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mentioned issue, AMI’s point estimate of petitioner’s 1993 unpaid
losses should be reduced to $71,915,000. Hurley concluded that
the third-mentioned criticism “involves purely actuarial
judgment” and offered no conclusion as to how adjusting for this
issue might affect the AMI point estimates.
Analysis
On the basis of all the evidence in the record, we conclude
that petitioner has failed to establish that it made fair and
reasonable estimates of its actual unpaid losses for the years in
issue. In particular, petitioner has failed to establish that
its add-ons of almost 10 percent to Tillinghast’s point estimates
were reasonable or appropriate.
On brief, petitioner argues that its management’s decisions
to increase Tillinghast’s point estimate were “not actuarial in
nature” but instead were based on certain “qualitative concerns”,
particularly regarding “the basic actuarial assumption that past
experience will replicate itself in the future.” Consequently,
petitioner argues, the 10-percent add-ons resulted in “an
appropriate expression of conservatism based on the implied range
around Tillinghast’s unchanged point estimate.”
Petitioner offered no evidence to show how it arrived at the
precise amounts of its add-ons to Tillinghast’s point
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