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WASHINGTON, D.C. (October 18, 2017) – News broke today that Assurant Inc. will acquire Chicago-based Warranty Group. According to reports, the acquisition paves the way for an inversion to Bermuda and will allow the new company to exploit the Insurance Tax Haven Loophole, which allows foreign based insurers to avoid paying federal taxes on reinsurance income generated in the U.S. The Coalition for American Insurance issued the following statement.

 

“It’s unfortunate that yet another company formerly based here in the U.S. has decided to shift its headquarters to Bermuda allowing it to avoid paying U.S. taxes on its reinsurance income. The news about Assurant Inc. is just the latest example of why the Insurance Tax Haven loophole must be closed in comprehensive tax reform. Foreign-based insurers should not be allowed to game the system like this and avoid paying taxes. The longer they are able to do so, the more costly this loophole becomes for taxpayers. The Joint Tax Committee estimates that the loophole will result in nearly $9 billion lost to the U.S. Treasury over the next decade. What’s more, its existence continues to incentivize an exodus of insurers to low or no-tax jurisdictions like Bermuda. Since the loophole was created nearly three decades ago, the share of U.S. based insurers in the U.S. insurance market has declined from 85 to 27 percent[1]. This must stop. A level playing field for all businesses operating within the U.S. reinsurance market is essential when it comes to taxes. Likewise, eliminating antiquated provisions in the current tax code that hamstring U.S. companies’ ability to compete in global markets will promote domestic growth and jobs.”

 

ABOUT THE COALITION –

The Coalition for American Insurance consists of twelve major U.S.-based insurance groups that employ hundreds of thousands of people within the United States. Coalition members provide millions of Americans with financial protection from unpredictable risks and pay substantial amount of federal, state and local taxes. The Coalition is seeking a level playing field and tax fairness for U.S.-based insurers and their consumers and employees by closing a current federal tax loophole that allows foreign-based insurers to avoid paying U.S. taxes.

 

[1] source: Dowling & Partners, IBNR Weekly #49, Vol. XXIII, December 22, 2016

 

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