I 
117TH CONGRESS 
1ST SESSION H. R. 4422 
To amend the Internal Revenue Code of 1986 to provide special rules for 
purposes of determining if financial guaranty insurance companies are 
qualifying insurance corporations under the passive foreign investment 
company rules. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 13, 2021 
Ms. MOORE of Wisconsin (for herself and Mr. SMITH of Nebraska) introduced 
the following bill; which was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
special rules for purposes of determining if financial 
guaranty insurance companies are qualifying insurance 
corporations under the passive foreign investment com-
pany rules. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. TREATMENT OF FINANCIAL GUARANTY INSUR-
ANCE COMPANIES AS QUALIFYING INSUR-
ANCE CORPORATIONS UNDER PASSIVE FOR-
EIGN INVESTMENT COMPANY RULES. 
(a) IN GENERAL.—Section 1297(f)(3) of the Internal 
Revenue Code of 1986 is amended by adding at the end 
the following new subparagraph: 
‘‘(C) SPECIAL
RULES
FOR
FINANCIAL 
GUARANTY INSURANCE COMPANIES.— 
‘‘(i) IN
GENERAL.—Notwithstanding 
subparagraphs (A)(ii) and (B), the applica-
ble insurance liabilities of a financial guar-
anty insurance company shall include its 
unearned premium reserves if— 
‘‘(I) such company is prohibited 
under generally accepted accounting 
principles from reporting on its appli-
cable financial statements reserves for 
losses and loss adjustment expenses 
with respect to a financial guaranty 
insurance or reinsurance contract ex-
cept to the extent that losses and loss 
adjustment expenses are expected to 
exceed the unearned premium reserves 
on the contract, 
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‘‘(II) the applicable financial 
statement of such company reports fi-
nancial guaranty exposure of at least 
15-to-1 or State or local bond expo-
sure of at least 9-to-1 (8-to-1 in the 
case of a taxable year of such com-
pany which ends on or before Decem-
ber 31, 2018), and 
‘‘(III) such company includes in 
its insurance liabilities only its un-
earned premium reserves relating to 
insurance written or assumed that is 
within the single risk limits set forth 
in subsection (D) of section 4 of the 
Financial Guaranty Insurance Guide-
line (modified by using total share-
holder’s equity as reported on the ap-
plicable financial statement of the 
company rather than aggregate of the 
surplus to policyholders and contin-
gency reserves). 
‘‘(ii) APPLICATION
OF
ALTERNATIVE 
FACTS AND CIRCUMSTANCES TEST.—A fi-
nancial guaranty insurance company shall 
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be treated as satisfying the requirements 
of paragraph (2)(B). 
‘‘(iii) FINANCIAL
GUARANTY
INSUR-
ANCE
COMPANY.—For purposes of this 
subparagraph, the term ‘financial guaranty 
insurance company’ means any insurance 
company the sole business of which is writ-
ing or reinsuring financial guaranty insur-
ance (as defined in subsection (A) of sec-
tion 1 of the Financial Guaranty Insurance 
Guideline) which is permitted under sub-
section (B) of section 4 of such Guideline. 
‘‘(iv) FINANCIAL
GUARANTY
EXPO-
SURE.—For purposes of this subpara-
graph, the term ‘financial guaranty expo-
sure’ means the ratio of— 
‘‘(I) the net debt service out-
standing insured or reinsured by the 
company that is within the single risk 
limits set forth in the Financial Guar-
anty Insurance Guideline (as reported 
on such company’s applicable financial 
statement), to 
‘‘(II) the company’s total assets 
(as so reported). 
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‘‘(v) STATE OR LOCAL BOND EXPO-
SURE.—For purposes of this subpara-
graph, the term ‘State or local bond expo-
sure’ means the ratio of— 
‘‘(I) the net unpaid principal of 
State or local bonds (as defined in 
section 103(c)(1)) insured or rein-
sured by the company that is within 
the single risk limits set forth in the 
Financial Guaranty Insurance Guide-
line (as reported on such company’s 
applicable financial statement), to 
‘‘(II) the company’s total assets 
(as so reported).’’ 
‘‘(vi) FINANCIAL
GUARANTY
INSUR-
ANCE
GUIDELINE.—For purposes of this 
subparagraph— 
‘‘(I) IN
GENERAL.—The term 
‘Financial Guaranty Insurance Guide-
line’ means the October 2008 model 
regulation that was adopted by the 
National Association of Insurance 
Commissioners on December 4, 2007. 
‘‘(II) DETERMINATIONS MADE BY 
SECRETARY.—The determination of 
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