,,ii  #aai? ,,congress  #a/ ,session    
,s4 #aihg  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,june #i1 #bjbe,mr4    
,cassidy 7= himself & ,mr4 ,m>%all7     
introduc$ ! foll[+ bill2 :i* 0 read     
twice & ref]r$ to ! ,committee on       
,f9ance  ,a ,,bill  ,to am5d ! ,int]nal 
,rev5ue ,code ( #aihf to provide special
 rules = purposes ( det]m9+ if f9ancial 
gu>anty insurance companies are qualify+
 insurance corporations "u ! passive    
=eign inve/m5t company rules4  #a4      
,treatm5t ( f9ancial gu>anty insurance  
companies z qualify+ insurance          
corporations "u passive =eign inve/m5t  
company rules  7a7 ,9 g5]al ,section    
#abig7;f77#c7 ( ! ,int]nal ,rev5ue ,code
 ( #aihf is am5d$ by add+ at ! end !    
foll[+ new subp>agraph3  7,c7 ,special  
rules = f9ancial gu>anty insurance      
companies  7i7 ,9 g5]al ,not)/&+        
subp>agraphs 7,a77ii7 & 7,b71 !         
applicable insurance liabilities ( a    
f9ancial gu>anty insurance company %all 
include its une>n$ premium res]ves if-- 

7,i7 su* company is prohibit$ "u g5]ally
 accept$ acc\nt+ pr9ciples f report+ on 
its applicable f9ancial /atem5ts res]ves
 = losses & loss adju/m5t exp5ses )     
respect to a f9ancial gu>anty insurance 
or re9surance contract except to ! ext5t
 t losses & loss adju/m5t exp5ses are   
expect$ to exce$ ! une>n$ premium       
res]ves on ! contract1  7,,ii7 !        
applicable f9ancial /atem5t ( su*       
company reports f9ancial gu>anty        
exposure ( at lea/ #ae-to-#a or ,/ate or
 local bond exposure ( at lea/ #i-to-#a1
 &  7,,iii7 su* company includes 9 its  
insurance liabilities only its une>n$   
premium res]ves relat+ to insurance     
writt5 or assum$ t is )9 ! s+le risk    
limits set =? 9 subsection 7,d7 (       
section #d ( ! ,f9ancial ,gu>anty       
,insurance ,guidel9e 7modifi$ by us+    
total %>ehold]'s equity z report$ on !  
applicable f9ancial /atem5t ( ! company 
r ?an aggregate ( ! surplus to          
policyhold]s & cont+5cy res]ves74  7ii7 
,application ( alt]native facts &       

circum/ances te/ ,a f9ancial gu>anty    
insurance company %all be treat$ z      
satisfy+ ! requirem5ts ( p>agraph       
7#b77;,b74  7iii7 ,f9ancial gu>anty     
insurance company ,= purposes ( ?is     
subp>agraph1 ! t]m f9ancial gu>anty     
insurance company means any insurance   
company ! sole bus9ess ( :i* is writ+ or
 re9sur+ f9ancial gu>anty insurance 7z  
def9$ 9 subsection 7,a7 ( section #a ( !
 ,f9ancial ,gu>anty ,insurance          
,guidel9e7 :i* is p]mitt$ "u subsection 
7,b7 ( section #d ( su* ,guidel9e4  7iv7
 ,f9ancial gu>anty exposure ,= purposes 
( ?is subp>agraph1 ! t]m f9ancial       
gu>anty exposure means ! ratio (-- 7,i7 
! net debt s]vice out/&+ insur$ or      
re9sur$ by ! company t is )9 ! s+le risk
 limits set =? 9 ! ,f9ancial ,gu>anty   
,insurance ,guidel9e 7z report$ on su*  
company's applicable f9ancial /atem5t71 
to  7,,ii7 ! company's total assets 7z s
 report$74  7v7 ,/ate or local bond     
exposure ,= purposes ( ?is subp>agraph1 
! t]m ,/ate or local bond exposure means

 ! ratio (-- 7,i7 ! net unpaid pr9cipal 
( ,/ate or local bonds 7z def9$ 9       
section #ajc7;c77#a77 insur$ or re9sur$ 
by ! company t is )9 ! s+le risk limits 
set =? 9 ! ,f9ancial ,gu>anty ,insurance
 ,guidel9e 7z report$ on su* company's  
applicable f9ancial /atem5t71 to  7,,ii7
 ! company's total assets 7z s report$74
  7vi7 ,f9ancial ,gu>anty ,insurance    
,guidel9e ,= purposes ( ?is             
subp>agraph-- 7,i7 ,9 g5]al ,! t]m      
,f9ancial ,gu>anty ,insurance ,guidel9e 
means ! ,octob] #bjjh model regulation t
 0 adopt$ by ! ,national ,association ( 
,insurance ,commission]s on ,decemb] #d1
 #bjjg4  7,,ii7 ,det]m9ations made by   
,secret>y ,! det]m9ation ( :e!r any     
provision ( ! ,f9ancial ,gu>anty        
,insurance ,guidel9e has be5 satisfi$   
%all be made by ! ,secret>y4  4  7b7    
,report+ ( c]ta9 items ,section         
#abig7;f77#d7 ( su* ,code is am5d$ by   
add+ at ! end ! foll[+ new subp>agraph3 
7,c7 ,cl>ification t c]ta9 items on     
applicable f9ancial /atem5t be sep>ately

 report$ ) respect to corporation ,an   
am\nt describ$ 9 p>agraph 7#a77;,b7 or  
clause 7i77,,ii71 7i77,,iii71 7iv77,i71 
7iv77,,ii71 7v77,i71 or 7v77,,ii7 (     
p>agraph 7#c77;,c7 %all be treat$ z     
report$ on an applicable f9ancial       
/atem5t = purposes ( ?is section if--   
7i7 su* am\nt is sep>ately report$ on   
su* /atem5t ) respect to ! corporation  
ref]r$ to 9 p>agraph 7#a71 or  7ii7 su* 
am\nt is sep>ately det]m9$ = purposes ( 
calculat+ an am\nt :i* is report$ on su*
 /atem5t4  7,d7 ,au?ority ( ,secret>y to
 require report+  7i7 ,9 g5]al ,ea*     
,unit$ ,/ates p]son :o owns an int]e/ 9 
a specifi$ non-publicly trad$ =eign     
corporation & :o takes ! position t su* 
corporation is n a passive =eign        
inve/m5t company %all report to !       
,secret>y su* in=mation ) respect to su*
 corporation z ! ,secret>y may require4 
7ii7 ,specifi$ non-publicly trad$ =eign 
corporation ,= purposes ( ?is           
subp>agraph1 ! t]m specifi$ non-publicly
 trad$ =eign corporation means any =eign

 corporation-- 7,i7 :i* w\ld be a       
passive =eign inve/m5t company if       
subsection 7b77#b77;,b7 did n apply1 &  
7,,ii7 no int]e/ 9 :i* is trad$ on an   
e/abli%$ securities m>ket4  4  7c7      
,effective date  7#a7 ,9 g5]al ,except z
 o!rwise provid$ 9 ?is subsection1 !    
am5dm5ts made by ?is section %all apply 
to taxable ye>s beg9n+ aft] ,decemb]    
#ca1 #bjbd4  7#b7 ,report+ ,! am5dm5t   
made by subsection 7b7 %all apply to    
reports made aft] ,decemb] #ca1 #bjbd4  
7#c7 ,c]ta9 f9ancial gu>antee insurance 
companies n treat$ z passive =eign      
inve/m5t companies m]ely by reason (    
/atus 9 c]ta9 prior taxable ye>s  7,a7  
,9 g5]al ,9 ! case ( any taxable ye> ( a
 qualifi$ f9ancial gu>antee insurance   
company beg9n+ aft] ,decemb] #ca1 #bjbd1
 section #abih7;b77#a7 ( ! ,int]nal     
,rev5ue ,code ( #aihf %all be appli$ to 
/ock held by any taxpay] 9 su* company  
by treat+ ! specifi$ grace p]iod )      
respect to su* company z n "p ( su*     
taxpay]'s hold+ p]iod ( su* /ock4  7,b7 

,qualifi$ f9ancial gu>antee insurance   
company ,= purposes ( ?is p>agraph1 !   
t]m qualifi$ f9ancial gu>antee insurance
 company means any f9ancial gu>antee    
insurance company 7z def9$ 9 subp>agraph
 7,c7 ( section #abig7;f77#c7 ( !       
,int]nal ,rev5ue ,code ( #aihf1 z add$  
by ?is section7 :i* w\ld n be a passive 
=eign inve/m5t company if-- 7i7 su*     
subp>agraph appli$ to ! specifi$ grace  
p]iod1 &  7ii7 9 ! case ( any taxable   
ye> end+ be=e ,janu>y #a1 #bjai1 clause 
7i77,,ii7 ( su* subp>agraph 7 appli$ by 
sub/itut+ #h-to-#a = #i-to-#a4  7,c7    
,specifi$ grace p]iod ,= purposes ( ?is 
p>agraph1 ! t]m specifi$ grace p]iod    
means1 ) respect to any f9ancial        
gu>antee insurance company1 ! p]iod     
beg9n+ ) su* company's fir/ taxable ye> 
beg9n+ aft] ,decemb] #ca1 #bjag1 & end+ 
) su* company's la/ taxable ye> beg9n+  
be=e ,janu>y #a1 #bjbe4  7,d7           
,regulations & o!r guidance ,! ,secret>y
 ( ! ,treasury 7or ! ,secret>y's        
delegate7 %all issue su* regulations or 

o!r guidance z may be necess>y or       
appropriate to provide = ! prop]        
treatm5t ( any f9ancial gu>antee        
insurance company :i* ceases to be      
treat$ z a passive =eign inve/m5t       
company by reason ( subp>agraph 7,a71   
includ+ regulations or o!r guidance :i* 
provide =-- 7i7 an opportunity = !      
revocation ( any election made "u       
section #abie7;b7 or #abif7k7 ( !       
,int]nal ,rev5ue ,code ( #aihf1 &  7ii7 
! application ( section #abic7;c7 ( su* 
,code to p]iods aft] su* company ceases 
to be treat$ z a passive =eign inve/m5t 
company4