NU Online News Service, Sept. 28, 3:29 p.m. EDT
Hannover Re, named as the first foreign reinsurer to qualify for reduced collateral requirements in Florida, said the state has approved its Bermuda subsidiary to benefit from the same law.
Two years ago Florida passed one-of-a-kind legislation to allow a reinsurer to post reduced collateral as long as it is highly rated and financially sound. The objective is to attract more reinsurers to do business in Florida.
The required level for Hannover Re (Bermuda) Ltd. is 20 percent. In the past foreign reinsurers were required to post collateral for 100 percent of the loss. Domestic reinsurers post no collateral. More than 90 percent of reinsurance for Florida property insurers is provided by foreign reinsurers, according to the Florida Office of Insurance Regulation (OIR).
"We hope that other U.S. states will also reduce the collateral requirements for foreign reinsurers," said Ulrich Wallin, chief executive officer of Hannover Re, in a statement.
Florida continues to be the only state to adopt lower collateral requirements. Insurance Commissioner Kevin McCarty has said the "modernization" of reinsurance regulations to bring in more capital to Florida is good for competition, and therefore good for the marketplace.
The National Association of Insurance Commissioners is trying to get other states to reduce reinsurance collateral requirements by pushing federal legislation.
Florida first announced its agreement with Germany-based Hannover Re in February. In June the OIR said it reached a similar agreement with XL Re Ltd.
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