H.R. No. 243
R E S O L U T I O N
WHEREAS, The insurance business greatly depends on
affiliated reinsurance for managing and spreading risk; and
WHEREAS, Purchasing reinsurance from affiliates is a means
for large insurers to manage capital and also serves an important
risk-transfer purpose, providing significant additional primary
insurance capacity, particularly for crop, windstorm, general
liability, products liability, and aircraft insurance; and
WHEREAS, Non-U.S.-based insurance companies with U.S.
affiliates purchase reinsurance from parent and sister companies
domiciled abroad, but a bill introduced in the United States
Congress would penalize them for doing so, even though U.S. and
foreign-based insurance groups currently pay functionally
equivalent taxes on reinsurance transactions; given the average tax
burden of 25 percent in European countries, such legislation would
render most offshore reinsurance transactions prohibitively
expensive, and the U.S. market would see a capacity shortfall and
increases in premiums for consumers; and
WHEREAS, A major study by the Brattle Group, an economic
research and consulting firm, concluded that the proposed policy
would result in a 20 percent reduction in the supply of reinsurance
for consumers in the United States, in turn leading to annual cost
increases of $10 to $12 billion; in addition, a broad coalition of
industry and consumer groups have spoken out against the proposal;
and
WHEREAS, Taxation proposed in H.R. 3424, 111th Cong. (2009),
discriminates against the use of offshore affiliated reinsurance by
foreign-based companies and, if enacted, will severely undermine
the risk management practices at the heart of international
reinsurance markets; now, therefore, be it
RESOLVED, That the House of Representatives of the 82nd Texas
Legislature hereby express its opposition to H.R. 3424 and to any
other proposal that would limit the use of reinsurance by
non-U.S.-based insurance companies; and, be it further
RESOLVED, That the chief clerk of the Texas House of
Representatives forward official copies of this resolution to the
president of the United States, to the president of the Senate and
the speaker of the House of Representatives of the United States
Congress, and to all the members of the Texas delegation to Congress
with the request that this resolution be entered in the
Congressional Record as a memorial to the Congress of the United
States of America.
Howard of Fort Bend
______________________________
Speaker of the House
I certify that H.R. No. 243 was adopted by the House on May
13, 2011, by the following vote: Yeas 144, Nays 0, 1 present, not
voting.
______________________________
Chief Clerk of the House