Lloyd's Seeks Change To Alien Re Rule The chairman of Lloyd's of London, speaking in Washington, D.C., called for an end to a rule that requires foreign reinsurers to fund 100 percent of their gross liabilities in the United States.
Under the current rule, Lloyd's, as an “alien reinsurer,” must hold collateral, using either letters of credit or cash in non-working trust funds, for the full amount of its gross liabilities in the United States. It's an arrangement that Lloyd's chairman finds “unfair, unreasonable and unjust.”
Domestic reinsurers are not held to the same rule, and they can fund their liabilities on a net basis, taking credit for reinsurance purchased.
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