ITB 11-07: Disallowance of the Deduction for Non-Taxed Reinsurance Premiums Paid to Affiliates

On February 14, the Office of Management and Budget ("OMB") released a proposed federal budget for fiscal year 2012 (the "Budget") and the U.S. Treasury Department released its General Explanations of the Administration's Fiscal Year 2012 Revenue Proposals, also known as the "Green Book". Of importance to foreign owned U.S. insurance companies is a provision that limits deductions for reinsurance premiums paid by a U.S. insurance company to its foreign affiliates. The provision is similar to an earlier budget proposal and also to a bill (the "Neal Bill") introduced by Congressman Richard Neal (D-MA) on July 31, 2009, but there are material differences between the current and earlier proposals.