Legaré W. Gresham
Derek W. Freihaut
Thomas R. Kolde
Timothy C. Mosler
Arthur R. Randolph II
Christopher M. Holt
Nicholas E. Alicea
Terrence D. Wright
John E. Wade
Joseph A. Herbers
Darcie R. Truttmann
Gregory W. Fears, Jr.
Aaron N. Hillebrandt
Michael K. Chen
Laura A. Maxwell
Erich A. Brandt
Robert J. Walling III
Pinnacle's team provides us a timely actuarial report and great customer service. We also appreciate their assistance in providing all insurance forms our Risk Management Group requires.
Pinnacle consultants deal with auditors daily, assisting them in serving their customers and evaluating the work products of other actuaries.
Pinnacle strives to construct benchmarks for any analysis, whether ratemaking, loss reserving or some other use, as close as possible to replicating the nature of the underlying data being reviewed.
Pinnacle provides loss reserve analyses and other
diagnostics in support of collateral negotiations associated with deductible
and/or self-insured retentions.
Assessing the reasonableness of indicated loss and loss adjustment expense reserves after the analysis is completed is an essential element of the loss reserve analysis. In particular, measures such as loss ratios, changes since the prior evaluation, implied claim frequencies and severities and costs per unit of exposure are a few of the diagnostic tests employed when considering the reasonableness of indicated reserves.
Management sometimes wishes to reflect the time value of money in funding projections, accruals for unpaid claims liabilities and other valuations. The two most important parameters for doing so are the assumed interest rate and the underlying claim payment pattern. Assessing reasonable values for these parameters is not trivial as the interest rate may need an adjustment for risk while the claim payment pattern may not be readily available.
Loss reserving is a process of estimating reasonable accruals for the unpaid loss and loss adjustment expenses that must be posted on a balance sheet. As this is often times the largest liability in a company’s financials, the accrual has a very significant impact on income and surplus (or net worth).
Pinnacle tailors our analysis of indicated reserves to your particular situation. Our loss reserve analyses are used to support statements of actuarial opinion (SAOs), audit opinions, financial examinations, insurance company liquidations and rehabilitations and as expert opinions in lawsuits. We rely on a wide variety of traditional actuarial methods to develop reasonable estimates of unpaid claims liabilities. The results of such a study can be stated as a point estimate, a reasonable range of outcomes or as a statistical distribution of all possible outcomes.
There are many factors that influence the analysis of indicated reserves, including internal factors such as safety programs, loss control efforts or management changes.
There are external influences as well - regulatory/judicial climate, the economy or weather patterns. Our consultants spend considerable time and effort to understand the unique climate in which your company operates before customizing our analysis to include the real world influences likely to influence the true accrual for unpaid claims liabilities. We also have significant expertise with insurer liquidators and rehabilitators.
Our experience with property/casualty insurance programs is both broad and deep, with no two programs alike. From financial analysis of companies and their management to expert witness testimony regarding our findings and recommendations, you can rely on our support.
September 27 2018 APEX Webinar
Loss Reserving 201
Authored by Legaré W. Gresham and Christopher M. Holt.
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Audit Support & Risk Transfer
Pinnacle provides audit support for captive insurers to a major accounting/audit firm. The audit support typically includes a review of the actuarial report and supporting documents to determine if the actuarial report adheres to professional standards and provides a reasonable estimate of held reserves. As part of this support we interact with the actuaries who developed the report in order to answer any relevant questions. Another frequent element of audit support engagements is risk transfer analysis. Pinnacle has developed a state-of-the-art approach to risk transfer modeling; our publications and presentations at industry trade shows have been well received. Ultimately, Pinnacle produces a report with relevant comments and our conclusions that provide the necessary documentation for the auditing firm.
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.
U S Domestic Statement of Actuarial Opinion
Domestic U.S. property/casualty insurers and risk retention groups are required to file an Annual Statement with state regulators each year by March 1. Part of that filing includes the submission of a formal Statement of Actuarial Opinion (SAO) by a qualified Appointed Actuary as to the reasonableness of held loss and loss adjustment expense reserves. The SAO must be one of five types:
In addition to the SAO, most jurisdictions require an Actuarial Opinion Summary (AOS) providing more detail on the Appointed Actuary’s specific findings by March 15. Lastly, a formal report narrative in support of the SAO and AOS is required to be available by May 1.
As the SAO is a compliance document, the primary audience is state regulators but the individual company must arrange for the service to be provided.
A recent SAO for one of our clients touched on many of the required disclosures:
At Pinnacle, we partner with you to explore whatever path it takes to find the answers you need.
November 27, 2018
Florida Chamber’s Annual Insurance Summit
November 27, 2018
Cayman Captive Forum