The Impact Of HR 3424 On The US Insurance Market

Law360, New York (July 22, 2010, 3:47 PM EDT) -- Congress recently conducted a hearing on H.R. 3424, legislation introduced by Rep. Richard Neal, D-Mass., that would deny deductions for certain reinsurance premiums paid by a foreign-owned U.S. insurer to an offshore affiliate. The legislation is a response to pressure from some U.S.-owned insurance groups that portray affiliate offshore reinsurance as a tax-avoidance strategy. These groups also argue that the tax is necessary to level the playing field and will not harm U.S. consumers.

We disagree. Affiliate reinsurance serves legitimate non-tax business purposes: it effectively mitigates...
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