NEW YORK — Dan Loeb’s Bermudian-based 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 criticised as abuses.

The Paulson reinsurance operation, based in Bermuda and known as PaCRe, “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 yesterday 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.”

US senator Ron Wyden has urged the Treasury Department since 2014 to crack down on operations that help hedge fund managers minimise 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 favourable tax treatment. Validus Holdings Ltd., which partnered with Paulson on a reinsurance venture, said in January that his PacRe Ltd. was shut down.

Berger has long sought to distinguish his company from PacRe. Bermuda-based Third Point Re, which counts on Loeb to oversee investments through his hedge-fund strategies, takes on underwriting risks from US mortgage guarantors and auto insurers and has added staff to win more contracts.

“If you take any reasonable test of what is a real insurance company, we pass it, from the amount of business we’re writing to the amount of reserves we have,” Berger said.

The CEO said he’s heard nothing new recently from the Internal Revenue Service about the industry’s tax treatment and that action may have been stalled amid the presidential race. Representatives for the IRS, Paulson and Wyden, an Oregon Democrat, had no immediate comment.

Berger acknowledged that competition has made it more difficult to find profitable underwriting opportunities. Third Point Re is headed for its third-straight annual decline in New York trading and still trades below its 2013 initial public offering price of $12.50 a share. The stock closed at $11.28 yesterday, down 9 cents from Tuesday’s close.