-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
(continued...)
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