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  #11  
Old 11-10-2017, 03:21 PM
A2TRM A2TRM is offline
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Originally Posted by elleminopee View Post
Almost seems like they singled-out the life insurance industry to squeeze while all other industries will get a benefit from tax reform.
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Originally Posted by MathGeek92 View Post
I believe the life industry ^*^* enough that they realized the mistake and "fixed" it.
I agree with both of these. It seems to me that they needed to generate some revenue in order to keep the total impact of the bill under the limit necessary to pass the legislation as reconciliation. Apparently the life insurance industry was a palatable target for that revenue.

I'd be really interested to hear more about how they developed the original 23.5% factor for tax reserves, and the 8% surcharge in the amendment.

Either way, it seems like they missed the mark on how much of a hit it would be to the industry, and/or how much pushback they would receive. And now they're walking it back.

Most of the management at my company doesn't appear too concerned at this stage. Given the recent history of proposed legislation failing to actually get across the finish line, many believe it either won't materialize at all or will be drastically different in it's final form.
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  #12  
Old 11-10-2017, 06:12 PM
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Most of the management at my company doesn't appear too concerned at this stage. Given the recent history of proposed legislation failing to actually get across the finish line, many believe it either won't materialize at all or will be drastically different in it's final form.
They may be right. But only if the industry as a whole makes a lot of noise about this.
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  #13  
Old 11-13-2017, 09:30 AM
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Analysts at KPMG noted that the provision could have changed reserving rules in a way that would have left an annuity issuer with too little cash to pay cash surrenders to contract holders who give up their contracts.
Could someone explain this to me? I don't see how tax reserve rules could result in annuity issuer not having enough cash to pay benefits. As long as Statutory reserving rules remain unchanged, then there should be enough cash on-hand to fund the benefits. Furthermore, since having tax reserves = 76.5% of Stat reserves would create a tax LOSS at the time of surrender (benefits paid > tax reserve released), the transaction which should net to zero on a pre-tax Stat basis (assuming Stat reserve = cash surrender value) will actually create a post-tax GAIN on surrender.
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  #14  
Old 11-16-2017, 04:54 PM
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https://cv.actuary.org/members/alert...2017-CP-23.pdf

Quote:
CROSS-PRACTICE ISSUES
Alert No. 2017-CP-23
November 16, 2017
Tax Reform Bill Passes U.S. House
Spoiler:
The U.S. House of Representatives today passed a tax reform bill by a vote of 227-205. The Tax Cuts
and Jobs Act would lower the corporate tax rate from 35 percent to 20 percent, double the standard
deduction, and restructure the individual income tax brackets from seven to four.
The bill would also eliminate the medical expense deduction, terminate deductions and exclusions for
contributions to medical savings accounts, and gradually eliminate the estate tax. Other provisions
affecting life and property/casualty insurers that were originally included in the bill were removed
before it was brought to a vote. These provisions included a repeal of the small life insurance company
deduction and a modification to the proration and discounting rules for property/casualty insurers.
The U.S. Senate is also considering its tax reform bill (still in draft form), which differs from the House
bill in several respects. Most notably, the Senate bill is expected to include a repeal of the penalty for
individuals without health insurance (known as the individual mandate). The Senate bill is also expected
to double the estate tax threshold rather than gradually eliminate it, retain the medical device tax, and
modify the thresholds for the seven individual income tax brackets. If the Senate passes its version of the
bill, the two chambers will need to conference to resolve differences between the two bills before
considering final legislation.

The Academy released an Essential Elements this week on the tax treatment of insurance and pension
protections, and the potential impacts of revisions to the tax code on insurance and pensions. The
Academy also sent a letter to members of the U.S. Congress in August that outlined these potential
impacts and reminded lawmakers of the importance of an actuarial perspective when considering tax
policy changes.
Here's their Essential Elements doc:
http://www.actuary.org/files/publica...tment11.17.pdf

Quote:
Tax Treatment of Pensions and Insurance Protections

The U.S. tax code, for public policy reasons, is deeply
interwoven with provisions that help individuals acquire
insurance protections and retirement security, and help
businesses insure against risk. Employee health and pension
benefits, individual health insurance, annuities and
life insurance, and property/casualty lines of insurance
are all interconnected with and affected by existing tax
policies.
Insurance and pensions have a unique purpose—to
secure individuals against unforeseen events and preserve
resources in retirement through the pooling of risk. Together
with income, investments, and retirement savings,
insurance plays a critical role in Americans’ economic
well-being. Each type of insurance and retirement plan is
governed by unique tax provisions that can help encourage
individuals to mitigate risks they may not be able to afford
or save for on their own.
More at link.

Here's the letter they sent in August:
https://www.actuary.org/files/public..._8_31_2017.pdf
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  #15  
Old 12-03-2017, 08:50 AM
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What got through the Senate:
http://www.thinkadvisor.com/2017/12/...paign=12022017

Quote:
Senate Passes Tax Bill That Includes Scott Life Amendments
Corker was the only Republican to vote against H.R. 1
Spoiler:
Members of the Senate today voted 49-51 to approve their version of H.R. 1, the Tax Cuts and Jobs Act bill, along a mostly party-line vote.

All Democrats and independents who participated voted against the bill.

Sen. Bob Corker, R-Tenn., was the only Republican to vote in favor of the bill.

The legislation the Senate actually approved appears to be a 479-page substitute amendment released late Friday by Sen. Orrin Hatch, R-Utah. A copy of the Hatch amendment is available here.

Rep. Kevin Brady, R-Texas, introduced one version of H.R. 1 in the House in early November. The House has already approved that version.

Hatch, the chairman of the Senate Finance Committee, posted a Senate version about a week later. When the committee was marking up the original Hatch version of the bill, the committee also posted a packet proposed by committee members.


.......
Life and Annuities

The original Brady and Hatch versions of the bill included a number of changes related to life insurance that received little public attention.

The Brady bill, for example, would have let life insurers keep only 76.5% of their statutory reserves as tax reserves. Analysts at the congressional Joint Committee on Taxation (JCT) estimated that change would have resulted in a gain for the federal government of about $15 billion over 10 years, or costs of about $1.5 billion per year for life insurers.


Tax bill (Image: Hatch)

(Image: Hatch)

The original Brady bill also would have changed how life insurers account for "deferred acquisition cost" (DAC) expenses, or the spending associated with bringing in new life and annuity business, such as marketing, underwriting, and paying agent sales commissions.

The original Hatch bill also included a DAC tax provision.

The JCT analysts predicted the Brady DAC provision would cost life insurers about $7 billion over 10 years, and that the original Hatch version would have cost about $23 billion over 10 years.

When the Senate Finance Committee was holding the bill markup meetings, Sen. Tim Scott, R-S.C., offered a package of life insurance section amendment proposals. The committee included the Scott proposal in the amendment packet but never discussed it during the markup.

The substitute amendment that Hatch posted today appears to include most of what Scott asked for.

Scott asked, for example, that tax bill managers extend the amortization period for DAC expenses to 15 years, from 10, and increase the DAC tax capitalization rates for new business by 20%.

Scott also asked the tax bill managers to let life insurers treat 95% of their statutory reserves as tax reserves, rather than 76.5%. The Hatch substitute amendment sets the tax reserve percentage at 92.87%.

The Hatch substitute amendment appears to keep a life settlement provision from the original Hatch bill. The life settlement provision will create new tax reporting requirements for life settlement transactions, and it will keep the life settlement providers from treating the cost of life insurance premiums as an expense when computing capital gains taxes.

The Future

The Senate and the House still have to resolve differences between their bills before a bill can go to the desk of President Donald Trump.

The House could simply approve the Senate version of H.R. 1, but congressional leaders have said they intend to set up a conference committee to try to combine the two bills.

Sen. Ron Johnson, R-Wis., said in a tweet that he decided to vote for the bill partly because he was told he could have a seat at the conference committee table.


So we have to wait to see what actually gets signed.
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  #16  
Old 12-06-2017, 10:39 AM
Actuary321 Actuary321 is offline
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Quote:
Originally Posted by Campbell's last article
Members of the Senate today voted 49-51 to approve their version of H.R. 1, the Tax Cuts and Jobs Act bill, along a mostly party-line vote.

All Democrats and independents who participated voted against the bill.

Sen. Bob Corker, R-Tenn., was the only Republican to vote in favor of the bill.
Does this mean what it seems to say?

Don't you usually list the winner's vote count first when describing the approval of something? So shouldn't they have said the vote was 51-49?

And if all the demos and indies voted against it, didn't Cocker also vote against it?
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  #17  
Old 12-06-2017, 11:13 AM
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Quote:
Originally Posted by Actuary321 View Post
didn't Cocker also vote against it?
I assumed this was incorrectly worded in the post.
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Pluto is no longer a planet and I am no longer an actuary. Please take my opinions as non-actuarial.


My latest favorite quotes, updated Apr 5, 2018.

Spoiler:
I should keep these four permanently.
Quote:
Originally Posted by rekrap View Post
JMO is right
Quote:
Originally Posted by campbell View Post
I agree with JMO.
Quote:
Originally Posted by Westley View Post
And def agree w/ JMO.
Quote:
Originally Posted by MG View Post
This. And everything else JMO wrote.
And this all purpose permanent quote:
Quote:
Originally Posted by Dr T Non-Fan View Post
Yup, it is always someone else's fault.
MORE:
All purpose response for careers forum:
Quote:
Originally Posted by DoctorNo View Post
Depends upon the employer and the situation.
Quote:
Originally Posted by Sredni Vashtar View Post
I feel like ERM is 90% buzzwords, and that the underlying agenda is to make sure at least one of your Corporate Officers is not dumb.
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  #18  
Old 12-06-2017, 11:21 AM
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Mary Pat Campbell
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Look, I just copy/paste

I'm a victim, too

And it's weird - they got it right in the subhed, and screwed it up in the article itself
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  #19  
Old 12-06-2017, 12:59 PM
Actuary321 Actuary321 is offline
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Yeah, and the article still shows it incorrectly.

The only comment on the article says, "Someone should proofread this story again."
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  #20  
Old 12-06-2017, 02:23 PM
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No one edits anymore since you have the whole internet for that now.
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