United States Tax Court June 30, 1945, Docket No. 3968 (Federal Union Ins. Co. v. Commissioner)

lead-opinion

OPINION.

Hill, Judge-.

As a fire insurance company, petitioner is required by state laws to keep a reserve equal to the unearned portion of premiums on unexpired risks, less a credit for risks reinsured. This requirement of a reserve arises out of the fact that the insurer collects the whole premium in advance, whereas the protection can only be given as time elapses.