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relevancy to our analysis herein. There, the insurer derived 98
percent of its premium income from A&H insurance and 2 percent
from life insurance. In contrast to the unpaid losses at issue
in this case, the issue there was whether the insurer’s unearned
premiums were reserves. The taxpayer generally argued that no
A&H obligation could meet the pre-1942 definition of “reserve”,
and it did not distinguish between accrued and unaccrued
obligations, asserting that the unearned premiums were not true
insurance reserves because they were not “required by law”. The
court disagreed, citing Commissioner v. Monarch Life Ins. Co.,
supra, to hold that the reserve deduction is not limited to
reserves that are life insurance reserves. Nor does petitioner
disagree with that holding. In fact, the parties agree that
petitioner included its unearned premiums in the reserve ratio's
denominator. Contrary to respondent's argument, it does not
follow from National Protective Ins. Co. that all A&H obligations
8(...continued)
with the following parenthetical: “(observing that purpose of
statute includes not only what it sets out to change, but also
what it resolves to leave alone).” In addition to the fact that
respondent could have made the same argument with respect to
every act that postdated the 1942 Act, the fact that Congress did
not change the reserve ratio in the later acts aids respondent's
position only if the reserve ratio meant what respondent says it
did before those acts. As explained herein, it did not. In
fact, the cited case is far more apt as a description of the
events surrounding the 1942 Act, in which Congress set out to
make it easier for companies writing noncancelable A&H insurance
to qualify as life insurance companies.
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