Minnesota Lawyers Mutual Insurance Company and Subsidiaries - Page 36




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            establishing petitioner’s reserves in the first instance but                               
            were asked after the fact to review petitioner’s carried                                   
            reserves, for purposes of satisfying the statutory certification                           
            requirement.                                                                               
                  With respect to petitioner’s 1993 taxable year, Witcraft                             
            specified no recommended range of reasonableness (unlike the                               
            taxpayer’s actuary in Utah Medical), but instead provided a                                
            “best estimate” that was significantly lower than petitioner’s                             
            carried net reserve, while noting historical redundancies in                               
            petitioner’s carried net reserves.  Petitioner has not explained                           
            the variance between this “best estimate” and the estimate                                 
            petitioner used for tax purposes.25                                                        

                  24(...continued)                                                                     
            Reserves)”.  The Teufel opinions for 1994 and 1995 each state                              
            that petitioner’s carried reserves were “computed in accordance                            
            with accepted loss reserving standards and principles”.  It is                             
            unclear, however, whether these statements are meant to refer to                           
            the actuaries’ assessment of computational techniques of                                   
            petitioner’s management as opposed to the actuaries’ own                                   
            computations in independently evaluating the adequacy of                                   
            petitioner’s reserves.  The actuaries were not called as                                   
            witnesses to resolve such ambiguities.                                                     
                  25 Petitioner states on brief that it did not call its                               
            actuaries to testify in part because “Petitioner was, and is,                              
            satisfied with the accuracy and clarity of the qualified                                   
            actuaries’ reports.”                                                                       
                  On brief, respondent complains about the lack of opportunity                         
            to cross-examine the actuaries.  Respondent had equal                                      
            opportunity, however, to call the actuaries as witnesses, either                           
            as part of his case-in-chief or as rebuttal witnesses, issuing a                           
            subpoena if necessary.  Respondent chose not to.  Accordingly, we                          
            do not infer that the actuaries’ testimony would have been either                          
            favorable or unfavorable to petitioner.  See Sisson v.                                     
                                                                         (continued...)                




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