BPA
How the argument progresses
"The asset behind the counterparty" — thirteen steps in three movements: the value machine onshore, the risk crossing offshore, and the rating asked to catch it.
Click any step to expand the reasoning behind it.
Movement I — the value machine, onshore
the same under-priced risk now leaves the country ↓
Movement II — the risk crosses offshore
and the regime reaches for a rating to capitalise it ↓
Movement III — the rating asked to catch it
The single thread
A thin deduction lets insurers value liabilities cheaply, manufacture day-one capital, and chase private credit — Thames Water showing the assets can fail. The same under-priced risk is then exported offshore through funded reinsurance. To capitalise it, the regime anchors to the reinsurer's rating — a derived, lagging read of those very assets. The pad grows from a few per cent to around ten; the asset behind the counterparty is still not priced.