Florida Office of Insurance Regulation Reaches Agreement with XL RE LTD to be the First Bermuda Reinsurer to Qualify under Modified Terms
TALLAHASSEE, Fla. – The Florida Office of Insurance Regulation (Office) today announced an agreement with Bermuda-based reinsurer XL Re Ltd (XL) to participate in Florida's insurance marketplace under modified regulatory terms. During a Property Insurance Special Session in 2007, Florida lawmakers passed legislation that authorized the Office to establish lower collateral requirements for alien (non-U.S.) reinsurers that are highly-rated and financially sound.
XL is the first Bermuda reinsurer approved by the Office to operate under the modified terms. XL already participates in the Florida market by reinsuring Florida property insurance, as well as reinsuring other lines. Earlier this year, the Office announced a similar agreement with Hannover Re of Germany.
"We welcome XL to the Florida marketplace under the modified rules for collateral," said Insurance Commissioner Kevin McCarty. "Florida continues to lead the nation towards a more modernized regulatory framework."
Prior to this legislative change in Florida and other states, non-U.S. based reinsurance companies were generally required to post 100 percent collateral while U.S. insurers posted no collateral. The 2007 law
and subsequent rule
(adopted in 2008) permits reinsurers that qualify based on their financial capabilities to operate in Florida with reduced collateral. Florida property insurers that buy qualified non-U.S. based reinsurance can still receive full accounting credit for having reinsurance. The loosening of these restrictions will potentially attract foreign reinsurers to reinsure more Florida catastrophe risk by lowering the cost for insurers.
XL was organized under the laws of Bermuda on August 7, 1998. The reinsurance company writes property, property catastrophe, casualty, marine, aviation, financial lines, and various other reinsurance lines to insurers worldwide. The company’s financial statement--that was submitted with its application--reported capital and surplus of approximately $4.8 billion as of December 31, 2009. It has also secured a financial rating indicating financial strength from at least two nationally recognized statistical rating organizations and has presented information to the Office substantiating its financial stability. Reinsurance continues to be an important part of the property insurance market in the U.S.