Bermuda's leading role in providing reinsurance cover to the US has been underlined by the latest report from the Reinsurance Association of America.

The RAA reports the US ceded $54.7 billion in premiums to offshore reinsurers in 2006 and ceded recoverables of $114.2bn.

The largest markets for unaffiliated premiums ceded and recoverables due were Bermuda, the United Kingdom and Ireland, Germany, Cayman Islands, Switzerland and Barbados.

One concern raised by the RAA is the possibility that US companies may be at risk because of offshore reinsurance deals.

"It is especially important in light of the current public policy debate regarding the reduction in collateral requirements for unlicensed, unauthorised reinsurers that are not subject to US regulatory and solvency requirements," states the RAA.

"The outcome of this policy debate could have significant implications to the solvency of US companies, as reinsurance recoverable from offshore companies continue to increase." The RAA has prepared a comprehensive report, entitled the Offshore Reinsurance in the US Market: 2006 Data, which tracks trends in the buying of reinsurance as it impacts the US and aims to provide policymakers and the public with data and analysis about the US reinsurance market.

Figures show there has been a 11.9 percent decrease in the level of premiums ceded from the US to offshore reinsurers between 2005 and 2006, and a 7.8 percent decline in recoverables.

"Offshore companies' share of US unaffiliated reinsurance premium increased to 53.1 percent from 51.8 percent, while the market share of offshore companies and US subsidiaries of offshore companies decreased to 84.5 percent of US unaffiliated reinsurance premium from 85.4 percent," said the Washington DC-based RAA.

The organisation notes that total US premiums ceded to affiliated offshore reinsurers decreased by 16.3 percent to $32.5m while net recoverables due from affiliated offshore reinsurers increased 2.8 percent to $70.8bn.

The RAA warns: "Data suggests the current US regulatory environment and 100 percent collateral requirements for unauthorised reinsurers is not a significant barrier for offshore companies as they account for more than half of the US unaffiliated reinsurance market.

"An offshore company can participate in the US market by becoming licensed in the states in which it does business, by establishing a US affiliate licensed in the states in which it does business or by posting collateral in the US. In 2006, offshore companies and US subsidiaries of offshore companies accounted for 84.5 percent of the US reinsurance market."