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To the editor: I feel compelled to write to express Zurich's disappointment in the tone and completeness of the "Announcement Raised Eyebrows" article written by Meg Fletcher in the Dec. 18 issue.
The phrase "raised eyebrows among some industry sources" implies some type of quid pro quo existed between Alessandro Iuppa's NAIC leadership position on the Reinsurance Evaluation Office issue and a potential benefit to be gained by Zurich.
Zurich's position on the REO, based on the proposal as drafted, is neutral for a number of reasons. While the many unknown variables that exist at this time prevent us from making a firm estimate of the impact this proposal might have on our expenses, the article implies that the benefit to Zurich under the proposed REO would be material, which very likely will not be the case.
Your "analysis" only considered reinsurance recoverables from Zurich entities. Under the REO proposal, Zurich would lose the benefit of a portion of collateral it currently holds from the unaffiliated alien reinsurers that reinsure our U.S. entities. To the extent that they have a similar reduction in collateral, Zurich would lose that collateral.
Therefore, any potential benefit to Zurich of the proposed REO, which is still unclear, most likely would be administrative, as it would allow us the flexibility of investment management without the constraints of trusts.
We welcome the opportunity to participate in an in-depth review of the potential effect of REO on insurers and reinsurers, the type of thoughtful coverage that is the hallmark of Business Insurance.
Zurich North America