RenaissanceRe reveals impact of new US tax bill
RenaissanceRe Holdings has conducted a preliminary assessment of how it will be impacted by the Tax Cuts and Jobs Act of 2017, which was passed by both houses of the United States Congress on December 20, 2017.
The bill amends a range of US federal tax rules applicable to individuals, businesses and international taxation, including, among other things, altering the current taxation of insurance premiums ceded from a United States domestic corporation to any non-US affiliate.
As a result of the bill’s reduction in the corporate tax rate from 35 percent to 21 percent effective January 1, 2018, the company anticipates that it will write down a portion of its deferred tax asset and currently estimates that this anticipated write-down will reduce its net income by approximately $40 million in the period in which the bill is enacted.
Apart from the write-down of the deferred tax asset, the company currently estimates that the economic impact of the bill to it will be ‘minimal’. However, it added that uncertainty regarding the impact of the bill remains, as a result of factors including future regulatory and rulemaking processes, the prospects of additional corrective or supplemental legislation, potential trade or other litigation and other factors.