Life Insurance Execs See Tax Reform As Good For The Industry – Insurance News

Industry officials say the $ 1.5 trillion tax reform package is expected to help the life insurance industry at low corporate tax rates. One way is to promote group life insurance sales as Americans will join parole in an expansion economy. The second way is that low corporate tax rates will reduce the risk-based capital (RBC) ratio for insurers.

A series of calls with officials stated that the tax reform bill, which soon expects the President’s desk, will reduce the RBC ratio for life insurers for an estimated 65 to 100 basis points.

RBC ratio is considered a major measure of the company’s capital power to support business operations and can limit the amount of risk by an insurance company.

The GOP-proposed correction bill drops corporate tax rate from 39.5 percent to 21 percent.

Nigel Daily, analyst of Morgan Stanley Life Insurance Industry, said in a research note published in early December, “Low Corporate Rate” is a potential 96-point deficiency in the risk-based capital ratio reported across the country. ,

The 2017 tax deduction and change under the Jobs Act will not affect the company’s capital deployment schemes, but may require the company’s capital posts re -looking by rating agencies, officials also explained Wall Street Analysts.

Life insurers will no longer face 8 percent Surtax on taxable income, The Wall Street Journal Informed on Tuesday.

Group insurance is a winner

Tax improvement will be good for metalife, “especially its group insurance business,” Steven A. Kanderian, Chairman, President and CEO of MetLife, said in an outlook call on Friday.

“There is a very close relationship between employment, economic development and group insurance business,” he said.

At the US Chamber of Commerce, Chief Policy Officer Neil Bradley called the change in the rate of corporate tax “home run”.

The bill includes changes in inheritance tax.

When someone dies, the property is dues to the property above $ 5.5 million for individuals at the value of assets transferred to individuals, $ 11 million for joints. The tax improvement bill doubles those boundaries and cancels the tax completely in 2025.

Democrats, none of whom voted for the tax reform bill, and other critics participated against the changes.

He said it was a corporate cheaper, which would only enrich large shareholders and rich individuals at the expense of medium -income taxpayers, while adding losses as $ 2 trillions.

Poll shows that Americans have deep reservation about the tax reform bill.

Senior writer Cyril Tuhi of INSURANCENESNET has covered the financial services industry for more than 15 years. Cyril can be reached (Email protected),

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Cyril Tuhi is a writer located in Pennsylvania. He has covered the financial services industry for more than 15 years. Can be reached on it (Email protected),