Mr. James, said U.K. generally accepted accounting principles and Lloyd's accounting principles are well understood in the United States so to raise this issue, "is a complete red herring."

He said the proposal on the table is not mandatory and would give regulators flexibility to give individual firms an exception from the 100 percent gross collateralization requirement.

Mr. James noted that 36 percent of Lloyd's capital comes from the United States and Bermuda and he called the NAIC's stance, "a trade barrier, leading to consumer costs."

He said it was possible that other approaches to secure a change in the requirement might be attempted commenting that U.S. government officials were "looking at what's going on" and mentioning that a change in collateralization rules has the support of the National Coalition of Insurance Legislators.

The Lloyds executive said the London market is writing a letter with its objections to the NAIC.

However, the International Accounting Standards Board efforts to draw up accounting standards that would pass muster among the NAIC members, are not expected to be ready for use for foreign reinsurers until some time in 2005 at the earliest.

At the NAIC session Ernst Csiszar, South Carolina insurance director and a member of the task force said the reinsurance task force will continue to keep an open mind, but "my sense of it is that this will be an open item up until the IASB comes out with its standards, either 2005 or 2006."

Mr. Csiszar, who is also NAIC vice president, commented at the task force session, "When you look at reinsurance recoverables, they generally form a significant component of the balance sheet.

"There are now estimates, for instance, with recent additions by AIG, The Hartford, ACE and Chubb, that maybe recoverables are oftentimes as high as 80 percent of their balance sheet."

"Well," he added, "that makes it a very, very significant solvency issue," he added, "when you are trying to set standards with conflicting, non-existing, overlapping, unclear kinds of accounting standards overseas."