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Reinsurance Security Agreement Template for Ireland

This document is a comprehensive legal agreement governed by Irish law that establishes security arrangements between a reinsurer and a cedent company. It details the provision, maintenance, and enforcement of collateral arrangements to secure reinsurance obligations. The agreement complies with Irish insurance regulations, including the Insurance Act 1989 and relevant EU directives incorporated into Irish law, particularly addressing requirements under Solvency II. It sets out specific provisions for collateral requirements, custody arrangements, enforcement mechanisms, and regulatory compliance matters within the Irish legal framework.

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What is a Reinsurance Security Agreement?

A Reinsurance Security Agreement is a crucial document used in the reinsurance industry to provide financial security and collateral arrangements between reinsurers and cedent companies. Under Irish law, these agreements are particularly important for compliance with regulatory requirements, including Solvency II provisions and Central Bank of Ireland regulations. The agreement is typically implemented when a cedent requires additional security for reinsurance obligations, especially in cases involving international reinsurers or significant risk exposure. It includes detailed provisions for collateral calculations, custody arrangements, enforcement rights, and regulatory compliance. The document must align with Irish financial services regulations while accommodating international reinsurance practices and standards.

What sections should be included in a Reinsurance Security Agreement?

1. Parties: Identifies and defines the contracting parties - typically the reinsurer providing security and the cedent receiving security

2. Background: Contextualizes the agreement, references the underlying reinsurance arrangement, and explains the purpose of the security agreement

3. Definitions and Interpretation: Defines key terms used throughout the agreement and sets out interpretation rules

4. Security Interest Creation: Establishes the creation and nature of the security interest, including the assets being secured

5. Collateral Requirements: Specifies the type, amount, and quality of collateral required, including calculation methods and maintenance requirements

6. Custody Arrangements: Details the arrangements for holding and managing the collateral, including custodian responsibilities

7. Top-Up and Release Provisions: Sets out conditions and procedures for increasing or releasing collateral based on value fluctuations or obligation changes

8. Rights and Obligations: Details the ongoing rights and obligations of all parties regarding the security arrangement

9. Events of Default: Defines circumstances constituting default and consequences thereof

10. Enforcement: Specifies the procedures and rights for enforcing security upon default

11. Representations and Warranties: Contains standard and specific representations and warranties from each party

12. Termination: Sets out circumstances and procedures for terminating the agreement

13. Governing Law and Jurisdiction: Specifies Irish law as governing law and establishes jurisdiction for disputes

What sections are optional to include in a Reinsurance Security Agreement?

1. Multi-Currency Provisions: Required when collateral may be provided in multiple currencies, specifying exchange rate mechanisms and currency conversion procedures

2. Trust Arrangements: Needed when the security arrangement involves a trust structure, detailing the trust mechanism and trustee obligations

3. Letters of Credit: Required when letters of credit are accepted as eligible collateral, specifying requirements and procedures

4. Investment of Collateral: Needed when collateral assets may be invested, specifying permitted investments and investment procedures

5. Tax Provisions: Required for cross-border arrangements or when specific tax implications need addressing

6. Regulatory Compliance: Needed when specific regulatory requirements must be addressed, such as Solvency II compliance

7. Third Party Rights: Required when rights are granted to non-parties, such as regulators or beneficiaries

What schedules should be included in a Reinsurance Security Agreement?

1. Schedule 1 - Underlying Reinsurance Contracts: Lists and describes the reinsurance contracts covered by the security arrangement

2. Schedule 2 - Collateral Specifications: Detailed requirements for eligible collateral, including types, ratings, and valuation methods

3. Schedule 3 - Calculation of Required Collateral Amount: Formula and methodology for calculating required collateral amounts

4. Schedule 4 - Forms of Notices: Standard forms for various notices required under the agreement

5. Schedule 5 - Custodian Agreement Terms: Key terms and requirements for any custody arrangement

6. Appendix A - Contact Details: Contact information for all relevant parties and authorized representatives

7. Appendix B - Reporting Requirements: Templates and specifications for required reporting under the agreement

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Ireland

Document Type

Security Agreement

Cost

Free to use

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