Physicians Insurance Company of Wisconsin, Inc. and Subsidiaries - Page 9




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               While we believe that the reserve indications and                      
               methods used to determine the reserve indications are                  
               reasonable, the development of these indications                       
               requires the projection of future contingent events;                   
               thus, it is not possible to guarantee that these                       
               reserves will prove to be adequate or not excessive.                   
          Petitioner’s Representation Letters to Tillinghast                          
               Before Tillinghast prepared its final reserve reports each             
          year, it required petitioner to provide a representation letter.            
          In connection with Tillinghast’s review of petitioner’s loss                
          reserves at yearend 1993, petitioner’s February 1994                        
          representation letter to Tillinghast confirmed, among other                 
          things, that petitioner had not knowingly withheld from                     
          Tillinghast any “relevant information which would materially                
          affect the loss and loss adjustment expense reserves”, that                 
          information furnished to Tillinghast for the calculation of the             
          loss and loss adjustment expense reserves was “complete and                 
          accurate”, and that Tillinghast had been advised of “all known              
          changes in internal methods or procedures which would materially            
          affect the determination of needed loss and loss adjustment                 
          expense reserves”.  Petitioner’s February 1995 representation               
          letter, in connection with Tillinghast’s review of petitioner’s             
          loss reserves at yearend 1994, was substantially identical.                 
          Third-Party Reviews of Petitioner’s Loss Reserves                           
               Coopers & Lybrand                                                      
               The accounting firm of Coopers & Lybrand (Coopers) reviewed            
          petitioner’s 1993 and 1994 annual statements.  Coopers also                 





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