-26-
Ph.D. in mathematics from the University of California
(Riverside) and has more than 21 years of actuarial consulting
experience.
In forming his opinion, Hayne relied primarily on
information supplied by petitioner, the Witcraft opinion, and
the Teufel opinions, as well as petitioner’s annual statements
and annual statements of other insurers specializing in legal
professional liability insurance.
Hayne did not attempt to estimate petitioner’s unpaid
losses. He testified that he had no actuarial opinion as to the
amount of unpaid loss reserves petitioner should use for either
annual statement or Federal income tax purposes. Instead, his
goal, as stated by petitioner on brief, was to “assess the
volatility present in petitioner’s data and the effect of that
volatility on projections based on that very data.”
Hayne testified that petitioner’s loss development was
historically volatile and difficult to predict with certainty.
He found that petitioner had substantially fewer expected paid
claims than the number generally needed each year for full
statistical credibility. He attempted to quantify the level of
uncertainty and to test petitioner’s carried reserves using two
statistical analyses, the incurred loss development method and
the paid loss development method. Under these two methods,
Hayne determined that the range of outcomes for petitioner’s
Page: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 NextLast modified: May 25, 2011