CLOUDY FUTURE FOR NEAL BILL
QUICk FACTS
legislation that would limit tax deductions for The bill is backed by the Coalition for a domestic
reinsurance that insurers cede to affiliates outside the Insurance Industry, a group of 14 US-based insurers
TOP 10 glObAl
United States has been reintroduced by representative that include William berkley, coalition spokesman and rEInSUrErS by nET
richard neal (democrat, Massachusetts). The bill, chairman and chief executive officer of W.r. berkley,
rEInSUrAnCE
PrEMIUMS
hr 3424, is designed to “end the practice of excessive who said the bill would “level the playing field”.
WrITTEn, 2007
reinsurance between related entities”, by changing the
however, opponents argue that the measure would cut
US Internal revenue Code to cap the deductibility of
reinsurance capacity and drive up costs for insurers.
non-taxed reinsurance premiums paid by insurers to ($ millions)
groups, including the Association of bermuda Insurers
their foreign affiliate. yet the bill’s future is unclear.
and reinsurers, the new york-based risk & Insurance
Company
Seen by many outside the US as a brash attempt to shut Management Society Inc. and the Washington-based
Net reinsurance
premiums written
down offshore financial centres, the bill is being closely Coalition for Competitive Insurance rates all oppose the bill.
Country
watched both inside and outside the US.
As a stand-alone tax measure, observers say the bill is not
rep. neal is arguing that foreign insurers shift likely to succeed, but could go through a revenue raiser
1/ Munich Reinsurance Co.
premiums offshore to lower their US tax burden, which on another piece of legislation completely unrelated
30,292.9/germany
puts US-based firms at an automatic disadvantage. to reinsurance. Observers say any action on the bill is
2/ Swiss Reinsurance Co.
Introducing the bill on the house floor recently, rep. unlikely until after the August recess. In addition, it has
27,706.6/Switzerland
neal said: “There is no doubt that there is a legitimate not yet been evaluated by the Congressional budget
role for reinsurance. however, reinsurance among Office to determine how much tax revenue the bill
3/ Berkshire Hathaway Re
17,398.0/US
affiliates can serve other purposes as well, including could generate. however, opponents say they plan to
tax avoidance.” keep up lobbying efforts.
4/ Hannover
Rueckversicherung AG
10,630.0/germany
NEW NOVAE UNIT
surplus capital across the group. It also shortens the tail of
5/ Lloyd’s (1)
8,362.9/UK
our business overall,” according to Matthew Fosh, chief
lloyd’s of london insurer novae group Plc is planning
executive officer of the novae group.
6/ SCOR SE
to form a new international unit, which will function
7,871.7/France
under the name novae re. It will operate as a discrete
7/ Reinsurance Group
unit and write property, liability, agriculture, engineering
of America, Inc.
and other specialty business, effective from January 2010.
WHITE MOUNTAINS REJIG
4,906.5/US
In a statement, novae group said the unit—still subject
White Mountains Insurance group has been reorganising
8/ Transatlantic
to approval by the UK Financial Services Authority and Holdings Inc.
its reinsurance business, with the company’s bermuda
lloyd’s—is expected to have gross written premiums of
3,952.9/US
reinsurance arm converted into a branch of White
about £100 million ($165.3 million) in 2010, with future 9/ Everest Reinsurance Co.
Mountains re Sirius. Warren Trace, current president and
growth subject to market conditions.
3,919.4/bermuda
chief executive officer of White Mountains re bermuda,
10/ PartnerRe Ltd.
The reason for the launch is to install $165.2 million of
will remain in charge of the bermuda branch operations,
3,757.1/bermuda
unused spare capital and to put risk back on the table
while reporting to goran Thorstensson, president and
as the environment improves, compared to the reduced
CEO of Sirius.
underwriting exposure strategy the company has had In 2007, global reinsurance
for the last three to four years. The new unit will have
The reorganisation is expected to come into effect on premiums written totalled
$168.0 billion, up 9.8
12 underwriters and eight support staff led by gunther
September 1, following the confirmation of the required
percent from $153.1 billion
Saacke, formerly head of reinsurance at Endurance UK.
regulatory approvals. Allan Waters, president and CEO
in 2006, according to
novae group said the london unit is being formed to
of White Mountains re, said: “This reorganisation keeps
Standard & Poor’s
take advantage of improving conditions in the reinsurance
our successful bermuda reinsurance team in place, while
market and to optimise deployment of the group’s bringing the security of the whole Sirius balance sheet to
(1) Represents an aggregation of all
syndicates participating at Lloyd’s.
capacity. novae re’s formation “brings a combination of our clients in bermuda. Our team is excited about the

Source: Standard & Poor’s.
strategic benefits. It diversifies our product range. It allows new structure and looks forward to continuing our strong
more efficient allocation of capital and begins to utilise the
relationships with all our brokers and clients.”
September 2009 | INTELLIGENT INSURER | 11
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