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petitioner's liability for package losses related to any single
occurrence to the extent the liabilities were greater than
$25,000 but did not exceed $10 million. Thus, there was a
theoretical exposure for NUF and OPL, to the extent that one or
more loss occurrences resulted in more than $10 million in loss
per occurrence. For example, if petitioner incurred liability to
shippers as a result of a single occurrence of three times the
$10 million limit that petitioner was insured for under the AFM
policy in 1984, NUF/OPL would have been liable for approximately
$20 million.44 (Twenty million dollars in additional claims
would have reduced the gross profit percentage from EVC's in 1984
from 78 percent to 58 percent.) Even in this unlikely event,
excess value revenue in 1984 would have exceeded over two times
the amount of claims paid. Considering the extreme magnitude of
a catastrophe that would have to occur before claims exceeded
excess value revenue in a given year, we again find it
unrealistic that petitioner or NUF/OPL would realize a loss in
its excess value activity.45
43(...continued)
liability to $25,000 per package.
44Disregarding the $25,000 deductible, petitioner would have
coverage of $10 million under the AFM policy, and NUF/OPL would
be liable for claims in excess of that.
45The only potential financial benefit that petitioner could
realize from its arrangement with NUF and OPL was if liabilities
(continued...)
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