US alien reinsurers see premium growth

The total U.S. premium ceded to alien reinsurers was US$62.1 billion and ceded recoverables totaled US$123.9 billion in 2005, which represents a 16.9% increase in premiums and 16.2% growth in recoverables since 2004, according to a recent report from the Reinsurance Association of America (RAA).
The report “Alien Reinsurance in the U.S. Market: 2005 Data” also states that alien companies’ share of U.S. unaffiliated reinsurance premium rose to 51.8% percent in 2005. In addition, the report says market share of alien and alien controlled U.S. companies grew to 85.4% of U.S. unaffiliated reinsurance premium in 2005.
Total premiums ceded to affiliated alien reinsurers grew by 24.6% over the previous year to US$38.8 billion while net recoverables due from affiliated alien reinsurers increased by 29.1% to US$68.5 billion, according to the report. In addition, the research shows that the largest markets for unaffiliated premiums ceded and recoverables due in 2005 were Bermuda, United Kingdom and Ireland, Germany, the Cayman Islands, Switzerland, and Barbados.
RAA’s annual report also suggests that premiums ceded to unaffiliated alien reinsurers increased by 5.9% to US$23.2 billion while recoverables from unaffiliated alien reinsurers grew 3.4% to US$55.5 billion.
The report is based on ceded reinsurance as reported in Schedule F, Part 3 data filed with the National Association of Insurance Commissioners (NAIC) and presents statistics on U.S. premiums ceded to and net recoverables from more than 4,000 reinsurers in 105 jurisdictions outside the U.S. Schedule F Part 3 data indicates that more than 2,300 alien companies assumed U.S. premium in 2005 and that over 4,000 alien companies from the 105 jurisdictions either assumed U.S. premiums or had reinsurance payables due to U.S. companies.
The RAA says this data suggests that the current U.S. regulatory environment and 100% collateral requirements for unauthorized reinsurers is not a significant barrier for alien companies as they account for more than half of the U.S. unaffiliated reinsurance market.
The RAA explains that an alien company can participate in the U.S. market by becoming licensed in the states in which it does business, by establishing a U.S. affiliate licensed in the states in which it does business, or by posting collateral in the U.S.
In 2005, the RAA reports that alien and alien controlled U.S. companies accounted for 85.4% of the U.S. reinsurance market.