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Principal and Consulting Actuary

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Arthur R. Randolph II

Arthur Randolph is a Principal and Consulting Actuary with Pinnacle Actuarial Resources, Inc. managing the firm’s Atlanta, Georgia office. He has been in the insurance industry since 1998 and has been consulting since 2001. Mr. Randolph’s consulting career has focused on medical professional liability (MPL), homeowners, workers’ compensation (WC), commercial and personal automobile, general liability, and commercial multiple peril exposures.

Mr. Randolph provides actuarial consulting services to property and casualty (re)insurers, self-insured entities, risk retention groups (RRGs), and captive insurers. His core services include reserving, ratemaking, risk transfer testing, funding allocations, and developing experience and retrospective rating plans.

Mr. Randolph is a member of the American Academy of Actuaries (AAA) Medical Professional Liability Committee, the AAA Workers’ Compensation Committee, and the Alabama Actuarial Council. He is actively involved with Association of Government Risk Pools (AGRiP), California Association of Joint Powers Authorities (CAJPA), Captive Insurance Companies Association (CICA), CPCU Society, Florida Chamber of Commerce, Insurance Accounting and Systems Association (IASA), International Association of Black Actuaries (IABA), and MPL Association.

Publications and Media

Case Studies

Funding Study

Funding Study

Pinnacle was approached by an aircraft manufacturer to provide recommended funding for various aviation and liability coverages. Pinnacle’s initial steps included discussing coverages to be provided and what data was available to complete the funding study. The captive was a start-up with no loss information on which to determine appropriate funding levels. Pinnacle was able to determine that the National Transportation Safety Board (NTSB) had a database of aircraft incidents that recorded both the manufacturer and model of the aircraft involved in the incident. Since the manufacturer was able to provide the number of units produced, Pinnacle was able to determine the frequency and severity of the incidents and project ultimate funding levels. The captive is currently operational after receiving regulatory approval.

Medical Malpractice PCF

Medical Malpractice PCF

Pinnacle has developed an excellent working knowledge of patient compensation and birth-related injury funds in many jurisdictions, including Florida, Indiana, New Mexico, Ohio, Virginia, and Wisconsin. In several of these states, we not only complete regular rate indications and loss reserve analyses, we are frequently involved in legislative costing of proposed laws that may impact the fund. These proposed laws have included addition, modification and removal of damage caps, changes to primary coverage limits, revisions to program eligibility or mandatory coverage requirements, and program benefits changes. In all of these states, policymakers have benefitted from Pinnacle’s expert analysis, understandable reports and insightful advice.

U S Domestic Statement of Actuarial Opinion

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:

  • Reasonable
  • Inadequate/Deficient
  • Excessive/Redundant
  • Qualified
  • No Opinion

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:

  1. The adequacy of held reserves on a net basis were below the low end of our range of reasonable reserves until we took into account anticipated salvage and subrogation recoveries.
  2. The unearned premium reserves for long duration contracts were substantial and we conducted a review to determine they were adequate
  3. The Company held material loss and loss adjustment expense reserves for pools and associations. In order avoid having to issue a Qualified Opinion, we separately computed indicated reserves for two of the pools/associations, and obtained an SAO from the Appointed Actuary for the National Workers Compensation Reinsurance Pool.
  4. Reinsurance recoveries were in doubt for certain carriers as balance were sometimes overdue by more than 90 days. After reviewing the reinsurers’ A. M. Best ratings, we made the required disclosures about reinsurance collectability. 

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