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company, and to form a new corporation (New Parthenon) to
continue to fulfill Parthenon's former captive insurance role.
Accordingly, HCA incorporated New Parthenon during 1984
under the Tennessee captive insurance statute to continue
providing captive insurance to petitioners. New Parthenon
originally was named Parthenon Casualty Insurance Company, but
subsequently changed its name to Parthenon Insurance Company upon
beginning operations. During 1985 and subsequent years, New
Parthenon issued policies and reinsurance contracts covering the
general and professional liability risks of petitioners on the
same basis as the old insurance company of the same name and
using basically the same staff of employees.
During March 1985, Old Parthenon changed its name to
Parthenon Casualty Insurance Company (PCIC), qualified as a
licensed surplus lines insurance company in a number of States,
and ceased its former role of a pure captive insurance company.
The accounting records and account balances for the previously
written captive business remained with PCIC, even though its
principal activity was to underwrite the professional liability
risks of third-party physicians. Additionally, during March
1985, PCIC declared and paid to HCA a dividend in the amount of
$2,250,000. HCA contributed that dividend to New Parthenon as
paid-in surplus.
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