Third Point Reinsurance Ltd., which counts Dan Loeb as a founder, said it’s more than just a hedge fund investing vehicle as the Internal Revenue Service weighs tightening regulation for offshore companies.
“Anyone that spent a day in our office would clearly see that we’re a real insurance company,” Chris Coleman, the chief financial officer, said at a conference Thursday in Boston.
Hedge fund managers like Loeb and John Paulson have pushed into the Bermuda reinsurance market to access additional capital for investing while gaining tax advantages. The IRS is weighing whether to impose minimum standards for reserves or premiums to distinguish the companies that rely most on underwriting from those that depend more on investing.
Third Point Re wrote $613.3 million in premiums in 2014, a 53 percent increase from the previous year. The company would pass proposed standards for sales while just missing on potential reserve requirements, Coleman said. He said there are “significant flaws” to some regulations under discussion, because they would apply to too much of the industry.
“There’s actually quite a few other companies that would equally fall below the threshold,” especially among insurers that shoulder risks tied to infrequent events, such as natural disasters, he said.
The U.S. Treasury Department said last year in a letter to Senator Ron Wyden that it’s considering ways to end a “loophole” that allows companies to route investments through low-tax countries.
‘Bulldog This’
“I’m going to bulldog this until this is resolved,” Wyden, an Oregon Democrat, said earlier this year. “These are people that are taking advantage of the law-abiding taxpayers that we’re talking about.”
Third Point Re’s Coleman said the industry may get direction from the government in the next 30 or 40 days, and that he’s looking forward to receiving clarity.
“The rules have never really been challenged, so in some ways, we welcome the news from the IRS,” he said.