Asset Depreciation Risk

(redirected from Asset Quality Risk)

Asset Depreciation Risk

In insurance, the risk of loss to the company as the result of declining investments. An insurance company generally maintains a portfolio of securities. If a stock declines or a bond defaults, it may find itself with fewer assets and the same number of liabilities. In the United States, state governments determine the investments insurance companies are allowed to make to reduce asset depreciation risk. It is one of four types of risk to an insurance company; the others are interest rate risk, pricing inadequacy risk, and general business risk. Asset depreciation risk is also called asset quality risk. See also: Legal list.
References in periodicals archive ?
According to a report by Motilal Oswal, HDFC Bank is best- placed in the current environment, with a current account savings account (CASA) ratio of about 43 per cent, strong earnings growth and least asset quality risk.
According to a report by Motilal Oswal, HDFC Bank is best-placed in the current environment, with a current account savings account (CASA) ratio of about 43%, strong earnings growth and least asset quality risk.
Fitch said banks in the region largely meet capital requirements and believes that further capital building efforts will be prioritised to offset asset quality risk and weak earnings prospects, but also in the context of Basel III rules.
The key investment theme for Turkish banks in 2013, in our view, is low dependence on securities and higher asset quality risk, which bodes well for Yapi Kredi and Vakifbank.
Despite rapid credit growth leading to asset quality risk to a certain extent, the ratings agency has issued a 'Stable' assignment to the outlook of the local banking sector.
The Company operates with little asset quality risk, limited underwriting risk, limited credit risk and has historically generated strong annual cash flow.
In managing through this situation, Lundstrom said the Bank has taken steps to maintain capital, minimize asset quality risk and return to long-term profitability.
The close relationship with the Bank's parents has led to a high related-party exposure; while the Bank also holds deposits from some related parties, they are not necessarily the same parties and present a potential asset quality risk as well as a liquidity risk.
Fitch Ratings said that commercial banks in Philippines would remain financially stable because of the growing local economy and relatively low asset quality risk.
The impact of the latest regulatory NPL cap on Kazakh banks' credit profiles will depend on the extent to which banks genuinely reduce asset quality risk.
Finally, Moody's notes that although lower lending rates would lighten borrowers' repayment burdens, the benefits are unlikely to alleviate asset quality risks in the short term.
Kazakh banks' legacy and emerging asset quality risks are consistent with their low Viability Ratings, which reflect weak standalone credit profiles, mostly in the 'b' category.