Bermuda reinsurers

[beerbaron]

Lately I have been focusing on finding a good Bermuda Reinsurer that would meet the following attributes:

-Good underwriting discipline

-Low dividend distributions (I want the tax free compounding to do it's magic)

-Well capitalized

-More then 5 years of existence

 

While researching if there is any changes in the US laws that might affect the Bermuda Re I found out that there is a law proposed under Obama's administration that would tax any Reinsurance above 50%. This could potentially be a big issue for any investor with a stake in the Re business, especially if Obama makes the 50% drop over time. I don't see any market discount due to this uncertity.

 

It seems to me the Bermuda Re would take a major blow to it's business if the tax would come into effect. Does anybody have a good and complete article that explains the situation? What do you guys think of the situation?

 

BeerBaron

 

[twacowfca]

Lately I have been focusing on finding a good Bermuda Reinsurer that would meet the following attributes:

-Good underwriting discipline

-Low dividend distributions (I want the tax free compounding to do it's magic)

-Well capitalized

-More then 5 years of existence

 

While researching if there is any changes in the US laws that might affect the Bermuda Re I found out that there is a law proposed under Obama's administration that would tax any Reinsurance above 50%. This could potentially be a big issue for any investor with a stake in the Re business, especially if Obama makes the 50% drop over time. I don't see any market discount due to this uncertity.

 

It seems to me the Bermuda Re would take a major blow to it's business if the tax would come into effect. Does anybody have a good and complete article that explains the situation? What do you guys think of the situation?

 

BeerBaron

 

 

 

Reinsurance is truly an international market.  Any such legislation would squeeze US companies out of an important market for limiting risk and put them at a disadvantage, forcing them to contract their business or maintain much higher capital ratios.  Such legislation would be very difficult to enforce because  reinsurance risk is sliced and diced and split up between all sorts of companies in many markets and jurisdictions.  :)

[arbitragr]

I haven't read up on the implications of the 'proposed' new tax.

 

But we've touched upon Bermuda reinsurers previously. Have a look at that Buffett buys munich re thread.

[beerbaron]

Found the bill....

 

It's referred as the Neil Bill by the Bermuda Re's. Judging's from Bermuda:Re magazine the players don't seem to alarmed by it.

 

H.R. 1755, Reinsurance Tax Equity Act

 

Still worth investigating if you have a stake in insurers.

 

BeerBaron