US moves forward on collateral reform

Revised proposals by the National Association of Insurance Commissioners’ (NAIC) Reinsurance Task Force could see top-rated foreign reinsurers released from collateral obligations when conducting business in the US. Under plans approved by the Reinsurance Task Force at the NAIC’s autumn meeting, foreign reinsurers will be assigned a rating by a single state regulator which will determine how much collateral they need to post against their US liabilities. For firms with financial strength ratings of AAA (Standard & Poor’s) and considered as “Secure-1” category, the US will not require any collat-eral. The requirement will rise to 10% for Secure-2 reinsurers, 20% for Secure-3 firms, 75% for Secure-4 reinsurers and 100% for Secure-5 category firms.