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Central Life wrote primarily guaranteed renewable A&H insurance.
In the latter year, Central Life qualified as a life insurance
company under the ratio (reserve ratio) set forth in section
816(a). In 1991, Central Life properly included unpaid losses
with respect to its guaranteed renewable A&H insurance in the
reserve ratio's numerator and denominator.
Beginning in late 1991, Central Life added a rider to its
existing guaranteed renewable A&H insurance policies, which
allowed it to terminate any of these policies upon 90 days’
notice. By virtue of this rider, Central Life's A&H insurance
policies issued after late 1991 were no longer guaranteed
renewable policies; they were nonguaranteed renewable or CA&H
insurance policies. Because Central Life stopped issuing
guaranteed renewable A&H insurance policies in late 1991,
unearned premiums and unpaid losses with respect to those
policies were no longer properly includable in the reserve
ratio's numerator in 1992 and years thereafter. Central Life's
A&H insurance business in 1992 consisted almost exclusively of
CA&H insurance; it also wrote a small amount of guaranteed
renewable group A&H insurance.
The parties agree that unpaid losses with respect to Central
Life's CA&H insurance policies are not includable in the reserve
ratio's numerator. The parties dispute whether those amounts
must be included in the reserve ratio’s denominator. Respondent
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Last modified: May 25, 2011