Aon Benfield
Analytics | Market Analysis
Market Analysis Update:
U.S. Collateral Reform
Guide to 2016 Year-End Statutory Reporting
December 2016
Risk. Reinsurance. Human Resources.
Proprietary and Confidential
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Table of Contents
Introduction
2
Disclaimer
2
2016 Regulatory Developments Related to U.S. Collateral Reform
3
Certified Reinsurers as a New Reporting Category
7
Multi-Beneficiary Trusts and their Impact on Statutory Reporting
8
Certified Reinsurer Reporting Concepts
12
Special Reporting Instructions for Recoverables from Lloyd’s Syndicates,
Tokio Millennium, Endurance Specialty and Montpelier Reinsurance
16
Links to Individual State Instructions
24
Additional Guidance on Schedule F Reporting
25
Contacts
25
About Aon
25
Appendix I: 2016 State Specific Certified Reinsurer Reporting Instructions
26
Appendix II: The Credit for Reinsurance Model Law and Regulation
72
Appendix III: Changes to Schedule F to Accommodate Certified Reinsurers
75
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
1
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Introduction
The statutory reporting of reinsurance recoverables changed significantly in 2012 with the introduction of
“certified” reinsurers and a new Part 6 of Schedule F. Previous to 2012, all reinsurance recoverables were
reported as emanating from a reinsurer classified as “authorized” or “unauthorized”. With only three
potential classes of reinsurers, one might assume that the statutory reporting of recoverables would be
relatively straight-forward. However, there are numerous factors that may make the tracking and reporting
of recoverables more convoluted, including:

The treatment of certified reinsurer upgrades, downgrades, revocations or lapses

The collateral deferral on recognized property catastrophe losses or named hurricanes

The impact of certified reinsurers who use Multi-Beneficiary Trusts (MBTs) to
collateralize recoverables

The potential need to bifurcate collateral on Schedule F
In short, recoverables from a single reinsurer may have to be split into more than one of the three classes
depending upon the interplay of the above variables. With respect to the 2016 annual statutory statement,
only ceding insurers domiciled in the 26 states where reinsurers have been certified are potentially
impacted by the reporting requirements for certified reinsurers on the new Schedule F-Part 6.
The purpose of this Market Analysis Update is to:
1. Provide an update on regulatory developments associated with the Credit for Reinsurance Model
Law and Regulation
2. Provide ceding insurers with guidance on reporting recoverables emanating from certified
reinsurers on the 2016 statutory annual statement
Disclaimer
Aon Benfield has compiled information from a number of public sources and has attempted only to summarize the
information in order to help clarify certain issues which may impact statutory reporting conducted by the recipient.
The information included in this document is from sources that we believe to be reliable, but whose accuracy and
completeness cannot be guaranteed. The public sources include insurance department websites and
correspondence with state insurance department staff, NAIC staff and reinsurers. This document is not intended to
be an exhaustive guide or compilation of relevant principles and clients should undertake further research as needed
before making statutory reporting decisions. Aon Benfield does not provide and this document does not constitute
any form of legal, accounting, taxation, regulatory or actuarial advice, including but not limited to advice on the
preparation of financial statements (including notes and schedules thereto). Ultimately, statutory reporting is
regulated by each ceding insurer’s state of domicile and recipients are encouraged to contact their state insurance
department to ensure proper statutory reporting. All recipients are also advised to consult their own professional
advisers to undertake an independent assessment of any legal, accounting, taxation or regulatory implications of
anything described in this document. This document is made available on an “as is” basis, without warranty of any
kind, including with respect to the accuracy, completeness, timeliness or sufficiency of the information contained
herein. Aon Benfield undertakes no obligation to update or revise this document based on changes, new
developments or otherwise, nor any obligation to correct any errors or inaccuracies in this document. Aon Benfield
and its affiliates shall not incur and hereby expressly disclaim any and all liability to any person or organization for
loss or damage caused by, arising out of or resulting from any use or reliance of this document. Aon Benfield
reserves all rights to the content of this document.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
2
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
2016 Regulatory Developments Related to
U.S. Collateral Reform
The most important developments in 2016 related to collateral reform are:

The Financial Regulation Standards and Accreditation Committee adopted the certified reinsurer
provisions from the Model Law and Regulation as an accreditation requirement effective January
1, 2019

Representatives of the Treasury Department and U.S. Trade Representative have been
attempting to negotiate a “covered agreement, which would likely preempt current state collateral
requirements but potentially provide Solvency II equivalency for U.S. insurers and reinsurers
operating in the EU

Five additional states (Arizona, Arkansas, Nebraska, North Dakota and Washington) have started
certifying reinsurers, Massachusetts has adopted the Credit for Reinsurance Model Regulation
and three additional states (Oklahoma, Tennessee and Utah) have adopted the Credit for
Reinsurance Model Law
There are also some revisions to the Model Law that were adopted in early 2016 in response to
reinsurance arrangements entered into, directly or indirectly, with life/health insurer-affiliated captives,
special purpose vehicles or similar entities that may not have the same statutory accounting requirements
or solvency requirements as US-based multi-state life/health insurers.
Adoption of the Credit for Reinsurance Model Law & Regulation
is Required for Accreditation
When the Credit for Reinsurance Model Law and Regulation were adopted by the NAIC, non-U.S.
reinsurers were pleased that collateral requirements and their costs would be reduced significantly.
However, the pace of states adopting the Model Law and Regulation has been much slower than
anticipated.
In response to this, non-U.S. reinsurers began lobbying that the Credit for Reinsurance Model Law and
Regulation be required for state accreditation.
Below is a description of the NAIC accreditation program.
The NAIC Accreditation Program was established to develop and maintain standards to promote effective
insurance company financial solvency regulation. The purpose of the accreditation program is for state
insurance departments to meet baseline standards of solvency regulation, particularly with respect to
regulation of multi-state insurers. This creates substantial efficiencies for insurance regulators, who are
then able to coordinate and rely on each other's work. It also creates far greater efficiencies for insurance
companies licensed in accredited states, which are then not subject to financial examinations or other
financial oversight by multiple jurisdictions. All fifty states, the District of Columbia and Puerto Rico are
currently accredited
In essence, this would compel states to adopt the Credit for Reinsurance Model Law and Regulation or
lose their accreditation from the NAIC.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
3
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
However, when there appeared to be delays in making the adoption of the Model Law and Regulation
an accreditation requirement, non-U.S. reinsurers began pushing for a federally negotiated “covered
agreement” which could potentially preempt the state regulations.
At the NAIC meeting in April 2016, the Financial Regulation Standards and Accreditation Committee
adopted the certified reinsurer provisions from the Model Law and Regulation as an accreditation
requirement. The certified reinsurer provisions are currently optional, but will become mandatory as
of January 1, 2019
Update on the Covered Agreement
Under Dodd-Frank, the Treasury Department and the Office of the U.S. Trade Representative are
empowered to bind the U.S. into an agreement on insurance supervision. The motivation for entering
into a bilateral agreement with the EU is to ensure that U.S. companies operating in the EU get equal
treatment to EU domiciled companies. During 2016, some EU regulators (e.g. Austria, Belgium, Germany
and Poland) have all announced interpretations of Solvency II that limit the ability of reinsurers from nonequivalent jurisdictions to act as reinsurers on a cross-border basis. From the U.S. perspective, one of the
goals of the covered agreement is to obtain Solvency II equivalency status. One of the main motivations
for EU domiciled reinsurers to support a covered agreement is to ensure reduced collateral requirements
are adopted nationwide.
The parties have met several times to discuss the covered agreement, but as of December 2016, no
agreement was reached. If the agreement is not reached prior to President Elect Trump taking office, it
is expected that the negotiations could be delayed as several of the U.S. negotiators are likely to change.
Also, at this time, it is not clear if there would be any substantial shift in position on the covered
agreement from the Obama Administration to the Trump Administration.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
4
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
State Adoption of the Credit for Reinsurance Model Law
As of December 15, 2016, 34 states and the District of Columbia have adopted the law that allows for
reduced amounts of collateral to be provided by approved reinsurers to ceding insurers domiciled in their
state. Many of these states have also adopted the accompanying Credit for Reinsurance Model
Regulation, which outlines the practices and procedures of the reduced collateral law. However, only 26
states have begun certifying reinsurers. The map below depicts the status of state adoption of collateral
reform as of December 15, 2016.
Active (state has certified reinsurers)
State has adopted Law (#785) and Regulation (#786)
State has adopted Model Law (#785)
The states that have certified reinsurers as of December 2016 are:









Alabama
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia









Indiana
Iowa
Louisiana
Maine
Maryland
Missouri
Nebraska
New Hampshire
New Jersey








New York
North Dakota
Ohio
Pennsylvania
Rhode Island
Vermont
Virginia
Washington
Only ceding insurers domiciled in these 26 states are potentially impacted by the reporting requirements
for certified reinsurers and the new Schedule F-Part 6 on the 2016 statutory annual statement.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
5
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Collateral Reform in Florida
In 2008, Florida became the first state to pass collateral reform legislation. They crafted their legislation to
mirror the Model Law and Regulation (as it was constructed in 2008). There were a few significant
differences from the Model Law and Regulation that was finalized in 2011 including:

Reinsurers eligible for reduced collateral were called “eligible reinsurers”

The amount of collateral required for “A-“ or “A3” rated reinsurers was 20%, instead of 50%

Most reinsurers were only permitted to provide reduced collateral on property catastrophes
reinsurance

The collateral deferral only applied to “named hurricanes”
On July 28, 2015, Florida implemented changes to bring it more in line with the current NAIC Model Law
and Regulation. The most significant changes are outlined in the table below.
Key Differences between the
Model Law / Regulation & Florida
Name for Reduced Collateral
Reinsurers
Amount of Collateral for “A-” or “A3”
Rated Reinsurers
Eligible lines of business
Collateral Deferral Applies only to
Model Law /
Regulation
Florida
Original
Florida
Revised
Certified
Eligible
Certified
50%
20%
50%
All lines
Property &
Casualty, but
most reinsurers
only were
approved for
property
catastrophe
All lines – The Florida
OIR will now allow
reinsurers to be
approved for reduced
collateral on lines
other than property
catastrophe
Recognized
catastrophes
Named
hurricanes
Named hurricanes
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
6
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Certified Reinsurers as a New Reporting Category
Previous to 2012, all reinsurance recoverables were reported as emanating from a reinsurer classified as
either authorized or unauthorized. With the introduction of the new Credit for Reinsurance Model Law and
Regulation, a third class of reinsurer was developed, a “certified reinsurer”.
1. Authorized Reinsurer: Reinsurers may meet the requirement to become authorized in one of
three ways:

They may be licensed to write insurance (which typically also includes reinsurance) or
reinsurance in a ceding insurer’s state of domicile.

They may be licensed in a state with “substantially similar” credit for reinsurance regulation. Also,
the reinsurers must agree that it will submit to the authority of the accrediting state. Submitting to
the authority of a state usually requires a yearly filing of an annual statement and the submission
of audited financial statements. The accredited reinsurer must also meet the minimum capital and
surplus requirements of the accrediting state. When all these requirements are met the reinsurer
is awarded “accredited” (or equivalent status) and is considered an authorized reinsurer. Most
U.S. reinsurers that are licensed in one state are awarded authorized treatment via this provision.

A handful of non-U.S. reinsurers have also become authorized through the establishment and
maintenance of a Multi-Beneficiary Trust (MBT) as well as meeting other state imposed
requirements (increased reporting etc.). The term for these reinsurers may differ by state, but
includes “accredited”, “trusteed”, “qualified”, “approved” etc.
2. Certified Reinsurer: A reinsurer that has been approved to provide reduced amounts of collateral for
its reinsurance liabilities due to ceding insurers domiciled in a state that has adopted the new Credit for
Reinsurance Model Law and Regulation.
3. Unauthorized Reinsurer: A reinsurer that was not authorized nor certified.
Recoverables from reinsurers at any point in time should now be reported in one of the following
categories; authorized, unauthorized or certified.
In 2013, Schedule F was expanded to accommodate the reporting of recoverables from certified
reinsurers. Specifically, a new part 6 was introduced and the former parts 6, 7, 8 and were relabeled parts
7, 8, and 9 respectively.
Important Note: The definitions of the above terms have been provided to clarify the statutory reinsurance
reporting treatment of recoverables. However, the terms may have a different meaning when used in
another context.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
7
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Multi-Beneficiary Trusts and their Impact on
Statutory Reporting
Several non-U.S. reinsurers have elected to use Multi-Beneficiary Trusts (MBTs) as collateral instead of
Letters of Credit (LOCs) or Single Beneficiary Trusts.
There are several unique characteristics of MBTs. These characteristics and how the MBT is used to
collateralize recoverables may impact the statutory account treatment of recoverables from both certified
and authorized reinsurers. Before dissecting the specific statutory reporting treatment, it may be
beneficial to review some background information on MBTs.
Background Information on MBTs
Most reinsurers currently using MBTs to collateralize recoverables were previously providing collateral
through Letters of Credit (LOCs) and/or Single Beneficiary Trusts. However, MBTs are more cost efficient
and much easier to manage than dozens of LOCs or Single Beneficiary Trusts. MBTs allow reinsurers to
set the amount of collateral based on claim notices from the ceding insurer and the reinsurer’s calculation
of IBNR.
Non-U.S. reinsurers wishing to use a MBT to secure obligations due to U.S. ceding insurers must meet a
number of requirements:

The MBT must be regulated by a state insurance department (Originally it was New York Division
of Financial Services (NY DFS) but New Jersey and Delaware have also been used.)

The MBT must be approved in every state where it will be used to collateralized recoverables due
to ceding insurers domiciled in the state

The reinsurer must agree to a number of additional requirements including additional reporting
and an agreement to collateralize 100% of all obligations due to ceding insurers in any state that
has approved the MBT (except certified reinsurers who are permitted to collateralize their
recoverables at less than 100%)

The reinsurer must also agree to provide an additional buffer layer of collateral in the MBT
–
The buffer is USD 20mn for MBTs that secure full (i.e. 100%) collateral obligations
–
The buffer is USD 10mn for MBTs that secure certified reinsurer (i.e. reduced collateral)
obligations
If the reinsurer meets all the requirements and the MBT is approved, the reinsurer is granted “trusteed”
status, “accredited” status or equivalent. (Please note states may have different terms for these reinsurers
that have been approved to use MBTs.)
If a reinsurer is trusteed, accredited or equivalent, then for statutory reporting purposes, recoverables
emanating from the reinsurer may be classified as authorized. There are some exceptions to this for
certified reinsurers, which are outlined in the “MBT Issues Impacting Statutory Reinsurance Reporting”
section on the following pages.
It should be noted that trusts that are used for full (or 100%) collateral obligations cannot also be used for
reduced collateral obligations. Therefore, reinsurers who are certified in some states may elect to
establish a second MBT for their reduced collateral obligations. Reinsurers may also use a MBT for their
full collateral obligations and LOCs or Single Beneficiary Trusts for their reduced collateral obligations.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
8
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Notable Reinsurers that utilize MBTs
There are 14 prominent non-U.S. reinsurers as well as Lloyd’s syndicates (a.k.a. Underwriters at Lloyd’s)
that utilize MBTs to secure their obligations due to U.S. ceding insurers. These reinsurers have had their
MBT approved in all 50 states as well as the District of Columbia, except where noted:

Aspen Bermuda Limited (All states except New York)

Aspen Insurance UK Limited

AXIS Specialty Limited (All states except New York)

DaVinci Reinsurance Limited

Endurance Specialty Insurance Limited (Please see pages 18 - 21 for additional information)

Hannover Rueck SE (f.k.a. Hannover Rueckversicherung AG)

Lancashire Insurance Company Limited

Mapfre Re, Compania de Reaseguros, S.A.

Markel Bermuda Limited (All states except Florida, Hawaii, Louisiana, Massachusetts, Montana
and New York)

Markel International Insurance Company Limited (All states except Louisiana, Maine, Michigan,
Minnesota and Rhode Island)

Partner Reinsurance Company, Limited

Renaissance Reinsurance Limited

Underwriters at Lloyd’s

Validus Reinsurance, Limited (All states except Florida and New York)

Validus Reinsurance (Switzerland) Ltd. (All states except Florida, Illinois, Minnesota, Nevada,
New Mexico and New York as of December 31, 2016)
Note:
1. This excludes some P&C run-off companies. (ex. Reinsurance Limited (UK) and Unionamerica
Insurance Co Ltd (UK)
2. Montpelier Reinsurance Limited used a MBT, but this company was merged with Endurance
Specialty Insurance Limited in December 2015.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
9
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
MBT Issues Impacting Statutory Reinsurance Reporting
There are four issues that potentially impact the reporting of recoverables collateralized by a reinsurer
using a MBT.
1. Reinsurers using MBTs may roll-in existing liabilities changing the reporting treatment of the
existing liabilities
Most of the reinsurers who elect to utilize a MBT to secure their recoverables were unauthorized prior
to the approval of the MBT. Once the MBT is approved, all recoverables from contracts that incept on
or after the date the MBT is approved should be classified as emanating from an authorized reinsurer.
To facilitate communication, we will refer to the date that the MBT is approved by a state as the “Date
Trusteed”.
A second step (often called a “roll-in”) is required to move existing recoverables (i.e. recoverables
from contracts that incept prior to the Date Trusteed) into the MBT.
Outlined below is the reporting treatment of the recoverables from contracts that incept prior to and
after the Date Trusteed - assuming the reinsurer is not also certified and has yet to enact a roll-in).
Reporting Treatment (Prior to any MBT Roll-in)
Prior to Date Trusteed
All recoverables = Unauthorized
Post Date Trusteed
All recoverables = Authorized
Therefore, if there is no roll-in of existing recoverables, ceding insurers should report recoverables
as follows:

Report all recoverables from contracts incepting prior to the Date Trusteed as unauthorized

Report all recoverables from contracts incepting on or after the Date Trusteed as authorized
Often reinsurers who elect to use an MBT want to also collateralize their existing recoverables in the
MBT. From the reinsurer’s perspective, it is usually more efficient and cost effective if all recoverables
(existing and prospective) are collateralized by the MBT. Therefore, some reinsurers elect to roll-in
existing recoverables. By existing recoverables, we are referring to recoverables from contracts that
incepted prior to the Date Trusteed.
Aon Benfield has not identified any laws or regulations preventing the roll-in of these existing
recoverables. However, the language of the MBT appears to allow the roll-in of these existing
recoverables. In addition, the NY DFS (the regulator of most MBTs currently in use) has permitted the
roll-in of existing recoverables. It appears that other states that regulate MBTs are permitting the rollin of existing recoverables.
There appears to be no official approval process for the roll-in of existing recoverables into a MBT. In
most cases, the reinsurer will prepare a listing of the ceding insurers and associated recoverables
that they intend to roll-in to the MBT. This listing (which may also be referred to as a “Rollover
Certificate”) is provided to the regulator of the MBT. Reinsurers who roll-in existing balances also
notify impacted ceding insurers, so their existing collateral (typically a LOC or Single Beneficiary
Trust) may be released.
If a reinsurer rolls-in existing recoverables to their MBT, it changes the reporting treatment of the
existing recoverables. In essence, all recoverables are treated as if emanating from an authorized
reinsurer as shown in the diagram on the next page.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
10
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Treatment - Post Roll-in
Prior to Date Trusteed
All recoverables = Authorized
Post Date Trusteed
All recoverables = Authorized
Therefore, if there is a roll-in of existing recoverables, ceding insurers should report all recoverables
as authorized (assuming the reinsurer is not also certified, which is addressed in the following
section).
2. Reinsurers using MBTs may also be certified
One of the current complications of statutory reporting of recoverables from non-U.S. reinsurers is
that the classification of a reinsurer may change over time. Often reinsurers that are unauthorized
become authorized. Some of these same reinsurers elect to become certified. Therefore,
recoverables from reinsurers that use MBTs may be authorized, unauthorized and/or certified. The
total recoverables from a reinsurer must be split among these three reporting classifications.
3. Certified reinsurers may use their full collateral MBT to secure reduced collateral liabilities
The type or amount of collateral provided does not dictate the reporting treatment of recoverables
from a certified reinsurer, with one significant exception. The exception occurs if the certified reinsurer
agrees to collateralize the recoverables at 100% through its MBT used for full (i.e. 100%) collateral. In
this case, the recoverables should be reported as emanating from an authorized reinsurer and be
reported on Schedule F – Parts 3, 4, 7 and 8 (as necessary). Alternatively, if a certified reinsurer is
only required to provide 20% collateral and provides 60% collateral via a LOC, the recoverables
should still be reported as emanating from a certified reinsurer and be reported on Schedule F – Parts
3, 4 and 6 (as necessary).
4. Ceding insurers may not know the amount of collateral in the MBT securing their liabilities
In Schedule F – Part 6 – Section 1, ceding insurers are required to indicate the amount of collateral
provided by their certified reinsurers. The collateral may be met in several ways, including: cash,
Letters of Credit (LOCs), Single Beneficiary Trusts and MBTs. For all but the MBTs, the ceding
insurer is aware of the amount of collateral provided. However, the amount held in a MBT (on behalf
of a ceding insurer) is typically not known by the ceding insurer. In practice, the amount held in the
MBT by a reinsurer should be equal to the recoverable balances due to the ceding insurer. There
may be some variances due to differences in the calculation of IBNR by the ceding insurer and the
reinsurer. The responsibility for ensuring that the MBT is sufficiently funded lies with the regulator of
the trust. Representatives of the NY DFS have indicated that ceding insurers that are provided
collateral through a MBT regulated by the NY DFS can assume their recoverables are adequately
collateralized by the reinsurer’s MBT. This view has been supported by the NAIC and other
regulators.
With respect to reinsurance reporting on Schedule F – Part 6, ceding insurers may indicate that all
recoverables that are collateralized by a MBT are funded adequately. Specifically, the amount of
collateral required is indicated in column 11 of Part 6 – Section 1. Therefore, ceding insurers (whose
recoverables are collateralized by a MBT) may enter an identical balance in column 12.
Representatives of the NAIC have stated that this reporting treatment was contemplated and agreed
upon during the development of Schedule F – Part 6. This approach ensures that ceding insurers will
get full credit (and not suffer a provision for reinsurance) for their recoverables that are collateralized
by a MBT.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
11
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Certified Reinsurer Reporting Concepts
The introduction of certified reinsurers, as well as the increased use of MBTs, has unintentionally
complicated the reporting of recoverables from reinsurers.
Outstanding recoverables from the same reinsurer may be subject to different reporting treatment. These
recoverables may appear on different parts (Part 5, 6, 7 and/or 8) of Schedule F and may need to appear
on different lines within the same Part of Schedule F.
Below are important concepts and additional information that may be used to guide the reporting of
recoverables from certified reinsurers and reinsurers that utilize MBTs.
1. The ability to provide reduced amounts of collateral to ceding insurers domiciled in a
particular state only applies on a prospective basis.
Specifically, only recoverables from contracts that incept on or after the date of certification are
eligible for reduced collateral. Recoverables that emanate from a contract that incepts prior to the
date of certification must be reported as emanating from either an authorized and/or unauthorized
reinsurer.
2. The certified reinsurer’s ability to provide reduced amounts of collateral may be restricted by
type or line of business.
Each reinsurer must apply and be approved for reduced collateral for specific lines or classes of
business (e.g. property/casualty, life, accident, health etc.). If approved by a state, the lines that are
eligible for reduced collateral are known as certified lines. Therefore, ceding insurers must confirm
that all recoverables subject to certified reporting treatment emanate from certified lines of business.
This has become less of an issue since Florida updated its Administrative Code on July 28, 2015 to
more closely follow the NAIC Credit for Reinsurance Model Law and Regulation.
However, prior to July 28, 2015, only Hannover Rueck SE and XL Re Ltd were eligible to provide
reduced amounts of collateral to Florida domiciled ceding insurers on all property and casualty lines.
All other reinsurers that were certified in Florida prior to July 28, 2015 were only eligible to provide
reduced collateral on property catastrophe reinsurance recoverables.
Appendix I provides specific reporting instructions for all reinsurers that were certified in Florida prior
to July 28, 2015.
In some cases, the certified lines may not be listed by the state insurance department. When the
specific lines of business are not indicated on the state website, ceding insurers often assume all
lines are certified.
3. Certified reinsurers may be able to defer the posting of collateral on recoverables resulting
from a property catastrophe event.
Certified reinsurers are able to defer collateralizing recoverables if the recoverables on specified lines
of business result from a catastrophe event that is “recognized for collateral deferral” by the insurance
department of the ceding insurer’s state of domicile. The deferral lasts for a period of one year from
when the ceding insurer posted its initial reserve for the loss. Schedule F – Part 6 of the statutory
annual statement has been redesigned to accommodate this collateral deferral. Therefore, ceding
insurers may need to track certified reinsurer recoverables resulting from a property catastrophe
event (or “named hurricane” for Florida domiciled companies) separately.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
12
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
4. The upgrade of a certified reinsurer applies on a prospective basis. Also, the upgrade may
require ceding insurers to report recoverables on separate lines within Schedule F – Part 6 in
order to reflect different collateral requirements.
The amount of collateral required to be provided by a certified reinsurer is dependent upon the rating
(e.g. Secure-1, Secure-2) assigned by the Insurance Commissioner of the ceding insurer’s state of
domicile. The ratings assigned by the Insurance Commissioner are based on commercial ratings
assigned by rating agencies such as A.M. Best, Fitch, Moody’s and Standard and Poor’s. In the event
the commercial ratings are upgraded, it may lead to an upgrade of the Insurance Commissioner’s
rating. Any upgrade in certified ratings only applies on a prospective basis. In other words, once
upgraded, the reinsurer will be able to fund at a lower level of collateral. This lower level of collateral
only applies to recoverables from contracts that incept on or after the date the Insurance
Commissioner upgrades the rating of the certified reinsurer. Contracts that incept prior to the certified
rating upgrade date will still need to be collateralized at the higher level. Therefore, recoverables from
the certified reinsurer may be subject to different collateral amounts. Recoverables from a certified
reinsurer that are subject to different collateral levels will need to be reported on separate lines on
Schedule F – Part 6 or an inaccurate provision for reinsurance may be calculated.
5. Any downgrade of a certified reinsure applies prospectively and retroactively. Also, certified
reinsurers that are downgraded or decertified by the Insurance Commissioner within the last
three months of the calendar year may be reported at the required amount of collateral before
the downgrade or decertification occurred.
If a certified reinsurer is downgraded by the Insurance Commissioner (usually resulting from a
downgrade of commercial ratings), the reinsurer may be subject to higher amounts of collateral. The
new higher collateral requirement applies prospectively and to all existing certified recoverables that
were collateralized at a lower percentage.
Once downgraded or decertified, reinsurers have three months to bring collateral up to the new
required level. During this three month grace period, ceding insurers should not be penalized (via the
Provision for Reinsurance) for any collateral shortfall directly due to the downgrade or decertification
th
of the reinsurer. Therefore, if a downgrade occurs in the 4 quarter, ceding insurers are permitted to
report the required collateral at the level before the downgrade or decertification occurred. For
example, assume a Secure-3 certified reinsurer was eligible to provide 20% collateral. If this reinsurer
st
was downgraded to a Secure-4 reinsurer on December 1 , they would need to provide 50%
st
collateral. However, the reinsurer may not have increased collateral to 50% by December 31 .
Therefore, the ceding insurer may still report this reinsurer as Secure-3, requiring 20% collateral on
their statutory annual statement.
Ceding insurers are also required to disclose any certified reinsurer downgrades or revocations in the
Notes to Financials. Under Note 23 I, ceding insurers are required to identify the following
information:

Name of certified reinsurer downgraded or whose certification was revoked

Date of Insurance Commissioner’s downgrade or revocation

Collateral requirements pre and post downgrade or revocation

Net obligations subject to collateral

Additional collateral required, but not received as of the filing date
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
13
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
6. Collateral provided by a non-U.S. reinsurer should follow the reporting treatment of the
recoverables that are being collateralized. Therefore, there may be a need to bifurcate the
collateral reported on Schedule F.
Ceding insurers need to report recoverables and the corresponding collateral accurately on Schedule
F or an inaccurate provision for reinsurance may result. For example, suppose a ceding insurer
domiciled in New York was owed USD 10mn in paid recoverables on two separate contracts
incepting January 1, 2012 and January 1, 2013 respectively. Suppose that the recoverables were due
from a non-U.S. unauthorized reinsurer that became certified on January 1, 2013 and was eligible to
provide 20% collateral. Therefore, the amount that should be collateralized by the reinsurer is USD
12mn (USD 10mn for the 100% obligations and USD 2mn for the reduced collateral obligations). If
the ceding insurer received a LOC for USD 12mn from the reinsurer, the recoverables and collateral
should be reported as follows (assuming there were no recoverables subject to the collateral deferral
outlined in item 3 above):
Part 3: Ceded Reinsurance

Recoverables of USD 10mn should be reported under Unauthorized – Other Non-U.S.
Reinsurers

Recoverables of USD 10mn should be reported under Certified – Other Non-U.S. Reinsurers
Part 5: Provision for Unauthorized Reinsurance

Recoverables of USD 10mn should be reported under Unauthorized – Other Non-U.S.
Reinsurers

LOC of USD 10mn should be reported on the same line (in column 7)
Part 6 – Section 1: Provision for Reinsurance Ceded to Certified Reinsurers

Recoverables of USD 10mn should be reported in columns 8 and 10 and USD 2mn should
be reported in column 11 under Certified – Other Non-U.S. Reinsurers

LOC of USD 2mn should be reported on the same line (in column 14)
Note: The recoverables may also need to be reported on other parts of Schedule F (e.g. Part 4 and
Part 6 – Section 2) if any of the recoverables are more than 90 days past due.)
7. Certified reinsurers are assigned a Certified Reinsurer Identification Number (CRIN) that
should be reported in Schedule F – Part 6.
The CRIN for a certified reinsurer will be its Alien ID number with a “CR” replacing the “AA” at the
beginning of the number.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
14
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions for Certified Reinsurers
Reporting for most certified reinsurers is relatively straight forward. Most reinsurers were unauthorized
before they became certified. The certification applies only on a prospective basis. Therefore,
recoverables from contracts incepting prior to the certification date, should be reported as unauthorized.
Recoverables from contracts that incept on or after the certification date, should be reported as certified –
PROVIDED they emanate from a certified line of business.
In most cases reinsurers obtain certification for all lines of business that they are authorized to write. The
only significant exception to the certified lines occurred in Florida where up until 07/28/15, most reinsurers
were certified for property catastrophe reinsurance only.
As mentioned in the previous sections, there are a number of factors which can complicate the reporting
of recoverables including:

The use of a multi-beneficiary trust for full (i.e. 100%) collateral obligations

Reserve upgrades and downgrades

The collateral deferral on recognized catastrophes or named hurricanes (Florida only)
Therefore, our approach to providing reporting instructions will be as follows:
If there are any known reporting complications (reserve changes, use of an MBT etc.), we will provide
specific reporting guidance at the state level. If the reinsurer is certified and there are no other
complications, then ceding insurers should report recoverables as follows:
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
15
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Special Reporting Instructions for Recoverables from
Lloyd’s Syndicates, Tokio Millennium, Endurance
Specialty and Montpelier Reinsurance
Lloyd’s Syndicates (2016 Statutory Statement)
Underwriters at Lloyd’s, London (Lloyd’s), is a market and obtains licensing on behalf of all syndicates in
each state. As of December 2016, Lloyd’s (and therefore all Lloyd’s syndicates) has been certified and
approved for reduced collateral in California, Florida, New York and Pennsylvania. Lloyd’s has yet to be
approved as a certified reinsurer in any other state.
Each Lloyd’s syndicate has the option to provide reduced amounts of collateral to ceding insurers
domiciled in:

California, for all property casualty recoverables from contracts that incept on or after July 1, 2015

Florida
o
For all property catastrophe reinsurance recoverables from contracts that incept on or
after October 6, 2011 through July 27, 2015
o
For all property casualty recoverables from contracts that incept on or after July 28,
2015*

New York, for all property casualty recoverables from contracts that incept on or after January 1,
2011

Pennsylvania, for all recoverables from contracts that incept on or after December 1, 2014
*Note: This is the date the Florida OIR changed its Administrative Code to remove the restriction that only property catastrophe
reinsurance recoverables could be certified.
To date, very few syndicates have elected to provide reduced collateral to ceding insurers domiciled in
California, Florida, New York or Pennsylvania.
If a syndicate elects to provide reduced collateral, they would need to establish a Letter of Credit (LOC) or
Single Beneficiary Trust. (To date, Lloyd’s has yet to establish a parallel MBT fund structure.) The
syndicate would also notify the ceding insurer that they plan to collateralize recoverables outside of their
MBT established for 100% collateral. In this case, the associated recoverables should be reported as
certified (instead of authorized) and follow the applicable statutory reporting guidelines. As more
recoverables become eligible for reduced collateral, more syndicates may be collateralizing recoverables
at a reduced percentage.
Conclusion: Unless the ceding insurer has agreed with a Lloyd’s syndicate to a specific collateral
arrangement with a LOC or Single Beneficiary Trust or funds withheld, all recoverables from
Lloyd’s should be reported as authorized. Cedant specific collateral arrangements should be
reported as certified where reduced collateral has been agreed to by the cedant or unauthorized
where the funding is 100% (but not collateralized through an MBT).
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
16
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Tokio Millennium (2016 Statutory Statement)
Special reporting instructions are required for Tokio Millennium as some of the state websites are not
100% clear.
Background on Tokio Millennium
In October 2013, Tokio Millennium Re, Ltd redomesticated from Bermuda to Switzerland and became
known as “Tokio Millennium Re AG”. The Bermuda operations of Tokio Millennium Re then became a
branch now known as “Tokio Millennium Re AG, Bermuda Branch”. Per Tokio Millennium, references to
“Tokio Millennium Re, Ltd.” or “Tokio Millennium Re AG” refer to the same legal entity - now organized
under the laws of Switzerland.
In 2014, Tokio Millennium Re AG (the Swiss entity) established a U.S. branch - Tokio Millennium Re AG
(U.S. Branch). This U.S. branch is separately capitalized. According to Tokio Millennium, the U.S. branch
has the full backing of the Swiss entity as the branch is simply an extension of the Swiss legal entity. Aon
Benfield spoke with state regulators who shared this view.
The U.S. branch is licensed by the state of New York and as of December 15, 2016 is now licensed
and/or accredited in all 50 states and in Washington DC.
Recoverables from Tokio Millennium should be reported as outlined below.
1. Tokio Millennium Re AG (U.S. Branch)
Recoverables from contracts where the U.S. Branch is the reinsurer should be reported as “authorized”.
2. Tokio Millennium Re AG or Tokio Millennium Re AG (Bermuda Branch)
Tokio Millennium Re AG became certified in Florida on 02/25/11. However, as previously noted, Florida
updated its Administrative Code regarding reduced collateral to bring it more in line with the NAIC Credit
for Reinsurance Model Law and Regulation. One of the main changes was that the reduced collateral
could apply to all reinsurance recoverables and not just property catastrophe reinsurance recoverables.
Therefore, the reporting of recoverables from Tokio Millennium Re AG Tokio Millennium Re AG and the
Tokio Millennium Re AG (Bermuda Branch) differ by the type of recoverables and from the reinsurance
contract Inception date as outlined in the table below:
For Florida Domiciled Ceding Insurers (Does not include recoverables due from the U.S. Branch)
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
17
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Tokio Millennium Re AG and the Tokio Millennium Re AG (Bermuda Branch) are certified in the following
states:
State
Alabama
California
Connecticut
Delaware
Georgia
Missouri
New Jersey
New York
Ohio
Pennsylvania
Rhode Island
Certification Date
07/01/15
07/01/14
05/14/15
04/01/15
10/27/14
07/01/15
04/30/14
07/01/11
01/01/16
07/01/15
07/07/15
Ceding insurers domiciled in the above states: Recoverables from contracts issued on non-U.S. branch
paper and incepting on or after the certification date should be reported as “certified”. All recoverables
from contracts incepting prior to the certification date should be reported as “unauthorized”
Ceding insurers domiciled in all other states: All recoverables on contracts issued on non-U.S. branch
paper should be reported as “unauthorized”.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
18
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Endurance Specialty Limited (2016 Statutory Statement)
Reporting of recoverables from Endurance Specialty Insurance Limited (Endurance Specialty) is currently
complicated for several reasons:



Endurance Specialty is certified in some states, authorized in some states and unauthorized in
other states
Some states where Endurance is operating as a certified reinsurer have yet to recognize (or have
yet to update their records) a rating upgrade which should lead to lower collateral requirements
Aon Benfield does not have complete information on whether recoverables from contracts that
incepted prior to Endurance Specialty’s Multi-Beneficiary Trust (MBT) being approved have been
rolled-in to the MBT (thereby changing their reporting classification to authorized from
unauthorized).
If there is any uncertainty regarding how to report recoverables from Endurance Specialty, we suggest
that ceding insurers contact Endurance Specialty and / or the Department of Insurance (DOI) in the
domicile of the ceding insurer.
The following is the information that we have assembled to date, based primarily on DOI websites and
DOI staff.
States where Endurance Specialty is not Certified nor Authorized
According to our findings, Endurance Specialty is not authorized nor certified in any of the following
states:










Idaho
Illinois
Maryland
Minnesota
Montana
New Mexico
New York
Pennsylvania
Washington
Wyoming
In all the above states, recoverables from Endurance Specialty should be reported as unauthorized.
Reporting Certified Recoverables from Endurance Specialty
According to our findings, Endurance Specialty is certified in the following states (but not also authorized):
State
Alabama
Colorado
Connecticut
Florida
Georgia
Iowa
Certification Date
11/10/15
05/31/12
12/30/15
05/31/12
12/29/15
12/14/15
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
19
Aon Benfield
Analytics | Market Analysis
Louisiana
Maine
Nebraska
New Hampshire
New Jersey
North Dakota
Ohio
Vermont
Virginia
Proprietary and Confidential
02/05/16
10/29/15
10/27/15
10/27/15
11/01/16
07/01/16
01/01/16
07/01/15
01/05/16
All recoverables from contracts that incept prior to the certification date should be reported as
unauthorized.
With the exception of Florida, all recoverables due to ceding insurers domiciled in these states should be
reported as certified if the reinsurance contract incepts on or after the certification date.
Please be advised that Endurance Specialty was upgraded by Moody’s on August 9, 2016. This upgrade,
if recognized by the Ceding Insurer’s state of domicile, should result in lower collateral requirements on a
prospective basis (i.e. for recoverable from contracts that incept on or after this date).
To ensure an accurate provision of reinsurance is calculated, recoverables that are collateralized at
different percentages should appear on separate line items in Schedule F Parts 6 – Sections 1 and 2.
Reporting recoverables from Endurance Specialty by Florida domiciled ceding insurers is more difficult as
until 07/28/15 only property catastrophe recoverables were eligible for reduced collateral. Also, Florida
had a slightly different rating scale (i.e. A- and A3 rated reinsurers only needed to provide 20% collateral).
Therefore, to the best of our knowledge, recoverables from Endurance Specialty (if there are any) should
be reported as follows:
Note: Recoverables resulting from Hurricane Matthew may be subject to the one-year collateral deferral.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
20
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Authorized Recoverables from Endurance Specialty
According to our findings, Endurance Specialty is authorized in the following states (but not also certified):
State
Alaska
Arizona
Arkansas
District of Columbia
Hawaii
Indiana
Kansas
Kentucky
Massachusetts
Michigan
Mississippi
Nevada
North Carolina
Oklahoma
Oregon
South Carolina
South Dakota
Tennessee
Texas
Utah
West Virginia
Wisconsin
Date Trusteed
10/27/15
11/06/15
01/06/16
04/25/16
12/29/15
12/17/15
07/06/16
11/23/15
12/23/15
12/08/15
01/01/15
08/22/16
10/20/15
07/01/11
12/31/15
10/27/15
11/09/15
11/06/15
03/14/16
05/02/16
08/12/16
11/02/15
All recoverables due to ceding insurers domiciled in these states should be reported as authorized if the
reinsurance contract incepts on or after the Date Trusteed.
Recoverables from contracts that incept prior to the Date Trusteed (a.k.a. existing balances), should be
reported as unauthorized, unless the existing balances were roll-in to the MBT (in which case they should
be reported as authorized.) Ceding insurers should be notified of any roll-ins by Endurance Specialty.
These communications typically also request the release of any Letters of Credit.
Reporting of Recoverables from Delaware, Missouri and Rhode Island
According to our records, Endurance Specialty is both certified and authorized in the following states:
State
California
Delaware
Missouri
Rhode Island
Date Certified
07/01/15
07/01/15
01/01/16
12/29/15
Date Trusteed
12/23/16
08/25/15
04/01/16
09/15/16
Based on our findings, recoverables due to ceding insurers domiciled in the above three states, should be
reported as follows:
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
21
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting for Ceding Insurers Domiciled in California (where Endurance Specialty is both
Certified and Authorized)
Notes:
1. Endurance Specialty recoverables from contracts incepting prior to 07/01/15 should be reported as
unauthorized, unless these recoverables have been rolled-in to a full collateral MBT.
2. The California DOI still lists Endurance Specialty as a Secure-4 certified reinsurer (50% collateral
required). However, Endurance Specialty was upgraded by Moody’s from A3 to A2 and technically should
be assigned a Secure-3 certified reinsurer (20% collateral required).
Reporting for Ceding Insurers Domiciled in Delaware (where Endurance Specialty is both Certified
and Authorized)
Notes:
1. Endurance Specialty recoverables from contracts incepting prior to 07/01/15 should be reported as
unauthorized, unless these recoverables have been rolled-in to a full collateral MBT.
2. On 08/09/16, the Delaware DOI assigns Secure 3 rating (20% collateral required) to Endurance
Specialty
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
22
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting for Ceding Insurers Domiciled in Missouri (where Endurance Specialty is both Certified
and Authorized)
Notes:
1. Endurance Specialty recoverables from contracts incepting prior to 07/01/15 should be reported as
unauthorized, unless these recoverables have been rolled-in to a full collateral MBT.
2. The Missouri DOI still lists Endurance Specialty as a Secure-4 certified reinsurer (50% collateral
required). However, Endurance Specialty was upgraded by Moody’s from A3 to A2 and technically should
be assigned a Secure-3 certified reinsurer (20% collateral required).
Reporting for Ceding Insurers Domiciled in Rhode Island (where Endurance Specialty is both
Certified and Authorized)
Notes:
1. Endurance Specialty recoverables from contracts incepting prior to 12/29/15 should be reported as
unauthorized, unless these recoverables have been rolled-in to a full collateral MBT.
2. The Rhode Island DOI still lists Endurance Specialty as a Secure-4 certified reinsurer (50% collateral
required). However, Endurance Specialty was upgraded by Moody’s from A3 to A2 and technically should
be assigned a Secure-3 certified reinsurer (20% collateral required).
Again, we recommend that all ceding insurers check with Endurance Specialty and the DOI of the state of
domicile to confirm reporting for year-end 2016.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
23
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Links to Individual State Instructions
Below are links to the state specific certified reinsurer reporting instructions for ceding insurers with
specific instructions on how to report the recoverables emanating from certified reinsurers on the 2016
statutory annual statement
Alabama
Maryland
Arizona
Missouri
Arkansas
Nebraska
California
New Hampshire
Colorado
New Jersey
Connecticut
New York
Delaware
North Dakota
Florida
Ohio
Georgia
Pennsylvania
Iowa
Rhode Island
Indiana
Vermont
Louisiana
Virginia
Maine
Washington
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
24
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Additional Guidance on Schedule F Reporting
If looking for detailed guidance on the completion of Schedule F, or a thorough discussion of reinsurance
accounting, consult Booke’s 2016 P&C Annual Statement Handbook, a 1,500 page manual explaining the
completion of the entire Yellow Book. Booke, an Aon company, is the leading provider of finance and
accounting education specific to the insurance industry. Booke courses are available through customized
onsite training, group live seminars, webinars or self-studies. Also, Booke’s annual statement software
product — The Complete Package (TCP) — includes all the 2016 changes to Schedule F. TCP has the
industry’s largest market share, is fast and intuitive, is available with the Handbook as a context sensitive
help file, has a new federal income tax module, and includes supporting consultation with Booke
instructors. For more information on Booke’s products and services, visit www.bookeseminars.com or call
336-728-2929.
Contacts
For additional information on U.S. Collateral Reform or the reporting of recoverables on the 2016
Statutory Annual Statement, please contact your local Aon Benfield Broker or a member of the Aon
Benfield Analytics – Market Analysis team, including:
Mike McClane
Market Analysis, Americas
Aon Benfield Analytics
+1.215.751.1596
[email protected]
Steven Le
Market Analysis, Americas
Aon Benfield Analytics
+1.215.751.1293
[email protected]
Sources: Aon Benfield Market Analysis, National Association of Insurance Commissioners, State Insurance Department websites
and staff, Aspen Bermuda Limited, Lancashire Insurance Company Limited, Lloyd’s U.S., Renaissance Reinsurance Limited, Tokio
Millennium Re AG, and Validus Reinsurance Limited.
About Aon
Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance
brokerage, and human resources solutions and outsourcing services. Through its more than 66,000
colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and
effective risk and people solutions and through industry-leading global resources and technical expertise.
Aon has been named repeatedly as the world’s best broker, best insurance intermediary, best
reinsurance intermediary, best captives manager, and best employee benefits consulting firm by multiple
industry sources. Visit aon.com for more information on Aon and aon.com/manchesterunited to learn
about Aon’s global partnership with Manchester United.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
25
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Appendix I: 2016 State Specific Certified Reinsurer
Reporting Instructions
Important Note: Not all states have identified which lines of business have been approved as certified
lines. For many states, all lines reinsured by a certified reinsurer are approved as certified lines.
Alabama
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
No
MBT
Roll-in
N/A
Trusteed
Date
N/A
Endurance Specialty
Insurance Ltd
No
N/A
N/A
Hannover Ruck SE
Yes
No
02/06/96
Tokio Millennium Re AG
No
N/A
N/A
Certified Reinsurer
Arch Reinsurance Ltd
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
Certification
Date
07/01/14
11/10/15 12/31/16
01/01/17 Current
Rating
Secure-3
Collateral
Required
20%
Secure-4
50%
Secure-3
20%
07/01/14
Secure-2
10%
Life, Annuities, A&H,
Property / Casualty
07/01/15
Secure-3
20%
Property / Casualty
Certified Lines
Property / Casualty
Property Cat
26
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions: Alabama
Certified Reinsurer
Endurance Specialty
Insurance Ltd.
Certification
Date
Date
Trusteed
11/10/15
N/A
Contract Inception
Date
Prior to 11/10/15
On/after 11/10/15
but before 01/01/17
On/after 01/01/17
Prior to 02/06/96
Hannover Rueck SE
07/01/14
02/06/96
On/after 02/06/96
but before 07/01/14
On/after 07/01/14
All other Certified
Reinsurers
See previous
page
See
previous
page
Prior to Certification
Date
On/after Certification
Date
Lines
All
Certified
All Other
Certified
All Other
All
Reporting
Treatment
Unauthorized
Certified
Unauthorized
Certified
Authorized
Unauthorized²
Collateral
Required
100%
50%
100%
20%¹
100%
100%
All
Authorized
100%
Certified
All Other
Certified
Authorized
10%
100%
All
Unauthorized
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
100%
Notes:
1.
On January 1, 2017, Endurance Specialty Insurance Ltd’s Secure-4 rating was upgraded to Secure-3. As a result,
recoverables from contracts that incept on or after this date require only 20% collateral.
2.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
27
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Arizona
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
MBT
Roll-in
Trusteed
Date
Certification
Date
Rating
Collateral
Required
Arch Reinsurance Ltd
No
N/A
N/A
04/26/16
Secure-3
20%
Hannover Ruck SE
Yes
No
12/28/98
04/21/16
Secure-2
10%
Life, Annuities, A&H,
Property / Casualty
Ironshore Insurance Ltd.
No
N/A
N/A
04/21/16
Secure-5
75%
Property / Casualty
Certified Reinsurer
Certified Lines
Life, Annuities, A&H,
Property / Casualty
Reporting Instructions: Arizona
Certified Reinsurer
Certification
Date
Date
Trusteed
Hannover Rueck SE
04/21/16
12/28/98
Contract Inception
Date
Prior to 12/28/98
On/after 12/28/98 but
before 04/21/16
On/after 04/21/16
All other Certified
Reinsurers
See previous
page
See
previous
page
Prior to Certification
Date
On/after Certification
Date
Lines
All
Reporting
Treatment
1
Unauthorized
Collateral
Required
100%
All
Authorized
100%
Certified
All Other
Certified
Authorized
10%
100%
All
Unauthorized
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
100%
Notes:
1.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
28
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Arkansas
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Certified Reinsurer
Allied World Assurance
Co. Ltd.
Hannover Ruck SE
Uses
MBT?
MBT
Roll-in
Trusteed
Date
Certification
Date
Rating
Collateral
Required
Certified Lines
No
N/A
N/A
01/01/16
Secure-3
20%
Property / Casualty
No
No
09/26/97
01/01/16
Secure-2
10%
Life, Annuities, A&H,
Property / Casualty
Reporting Instructions: Arkansas
Certified Reinsurer
Allied World Assurance
Co. Ltd.
Certification
Date
Date
Trusteed
01/01/16
N/A
Contract Inception
Date
Prior to 01/01/16
On/after 01/01/16
Prior to 09/26/97
Hannover Ruck SE
01/01/16
09/26/97
On/after 09/26/97
but before 01/01/16
On/after 01/01/16
Lines
All
Certified
All Other
All
Reporting
Treatment
Unauthorized
Certified
Unauthorized
1
Unauthorized
All
Authorized
Certified
All Other
Certified
Authorized
Collateral
Required
100%
20%
100%
100%
100%
10%
100%
Notes:
1.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
29
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
California
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
MBT
Roll-in
Trusteed
Date
Certification
Date
Rating
Collateral
Required
No
N/A
N/A
01/01/14
Secure-2
10%
Arch Reinsurance Ltd.
No
N/A
N/A
07/01/14
Secure-3
20%
Life, A&H,
Property / Casualty
Endurance Specialty
Insurance, Ltd.
No
N/A
N/A
07/01/15
Secure-4¹
50%
Property / Casualty
Hannover Ruck SE
Yes
No
10/09/96
01/01/14
Secure-2
10%
Life, A&H,
Property / Casualty
Swiss Reinsurance
Company Ltd.
No
N/A
N/A
07/01/14
Secure-2
10%
Life, A&H,
Property / Casualty
Tokio Millennium Re AG
No
N/A
N/A
07/01/14
Secure-3
20%
Property / Casualty
Underwriters at Lloyd's
London
Yes
Yes
12/22/06
07/01/16
Secure-3
20%
Property / Casualty
Certified Reinsurer
Chubb Tempest
Reinsurance Ltd.
Certified Lines
Life, Property /
Casualty
Notes:
1.
The California DOI still lists Endurance Specialty as a Secure-4 certified reinsurer (50% collateral required). However,
Endurance Specialty was upgraded by Moody’s from A3 to A2 and technically should be assigned a Secure-3 certified
reinsurer (20% collateral required). Ceding insurers should check with Endurance Specialty Limited and the DOI of their
state of domicile to confirm reporting for year-end 2016.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
30
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions: California
Certified Reinsurer
Endurance Specialty
Insurance Limited
Certification
Date
Date
Trusteed
07/01/15
12/23/16
Contract Inception
Date
Prior to 07/01/15
On/after 07/01/15 but
before 12/23/16
On/after 12/23/16
Prior to 10/09/96
Hannover Ruck SE
01/01/14
10/09/96
On/after 10/09/96 but
before 01/01/14
On/after 01/01/14
Prior to 12/02/06
Underwriters at
Lloyd's London
07/01/16
12/22/06
On/after 12/02/06 but
before 07/01/16
On/after 07/01/16
All other Certified
Reinsurers
See previous
page
See
previous
page
Prior to Certification
Date
On/after Certification
Date
Lines
All
Certified
All Other
Certified
All Other
All
Reporting
Treatment
Unauthorized
Certified
Unauthorized
Certified
Authorized
Unauthorized³
Collateral
Required
100%¹
50%²
100%
50%
100%
100%
All
Authorized
100%
Certified
All Other
All
Certified
Authorized
Authorized⁴
10%
100%
100%
All
Authorized
100%
Certified
All Other
Authorized⁵
Authorized
100%
100%
All
Unauthorized
100%
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
Notes:
1.
Receivables prior to 07/01/15 should be collateralized at 100% and reported as unauthorized (unless ceding insurers
domiciled in California have received notice that these recoverables have been rolled-in to Endurance Specialty’s MBT. If
recoverables were rolled into a 100% MBT, they should be reported as authorized).
2.
Endurance Specialty Insurance Limited became certified on July 1, 2015. Aon Benfield believes that all lines written by
Endurance Specialty are eligible for reduced collateral (but there is no indication of certified lines on the DOI website).
Therefore, all recoverables from contracts on or after this date should be reported as certified and only require 50%
collateral.
3.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
4.
Prior to the Date Trusteed, some recoverables from Lloyd’s may need to be reported as unauthorized. In these cases, the
Lloyd’s syndicate must be supplying the ceding insurer with a Letter of Credit or single Beneficiary Trust.
5.
Post Certification - Most Lloyd's syndicates are providing 100% collateral for all recoverables through their MBT. Ceding
insurers will be notified and provided with a LOC or Single Beneficiary Trust, if a syndicate elects to provide a reduce
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
31
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Colorado
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
MBT
Roll-in
Trusteed
Date
Certification
Date
Rating
Collateral
Required
Arch Reinsurance Ltd
No
NA
N/A
07/01/11
Secure-3
20%
Endurance Specialty IC
Hannover Ruck SE
No
Yes
NA
No
N/A
07/01/96
05/31/12
10/01/15
Secure-3
Secure-2
20%
10%
Certified Reinsurer
Certified Lines
Life, Annuities, A&H,
Property / Casualty
Property / Casualty
Property / Casualty
Reporting Instructions: Colorado
Certified Reinsurer
Certification
Date
Date
Trusteed
Hannover Ruck SE
10/01/15
07/01/96
Contract Inception
Date
Prior to 07/01/96
On/after 07/01/96
but before 10/01/15
On/after 10/01/15
All other Certified
Reinsurers
See previous
page
See
previous
page
Prior to Certification
Date
On/after Certification
Date
Lines
All
Reporting
Treatment
1
Unauthorized
Collateral
Required
100%
All
Authorized
100%
Certified
All Other
Certified
Authorized
10%
100%
All
Unauthorized
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
100%
Notes:
1.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
32
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Connecticut
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
MBT
Roll-in
Trusteed
Date
Certification
Date
Rating
Collateral
Required
Arch Reinsurance
Ltd. (Bermuda)
No
N/A
N/A
04/27/15
Secure-3
20%
Endurance Specialty
Insurance Ltd.
No
N/A
N/A
12/30/15
Secure-4¹
50%
Hannover Rueck SE
Yes
No
09/11/95
05/22/14
Secure-2
10%
Swiss Reinsurance
Company Ltd
No
N/A
N/A
01/01/13
Secure-2
10%
Tokio Millennium Re
AG
No
N/A
N/A
05/04/15 -9/17/15
09/18/15 - Current
Secure-2
Secure-3
10%
20%
Certified Reinsurer
Certified Lines
Life, Annuities,
A&H, Property /
Casualty
Property /
Casualty
Life, Annuities,
A&H, Property /
Casualty
Life, Annuities,
A&H, Property /
Casualty
Property /
Casualty
Notes:
1.
The Connecticut DOI still lists Endurance Specialty as a Secure-4 certified reinsurer (50% collateral required). However,
Endurance Specialty was upgraded by Moody’s from A3 to A2 and technically should be assigned a Secure-3 certified
reinsurer (20% collateral required). Ceding insurers should check with Endurance Specialty Limited and the DOI of their
state of domicile to confirm reporting for year-end 2016.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
33
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions: Connecticut
Certified Reinsurer
Certification
Date
Date
Trusteed
Hannover Rueck SE
05/22/14
09/11/95
Contract Inception
Date
Prior to 09/11/95
On/after 09/11/95 but
before 05/22/14
On/after 05/22/14
Prior to 05/14/15
Tokio Millennium Re
AG
05/14/15
N/A
On/after 05/14/15 but
before 09/17/15
On/after 09/17/15
All other Certified
Reinsurers
See previous
page
See
previous
page
Prior to Certification
Date
On/after Certification
Date
Lines
All
Reporting
Treatment
1
Unauthorized
Collateral
Required
100%
All
Authorized
100%
Certified
All Other
All
Certified
Authorized
Unauthorized
10%
100%
100%
Certified
Certified
10%
All Other
Unauthorized
100%
Certified
Certified
20%
All Other
Unauthorized
100%
All
Unauthorized
100%
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
2
Notes:
1
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized
2
On September 17, 2015, Tokio Millennium Re AG's Secure-2 rating was downgraded to Secure-3. As a result,
recoverables from contracts that incept on or after this date require 20% collateral.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
34
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Delaware
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
MBT
Roll-in
Trusteed
Date
Certification Date
Rating
Collateral
Required
Certified
Lines
No
N/A
N/A
01/01/17
Secure-2
10%
Not identified
Allied World Assurance
Company, Ltd.
No
N/A
N/A
10/01/14
Secure-3
20%
Not identified
Arch Reinsurance Ltd.
No
N/A
N/A
Yes
N/A
08/25/15
Secure-3
Secure-4
Secure-3
20%
50%
20%
Not identified
Endurance Specialty
Insurance Limited
10/01/14
07/01/15 - 08/08/16
08/09/16 - Current
Everest Reinsurance
(Bermuda), Ltd.
No
N/A
N/A
10/01/14
Secure-3
20%
Not identified
Hamilton Re Ltd
Hannover Ruck SE
No
Yes
N/A
No
N/A
08/21/96
11/03/16
10/01/14
Secure-5
Secure-2
75%
10%
Not identified
Not identified
Münchener
RückversicherungsGesellschaft
Aktiengesellschaft in
Munchen (Munich Re)
No
N/A
N/A
10/01/14
Secure-2
10%
Not identified
SCOR Global Life
Reinsurance Ireland Ltd.
No
N/A
N/A
Tokio Millennium Re AG
TransRe London Limited
No
No
N/A
N/A
N/A
N/A
10/01/14 - 12/31/16
01/01/17 - Current
04/01/15
01/01/16
Secure-3
Secure-2
Secure-3
Secure-3
20%
10%
20%
20%
Certified Reinsurer
ACE INA Overseas
Insurance Company Ltd.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
Not identified
Not identified
Not identified
Not identified
35
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions: Delaware
Certified Reinsurer
Endurance Specialty
Insurance Limited
Certification
Date
Date
Trusteed
Contract Inception
Date
Prior to 07/01/15
On/after 07/01/15 but
before 08/25/15
07/01/15
08/25/15
On/after 08/25/15 but
before 08/09/16
On/after 08/09/16
Prior to 08/21/96
Hannover Ruck SE
10/01/14
08/21/96
On/after 08/21/96 but
before 10/01/14
On/after 10/01/14
Prior to 10/01/14
SCOR Global Life
Reinsurance Ireland
Ltd.
All other Certified
Reinsurers
10/01/14
N/A
On/after 10/01/14 but
before 01/01/17
On/after 01/01/17
See previous
page
See
previous
page
Prior to Certification
Date
On/after Certification
Date
Reporting
Treatment
Unauthorized
Collateral
Required
100%¹
Certified
50%²
Unauthorized
Certified
Authorized
Certified
Authorized
Unauthorized⁴
100%
50%
100%
20%³
100%
100%
Lines
All
Certified
All Other
Certified
All Other
Certified
All Other
All
All
Authorized
100%
Certified
All Other
All
Certified
All Other
Certified
All Other
Certified
Authorized
Unauthorized
Certified
Unauthorized
Certified
Unauthorized
10%
100%
100%
20%
100%
10%⁵
100%
All
Unauthorized
100%
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
Notes:
1.
Receivables prior to 07/01/15 should be collateralized at 100% and reported as unauthorized (unless ceding insurers
domiciled in Delaware have received notice that these recoverables have been rolled-in to Endurance Specialty’s MBT. If
recoverables were rolled into a 100% MBT, they should be reported as authorized).
2.
Endurance Specialty Insurance Limited became certified on July 1, 2015. Aon Benfield believes that all lines written by
Endurance Specialty are eligible for reduced collateral (but there is no indication of certified lines on the DOI website).
Therefore, all recoverables from contracts on or after this date should be reported as certified and only require 50%
collateral.
3.
On August 9, 2016, Endurance Specialty’s Secure-4 rating was upgraded to Secure-3. As a result, recoverables from
contracts that incept on or after this date require only 20% collateral
4.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
5.
On January 1, 2017, SCOR Global Life Reinsurance Ireland Ltd.’s Scure-3 rating was upgraded to Secure-2. As a result,
recoverables from contracts that incept on or after this date require only 10% collateral
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
36
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Florida
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
MBT
Rollin
Trusteed
Date
No
N/A
N/A
Arch Reinsurance
Ltd.
No
N/A
N/A
Aspen Bermuda Ltd.
Yes
Yes
06/06/12
Axis Specialty
Limited
Yes
No
09/27/13
Certified Reinsurer
Allied World
Assurance
Company, Ltd.
Chubb Tempest
Reinsurance Ltd.
No
DaVinci Reinsurance
Ltd.
Yes
Endurance Specialty
Insurance, Ltd.
No
N/A
Yes
N/A
N/A
08/25/11
N/A
Hannover Re
(Bermuda) Ltd.
No
Hannover Ruck SE
Yes
No
10/16/00
Hiscox Insurance
Company (Bermuda)
Limited
No
N/A
N/A
Markel Bermuda
Limited
No
N/A
N/A
N/A
N/A
Certification Date
Rating
Collateral
Required
Certified Lines
03/01/11 - 07/27/15
Secure -3
20%
Property Cat. Reins.
07/28/15 - Current
Secure -3
20%
Property / Casualty
03/31/11 - 07/27/15
Secure -3
20%
Property Cat. Reins.
07/28/15 - Current
Secure -3
20%
Property / Casualty
05/06/11 - 07/27/15
Secure -3
20%
Property Cat. Reins.
07/28/15 - Current
Secure -3
20%
Property / Casualty
05/23/11 - 07/27/15
Secure -3
20%
Property Cat. Reins.
07/28/15 - Current
Secure -3
20%
Property Cat. Reins.
10/06/10 - 12/31/14
Secure -3
20%
Property Cat. Reins.
01/01/15 - 07/27/15
Secure -2
10%
Property Cat. Reins.
07/28/15 - Current
Secure -2
10%
Property / Casualty
06/01/11 - 07/27/15
Secure-3
20%
Property Cat. Reins.
07/28/15 - Current
Secure -4
50%
Property / Casualty
05/31/12 - 07/27/15
Secure -3
20%
Property Cat. Reins.
07/28/15 - 08/08/16
Secure -4
50%
Property / Casualty
08/09/16 - Current
Secure -3
20%
Property / Casualty
09/21/10-12/31/14
Secure -3
20%
Property Cat. Reins.
01/01/15 - 07/27/15
Secure -2
10%
Property Cat. Reins.
07/27/15 - Current
Secure -2
10%
Property / Casualty
01/01/10 - 12/31/14
Secure -3
20%
Property / Casualty
01/01/15 - Current
Secure -2
10%
Property / Casualty
11/04/10 - 07/27/15
Secure -3
20%
Property Cat. Reins.
07/28/15 - Current
Secure -3
20%
Property / Casualty
03/23/11 - 07/27/15
Secure -3
20%
Property Cat. Reins.
07/28/15 - Current
Secure -3
20%
Property / Casualty
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
37
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Certified Reinsurer List as of December 2016 – Florida Continued
Certified
Reinsurer
MS Frontier
Reinsurance
Limited
Partner
Reinsurance
Company Ltd.
Platinum
Underwriters
Bermuda, Ltd.
Uses
MBT?
MBT
Roll-in
Trusteed
Date
No
N/A
N/A
Yes
Yes
11/04/10
No
N/A
N/A
Renaissance
Reinsurance Ltd.
Yes
Yes
06/29/11
Tokio Millennium
Re AG
No
N/A
N/A
Underwriters at
Lloyd’s, London
Yes
Yes
08/01/95
Validus
Reinsurance, Ltd.
No
XL Bermuda Ltd.
No
N/A
N/A
N/A
N/A
Certification Date
06/13/13 - 07/27/15
Rating
Secure -3
Collateral
Required
20%
Certified Lines
Property Cat. Reins.
07/28/15 - Current
Secure -3
20%
Property / Casualty
11/04/10 - 07/27/15
Secure -3
20%
Property Cat. Reins.
07/28/15 - Current
Secure -3
20%
Property / Casualty
12/31/11 - 12/30/15
Secure-3
20%
Property Cat. Reins.
12/31/15 - Current
Secure -4
50%
Property Cat. Reins.
12/29/10 - 07/27/15
Secure -3
20%
Property Cat. Reins.
07/28/15 - Current
Secure -3
20%
Property / Casualty
02/25/11 -07/27/15
Secure -3
20%
Property Cat. Reins.
07/28/15 - Current
Secure -3
20%
Property / Casualty
10/06/11 - 07/27/15
Secure -3
20%
Property Cat. Reins.
07/28/15 - Current
Secure -3
20%
Property / Casualty
06/01/12 - 07/27/15
Secure -3
20%
Property Cat. Reins.
07/28/15 - 08/08/16
Secure -4
50%
Property / Casualty
08/09/16 - Current
Secure -3
20%
Property / Casualty
06/17/10 - Current
Secure -3
20%
Property / Casualty
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
38
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions: Florida
Certified
Reinsurer
Certification
Date
Date
Trusteed
Contract Inception
Date
Prior to 05/06/11
On/after 05/06/11
but before 07/28/15
Aspen Bermuda
Ltd.
05/06/11
06/06/12
On/after 07/28/15
Prior to 05/23/11
Axis Specialty
Limited
On/after 05/23/11
but before 09/27/13
05/23/11
09/27/13
On/after 09/27/13
but before 07/28/15
On/after 07/28/15
Prior to 10/06/10
Chubb Tempest
Reinsurance
Ltd.
On/after 10/06/10
but before 12/31/14
10/06/10
N/A
On/after 01/01/15
but before 07/28/15
On/after 07/28/15
Prior to 06/01/11
DaVinci
Reinsurance
Ltd.
06/01/11
08/25/11
On/after 06/01/11
but before 07/28/15
On/after 07/28/15
Reporting
Treatment
Authorized
Collateral
Required
100%
Property Cat
Authorized or
1
Certified
100% if
Authorized
or 20% if
Certified
All Other
Authorized
100%
Property / Casualty
Authorized or
1
Certified
100% if
Authorized
or 20% if
Certified
All Other
All
Property Cat
All Other
Property Cat
All Other
Property Cat
All Other
All
Property Cat
All Other
Property Cat
All Other
Property / Casualty
All Other
All
Property Cat
All Other
Property / Casualty
All Other
Authorized
Unauthorized
Certified
Unauthorized
Certified
Authorized
Certified
Authorized
Unauthorized
Certified
Unauthorized
Certified
Unauthorized
Certified
Authorized
Authorized
Certified
Authorized
Certified
Authorized
100%
100%
20%
100%
20%
100%
20%
100%
100%
20%
100%
10%²
100%
10%
100%
100%
20%
100%
50%*
100%
Lines
All
Notes:
1.
Recoverables from Aspen Bermuda due to ceding insurers domiciled in Florida will be evaluated on a case-by-case
basis to determine if reduced collateral will be applied (assuming the recoverables are due from contracts incepting on
or after the certification date) or collateralized in our Multi-Beneficiary Trust at 100%.
2.
On January 1, 2015, Chubb Tempest Reinsurance Ltd.'s Secure-3 rating was upgraded to Secure-2. As a result,
recoverables from contracts that incept on or after this date require only 10% collateral.
*
On 07/28/15, Florida changed its Administrative Code. Reinsurer’s with an “A3” Moody’s rating have to provide 50%
collateral as opposed to 20%.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
39
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions: Florida - Continued
Certified
Reinsurer
Endurance
Specialty
Insurance,
Ltd.
Certification
Date
Date
Trusteed
Contract Inception
Date
Prior to 05/31/12
On/after 05/31/12 but
before 07/28/15
05/31/12
N/A
On/after 07/28/15 but
before 08/09/16
On/after 08/09/16
Prior to 10/16/00
On/after 10/06/00 but
before 01/01/10
Hannover
Ruck SE
01/01/10
10/16/00
On/after 01/01/10 but
before 01/01/15
On/after 01/01/15
Prior to 11/04/10
Partner
Reinsurance
Company Ltd.
11/04/10
Renaissance
Reinsurance
Ltd.
12/29/10
11/04/10
06/29/11
On/after 11/04/10 but
before 07/28/15
On/after 07/28/15
Prior to 12/29/10
On/after 12/29/10 but
before 07/28/15
On/after 07/28/15
Lines
All
Property Cat
All Other
Property / Casualty
All Other
Property / Casualty
All Other
All
Reporting
Treatment
Unauthorized
Certified
Unauthorized
Certified
Unauthorized
Certified
Unauthorized
Collateral
Required
100%
20%
100%
50%*
100%
20%³
100%
100%
All
Unauthorized⁴
Authorized
100%
Property / Casualty
All Other
Property / Casualty
All Other
All
Certified
Authorized
Certified
Authorized
Authorized
20%
100%
10%⁵
100%
100%
All
Authorized⁶
100%
All
All
Property Cat
All Other
Property / Casualty
All Other
Authorized⁶
Authorized
Certified
Authorized
Certified
Authorized
100%
100%
20%
100%
20%
100%
Notes:
3.
On August 9, 2016, Endurance Specialty’s Secure-4 rating was upgraded to Secure-3. As a result, recoverables from
contracts that incept on or after this date require only 20% collateral.
4.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
exhibit. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
5.
On February 2, 2015, Hannover Ruck SE's Secure-3 rating was upgraded to Secure-2. As a result, recoverables from
contracts that incept on or after this date require only 10% collateral.
6.
Partner Re has elected to provide 100% collateral for all recoverables through their MBT
*
On 07/28/15, Florida changed its Administrative Code. Reinsurer’s with an “A3” Moody’s rating have to provide 50%
collateral as opposed to 20%.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
40
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions: Florida - Continued
Certified
Reinsurer
Underwriters at
Lloyd’s, London
Certification
Date
10/06/11
Date
Trusteed
08/01/95
Contract Inception
Date
Prior to 08/01/95
All
On/after 08/01/95
but before 10/06/11
All
On/after 10/06/11
Prior to 06/01/12
Validus
Reinsurance,
Ltd.
On/after 06/01/12
but before 07/28/15
08/10/12
N/A
On/after 07/28/15
but before 08/09/16
On/after 08/09/16
XL Re Ltd.
06/17/10
N/A
Prior to 06/17/10
On/after 06/17/10
Prior to Certification
Date
All other
Certified
Reinsurers
See previous
page
See
previous
page
Lines
On/after Certification
Date but before
07/28/15
On/after 07/28/15
Notes:
Property / Casualty
All Other
All
Property Cat
All Other
Property / Casualty
All Other
Property / Casualty
All Other
All
Property / Casualty
All Other
Reporting
Treatment
Unauthorized
(but could be
Authorized)⁷
Collateral
Required
Most likely
Authorized (but
eligible for
Certified)⁹
Most likely
100% (but
eligible for
20%)
Authorized⁸
100%
100%
Authorized
Unauthorized
Certified
Unauthorized
Certified
Unauthorized
Certified
Unauthorized
Unauthorized
Certified
Unauthorized
100%
100%
20%
100%
50%*
100%
20%¹⁰
100%
100%
20%
100%
All
Unauthorized
100%
Property Cat
Certified
See
Previous
Page
All Other
Unauthorized
100%
Property / Casualty
Certified
See
Previous
Page
All Other
Unauthorized
100%
7.
In most cases, recoverables from contracts that incepted before 08/01/95 are unauthorized. However, Lloyd’s has
advised that some pre-08/01/95 recoverables have been rolled-in to MBTs, which requires authorized reporting
treatment. Lloyd’s has stated that NY domiciled ceding insurers should have been made aware of any of these
exceptions.
8.
Recoverables from contracts that incepted on or after 08/01/95 until 10//06/11 should be reported as authorized (100%
collateral required.)
9.
Post certification, most Lloyd's syndicates are providing 100% collateral for all recoverables through their MBT. Ceding
insurers will be notified and provided with a LOC or Single Beneficiary Trust, if a syndicate elects to provide a reduced
amount of collateral.
10. On August 9, 2016, Validus Reinsurance, Ltd.'s Secure-4 rating was upgraded to Secure-3. As a result, recoverables
from contracts that incept on or after this date require only 20% collateral.
*
On 07/28/15, Florida changed its Administrative Code. Reinsurer’s with an “A3” Moody’s rating have to provide 50%
collateral as opposed to 20%.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
41
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Georgia
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
No
MBT
Roll-in
N/A
Trusteed
Date
N/A
Certification
Date
08/28/15
Rating
Secure-3
Collateral
Required
20%
Certified Lines
Property / Casualty
Endurance Specialty
Insurance Limited
No
N/A
N/A
12/29/15
Secure-4¹
50%
Property / Casualty
Hannover Ruck SE
Yes
No
03/14/96
04/17/14
Secure-2
10%
Münchener
RückversicherungsGesellshaft
No
N/A
N/A
12/03/14
Secure-2
10%
Tokio Millennium Re AG
No
N/A
N/A
10/27/14
Secure-2
10%
Certified Reinsurer
Arch Reinsurance Ltd.
Life, Annuities,
A&H, Property /
Casualty
Life, Annuities,
A&H, Property /
Casualty
Property / Casualty
Notes:
1.
The Georgia DOI still lists Endurance Specialty as a Secure-4 certified reinsurer (50% collateral required). However,
Endurance Specialty was upgraded by Moody’s from A3 to A2 and technically should be assigned a Secure-3 certified
reinsurer (20% collateral required). Ceding insurers should check with Endurance Specialty Limited and the DOI of their
state of domicile to confirm reporting for year-end 2016.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
42
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions: Georgia
Certified Reinsurer
Certification
Date
Date
Trusteed
Hannover Ruck SE
04/17/14
03/14/96
Contract Inception
Date
Prior to 03/14/96
On/after 03/14/96 but
before 04/17/14
On/after 04/17/14
All other Certified
Reinsurers
See previous
page
See
previous
page
Prior to Certification
Date
On/after Certification
Date
Lines
All
Reporting
Treatment
1
Unauthorized
Collateral
Required
100%
All
Authorized
100%
Certified
All Other
Certified
Authorized
10%
100%
All
Unauthorized
100%
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
Notes:
1.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
43
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Iowa
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
No
MBT
Roll-in
N/A
Trusteed
Date
N/A
Certification
Date
05/06/16
Rating
Secure-3
Collateral
Required
20%
Certified
Lines
Not identified
Endurance Specialty
Insurance Limited
No
N/A
N/A
12/14/15
Secure-4
50%
Not identified
Hannover Ruck SE
Yes
No
10/04/96
09/22/14
Secure-2
10%
Not identified
Certified Reinsurer
Arch Reinsurance Ltd.
Reporting Instructions: Iowa
Certified Reinsurer
Certification
Date
Date
Trusteed
Hannover Ruck SE
09/22/14
10/04/96
Contract Inception
Date
Prior to 10/04/96
On/after 10/04/96 but
before 09/22/14
On/after 09/22/14
All other Certified
Reinsurers
See previous
page
See
previous
page
Prior to Certification
Date
On/after Certification
Date
Lines
All
Reporting
Treatment
1
Unauthorized
Collateral
Required
100%
All
Authorized
100%
Certified
All Other
Certified
Authorized
10%
100%
All
Unauthorized
100%
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
Notes:
1.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
44
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Indiana
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Certified Reinsurer
Arch Reinsurance, Ltd
Chubb Tempest
Reinsurance Ltd.
Equator Reinsurances
Ltd.
Hannover Rück SE
Uses
MBT?
MBT
Roll-in
Trusteed
Date
Certification
Date
Rating
Collateral
Required
No
N/A
N/A
11/18/16
Secure-3
20%
No
N/A
N/A
01/01/16
Secure-2
10%
No
N/A
N/A
01/01/16
Secure-3
20%
Property / Casualty
Yes
No
02/21/96
03/15/16
Secure-2
10%
Life, Annuities,
A&H, Property /
Casualty
Certified Lines
Life, Annuities,
A&H, Property /
Casualty
Life, Property /
Casualty
Reporting Instructions: Indiana
Certified Reinsurer
Certification
Date
Date
Trusteed
Hannover Rück SE
03/15/16
02/21/96
Contract Inception
Date
Prior to 02/21/96
On/after 02/21/96 but
before 03/15/16
On/after 03/15/16
All other Certified
Reinsurers
See previous
page
See
previous
page
Prior to Certification
Date
On/after Certification
Date
Lines
All
Reporting
Treatment
1
Unauthorized
Collateral
Required
100%
All
Authorized
100%
Certified
All Other
Certified
Authorized
10%
100%
All
Unauthorized
100%
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
Notes:
1.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
45
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Louisiana
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
MBT
Roll-in
Trusteed
Date
Certification
Date
Rating
Collateral
Required
Certified Lines
No
N/A
N/A
12/09/14
Secure-2
10%
Not identified
Arch Reinsurance Ltd
No
N/A
N/A
10/01/14
Secure-3
20%
Not identified
Endurance Specialty
Insurance Ltd.
No
N/A
N/A
02/05/16
Secure-4¹
50%
Not identified
Hannover Rueck SE
Yes
No
12/15/09
10/01/14
Secure-2
10%
Not identified
Certified Reinsurer
ACE Tempest
Reinsurance Ltd
Notes:
1.
The Louisiana DOI still lists Endurance Specialty as a Secure-4 certified reinsurer (50% collateral required). However,
Endurance Specialty was upgraded by Moody’s from A3 to A2 and technically should be assigned a Secure-3 certified
reinsurer (20% collateral required). Ceding insurers should check with Endurance Specialty Limited and the DOI of their
state of domicile to confirm reporting for year-end 2016.
Reporting Instructions: Louisiana
Certified Reinsurer
Certification
Date
Date
Trusteed
Hannover Rueck SE
10/01/14
12/15/09
Contract Inception
Date
Prior to 12/15/09
On/after 12/15/09 but
before 10/01/14
On/after 10/01/14
All other Certified
Reinsurers
See previous
page
See
previous
page
Prior to Certification
Date
On/after Certification
Date
Lines
All
Reporting
Treatment
1
Unauthorized
Collateral
Required
100%
All
Authorized
100%
Certified
All Other
Certified
Authorized
10%
100%
All
Unauthorized
100%
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
Notes:
1.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
46
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Maine
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
No
MBT
Roll-in
N/A
Trusteed
Date
N/A
Certification
Date
02/18/15
Rating
Secure-3
Collateral
Required
20%
Certified Lines
Not identified
Endurance Specialty
Insurance Ltd
No
N/A
N/A
10/29/15
Secure-4¹
50%
Not identified
Hannover Rück
Yes
No
01/10/96
05/15/15
Secure-2
10%
Not identified
Certified Reinsurer
Arch Reinsurance Ltd
Notes:
1.
The Maine DOI still lists Endurance Specialty as a Secure-4 certified reinsurer (50% collateral required). However,
Endurance Specialty was upgraded by Moody’s from A3 to A2 and technically should be assigned a Secure-3 certified
reinsurer (20% collateral required). Ceding insurers should check with Endurance Specialty Limited and the DOI of their
state of domicile to confirm reporting for year-end 2016.
Reporting Instructions: Maine
Certified Reinsurer
Hannover Rück
Certification
Date
Date
Trusteed
05/15/15
01/10/96
Contract Inception
Date
Prior to 01/10/96
On/after 01/10/96 but
before 05/15/15
On/after 05/15/15
All other Certified
Reinsurers
See previous
page
See
previous
page
Prior to Certification
Date
On/after Certification
Date
Lines
All
Reporting
Treatment
1
Unauthorized
Collateral
Required
100%
All
Authorized
100%
Certified
All Other
Certified
Authorized
10%
100%
All
Unauthorized
100%
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
Notes:
1.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
47
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Maryland
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Certified Reinsurer
Arch Reinsurance Ltd
Legal & General
Assurance Society
Limited
Hannover Ruck SE
Uses
MBT?
No
MBT
Roll-in
N/A
Trusteed
Date
N/A
Certification
Date
07/01/16
Rating
Secure-3
Collateral
Required
20%
Certified Lines
Not identified
No
N/A
N/A
12/10/14
Secure-2
10%
Not identified
Yes
No
08/21/98
03/27/15
Secure-2
10%
Not identified
Reporting Instructions: Maryland
Certified Reinsurer
Certification
Date
Date
Trusteed
Hannover Ruck SE
03/27/15
08/21/98
Contract Inception
Date
Prior to 08/21/98
On/after 08/21/98 but
before 03/27/15
On/after 03/27/15
All other Certified
Reinsurers
See previous
page
See
previous
page
Prior to Certification
Date
On/after Certification
Date
Lines
All
Reporting
Treatment
1
Unauthorized
Collateral
Required
100%
All
Authorized
100%
Certified
All Other
Certified
Authorized
10%
100%
All
Unauthorized
100%
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
Notes:
1.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
48
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Missouri
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
MBT
Roll-in
Trusteed
Date
Certification
Date
Rating
Collateral
Required
No
N/A
N/A
07/01/16
Secure-3
20%
Arch Reinsurance
Ltd. (Bermuda)
No
N/A
N/A
01/01/14
Secure-3
20%
Endurance Specialty
Insurance, Ltd
Yes
N/A
04/01/16
01/01/16
Secure-4¹
50%
Hannover Rück SE
Yes
No
08/06/99
01/01/15
Secure-2
10%
A&H, Property /
Casualty
No
N/A
N/A
10/01/16
Secure-2
10%
Life, Annuities,
A&H
No
N/A
N/A
10/01/16
Secure-5
75%
Property /
Casualty
No
N/A
N/A
10/01/14
Secure-3
20%
Life, Annuities,
A&H
Swiss Re Company
Ltd.
No
N/A
N/A
01/01/14
Secure-2
10%
Swiss Re Corporate
Solutions Ltd.
No
N/A
N/A
Secure-3
20%
N/A
N/A
01/01/14 12/31/16
01/01/17 - Current
Secure-2
10%
Tokio Millennium AG
No
N/A
N/A
07/01/15
Secure-3
20%
Wilton Reinsurance
Bermuda, LTD
No
N/A
N/A
01/01/16
Secure-3
20%
Certified Reinsurer
American
International
Reinsurance
Company, Ltd.
Legal and General
Assurance Society,
Ltd.
Maiden Reinsurance
Company, Ltd.
RGA Americas
Reinsurance Co.
Ltd.
Certified Lines
Life, Annuities,
A&H, Property /
Casualty
Life, Annuities,
A&H, Property /
Casualty
Property /
Casualty
Life, Annuities,
A&H, Property /
Casualty
Life, Annuities,
A&H, Property /
Casualty
Property /
Casualty
Life, Annuities
Notes:
1.
The Missouri DOI still lists Endurance Specialty as a Secure-4 certified reinsurer (50% collateral required). However,
Endurance Specialty was upgraded by Moody’s from A3 to A2 and technically should be assigned a Secure-3 certified
reinsurer (20% collateral required). Ceding insurers should check with Endurance Specialty Limited and the DOI of their
state of domicile to confirm reporting for year-end 2016.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
49
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions: Missouri
Certified
Reinsurer
Endurance
Specialty
Insurance Ltd
Certification
Date
Date
Trusteed
01/01/16
04/01/16
Contract Inception
Date
Prior to 01/01/16
On/after 01/01/16 but
before 04/01/16
On/after 04/01/16
Prior to 08/06/99
Hannover
Rück SE
01/01/15
08/06/99
On/after 08/06/99 but
before 01/01/15
On/after 01/01/15
Prior to 01/01/14
Swiss Re
Corporate
Solutions Ltd.
All other
Certified
Reinsurers
01/01/14
N/A
On/after 01/01/14 but
before 01/01/17
On/after 01/01/17
See previous
page
See
previous
page
Prior to Certification
Date
On/after Certification
Date
Lines
All
Reporting
Treatment
1
Unauthorized
Collateral
Required
100%
Property / Casualty
Certified
50%
All Other
Unauthorized
1
100%
Property / Casualty
All Other
All
Certified
Authorized
Unauthorized²
50%
100%
100%
All
Authorized
100%
Certified
All Other
All
Certified
All Other
Certified
All Other
Certified
Authorized
Unauthorized
Certified
Unauthorized
Certified
Authorized
10%
100%
100%
20%
100%
10%³
100%
All
Unauthorized
100%
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
Notes:
1.
Endurance Specialty recoverables from contracts incepting prior to 01/01/16 should be reported as unauthorized,
unless these recoverables have been rolled-in to an MBT.
2.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
3.
On January 1, 2017, Swiss Re Corporate Solutions Ltd.'s Secure-3 rating was upgraded to Secure-2. As a result,
recoverables from contracts that incept on or after this date require only 10% collateral.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
50
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Nebraska
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Certified Reinsurer
Arch Reinsurance Ltd.
Hannover Rück SE
Münchener
RückversicherungsGesellschaft
Aktiengesellschaft in
München (Munich Re)
Uses
MBT?
No
Yes
MBT
Roll-in
N/A
No
Trusteed
Date
N/A
10/22/96
Certification
Date
08/23/16
06/20/16
Rating
Secure-3
Secure-2
Collateral
Required
20%
10%
Certified Lines
Not identified
Not identified
No
N/A
N/A
12/24/15
Secure-2
10%
Not identified
Reporting Instructions: Nebraska
Certified Reinsurer
Certification
Date
Date
Trusteed
Hannover Rück SE
06/20/16
10/22/96
Contract Inception
Date
Prior to 10/22/96
On/after 10/22/96 but
before 06/20/16
On/after 06/20/16
All other Certified
Reinsurers
See previous
page
See
previous
page
Prior to Certification
Date
On/after Certification
Date
Lines
All
Reporting
Treatment
Unauthorized¹
Collateral
Required
100%
All
Authorized
100%
Certified
All Other
Certified
Authorized
10%
100%
All
Unauthorized
100%
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
Notes:
1.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
51
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
New Hampshire
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
MBT
Roll-in
Trusteed
Date
Certification Date
Rating
Collateral
Required
Certified
Lines
No
N/A
N/A
07/01/14
Secure-3
20%
Not identified
Arch Reinsurance Ltd
No
N/A
N/A
No
N/A
N/A
Hannover Rück SE
Yes
No
07/17/97
Swiss Re Corporate
Solutions, Ltd
No
N/A
N/A
Secure-3
Secure-4
Secure-3
Secure-2
Secure-3
Secure-2
20%
50%
20%
10%
20%
10%
Not identified
Endurance Specialty
Insurance Ltd.
07/01/14
10/27/15 - 12/31/16
01/01/17 - Current
07/01/14
1/1/2014 - 12/31/16
01/01/17 - Current
Swiss Reinsurance
Company, Ltd
No
N/A
N/A
01/01/14
Secure-2
10%
Not identified
Validus Reinsurance, Ltd
Yes
Yes
10/22/15
7/1/2016 - 12/31/16
01/01/17 - Current
Secure-4
Secure-3
50%
20%
Not identified
Certified Reinsurer
Allied World Assurance
Company, Ltd
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
Not identified
Not identified
Not identified
52
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions: New Hampshire
Certified Reinsurer
Endurance Specialty
Insurance Ltd.
Certification
Date
Date
Trusteed
10/27/15
N/A
Contract Inception
Date
Prior to 10/27/15
On/after 10/27/15 but
before 01/01/17
On/after 01/01/17
Prior to 07/17/97
Hannover Rück SE
07/01/14
07/17/97
On/after 07/17/97 but
before 07/01/14
On/after 07/01/14
Prior to 01/01/14
Swiss Re Corporate
Solutions, Ltd
01/01/14
N/A
On/after 01/01/14 but
before 01/01/17
On/after 01/01/17
Prior to 07/01/16
Validus Reinsurance,
Ltd
All other Certified
Reinsurers
07/01/16
See previous
page
10/22/15
See
previous
page
On/after 07/01/16
Prior to Certification
Date
On/after Certification
Date
Lines
All
Certified
All Other
Certified
All Other
All
Reporting
Treatment
Unauthorized
Certified
Unauthorized
Certified
Authorized
Unauthorized²
Collateral
Required
100%
50%
100%
20%¹
100%
100%
All
Authorized
100%
Certified
All Other
All
Certified
All Other
Certified
All Other
All
Certified
Authorized
Unauthorized
Certified
Unauthorized
Certified
Authorized
Authorized
10%
100%
100%
20%
100%
10%³
100%
100%
Certified
Authorized
(but eligible
for Certified)⁴
100%
All Other
Authorized
100%
All
Unauthorized
100%
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
Notes:
1.
On January 1, 2017, Endurance Specialty’s Secure-4 rating was upgraded to Secure-3. As a result, recoverables from
contracts that incept on or after this date require only 20% collateral.
2.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
3.
On January 1, 2017, Swiss Re Corporate Solutions, Ltd’s Secure-3 rating was upgraded to Secure-2. As a result,
recoverables from contracts that incept on or after this date require only 10% collateral.
4.
Recoverables from Validus Reinsurance Ltd. due to ceding insurers domiciled in New Hampshire are currently all being
collateralized at 100% in their full collateral MBT. However, this practice could change in 2017.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
53
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
New Jersey
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
No
MBT
Roll-in
N/A
Trusteed
Date
N/A
Certification
Date
11/23/15
Rating
Secure-3
Collateral
Required
20%
Certified Lines
Not identified
Chubb Tempest
Reinsurance Ltd.
No
N/A
N/A
10/08/13
Secure-2
10%
Not identified
Endurance Specialty
Insurance Ltd
No
N/A
N/A
11/01/16
Secure-3
20%
Not identified
Hannover Rück SE
Yes
No
08/05/02
10/31/13
Secure-2
10%
Not identified
Hiscox Insurance
Company
(Bermuda) Limited
No
N/A
N/A
12/05/13
Secure-3
20%
Not identified
Tokio Millennium Re AG
No
N/A
N/A
4/30/14 - 9/28/15
9/29/15 - Current
Secure-2
Secure-3
10%
20%
Not identified
Certified Reinsurer
Arch Reinsurance Ltd.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
54
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions: New Jersey
Certified Reinsurer
Certification
Date
Date
Trusteed
Hannover Rück SE
10/31/13
08/05/02
Contract Inception
Date
Prior to 08/05/02
On/after 08/05/02 but
before 10/31/13
On/after 10/31/13
Prior to 04/30/14
Tokio Millennium Re
AG
04/30/14
N/A
On/after 04/30/14 but
before 09/29/15
On/after 9/29/15
All other Certified
Reinsurers
See previous
page
See
previous
page
Prior to Certification
Date
On/after Certification
Date
Lines
All
Reporting
Treatment
1
Unauthorized
Collateral
Required
100%
All
Authorized
100%
Certified
All Other
All
Certified
Authorized
Unauthorized
10%
100%
100%
Certified
Certified
10%
All Other
Unauthorized
Certified
Certified
All Other
Unauthorized
100%
20%²
100%
All
Unauthorized
100%
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
Notes:
1.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
2.
On September 29, 2015, Tokio Millennium Re AG's Secure-2 rating was downgraded to Secure-3. As a result,
recoverables from contracts that incept on or after this date require 20% collateral.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
55
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
New York
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation:
Assured Guaranty Re Ltd.’s certified reinsurer status expired effective April 8, 2015.
Montpelier Reinsurance Ltd. (Bermuda)'s certified reinsurer status was terminated effective December 31,
2015, as the result of a merger.
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
MBT
Roll-in
Trusteed
Date
Certification
Date
Rating
Collateral
Required
No
N/A
N/A
07/01/11
Secure-3
20%
No
N/A
N/A
07/01/11
Secure-3
20%
No
N/A
N/A
07/01/11
Secure-3
20%
Chubb Tempest
Reinsurance, Ltd
No
N/A
N/A
01/01/11
Secure-2
10%
Commonwealth
Annuity and Life
Insurance Company
No
N/A
N/A
07/01/12 07/27/16
07/28/16 Current
Secure-5
75%
Secure-4
50%
Everest Reinsurance
(Bermuda) Ltd.
No
N/A
N/A
07/01/12
Secure-3
20%
General American Life
Insurance Company
No
N/A
N/A
07/01/14
Secure-2
10%
Secure-3
20%
Secure-2
10%
Secure-3
20%
Secure-2
10%
Certified Reinsurer
Allied World Assurance
Company Ltd.
Arch Reinsurance Ltd
(Bermuda)
Aspen Bermuda
Limited
01/01/11 09/17/12
09/18/12 Current
01/01/11 09/17/12
09/18/12 Current
Certified Lines
Property /
Casualty
Property /
Casualty
Property /
Casualty
Life, Annuities,
A&H, Property /
Casualty
Life, Annuities,
A&H,
Property /
Casualty
Life, Annuities,
Endowments,
A&H, Variable
Contracts
Hannover Re
(Bermuda) Ltd
No
N/A
N/A
Hannover Rück SE
Yes
No
12/21/95
Hiscox Insurance
Company (Bermuda)
Limited
No
N/A
N/A
07/01/11
Secure-3
20%
Property /
Casualty
Legal & General
Assurance Society
Limited
No
N/A
N/A
07/01/12
Secure-2
10%
Life, Annuities,
A&H,
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
Property /
Casualty
Life, Annuities,
A&H, Property /
Casualty
56
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Certified Reinsurer List as of December 2016 – New York Continued
Uses
MBT?
MBT
Roll-in
Trusteed
Date
Markel Bermuda
Limited (f/k/a Alterra
Bermuda Limited)
No
N/A
N/A
Mitsui Sumitomo
Insurance Company
No
N/A
N/A
MS Frontier
Reinsurance Ltd.
No
N/A
Münchener
RückversicherungsGesellshaft
Aktiengesellschaft
No
N/A
Partner Reinsurance
Company Ltd
Yes
Swiss Re Corporate
Solutions Ltd.
No
Certified Reinsurer
Certification
Date
07/01/11 05/28/14
05/29/14 Current
Rating
Collateral
Required
Secure-4
50%
Secure-3
20%
01/01/15
Secure-3
20%
Property / Casualty
07/01/12
Secure-3
20%
Property / Casualty
N/A
07/01/15
Secure-2
10%
Life, Annuities,
A&H, Property /
Casualty
Yes
06/08/10
01/01/11
Secure-3
20%
Property / Casualty
N/A
N/A
07/01/15
Secure-3
20%
Property / Casualty
Secure-3
20%
Secure-2
10%
Life, Annuities,
A&H, Property /
Casualty
Certified Lines
Property / Casualty
No
N/A
N/A
01/01/1106/30/14
07/01/14 Current
No
N/A
N/A
07/01/11
Secure-3
20%
Property / Casualty
No
N/A
N/A
07/01/14
Secure-3
20%
Property / Casualty
Yes
Yes
04/22/97
01/01/11
Secure-3
20%
Property / Casualty
United Healthcare
Insurance Company
No
N/A
N/A
07/01/13
Secure-3
20%
Wilton Reassurance
Company
No
N/A
N/A
07/01/11
Secure-3
20%
No
N/A
N/A
07/01/11
Secure-3
20%
Life, Annuities
No
N/A
N/A
01/01/11
Secure-3
20%
Property / Casualty
Swiss Reinsurance
Company Ltd.
Tokio Millennium Re
AG
TransRe London
Limited
Underwriters at Lloyd's,
London
Wilton Reinsurance
Bermuda Limited
XL Bermuda Ltd. (f/k/a
XL Insurance
(Bermuda) Ltd and XL
Re Ltd.)
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
Life, A&H,
Workmen's
Compensation
Life, Annuities,
A&H
57
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions: New York
Certified
Reinsurer
Aspen Bermuda
Limited
Commonwealth
Annuity and Life
Insurance
Company
Certification
Date
07/01/11
07/01/12
Date
Trusteed
N/A
N/A
Contract Inception
Date
Prior to 07/01/11
Lines
All
Reporting
Treatment
Unauthorized
Collateral
Required
100%
On/after 07/01/11
Property /
Casualty
Authorized or
Certified¹
100% if
Authorized
or 20% if
Certified
Prior to 07/01/12
All Other
All
Unauthorized
Unauthorized
100%
100%
Certified
Certified
75%
All Other
Certified
All Other
All
Unauthorized
Certified
Unauthorized
Unauthorized
100%
50%²
100%
100%
Certified
Certified
20%
All Other
Certified
All Other
All
Unauthorized
Certified
Unauthorized
100%
On/after 07/01/12 but
before 07/28/16
On/after 07/28/16
Prior to 01/01/11
Hannover Re
(Bermuda) Ltd
01/01/11
N/A
On/after 01/01/11 but
before 09/18/12
On/after 09/08/12
Prior to 12/21/95
On/after 12/21/95 but
before 01/01/11
Hannover Rück
SE
01/01/11
12/21/95
On/after 01/01/11 but
before 09/18/12
On/after 09/18/12
10%³
100%
100%
All
Unauthorized⁴
Authorized
100%
Certified
Certified
20%
All Other
Certified
All Other
Authorized
Certified
Authorized
100%
10%³
100%
Notes:
1.
Recoverables from Aspen Bermuda due to ceding insurers domiciled in New York will be evaluated on a case-by-case
basis to determine if reduced collateral will be applied (assuming the recoverables are due from contracts incepting on
or after the certification date) or collateralized in our Multi-Beneficiary Trust at 100%.
2.
On July 28, 2016, Commonwealth Annuity and Life Insurance Company's Secure-5 rating was upgraded to Secure-4.
As a result, recoverables from contracts that incept on or after this date require 50% collateral.
3.
On September 18, 2012, Hannover Re (Bermuda) Ltd and Hannover Rück SE's Secure-3 rating was upgraded to
Secure-2. As a result, recoverables from contracts that incept on or after this date require 10% collateral.
4.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
exhibit. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
58
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions: New York - Continued
Certified
Reinsurer
Certification
Date
Date
Trusteed
07/01/11
N/A
Markel Bermuda
Limited (f/k/a
Alterra Bermuda
Limited)
Contract Inception
Date
Prior to 07/01/11
On/after 07/01/11
but before 05/29/14
On/after 05/29/14
Prior to 01/01/11
Partner
Reinsurance
Company Ltd
01/01/11
06/08/10
On/after 01/01/11
Prior to 01/01/11
Swiss
Reinsurance
Company Ltd.
01/01/11
N/A
On/after 01/01/11
but before 07/01/14
On/after 07/01/14
Lines
All Lines
Reporting
Treatment
Unauthorized
Collateral
Required
100%
Certified Lines
Certified
50%
All Other Lines
Certified Lines
All Other Lines
All
Unauthorized
Certified
Unauthorized
100%
Authorized⁶
20%⁵
100%
100%
Authorized (but
eligible for
Certified)⁷
100% (but
eligible for
20%)
Authorized
Unauthorized
100%
100%
Certified
Certified
20%
All Other
Certified
All Other
Unauthorized
Certified
Unauthorized
100%
Certified
All Other
All
10%⁸
100%
Notes:
5.
On May 29, 2014, Markel Bermuda Limited's Secure-4 rating was upgraded to Secure-3. As a result, recoverables from
contracts that incept on or after this date require 20% collateral.
6.
Partner Re has completed a roll-in of existing recoverables into their MBT, so all recoverables prior to 01/01/11 should
be reported as authorized.
7.
Partner Re has elected to provide 100% collateral for all certified recoverables through their full collateral MBT and
therefore all recoverables should be reported as authorized
8.
On July 1, 2014, Swiss Reinsurance Company Ltd.'s Secure-3 rating was upgraded to Secure-2. As a result,
recoverables from contracts that incept on or after this date require 10% collateral.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
59
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions: New York – Continued
Certified
Reinsurer
Certification
Date
Underwriters at
Lloyd’s, London
01/01/11
Date
Trusteed
04/22/97
Contract Inception
Date
See previous
page
See
previous
page
Collateral
Required
Authorized¹⁰
100%
Property /
Casualty
Most likely
Authorized
(but eligible
for Certified)¹¹
Most likely
100% (but
eligible for
20%)
All Other
Authorized
100%
All
Unauthorized
100%
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
Prior to 04/22/97
All
On/after 04/22/97
but before 01/01/11
All
On/after 01/01/11
All other Certified
Reinsurers
Reporting
Treatment
Unauthorized
(but could be
Authorized)⁹
Lines
Prior to Certification
Date
On/after
Certification Date
100%
Notes:
9.
In most cases, recoverables from contracts that incepted before 04/22/97 are unauthorized. However, Lloyd’s has
advised that some recoverables from contracts that incepted prior to 04/22/97 have been rolled-in to MBTs, which
requires authorized reporting treatment. Lloyd’s has stated that NY domiciled ceding insurers should have been made
aware of any of these exceptions.
10. Recoverables from contracts that incepted on or after 04/22/97 until 12//01/14 should be reported as authorized (100%
collateral required.)
11. Post certification, most Lloyd's syndicates are providing 100% collateral for all recoverables through their MBT and
these recoverables should be reported as authorized. Ceding insurers will be notified and provided with a LOC or
Single Beneficiary Trust, if a syndicate elects to provide a reduced amount of collateral.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
60
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
North Dakota
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
No
Yes
MBT
Roll-in
N/A
Yes
Trusteed
Date
N/A
08/21/12
Certification
Date
08/05/16
01/01/16
Rating
Secure-3
Secure-3
Collateral
Required
20%
20%
Certified Lines
Not identified
Not identified
Endurance Specialty
Insurance, Ltd.
Yes
N/A
N/A
07/01/16
Secure-3
20%
Not identified
Equator Reinsurances
Limited
No
N/A
N/A
09/12/16
Secure-3
20%
Not identified
Hannover Ruck SE
Yes
No
07/31/96
04/29/16
Secure-2
10%
Not identified
Certified Reinsurer
Arch Reinsurance, Ltd.
Aspen Bermuda Limited
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
61
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions: North Dakota
Certified Reinsurer
Aspen Bermuda
Limited
Certification
Date
Date
Trusteed
01/01/16
08/21/12
Contract Inception
Date
Prior to 01/01/16
On/after 01/01/16
Prior to 07/31/96
Hannover Ruck SE
04/29/16
07/31/96
On/after 07/31/96
but before 04/29/16
On/after 04/29/16
All other Certified
Reinsurers
See previous
page
See
previous
page
Prior to Certification
Date
On/after
Certification Date
Reporting
Treatment
Authorized
Collateral
Required
100%
Property Cat
Authorized or
Certified¹
100% if
Authorized
or 20% if
Certified
All Other
All
Authorized
Unauthorized²
100%
100%
All
Authorized
100%
Certified
All Other
Certified
Authorized
10%
100%
All
Unauthorized
100%
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
Lines
All
Notes:
1.
Recoverables from Aspen Bermuda due to ceding insurers domiciled in North Dakota will be evaluated on a case-bycase basis to determine if reduced collateral will be applied (assuming the recoverables are due from contracts
incepting on or after the certification date) or collateralized in our Multi-Beneficiary Trust at 100%.
2.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
62
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Ohio
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Certified Reinsurer
Arch Reinsurance, Ltd
Endurance Specialty
Insurance Ltd
Hannover Rück SE
Tokio Millennium Re
AG
Uses
MBT?
No
MBT
Roll-in
N/A
Trusteed
Date
N/A
Certification
Date
07/01/15
Rating
Secure-3
Collateral
Required
20%
Certified Lines
Not identified
No
N/A
N/A
01/01/16
Secure-4¹
50%
Not identified
Yes
No
12/31/96
07/01/15
Secure-2
10%
Not identified
No
N/A
N/A
01/01/16
Secure-3
20%
Not identified
Notes:
1.
The Ohio DOI still lists Endurance Specialty as a Secure-4 certified reinsurer (50% collateral required). However,
Endurance Specialty was upgraded by Moody’s from A3 to A2 and technically should be assigned a Secure-3 certified
reinsurer (20% collateral required). Ceding insurers should check with Endurance Specialty Limited and the DOI of their
state of domicile to confirm reporting for year-end 2016.
Reporting Instructions: Ohio
Certified Reinsurer
Certification
Date
Date
Trusteed
Hannover Rück SE
07/01/15
12/31/96
Contract Inception
Date
Prior to 12/31/96
On/after 12/31/96 but
before 07/01/15
On/after 07/01/15
All other Certified
Reinsurers
See previous
page
See
previous
page
Prior to Certification
Date
On/after Certification
Date
Lines
All
Reporting
Treatment
1
Unauthorized
Collateral
Required
100%
All
Authorized
100%
Certified
All Other
Certified
Authorized
10%
100%
All
Unauthorized
100%
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
Notes:
1.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
63
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Pennsylvania
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
MBT
Roll-in
Trusteed
Date
Certification Date
07/01/14 - 12/31/16
01/01/17 - Current
Rating
Secure-3
Secure-2
Collateral
Required
20%
10%
No
N/A
N/A
ACE Reinsurance
(Switzerland) Ltd
No
N/A
N/A
01/01/15
Secure-2
10%
Not identified
Arch Reinsurance Ltd
No
N/A
N/A
12/01/14
Secure-3
20%
Not identified
No
N/A
N/A
07/01/14
Secure-2
10%
Not identified
No
N/A
N/A
06/19/14
Secure-3
20%
Not identified
Yes
No
02/16/96
12/01/14
Secure-2
10%
Not identified
Münchener
RückversicherungsGesellschaft
Aktiengesellschaft in
München (Munich Re)
No
N/A
N/A
07/01/15
Secure-2
10%
Not identified
Swiss Reinsurance Co
Ltd
No
N/A
N/A
10/01/14
Secure-2
10%
Not identified
Tokio Millennium Re AG
No
N/A
N/A
07/01/15
Secure-3
20%
Not identified
Underwriters at Lloyd's
London
Yes
Yes
04/22/97
12/01/14
Secure-3
20%
Not identified
Certified Reinsurer
ACE INA Overseas
Insurance Company
Chubb Tempest
Reinsurance Ltd.
Equator Reinsurance
Ltd
Hannover Rueck SE
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
Certified Lines
Not identified
64
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions: Pennsylvania
Certified
Reinsurer
ACE INA Overseas
Insurance Company
Certification
Date
07/01/14
Date
Trusteed
N/A
Contract
Inception Date
Prior to 07/01/14
Lines
All
Reporting
Treatment
Unauthorized
Collateral
Required
100%
Certified
Certified
20%
All Other
Certified
All Other
All
Unauthorized
Certified
Unauthorized
Unauthorized²
100%
10%¹
100%
100%
All
Authorized
100%
On/after 12/01/14
Certified
All Other
Certified
Authorized
10%
100%
Prior to 04/22/97
All
Unauthorized
(but could be
Authorized)³
100%
On/after 04/22/97
but before
12/01/14
All
Authorized⁴
100%
Property /
Casualty
Most likely
Authorized (but
eligible for
Certified)⁵
Most likely
100% (but
eligible for
20%)
All Other
Authorized
100%
All
Unauthorized
100%
Certified
Certified
All Other
Unauthorized
On/after 07/01/14
but before
01/01/17
On/after 01/01/17
Hannover Rueck
SE
Underwriters at
Lloyd’s, London
12/01/14
12/01/14
02/16/96
04/22/97
Prior to 02/16/96
On/after 02/16/96
but before
12/01/14
On/after 12/01/14
All other Certified
Reinsurers
See previous
page
See
previous
page
Prior to
Certification Date
On/after
Certification Date
See
Previous
Page
100%
Notes:
1.
On January 1, 2017, ACE INA Overseas Insurance Company's Secure-3 rating was upgraded to Secure-2. As a result,
recoverables from contracts that incept on or after this date require only 10% collateral.
2.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
3.
In most cases, recoverables from contracts that incepted before 04/22/97 are unauthorized. However, Lloyd’s has
advised that some pre-04/22/97 recoverables have been rolled-in to MBTs, which requires authorized reporting
treatment. Lloyd’s has stated that NY domiciled ceding insurers should have been made aware of any of these
exceptions.
4.
Recoverables from contracts that incepted on or after 04/22/97 until 12//01/14 should be reported as authorized (100%
collateral required.)
5.
Post certification, most Lloyd's syndicates are providing 100% collateral for all recoverables through their MBT. Ceding
insurers will be notified and provided with a LOC or Single Beneficiary Trust, if a syndicate elects to provide a reduced
amount of collateral.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
65
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Rhode Island
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
No
MBT
Roll-in
N/A
Trusteed
Date
N/A
Certification
Date
04/08/15
Rating
Secure-3
Collateral
Required
20%
Certified Lines
Property / Casualty
Endurance Specialty
Insurance Ltd.
Yes
N/A
09/15/16
12/29/15
Secure-4¹
50%
Property / Casualty
Hannover Ruck SE
Yes
No
12/10/96
04/13/15
Secure-2
10%
Swiss Reinsurance
Company Ltd.
No
N/A
N/A
06/21/16
Secure-2
10%
Tokio Millennium Re AG
No
N/A
N/A
07/07/15
Secure-3
20%
Property / Casualty
Life, Annuities,
A&H, Property /
Casualty
Multi-Peril Crop,
Crop & Hail,
Property Cat,
Terrorism Cat and
Workers Comp Cat
Certified Reinsurer
Arch Reinsurance Ltd
Notes:
1.
The Rhode Island DOI still lists Endurance Specialty as a Secure-4 certified reinsurer (50% collateral required). However,
Endurance Specialty was upgraded by Moody’s from A3 to A2 and technically should be assigned a Secure-3 certified
reinsurer (20% collateral required). Ceding insurers should check with Endurance Specialty Limited and the DOI of their
state of domicile to confirm reporting for year-end 2016.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
66
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions: Rhode Island
Certified
Reinsurer
Endurance
Specialty
Insurance Ltd.
Hannover Ruck
SE
All other
Certified
Reinsurers
Certification
Date
Date
Trusteed
12/29/15
09/15/16
04/13/15
12/10/96
Contract
Inception Date
Prior to 12/29/15
Lines
All
Property / Casualty
Reporting
Treatment
1
Unauthorized
Certified
Collateral
Required
100%
50%²
All Other
Unauthorized
100%
On/after 09/15/16
Property / Casualty
All Other
Certified
Authorized
Prior to 12/10/96
All
Unauthorized
On/after 12/10/96
but before 04/13/15
All
Authorized
100%
Certified
All Other
Certified
Authorized
10%
100%
All
Unauthorized
100%
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
On/after 12/29/15
but before 09/15/16
On/after 04/13/15
See previous
page
See
previous
page
Prior to Certification
Date
On/after
Certification Date
1
50%²
100%
³
100%
Notes:
1.
Endurance Specialty recoverables from contracts incepting prior to 12/2915 should be reported as unauthorized, unless
these recoverables have been rolled-in to an MBT.
2.
The Rhode Island DOI still lists Endurance Specialty as a Secure-4 certified reinsurer (50% collateral required).
However, Endurance Specialty was upgraded by Moody’s from A3 to A2 and technically should be assigned a Secure3 certified reinsurer (20% collateral required). Ceding insurers should check with Endurance Specialty Limited and the
DOI of their state of domicile to confirm reporting for year-end 2016.
3.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
exhibit. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
67
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Vermont
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
MBT
Roll-in
Trusteed
Date
Certification Date
Rating
Collateral
Required
Arch Reinsurance Ltd.
No
N/A
N/A
12/14/15
Secure-3
20%
Endurance Specialty
Insurance Ltd.
No
N/A
N/A
11/3/2015 - 08/08/16
08/09/16 - Current
Secure-4
Secure-3
50%
20%
Hannover Rück SE
Yes
No
02/15/96
10/26/15
Secure-2
10%
Wilton Re Bermuda
No
N/A
N/A
01/01/16
Secure-3
20%
Certified Reinsurer
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
Certified Lines
Life, Annuities,
A&H, Property /
Casualty
Property /
Casualty
Property /
Casualty
Life / Annuities
68
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Reporting Instructions: Vermont
Certified Reinsurer
Endurance Specialty
Insurance Ltd.
Certification
Date
Date
Trusteed
Contract Inception
Date
Prior to 11/03/15
On/after 11/03/15 but
before 12/29/15
11/03/15
N/A
On/after 12/29/15 but
before 08/09/16
On/after 08/09/16
Prior to 02/12/96
Hannover Rück SE
10/26/15
02/12/96
On/after 02/12/96 but
before 10/26/15
On/after 10/26/15
All other Certified
Reinsurers
See previous
page
See
previous
page
Prior to Certification
Date
On/after Certification
Date
Lines
All
Certified
All Other
Certified
All Other
Certified
All Other
All
Reporting
Treatment
Unauthorized
Certified
Unauthorized
Certified
Authorized
Certified
Authorized
Unauthorized²
Collateral
Required
100%
50%
100%
50%
100%
20%¹
100%
100%
All
Authorized
100%
Certified
All Other
Certified
Authorized
20%
100%
All
Unauthorized
100%
Certified
Certified
See Previous
Page
All Other
Unauthorized
100%
Notes:
1.
On August 9, 2016, Endurance Specialty Insurance Ltd.’s Secure-4 rating was upgraded to Secure-3. As a result,
recoverables from contracts that incept on or after this date require only 20% collateral.
2.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
69
Aon Benfield
Analytics | Market Analysis
Proprietary and Confidential
Virginia
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
No
MBT
Roll-in
N/A
Trusteed
Date
N/A
Certification
Date
10/07/14
Rating
Secure-3
Collateral
Required
20%
Certified Lines
Not identified
Endurance Specialty
Insurance Ltd.
Yes
N/A
N/A
01/05/16
Secure-4¹
50%
Not identified
Swiss Reinsurance
Company, Ltd
No
N/A
N/A
12/17/14
Secure-2
10%
Not identified
Certified Reinsurer
Arch Reinsurance Ltd.
Notes:
1.
The Virginia DOI still lists Endurance Specialty as a Secure-4 certified reinsurer (50% collateral required). However,
Endurance Specialty was upgraded by Moody’s from A3 to A2 and technically should be assigned a Secure-3 certified
reinsurer (20% collateral required). Ceding insurers should check with Endurance Specialty Limited and the DOI of their
state of domicile to confirm reporting for year-end 2016.
Reporting Instructions: Virginia
Certified Reinsurer
All Certified
Reinsurers
Certification
Date
See previous
page
Date
Trusteed
See
previous
page
Contract Inception
Date
Prior to Certification
Date
On/after Certification
Date
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
Lines
Reporting
Treatment
Collateral
Required
All
Unauthorized
100%
Certified
Certified
See
Previous
Page
All Other
Unauthorized
100%
70
Aon Benfield
Analytics | Market Analysis
Washington
Property Catastrophe Events Eligible for the Collateral Deferral: None identified (Check with State of
Domicile Insurance Department as needed)
Certified Reinsurer Retirements or Status Subject to Revocation: None
Certified Reinsurer List as of December 2016 (Includes new certified reinsurers, rating upgrades and
downgrades)
Uses
MBT?
MBT
Roll-in
Trusteed
Date
Certification
Date
Rating
Collateral
Required
Arch Reinsurance
(Bermuda), Ltd.
No
N/A
N/A
11/06/16
Secure-3
20%
Hannover Rück SE
Yes
No
06/09/98
05/03/16
Secure-2
10%
Certified Reinsurer
Certified Lines
Life, Annuities,
A&H, Property /
Casualty
Life, Annuities,
A&H, Property /
Casualty
Reporting Instructions: Washington
Certified Reinsurer
Arch Reinsurance
(Bermuda), Ltd.
Certification
Date
Date
Trusteed
11/06/16
N/A
Contract Inception
Date
Prior to 11/06/16
On/after 11/06/16
Prior to 06/09/98
Hannover Rück SE
05/03/16
06/09/98
On/after 06/09/98 but
before 05/03/16
On/after 05/03/16
Lines
All
Certified
All Other
All
Reporting
Treatment
Unauthorized
Certified
Unauthorized
Unauthorized¹
Collateral
Required
100%
20%
100%
100%
All
Authorized
100%
Certified
All Other
Certified
Authorized
10%
100%
Notes:
1.
For the majority of ceding insurers, recoverables due from Hannover Rueck SE should be reported as outlined in this
table. However, Hannover Rueck SE has advised that in some cases, recoverables for a small number of U.S. ceding
insurers were rolled into their full collateral MBT. In these select cases, all recoverables emanating prior to the Date
Trusteed should be reported as authorized.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
71
Aon Benfield
Analytics | Market Analysis
Appendix II: The Credit for Reinsurance Model Law and
Regulation
Background on U.S. Collateral Reform
The NAIC’s Solvency Modernization Initiative began in June 2008 as a critical examination of the U.S.
insurance solvency regulation framework focusing on five solvency areas, one of which is reinsurance.
In the winter of 2008, the NAIC’s Reinsurance Task Force developed a Reinsurance Framework with a
goal of facilitating reinsurance transactions to enhance competition. As part of this initiative, the
Reinsurance Task Force explored the possibility of relaxing collateral standards for some classes of nonU.S. assuming insurers. As a result, the Reinsurance Task Force introduced a number of amendments to
the NAIC Credit for Reinsurance Model Law (#785) and Regulation (#786). These draft amendments
were discussed and debated by regulators, U.S. ceding insurers, reinsurers and other interested parties.
The draft amendments were modified to some extent based on the feedback and recommendations of all
the parties involved in the discussions.
In late 2011, the NAIC Executive Committee and Plenary unanimously approved the proposed revisions
to the Credit for Reinsurance Model Law and Regulation. This Model Law and Regulation is intended to
serve as the standard for states that wish to enact reduced collateral regulations. The key aspects of the
Credit for Reinsurance Model Law and Regulation are outlined in the remaining parts of Appendix II.
To be eligible for reduced collateral, reinsurers must apply in each state and meet certain minimum
requirements including:
1. Have a minimum specified amount of capital and surplus as determined by the State Insurance
Commissioner. The Model Regulation specifies a minimum of USD 250mn.
2. Be domiciled in a “Qualified Jurisdiction”. The NAIC is maintaining a list of Qualified Jurisdictions
through a committee process which considers the reinsurer’s domiciliary regulatory system,
reciprocity of information sharing and several other factors.
3. Be authorized in their domiciliary jurisdiction to assume the line(s) of business for which they are
seeking certification.
4. Maintain a secure financial strength rating from at least two statistical rating organizations
deemed acceptable by the commissioner. The Model Regulation specifically lists four rating
organizations (A.M. Best, Fitch, Moody's and Standard & Poor’s), which implies these
organizations are acceptable.
A reinsurer who has applied for and is approved for reduced collateral by a state regulator will be
classified as a “certified reinsurer”. States certifying reinsurers will use the financial strength ratings to
assign a rating which will then determine the percentage of collateral required. The ratings scale is shown
on the following page.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
72
Aon Benfield
Analytics | Market Analysis
Certified Reinsurer Ratings Scale
Rating
Secure-1
Secure-2
Secure-3
Secure-4
Secure-5
Collateral
Required
0%
10%
20%
50%
75%
Vulnerable-6
100%
A.M. Best
A++
A+
A
AB++, B+
Ratings B
and below
S&P / Fitch
Moody's
AAA
Aaa
AA+, AA, AAAa1, Aa2, Aa3
A+, A
A1, A2
AA3
BBB+, BBB, BBB- Baa1, Baa2, Baa3
Ratings BB+
Ratings Ba1
and below
and below
Collateral Deferral on Recognized Catastrophe Losses
Under the Credit for Reinsurance Model Law and Regulation, certified reinsurers do not have to post any
collateral for losses due from property catastrophe events recognized by the insurance regulator of the
state. Property catastrophe losses are defined as losses from a catastrophe in one or more of the
following statutory lines of business:

Fire

Allied Lines

Farmowners Multiple Peril

Homeowners Multiple Peril

Commercial Multiple Peril

Inland Marine

Earthquake

Auto Physical Damage
Qualified Jurisdictions
One of the requirements to become a certified reinsurer is that a reinsurer must be domiciled and
licensed to transact insurance or reinsurance in a qualified jurisdiction. In 2013, the process for reviewing
non-U.S. jurisdictions as qualified jurisdictions was finalized and a new Qualified Jurisdiction Working
Group was developed and assigned with evaluating and approving international jurisdictions. The goal of
the Qualified Jurisdiction Working Group was to develop a list of NAIC Qualified Jurisdictions, which then
can be relied upon by the individual states. This NAIC listing relieves the individual states from conducting
their own due diligence of non-U.S. jurisdictions. If a state approves a jurisdiction that does not appear on
the NAIC Qualified Jurisdictions list, the state must thoroughly document the justification for its approval
based on all the applicable criteria.
The process to determine a qualified jurisdiction involves a review and evaluation of the jurisdiction’s:

Laws, regulations, practices and procedures

Regulatory cooperation, information sharing and reciprocity

History of the performance of the domestic reinsurers
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
73
Aon Benfield
Analytics | Market Analysis

Restrictions on the enforcement of foreign judgments and information about reinsurers from the
jurisdiction to propose or participate in any solvent scheme of arrangement or similar procedure
In December 2014, the following seven jurisdictions were approved as qualified jurisdictions effective
January 1, 2015:

Bermuda - Bermuda Monetary Authority (BMA)

France - French Autorité de Contrôle Prudentiel et de Résolution

Germany - German Federal Financial Supervisory Authority

Ireland - Central Bank of Ireland

Japan - Financial Services Agency of Japan (FSA)

Switzerland - Financial Market Supervisory Authority (FINMA)

United Kingdom - United Kingdom's Prudential Regulation Authority of the Bank of England
(PRA)
These approved qualified jurisdictions will be reevaluated every 5 years, unless a significant change
prompts an earlier reevaluation.
Each jurisdiction has a lead state for purposes of regulatory cooperation and information sharing.
Lead State
California
Connecticut
Delaware
Florida
New York
Jurisdictions
Germany, Japan
Switzerland
Ireland
Bermuda
France, United Kingdom
Reinsurance Financial Analysis Working Group (ReFAWG)
In 2013, ReFAWG was developed and assigned with providing support to states in reviewing non-U.S.
reinsurers for certification. If a state has approved a reinsurer for certification, ReFAWG will review the
due diligence process of the approving state. If ReFAWG agrees with and accepts the state’s
determination, other states could rely on the assessment without having to undertake their own review
(a.k.a. passporting). ReFAWG has the authority to accept or reject the state’s determination, but not
assign ratings or the associated collateral requirements.
To date, ReFAWG has analyzed over 30 reinsurers. Many of these reinsurers were approved for
passporting. Reinsurers approved for passporting will still have to apply for certification in each state.
However, they will not have to include all the supporting documentation. Another benefit of passporting
is that reinsurers will be eligible to provide the same amount of collateral in all states in which they
are certified.
Additional details on the Credit for Reinsurance Model Law and Regulation and U.S. collateral reform
can be obtained by contacting Aon Benfield’s Market Analysis Team. Please see “Contacts” for
additional information.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
74
Aon Benfield
Analytics | Market Analysis
Appendix III: Changes to Schedule F to Accommodate
Certified Reinsurers
Schedule F is intended to provide additional details about reinsurance cessions and assumptions. To
accommodate the new class of certified reinsurers, a new Part 6 was developed in 2012. For 2016 yearend reporting, only ceding insurers domiciled in the aforementioned 25 states that have approved
reinsurers for certification may need to complete the new Part 6.
Schedule F consists of 9 Parts:

Parts 1 through 3 provide a summary of all assumed and ceded reinsurance transactions and
outstanding balances by ceding insurer or assuming reinsurer (including reinsurance ceded or
cancelled on a portfolio basis)

Parts 4 through 8 calculate the “provision for reinsurance”

Part 9 restates the Balance Sheet on a gross basis
As mentioned above, Parts 4 through 8 are designed to calculate the provision for reinsurance. The intent
of the provision is to serve as a minimum reserve for uncollectible reinsurance. Under statutory
accounting, most recoverables 90 days past due are non-admitted assets, unless they are collateralized.
One exception to this rule is amounts recoverable from reinsurers. Instead of reclassifying reinsurance
recoverables on paid losses over 90 days past due as non-admitted assets, statutory accounting imposes
a liability against these recoverables (the provision for reinsurance). The provision, in effect, offsets the
value of the amounts recoverable from reinsurers. A provision may be calculated for disputed
recoverables, overdue recoverables or uncollateralized recoverables. The amount of the provision may
be influenced by whether the recoverables emanate from an authorized, unauthorized or certified
reinsurer.
Below are the 9 Parts of Schedule F:






Part 1: Assumed Reinsurance
– Identifies all ceding companies from whom the reporting entity assumes business
– Ceding companies with balances (paid and unpaid loss & loss adjustment expenses
(LAE) less than $ 100,000 may be aggregated)
Part 2: Portfolio Reinsurance
– Lists any portfolio reinsurance effected or cancelled during the year (assumed or ceded)
Part 3: Ceded Reinsurance
– Identifies all cessions (ceded written premium) to reinsurers during the calendar year
– Identifies all reinsurers with outstanding recoverables (paid and unpaid losses, loss
adjustment expenses (LAE) and unearned premiums) and payables
– Unaffiliated reinsurers may be aggregated if ceded written premiums and total
reinsurance recoverables are less than $ 100,000 and no recoverables are more than 90
days past due
Part 4: Aging of Ceded Reinsurance
– Ages reinsurance recoverables on paid losses and LAE
Part 5: Provision for Unauthorized Reinsurance
– Calculates the provision for reinsurance for unauthorized reinsurers
Part 6, Section 1: Provision for Reinsurance Ceded to Certified Reinsurers
– Calculates a provision if the collateral is underfunded
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
75
Aon Benfield
Analytics | Market Analysis
Part 6, Section 2: Provision for Overdue Reinsurance Ceded to Certified Reinsurers
– Section 2 potentially creates an additional provision based on whether the certified
reinsurer has disputed and/or overdue recoverables; the provision may be lower for
1
certified reinsurers that are considered Non-Slow Payers and potentially higher for
2
certified reinsurers that are considered Slow Payers
– Both sections reflect the one-year deferral on approved property catastrophe losses (or
named hurricanes)
1
Part 7: Provision for Overdue Authorized Reinsurance (Non-Slow Payers )
– Calculates the provision for reinsurance for authorized reinsurers that have disputed
and/or overdue balances and are NOT “slow payers”
2
Part 8: Provision for Overdue Reinsurance (Slow Payers )
– Calculates the provision for reinsurance for authorized reinsurers that are deemed “slow
payers”
Part 9: Restatement of Balance Sheet to Identify the Net Credit for Reinsurance
– Provides a gross balance sheet which is intended to show the impact of ceded
reinsurance on the balance sheet




Notes:
1. Non-Slow Payers are certified or authorized reinsurers where less than 20% of the paid reinsurance recoverables are
overdue.
2. Slow Payers are certified or authorized reinsurers where 20% or more of the paid reinsurance recoverables are overdue.
Market Analysis Update: U.S. Collateral Reform – December 2016
Proprietary and Confidential
76