Two subsidiaries of the American International Group — Granite State Insurance Company and New Hampshire Insurance Company — recently filed for approval a plan of redomestication that would change their state of domicile from Pennsylvania to Illinois. The two companies cited Pennsylvania’s “relatively high premium-tax rate” as a reason for their redomestication filing.
In their Oct. 20 filings with the Pennsylvania Insurance Department, the two carriers said they are seeking to redomesticate from Pennsylvania to Illinois in order to reduce “the premium tax burden” and to correspondingly reduce expenses.
The public comment period for their filings is formally open until Dec. 1 in Pennsylvania.
The two carriers said they sustain “a ‘retaliatory tax’ burden imposed by many other states because of the relatively high premium-tax rate in Pennsylvania.”
“Even though these other states’ premium tax rates may be lower than Pennsylvania, they impose Pennsylvania’s higher rate on the Applicant on a retaliatory basis,” the carriers said. “By redomesticating to Illinois, which from a comparative perspective has a more favorable tax rate, this ‘retaliatory tax’ burden will be limited.”
According to the Pennsylvania Revenue Department’s online listing of current tax rates, Pennsylvania has a gross premiums tax rate of “2 percent plus any retaliatory tax” and “3 percent surplus lines tax rate is imposed on policies written with unlicensed non-life insurers.”
In Illinois, the tax rate for life and the property/casualty is 0.5 percent while the accident and health rate is 0.4 percent, plus any applicable retaliatory tax, according to a spokesperson from the Illinois Department of Insurance. The redomestication to Illinois requires approval by director of the Illinois Department of Insurance.
Was this article valuable?
Here are more articles you may enjoy.