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In addition to using the five methods, in arriving at each
of its ultimate loss estimates for year ends 1993 and 1994,
Tillinghast also factored in (to a greater degree for 1994 than
for 1993) ultimate loss estimates that it had selected in the
preceding year (prior selections).5 Because the prior selections
were significantly higher than the estimates indicated by any of
the five methods, the effect of factoring in the prior selections
was to significantly increase Tillinghast’s ultimate loss
estimates for each of the years 1993 and 1994.
Tillinghast’s point estimates of petitioner’s unpaid losses
for the years in issue were as follows:
Tillinghast Unpaid
Year Loss Estimate
1993 $74,027,009
1994 $77,029,796
Petitioner’s Add-Ons to Tillinghast’s Point Estimates
David L. Maurer (Maurer), petitioner’s treasurer and vice
president of finances, was responsible for selecting an estimate
of unpaid losses to be recommended to petitioner’s board of
directors and, following approval, reported on petitioner’s
annual statement. For the years in issue, Maurer reviewed each
5 For example, in its analysis of petitioner’s unpaid losses
for yearend 1993, Tillinghast first estimated losses by each of
the five methods for each report year. Rather than simply blend
these results to select ultimate losses for each report year,
Tillinghast factored in the higher estimates of ultimate losses
that had been selected in its yearend 1992 analysis.
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Last modified: May 25, 2011