NU Online News Service, Nov. 15, 2:35 p.m. EST
A model law passed by the National Association of Insurance Commissioners that, if adopted by states, would allow foreign reinsurers in qualified jurisdictions to post reduced collateral benefits those foreign reinsurers but is credit-negative for U.S. insurers that buy reinsurance, according to Moody's Investors Service.
In its Weekly Credit Outlook, Moody's says the model law calling for lower collateral requirements will be positive for unsecured creditors of foreign reinsurers. “Collateral provides more security to reinsurance buyers but that enhanced security comes at the expense of liquidity to the reinsurers' unsecured creditors, making this latest news an incremental positive for reinsurers' bondholders.”
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