Hospital Corporation of America and Subsidiaries - Page 83

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          Mr. Biscoglia's reserve analysis report for the policy year 1986            
          addresses only professional and general liability reserves, he              
          cannot render an opinion as to the adequacy of the total loss and           
          loss expense reserves of Parthenon.  Additionally, respondent               
          contends that petitioners' computations that are based on Mr.               
          Biscoglia's 1986 report are not relevant to the fairness and                
          reasonableness of the unpaid losses reserves because Mr.                    
          Klaassen, not Mr. Biscoglia, served as Parthenon's actuary for              
          year ended 1986.  Respondent contends further that Mr. Klaassen's           
          computations are erroneous because they are based on an                     
          occurrence policy rather than a claims-made policy.  Respondent             
          maintains that the adjustments to the unpaid losses reserves                
          proposed by Mr. Merlino are correct.                                        
               Petitioners contend that Mr. Biscoglia's reserve analysis              
          reports are relevant even though they address both Parthenon and            
          PCIC because the relevant question in the consolidated return               
          setting is whether the total reserves for both companies are                
          reasonable in each applicable year.  Additionally, petitioners              
          contend, the 1986 annual statements of Parthenon and PCIC show              
          the respective reserve amounts that each booked.                            
               Mr. Merlino did not calculate independently the amount or              
          range that he believes represents a fair and reasonable estimate            








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