NU Online News Service, June 17, 3:40 p.m. EDT
The Florida Office of Insurance Regulation (OIR) said it has reached an agreement with a second reinsurer to participate in the state's market under modified regulatory terms.
XL Re Ltd. is the first reinsurance company from Bermuda to operate in Florida without having to put up 100 percent collateral, said the OIR.
Reinsurance companies based outside of the United States previously had to provide full collateral in Florida to do business there. But legislation passed two years ago allows a reinsurer to post reduced collateral as long as it is highly-rated and financially sound.
U.S. reinsurers post no collateral.
The measure was meant to attract private capital to Florida, said Brittany Benner, OIR spokeswoman. The state hopes more foreign reinsurance carriers will follow to take on Florida's massive catastrophe risk and lower costs for insurers.
XL follows Germany-based Hannover Re, which in February reached a similar agreement with the OIR. Both reinsurers had already provided reinsurance to Florida property insurance companies, as well as other lines of insurance, before taking advantage of the opportunity to post reduced collateral.
Florida Insurance Commissioner Kevin McCarty previously said the state was the first to lower collateral requirements in order to attract non-U.S. reinsurance companies.
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