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Announcement raised eyebrows

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Zurich Financial Services Group announcement last week that Alessandro Iuppa would become a senior government affairs representative for the insurer raised eyebrows among some industry sources.

The announcement came just days after Mr. Iuppa, the immediate past-president of the National Assn. of Insurance Commissioners, spearheaded a successful effort to encourage NAIC regulators to commit to overhaul the nation's regulatory structure for reinsurance by establishing a Reinsurance Evaluation Office.

An analysis by industry sources estimates that the proposal's impact on Zurich--which would be placed in the REO 3 category requiring 40% collateral, rather than the current 100%--would result in a $1 billion reduction in collateral in the future. The actual dollar value is much less than that, though, because of financing arrangements like letters of credit, according to the NAIC's October 2005 white paper.

Mr. Iuppa denied any impropriety. "There is absolutely no relationship between my support of the collateral reduction and my new job," he said. "I take some offense if that is what is being suggested out there."

The REO proposal is broad-based and not company specific, Mr. Iuppa said. If Zurich had been more specifically involved, he would have recused himself, he said. Also, he has been a long-time advocate of modernizing U.S. collateral requirements.

"I have conducted myself in an honest and ethical way throughout my 20-year regulatory career and I certainly wouldn't stop now," Mr. Iuppa said.

A Zurich spokesman declined to comment on the impact of the proposal.