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Industry players weigh in on tax reform’s effects

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Reforms to the nation’s tax code will bring varied benefits to different members of the insurance sector, insurers and organizations say.

Chubb Ltd. on Dec. 26 said it expects to record a one-time benefit of more than $250 million in the fourth quarter of 2017 as a result of the new U.S. tax law.

The insurer said its preliminary estimate reflects the one-time impact of the reduced U.S. corporate income tax rate and the deemed repatriation of foreign subsidiary earnings on its net deferred tax liability position.

RenaissanceRe Holdings Ltd., Pembroke, Bermuda, said Dec. 22 that it expects to take a $40 million hit to its net income because it anticipates that it will write down a portion of its deferred tax asset as a result of the corporate tax rate dropping to 21% from 35%.

The reinsurer added that it estimates any further effects of the tax changes will be “minimal” but warned that “uncertainty regarding the impact of the Tax Bill remains.”

The National Association of Professional Insurance Agents said Dec. 22 that the new tax law will help small business owners.

Specifically, the law will allow members who own small businesses such as insurance agencies to save taxes on income that passes through these small businesses and is recorded as personal income.

The law could also, however, induce small-business owners to reorganize such businesses to take greater advantage of the new tax law, but such reorganizations can be costly and present regulatory challenges, the Alexandria, Virginia-based association said, adding the legislation was nonetheless a “net positive for most PIA members.”

In a research note Dec. 4, Keefe Bruyette & Woods Inc. analyst Meyer Shields, based in Baltimore, said domestic reinsurers and specialty insurers would benefit the most from the new tax bill.