FCAS, MAAA
Senior Consulting Actuary

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Blog posts

Pierogis and Palaces
Jan 9, 2018

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Erich A. Brandt

Erich Brandt is a senior consulting actuary with Pinnacle Actuarial Resources in Bloomington, Illinois. He has more than 20 years of experience as an actuary.

Erich has considerable experience in assignments involving loss reserving, funding studies, cost allocation mechanisms, loss cost projections, competitive analysis, captive feasibility studies and financial analysis of insurance companies.

Erich has made numerous presentations to brokers, corporate risk managers, and CFOs regarding loss reserving, future loss projections and how company characteristics impact actuarial calculations. He currently serves as a member of the Casualty Actuarial Society (CAS) Syllabus and Examination committee.

Erich also works with students and faculty at Illinois State University (ISU). He engages in joint research and speaks at actuarial club and the Katie School of Insurance & Risk Management functions. He is a member of the advisory boards for the actuarial science major at ISU and the Milwaukee School of Engineering. Erich is also on the board of directors of the Illinois Shakespeare Festival.

Publications and Media

July APEX Webinar
Causes of Recent Reserve Development
Authored by Erich A. Brandt and Gregory W. Fears, Jr..

October 2020 APEX Webinar
An Update to Pinnacle’s Risk Retention Group Benchmarking Study
Authored by Erich A. Brandt and Gregory W. Fears, Jr. and Robert J. Walling III.

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Case Studies

Captive Dividend Assessment

Captive Dividend Assessment

An onshore, single parent captive was concerned with the amount of retained earnings and wanted to establish a policy for the minimum capital for the program to trigger dividend distributions. Pinnacle compared the program’s capitalization to a wide variety of industry standards for similar programs from rating agencies, regulators, and other sources. The results of this analysis lead to a recommended board policy regarding a minimum capital threshold for dividend distributions and ultimately to a significant dividend being declared to the parent company.

Rate Indications / Filings

Rate Indications / Filings

A regional carrier came to Pinnacle wanting to implement an insurance score program along with rate indications for home, auto and farm. Pinnacle developed rate indications for each line, and developed an underwriting scorecard rating approach using insurance score as a critical component. The combination of implementing appropriate rates and the new rating plan enabled this company to turn their business around, become profitable and rebuild their surplus position.

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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