In June 2016, the Financial Accounting Standards Board (FASB) approved a new accounting standard, the Current Expected Credit Loss (CECL) model, to replace the former incurred loss model for measuring credit risk on financial instruments. This change will accelerate the financial reporting of credit losses on loans and other financial instruments, including reinsurance … [Read more...] about Preparing for CECL: A Ceded Reinsurance Perspective
Legislation
Legacy Watershed: Capitalizing on the New Legislative Options for Runoff
New legislation is loosening the tight regulatory knot that’s been wrapped around legacy insurance business in the U.S. Upcoming game-changers include: Key amendments to the Rhode Island Voluntary Restructuring Statute (the ‘Rhode Island Statute’), which, among other amendments (House Bill 8163), would allow (re)insurers to transfer eligible portfolios without requiring … [Read more...] about Legacy Watershed: Capitalizing on the New Legislative Options for Runoff
The Impact of the Tax Reform Act on the Insurance Industry
Touted as the most significant federal tax legislation since 1986, Public Law 115-97 – informally known as the “Tax Cuts and Jobs Act” (the “TCJA”) – was enacted on December 22, 2017. This article examines the potential impact of several provisions of the TCJA on the insurance industry. The changes in the TCJA to domestic corporate tax provisions, including the corporate tax … [Read more...] about The Impact of the Tax Reform Act on the Insurance Industry
The Legacy Market: Anticipation. Excitement. Commitment. Patience. That Order.
In the previous three articles, we took a journey that would be a dream if it were a holiday itinerary: Europe and its uniform legal and regulatory framework for portfolio transfers; then Europe met the U.S., which with small but steady steps is trying to develop its own system for legal finality and insurance business transfers; and finally, we focused on Rhode Island, … [Read more...] about The Legacy Market: Anticipation. Excitement. Commitment. Patience. That Order.
The Legacy Market: Strength. Stability. Transparency. Certainty. That Order.
In a world where “strong and stable” equates to weak and uncertain, the European legacy market remains strong and stable (as defined by the Oxford Dictionary), transparent, and continues to deliver Certainty (the capital C is not a typo!) and a cleaner, leaner and stronger balance sheet to each carrier that engages in the process through the implementation of the most … [Read more...] about The Legacy Market: Strength. Stability. Transparency. Certainty. That Order.
Twisting in the Wind: Covered Agreement Dangling by Uncertainty and Politics
On January 13, 2017, the United States and the European Union (EU) concluded negotiations on the first insurance covered agreement after this novel multilateral international agreement, envisioned and promoted by the National Association of Insurance Commissioners (“NAIC”) and the U.S. state insurance regulators who are its members, was authorized by Title V of the Dodd-Frank … [Read more...] about Twisting in the Wind: Covered Agreement Dangling by Uncertainty and Politics
USF&G v. American Re Settles
What does that mean? If rumors are to be believed (and there is no reason to think that they should not be), the long running dispute of United States Fidelity & Guaranty Co. v. American ReInsurance Co. (“USF&G v. Am Re”) settled with trial looming. As many will remember, in February 2013, the New York Court of Appeals (the state’s highest court) issued an important … [Read more...] about USF&G v. American Re Settles
The Legacy Market: Innovation. Flexibility. Creativity. Capital Appeal. That Order.
The insurance industry has shown through the years that it has a remarkable ability to respond to challenges, and to adopt and adapt, whether this relates to a new financial or regulatory framework or to respond to demands for new products and solutions. One of the biggest challenges that the European industry faced in recent years was the implementation of Solvency II, the … [Read more...] about The Legacy Market: Innovation. Flexibility. Creativity. Capital Appeal. That Order.
Rhode Island Regulation 68: Voluntary Restructuring of Solvent Insurers Act
Recently Rhode Island revised its Voluntary Restructuring of Solvent Insurers Act as implemented by DBR Regulation 68. This is, in many respects, modeled after the UK’s Part VII Transaction, which, subject to court approval, enables companies to transfer/novate a book of business (and divest itself of all residual liability), to another unrelated insurer that assumes all … [Read more...] about Rhode Island Regulation 68: Voluntary Restructuring of Solvent Insurers Act
Brexit Implications for the Runoff Business: A Macroeconomic Perspective
On June 23, 2016, the United Kingdom held a referendum on membership in the European Union (EU), which the country had joined in 1973. As a surprise to many, the referendum resulted in a majority favoring an exit. The Brexit vote prompted a change in political leadership in the following month, with Theresa May being appointed Prime Minister. On March 29, 2017, the United … [Read more...] about Brexit Implications for the Runoff Business: A Macroeconomic Perspective
Does Covered Mean Equal? EU and U.S. Bilateral Agreement on Insurance and Reinsurance
On January 13, 2017, the Secretary of the Treasury (“Treasury”), the U.S. Trade Representative (“USTR”) and the European Union (“EU”) took the industry and regulators alike by surprise when they issued a press release announcing the completion of negotiations and the finalization of the “Bilateral Agreement Between the European Union and the United States of America on … [Read more...] about Does Covered Mean Equal? EU and U.S. Bilateral Agreement on Insurance and Reinsurance
Trash or Treasure. Are Insolvencies and Reinsurance Asset Sales Inevitable?
The purchase of distressed debts is not a new thing. Losses generated in the 1990’s by rocketing APH exposures and the dawn of a new era of litigation saw billions of dollars of additional liability flood the market, and the run-off industry as we know it was born. Today, it is estimated that the value of non-life European run-off stands at around €247bn and this is anticipated … [Read more...] about Trash or Treasure. Are Insolvencies and Reinsurance Asset Sales Inevitable?
Lifting the Veil on Arbitration Proceedings: Who’s Your Counsel: Disqualification of Counsel by Courts
In the Spring 2016 issue of AIRROC Matters, we featured Part 1 of a multipart arbitration series by Michael Goldstein and Dan Endick titled, “When Courts Peek Under the Arbitral Veil: the Role of the Courts in Managing Your Reinsurance Arbitration”. The following article is Part 2, “Who’s Your Counsel.” The final article in the series – Part 3 – will appear in a subsequent … [Read more...] about Lifting the Veil on Arbitration Proceedings: Who’s Your Counsel: Disqualification of Counsel by Courts
