-17-
of these projections, she selected estimates of petitioner’s
ultimate losses. The report states that Witcraft’s best
estimate of the reserve for petitioner’s unpaid losses and loss
adjustment expenses, net of reinsurance, was approximately $7.8
million. The report specifically notes that Witcraft’s best
estimate was significantly lower than petitioner’s booked
reserve of $11.6 million.14
For 1994 and 1995, Patricia A. Teufel (Teufel) of KPMG Peat
Marwick issued petitioner’s statements of actuarial opinion (the
Teufel opinions). The 1994 and 1995 Teufel actuarial reports
that accompanied the Teufel opinions each state that her
evaluation of petitioner’s loss reserve was made using the paid
development method, the incurred development method, and the
14 In exhibits accompanying her report, Susan E. Witcraft
(Witcraft) noted that for 1993, there was a $4,210,000 aggregate
“redundancy” in petitioner’s booked net reserve, comprising
redundancies with respect to petitioner’s booked net reserves for
preceding years in the following amounts:
Year Amount
1985 $19,000
1986 22,000
1987 70,000
1988 123,000
1989 281,000
1990 304,000
1991 803,000
1992 1,099,000
1993 2,421,000
Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 NextLast modified: May 25, 2011