Moves by the United States to eliminate tax exemptions for thousands of offshore small property casualty companies was discussed last week at a conference in Bermuda.

The second day of the Offshore Insurance Operations Conference 2000 saw talks by Hugh McCormick, of LeBoeuf, Lamb, Greene & MacRae LLP and Gordon Pehrson of Hopkins & Sutter on the use of offshore vehicles to write annuity and life insurance products.

Mr. Pehrson said: "There is a proposal to eliminate tax exemption in the property casualty business for dealings of less than $3,000 -- which affects thousands of companies around the world.

He addressed over 170 delegates who have attended the two day conference at the Southampton Fairmont Princess.

The two men discussed the off-shore market which has seen dramatic growth in recent years in the formation of entities to ensure and re-insure life and annuity products. They explained how and why this had happened.

Mr. McCormick said in his opening: "The past few years have seen a burgeoning interest in life insurance and annuity products issued by offshore insurers.

The target markets are three-fold.

"Firstly US citizens and tax residents outside the States interested in acquiring tax-favoured products for investment and insurance purposes.

"Then there are US taxpayers who reside in the US but are interested in holding assets outside of the US for the purpose of shielding assets from creditors, who may be beneficiaries of estate-planning arrangements created by foreign persons or who may be temporary US tax residents.

"Thirdly there are non-citizens -- or residents who are interested in dollar-denominated insurance products offered by major US insurers -- but who do not wish to be subject to the US withholding taxes.'' The tax issues are a hot topic this year after Bill Clinton included some changes in the way captives are taxed in his proposed budget.

George Abramowitz, a parent in Le Boeuf, Lamb & MacRae, LLP also spoke to delegates about the issue.

In a talk entitled "Engaging in a US Trade or Business,'' Mr. Abramowitz spoke about the treaty and non-treaty issues involved in determining whether an insurer or reinsurer could be found to be doing business in the United States for federal income tax purposes and concerns about branch profits and their taxes.

Talking taxes: George Abramowitz, a partner at LeBoeuf, Lamb, Greene & MacRae LLP, spoke at length about treaty and non-treaty tax issues. Federal income tax for captives was a hot topic at the Offshore Insurance Operation Conference 2000 held at the Southampton Fairmont Princess recently.

BUSINESS BUC TAXES TAX