Florida Office Of Insurance Regulation Issues Subpoenas
Contact: Valerie Beynon, APR
Tallahassee - Florida Insurance Regulation Commissioner Kevin McCarty issued investigative subpoenas this week requesting information related to finite reinsurance activities in the insurance industry.
Finite reinsurance is a form of reinsurance that through the use of various provisions limits the amount of risk, if any, actually being transferred from the ceding insurance company to the reinsurance company. The improper use of finite reinsurance can hinder the ability of insurance regulators and the public to ascertain and assess the true financial condition of an insurer.
Commissioner McCarty addressed the action as a clarification of financial questions that have arisen related to reinsurance transactions. Commissioner McCarty stated "consumers and regulators must be secure in the knowledge of an insurance company's solvency."
In addition to its own actions, the Florida Office of Insurance Regulation is participating in efforts by the National Association of Insurance Commissioners to develop a national solution to problems created by the abuse of finite reinsurance products.
Finite reinsurance that does not transfer risk has contributed to the failure of several insurance companies in Florida and the United States.
Among the companies subpoenaed are:
Alea London Limited
Chubb Atlantic Reinsurance Specialist Ltd.
E&S Reinsurers Ltd.
Hannover Re Ltd.
National Indemnity Company of the South (A subsidiary of Berkshire Hathaway)
National Union Fire Insurance Company of Pittsburgh, PA (A subsidiary of AIG)
Partner Reinsurance Company of the U.S.
Swiss Reinsurance American Corporation
Transatlantic Reinsurance Company (A subsidiary of AIG)