Minnesota Lawyers Mutual Insurance Company and Subsidiaries - Page 5

            he did not recommend that petitioner be made a candidate for                               
            “rehabilitation”, because of petitioner’s actions to increase its                          
            premiums and reserves and to obtain additional paid-in capital.                            
            The special examiner continued to review petitioner's activities                           
            until December 31, 1987.                                                                   
                  In 1989, as part of its regular, triennial examination of                            
            insurance companies, the department conducted an examination of                            
            petitioner for its 1988 year of operation.  Its report, issued                             
            June 21, 1990, found no reasons to recommend increased oversight                           
            by the department but made several recommendations for                                     
            operational improvements that were later implemented by                                    
            petitioner.  With respect to petitioner’s loss reserves, the                               
            department accepted petitioner’s estimates but stated:                                     
                        it should be noted that due to the short                                       
                        history of * * * [petitioner], the lack of                                     
                        credible industry data for this single line                                    
                        claims made coverage; coupled with the                                         
                        volatility of the severity and frequency of                                    
                        claims the ultimate loss development could                                     
                        vary substantially from the amounts reserved.                                  
                  In an examination for the 5-year period ended                                        
            December 31, 1993, the department declared petitioner’s loss                               
            reserves to be “adequate”.  The department’s examination included                          
            a review of petitioner’s claim department procedures, for which                            
            the department made only one minor recommendation.4                                        

                  4 The department recommended that petitioner establish a                             
            separate reserve account for unallocated loss adjustment                                   

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Last modified: May 25, 2011