- 19 -                                         
               $100 per claim approximated $20,000,000.  In Exhibits                  
               II-1A and II-2A we have attempted to set forth the                     
               implications of this coverage to * * * [petitioner] on                 
               a net after tax basis.  In this Exhibit we have made                   
               the following assumptions:                                             
                    1.   Revenues are in equal amounts payable at mid                 
                    points of quarters;                                               
                    2.   Expenses as percent of gross premium = 0%;                   
                    3.   Loss ratio = .299;                                           
                    4.   Duration (in years) to ultimate value of losses =            
                    2;                                                                
                    5.   Annual payout pattern - 70%, 30%;                            
                    6.   Plan reimburses gross paid losses for each month             
                    at the end of the following month;                                
                    7.   Applicable Federal Income Tax rate as percentage =           
                    46%; and,                                                         
                    8.   Effective rate of interest per annum as percent =            
                    12%.                                                              
               Based upon these assumptions review of Exhibits II-1A                  
               and II-2A disclose that the contribution of this                       
               program to * * * [petitioner's] after tax earnings is                  
               $31,001,618 at the end of the second subsequent year                   
               when all losses are closed.                                            
               On February 24, 1983, a meeting was held at Hall's offices             
          in Briarcliff Manor, New York, to discuss petitioner's excess               
          value activity.  In attendance at this meeting were:  Messrs.               
          Danielewski, Johnson, Pat Edmunds, Jerry Stein, and Jack                    
          McGuinness representing petitioner; Mr. Allen Dougherty, as                 
          petitioner's attorney; and Messrs. Corde, Garrity, and Roger Wade           
          representing Hall.  Mr. Corde prepared a memorandum dated March             
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