-34-
1994 and 1995 Best reports indicate that petitioner was very
conservatively reserved and had demonstrated a pattern since
1987 of writing down excess reserves established in prior years.
In sum, petitioner has failed to prove the necessity of the
adverse development reserve for the years in issue, during which
neither its own reserve analyses nor historical experience
indicated deficiencies in its case reserves. Even if we were to
assume arguendo that petitioner has demonstrated a need for
adverse development reserves for the years in issue, petitioner
nonetheless has failed to carry its burden to show that its
unpaid loss reserve estimates were fair and reasonable. It has
not shown what specific factors, if any, were taken into account
in establishing the extra percentage of case reserves that would
be included in the adverse development reserve, nor has it shown
how the factors might have been weighted. Other than summary
reserve analyses, petitioner presented no work papers or other
documentation showing what facts it considered or analyzed in
determining its adverse development reserve. There is no
specific indication in the record, for example, why petitioner,
in computing its adverse development reserve for 1995, applied a
factor of 45 percent for 1995 open claims of $100,000 or less,
rather than some lower or higher factor, or why the factor
applied to current-year claims varied from year to year.
Similarly, although Bixler testified that petitioner made
separate and additional allowance for claims over $100,000,
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