Real Estate Swap
Transaction in which the property owner (for example, a pension fund) agrees to pay the insurance company a rate of return tied to the fluctuations in real estate prices. In return, the insurance company stipulates that it will pay the property owner a rate of return that is more predictable, such as a floating interest rate, if the insurance company believes that the depressed real estate market has an attractive potential for capital gains but has no desire to own and/or manage property. Meanwhile a pension fund owns more property than it deems prudent. The solution, through the swap, would entail the pension fund passing on to the insurance company any gains or losses generated by the property in return for the insurance company paying the pension fund a floating interest rate. This floating interest rate to be paid would be tied to a stipulated index such as the U.S. Treasury Bill rate. The result would be that the pension fund lowers its real estate portfolio to a more acceptable level, and the insurance company has increasing capital gains expectations.
Popular Insurance Terms
Liability insurance that provides coverage for the insured in the event the insured's negligent acts and/or omissions result in libel, slander, invasion of privacy, or false arrest suit. ...
Inability of the insured to perform one or more of the important daily duties of that insured's occupation. The income payment to the insured is reduced from that of total disability. ...
Same as term Depositors Forgery Insurance: coverage provided for individuals or businesses for loss due to forgery or alteration of such financial instruments as notes, checks, drafts, and ...
Risk incurred by the insurance company after it makes the commitment to make the loan at some future time and the borrower may not accept the loan at that time. ...
State that increases the probability of a loss. For example, storage of flammable material next to a furnace in one's home increases the hazard with the knowledge of an insured, and is ...
Provision in marine insurance listing onshore perils covered. In the case of marine cargo, these may include such occurrences as damage from flooding, sprinklers, collapse of docks, and ...
Business interruption insurance in which the insured is indemnified for loss of earnings and payment of expenses resulting from adverse weather conditions. For example, the raining out of a ...
To accept by a reinsurer, part or all of a risk transferred to it by a primary insurer or another reinsurer. ...
Liability exposure, in insurance, associated with three classifications of individuals that may come upon an insured property: TRESPASSER: individual enters without permission. Generally ...
Have a question or comment?
We're here to help.