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does not pay any interest on the funds in the operating account.
Petitioner invests the premiums in the Seattle trust account in
U.S. dollar-denominated assets and retains the earnings in the
same account. As a general business practice, during the years
at issue, petitioner did not withdraw assets until they matured
or rely upon assets outside of the trust account to cover the
liabilities incurred by its U.S. branch.
In 1987, petitioner transferred between $7 and $8 million in
Canadian dollar-denominated bonds from its Canadian business to
the Seattle bank trust account in order to increase its surplus
assets held in the United States relative to the proportion of
its surplus held in the Canadian operation. In 1988, petitioner
sold stock in a related domestic company for its original cost to
Industrial Alliance Life Insurance Co., petitioner's Canadian
parent corporation. The stock had been recorded on the books of
petitioner's U.S. branch and included in the Seattle trust
account.
F. Mandatory Filings
The insurance commissioner of each State in which petitioner
is licensed to carry on an insurance business requires
petitioner's U.S. branch to file certain annual statements
reflecting its U.S. branch operations. To standardize reporting
requirements, all States require reporting on the annual
statement forms developed by National Association of Insurance
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Last modified: May 25, 2011