Best Life Assurance Company of California - Page 6




                                                - 6 -                                                  
            insurance company qualifying fraction includes accrued unpaid                              
            losses on CA&H insurance policies.1                                                        
                  Best Life argues that the term “unpaid losses” in section                            
            816(c)(2) refers only to unaccrued unpaid losses corresponding to                          
            the amounts reflected on Exhibits 8 and 9 of its Annual                                    
            Statements.  Best Life argues that accrued unpaid losses reflect                           
            current liabilities, not reserves in the NAIC Annual Statement                             
            sense, and that they should not be included in the denominator of                          
            the qualifying fraction as part of an insurance company's total                            
            reserves.  Accordingly, for 1991 and 1992, Best Life calculated                            
            that it qualified as a life insurance company under section 816                            
            and timely filed U.S. Life Insurance Company income tax returns                            
            claiming life insurance company treatment and deductions under                             
            section 806 in the amounts of $615,971 and $712,152,                                       
            respectively.                                                                              
                  On audit, respondent treated the accrued amounts (shown on                           
            Exhibit 11 of Best Life's Annual Statements) as unpaid losses in                           


                  1  The following schedule reflects the parties' conflicting                          
            computations herein of Best Life's life insurance company                                  
            qualifying fraction under section 816:                                                     
            For 1991:                                                                                  
                  Best Life:        $1,669,727  2,089,513 = 79.9% Life Reserves                       
                  Respondent:       $1,669,727  4,755,844 = 35.1% Life Reserves                       
            For 1992:                                                                                  
                  Best Life:        $2,089,797  2,532,058 = 82.5% Life Reserves                       
                  Respondent:       $2,089,797  5,026,179 = 41.6% Life Reserves                       





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  Next

Last modified: May 25, 2011