-6-
reinsuring any Florida fund other than the Florida Retail
Federation Self-Insurers Fund and ESIF.
3. Crossroads' Retrocession Agreements
A reinsurance company can reinsure itself above an
established retention point with another reinsurance or third-
party insurance company. The third-party insurer assumes the
risks for the retroceded policies (i.e., those policies the
reinsurer retrocedes to the third insurer). This is a
"retrocession" agreement.3
Beginning in 1988, Crossroads retroceded 50 percent of the
risks of ESIF to U.S. Employers Insurance, Inc. (U.S. Employers),
a company incorporated in the Cayman Islands and owned by ESIF.
Petitioner has served on the board of directors of U.S. Employers
since it was incorporated. Crossroads has also retroceded
policies to Lloyds of London.
As of January 1, 1992, Crossroads had retroceded 45 percent
of the risks of Florida Retail Federation Self-Insurers Fund,
Louisiana Retailers Association Self-Insurers Fund, and Louisiana
Employers Safety Association Self-Insurers Fund to Gulf Insurance
Co., Ltd. (Gulf), a company incorporated in the Cayman Islands on
3 See Trans City Life Ins. Co. v. Commissioner, 106 T.C. at
278-279.
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