Taxation Issues in Valuation of Property Casualty Operations

Prior to the Tax Reform Act of 1986, federal taxes did not have significant impact in cash flow valuation models - the advent of the new law has made taxation a key factor in industry's future. Also, certain attributes of the TRA of 1986 create large tax credits or debits that should be valued in a merger or acquisition decision. Finally, certain other attributes which are temporary in nature present special cases over the next five to ten year that must be separately analyzed. The method of acquiring a company can dramatically affect the value of the aforementioned items.