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of AIG was the actuary who designed and priced the COLI policies
purchased by petitioner. On June 4, 1993, Mr. Larry Walters of
AIG, sent a Letter of Understanding regarding the COLI policies
to Mr. McCook. The Letter of Understanding provided that
petitioner would remit, as consideration for the policies, a net
payment of $7,245,000, the difference between a total premium of
$108,573,000 and an estimated first year policy loan of
$101,328,000. In the Letter of Understanding, AIG agreed to
provide life insurance coverage in accordance with the Policy
Terms Overview. The Letter of Understanding required that the
following conditions be met:
1. * * *[Petitioner] reviews and verifies the
accuracy of the information contained on the
Client Master Information Form, attached as
Exhibit A.[22] * * *
2. * * *[Petitioner] completes and certifies the
information contained on the Certification of
Employee Census form, attached as Exhibit B,[23]
22Exhibit A, Client Master Information Form, listed
petitioner's name as the name to appear on the policy and as the
owner of the policy. Petitioner's main address was listed as the
billing address, and Mr. McCook was named as the contact. The
policy name was listed as "Excess Interest Life Ins.", and the
effective date was listed as Mar. 1, 1993.
23Exhibit B, Certification of Employee Census, generally
required that petitioner, as part of the application for coverage
under the policies, certify that employee information on the
census was correct. Among other things, petitioner certified
that each individual on the census was a full-time (minimum 30
hours per week) employee, at least 18 years of age, no older than
age 75, not absent from work for more than 10 consecutive
business days within the 90 days preceding the date of
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