An unincorporated group of individuals or organizations (subscribers) that
agree to pool risks for the purpose of paying the cost of retained losses and
purchasing reinsurance. Also known as interinsurance exchanges, they are managed
by an attorney-in-fact. Subscribers have contingent liability (several and proportionate)
for paying the losses of the reciprocal, but if adequate capital exists, nonassessable
policies may be issued. Under federal tax law, subscribers' surplus is not taxed;
income is taxed when distributed.