German Tax Law Change Would Benefit Insurers

October 14, 2003

The German government is poised to introduce legislation that would change tax laws applicable to the country’s insurers, resulting in a substantial reduction in the amount of taxes they must pay.

Originally reported by the Financial Times Deutschland, the report was later confirmed by the German Finance Ministry. If enacted, the companies would be allowed to deduct stock market losses directly from their tax bill, which could save as much as 10 billion euros ($11.65 billion) in taxes this year.

The changes, which could be enacted this month, would give a strong boost to the sagging fortunes of Germany’s insurers, particularly Allianz and Munich Re, both of which have been reporting continuing losses, due in large part to tax charges.

The news prompted a strong rally on the Frankfurt stock exchange, and later in New York where Allianz ADR shares, traded on the NYSE, rose 3.7 percent on the news to close at $9.81.

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