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Why is subordinated loan stock considered a liability for shareholders?

Discussion in 'SA2' started by curiousactuary, Jul 11, 2020.

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  1. curiousactuary

    curiousactuary Member

    Why is subordinated loan stock considered a liability for shareholders? This is mentioned under section 6 of chapter 14 (capital management).
     
    curiousactuary, Jul 11, 2020
    #1
  2. mugono

    mugono Ton up Member

    Equity holders are paid only after / if all other obligations have first been settled.
     
    mugono, Jul 11, 2020
    #2
    curiousactuary likes this.
  3. curiousactuary

    curiousactuary Member

    Thanks this makes sense
     
    curiousactuary, Jul 12, 2020
    #3
  4. Em Francis

    Em Francis ActEd Tutor Staff Member

    Thanks Mugono
    Yes, if you are thinking about the regulatory balance sheet, the main concern is meeting the policyholders' obligations, and subordinated debt ranks below policyholders' obligations.
     
    Em Francis, Jul 14, 2020
    #4

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