance is called the buyer, and the party bearing the risk is called the seller.Both parties agree that if there is no default, the buyer will pay "insurance premium" to the seller on a regular basis, and in case of default, the seller will bear the loss of the buyer's assets.
In terms of credit default swaps, banks or other financial institutions that hold a large number of financial assets generally buy insurance, while insurance companies, hedge funds, commercial banks and investment banks also sell credit default insurance.Both parties to the contract can freely transfer the insurance contract.
