On 1 January 2011, the changes to New York’s credit for reinsurance regulations took effect. The amendments (i) provide that New York’s credit for reinsurance regulations will no longer apply to a non-New York ceding company if its domiciliary state is “an NAIC-accredited state, or has financial solvency requirements substantially similar to the requirements necessary for NAIC accreditation, and recognizes credit for reinsurance for the insurer’s ceded risk”; (ii) set forth certain prudent reinsurance credit risk management factors including diversification requirements; (iii) include provisions permitting the reduction of the trusteed surplus posted by alien assuming reinsurers under certain conditions; and (iv) most importantly, allow for reduced collateral requirements for credit for reinsurance obtained from unauthorized reinsurers. The amended regulations provide for 0%, 10%, 20%, 75% or 100% collateral requirements from unauthorized reinsurers using ratings-based criteria. The reduced collateral requirements, however, will not be available to reinsurers that have participated in solvent schemes or similar procedures involving U.S. ceding companies. Two leading reinsurers have already taken advantage of the new collateral scheme under New York law. For more detail, please see our prior article, New York’s Changes to Credit for Reinsurance Regulations and Special Treatment of Reinsurers Involved in Solvent Schemes of Arrangement, from our December 2010 bulletin.