Topic Authorisation 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.
The Agreement will make it possible for contracts to be concluded between a US reinsurer and an EU primary insurance undertaking or reinsurance undertaking without the US reinsurer being required to establish a branch in the respective EU member state. A prerequisite for this is that the undertaking meets the requirements set out in the Agreement. These are set out in Article 3(4) of the Agreement: US reinsurers must fulfil certain capital requirements as well as local risk-based capital requirements. Furthermore, they have an obligation to submit certain declarations to the supervisory authority responsible for the EU insurance undertaking.
Ratification of the Agreement
BaFin is working on the assumption that the Agreement will be ratified in the near future. In this respect, it 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 US reinsurers 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). BaFin is already taking this into account in its current activities. There is no need for the Agreement to be legally transposed into German law.
BaFin would appreciate it if insurers from the USA would familiarise themselves with the conditions of the Agreement in good time and enter into dialogue with BaFin regarding compliance with these conditions.