On January 13, 2017, the US Department of the Treasury, the Office of the US Trade Representative and the European Commission announced that they had reached a covered agreement (Agreement) regarding insurance groups doing business in the United States and the European Union (EU), concluding negotiations that officially began in November 2015. The Agreement eliminates the requirement that EU reinsurers post collateral as a condition for a US ceding insurer to take statutory financial statement credit for reinsurance, provided that the reinsurer satisfies certain minimum financial tests and other requirements. It also prohibits national regulators in the EU from imposing local presence requirements on US reinsurers as a condition of doing business in EU member states. Finally, it confirms the mutual agreement of the United States and EU that insurers operating in each other’s markets will only be subject to worldwide prudential insurance group oversight by the supervisors in their home jurisdiction, although individual regulators will still be able to regulate operations within their jurisdictions. Full implementation of the Agreement will take place over a period of up to five years, although certain provisions of the Agreement will likely be effectively operative at an earlier date.
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