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Those regulations, which govern the reserve deduction under the
1921 Act, state:
The reserve deduction is based upon the reserves
required by express statutory provisions or by the
rules and regulations of the State insurance
departments when promulgated in the exercise of a power
conferred by statute; * * * Only reserves peculiar to
insurance companies are to be taken into consideration.
* * * Generally speaking, the following will be
considered reserves as contemplated by the law: Items
7, 8, 9, 10, and 11 of the liability page of the annual
statement for life companies, and items 16, 17, 18, 19,
and 26 of the liability page of the annual statement
for miscellaneous stock companies, if a life insurance
company is also transacting other kinds of insurance
business. * * *
The accompanying regulations which controlled the calculation of
the reserve ratio stated that the definition in Article 681 would
also apply for purposes of that ratio. See Regs. 62, Art. 661
(1921 Act). Subsequent regulations under the Revenue Act of
1924, ch. 234, 43 Stat. 253, the Revenue Act of 1926, ch. 27, 44
Stat. 9, the Revenue Act of 1928, ch. 852, 45 Stat. 791, and the
Revenue Act of 1932, ch. 209, 48 Stat. 680, continued this
treatment by carrying forward the language in the 1921
regulations as to the definition of a “reserve” and the
computation of the reserve ratio.
With the passage of the Revenue Act of 1934 (1934 Act), ch.
277, 48 Stat. 680, the Commissioner changed his view on the
meaning of the word “reserves” as applied to the industry of life
and A&H insurance. The Commissioner adopted in the regulations
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