Reinsurers trading in the US are facing new headwinds. A bill up for consideration in congress would impose new taxes on the cohort of companies, and regulators are also starting to take a closer look as life insurance companies start to get more creative in their approach to reinsurance. Still, as a group publicly traded reinsurers posted generally positive performance during the last round of earnings reporting, a trend that is likely to continue through the fourth quarter.
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Kean Driscoll, CEO of Bermuda-based Validus Re, made an appearance before congress this week as the House Financial Services’ Housing and Insurance Subcommittee took up the issue of insurance. Reps. Richard Neal and Bill Pascrell and Sen. Robert Menendez have bills up in both the House and Senate (HR 2054 and S 991) that would impose a new tax on reinsurance companies. The measure has also been included in current and past budget proposals from President Obama.
During the hearing, Driscoll took questions from Representatives on whether the tax would limit the ability of reinsurance companies to take on risk. Republicans are seeking to shrink the size of government backed insurance companies and are looking for avenues to get private sector insurers and reinsurers to take on some of that load,......................