Willis Re Launches $400M Reinsurance Facility The reinsurance division of Willis Group Holdings plc, Willis Re, have launched their syndicated reinsurance facility in May that provides the broadest available protection for insurers against the catastrophic and systemic loss accumulations that arise from liability portfolios. The facility, called PRIMO, is designed to respond across all casualty and professional lines, and it was initially supported by 20 of the leading global reinsurers. This new international facility is an industry-first for casualty cover in that it provides over USD 400 million in reinsurance capacity globally (based on preagreed contract wording). “PRIMO builds on over 25 years of continuous research and development since its precursor was developed in the late 1980s. Willis Re can now offer our diverse and global clients a tried and tested reinsurance solution protecting against events that impact multiple accident years, create quarter-on-quarter earnings pressure and represent a significant unknown in terms of quantum from the time the event is discovered until it becomes a paid loss,” said John Cavanagh, global CEO of Willis Re. Andrew Newman, head of global casualty at Willis Re, reported that, compared to first-party risks from natural and man-made ‘perils’, third-party casualty risks have up to this point been considerably underserved by property catastrophe reinsurance markets. “While conventional clash reinsurance products can respond well to certain threat scenarios such as industrial accidents or earthquake threat to workers compensation, they are not designed to and do not offer broad systemic protection. Now, for the first time, meaningful catastrophic reinsurance protection is available, and affordable, for writers of casualty business, including all financial and injury-based lines,” said Newman. New global insurance rules face scrutiny from Republicans The Financial Stability Board (FSB), composed of regulators and central bankers and set up by the Group of 20 leading economies in 2009 to fortify the global financial system, faced criticism from the Republicans at a hearing in May. Heading up the attack is Richard Shelby, chairman of the Senate banking committee, who expressed a range of concerns about the FSB’s influence at the hearing. “An international regulatory regime should not dictate how US regulators supervise American or US-based companies,” he said. AIG, Prudential Financial, and MetLife have been deemed so critically important to the financial system that the FSB decided the three US insurers must be subject to tighter global regulation and potentially higher capital requirements. Shelby, whose sentiments are apparently in line with a longstanding (Republican) scepticism toward international forums, bemoaned the decisions made by the FSB, based in Basel, Switzerland, suggesting it has been adopted ‘with what appears to be little independent evaluation’ by the Financial Stability Oversight Council (the US’s umbrella group of regulators) despite them being of the same opinion calling the three insurers ‘systematically important’. Shelby, who accused the FSB of being an ‘unaccountable international body,’ said the FSB should not dictate how US regulators supervise American or US-based companies. The FSB relies on the soft diplomacy of its members to ensure proposals are implemented by each country and they have no power to enforce recommendations.