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petitioner reduced its umbrella coverage from $10,000,000 to
$5,000,000 and self-insured for risks above $5,000,000.
Petitioner had an umbrella policy providing per occurrence and
aggregate coverage of $5,000,000. The annual premium for this
policy was $57,000 to $67,000. Benefits under this policy were
payable only if petitioner had exhausted the primary policies.
Petitioner had the following umbrella insurance coverage from
1983 to 1989:
Annualized
Policy period Insurer Limits premium
11/11/83-1/1/85Western Employers $10 mil. per $6,517
occur. and
aggregate
1/1/85-10/1/85 U.S. Fire $10 mil. per 12,467
occur.
10/1/85-10/1/86 U.S. Fire $5 mil. per 23,500
occur.
1/1/86-1/1/879 INA $5 mil. aggregate 57,096
1/1/87-1/1/88 INA $5 mil. aggregate 66,707
1/1/88-1/1/89 INA $5 mil. aggregate 57,130
1/1/89-1/1/90 INA $5 mil. aggregate 46,245
5. Petitioner's Financial Condition
Petitioner paid no dividends in fiscal year 1982, but it
paid dividends annually from 1983 through the years in issue.
Petitioner paid almost $900,000 in dividends to its stockholders
from March 31, 1983, to March 31, 1989, an average of about 10
9 During the first 6 months of the 1987 fiscal year (from
Mar. 31 to Oct. 1, 1986), petitioner carried $10,000,000 of
commercial umbrella liability insurance.
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