XL Insurance Bermuda, and XL Re, the subsidiaries of XL Group, have received an approval from the New York Insurance Department (NYID) for reduced collateral status in the state of New York state.
As per the recently passed amendments in the New York insurance regulation allows the NYID Superintendent of Insurance to establish lower collateral requirements for foreign (re)insurers that, among other criteria, are considered financially strong by credit rating agencies and other industry regulators.
Under the amended agreement, both XL Insurance and XL Re can post collateral for 20% of loss reserves rather than the 100% required of non-eligible foreign (re)insurers.
XL Group said that in its approval letter to XL Insurance and XL Re, the NYID stated various reasons for granting approval including the entities’ secure financial strength ratings and strong solvency position.
XL CEO Mike McGavick said the elimination of unnecessary collateral requirements on foreign insurers and reinsurers is not only beneficial for the individual companies but for the industry as a whole.
"We are encouraged by New York’s elimination of these collateral requirements and we remain fully committed to meeting the needs of our clients in New York and around the world," McGavick said.