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Useful website
www.bankofengland.co.uk/pra/Pages/solvency2/default.aspx

Sources of business
A few of the largest professional reinsurers in Europe acquire business to a great extent by direct
marketing. This requires the representatives of those companies to travel or have operations in many
areas of the world.
Some smaller professional reinsurers also seek to write business through a direct relationship with their
ceding companies but many will accept business through brokers in order to keep their acquisition costs
low. In the past, brokers based in Europe have played a comparatively small role in reinsurance, with a
few exceptions, but this position is changing.
Reinforce
Before you move on, remind yourself of the ways in which brokers service clients’ business. Check your notes
against chapter 1, section F5.

EU referendum
On 23 June 2016, the UK voted to leave the European Union (EU).
The UK Government invoked ‘Article 50’ of the Lisbon Treaty on 29 March 2017. In doing so, the two-year
negotiation period which will result in Britain leaving the EU began. This means that, at the time of publication,
the UK’s membership of the EU will cease on 29 March 2019.
Until this final ‘withdrawal agreement’ is entered into, the UK will continue to be a full member of the EU, compliant
with all current rules and regulations, and firms must continue to abide by their obligations under UK law, including
those derived from the EU, and continue with the implementation of all legislation that is still to come into effect.

The longer term impact of the decision to leave the EU on the UK’s overall regulatory framework will depend, in part,
on the relationship agreed between the UK Government and the EU to replace the UK’s current membership at the
end of the ‘Article 50’ negotiation period.

Please note: The UK decision to leave the European Union will have no impact on the 2018 CII syllabuses or exams. Reference copy for CII Face to Face Training
Changes that may affect future exam syllabuses will be announced as they arise.

B3 US reinsurance market

The US reinsurance market is necessarily large owing to the fact that the US domestic insurance industry
The US reinsurance
market is the largest is the largest in the world. Indeed, we can see in appendix 9.1 that US-domiciled insurers generated over
in the world US$794m of non-life premiums in 2016.
While it is difficult to determine the exact size of the US reinsurance market, according to regulatory
returns to the National Association of Insurance Commissioners (NAIC), more than 3,800 reinsurers from
over 100 jurisdictions assumed business from US cedants in 2014, bringing much needed capacity and
capital to the US market.
The Reinsurance Association of America reports that, in 2016, US$42.5bn of reinsurance net written
premium was recorded by the nation’s main US professional reinsurance companies, and US$78.5bn
was ceded to reinsurers domiciled offshore. Further, it is estimated that US$45.5bn, or 58%, of that
offshore premium was ceded to affiliates of US professional reinsurance companies, the balance going
9 to foreign reinsurers.
Chapter In a typical year, around twice as many premiums are ceded to offshore reinsurers which are affiliated to

a US cedant than to those which are not affiliated a US cedant. Domiciles which receive the highest
amounts overall include Bermuda, the UK, Germany and the Cayman Islands.
In recent years, reinsurance capital has continued to migrate offshore to, among other places, Bermuda,
Switzerland and Ireland. In fact, the only new US-domiciled reinsurers have been formed as US
subsidiaries of offshore start-ups. A formerly broad and diverse US domestic reinsurance industry
appears to have been subsumed by offshore reinsurers through various mergers and acquisitions not
least because its corporate tax rate is one of the highest in the world.