Concerns about California premium taxes prompted Pacific Life Insurance Company to redomesticate its operations to Nebraska from California effective Sept. 1, 2005.[@@]
Nebraska Insurance Director L. Tim Wagner approved the move Aug. 19.
The premium tax rate is 1% in Nebraska. That compares with a rate of 2.35% in California, says Tennyson Oyler, a Pacific Life spokesman.
When Pacific Life was domesticated in California, it had to pay the higher of each state’s local tax rate or California’s 2.35% rate in each of the 50 jurisdictions in which it was authorized to conduct business, Oyler says.
The requirement that an insurer pay the higher tax is called a “retaliatory tax.”
Now, Pacific Life will pay a maximum rate of 1%, Oyler says.
Pacific Life’s corporate headquarters are still in Newport Beach, Calif., but the company also has a newer office in Omaha, Neb., that employs 130 people. Eventually, the Omaha office will employ 250 people, Oyler says.
Some of the employees in Omaha were transferred from Newport Beach, but no jobs in Newport Beach have been eliminated as a result of the opening of the Omaha office, Oyler says.
The redomestication applies specifically to Pacific Life, Oyler says.
Pacific Mutual Holding Company, the ultimate parent, continues to be based in Newport, Calif. The parent company’s Pacific Life Corp unit, is domiciled in Delaware. Another unit, Pacific Life and Annuity Company, is domiciled in Arizona and sells products in New York.
Premium taxes can vary widely from state to state, according to the National Association of Insurance Commissioners, Kansas City, Mo.
Rates range from a low of 0.75% in Wyoming and 1% in Nebraska to a high of 4.265% in Hawaii.