Atlantic Mutual Insurance v. Commissioner

Property and casualty insurance companies maintain accounting reserves for “unpaid losses.” Under the Tax Reform Act of 1986, increases in loss reserves that constitute “reserve strengthening” do not qualify for a certain one-time tax benefit. We must decide whether the term “reserve strengthening” reasonably encompasses any increase in re serves, or only increases that result from changes in the methods or assumptions used to compute them.

HH

Atlantic Mutual Insurance Co. is the common parent of an affiliated group of corporations, including Centennial Insurance Co., a property and casualty…