Full Deep-Dive: The Offshore Reinsurance Tax Dodge

“How Warren Buffett turns U.S. insurance premiums into Bermuda tax havens”

The mechanics (2025)

  • U.S. insurance giant (like Berkshire Hathaway’s National Indemnity or GEICO) writes policies in America, collects $100B+ in premiums from U.S. customers.
  • Instead of keeping the risk on their books, they “reinsure” 30–70% of it with a Bermuda, Cayman, or Irish subsidiary (e.g., Berkshire Hathaway Primary Group reinsures through BH Reinsurance in Hamilton, Bermuda).
  • The U.S. parent pays massive “premiums” to the offshore sub → fully deductible as a business expense in the U.S. (wiping out U.S. taxable income).
  • Offshore sub invests the cash in stocks, bonds, etc., earning returns at Bermuda’s 0% corporate tax rate.
  • Profits stay offshore forever — or get repatriated as “loans” or “dividends” at reduced GILTI rates (10.5–13.125%).
  • Result: Billions in U.S.-sourced profits taxed at near-zero rates.

Buffett’s Berkshire as the poster child

  • Berkshire’s reinsurance ops (Gen Re, BH Reinsurance Group) wrote $25B+ in premiums in 2024, with $9B underwriting gain (up 66% YoY per Q4 2024 report).
  • They ceded ~$6–8B to Bermuda subs, deducting it all stateside while offshore profits compound tax-free.
  • 2025 H1: $3.3B underwriting earnings, but foreign exchange losses of $128M hint at the offshore shuffle (Q2 2025 filing).
  • Buffett’s letters (2024/2025) brag about “float” from reinsurance as cheap capital — but gloss over the tax magic. Berkshire’s effective tax rate on insurance: ~5–7% vs. 21% headline.

The money lost

  • Industry-wide (insurers like AIG, Travelers, Chubb): $10–15B annual U.S. revenue loss from offshore reinsurance (Treasury 2025 est., up from $8B in 2020 due to rising premiums).
  • Berkshire alone: ~$1–2B/year avoided (ITEP analysis of 2024 filings).
  • Total through 2030: $100B+ if unchecked.

Real example

  • In 2024, Berkshire collected $50B+ in U.S. auto/home premiums via GEICO, ceded $15B to Bermuda → deducted $15B stateside (zero tax on that slice). Offshore sub invests in Apple/Chevron, earns 10% ($1.5B) → 0% Bermuda tax. Repatriated as “management fees” at 10.5% GILTI. Net savings: $300M+ for Berkshire.

Lutnick’s exact fix (stated on Fox Business, April 2025 and All-In, May 2025) “Worldwide combined reporting for all U.S.-based multinationals — pool all global profits, apportion based on U.S. sales/property/payroll, tax at 21%. No more sending premiums to Bermuda and calling it a deduction. One framework. Ends the offshore reinsurance game forever.”

Revenue impact

  • Immediate: +$10–$12B per year from insurance sector alone.
  • Broader: Forces $50B+ in profit repatriation, boosting U.S. investment.
  • Ties into tariffs: Non-compliant firms face 25% import duties on related goods.

What insurers will scream “This kills global competitiveness!” Reality: Bermuda will still be cheaper for pure offshore ops, but U.S. giants can’t deduct cessions to their own subs. Berkshire’s float shrinks 10–15%, but they adapt (they’re Berkshire).

One policy change turns the world’s biggest insurers into actual U.S. taxpayers.

“How Warren Buffett turns U.S. insurance premiums into Bermuda tax havens”

The mechanics (2025)

  • U.S. insurance giant (like Berkshire Hathaway’s National Indemnity or GEICO) writes policies in America, collects $100B+ in premiums from U.S. customers.
  • Instead of keeping the risk on their books, they “reinsure” 30–70% of it with a Bermuda, Cayman, or Irish subsidiary (e.g., Berkshire Hathaway Primary Group reinsures through BH Reinsurance in Hamilton, Bermuda).
  • The U.S. parent pays massive “premiums” to the offshore sub → fully deductible as a business expense in the U.S. (wiping out U.S. taxable income).
  • Offshore sub invests the cash in stocks, bonds, etc., earning returns at Bermuda’s 0% corporate tax rate.
  • Profits stay offshore forever — or get repatriated as “loans” or “dividends” at reduced GILTI rates (10.5–13.125%).
  • Result: Billions in U.S.-sourced profits taxed at near-zero rates.

Buffett’s Berkshire as the poster child

  • Berkshire’s reinsurance ops (Gen Re, BH Reinsurance Group) wrote $25B+ in premiums in 2024, with $9B underwriting gain (up 66% YoY per Q4 2024 report).
  • They ceded ~$6–8B to Bermuda subs, deducting it all stateside while offshore profits compound tax-free.
  • 2025 H1: $3.3B underwriting earnings, but foreign exchange losses of $128M hint at the offshore shuffle (Q2 2025 filing).
  • Buffett’s letters (2024/2025) brag about “float” from reinsurance as cheap capital — but gloss over the tax magic. Berkshire’s effective tax rate on insurance: ~5–7% vs. 21% headline.

The money lost

  • Industry-wide (insurers like AIG, Travelers, Chubb): $10–15B annual U.S. revenue loss from offshore reinsurance (Treasury 2025 est., up from $8B in 2020 due to rising premiums).
  • Berkshire alone: ~$1–2B/year avoided (ITEP analysis of 2024 filings).
  • Total through 2030: $100B+ if unchecked.

Real example

  • In 2024, Berkshire collected $50B+ in U.S. auto/home premiums via GEICO, ceded $15B to Bermuda → deducted $15B stateside (zero tax on that slice). Offshore sub invests in Apple/Chevron, earns 10% ($1.5B) → 0% Bermuda tax. Repatriated as “management fees” at 10.5% GILTI. Net savings: $300M+ for Berkshire.

Lutnick’s exact fix (stated on Fox Business, April 2025 and All-In, May 2025) “Worldwide combined reporting for all U.S.-based multinationals — pool all global profits, apportion based on U.S. sales/property/payroll, tax at 21%. No more sending premiums to Bermuda and calling it a deduction. One framework. Ends the offshore reinsurance game forever.”

Revenue impact

  • Immediate: +$10–$12B per year from insurance sector alone.
  • Broader: Forces $50B+ in profit repatriation, boosting U.S. investment.
  • Ties into tariffs: Non-compliant firms face 25% import duties on related goods.

What insurers will scream “This kills global competitiveness!” Reality: Bermuda will still be cheaper for pure offshore ops, but U.S. giants can’t deduct cessions to their own subs. Berkshire’s float shrinks 10–15%, but they adapt (they’re Berkshire).

One policy change turns the world’s biggest insurers into actual U.S. taxpayers.

“How Warren Buffett turns U.S. insurance premiums into Bermuda tax havens”

The mechanics (2025)

  • U.S. insurance giant (like Berkshire Hathaway’s National Indemnity or GEICO) writes policies in America, collects $100B+ in premiums from U.S. customers.
  • Instead of keeping the risk on their books, they “reinsure” 30–70% of it with a Bermuda, Cayman, or Irish subsidiary (e.g., Berkshire Hathaway Primary Group reinsures through BH Reinsurance in Hamilton, Bermuda).
  • The U.S. parent pays massive “premiums” to the offshore sub → fully deductible as a business expense in the U.S. (wiping out U.S. taxable income).
  • Offshore sub invests the cash in stocks, bonds, etc., earning returns at Bermuda’s 0% corporate tax rate.
  • Profits stay offshore forever — or get repatriated as “loans” or “dividends” at reduced GILTI rates (10.5–13.125%).
  • Result: Billions in U.S.-sourced profits taxed at near-zero rates.

Buffett’s Berkshire as the poster child

  • Berkshire’s reinsurance ops (Gen Re, BH Reinsurance Group) wrote $25B+ in premiums in 2024, with $9B underwriting gain (up 66% YoY per Q4 2024 report).
  • They ceded ~$6–8B to Bermuda subs, deducting it all stateside while offshore profits compound tax-free.
  • 2025 H1: $3.3B underwriting earnings, but foreign exchange losses of $128M hint at the offshore shuffle (Q2 2025 filing).
  • Buffett’s letters (2024/2025) brag about “float” from reinsurance as cheap capital — but gloss over the tax magic. Berkshire’s effective tax rate on insurance: ~5–7% vs. 21% headline.

The money lost

  • Industry-wide (insurers like AIG, Travelers, Chubb): $10–15B annual U.S. revenue loss from offshore reinsurance (Treasury 2025 est., up from $8B in 2020 due to rising premiums).
  • Berkshire alone: ~$1–2B/year avoided (ITEP analysis of 2024 filings).
  • Total through 2030: $100B+ if unchecked.

Real example

  • In 2024, Berkshire collected $50B+ in U.S. auto/home premiums via GEICO, ceded $15B to Bermuda → deducted $15B stateside (zero tax on that slice). Offshore sub invests in Apple/Chevron, earns 10% ($1.5B) → 0% Bermuda tax. Repatriated as “management fees” at 10.5% GILTI. Net savings: $300M+ for Berkshire.

Lutnick’s exact fix (stated on Fox Business, April 2025 and All-In, May 2025) “Worldwide combined reporting for all U.S.-based multinationals — pool all global profits, apportion based on U.S. sales/property/payroll, tax at 21%. No more sending premiums to Bermuda and calling it a deduction. One framework. Ends the offshore reinsurance game forever.”

Revenue impact

  • Immediate: +$10–$12B per year from insurance sector alone.
  • Broader: Forces $50B+ in profit repatriation, boosting U.S. investment.
  • Ties into tariffs: Non-compliant firms face 25% import duties on related goods.

What insurers will scream “This kills global competitiveness!” Reality: Bermuda will still be cheaper for pure offshore ops, but U.S. giants can’t deduct cessions to their own subs. Berkshire’s float shrinks 10–15%, but they adapt (they’re Berkshire).

One policy change turns the world’s biggest insurers into actual U.S. taxpayers.

Share:

More Posts

Send Us A Message

Scroll to Top