If non-U.S. reinsurers secure lower collateral requirements, the domestic insurers that cede risk to them will feel it in their ratings, an analyst has warned carriers.
Ceding companies using alien reinsurers will be met with higher capital charges in Standard & Poor's rating model if collateral requirements go away, said Steven Dreyer, managing director and practice leader for North American insurance ratings for Standard & Poor's in New York.
During the World Insurance Forum in Southhampton, Bermuda last week, executives, including Lloyd's Chairman Peter Levene, repeatedly called for U.S. regulators to lower requirements for alien reinsurers to post collateral equivalent to 100 percent of liabilities.
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