Topic Authorisation "Bilateral Agreement between the European Union and the United States of America on prudential measures regarding insurance and reinsurance"

Insurance and reinsurance Agreement between the EU and the USA

The EU and the USA have signed a bilateral agreement that will make it possible for contracts to be concluded between a reinsurer from the USA and a primary insurance undertaking or reinsurance undertaking in the EU without a branch being required in the respective EU member state. This will only be possible, however, if the reinsurer from the USA meets the requirements set out in the Agreement.

BaFin is working on the assumption that the final ratification of the Agreement will take place in the near future. In this respect, BaFin recognises that in the foreseeable future, provided that undertaking-specific criteria have been met in accordance with the Agreement, authorisation will not be required for reinsurers from the USA to conduct reinsurance business, an activity which is currently subject to an authorisation requirement pursuant to section 67 (1) sentence 1 of the German Insurance Supervision Act (Versicherungsaufsichtsgesetz – VAG). There is no need for the Agreement to be legally transposed into German law.


The relevant requirements can be found in Article 3(4) of the Agreement. The reinsurer from the USA must meet certain capital requirements ("capital and surplus": at least USD 250 million (Article 3(4)(a)) as well as local risk-based capital requirements ("Authorized Control Level": at least 300% (Article 3(4)(b)). Furthermore, these reinsurers have an obligation to submit certain declarations to the insurance supervisory authority responsible for the ceding insurer.
BaFin would appreciate it if insurers from the USA would familiarise themselves with the conditions specified in the Agreement in good time and enter into dialogue regarding compliance with the conditions.

Documentation to be submitted

As part of this dialogue, the following documentation is to be submitted:

  1. declaration from the assuming reinsurer that the assuming reinsurer will provide prompt written notice and explanation to BaFin if:

    1. it falls below the minimum capital and surplus or own funds, as applicable, specified in Article 3(4)(a) of the Agreement, or the capital ratio specified in Article 3(4)(b) of the Agreement; or
    2. any regulatory action is taken against it for serious noncompliance with applicable law (Article 3(4)(c));
  2. a written confirmation from the assuming reinsurer regarding its consent to the jurisdiction of the courts of the territory in which the ceding insurer has its head office or is domiciled (Article 3(4)(d));
  3. a written declaration that the assuming reinsurer will pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer, that have been declared enforceable in the territory where the judgment was obtained (Article 3(4)(f));
  4. submission of the following documents and information:

    1. annual audited financial statements, in accordance with the applicable law of the territory of the head office of the assuming reinsurer, including the external audit report, with respect to the preceding two years;
    2. solvency and financial condition report or actuarial opinion, if filed with the assuming reinsurer's supervisor, with respect to the preceding two years;
    3. list of all disputed and overdue reinsurance claims outstanding for 90 days or more, regarding reinsurance contracts from ceding insurers from Germany;
    4. information regarding the assuming reinsurer's assumed reinsurance by ceding company, ceded reinsurance by the assuming reinsurer, and reinsurance recoverable on paid and unpaid losses by the assuming reinsurer, to allow for the evaluation of the criteria set forth in Article 3(4)(i) (Article 3(4)(h));
  5. a written confirmation from the assuming reinsurer that it is not presently participating in any solvent scheme of arrangement which involves European Union ceding insurers, and a declaration that it will notify the ceding insurer and BaFin and provide 100 percent collateral to the ceding insurer consistent with the terms of the scheme should the reinsurer enter into such an arrangement (Article 3(4)(j));
  6. a confirmation from the competent supervisory authority that the reinsurer complies with the risk-based capital ratio within the meaning of Article 3(4)(b) (Article 3(4)(l)). Evidence is to be provided of compliance with the capital requirements within the meaning of Article 3(4)(a).


Furthermore, the reinsurer must observe the following conditions:

  1. the assuming reinsurer agrees in each reinsurance agreement subject to the Agreement that it will provide collateral for 100 percent of the assuming reinsurer's liabilities attributable to reinsurance ceded pursuant to this agreement if the assuming reinsurer resists enforcement of a final judgment that is enforceable under the law of the territory in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its resolution estate, if applicable (Article 3(4)(g));
  2. the assuming reinsurer maintains a practice of prompt payment of claims under reinsurance agreements; the lack of prompt payment will be evidenced if any of the criteria specified in Article 3(4)(i)(i-iii) is met (Article 3(4)(i));
  3. if subject to a legal process of resolution, receivership, or winding-up proceedings as applicable, the ceding insurer, or its representative, may seek and, if determined appropriate by the court in which the resolution, receivership, or winding-up proceedings is pending, may obtain an order requiring that the assuming reinsurer post collateral for all outstanding ceded liabilities (Article 3(4)(k)).

Filing and enquiries

The documentation can be filed in English. If no translation of the submitted documents into German is filed, a declaration in which the reinsurer commits to filing a translation of the documents upon BaFin's request is to be signed by the authorised representative body and submitted as an original copy.
After the reinsurer begins operating in Germany, it must observe the information obligations in the Agreement in the future.

Enquiries can be sent to the e-mail address

updated on: 08.11.2017

Additional information

Did you find this article helpful?

We appreciate your feedback

* Mandatory field

Publications on this topic

Brex­it - BaFin Chief Ex­ec­u­tive Di­rec­tor Raimund Rösel­er: "We are think­ing prag­mat­i­cal­ly, but we will not ac­cept emp­ty shells"

Brexit, the United Kingdom’s departure from the European Union, has been looming over the financial sector for some time now, just as it has over other industries. It is likely that European passports for UK-domiciled companies will lose their validity. At present, these passports enable such companies to conduct business in other EU member states.

US rein­sur­ers: Bi­lat­er­al Agree­ment be­tween the EU and the USA

The EU and the USA have signed the "Bilateral Agreement between the European Union and the United States of America on prudential measures regarding insurance and reinsurance". Among other things, the Agreement contains provisions regarding the conclusion of contracts by reinsurers from the USA with primary insurance undertakings and reinsurance undertakings from the EU.

Check­list: Au­tho­ri­sa­tion as a cred­it in­sti­tu­tion

This checklist is to be viewed as an aid for preparing an application for the granting of authorisation to conduct banking business. We do not claim that it is exhaustive.

All documents