Bermuda preparing for Clinton plan. (Clinton Administration taxation of captive insurance companies in 1997 proposed budget)(Captive Insurance Review)

National Underwriter Property & Casualty-Risk & Benefits Management, March, 1997 by Otis, L.H.

The specter of risk managers boosting non-related business in Bermuda captives for tax reasons, which in the 1970s and 1980s led to disastrous losses, has again been raised as a result of a recent Clinton administration budget proposal. But executives with captive management firms who spoke at a recent symposium in Bermuda said the sophistication of the present-day captive industry on the island precludes a repeat of the mistakes made in decades past, should the U.S.

proposal be instituted. The Clinton administration proposal--part of its fiscal 1997 budget--would require corporate captives to write 50 percent of their insurance business in non-related risks, up from about 30 percent currently, or no longer receive tax treatment as insurers. Although...

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