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After all the alternatives were discussed, it was agreed
that petitioner would pursue the alternative to create an
insurance subsidiary to act as a reinsurer. Further, the
insurance subsidiary would be owned by petitioner, and
ultimately, petitioner might adopt a long-range strategy of
transferring ownership in such a company to petitioner's
shareholders. Finally, it was agreed that Mr. Danielewski and
other members of the UPS team would submit a proposal to senior
management based on the following financial projections, as
stated in Mr. Corde's March 1, 1983, memorandum:
UPS CURRENT POSITION
A:
Projected 1983 Declared Value Revenue$69,900,000
Estimated 1983 Losses $21,400,000
Pretax Profit $48,500,000
Net After Tax Profit $26,190,000
B-Alternative Program:
1. Insured Declared Value Program (U.S. Front)
Estimated Annual Premium $69,900,000
*Estimated Expenses (6.5) $4,485,000
Net Underwriting Income $65,415,000
2. UPS Insurance Subsidiary
Foreign Reinsurance Premium Income $65,415,000
Ceding Commission - 2-1/2% $1,747,500
Net Premium Income $63,667,500
Expected Losses $21,400,000
Underwriting Profit $42,267,500
C: Projected Benefit to * * *
[Petitioner] $16,077,500
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