On September 4, 2013, the U.S. Tax Court held that the loss and loss adjustment expense (LAE) reserves carried by Acuity Insurance, a multiline mutual P&C insurer based in Wisconsin, as of year-end 2006 were “fair and reasonable” within the meaning of U.S. income tax regulations. The court rejected the position of the Internal Revenue Service (IRS), which had sought to reduce Acuity’s reserve by close to $100 million—an amount that would have had sizable implications for Acuity.

This issue of P&C Perspectives explores the implications of this recent verdict for insurers.