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liability. Petitioner argues that the meaning of the subject
term as given to it by the industry of life and A&H insurance is
the meaning that applies here.
We agree with petitioner that the specific industry at the
focus of our inquiry is life and A&H insurance and that the life
and A&H insurance industry distinguishes meaningfully a reserve
from a liability and an accrued unpaid loss from an unaccrued
unpaid loss. We also agree with petitioner that an unaccrued
unpaid loss, which the industry treats as a reserve and not a
liability, is substantively different for purposes of section 816
from an accrued unpaid loss, which the industry treats as a
liability and not a reserve.
As we read the applicable text with its lengthy history in
mind, we believe that Congress meant for the term “unpaid losses”
to reach only those unpaid losses which are technical reserves in
the NAIC sense; to wit, unaccrued unpaid losses. According to
the NAIC, an unaccrued unpaid loss is considered a reserve for
annual statement purposes, and an accrued unpaid loss is
considered a liability.5 We, like the Court of Appeals for the
5 As we understand the nomenclature of the life and A&H
industry, an A&H insurer incurs a loss upon the happening of an
insured event, and, when it does, the estimated liability on the
portion of the loss that represents services yet to be received
is called an unaccrued unpaid loss or a reserve. The estimated
liability of the portion that represents services already
received is called an accrued unpaid loss or an accrued
(continued...)
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