WASHINGTON - The United States and the European Union signed an agreement late Friday to streamline regulations on international insurance and reinsurance companies, and free up capital for investments, a deal that was 20 years in the making.

The governments said the deal, negotiated by former US president Barack Obama's administration and announced just before he left office in January, will offer "enhanced regulatory certainty" to the companies, reducing red tape "while maintaining robust consumer protections."

US Treasury Secretary Steven Mnuchin said the agreement with the EU "is a win for the United States, its insurance industry, and US policyholders."

He said that by reducing the regulatory burden companies face, the deal "enables American companies to be more competitive in the EU, enhances opportunities for US insurers and reinsurers at home and abroad, and furthers the administration's goal of sustained economic growth."

Insurers now "will only be subject to worldwide prudential insurance group oversight by supervisors in their home jurisdiction" rather than in the country where they are operating, according to a joint statement.

In addition, the pact reduces collateral requirements for reinsurers -- which US firms were not required to hold -- which the EU said increases the investment capacity of the firms.

"EU reinsurers estimate that they have about $40 billion of collateral posted in the US, which could instead be invested to create jobs and growth," the EU said in a statement.

The governments said the deal also will facilitate exchange of information among supervisors, which will help boost consumer protection.

The terms of the five-year deal will be effective immediately, but provisionally, as the European Parliament and Council must approve the agreement.