The North West Life Assurance Company of Canada - Page 43

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            13(...continued)                                                                           
                  shall be computed on the basis of a ratio the numerator                              
                  of which is the excess of the assets over the total                                  
                  insurance liabilities, and the denominator of which is                               
                  the total insurance liabilities.                                                     
                  Sec. 805(a) of the 1954 Internal Revenue Code, as amended,                           
            defined policy and other contract liability requirements as the                            
            sum of:                                                                                    
                        (1) the adjusted life insurance reserves,                                      
                  multiplied by the adjusted reserves rate,                                            
                        (2) the mean of the pension plan reserves at the                               
                  beginning and end of the taxable year, multiplied by                                 
                  the current earnings rate, and                                                       
                        (3) the interest paid.                                                         
                  Sec. 805(b)(2) of the 1954 Internal Revenue Code, as                                 
            amended, defined the current earnings rate as:                                             
                  * * * the amount determined by dividing--                                            
                              (A) the taxpayer's investment yield for such                             
                        taxable year, by                                                               
                              (B) the mean of the taxpayer's assets at the                             
                        beginning and end of the taxable year.                                         
                  Sec. 805(b)(4) defined assets for purposes of the above sec.                         
            805(b)(2) as follows "all assets of the company (including                                 
            nonadmitted assets), other than real and personal property                                 
            (excluding money) used by it in carrying on an insurance trade or                          
            business."                                                                                 
                  Sec. 809(a)(2) of the 1954 Internal Revenue Code, as                                 
            amended, defined "required interest" for purposes of subsection                            
            819 as:                                                                                    
                  the sum of the products obtained by multiplying--                                    
                              (A) each rate of interest required, or                                   
                        assumed by the taxpayer, in calculating the                                    
                        reserves described in section 810(c) by                                        
                                                                         (continued...)                




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