-10-
employed by Tillinghast, prepared annual rate reviews and
semiannual loss reserve reviews for petitioner. In preparing his
reserve reviews, Hurley received information from petitioner
about its paid losses and case reserves.8 Petitioner's claims
investigators generally established petitioner's case reserves
based on their initial impression of each claim and revised them
as they acquired more information.
The high end of Tillinghast's estimate of petitioner's
ultimate losses in 1986 and the high end reestimates of its
ultimate losses in later years were as follows:
Tillinghast's High End Estimates Of Petitioner's
Ultimate Net Losses & Allocated Loss Adjustment Expenses1
(in thousands)
Year 1986 1987 1988 1989 1990 1991 1992 1993 1994
1986 $3,544 $2,481 $2,293 $2,186 $2,700 $2,700 $2,750 $2,875 $2,850
1987 -- 8,450 6,840 6,655 6,300 7,250 7,250 7,000 6,900
1988 -- -- 12,791 11,372 9,900 9,250 8,750 8,250 7,750
1989 -- -- -- 13,782 12,500 12,250 11,000 10,250 9,000
1990 -- -- -- -- 16,000 15,250 14,500 13,500 12,500
1991 -- -- -- -- -- 15,500 15,000 14,000 13,250
1992 -- -- -- -- -- -- 17,500 17,000 16,500
1993 -- -- -- -- -- -- -- 15,000 15,000
1994 -- -- -- -- -- -- -- -- 16,500
IBNR 665 1,476 1,777 1,361 1,625 1,034 3,284 4,657
Total 3,544 11,596 23,400 35,772 48,761 63,825 77,784 91,159 104,907
1 Allocated loss adjustment expense is defined above at par.
I-E.
Petitioner discounted the part of its reserves that related
8 Case reserves are estimates made by an insurer of the
unpaid loss amounts expected to be paid in connection with
specific known claims.
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