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contended that petitioner's reserves were above the high end of
Hurley's ranges because respondent considered the discounted
total reserves column rather than the undiscounted total reserves
column. Petitioner selected reserves from the undiscounted
column as required by sections 846(b)(1) and (2). Petitioner
deducted paid losses from Tillinghast's projected reserves to
account for the difference between the paid losses in
petitioner's records and the paid losses in Tillinghast's
records. Finally, Oslowski testified credibly that petitioner
chose reserves from the high end, but not above the high end, of
Tillinghast's reserve estimates. We find that petitioner's
reserves were within the ranges of Tillinghast's reserve
estimates.
3. Whether Petitioner's Selection of Tillinghast's High
End Values for 1991 and 1992 Was Fair and Reasonable
Respondent argues that, because petitioner overstated its
unpaid loss reserves for 1986 to 1990, petitioner's establishment
of reserves using amounts at the high end of Tillinghast's range
in 1991 and 1992 was not fair and reasonable. Respondent
contends that the favorable development for 1986-90 was apparent
when Tillinghast made the unpaid loss estimates in question,
which meant petitioner's estimates were overstated.
We disagree. Petitioner properly considered the fact that
the frequency and severity of its claims began to increase
significantly in 1990. That fact, along with petitioner's prior
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