-12-
ranges were relatively large because, in Hurley's opinion,
medical malpractice losses are difficult to project accurately.
Tillinghast projected that, as of December 31, 1991,
petitioner had ultimate losses ranging from $88,483,000 to
$99,645,000 (before discounting), and that reserves ranging from
$45,426,000 to $57,289,000 (before discounting) for coverage
years 1978 to 1991 would be reasonable. As of December 31, 1992,
Tillinghast projected that petitioner had ultimate losses ranging
from $100,101,000 to $112,204,000 (before discounting), and that
reserves ranging from $49,066,000 to $61,948,000 (before
discounting) for the coverage years 1978 to 1992 would be
reasonable. Tillinghast separated the projected ultimate losses
by coverage year.
Joseph Perry, petitioner's vice president of finance/chief
financial officer, subtracted from these ultimate loss estimates
petitioner's paid losses as of December 31, 1991, and December
31, 1992, to determine a range of unpaid losses for all of the
coverage years included in the 1991 and 1992 unpaid loss
reserves. Petitioner reported on its annual statements that it
had undiscounted unpaid losses of $56,847,261 for 1991 and
$61,971,100 for 1992. Petitioner had a conservative reserve
philosophy to ensure that it could pay future losses. Petitioner
selected reserves below the low end of Tillinghast's range for
1986 and at the high end of Tillinghast's ranges for 1987 to
1992.
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011