Dear friend,

I’ve got to be quick today, it’s shaping up to be a busy one with most of the team getting ready to go to Baden Baden.

Hats off to New York insurance superintendent Eric Dinallo for having the strength of character to say that alien reinsurers are welcome and needed in his patch.

In an era that is seeing US protectionist talk on the rise it is also laudable to hear someone who has understood that the cost to alien reinsurers of posting collateral ends up as an unnecessary extra loading onto US citizens.

Collateralisation amounts to a trade barrier and trade barriers often ending up costing the imposer of the barrier more than they do the foreigner.

And with Solvency II not so far away it makes little sense to make the foreigners load up — after all a line from Munich Re, Munich, Germany is as good, if not better for the cash, than the same line from Munich Re America.

I like the use of the sliding scale credit too — you only get to avoid posting any collateral at all if you have two separate AAA ratings. So finally we have an incentive for reinsurers to seek a return the highest echelons of the rating firmament. Reinsurers have always moaned about how there is rarely any market recognition of superior ratings quality and financial strength, well now we have someone calling their bluff.

Twenty years ago all the top ten reinsurers in the world were triple-A.

It’s just fairly amusing that the only current AAA-rated player out there happens to be US-domiciled!

Come on everyone – at last a reason to hang on to some surplus capital, of which I hope you currently have an abundance.