A.M. BestTV: How U.S. Tax Reform Will Affect Insurers

Insurance Weekly News

By a News Reporter-Staff News Editor at Insurance Weekly News -- In this A.M.BestTV episode, A.M. Best Senior Industry Research Analysts George Hansen and David Blades examine how the 2017 U.S. tax reform is set to impact a wide range of insurance areas, including reinsurance, reserves, long-tail lines and more. Click on http://www.ambest.com/v.asp?v=taxreform118 to view the entire program.

The effects of tax reform will continue to play out throughout 2018. While the primary impact of a significantly lower corporate tax rate is good for the overall insurance industry, other changes are certain to affect the handling and treatment of net operating losses and reserves.

Hansen believes that the Base Erosion Anti-Abuse Tax (BEAT) is one that really bears watching.

"The life reinsurers will be particularly impacted by the BEAT tax, since this changes the way those U.S. companies that use foreign reinsurers are taxed," said Hansen. "The minimum tax on certain deductible payments made to foreign affiliates will be 5% for 2018, 10% in 2019 and in 2025, 12.5%. This will diminish the tax advantage these foreign reinsurers had. "

"It is important to note that the companies, which are going to be subject to that BEAT tax, will be those that have three-year average annual gross receipts in excess of USD 500 million, as well as a BEAT erosion that accounts for over 3% of their overall deductions," said Blades.

To access a full copy of this Best's Briefing, titled, "First Look - Tax Reform 2017," please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=269221.

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