US lawmaker Richard Neal yesterday held a meeting of Congressional colleagues and US insurance executives to muster support for a US tax measure that could hit the bottom lines of Bermuda re/insurers.

Rep. Neal's meeting yesterday, according to TheHill.com website, included three senior executives at three US-based insurers — WR Berkley Corp., Chubb Corp. and MBIA.

Another source told this newspaper that Rep. Neal had invited 11 Democrat colleagues to the private meeting.

The source said it was likely that Rep. Neal, an influential member of the tax-setting House Ways and Means Committee, would attempt to attach his legislation as a "paid-for amendment" to one of the bills set to go through Congress after the Easter break.

The Massachusetts Democrat has so far failed to find a co-sponsor for his bill, which is aimed at non-US insurance groups who provide reinsurance for policies sold by their own US subsidiaries.

But the issue has received more attention in Washington after US President Barack Obama included a similar proposal in his Budget plan last month.

The Obama proposal, which would raise $519 million in tax revenue between 2011 and 2020, would not cost non-US insurers as much as the Neal bill would.

Rep. Neal's attempt to glean more taxation revenue from affiliated reinsurance does not specifically target Bermuda, since it would impact insurance groups based in any domicile outside the US.

The bill would limit the insurers' ability to receive US tax deductions on some reinsurance premiums they cede from their US subsidiaries to the non-US parent.

"I believe prompt passage of my legislation is essential to maintain competitive balance between domestic and foreign insurers and to preserve the U.S. tax base," Rep. Neal wrote in a letter to lawmakers ahead of the yesterday's meeting. "We need to take steps now before it is too late."

The proposed legislation has caused huge controversy in the industry. The US insurers have formed the Coalition for a Domestic Insurance Industry, while the bill's opponents — including the Association of Bermuda Insurers and Reinsurers — established the Coalition for Competitive Insurance Rates.

The bill's opponents, backed by an economic study from the Brattle Group, claim that Rep. Neal's legislation would cause premiums to rise, costing US insurers an extra $10 billion to $12 billion. They say it would also hurt the availability of insurance and reinsurance in the US, particularly in areas that are prone to major natural disasters such as hurricanes.

William Berkley, chairman and CEO of WR Berkley, has been the most vocal supporter of the Neal bill and said last month he did not believe the President's proposal was strong enough.

Even supporters of the bill have concerns about what it could mean for the industry if it is not structured carefully.

Ted Kelly, the CEO of one of the US coalition insurers, Liberty Mutual, said at the World Insurance Forum in Bermuda last week that the bill could have "unintended consequences".

Mr. Kelly told this newspaper: "Any bill that is passed, unless it is properly crafted, it could do a lot of collateral damage. They just have to be very careful."