(Bloomberg) -- Dan Loeb’s Third Point Reinsurance Ltd. said scrutiny of the industry’s offshore tax advantage has lessened after hedge fund manager John Paulson closed a venture that stood out as an “outlier” for its aggressive use of strategies that were criticized as abuses.
The Paulson reinsurance operation “had no employees, they wrote very little business and they had a big amount of capital sitting offshore. And I think that got a lot of attention,” Third Point Re Chief Executive Officer John Berger said Wednesday at a conference held by Morgan Stanley. “Well, that’s off the table now, they shut that down. So I think the pressure to do something about that has diminished.”
|Crack down
U.S. Senator Ron Wyden has urged the Treasury Department since 2014 to crack down on operations that help hedge fund managers minimize taxes on some trading profits when the investments are tied to insurers in locations such as Bermuda.
The IRS has never clearly defined how much insurance a company must sell to qualify for the favorable tax treatment. Validus Holdings Ltd., which partnered with Paulson on a reinsurance venture, said in January that his PacRe Ltd. was shut down.
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