President Obama’s recently announced intention to crack down on corporations that use foreign subsidiaries as tax shelters was foreshadowed by a long-running battle within the insurance industry.

U.S. domiciled reinsurers have long contended that they are at a competitive disadvantage to reinsurers based offshore in low-tax countries such as Bermuda. Foreign companies, they charge, dodge U.S. taxes by shifting premium from the U.S. subsidiary’s books to the foreign parent’s books, while the risk remains in the same corporate group.

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