The North West Life Assurance Company of Canada - Page 70

                                               - 70 -                                                  

            the conduct of a U.S. insurance business was increased by an                               
            imputed amount if its surplus held in the United States was less                           
            than a statutorily defined required surplus.  Sec. 813(a)(1).                              
            The minimum surplus was computed in the same manner as prior                               
            section 819(a)(2), which was in effect in 1980 when the Treaty                             
            was signed.  Sec. 813(a)(2).  Under section 819, a foreign life                            
            insurance company was required to reduce certain deductions by an                          
            imputed amount if its surplus fell below a statutorily defined                             
            amount.  Sec. 819(a)(2).  The required surplus was computed by                             
            multiplying the company's total insurance liabilities on U.S.                              
            business by the ratio of the surplus to total insurance                                    
            liabilities of domestic life insurance companies.  Sec.                                    
            819(a)(2).                                                                                 
                  Similarly, section 842(b) imputes to the U.S. branch a                               
            minimum amount of assets based upon the branch's actual                                    
            liabilities.  This minimum amount is determined by multiplying                             
            the U.S. branch's own liabilities by the applicable                                        
            asset/liability ratio.  Sec. 842(b)(2)(A).  Resembling sections                            
            819(a)(2) and 813(a)(2), section 842(b) uses asset and liability                           
            figures from domestic life insurance companies in order to                                 
            calculate this applicable ratio.  Sec. 842(b)(2)(C).  Therefore,                           
            the rule in section 842(b)(2), which imputes an amount of                                  
            "required U.S. assets" is merely a continuation of a principle                             
            that has been consistently applied for over 35 years.                                      





Page:  Previous  57  58  59  60  61  62  63  64  65  66  67  68  69  70  71  72  73  74  75  76  Next

Last modified: May 25, 2011