- 62 -
Petitioners contend that they established Parthenon to address a
legitimate business concern, that petitioners acted in a
straightforward manner, with no intent to create an unwarranted
tax deduction, and that Parthenon was fully capitalized,
domestically incorporated, regulated by the State, and was not
propped up by guaranties from HCA or the sister subsidiaries.
Petitioners contend further that Parthenon did not act solely as
a reinsurer of risks but directly insured the general and
professional liability risks of HCA and the sister subsidiaries.
Additionally, petitioners contend that the comfort letter
HCA gave to Ideal Mutual was a normal kind of reinsurance
security arrangement that had no effect on risk transfer.
Petitioners contend that the comfort letter HCA gave to Ideal
Mutual affected only a modest portion of Parthenon's business and
was not in effect when Continental became the commercial carrier
for the workers' compensation insurance during 1984 following
Ideal Mutual's insolvency. Accordingly, petitioners maintain,
the comfort letter did not "prop up" Parthenon. Additionally,
petitioners contend that the indemnity provision of the agreement
between HCA and Continental is not relevant to the reinsurance
provided by Parthenon because the subject matter of the indemnity
Page: Previous 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 NextLast modified: May 25, 2011