WR Berkley CEO: Offshore Insurance Tax Advantage's Days Appear Limited

BER Berkley CEO: Offshore Insurance Tax Advantage's Days Appear Limited: "American insurers looking to curtail a tax advantage they say favors competitors who set up reinsurance operations in Bermuda have taken heart that the Obama administration's proposed budget includes language favorable to their cause. But little will happen until legislation enabling that becomes reality.

Speaking at A.M. Best's Review/Preview ratings conference, W.R. Berkley Corp. Chairman and Chief Executive Officer William R. Berkley said he was heartened by news that projections in the President's budget anticipate increased tax revenues from offshore financial transactions, some of which will likely include insurance activities.

At present, there is no formal legislation in either branch of Congress that changes the treatment of related party reinsurance transactions with offshore affiliates with regard to risk underwritten in the United States.

In 2008, U.S. Rep. Richard Neal, D-Mass. introduced H.R. 6969, to address concerns raised by the 14-member Coalition for a Domestic Insurance Industry. That group includes U.S.-based property/casualty insurers such as W.R. Berkley Corp., Berkshire Hathaway, Chubb Corp., Hartford Financial Services Group, Liberty Mutual, Safeco Corp. and Travelers Cos. The group contends that shifting profits on business written in the United States to jurisdictions with favorable tax treatment such as Bermuda and the Cayman Islands have made it increasingly difficult for U.S.-domiciled firms to compete. That legislation expired.

Neal's original bill called for limiting deductions for related-party reinsurance cessions to the average percentage of premium ceded to unrelated reinsurers. Excess amounts would be determined by line of business, and the U.S. Treasury would be authorized to enforce its provisions."

For Source and Full Article Visit: Trading Markets