NU Online News Service, July 29, 12:52 p.m.EDT

NEW YORK—Lloyd's says it has received approval from theNew York Insurance Department to post reduced collateral onreinsurance contracts.

Lloyd's is approved as a Secure-3 reinsurer, meaning itscollateral requirements will be reduced from 100 percent to 20percent.

Following Florida's lead, New York, and most recently New Jersey, passed laws allowing foreign reinsurers to postless collateral when doing business in these states, as long as thereinsurer is highly rated and financially sound.

In New York and New Jersey, reinsurers are required to carry$250 million in surplus. Florida requires $100 million.

Illinois, Indiana and Louisiana are considering similarreduced-collateral requirements that allow foreign reinsurers topost collateral for 20 percent of property and casualty reinsuranceloss reserves in a state rather than 100 percent, which was thepractice in every state. U.S reinsurers post no collateral.

In a speech given at Lloyd's New York City Dinner last night,Lloyd's Chairman Lord Peter Levene emphasizes the importance offoreign reinsurers to the United States.

"Businesses like Lloyd's act as a magnet for internationalcapital, and we then redeploy it to the places which need it themost, when they are faced with a crisis," he says.

"This is nothing new," he adds. "We saw it 10 years ago, in thiscity, after the appalling attacks on the World Trade Center. Backthen, it felt like the end of the world. But New York has not justsurvived, it has flourished. Wall Street remains Main Street to theworld's financiers."

This is not due simply to insurance. "The greatest credit mustgo to the city and the gritty determination of you who live here,"he notes. "But reinsurers helped."

Reinsurers, he explains, "picked up just under 70 percent of theinsurance bill after 9/11. I am told that when the then-secretaryof the Treasury asked who the major reinsurers were, he was toldthat nearly all of them were foreign, and he found it difficult tobelieve."

Levene says that while five out of the top six reinsurers areEuropean, "did this matter to the people receiving the checks?"