In my latest IRMI Expert Commentary on Reinsurance I discuss reinsurance security and what can go wrong. You can read the commentary at IRMI.com here (you may need to create a log in to read the commentary).
Some Thoughts on Reinsurance Security
Tag: collateral
When Collateral Transactions Go Awry
Many reinsurance agreements require that the reinsurer provide security for the reinsurance obligations arising from the reinsurance transaction. There are many ways security may be provided. One method is establishing a trust account to hold collateral backing up the reinsurance obligation. Where the collateral is held, how it is used and who manages the collateral in the trust account is critical to maintaining viable security for the reinsurance obligations.
In a case brought in New York federal court, a cedent in a coinsurance treaty with an off-shore reinsurer, found itself without the security that it thought it contracted for.
Continue reading “When Collateral Transactions Go Awry”What the New Proposed Credit for Reinsurance Regulations Mean for Reinsurance Disputes
You remember the Covered Agreements entered into between the US and the UK and the US and the EU to deal with Brexit and Solvency II and international financial standards, right? Well, the New York Department of Financial Services has noticed a proposed regulation implementing the new credit for reinsurance rules required under the Covered Agreements. The new regulation, the 12th amendment to regulations 17, 20 and 20A, does what was expected by allowing for reciprocal relief from credit for reinsurance requirements, but adds a few new interesting items relevant to reinsurance disputes.
Continue reading “What the New Proposed Credit for Reinsurance Regulations Mean for Reinsurance Disputes”To the Cedent, Summary Judgment
Many reinsurance arrangements require the posting of collateral. The failure to post collateral is often grounds for a breach of contract claim. In a recent decision, a New York federal court granted summary judgment to the cedent on its claim of breach of contract by the reinsurer when the reinsurer failed to provide the required collateral.
Continue reading “To the Cedent, Summary Judgment”