Speaking last week at the annual insurance regulation seminar of CityBar Center for Continuing Legal Education, Mr. Mills defended his issuance of a circular letter requiring chief executive officers to attest to the validity of every reinsurance contract in force.

The action came in the wake of concerns that finite reinsurance contracts rather than legitimate risk transfers have been used by companies as an accounting device to paint a false financial picture.

Such contracts have been under investigation by the New York Attorney General's Office and the Securities and Exchange Commission.

Joseph Sieverling, vice president of the Washington D.C.-based Reinsurance Association of America, said that "because the circular letter was so broadly drafted compliance will be difficult."

Mr. Sieverling said the industry had proposed a disclosure model that was more "prospective in nature."

He noted that many reinsurance contracts entered into decades ago may still be in effect if losses are still being reported.

Mr. Mills told National Underwriter that he has been meeting with representatives of the primary and secondary insurance industry over the past couple of weeks about compliance issues.

"I wouldn't say there are going to be modifications. Basically they have questions, and if we can clarify them we certainly will," he said.

Companies will have to undergo a similar process to meet Sarbanes-Oxley requirements in the near future, he added.

In his Circular Letter 8, issued March 29, Mr. Mills requires chief executive officers to attest that there are no side agreements that would affect the loss to parties under the reinsurance contract and that an underwriting file documenting the risk transfer analysis evidencing the proper accounting treatment be available for review.

In addition to his New York role, Mr. Mills also heads up a National Association of Insurance Commission task force looking into whether accounting rules should be changed to accommodate concerns about improper accounting for reinsurance arrangements.

Mr. Mills' announcement of the new rule came just a day before the nation's largest insurer?New York-based American International Group?admitted it had mischaracterized various dealings with reinsurers and improperly documented a $500 million reinsurance agreement it provided for General Re.