Referred to the Committee on Ways and Means, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
The Catastrophic Risk Transfer Act of 2025 creates a new tax classification for specialized insurance companies that manage large-scale, low-probability risks by transferring them through reinsurance and securities. These "catastrophic risk transfer companies" must be domestic corporations that derive at least 90 percent of their income from investment returns and insurance premiums, maintain full collateral backing, and distribute at least 90 percent of taxable income to shareholders as dividends. The bill establishes a "look-through" tax treatment that taxes shareholders based on the type of income underlying their dividends (interest, capital gains, or insurance premiums), avoiding double taxation while requiring these companies to pay corporate-level taxes only on retained adjusted income. The legislation also streamlines dividend timing rules, allows exemptions from federal withholding taxes on certain dividends paid to foreign investors, and prevents states from imposing premium taxes on reinsurance policies except in the company's home state, capped at federal rates. These provisions aim to encourage the development of a specialized capital market for catastrophic insurance risk while maintaining adequate safety and solvency standards.
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