Minnesota Lawyers Mutual Insurance Company and Subsidiaries - Page 11

                  For the years in issue, petitioner’s case reserves, net of                           
            any reinsurance, for its professional liability insurance were                             
            as follows:                                                                                
                                                   Net Case                                            
                        Year                        Reserve                                            
                        1993                 $8,478,000                                                
                        1994                 7,833,000                                                 
                        1995                 7,888,000                                                 
                  Throughout petitioner’s period of operations, petitioner’s                           
            claim department was periodically reviewed and examined by                                 
            either reinsurance companies or the department.  Reinsurance                               
            companies reviewed petitioner’s claim department operations to                             
            assess petitioner’s overall claim handling procedures for                                  
            purposes of determining whether to enter into, or renew, a                                 
            reinsurance agreement with petitioner.  The department examined                            
            petitioner’s claim department as part of its triennial                                     
            examination of petitioner’s operations.  These reports and                                 
            examinations have generally approved petitioner’s procedures in                            
            processing claims and establishing reserves for its case                                   
                     2.  Adverse Development Reserve                                                   
                  In addition to the case reserve set by the claim                                     
            department, petitioner’s incurred loss reserve also comprises an                           

                  8 The department’s examination for petitioner’s 1993 year                            
            included a review of petitioner’s claim department procedures.                             
            There was only one minor recommendation regarding petitioner’s                             
            claim department procedures, which petitioner implemented after                            
            the examination.                                                                           

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Last modified: May 25, 2011