NEW YORK--An advocate of legislation to revise tax rules that some U.S. insurers say favor Bermuda insurance companies with U.S. subsidiaries over their own companies, predicted such a measure could be considered by federal lawmakers this year..

William Berkley, chair and chief executive of W.R. Berkley Group in Greenwich, Conn., also said that if such legislation isn't passed, U.S.-domiciled companies will be forced to move.

Mr. Berkley, responding to questions about his leadership of a 17-member coalition seeking changes in taxes for offshore entities during a media briefing this week, said it would not surprise him if the legislation was not introduced shortly. He explained that the change in law coalition members are seeking will focus on "only one thing."

The only focus, he said, is "people who reinsure their business to affiliates," and the coalition is "making a lot of progress" with lawmakers on this particular issue.

"We continue to pursue efforts to level the playing field," he said, noting that the coalition's intentions have been "distorted by the people in Bermuda and Switzerland" who have charged that Mr. Berkley and his followers are "trying to tax people outside of the jurisdiction of the United States."

That's not the case, he said. "All we are saying is if you write business in the United States, you ought to pay tax on the business that's written in the United States," he said. "It's a pretty straightforward issue."

Mr. Berkley's assessment is contrary to a pronouncement from Fitch Ratings, which said in March that the political maneuvering involved in a system change is "extensive and unlikely to occur in the near term."

According to Fitch's analysis, the issue of U.S. coastal insurance capacity and costs could be used by opponents of such legislation for an argument that a change would reduce capacity and increase the cost of insurance.

Responding to a reporter who asked if he would make good on past "threats" to move his own company to Bermuda, Mr. Berkley said he had never made such a threat.

Instead, he explained that what he said previously, and restated at the briefing, is that "every insurance company in America will have to move offshore to compete if the current tax regime remains as it is."

"I, as well as every company [executive], will be forced to" do this. "It's not what I want to do," he said.

"Will I do it? I don't even want to put that on the table, because I don't want people to feel like I'm threatening," he said.

"Economic reality is economic reality. We can't survive with an 8-, 10-, 12-point differential" in tax rates. "So ultimately, you're going to have to do it," he said, likening the situation to the movement of shipping companies out of the United States because of labor laws that made it economically untenable to remain here.

Mr. Berkley said the coalition of insurance companies working with him includes Employers Mutual of Des Moines, Travelers, Hartford and Chubb.

Special Reports /

Offshore Tax Fix Legislation May Come This Year: Berkley

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