-30-
appropriate, to project the ultimate losses for that year. In
this respect, Streff’s approach is similar to methods used by
petitioner’s appointed actuaries.
Streff then reduced the ultimate losses by the amounts
already paid for each year to determine the projected loss
reserve. He did this for both incurred losses and paid losses.
Streff equally weighted the projected losses using incurred loss
development and paid loss development to arrive at his selected
loss reserve for each of the years in issue.
Streff separately calculated the amount to be reserved for
allocated loss expenses. He reviewed the historical
relationship between paid losses and paid loss expenses to
determine a ratio for each year in which claims remained open.
Streff then applied this ratio to his projected unpaid losses to
determine the amount of projected allocated loss expenses.
Streff also calculated a reserve for unallocated loss expenses.
Unlike Hayne, Streff provided a “most likely estimate” of
petitioner's net loss reserve for each of the years in issue as
follows:
Year Amount
1993 $8,240,000
1994 7,273,000
1995 6,212,000
Page: Previous 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 NextLast modified: May 25, 2011