Why Do Finite-Risk Deals Raise Eyebrows?
The headlines have migrated in recent weeks from broker compensation to certain financial arrangements between insurers and reinsurersparticularly finite-risk reinsurance. Regulators are investigating whether some insurers and reinsurers used such products to improperly enhance their financial statements.
In New York, Howard Mills, acting superintendent of insurance, issued a circular letter at the end of March addressing the matter. The letter spells out new requirements that insurer CEOs attestunder penalty of perjurythat reinsurance contracts meet certain standards. The CEOs must attest:
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