2 AIG Carriers File for Redomestication

Two subsidiaries of the American International Group – Granite State Insurance Co. and New Hampshire Insurance Co. — recently filed for approval a plan of redomestication that would change their state of domicile from Pennsylvania to Illinois.

In their Oct. 20 filings with the Pennsylvania Insurance Department, the two carriers said they are seeking to redomesticate to Illinois to reduce “the premium tax burden.” The 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.” The public comment period for their filings is open until Dec. 1 in Pennsylvania.

Pennsylvania has a gross premiums tax rate of 2 percent plus any retaliatory tax – and a 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.

The redomestication to Illinois would require approval by the director of the Illinois Department of Insurance.