NU Online News Service, Dec. 7, 3:27 p.m.EST

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A representative of international insurers sees conclusions of the deficit panel last week as a positive forthe international insurance industry, noting that it calls forlower corporate tax rates in the U.S. as well as a revised taxscheme consistent with those in most other countries.

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The panel, the National Commission on Fiscal Responsibility andReform, unveiled Friday a blueprint designed to tackle the nation'sexploding budget deficit problems. While 11 of the 18 panel membersvoted to support the final blueprint that the commission developed,the vote was four short of the necessary supermajority necessary toput the report automatically before the Congress.

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But in comments as the blueprint was released, Democraticco-chair Erskine Bowles said the panel's work shows it is possibleto have "an adult conversation about the deficit."

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And his Republican co-chair, former Wyoming Sen. Alan Simpson,said the panel "took a big banana and threw it into the gorillacage." Now, he predicted, lawmakers will play with it, "but theywill eat some."

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Brad Kading, president and executive director of the Associationof Bermuda Insurers and Reinsurers (ABIR), said he believes theconclusions of the panel imply that "corporate tax reform ispolitically feasible in the future."

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He implied that corporate tax reform and a change in the U.S.tax structure to only tax the U.S. earnings of multinationalcompanies based in the U.S. means that pressure would be reducedfor increasing taxes on foreign insurers, such as that proposed by Rep. Richard Neal, D-Mass., a ranking memberof the House Ways & Means Committee,

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The Neal bill, H.R. 3424, would raise $17 billion over 10 years by disallowingthe tax deduction for reinsurance between affiliated entities.

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Mr. Kading said the election of a Republican-controlled House inthe mid-term election has also changed the debate over the foreigntax issue.

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Because the deficit panel conclusions are consistent with viewsof House Republicans, Mr. Kading said, it creates bipartisansupport for a U.S. tax policy more consistent with the policies inall other nations.

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He also said that Chubb and the Berkley Companiesofficials–leaders of a coalition supporting the Neal bill–havetestified that their overall objective in seeking the higher tax onforeign insurers and reinsurers is to lower the tax rate fordomestic insurers.

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"The deficit panel proposal would accomplish what the coalitionsupporting the Neal bill ultimately wants to accomplish" withoutthe foreign tax, Mr. Kading said.

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Another component of the deficit panel recommendations is toimpose a "territorial tax system" in the U.S., the same system usedby most foreign countries, Mr. Kading said.

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Currently in the U.S., he explained, the earnings of U.S.-basedcompanies are taxed even on their overseas earnings. Most othercountries, he said, only tax the earnings of companies in theirjurisdiction.

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Besides tax reform, specific proposals for deficit reductiondealing with the property and casualty industry included"aggressive tort reform" as well as a recommendation for creationof a disaster fund whose purpose to be to "budget honestly forcatastrophes."

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