ACAS, MAAA, CERA
Managing Principal

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Joseph A. Herbers

Joe Herbers is Pinnacle’s Managing Principal and has over 32 years of consulting experience. His practice is concentrated in providing loss reserving and funding studies for a wide variety of entities – both traditional insurance companies and alternative market entities. Mr. Herbers’ areas of focus include policyholder owned group captives, large deductible and/or self-insured entities, lawyers’ professional liability carriers, Florida property writers and nonstandard auto writers.

His skill set includes loss reserving for all lines of business, hands-on interaction with policyholder-owned group captive insurance companies, networking with service providers and traditional ratemaking for all types of entities with insurance exposure. Mr. Herbers is an Associate of the Casualty Actuarial Society, a Member of the American Academy of Actuaries and a Chartered Enterprise Risk Analyst. He served as long-term member and Chair on the American Academy of Actuaries Committee on Property Liability Financial Reporting (COPLFR) as well as several other professional committees. He is a regular speaker at industry events.

Publications and Media

January 2019 APEX Webinar
Statements of Actuarial Opinion at Year-End 2018
Authored by Joseph A. Herbers and Aaron N. Hillebrandt.

January 2018 APEX Webinar
Statements of Actuarial Opinion at Year-End 2017
Authored by Joseph A. Herbers and Aaron N. Hillebrandt.

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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.

Commercial Lines

Commercial Lines

Pinnacle was approached by a national insurer that wanted to develop a more sophisticated commercial automobile rating program. Their current commercial automobile plan was a traditional rating approach and did not take full advantage of driver, credit scoring or vehicle characteristics and the company felt they could take advantage of a significant opportunity in the market. Pinnacle, through the use of predictive modeling, assisted the carrier in designing a new rating and tiering structure, which included modifications of the rating plan, the introduction of underwriting scoring, and new territory definitions. This new structure allowed the company to have more precise rating, more adequate and yet competitive rates for a broader spectrum of risks.

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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