Florida lowers collateral requirements for Alterra
Alterra Capital Holdings Ltd announced yesterday that its subsidiary Alterra Bermuda Ltd received approval from the State of Florida to qualify as an “eligible reinsurer,” which allows lower collateral requirements on non-domestic reinsurers that are highly rated and financially secure.
Alterra Bermuda Ltd will now be able to post 20 percent of loss reserves on property catastrophe reinsurance in Florida rather than the 100 percent required by most non-US reinsurers. Florida is currently among a small group of states within the US to adopt this rule, which effectively lowers the barriers of entry into the market for non-US reinsurers.
Alterra is is the seventh Bermuda reinsurer to win “eligible reinsurer” approval from Florida, which in effect increases capacity for doing business there.
The Florida Office of Insurance Regulation reviews reinsurers for approval after companies undergo a selective application process requiring them to have capital and surplus of at least $100 million, proof of financial strength by at least two nationally recognised rating organisations, and evidence of continued financial soundness and stability.
The state of New York has followed Florida's lead and Bermuda's reinsurance industry will hope to see more states lower collateral requirements.