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reserves. Parthenon requested permission to book total reserves
of $187,023,000. That request was supported by actuarial studies
prepared by Mr. Klaassen and Mr. Biscoglia, but it was above the
amount recommended by Mr. Klaassen and at the lower middle of the
range recommended by Mr. Biscoglia. In a letter addressed to the
Tennessee Commissioner of Insurance dated March 27, 1987, Mr.
Klaassen certified that the amounts carried on Parthenon balance
sheets on account of reserves for unpaid losses and loss
adjustment expense for yearend 1986 were computed in accordance
with accepted loss reserving standards and were fairly stated in
accordance with sound loss reserving principles, were based on
factors relevant to policy provisions, met the requirements of
the insurance laws of the State of Tennessee, and made good and
sufficient provision for all of Parthenon's unpaid loss and loss
expense obligations.
The amount of $187,023,000 represented the total of what
then already was booked as liability reserves on Parthenon's
books, and $13 million that HCA had previously booked as a
liability on the consolidated financial statements and agreed to
pay Parthenon as additional premium, and was in the range of
amounts recommended by its actuaries. For financial reporting
purposes, HCA recorded consolidated reserves for general and
hospital professional liabilities as of December 31, 1986, of
$120 million over and above the $187 million reserves for the
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