-33-
Hurley's initial high end estimate of ultimate loss for 1992.
Gleeson testified that Hurley's $17,500,000 high end estimate was
a reasonable estimate of petitioner's ultimate losses for 1992 as
of the end of 1992.
On cross-examination, respondent asked Gleeson to add
coverage years 1987 to 1991 to his test. Respondent asked
Gleeson to review Exhibits 86, 87, and 88,24 which purport to
show that petitioner's net ultimate losses as reestimated for
coverage years 1987 to 1992 fell increasingly to the right of the
range moving back from 1992 to 1990 and fell outside the range
for 1989 to 1987. Gleeson testified that respondent's
computations in Exhibits 86, 87, and 88 were accurate.
Respondent argues that Gleeson agreed that petitioner's estimates
for coverage years 1987 to 1992, taken together, failed his test.
We disagree. Gleeson testified that respondent's
probability distribution graphs did not change his conclusion
that Hurley's work was reasonable. He pointed out that Exhibits
86, 87, and 88 (particularly Exhibit 87) used basic limits data,
that is, data about claims that are paid or reserved at $100,000
or less. In Gleeson's opinion, basic limits data shows more
rapid development than total limits data because the smaller and
easier to settle claims are paid first. He also pointed out that
24 Exhibit 86 contains several probability distribution
graphs showing factors for 1987 to 1992. Exhibit 87 is a 1992
report showing updated development factors that had been
contained in an attachment to Gleeson's report. Exhibit 88
contains loss development factors. These exhibits extended
Gleeson's probability distribution test back through 1987.
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