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advisers to manage the company's investments under the
supervision of its investment committee. Additionally,
Parthenon's investment committee received informal investment
advice and counsel from HCA's corporate investment staff, under
the direction of William McInnes, HCA's vice president for
finance. Parthenon's investment portfolio complied with the
requirements of the Tennessee statute and was typical of the
portfolios maintained by property and casualty insurance
companies generally.
For the years 1981 through 1986, Parthenon issued to
petitioners annual policies providing $10 million in primary
comprehensive hospital liability, comprehensive personal injury
liability, comprehensive property damage liability, and
advertising liability coverages. For the years through 1985, the
coverage offered by Parthenon was on an "occurrence" basis, which
meant that Parthenon indemnified the insureds against all covered
liabilities arising out of any occurrence that caused injury
during the policy period, no matter when the claim arising out of
that injury was reported. For 1986 and subsequent years,
Parthenon provided liability insurance to petitioners on a
"claims made" basis, which meant that coverage was extended only
for claims actually made against an insured during the policy
period arising out of events subsequent to a designated
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