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reserves for years ended 1984, 1986, 1987, and 1988 should be
made as follows:
Increase (Decrease)
TYE in Total Reserves
1984 $22,276,000
1986 (67,384,000)
1987 (10,847,000)
1988 (25,442,000)
An increase in reserve results in a larger allowable deduction
and a decrease in reserve results in a smaller allowable
deduction for the applicable year.
Petitioners do not dispute the increase in reserves for
unpaid losses proposed by Mr. Merlino for year ended 1984, but
they deny that any adjustment to the reserves is required for
years ended 1986, 1987, and 1988. They contend that the reserves
for years ended 1986 through 1988 fall within the range of
reasonable estimates made at the time by Parthenon's independent
consulting actuary.
Petitioners presented Mr. Biscoglia as their expert witness
relating to the reasonableness of the professional and general
liability reserves of Parthenon and PCIC as of December 31, 1986.
For purposes of the trial, Mr. Biscoglia did not perform a
subsequent independent analysis of the reserves as of yearend
1986. Rather, he reviewed the reserve analysis report dated
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