(Bloomberg) -- Dan Loeb’s Third Point Reinsurance Ltd. saidscrutiny of the industry’s offshore taxadvantage has lessened after hedge fund manager John Paulsonclosed a venture that stood out as an “outlier” for its aggressiveuse of strategies that were criticized as abuses.

The Paulson reinsurance operation “had no employees, they wrotevery little business and they had a big amount of capital sittingoffshore. And I think that got a lot of attention,” Third Point Re Chief Executive Officer JohnBerger said Wednesday at a conference held by Morgan Stanley.“Well, that’s off the table now, they shut that down. So I thinkthe pressure to do something about that has diminished.”

Crack down

U.S. Senator Ron Wyden has urged the Treasury Department since 2014to crack down on operations that help hedge fund managers minimizetaxes on some trading profits when the investments are tied toinsurers in locations such as Bermuda.

The IRS has never clearly defined how much insurance a companymust sell to qualify for the favorable tax treatment. ValidusHoldings Ltd., which partnered with Paulson on a reinsuranceventure, said in January that his PacRe Ltd. was shut down.

Berger has long sought to distinguish his company from PacRe.Bermuda-based Third Point Re, which counts on Loeb to overseeinvestments through his hedge-fund strategies, takes onunderwriting risks from U.S. mortgage guarantors and auto insurersand has added staff to win more contracts.

‘Reasonable test’

“If you take any reasonable test of what is a real insurancecompany, we pass it, from the amount of business we’re writing tothe amount of reserves we have,” Berger said.

The CEO said he’s heard nothing new recently from the InternalRevenue Service about the industry’s tax treatment and that actionmay have been stalled amid the presidential race. Representativesfor the IRS, Paulson and Wyden, an Oregon Democrat, had noimmediate comment.

Berger acknowledged that competition has made it more difficultto find profitable underwriting opportunities. Third Point Re isheaded for its third-straight annual decline in New York tradingand still trades below its 2013 initial public offering price of$12.50 a share. The stock changed hands at $11.40 at 1:17 p.m., up3 cents from Tuesday’s close.

Related: Loeb, Einhorn reinsurers cite risk from IRS, Wydentax scrutiny

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.