The IRS has rarely if ever done so. Tax lawyers and insurance executives said they were unaware of any company targeted by the IRS, even in private.
“Nobody’s been challenged, so nobody knows whether it’s ironclad or not,” said Faries, the Bermuda lawyer. The IRS declined to comment.
A year after the IRS notice, Greenlight Capital Inc.’s Einhorn started laying the groundwork for another reinsurer in a tax haven. Greenlight Capital Re Ltd., which opened in 2006 in the Cayman Islands, put 100 percent of its assets under Einhorn’s control. Einhorn, 44, whose net worth is estimated by Forbes at $1.2 billion as of last September, took the reinsurer public in 2007.
Third Point
Third Point’s Loeb, 51, was next in 2011 with Third Point Reinsurance Ltd., which raised about $785 million, including $75 million of Loeb’s own money. Forbes magazine estimated his personal fortune at $1.3 billion as of September.
And last year, SAC’s Cohen, 56, whose net worth Bloomberg estimates at about $9.5 billion, put $125 million of his own money into a $500 million reinsurance company called SAC Re.
Both Cohen and Loeb followed the Greenlight model: hire a handful of local employees to sell reinsurance while relying on the hedge fund firm to manage the assets.
A stable pool of capital to invest may be particularly welcome at SAC Capital, whose outside investors this month asked to withdraw $1.7 billion amid a U.S. government insider-trading investigation. Outside money accounts for less than half of SAC Capital’s $15 billion under management; the rest belongs to Cohen and his employees.
Cohen and SAC haven’t been accused of any wrongdoing and believe they’ve acted appropriately, a spokesman said in November. They declined to comment for this article.
Third Point Re said in a statement last year that it located in Bermuda because of the island’s “respected regulatory regime” and talented workforce. It hired John Berger, a career insurance executive, as CEO.