-3-
chairman of the board of Crossroads since 1978. At all times
relevant to this case: (1) The outstanding shares of stock of
Crossroads consisted of 10,000 shares of common stock and 750,000
shares of 10 percent, noncumulative, redeemable preferred stock;
and (2) the members of Crossroads' board of directors were
petitioner and four minority shareholders: Paula Dockery, Mavis
Dockery, Carl Dockery, and Michele Jones.
Crossroads is managed in Georgetown, Grand Cayman. It has
no office in the United States. It is a controlled foreign
corporation under section 957(b). Crossroads' customers are all
in the United States.
Crossroads is licensed to write insurance in Florida and
Louisiana. Each year, Crossroads files annual statements with
Florida and Louisiana reporting the financial condition of its
operations.
1. The Reinsurance Industry
Crossroads is a reinsurer.1 It is engaged in the business
of providing aggregate "stop loss" workers' compensation
reinsurance2 to self-insurer pools (also referred to as funds).
1 A reinsurer is an insurer who agrees to provide coverage
of risks that a primary insurer has already assumed under an
insurance contract with another party. 1 Couch on Insurance 3d,
sec. 1:4, at 1-8 to 1-9 (1995).
2 Reinsurance is an agreement between an insurer (the ceding
company) and a second insurer (the reinsurer), under which the
ceding company passes to the reinsurer some or all of the risks
that the ceding company assumes through the direct underwriting
(continued...)
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