Question

What is a variant to the assurance of contingent capital?

a.

Purchase of a put option

b.

Purchase of equity shares

c.

Issuance of bonds

d.

Creation of a risk retention group

Answer: (a).Purchase of a put option Explanation:A variant to the assurance of contingent capital is the purchase of a put option. It explains that if a pre-specified insurance loss occurs and the share price falls below a predefined level, the assured insurer can exercise the put option and raise additional capital at the agreed price.

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Q. What is a variant to the assurance of contingent capital?

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