Co-Operation Across The Atlantic – EU And US Covered Agreement Signed

The EU and US covered agreement on insurance and reinsurance prudential requirements was finally signed on 22 September, eight months after it was agreed, following nearly two years of negotiation.

The aim of the agreement is to enable better co-operation between the EU and US markets, and it covers three areas:

• Reinsurance: the principle behind the provisions on reinsurance is that reinsurers domiciled in either the US or the EU should not, when operating in the other jurisdiction, be subject to collateral and local presence requirements which are more rigorous than those imposed on local reinsurers. Therefore, under the agreement the US has committed to encourage US states to reduce and eventually remove the requirement for EU reinsurers to post collateral when reinsuring US cedants; and the EU has committed to remove restrictions on EU cedants obtaining reinsurance from US firms domiciled in US states, where the regulatory requirements are not deemed to be