Loss Reserving

Bermuda SAO

Pinnacle provides the loss reserve analysis and statement of actuarial opinion to the Bermuda-domiciled captive of a major national long haul trucking company for over a decade. This reserve analysis examined the captive's coverages for excess automobile liability coverage, deductible reimbursement under a large deductible workers compensation policy and cargo liability and physical damage coverages. The analysis utilized both company loss development triangles and industry benchmarks. Once the reserve analysis was completed and discussed with the client, the statement of actuarial opinion was produced to comply with regulatory requirements. Our excellent working relationship with the captive’s auditors simplifies the work of both firms on behalf of the captive.

Cayman Captive

Pinnacle serves many of the largest group captives in the world, many of them domiciled in the Cayman Islands. These reserve analyses are typically produced twice a year and serve multiple purposes. First, they provide a range of reasonable estimates which management uses to determine their best estimate of ultimate losses and unpaid claims liabilities. Second, these reserve estimates can then be allocated to individual members to determine the outstanding liabilities and potential future assessments, if any. Finally, the allocated ultimate losses become the basis for renewal pricing estimates for each member. Pinnacle’s approach to estimating and allocating reserves in group captives is unique in the industry and sets our alternative practice apart with its efficiency and accuracy.

Florida Department of Financial Services

The Florida Department of Financial Services (DOFS) oversees and administers the runoff of domestic Florida insurance companies in rehabilitation. Typically, when a company's financial condition is perilous, the DOFS obtains court orders to oversee the company’s administration and manage the orderly adjudication of all unpaid claims liabilities.

Measuring the extent of those claims liabilities involves uncertainty as to the number and severity of those claims. Further complicating the issue relates to the attitudes of claimants and their attorneys as regards to settlement of such claims knowing the company itself is under regulatory supervision. 

We assisted the DOFS in a formal way with the runoff of three nonstandard auto writers, all part of a company group. The nature of the exposure was such that the unpaid claims were dominated by bodily injury and property damage liability claims. Our modeling of the anticipated future settlements considered input from company claims representatives, the DOFS itself and the company’s auditors.

At the outset of the assignment, the company’s surplus was impaired significantly. During the process, the DOFS was able to achieve significant concessions on the part of claimants given the uncertain financial condition of the carriers involved. The outcome was when the last claim was paid, the company shell that remained had a positive surplus balance.