316 NAC 24-061. INSURANCE COMPANIES

REG-24-061 INSURANCE COMPANIES 061.01 Special Apportionment Formula. When an insurance company has income from sources both within and without this state the amount of business income from sources within this state shall be determined pursuant to the special apportionment formula provided in this regulation. 061.01A General Definitions. The following definitions are applicable to the terms used in the apportionment factor descriptions: 061.01A(1) Insurance company means a company engaged in the business of insurance as defined in Neb. Rev. Stat. Section 44-102. 061.01A(2) Schedule T is part of the annual statement prescribed by the National Association of Insurance Commissioners, which is required to be filed annually with the various state insurance departments. 061.01A(3) Quota-share reinsurance is reinsurance of a certain percentage of all or certain parts of the business of the reinsured. 061.01A(4) Premiums shall mean the consideration paid to insurance companies for insurance and shall include policy fees, assessments, dues or other similar payments (except premiums on all annuity contracts and pension, profit-sharing, individually sponsored retirement plans, and other pension plan contracts which are described in section 818(a) of the Internal Revenue Code). 061.01A(5) Direct premiums shall mean all premiums received for insurance other than reinsurance premiums. 061.01A(6) Reinsurance premiums shall mean premiums which are paid by an insurer to a third party to insure it against loss or liability by reason of such original insurance. 061.01B Sales Factor 061.01B(1) The numerator of the sales factor of an insurance company or a unitary group of insurance companies shall consist of direct premiums received on property or risks in Nebraska and the denominator of which is direct premiums received on property or risks everywhere. Premiums for reinsurance are not included except as provided in paragraph 061.01B(2). 061.01B(2) Reinsurance premiums are included in the sales factor when more than one-third of the premiums received by an insurance company or a unitary group of insurance companies consist of premiums received for reinsurance accepted. All transactions between corporate members of the same unitary group are eliminated prior to making the determinations outlined in this regulation. 061.01B(2)(a) Premiums received for reinsurance accepted will be sourced to Nebraska if it can be established or reasonably be assumed that the underlying risks are in Nebraska. In the case of reinsurance accepted for which the location of the underlying risk can neither be established nor reasonably assumed, premiums received will be sourced to the state of commercial domicile of the ceding company with the following exception. If more than half of the ceding company’s premiums written are direct premiums, reinsurance premiums received with respect to quota-share shall be sourced in proportion to the ceding company’s Annual Statement -- Schedule T allocation of its direct premiums written. 061.01C Unitary Group. An insurance company cannot be included in a unitary group when the other members of the unitary group are not insurance companies. A unitary group of insurance companies cannot include a corporation that is not an insurance company. 061.02 Credits for Taxes on Premiums and Assessments. An insurance company may receive a nonrefundable credit against its corporation income tax for taxes on premiums and assessments paid to the Nebraska Department of Insurance pursuant to the sections 77-908 and 81-523. 061.02A For taxable years beginning on or after January 1, 1997, an insurance company shall only receive a credit for taxes paid on premiums and assessments to the extent that the premiums were received on property or risks in Nebraska. 061.02B An insurance company may receive a nonrefundable credit for assessments paid to the Comprehensive Health Insurance Pool to the extent such assessment was allowed as an offset against premiums tax payments or prepayments imposed by section 77-908 or related retaliatory tax imposed by section 44-150. (Section 77-2734.03, R.S.Supp. 1998, and Section 77-2734.15, R.R.S. 1996. November 11, 1998.)