Contingent Capital "Municipal Guarantee Fund"

Description: One way to finance statistically improbable losses without incurring the costs of warehousing excess insurance limits is through Contingent capital. Insurance limits are also a form of contingent capital, albeit an owned source of risk capital that remains off-balance sheet. By the same token, retained losses also represent owned risk capital, albeit on-balance sheet. By definition, owned capital is more expensive than non-owned capital.