View the documents related to Florida`s approval of Endurance and

FINANCIAL SERVICES
COMMISSION
RICK SCOTT
GOVERNOR
OFFICE OF INSURANCE REGULATION
JEFF ATWATER
CHIEF FINANCIAL OFFICER
PAM BONDI
ATTORNEY GENERAL
KEVIN M. MCCARTY
ADAM H. PUTNAM
COMMISSIONER OF
AGRICULTURE
COMMISSIONER
January 28, 2016
Francesca S. Marsala
Endurance Services Limited
4 Manhattanville Road, 3rd Floor
Purchase, NY 10577
RE:
Endurance Specialty Insurance Ltd.
Dear Ms. Marsala,
I am writing in response to your request on January 8, 2016 regarding the use of a multi-beneficiary
trust by certified reinsurer Endurance Specialty Insurance Ltd.
Let me preface my remarks by stating that the Office does not have statutory authority to render
interpretations of statutes, except in rules for interpretations of general applicability, or in declaratory
statements for interpretation of a more limited applicability, assuming the requirements for such a
statement are met. I refer you to Section 120.54, Florida Statutes, for the applicable statute on rules.
Further, declaratory statements are covered by Section 120.565, Florida Statutes, and Florida
Administrative Code Chapter 28-105.
You asked whether a reinsurer, which does not have trusteed status, may use its multi-beneficiary
trust to satisfy the Florida credit for reinsurance requirements with certified reinsurer status.
Although the Office cannot provide legal opinions, please note Section 624.610(3)(e), Florida
Statutes, and Rule 690-144.07, Florida Administrative Code, which establish the conditions and
requirements for acquiring and maintaining certified reinsurer status in the state of Florida.
To provide some historical context, the Florida Legislature amended Section 624.610, F.S., in 2007,
adding Paragraph (e) to Subsection (3), in response to Florida's troubled property insurance market
following the 2004 and 2005 hurricane seasons, as well as to a recommendation by the legislativelycreated Task Force on Long-Term Solutions for Florida’s Hurricane Insurance Market (the Task
Force), to remove specifically “any arbitrary, artificial barriers to competition in the reinsurance
market.” Please see the recommendation on page 6, and the reinsurance discussion on page 35, of the
Task Force’s final report which may be accessed by the following link:
http://www.myfloridacfo.com/hurricaneinsurancetaskforce/TaskforceRS2/draftlts6.pdf
• • •
NICOLE ALTIERI • REINSURANCE FINANCIAL SPECIALIST
200 EAST GAINES STREET • TALLAHASSEE, FLORIDA 32399-0329 • (850) 413-5240 • FAX (850) 488-2935
WEBSITE: WWW.FLOIR.COM • [email protected]
Affirmative Action / Equal Opportunity Employer
Paragraph (e) of Section 624.610(3), Florida Statutes, therefore, identifies specific factors that the
Florida Insurance Commissioner must consider if reinsurance is ceded to an assuming insurer that is
not authorized, accredited or has established the requisite trust account pursuant to Section
624.610(3)(a)-(d), Florida Statutes. Paragraph (e) establishes a status apart from Paragraphs (a)–(d).
Originally, the status was that of eligible reinsurer, but the name was changed to certified in order to
reflect the NAIC’s model law and regulations. See, transcript comments by Florida Insurance
Commissioner, Kevin McCarty, before the Financial Services Commission, dated December 9, 2014,
pages 31-32, available at:
http://www.myflorida.com/myflorida/cabinet/agenda15/0623/OIR062315.pdf
Under Section 624.610(3)(e), the Florida Insurance Commissioner may allow credit, but only if the
assuming insurer holds surplus in excess of $250 million and has a secure financial strength rating
from at least two statistical rating organizations deemed acceptable by the commissioner as having
experience and expertise in rating insurers doing business in Florida, including, but not limited to,
Standard & Poor’s, Moody’s Investors Service, Fitch Ratings, A.M. Best Company, and Demotech.
Section 624.610(3)(e), Florida Statutes.
Please note that Paragraph 6 of Rule 690-144.007, Florida Administrative Code, implementing
Paragraph (e) of Section 624.610(3), Florida Statutes, specifically allows the use of a trust by a
certified reinsurer to meet applicable collateral requirements. While the statute and the administrative
rule do not specifically identify a specific form of trust, it is clear there is no express language
prohibiting a multi-beneficiary trust.
I hope this adequately responds to your inquiry.
Sincerely,
Nicole Altieri
Reinsurance Financial Specialist