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be $14,241,915. The $14,241,915 estimated premium was paid to
Liberty Mutual by petitioner in monthly installments in 1984. By
April 1, 1985, Liberty Mutual completed its audit of the hours
worked by various classes of petitioner's employees in California
and determined the audited premium. After the audit, the
standard premium for petitioner was increased by $204,496 to
reflect the actual amounts of petitioner's California payroll for
the year 1984.
In October 1985, Liberty Mutual Fire sent petitioner a
statement showing the first dividend adjustment to the Liberty
Mutual policy. Every year thereafter through 1994, an annual
dividend statement was sent to petitioner reflecting further
dividend readjustments to the policy.
B. Liberty Mutual-OPL Reinsurance Treaty
Effective January 1, 1984, Liberty Mutual and OPL entered
into a reinsurance treaty for petitioner's 1984 California
workers' compensation liability, which was the subject of the
Liberty Mutual policy. Pursuant to the agreement, in 1984
Liberty Mutual: Paid OPL $12,228,077.62 in premiums in monthly
installments; retained a ceding commission of $1.2 million;
withheld and created an escrow of $480,000 to cover OPL's
liability for losses paid by Liberty Mutual; paid a Federal
excise tax of $141,919.15; and retained a management fee of
$141,918.23.
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