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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.
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