RenRe and Chubb record deferred tax benefits ahead of Bermuda corporate income tax
Re/insurers RenaissanceRe and Chubb have both recorded deferred tax benefits due to Bermuda’s plans to introduce a corporate income tax in 2025.
RenaissanceRe said it recorded a net deferred tax asset in the fourth quarter of $593.8 million, which it said it expects to use over a 10-year period.
Chubb, which also released its earnings last night, recorded a $1.14 billion deferred tax asset, which it said boosted its earnings in the quarter.
RenRe said: “On December 27, 2023, the Government of Bermuda enacted the Corporate Income Tax Act 2023, which will apply a 15% corporate income tax to certain Bermuda businesses in fiscal years beginning on or after January 1, 2025.
“The act includes a provision referred to as the economic transition adjustment, which is intended to provide a fair and equitable transition into the tax regime, and results in a deferred tax benefit for the Company.
“The act will also require the Company to reverse certain transaction related purchase accounting adjustments in determining its taxable income, which results in a deferred tax expense.
“Pursuant to this legislation, the Company recorded a $593.8 million net deferred tax asset in the fourth quarter of 2023, expected to be utilized predominantly over a 10-year period. The Company expects to incur and pay increased taxes in Bermuda beginning in 2025.”
Evan G. Greenberg, chairman and chief executive officer of Chubb Limited, said Chubb had a “a blowout year – the best in our company's history”.
“The quarter's results included double-digit P&C premium growth globally, record P&C underwriting income with a world-class 85.5% combined ratio, record investment income, and strong life operating income, all leading to exceptional operating earnings on both a per-share and dollar basis.
“Our results, both earnings and book value related, were positively impacted in a significant way by a one-time deferred tax benefit related to Bermuda's new income tax law. Core operating income was $2.3 billion excluding the tax benefit, up 36%, or $5.54 per share, up 39%. The one-time tax benefit then added $1.1 billion or $2.76 per share.”