The American Council of Life Insurers (ACLI) issued the following statement today on the proposed 2012 federal budget:                                                

Washington, D.C. (February 15, 2011) — “The American Council of Life Insurers (ACLI) is concerned about provisions in the 2012 federal budget proposal that would impose new taxes and fees on an industry that plays a key role in helping 75 million American families and businesses across the country plan for their financial futures.

“One proposal would impose new taxes on a type of life insurance used by businesses of all sizes. Corporate-owned life insurance (COLI) protects businesses against financial or job loss stemming from the death of owners or key employees. COLI is used to ensure business continuation and is widely used as a mechanism for funding employee and retiree benefits.

“Another proposal would undercut longstanding rules regarding life insurers’ dividends-received deductions (DRD) that are designed to prevent double taxation of corporate earnings. The administration’s proposal would reduce the DRD that life insurers use in accounts that fund variable life insurance and variable annuity contracts—key products for financial and retirement security.

“A third proposal would impose a financial crisis responsibility fee on certain bank and thrift holding companies in an effort to recoup funds used for the Troubled Asset Relief Program (TARP). The proposal could apply the new fee to life insurers that own a bank or a thrift whether they received TARP funds or not. Most life insurance companies did not participate in the TARP program and those that did have already repaid their loan.

“ACLI does applaud the Obama administration for including incentives for small businesses to adopt retirement savings plans for their employees and other provisions aimed at helping Americans prepare for retirement. Helping Americans achieve financial and retirement security is a goal that life insurers share with the administration.

“However, our nation’s economy is still recovering from the financial crisis. Now is not the time to discourage families and businesses from protecting their financial futures or for the imposition of new, unnecessary fees on an industry that has withstood the financial crisis. Congress rejected the same proposals last year. We urge the withdrawal of the COLI, DRD and bank fee proposals.”

The American Council of Life Insurers (ACLI) is a Washington, D.C.-based trade association with more than 300 legal reserve life insurer and fraternal benefit society member companies operating in the United States. ACLI members represent more than 90 percent of the assets and premiums of the life insurance and annuity industry. In addition to life insurance and annuities, ACLI member companies offer pensions, 401(k) and other retirement plans, long-term care and disability income insurance, and reinsurance. ACLI's public Web site can be accessed at www.acli.com.