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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
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