-16-
Crossroads' projected reserves made by Gallagher,
Crossroads' management, KPMG Peat Marwick, and respondent were as
follows:
Crossroads' reserves as
estimated by-- As of 12/31/91 As of 12/31/92
KPMG Peat Marwick,8
including losses for
retroceded policies $22,000,000 $30,400,000
Crossroads' reserves, net of
losses for retroceded policies 19,410,000 22,994,000
Gallagher, net of losses
for retroceded policies 36,011,000 31,805,000
Respondent, net of losses
for retroceded policies 13,587,000 16,095,800
2. KPMG Peat Marwick
KPMG Peat Marwick annually reviewed the reinsurance policies
and historical claims data for each of the self-insurer funds
reinsured by Crossroads to estimate the value of each fund for
each year. It used standard actuarial loss development methods
to estimate the size of Crossroads' reserves for 1991 and 1992.
On June 22, 1992, KPMG Peat Marwick appraised Crossroads'
common stock. The appraisal was based on the discounted present
value of the future dividend stream available to a U.S. owner of
its stock; KPMG Peat Marwick used a discount rate based on the
8 KPMG Peat Marwick's reserve estimates reflect all claims
liabilities and are gross of retroceded policies on the gift
dates.
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