Lloyd’s Chairman Lord Levene has called for an end to the US rule which requires foreign reinsurers to fund 100% of their gross liabilities in the US.

As an “alien”, Lloyd’s must hold collateral equal to its gross liabilities in the US, and Lloyd’s says that is “unreasonable and unjust”.

Speaking in Washington DC, Lord Levene said US reinsurers are able to fund their US liabilities on a net basis, taking credit for reinsurance purchased. “It is here in America, the bastion of free trade, where we face one of the greatest obstacles to trade” he said. “Despite our integral role in this economy throughout the past 150 years, Lloyd’s remains under US regulation as an alien insurer and reinsurer.”

With some $17 billion in its US reserves, the London market has too much tied up in “massive and needless overfunding of its liabilities”, he said.

“These US regulations prevent market forces from operating freely, preventing insurance from being priced as competitively and economically as possible.”