Page:United States Statutes at Large Volume 73.djvu/175

 73 S T A T. ]

PUBLIC LAW 86-69-JUNE 25, 1959

" (B) the percentage which the total insurance liabilities on United States business for the taxable year is of the company's total insurance liabilities. "(2)

DISTRIBUTIONS PURSUANT TO CERTAIN MUTUALIZATIONS.—

I n applying section 815(e) for purposes of subsection (a) — " (A) the paid-in capital and paid-in surplus referred to in section 815(e)(1)(A) of a foreign life insurance company is the portion of such capital and surplus determined by multiplying such capital and surplus by the percentage selected for the taxable year under paragraph (1); and " (B) the excess referred to in section 815(e)(2)(A)(i) (without the adjustment provided by section 815(e)(2)(B)) is whichever of the following is the greater: " (i) the minimum figure for 1958 determined under subsection (b)(2)(A), or "(ii) the surplus described in subsection (b)(2)(B) (determined as of December 31, 1958). " (d) No UNITED STATES INSURANCE BUSINESS.—Foreign life insurance companies not carrying on an insurance business within the United States shall not be taxable under this part but shall be taxable as other foreign corporations. "SEC. 820. OPTIONAL TREATMENT OF POLICIES REINSURED UNDER MODIFIED COINSURANCE CONTRACTS. "(a)

IN GENERAL.— "(1) TREATMENT AS REINSURED UNDER CONVENTIONAL COINSUR-

ANCE CONTRACT.—Under regulations prescribed by the Secretary or his delegate, an insurance or annuity policy reinsured under a modified coinsurance contract (as defined in subsection (b)) shall be treated, for purposes of this part (other than for purposes of section 801), as if such policy were reinsured under a conventional coinsurance contract. "(2)

CONSENT OF REINSURED AND REINSURER.—Paragraph (1)

shall apply to an insurance or annuity policy reinsured under a modified coinsurance contract only if the reinsured and reinsurer consent, in such manner as the Secretary or his delegate shall prescribe by regulations— " (A) to the application of paragraph (1) to all insurance and annuity policies reinsured under such modified coinsurance contract, and " (B) to the application of the rules provided by subsection (c) and the rules prescribed under such subsection. Such consent, once given, may not be rescinded except with the approval of the Secretary or his delegate. " (b) DEFINITION OF MODIFIED COINSURANCE CONTRACT.—For purposes of this section, the term 'modified coinsurance contract' means an indemnity reinsurance contract under the terms of which— "(1) a life insurance company (hereinafter referred to as *the reinsurer') agrees to indemnify another life insurance company (hereinafter referred to as 'the reinsured') against a risk assumed by the reinsured under the insurance or annuity policy reinsured, "(2) the reinsured retains ownership of the assets in relation to the reserve on the policy reinsured, "(3) all or part of the gross investment income derived from such assets is paid by the reinsured to the reinsurer as a part of the consideration for the reinsurance of such policy, and "(4) the reinsurer is obligated for expenses incurred, and for Federal income taxes imposed, in respect of such gross investment income.

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