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may escape U.S. taxation on investment income attributable to
their U.S. business.
Respondent retained Richard E. Stewart, Richard S.L. Roddis,
and Barbara D. Stewart of Stewart Economics, Inc.15 (Stewart), as
expert witnesses to give their professional opinion as to the
reasons and incentives Canadian life insurance companies have for
holding certain assets in the United States and why the
investment income earned on those assets is not an inherently
reliable measure of the investment income flowing from the branch
operations. We have received into evidence their report.16
Stewart reviewed the history of the State regulations applying to
foreign insurance companies, including the NAIC annual statement
and the trust requirements for such companies. The report agrees
with respondent that NAIC form 1A is not an effective means by
which to ascertain the net investment income that is effectively
15Richard E. Stewart holds a degree from West Virginia
University and a law degree from Harvard Law School. He is
former Superintendent of Insurance of the State of New York and a
former officer and director of The Chubb Group of Insurance
Companies. Richard S.L. Roddis holds a degree from San Diego
University and a law degree from Boalt Hall School of Law at the
University of California at Berkeley. He is a former
Superintendent of Insurance of the State of California.
Barbara D. Stewart holds a bachelor's degree in economics and
business administration from Beaver College. She is a former
corporate economist of the Chubb Group.
16We have disregarded the Stewart report to the extent that
it relies on State law of Washington for years not at issue. The
record does not indicate that petitioner operated in Michigan;
we have also disregarded the report to the extent that it relies
on Michigan State law.
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