Florida is allowing the Allied World Assurance Co. to meet a lower collateral requirement, making the Bermuda-based foreign reinsurer the ninth such reinsurer the state has approved.
“We are encouraged by the number of reinsurers who are participating in Florida’s market by taking advantage of the reduce capital requirements,” Insurance Commissioner Kevin McCarty said. “Reinsurers continue to provide a critical risk-sharing role in Florida’s complex property insurance market.”
In 2007, Florida lawmakers passed a law authorizing the Office of Insurance to establish lower collateral requirements for only the most highly rated and fiscally sound foreign reinsurers in hopes of encouraging global reinsurance players to increase their participation in the Florida market. The goal is to lessen the potential burden on the Florida Hurricane Cat Fund, which is backed by policyholder assessments
Under the law, a foreign reinsurer only has to post 20 percent of collateral rather than the previous 100 percent if their combined capital and surplus equals at least $100 million. Additionally, the reinsurer must also show proof of financial strength by securing ratings from at least two nationally recognized rating organizations. Allied World reported more than $3 billion in capital and surplus.
Topics Florida Reinsurance
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