Legislators are weighing limits on rules that allow hedge fund managers to pay lower rates on trading profits and postpone some bills when their operations are classified as insurers in offshore locations. (Photo: Shutterstock)

(Bloomberg) — Dan Loeb’s reinsurer cited risks tied to regulation as the Internal Revenue Service and U.S. Senator Ron Wyden work to limit what the lawmaker called a “tax loophole” used by hedge fund managers to route investments abroad.

Third Point Reinsurance Ltd. joins a venture with ties to David Einhorn in addressing the effects of possible tax changes. Legislators are weighing limits on rules that allow hedge fund managers to pay lower rates on trading profits and postpone some bills when their operations are classified as insurers in offshore locations. The IRS in April proposed rules that could limit the insurance company exemption, while not offering specifics about which firms would be excluded.

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