Tokio Millenium Re Approved to Post Reduced Collateral in New York

The New York Department of Insurance has approved a request from Tokio Millenium Re Ltd. to post lower collateral than had previously been required when underwriting business for New York reinsurance policyholders or cedants.

Most reinsurers based outside of the United States are required to post collateral for 100% of property/casualty reinsurance loss reserves. But New York and a few other states allow reinsurers to post lower collateral levels based on the financial stability of the company. Tokio Millenium Re, a Bermuda-based subsidiary of the Japanese firm Tokio Marine & Nichido Fire Insurance Co. Ltd., currently has a Best's Financial Strength Rating of A+ (Superior).

Florida and New Jersey have adopted similar terms. Illinois, Indiana and Louisiana are among other states considering these revised requirements (BestWire, May 25, 2011).

The New York DOI's decision moves Tokio Millenium Re into the state's Secure-2 classification, which requires the company to post 10% of collateral -- the second-lowest collateral requirement in the state.

"We continue to seek similar status in other states and believe that this movement towards lowering the collateral requirement will benefit not only foreign reinsurers but also U.S. cedants who rely on the capacity from the overseas reinsurance market," said Tatsuhiko Hoshina, president and chief executive officer of Tokio Millenium Re.

Last week, the New York DOI approved a request from Alterra Capital Holdings Ltd. to post collateral for 20% of property/casualty reinsurance loss reserves in New York (BestWire, July 8, 2011).

(By Jeff Jeffrey, Washington Correspondent: [email protected])