THE European Union (EU) will mount a fresh bid to persuade the United States to free up the billions of euros in collateral it requires foreign reinsurers to set aside against policies.

    EU states agreed Tuesday to give the bloc’s executive European Commission a mandate to negotiate a regulatory pact with the United States.

    European reinsurers, such as Munich Re and Hannover Re of Germany and syndicates on the market run by Lloyd’s of London Ltd., comply with EU solvency rules but must also meet additional collateral requirements when underwriting in the United States.

    Reinsurers say this puts them at a disadvantage to American rivals by increasing capital costs and making premiums more expensive.

    “An agreement with the United States will greatly facilitate trade in reinsurance and related activities”, Janis Reirs, minister of finance for Latvia, which holds the EU’s rotating presidency, said in a statement.

    “It will enable us for instance to recognize each other’s prudential rules and help supervisors exchange information.”

    European and other non-American reinsurers helped to pay for damage from the 1906 earthquake in San Francisco and met 64 percent of the claims from the Sept. 11 attacks in New York.

    The European Union introduces new solvency rules for insurers next January and the European Commission must decide if U.S. and other foreign insurers should comply to continue operating in the 28-nation bloc.(SD-Agencies)