-8- petitioner’s pricing and reserving are “conservative by industry standards”. The 1994 and 1995 Best reports also state: “Somewhat offsetting these positive rating factors is a concentration of underwriting risk as the company is primarily a one state, one line writer and is subject to changes in insurance regulation and judicial climate." The 1995 Best report states: Favorable underwriting gains continued for the tenth consecutive year in 1995, despite a high frequency claim year. Underwriting income benefitted from the take down of approximately $3 million of redundant reserves from prior report years. This reduction has been a consistent pattern since 1987. [Emphasis added.6] Additionally, in regard to petitioner's reserve quality, the 1995 Best report concludes: The company's carried loss reserve position is strong, with significant accident year redundancies recorded over the last ten years reflective of the very conservative reserving practices and commitment to reserve adequacy. Management believes that professional liability is a very volatile line of business, so they reserve very conservatively in the early years of development and retire any redundant reserves after claims are more seasoned and predictable. Given the volatility and the low mathematical credibility of the company's development patterns this course of action insures that reserves set aside by report year will be adequate to cover future development. Therefore, despite annual reductions on old report years, the company continues to be very conservatively reserved. [Emphasis added.] 6 Similarly, the 1994 Best report states: “Bulk reserves on years prior to 1994 which were deemed redundant were reduced by $1.7 million last year. This take down of reserves has been a consistent pattern since 1987.” (Emphasis added.)Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011