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          unrelated insurance companies that had written direct insurance             
          covering petitioners--for example, Arkwright-Boston, which wrote            
          direct property coverage for petitioners.  The amounts involved             
          are less than 1 percent of total reserves at December 31, 1986,             
          and Parthenon is not claiming a deduction for an addition to its            
          reserves for those liabilities.                                             
               During policy years 1981 through 1986, Parthenon negotiated            
          reinsurance agreements with a number of professional reinsurance            
          companies in the United States and England covering portions of             
          the risks of petitioners and of the managed hospitals that                  
          Parthenon had insured.  During policy year 1981, Parthenon ceded            
          all potential liabilities in excess of $350,000 per occurrence to           
          reinsurers.  Liabilities in the layer $650,000 excess of $350,000           
          were ceded to General Reinsurance Corp. (General Re), the largest           
          reinsurance company in the United States.  Liabilities in the               
          layer $4 million excess of $1 million were ceded 80 percent to              
          General Re and 20 percent to various syndicates at Lloyds of                
          London.  The remaining liabilities were ceded 20 percent to                 
          General Re, 40 percent to INA Reinsurance Co., and 40 percent to            
          a consortium of Lloyds syndicates and British reinsurance                   
          companies.  General Re, Parthenon's principal reinsurer, reviewed           
          Parthenon's claims and other operations on an ongoing basis to              
          ensure that the reinsured business was conducted in accordance              
          with appropriate standards.                                                 
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