Although reinsurers in the U.S. continue to be regulated primarily at the state level, a number of important developments at the state, federal and international levels have changed the regulatory landscape since the financial crisis in 2008. The National Association of Insurance Commissioners (NAIC) undertook its Solvency Modernization Initiative (SMI) in June 2008. SMI has been described as "a critical self-examination of the United States' insurance solvency regulation framework and includes a review of international developments regarding insurance supervision, banking supervision, and international accounting standards and their potential use in U.S. insurance regulation." The SMI focused on five key areas: capital requirements, international accounting, insurance valuation, reinsurance, and group regulatory issues. The project resulted in a variety of modifications and enhancements to the state regulatory system. This work largely was completed in 2015.
At the federal level, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) was enacted in 2010, which, among other things, established: (1) the Federal Insurance Office (FIO); (2) the Financial Stability Oversight Council (FSOC), which was charged with establishing a methodology for determining which financial institutions pose a systemic risk and should be subject to heightened regulation by the Federal Reserve Board; and (3) the Office of Financial Research (OFR), created to support the data collection and research efforts of the FSOC. In addition, Dodd-Frank includes the Non-Admitted and Reinsurance Reform Act, which has two parts: Part I reforms the regulation of surplus lines insurance by limiting regulatory authority over surplus lines transactions to the home state of the insured and by setting federal standards for the collection of surplus lines premium taxes, insurer eligibility, and commercial purchaser exemptions. Part II provides: (1) the cedent's domiciliary regulator is the sole decision maker of that company's credit for reinsurance; (2) states cannot apply their insurance laws on an extraterritorial basis; and (3) the reinsurer's domiciliary regulator is the sole regulator of its solvency. These developments are creating multiple, and sometimes conflicting, obligations on insurers in various areas, including financial reporting, corporate governance, solvency assessment and data collection.
At the international level, because insurance is a global industry, following the 2008 financial crisis, international standard setters increased their attention on regulating financial institutions. The Financial Stability Board (FSB) was established to coordinate the work of national financial authorities and international standard setting bodies for banks, securities and insurance and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies in the interest of financial stability. The International Association of Insurance Supervisors (IAIS) has been at the forefront of insurance standard setting and, as set forth below, is addressing systemic risk, the regulation of internationally active insurance groups and the development of a global capital standard. U.S. regulators are also engaging in discussions with their counterparts in the European Union (E.U.) to explore their regulatory similarities and to foster regulatory cooperation and coordination. The E.U.'s Solvency II became effective on January 1, 2016 and establishes a revised set of E.U.-wide capital requirements and risk management standards to replace the current solvency requirements.
Overview of State Regulation
U.S. reinsurers are currently regulated on a multi-state basis. While the current state-based insurance regulatory system is focused primarily on solvency regulation with a significant emphasis on regulating market conduct, contract terms, rates and consumer protection, reinsurance regulation focuses almost exclusively on ensuring the reinsurer's financial solvency so that it can meet its obligations to ceding insurers.
Reinsurance is regulated by the states utilizing two different methods: direct regulation of U.S.-licensed reinsurers and indirect regulation of reinsurance transactions. States directly regulate reinsurers that are domiciled in their state, as well as those U.S. reinsurers that are simply licensed in their state, even if domiciled in another state1. [1State insurance laws also typically allow an insurer to offer reinsurance in the same lines it writes on a direct basis.] These reinsurers are subject to the full spectrum of solvency laws and regulations to which an insurer is subject, including: minimum capital and surplus requirements, risk-based capital requirements, investment restrictions, required disclosure of material transactions, licensing, asset valuation requirements, examinations, mandated disclosures, unfair trade practices laws, Annual Statement requirements and actuarial-certified loss reserve opinion requirements. By focusing on the reinsurer rather than on the reinsurance contract, primary insurance companies are allowed to purchase reinsurance to suit their particular business needs. Because the reinsurance transaction is between two sophisticated parties, there are no regulatory requirements relating to the rates that are negotiated between the parties or the forms used to evidence contractual terms.
As part of its direct regulation, nearly all states have adopted regulations affecting reinsurance contracts. An example of this type of regulatory involvement is the requirement of a standard insolvency clause, which allows the receiver of an insolvent insurer to collect on reinsurance contracts. While few states require the filing or approval of reinsurance contracts, indirect regulation of reinsurance contracts and rates does exist. For example, restrictions on insurance rates affect reinsurance rates. Generally, if the amount paid in premium to the insurer is limited, the amount of premium paid under a quota share reinsurance contract may also be limited.
There is also indirect regulation of reinsurance transactions through the credit for reinsurance mechanism, which is the financial statement accounting effect given to an insurer if the reinsurance it has purchased meets certain prescribed criteria. If these criteria are met, the insurer may record a reduction in its insurance liabilities for the effect of its reinsurance transactions. The goal of reinsurance regulation, beginning with credit for reinsurance laws, is to assure that reinsurance will be paid. This is accomplished in two ways: by direct solvency regulation of the reinsurer or by providing sufficient collateral to meet the reinsurer's obligations. This goal encourages ceding insurers to do business with reinsurers, domestic or non-U.S., that are well-funded, solvent, responsible and will be there to pay when insurance claims come due.
One of the most widely discussed criteria is the "collateral" requirement that a non-licensed reinsurer must either establish a U.S. trust fund or other security in the U.S., such as a clean, irrevocable and unconditional letter of credit issued by an acceptable institution, to cover its potential liabilities to the insurer. This provision is based on the historic premise that state regulators do not have the regulatory capability or resources to assess the financial strength or claims paying ability of reinsurers that are not authorized or licensed in that state.
Credit for Reinsurance
As a general matter, a U.S. insurer can purchase reinsurance from a reinsurer located anywhere in the world. To ensure there is adequate security, every state enforces some type of credit for reinsurance law, regulation or internal departmental standard. Historically, state insurance departments were unable to assess the strength of companies located in other countries or measure the extent of regulation under which these non-U.S. reinsurers operate. State insurance departments imposed regulatory restrictions on U.S. insurers, frequently requiring security arrangements between the ceding insurer and reinsurer if the reinsurer is not licensed.
In November 2011, the NAIC passed revisions to the Model Credit for Reinsurance Law and Regulation (the Revised Models) that allow "qualified" foreign reinsurers from certified jurisdictions to support their U.S. cross border business with reduced collateral if certain criteria are met. The Revised Models give the insurance commissioner the discretion to consider the strength of other regulatory regimes as well as the strength of individual reinsurers in assessing reinsurance collateral requirements.
The Revised Models require an assuming insurer to be licensed and domiciled in a qualified jurisdiction in order to be eligible for certification by a state as a certified reinsurer. The NAIC Reinsurance Task Force was charged with developing a list of jurisdictions recommended for recognition by the states as qualified jurisdictions. Under the Revised Models, states must consider this list when approving qualified jurisdictions. In August 2013, the NAIC adopted the Process for Developing and Maintaining the NAIC List of Qualified Jurisdictions, which is a process to evaluate the reinsurance supervisory systems of non-U.S. jurisdictions for reinsurance collateral reduction purposes. One of the requirements of this process is to evaluate the rights, benefits and the extent of reciprocal recognition afforded to U.S. reinsurers by the jurisdiction being evaluated. As of January 1, 2016, Bermuda, France, Germany, Ireland, Japan, Switzerland, and the U.K. have been placed on the NAIC List of Qualified Jurisdictions.
With respect to the evaluation of individual reinsurers, the Revised Models establish the process for a regulatory evaluation, which involves an analysis of the financial strength of the reinsurer as well as a number of evaluative factors designed to ensure that only the most financially strong reinsurers from rigorous regulatory jurisdictions receive a reduction in collateral requirements and that insurers and insureds are protected.
Under existing laws in most states, there are 3 alternatives:
1. Credit is allowed if the reinsurer is licensed or accredited in the same state where the ceding insurer does business. Some companies, however, have chosen to become accredited rather than licensed, which is a streamlined process based on another U.S. state license. The process of accreditation usually requires a company to submit data to the state insurance department comparable to that of a company seeking licensure.
2. Credit may also be allowed if the reinsurer is domiciled and licensed in a state that employs substantially similar credit for reinsurance standards to those imposed by the primary insurer's state of domicile. Very few states use this alternative, even if provided for by law or regulation, because they prefer to rely on their own evaluation rather than wholly defer to another regulator's determination.
3. If a company chooses to buy from a non-U.S. reinsurer, the reinsurer must provide collateral for the ceding company to receive credit for reinsurance. Collateral may be provided in many forms and can be under a U.S. trust fund or a clean, irrevocable and unconditional letter of credit issued by an acceptable bank. The amount of security necessary for a reinsurer to post can vary based on the state's assessment of the reinsurer and its domiciliary regulator.
The Revised Models are being introduced and, in some jurisdictions, passed through the legislative process in a number of states. The NAIC has also finalized and begun implementation of the process for vetting jurisdictions and for vetting reinsurers from those jurisdictions. The NAIC has determined that, effective January 1, 2019, the Revised Models will be a required accreditation standard.
NAIC Solvency Modernization Initiative
In June 2008, the NAIC undertook its Solvency Modernization Initiative (SMI) to evaluate the U.S. insurance solvency regulation framework and review international developments regarding insurance supervision, banking supervision, and international accounting standards and their potential use in U.S. insurance regulation. The SMI focused on 5 key areas: capital requirements, international accounting, insurance valuation, reinsurance, and group regulatory issues.
Through the SMI, the NAIC adopted or undertook several significant initiatives that impact the insurance and reinsurance industries. In September 2012, the NAIC adopted the newly created Risk Management and Own Risk and Solvency Assessment (ORSA) Model Act, which provides a statutory basis for requiring a risk management framework and the filing of an ORSA summary report. Insurers above a certain premium threshold must follow the NAIC ORSA Guidance Manual when developing reports that are required in the ORSA Model. The ORSA Model includes three primary requirements: (1) maintain a risk-management framework; (2) regularly conduct an ORSA; and (3) submit an ORSA Summary Report to the lead state commissioner.
In 2010, the NAIC also adopted amendments to the Model Insurance Holding Company System Regulatory Act and Regulation, which is required as a state accreditation standard effective January 1, 2016. Further revisions of the Model Insurance Holding Company System Regulatory Act and Regulation relating to group supervision were adopted in 2015. The SMI also undertook the development of a new NAIC model law on corporate governance, which was adopted in December 2014. The NAIC also continues to consider regulatory enhancements to group supervision, particularly in light of international efforts to develop a common framework for the supervision of internationally active insurers.
The SMI continues to consider, among other things, the future of statutory accounting and reporting as a result of a purported global desire for a single set of accounting and financial reporting standards that can be utilized internationally. In addition, the SMI has focused on reserve liabilities in the life and health insurance company balance sheets with the principles-based reserving (PBR) project, which is intended to improve the reserve values for life and health insurance business in the U.S. and to increase uniformity in the process.
Federal Role in Reinsurance Regulation
At the federal level, the Dodd-Frank Act introduced new federal components to the regulation and/or supervision of the (re)insurance industry. Dodd-Frank established the Federal Insurance Office (FIO), the Financial Stability Oversight Council (FSOC) and the Office of Financial Research (OFR), all of which impact the business of insurers and reinsurers to varying degrees. Dodd-Frank also included the Non-Admitted and Reinsurance Reform Act, which reforms both the regulation of surplus lines insurance and vests sole authority for solvency regulation of designated reinsurers in the domiciliary regulator. In addition to new federal authority created by the Dodd-Frank Act, companies are subject to federal taxation and public companies are also regulated by the SEC.
Federal Insurance Office
The Dodd-Frank Act created the Federal Insurance Office and empowered it to:
• monitor all aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers that could contribute to a systemic crisis in the insurance industry or the U.S. financial system;
• monitor the affordability and accessibility of insurance products to consumers under all lines of business, except health insurance;
• recommend to the FSOC that it designate an insurer as an entity subject to regulation as a nonbank financial company supervised by the Board of Governors under Dodd-Frank;
• assist the Treasury Secretary in administering the Terrorism Risk Insurance Program (TRIP);
• advise the Treasury Secretary on major domestic and prudential international insurance policy issues and consult with state insurance regulators regarding insurance matters of national and international importance;
• assist the Treasury Secretary in jointly negotiating, with the U.S. Trade Representative, bilateral or multilateral agreements regarding prudential matters with respect to the business of insurance or reinsurance;
• coordinate federal efforts and policy on international insurance issues, and represent the United States before relevant international organizations, including the IAIS; and
• consult with the states (including state insurance regulators) regarding matters of national importance and prudential insurance matters of international importance.
The Dodd-Frank Act does not confer regulatory authority on FIO. Specifically, Dodd-Frank states that "[n]othing in this [law] shall be construed to establish or provide the Office or the Department of the Treasury with general supervisory or regulatory authority over the business of insurance." Further, the scope of FIO's authority under the Dodd-Frank Act does not extend to (1) health insurance; (2) long-term care insurance; and (3) crop insurance under the Federal Crop Insurance Act.
The Dodd-Frank Act also requires, as part of FIO's charge to monitor all aspects of the insurance industry and identify potential issues or gaps requiring regulatory reform, that FIO prepare reports on various issues. Specifically, FIO is required to prepare: (1) annual reports to Congress on or before September 30 of each year on the insurance industry; (2) a report "describing the breadth and scope of the global reinsurance market and the critical role such market plays in supporting insurance in the United States"; (3) a report describing "the impact of Part II of the Nonadmitted and Reinsurance Reform Act of 2010 on the ability of State regulators to access reinsurance information for regulated companies in their jurisdictions"; and (4) a report "on how to modernize and improve the system of insurance regulation in the United States." In addition, FIO was tasked to coordinate the work of the President's Working Group on Financial Markets on the Long-Term Availability and Affordability of Insurance for Terrorism Risk and also prepared a report on that topic. FIO reports can be accessed at https://www.treasury.gov/initiatives/fio/reports-and-notices/Pages/default.aspx.
As part of the reauthorization of TRIP in January 2015 pursuant to the Terrorism Risk Insurance Program Reauthorization Act of 2015, FIO also was tasked to prepare a Report on the Overall Effectiveness of the Terrorism Risk Insurance Program, which was published in January 2016. The 2015 reauthorization act also created a federal Advisory Committee on Risk-Sharing Mechanisms (ACRSM) to provide advice and recommendations to Treasury through the FIO with respect to the creation and development of non-governmental, private market risk-sharing mechanisms for protection against losses arising from acts of terrorism.
Additionally, as part of its charge to coordinate federal efforts and policy on international insurance issues and to represent the United States before relevant international organizations, FIO participates at the IAIS along with U.S. state regulators regarding the IAIS's development of international insurance regulatory principles and standards. As noted above, Dodd-Frank also empowers FIO to assist the Treasury Secretary in jointly negotiating, with the U.S. Trade Representative (USTR), bilateral or multilateral agreements regarding prudential matters with respect to the business of insurance or reinsurance, or "covered agreements," between the U.S. and one or more foreign governments, authorities or regulatory entities. With respect to covered agreements, Treasury and USTR are required to provide notice to Congress before, during and at the conclusion of negotiations. To the extent that state insurance measures are determined to be inconsistent with an executed covered agreement, such measures would be preempted, subject to notice and review as required by Dodd-Frank. In November 2015, FIO provided its first notice to Congress of its intention to negotiate a covered agreement with the E.U. As of July, 2016, these negotiations are ongoing.
The Federal Advisory Committee on Insurance (FACI) was created in 2012 to provide advice and recommendations to assist FIO in carrying out its statutory authority. FACI may consist of up to 25 members and must reflect balanced membership, including a cross-section of members representative of the views of State and non-governmental persons, such as state insurance regulators and industry experts. Additional information regarding FACI can be found at https://www.treasury.gov/initiatives/fio/Pages/faci.aspx
The nature and extent of the FIO's role in insurance and reinsurance regulation, both domestically and internationally, will continue to develop.
The Non-Admitted and Reinsurance Reform Act
The Dodd-Frank Act also streamlined state regulation of reinsurance for U.S. reinsurers through the passage of the Non-Admitted and Reinsurance Reform Act (NRRA), which has two parts. Part I reforms the regulation of surplus lines insurance by limiting regulatory authority over surplus lines transactions to the home state of the insured and by setting federal standards for the collection of surplus lines premium taxes, insurer eligibility, and commercial purchaser exemptions. Part II of the legislation provides that: (1) the cedent's domiciliary regulator is the sole decision maker of that company's credit for reinsurance; (2) states cannot apply their insurance laws on an extraterritorial basis; and (3) the reinsurer's domiciliary regulator is the sole regulator of its solvency. "Reinsurer" is defined as an insurer that: (i) is principally engaged in the business of reinsurance; (ii) does not conduct significant amounts of direct insurance as a percentage of its net premiums; and (iii) is not engaged in an ongoing basis in the business of soliciting direct insurance. The determination of who is a reinsurer "shall be made under the laws of the State of domicile" subject to these criteria.
With respect to Part II of the legislation, certain states raised concerns regarding the NRRA's vesting of sole authority over solvency regulation in the domiciliary regulation, and questioned whether they would be able to obtain sufficient financial information about reinsurers from the domiciliary regulator. As noted above, the Dodd-Frank Act required that FIO prepare a report describing "the impact of Part II of the Nonadmitted and Reinsurance Reform Act of 2010 on the ability of State regulators to access reinsurance information for regulated companies in their jurisdictions." The report was published in October 2013, and concluded that "Part II of the NRRA has not had an adverse impact on the ability of state regulators to access reinsurance information for regulated companies." An updated report from FIO on this issue in 2015 reached the same conclusion.
Systemic Risk Regulation
The Dodd-Frank Act created two new agencies, the Financial Stability Oversight Council (FSOC or the Council) and the Office of Financial Research (OFR). The FSOC is charged with identifying threats to the financial stability of the United States, promoting market discipline, and responding to emerging risks to the stability of the United States financial system. The Council consists of 10 voting members and 5 nonvoting members and brings together the expertise of federal financial regulators, state regulators, and an independent insurance expert appointed by the President. The independent insurance expert is a voting member, appointed by the President and confirmed by the Senate for a six-year term. The Director of FIO and a state insurance commissioner selected by the state insurance commissioners (through the NAIC) serve as non-voting members.
The FSOC must collate data (received from affiliated agencies and potentially from the companies themselves) to assess risks to the financial system, monitor the financial services marketplace, and make general regulatory recommendations to affiliated agencies. Under defined circumstances, the Chairman of the Council (who is the Secretary of the Treasury), with the concurrence of 2/3 voting members, may place nonbank financial companies or domestic subsidiaries of international banks under the supervision of the Federal Reserve if it appears that these companies could pose a threat to the financial stability of the U.S. The FSOC must monitor domestic and international regulatory proposals and developments, and advise Congress in these areas. The FSOC has promulgated criteria for determining which financial and non-bank financial entities are systemically important and the additional supervisory measures that will be applied to those entities. Additional information regarding FSOC's authority and the designation process can be found at https://www.treasury.gov/initiatives/fsoc/designations/Pages/default.aspx.
The OFR monitors systemic risk, collects and assesses data, performs applied research on these issues and develops tools for risk measurement and monitoring. The Council and the OFR are charged with facilitating information sharing and coordination among the member agencies and other federal and state agencies regarding domestic financial services policy development, rule-making, examinations, reporting requirements, and enforcement actions.
International Insurance Regulation
U.S.-based reinsurers are subject to some level of regulation in all jurisdictions in which they are doing business, and may also be subject to international standard setting depending upon their corporate structure.
International Association of Insurance Supervisors (IAIS) Insurance Core Principles
The IAIS' website states that it represents insurance regulators and supervisors of more than 200 jurisdictions in nearly 140 countries, constituting 97% of the world's insurance premiums. The IAIS acts as the global standard setter for insurance regulation and works with the International Monetary Fund (IMF) and other international organizations such as the International Actuarial Association (IAA). The IAIS has developed Insurance Core Principles (ICPs), an internationally developed set of principles, standards and guidance applicable to supervisors (that is, regulators) of insurance companies. They seek to encourage convergence towards a globally consistent supervisory framework and serve as a benchmark for insurance supervisors in all jurisdictions. A list of the ICPs can be accessed at: http://www.iaisweb.org/ICP-on-line-tool-689.
The IMF uses the ICPs to evaluate a country's insurance regulatory regime when it conducts a Financial Sector Assessment Program (FSAP) review. In jurisdictions with financial sectors deemed by the IMF to be systemically important, financial stability assessments under the FSAP are a mandatory part of surveillance under the IMF's Articles of Agreement, and are to take place every five years; for all other jurisdictions, participation in the program is voluntary. In developing and emerging market countries, FSAPs are conducted jointly with the World Bank. In these countries, FSAP assessments include two components: a financial stability assessment, which is the responsibility of the IMF, and a financial development assessment, which is the responsibility of the World Bank. Each individual country's FSAP concludes with the preparation of a Financial System Stability Assessment (FSSA), which focuses on issues of relevance to IMF surveillance and is discussed at the IMF Executive Board together with the country's Article IV report. FSAP reports can be accessed at: http://www.imf.org/external/NP/fsap/fsap.aspx. The U.S. last underwent an FSAP assessment in 2014.
Common Framework for the Supervision of Internationally Active Insurance Groups
Work continues on the development of the Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame), a set of international requirements focusing on the group-wide supervision of internationally active insurance groups (IAIGs). ComFrame expands upon the ICPs, which generally apply on both a legal entity and group-wide level. ComFrame was initially intended to be a framework for supervisors to efficiently and effectively cooperate and coordinate in the regulatory and supervision of IAIGs. By coordinating supervisory activities and information about IAIGs at the group-wide level and between group-wide and host supervisors, ComFrame could reduce compliance and reporting demands on IAIGs. The current draft of ComFrame also contains notable requirements on companies. Field testing of ComFrame began in 2014 and continues to evaluate ComFrame in practice so that it can be modified prior to formal adoption. The IAIS is currently scheduled to formally adopt ComFrame in 2018, with its members to begin implementing ComFrame thereafter
Solvency II
The European Union is in the process of implementing Solvency II, an E.U. directive, in all 27 E.U. member states, which went into effect on January 1, 2016. This directive establishes a revised set of E.U.-wide capital requirements and risk management standards to replace the current solvency requirements. The legislation replaces 13 previously existing E.U. insurance directives. The European Insurance and Occupational Pensions Authority (EIOPA) has published Solvency II Implementing Technical Standards and Guidelines, which establish protocols for the implementation of Solvency II.
Solvency II has a direct impact on companies based in the E.U., but also has global ramifications for other reinsurers (called "third-country reinsurers") located outside the E.U., as all E.U. (re)insurers are required, under Solvency II, to assess the default risk on their counterparties (e.g., international reinsurance partners). In this context, the concept of "equivalence between regulatory regimes" has been introduced. The Solvency II "Framework Directive" provides the European Commission with the option to evaluate whether a third country regulatory regime - as applicable to reinsurance - is equivalent to Solvency II or not. If a third country's regulatory regime is deemed to be equivalent, reinsurance contracts between an E.U. member company cedent and a third-country reinsurance company will be treated in the same way as reinsurance contracts with reinsurers based in the E.U.
Global Systemically Important Insurer Designations
The Financial Stability Board (FSB) has tasked the IAIS to identify global systemically important insurers (G-SIIs) whose failure, because of their size, complexity, and interconnectedness, would cause significant disruption to the global financial system and economic activity. In July 2013, the IAIS published a methodology for identifying global systemically important insurers (G-SIIs), and a set of policy measures that will apply to them. The FSB has endorsed the methodology and these policy measures. Using the IAIS assessment methodology and based on 2011 data, the FSB, in consultation with the IAIS and national authorities, identified in 2013 an initial list of nine G-SIIs to which the policy measures should apply. The G-SII list is updated annually, based on information provided by the IAIS and published by the FSB each November. Furthermore, the FSB and IAIS have been developing a framework of policy measures that will be applied to G-SIIs, the objective of which is to reduce negative external impacts from the potential failure of a G-SII. The three main types of policy measures are: (1) enhanced supervision; (2) effective resolution; and (3) higher loss absorbency.
No changes to the list were made in 2014. The FSB published a new G-SII list in November 2015, which was again composed of nine total insurers, although the list of insurers changed from previous years. Pending further development of the methodology, the FSB, in consultation with the IAIS and national authorities, continues to discuss whether any reinsurers should be designated as G-SIIs and any appropriate risk mitigating measures for reinsurers.
U.S.-E.U. Insurance Dialogue Project
In early 2012, FIO and U.S. state regulators began a regulatory dialogue with the European Commission (EC) and EIOPA known as the U.S.-E.U. Insurance Dialogue Project. The objective of the project is to increase mutual understanding and enhance cooperation between the European Union and the United States in order to promote business opportunity, consumer protection and effective supervision. The project includes a comparison of the E.U. and U.S. regimes on seven topics: (1) professional secrecy/confidentiality; (2) group supervision; (3) solvency and capital requirements; (4) reinsurance and collateral requirements; (5) supervisory reporting; (6) data collection and analysis; and (7) independent third party review and supervisory on-site inspections. Work continues on the project.
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