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An Ode to the Actuaries: Tax Court Concludes that Acuity’s Loss Reserves Were “Fair and Reasonable”



by Sutherland Asbill Brennan LLP - Washington Office

September 12, 2013

Previously published on September 10, 2013

On September 4, the United States Tax Court issued its opinion in Acuity v. Commissioner, T.C. Memo. 2013-209. In brief, the court concluded that Acuity’s reserves for unpaid losses and loss adjustment expenses for 2006, as used by the company in computing “losses incurred” within the meaning of IRC § 832(b)(5), were “fair and reasonable” estimates and represented “only actual unpaid losses” within the meaning of Treas. Reg. § 1.832-4(a)(14) and (b). In reaching this conclusion, the court gave great weight to the analysis performed by Acuity’s internal actuary in determining the company’s loss reserves for 2006, as well as the extensive review conducted by the company’s appointed actuary.


 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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