San Francisco partner John Finston was quoted in a Law360 article titled “3 Key Questions On The US-EU Insurance Pact.” The article discusses the implementation of a pact between the U.S. and the European Union, which will ax collateral requirements for EU reinsurers doing business stateside. The article also examines important issues that regulators need to consider as they navigate a path for effectuating the transatlantic insurance deal.

John spoke on two of these issues: needed changes to existing laws and new safeguards for U.S. insurers. Concerning the first issue, John spoke about the current reinsurance collateral reduction framework, explaining that unlike the proposed pact, it “includes a credit rating that is used to determine how much collateral relief is provided.”

In terms of new safeguards to protect U.S. insurers, John mentioned that “[o]ne of the proposals floated at the [National Association of Insurance Commissioners’] meeting was to have additional guardrails, including an additional capital charge associated with reinsurance issued by reinsurers that don’t post collateral, and that capital charge would vary depending on the creditworthiness of the reinsurer…That kind of requirement is permitted under the covered agreement, because it would be applied generally to all forms of reinsurance.”

Read “3 Key Questions On The US-EU Insurance Pact.”

Source: Law360
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