Newsletter Jan 2007: $50 billion collateral

CEA, the Brussels-based European insurance and reinsurance federation, has estimated that $50 billion (€39 billion) in collateral in the form of letters of credit or government bonds, for instance, is held in the US by foreign reinsurers, most of it accounted for by Europeans. The cost to European Union reinsurers of complying with the collateral requirements is calculated at around $500 million a year, according to CEA estimates. The annual bill for the Lloyd’s market is reckoned to be in the region of $150 million.