Rep. Richard E. Neal (D- Mass.), Chairman of the Subcommittee on Select Revenue Measures, has reintroduced a bill in the U.S. House of Representatives that he says would negate a tax advantage enjoyed by foreign-based reinsurance providers.
Supporters of the legislation contend that the use of excessive affiliate reinsurance by foreign insurance groups enables them to park their U.S. income in offshore tax havens, thus gaining a competitive advantage over their American-based counterparts. To buttress this contention, Neal noted the amount of reinsurance sent to offshore affiliates has grown dramatically, from a total of $4 billion ceded in 1996 to $33 billion in 2008, including nearly $21 billion to Bermuda affiliates and over $7 billion to Swiss affiliates.
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