Services

Loss Reserving

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.

Publications and Media

October 12 2017 APEX Webinar
State of the Florida Homeowners Market
Authored by Derek W. Freihaut and Arthur R. Randolph II.

August 2017 APEX Webinar
Actuarial Considerations for Allocating IBNR Reserves
Authored by Joseph A. Herbers and Aaron N. Hillebrandt.

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Case Studies

Audit Support & Risk Transfer
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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.

Dedicated Fund Review
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Dedicated Fund Review

Pinnacle was asked by a State Insurance Department to review the financial soundness of a State controlled, dedicated fund. The review consisted of establishing the State’s outstanding liabilities and future funding needs. Detailed historic exposure and loss experience were not readily available from the State because the program was administered by individual insurers. Pinnacle designed and conducted an industry data call on behalf of the State. The collected data was then used by Pinnacle in support of their analysis. As the data was still somewhat limited, additional industry data was gathered from other states to supplement Pinnacle’s analysis. Pinnacle then provided the State with a report detailing the determination of the estimated liabilities, the indicated rate changes, and recommendations on data capturing for enhancement on future studies.

Liquidation - Workers Compensation
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Liquidation - Workers Compensation

Pinnacle was retained by the liquidator of a monoline workers' compensation carrier to estimate outstanding liabilities and provide expert testimony in support of the loss reserve estimation.

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