-9-
occurrence basis years. UDI approved petitioner's request.
However, UDI required petitioner to begin filing quarterly
statements and to provide UDI with loss and investment
information. UDI, in effect, began to oversee petitioner's
operations.
2. Tillinghast
In 1984, petitioner hired Tillinghast to determine whether
petitioner had sufficient assets and surplus to meet its
liabilities. Tillinghast concluded that petitioner did not.
3. Tillinghast's Loss Reserve Reviews and Rate Reviews
Tillinghast began preparing loss reserve reviews6 and rate
reviews7 for petitioner at the end of 1985.
Sometimes actuaries estimate ultimate losses as a range with
high and low bounds (a "bounded range") instead of as a single
number (a "point estimate"). Actuarial Standard of Practice No.
9 states: "The uncertainty inherent in the estimation of
required provisions for unpaid losses or loss adjustment expenses
implies that a range of reserves can be actuarially sound."
Tillinghast estimated petitioner's ultimate losses within a
bounded range.
Beginning in 1989, James Hurley (Hurley), an actuary
6 Loss reserve reviews project an insurer's ultimate losses
based on its loss data.
7 Tillinghast analyzed petitioner's rates (i.e., premiums),
to help petitioner decide how much to charge its insureds in the
upcoming year.
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Last modified: May 25, 2011