Captives should shun the euphoria of outside business. (Risk Management Beat) (column)

National Underwriter Property & Casualty-Risk & Benefits Management, March, 1991 by Katz, David M.

Captives Should Shun The Euphoria Of Outside Business While the U.S. Tax Court's recent ruling on when parent companies can deduct premiums paid their captives seems finally to have provided clarity where there was little before, it also offers it share of absurdities. For instance, the court, which found on Jan.

24 by a margin of 12 to 3 that a parent can deduct if its wholly-owned captive writes as little as 30 percent in outside business in a given year, found it necessary at one point to argue that Allstate is an insurance company. Talk about belaboring the obvious. In its ruling on the Sears-Allstate case - which was issued simulataneously with decisions on cases involving the Harper Group and AMERCO - the court felt the need to assert that "Allstate...

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