Trans City Life Insurance Company, an Arizona Corporation - Page 5

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          (...continued)                                                              
               defined in subsection (c)).  For purposes of the                       
               preceding sentence, the term “insurance company” means                 
               any company more than half of the business of which                    
               during the taxable year is the issuing of insurance or                 
               annuity contracts or the reinsuring of risks                           
               underwritten by insurance companies.                                   
                    (b) Life Insurance Reserves Defined.--                            
                         (1) In general.--For purposes of this                        
                    part, the term “life insurance reserves”                          
                    means amounts--                                                   
                              (A) which are computed or                               
                         estimated on the basis of                                    
                         recognized mortality or morbidity                            
                         tables and assumed rates of                                  
                         interest, and                                                
                              (B) which are set aside to                              
                         mature or liquidate, either by                               
                         payment or reinsurance, future                               
                         unaccrued claims arising from life                           
                         insurance, annuity, and                                      
                         noncancellable accident and health                           
                         insurance contracts (including life                          
                         insurance or annuity contracts                               
                         combined with noncancellable                                 
                         accident and health insurance)                               
                         involving, at the time with respect                          
                         to which the reserve is computed,                            
                         life, accident, or health                                    
                         contingencies.                                               
                         (2) Reserves must be required by law.--                      
                    Except--                                                          
                              (A) in the case of policies                             
                         covering life, accident, and health                          
                         insurance combined in one policy                             
                         issued on the weekly premium                                 
                         payment plan, continuing for life                            
                         and not subject to cancellation,                             
                         * * *                                                        
                         *    *    *    *    *    *    *                              
                         in addition to the requirements set (continued...)           





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