IL DEPT OF INSURANCE TO ALLOW U.S. INSURANCE SECURITIZATION TRANSACTIONS

Springfield, IL - The Illinois Department of Insurance today approved a regulation filed by INEX Insurance Exchange, Chicago, to conduct U.S. based securitization transactions. The regulation allows INEX to transfer high level insurance risks to special purpose limited syndicates. They in turn would issue securities to private investors and place the proceeds in a fully collateralized trust to secure the underlying insurance risks.

Both the special purpose syndicates and all proposed insurance securitizations will be subject to approval by the Insurance Department. "We intend to maintain the proper regulatory oversight, while facilitating a mechanism that allows Illinois to compete in the global insurance market," noted Acting Insurance Director Arnold Dutcher.

"The INEX regulation not only allows insurers and reinsurers to conduct insurance securitizations within U.S. borders, it offers an important layer of protection to the U.S. property and casualty industry," Dutcher said. "As the home state of some of the largest property and casualty insurers, Illinois' domestic industry is particularly vulnerable to major catastrophic losses including a significant earthquake exposure along the New Madrid fault. The ability to transfer some of those risks to the capital markets through an onshore mechanism better enables companies to manage their risk exposures."