Cybercrime has driven up demand for cyber insurance. But losses are on the rise, too, and some cyber events are uninsurable. How are insurers responding to higher losses, and what can be done about the kinds of risks that are too big for private insurers to cover? Plus, sales of alternative fuel vehicles worldwide are accelerating. What does it mean for the credit quality of auto finance captives, the companies that finance loans and leases on behalf of automakers?Guests: Michael Dion, Vice President, Senior Analyst – Financial Institutions Group, Moody’s Investors Service; Inna Bodeck, Vice President, Senior Analyst  – Financial Institutions Group, Moody’s Investors ServiceHosts: Danielle Reed, Vice President, Senior Research Writer – Financial Institutions Group, Moody’s Investors Service; Myles Neligan, Vice President, Senior Research Writer – Financial Institutions Group, Moody’s Investors ServiceRelated content on Moodys.com (some content only available to registered users or subscribers): Property & Casualty Insurance – Global: Proliferation of cyberattacks prompts re-evaluation of cyber insurance riskAuto Finance – Global: Sector can manage surge of residual value risk as electric vehicles come on line

Ahead of the COP 26 conference in Glasgow, analysts Lev Dorf, Brandan Holmes and Vanessa Robert explain why banks, insurance companies and asset managers are under pressure to reduce exposure to carbon-intensive industries. Indeed Moody's has estimated that G20 financial institutions are exposed to carbon transition risk to the tune of a staggering $22 trillion. However, financial institutions will need to play a vital role in financing the shift to net zero, and in this episode our team discuss what new areas of economic growth are emerging, amid the risks of decarbonization. Inside this episode:Brandan Holmes on the drivers of  decarbonization for insurance (begins at 2:38 mins) Lev Dorf on the biggest risks of decarbonization for banks (begins at 9:08 mins Lev Dorf discusses the economic opportunities for banks (begins at  13:17 mins) Related Content:Financial firms face challenge of supporting corporate clients through the carbon transition (free to register) Infographic (free to register): Data on G20 financial institutions reveals $22 trillion of carbon transition 

Peter Nerby, Olivier Panis and Shunsaku Sato explain how global systemically important banks are faring as the pandemic starts to recede. Dean Ungar discusses the implications for US health insurers should the Medicare hospital insurance trust fund run out of money. And David Yin tells us how a recent cryptocurrency ban in China is positive for financial institutions.Inside this episode:Dean Ungar discusses the implications for US health insurers should the Medicare hospital insurance trust fund run out of money. (begins at 2:48 mins)David Yin tells us how a recent cryptocurrency ban in China is positive for financial institutions. (begins at 5:06 mins)Peter Nerby, Olivier Panis and Shunsaku Sato explain how global systemically important banks are faring as the pandemic starts to recede. (begins at 8:22 mins) Related content:Banks – Global: Biggest banks retain competitive advantage, but stiff obstacles loom post pandemic - Most of the 30 large, global systemically important banks have maintained strong capitalization and liquidity, and their profitability is stronger than that of regional peers.Financial Institutions – North America: Looming Medicare trust fund depletion is credit negative for MA insurers - The trust fund's depletion would require reduced Medicare spending, which could mean lower payments for Medicare Advantage (MA).Financial Institutions – China: China's crackdown on virtual currencies is credit positive for financial institutions - Chinese authorities' crackdown on cryptocurrencies will support financial stability and back China's policy of reducing carbon emissions.  

Stephen Tu, Melina Skouridou and Farooq Khan explain how four forces reshaping finance will likely reduce banks’ revenue from core activities and undermine their role as financial intermediaries. Plus, Alka Anbarasu explains why India’s banks will weather the stress from a COVID-19 resurgence, and Jasper Cooper gives an update on insured hurricane losses in the US.Inside this episode:Alka Anbarasu explains why India’s banks will weather the stress from a COVID-19 resurgence. (begins at 1:55 mins)Jasper Cooper gives an update on insured hurricane losses in the US. (begins at 4:48 mins)Stephen Tu, Melina Skouridou and Farooq Khan explain how four forces reshaping finance will likely reduce banks’ revenue from core activities and undermine their role as financial intermediaries.  (begins at 7:11 mins)Related content:Banks – India: Resurgence of coronavirus raises asset risks but loan-loss buffers are sufficiently strong - A resurgence of coronavirus cases will lead to more problem loans. However, a sharp increase in problem loans is unlikely, and banks have sufficient buffers to absorb anticipated lossesProperty & Casualty Insurance– US Hurricane Ida's Northeast track adds billions to insurers' losses - Hurricane Ida's damages through New York, New Jersey and surrounding states will increase insurers' losses by billions of dollars.Reinsurance – Global:  Weak La Niña and warm waters point to active 2021 Atlantic hurricane season - Above average sea surface temperatures, weaker trade winds and an enhanced West African monsoon result in more favorable conditions for hurricane formation and intensification this year.Financial Institutions – Global: Four forces reshaping financial landscape have potential to dislodge incumbents - We identify four forces of digitalization that have the potential to dislodge incumbents from dominant positions in financial markets.Banking – Global: Central banks aim to limit disruption when designing retail digital currencies - Banks would likely maintain their client-facing roles and would play a part in disseminating central bank digital currencies (CBDCs), but disintermediation risks will be heightened.Banks – Cross Region: Wide use of digital currencies in cross-border payments would be credit negative - Potential future wide acceptance of central bank digital currencies in cross-border payments and settlements will result in lower fees and commissions for banks.

Analyst Fadi Massih discusses the credit strengths and weaknesses of the crypto asset exchange.Related content: Coinbase Global, Inc. Strong finances and market position offset by uncertain regulatory environment and fierce competitive conditions - Coinbase displays investment grade characteristics and financials that are offset by a challenging operating environment marked by uncertain regulatory framework and fierce competition. 

The insurance group’s Helena Kingsley-Tomkins explains what’s driving the global reinsurance outlook shift to stable from negative. Plus, Young Kim tells us how evolving technology and rising fintech competition are transforming Korea’s insurance business.Inside this episode:Young Kim tells us how evolving technology and rising fintech competition are transforming Korea’s insurance business. (begins at 1:45 mins)Helena Kingsley-Tomkins explains what’s driving the global reinsurance outlook shift to stable from negative. (begins at 9:35 mins)Related content:Reinsurance – Global - Change to stable outlook reflects sound pricing, economic rebound - We have revised our outlook on the reinsurance sector to stable from negative, reflecting continued reinsurance price increases as the global economy recovers from the pandemic.Insurers – Korea - Stakes are rising in fintech adoption - Digital transformation will bring new business opportunities and operational efficiencies to Korean insurers but also heightens competition and adjustment risks they face. 

As infections rise and overall vaccination rates remain low in Southeast Asian nations and India, loan performance will weaken as economic recoveries stall, although the effects will vary by country. However, government support and strong loss-absorbing buffers will support banks’ credit strength.Related content:Property & Casualty – United States of America Losses from Dixie wildfire will hit California property and casualty insurers - Total insured losses from California wildfires are likely to exceed $1 billion for California homeowners insurers and commercial property insurers. Allianz SE US DOJ investigation into investment funds raises financial and reputational risk - DoJ investigation into investment activities of “Structured Alpha” funds raises the risk of a financial hit to the group and highlights governance challenges of complex groups. Aon, Willis Towers Watson Termination of Aon-Willis Towers Watson merger agreement poses governance challenge for WLTW - Aon and WLTW must reset their corporate strategies after terminating their proposed merger. The firms reduced their financial leverage and accumulated cash in preparation for the merger. Banks – ASEAN and India Asset risks will rise amid resurgences of coronavirus infections but credit strength will remain intact  - Asset risks will rise for banks in the region amid a surge in coronavirus cases. However, the negative impact will be mitigated by continued policy support and strong loss-absorbing buffers. 

Inside this episode:Tae Jong Ok looks at Kakao Bank’s rapid rise from its social media origins to one of Korea’s biggest retail lenders. Plus, Christian Badorff and Melina Skouridou talk about the insurance impact of recent heavy floods in Germany, and the European Central Bank’s plan to pilot a digital euro.Related content:Banks – Europe: Despite financial inclusion benefits, digital euro poses disintermediation risks to banks, a credit negative A digital euro would support innovation and financial inclusion, and could become an alternative to stablecoins, but would reduce banks' profitability and increase disintermediation risk.Insurance – Germany: German floods will hit P&C insurers' profit, highlighting climate change risk Devastating floods that hit parts of Germany on 14 and 15 July look set to cause insured losses of €4 billion to €5 billion, according to preliminary estimates. Banks – Korea: Big Tech success in banking highlights rising competition from virtual banks Big Tech success in banking highlights rising competition from virtual banks 

Dean Ungar diagnoses the causes of US health insurers’ evolution over the past decade, and discusses the benefits and risks for the sector’s credit strength. Plus, Guy Combot and Atsi Sheth talk about recent changes in Italian bank governance and the broader credit implications of increased gender diversity.Inside this episode:Guy Combot and Atsi Sheth talk about recent changes in Italian bank governance and the broader credit implications of increased gender diversity. (begins at 2:12 mins)Dean Ungar diagnoses the causes of US health insurers’ evolution over the past decade, and discusses the benefits and risks for the sector’s credit strength.  (begins at 9:55 mins)Related content:Banks – Italy: New “fit and proper” board criteria will reinforce Italian bank governanceESG – Global: Rising focus on gender inclusion highlights links to economic growth and credit qualityHealth Insurance – US: Sector’s evolution brings increased scale and diversification but also higher leverageAetna Inc., Anthem, Centene Corp., Cigna Corp., Humana Inc., UnitedHealth Group : Vertical integration: short-term credit pain, long-term credit gainHealth Insurance – US: Policy drive toward transformation of health insurance poses risks to profitability

Inside this episode:Rajeev Bamra and Steve Tu speak with Carolyn Henson about why stablecoin growth has put traditional financial institutions and bank regulators on the defensive. Meanwhile, David Fanger explains why large US banks will be able to distribute more to shareholders this year, and Marina Cremonese discusses money market funds’ readiness for the transition away from LIBOR.Related content:Banks – United States: Lower stress capital buffers allow many banks to increase capital distributions, a credit negative Compliance with regulatory buffer requirements and dividend caps supports US banks' capitalization.Money Market Funds – Cross Region: Money marketfunds are well positioned for IBOR phase-out MMFs face little disruption from the phase-out of IBOR reference rates. The sector is adopting alternatives, and will rapidly replace IBOR-linked portfolio assets.Technology & Innovation – Global: FAQ on the risks and opportunities of stablecoins Stablecoins, a digital currency, have many potential uses in banking and finance. They also pose risks that if left unaddressed could undermine financial stability and monetary sovereignty.Financial Institutions – Cross Region: G-7 call to step up dialogue on digital currencies is likely to hasten disintermediation of banks and payments providers Although digital currencies potentially will generate significant public benefits, a direct link between customers and public money risks disintermediating payment companies and banks.