Minnesota Lawyers Mutual Insurance Company and Subsidiaries - Page 27

            paid and incurred loss reserves for the years in issue were as                             
            follows (rounded, in millions of dollars):                                                 
                                 Incurred Loss           Paid Loss                                     
            Year                 Development Method   Development Method                               
                  1993           $6.0 to $9.6            $3.9 to $19.9                                 
                  1994           4.9 to  8.7             7.0 to  31.9                                  
                  1995           4.8 to  9.4             8.3 to  39.2                                  
            Hayne’s expert report states:                                                              
                  If the message given by the paid patterns * * * were indeed                          
                  correct, one could conclude that * * * [petitioner’s]                                
                  carried reserves would not be adequate.  If, however, the                            
                  message given by the incurred patterns were correct, one                             
                  could conclude that the carried reserves may be sufficient,                          
                  or perhaps even redundant.                                                           
            Hayne concluded that given the wide range of potential outcomes                            
            from these two statistical analyses, he “could not conclude that                           
            * * * [petitioner’s] carried reserves were, in total, so high as                           
            to be unreasonable.”  Or, as petitioner summarizes Hayne’s                                 
            opinion on brief:  “there was so much volatility in petitioner’s                           
            data that petitioner’s reserves were reasonable.”                                          
                  Hayne also presented a comparison of petitioner's                                    
            development factors to those of a selected “peer” group of                                 
            companies, comprising eight companies that are single-line,                                
            legal malpractice insurers operating in other States.  He                                  
            compared the ratio of petitioner's paid to ultimate losses and                             
            allocated loss adjustment expenses to the peer group.  Hayne                               
            also compared the ratios of bulk and IBNR losses and allocated                             
            loss adjustment expenses to ultimate losses for petitioner with                            
            the same ratios for the selected group.  Hayne did not define                              

Page:  Previous  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  Next

Last modified: May 25, 2011