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risk, and increased claims and litigation being threatened
against petitioner.
Sanders testified that he knew of no actuarial standard of
practice or guideline that suggests a 10-percent tolerance on
either side of a best estimate, stating that it was a “very
judgmental area.”
To prepare his report, Sanders examined petitioner’s annual
statements for 1993 and 1994; Tillinghast’s yearend 1993 and
yearend 1994 reports; Tillinghast’s rate reviews prepared in
October 1993 and September 1994; reports drafted by respondent’s
experts; and various publicly accessible documents and filings.
Sanders never met with Tillinghast personnel to discuss
Tillinghast’s reports, however, nor did he review any of
Tillinghast’s pre-1993 reports for petitioner or any of
Tillinghast’s working papers beyond the exhibits supporting
Tillinghast’s reports.
Kilbourne and Otto
In their joint report, Kilbourne and Otto concluded that
petitioner’s estimates of its unpaid losses for 1993 and 1994
were too high. They stated that they had reviewed Tillinghast’s
reports and work papers and had concluded that Tillinghast’s work
“violates professional actuarial standards then in place”,
particularly as regards its reliance upon “prior selections”.
They also opined that petitioner’s almost 10-percent add-ons
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