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Senior Consulting Actuary

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Erich A. Brandt

Erich Brandt is a Senior Consulting Actuary with Pinnacle Actuarial Resources, Inc. in the Bloomington, Illinois office, with nineteen years experience as an actuary.

He is a Fellow of the Casualty Actuarial Society and a Member of the American Academy of Actuaries.  He currently serves as a member of the Casualty Actuarial Society (CAS) Examination Committee.

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

Mr. Brandt has made numerous presentations to brokers, corporate risk managers, and CFO’s regarding loss reserving, future loss projections and how their company’s characteristics impact their actuarial calculations.  He also works at length with the students and faculty at Illinois State University (ISU) by teaching class sessions on insurance operations, assisting with the compilation of data for academic research, and discussing the actuarial profession with current and prospective actuarial science majors.  Furthermore, Mr. Brandt is a member of the advisory board for the actuarial science major at ISU.

Publications and Media

July 6 2017 APEX Discussion Series
Causes of Recent Reserve Development
Authored by Erich A. Brandt and Gregory W. Fears, Jr..

Your Results May Vary
An Updated Look at RRG Financial Exam Costs
Authored by Erich A. Brandt and Gregory W. Fears, Jr. and Robert J. Walling III.

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Case Studies

Formation

Formation

In an effort to attract and retain quality physicians, a large integrated healthcare system operating in the Midwest decided to create a physician’s professional liability insurance (PPLI) alternative to the commercial markets. After a comprehensive feasibility analysis, an offshore captive insurance company (CIC) was capitalized and formed. Pinnacle actuaries were engaged to assist in the feasibility analysis and implementation of this strategy. Pinnacle’s involvement began by assisting the captive manager to develop appropriate assumptions that were incorporated into the CIC’s proposed business plan and filed with regulators. Initially, Pinnacle performed a comprehensive analysis of the current PPLI market to develop base rates, rating factors and underwriting guidelines. On an annual basis, Pinnacle re-evaluates the base rates and rating factors and recommends adjustments to reflect current trends in the market as well as credible indications borne out of the CIC’s experience. In addition to maintaining adequate rates for the program, Pinnacle has also been retained to perform the annual analysis of unpaid loss and expense reserves. The CIC’s annual reserve analysis includes a review of policies written, premium collected and claims incurred by the CIC at the close of each fiscal reporting period. Management relies on Pinnacle’s analyses to ensure the financial health of this strategic venture.

Staffing Self Insured Reserve Analysis

Staffing Self Insured Reserve Analysis

Pinnacle was retained by a group of staffing companies with large self-insured retentions for their workers compensation loss exposures to perform quarterly loss reserve analyses and annual funding studies. Pinnacle initially used customized benchmarks for the staffing as the basis for our analyses. However, it became apparent that the benchmarks were not reflective of the unique characteristics of this program. Pinnacle worked with the third party administrator (TPA) for the program to gather additional historical experience for the program, as well as consolidated experience for several similar programs administered by the TPA. Using the results of our analysis of the TPA’s previous experience for this program and others like it, we were able to develop benchmark loss development assumptions that tracked much more closely with the program’s actual loss emergence.

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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