-31-
We disagree that Hurley improperly reestimated the prior
years' ultimate losses. Hurley reestimated the ultimate losses
for each prior coverage year when he estimated reserves for 1991
and 1992. Hurley adjusted his ranges for 1991 and 1992 based on
petitioner's favorable experience from 1986 to 1990.
Respondent's contention that he merely included the prior year's
initial estimates in the current year's high end estimate is
mistaken. Instead, he compared the results of the development
methods for the current year to the initial estimates for the
prior year. In calculating the ultimate loss estimates for 1991
and 1992, Hurley used reestimated ultimate loss estimates for
prior coverage years.
Respondent contends that because Hurley reestimated by
gradually reducing the high end ultimate losses for the post-1985
coverage years as of the end of 1991 and 1992, he compounded
petitioner's overstated reserves for those years by carrying the
overstatements forward. We disagree that Hurley compounded
petitioner's overstated reserves by his approach. As
petitioner's loss experience began to improve, Hurley reduced the
estimates for that coverage year.
7. Kilbourne's Criticism of Petitioner's Methods
Respondent argues that Kilbourne's method is reasonable and
points out that it is very similar to petitioner's actual
experience, as reflected in the development of petitioner's
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