(1) Wet marine and transportation insurance written by authorized foreign or alien insurers within this state shall be taxed only on that proportion of the total underwriting profit of the authorized insurer from wet marine and transportation insurance written within the United States that the gross premiums of the authorized insurer from wet marine and transportation insurance written within this state bear to the gross premiums of the authorized insurer from wet marine and transportation insurance written within the United States.

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(2) The ‘underwriting profit,’ for purposes of this section, is arrived at by deducting from the net earned premiums on wet marine and transportation insurance policies written within the United States during the calendar year:

(a) The losses incurred; and

(b) Expenses incurred, including all taxes, state and federal, in connection with net earned premiums.

(3) The amount of ‘net earned premiums’ on wet marine and transportation insurance policies written during the calendar year is the sum of paragraphs (a) and (b) of this subsection less paragraph (c) of this subsection:

(a) Gross premiums on wet marine and transportation insurance policies written during the calendar year, less any and all return premiums, any and all premiums on policies not taken and any and all premiums paid for reinsurance.

(b) Unearned premiums on outstanding marine business at the end of the preceding calendar year.

(c) Unearned premiums on outstanding marine business at the end of the current calendar year.

(4) ‘Losses incurred,’ as used in this section, means gross losses incurred during the calendar year under policies written within the United States, less reinsurance claims collected or collectible and salvages or recoveries collectible from any source applicable to the losses.

(5) ‘Expenses incurred’ includes:

(a) Specific expenses incurred on earned wet marine and transportation insurance premiums, consisting of all commissions, agency expenses, taxes, licenses, fees, loss-adjustment expenses, and all other expenses incurred directly and specifically in connection with the premiums, less recoveries or reimbursements on account of or in connection with commissions or other expenses collected or collectible because of reinsurance or from any other source.

(b) General expenses incurred on earned premiums, consisting of that proportion of general or overhead expenses, such as salaries of officers and employees, printing and stationery, all taxes of this state and of the United States, except as otherwise provided in this section, and all other expenses not chargeable specifically to a particular class of insurance, that the net premiums of insurance written bear to the total net premiums written by an authorized insurer from all classes of insurance written by the authorized insurer during the current calendar year. However, in arriving at the ‘underwriting profit’ for purposes of taxation under this section there may not be deducted in respect to expenses incurred, as defined and specified in this subsection, amounts that, in the aggregate, exceed 40 percent of the gross premiums on the insurance policies. [Formerly 745.145; 2019 c. 493 § 1]