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“contradict the actuarial work done by Tillinghast.” On the
basis of their independent analyses, Kilbourne and Otto concluded
that fair and reasonable estimates of petitioner’s unpaid losses
were $50 million for 1993 and $39 million for 1994.
Kilbourne and Otto also reviewed the AMI report and
concluded that it relied upon “erroneous calculations and
unsupportable assumptions”. They stated that if these defects
had been cured, the results of the AMI analysis would corroborate
their own conclusions.
James D. Hurley
The Hurley rebuttal report responded to three criticisms
that Kilbourne and Otto made of the AMI analysis: (1) The use of
incorrect premium data in AMI’s application of the Bornhuetter-
Ferguson actuarial method; (2) inappropriate interpolation of
loss development factors in AMI’s application of the paid loss
development actuarial method; and (3) inappropriate selection of
factors generally in the AMI analysis.
Hurley concluded that the first criticism noted above was
valid and that if the AMI analysis were adjusted to correct this
error, AMI’s point estimate of petitioner’s 1993 unpaid losses
should be reduced from $87,419,000 to $82,544,000. Hurley
concluded that the second-mentioned criticism “involves a matter
of actuarial judgment” but stated nonetheless that if one were to
adjust the AMI report for this issue as well as the first-
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