Property and Casualty Practice Note December 2008 ($JKL) is immaterial. Aggregate reserves held for all pools are $XYZ. Company practice is to accrue for the reporting lag for these pools. 3.
Immaterial pool exposure The Company participates in a small number of voluntary and involuntary pools. Company practice is to record the loss and loss adjustment reserves reported to it by the pools. Reserve exposure with respect to pools is considered immaterial.
4.
No adjustment for booking lag Company practice is to record the loss and loss adjustment reserves reported to it by the pools. Any adjustment to these reserves for reporting lag is considered immaterial.
DISCUSSION-OTHER DISCLOSURES IN EXHIBIT B – MASS TORT EXPOSURE: Many mass tort events have significant uncertainties associated with reserve estimation. Recent advances in actuarial methodologies have assisted in the quantification of some such incidents; however, there may be some cases in which the actuary may believe that the reserve is not actuarially estimable, and this may create a qualified opinion as defined in ASOP No. 36. The examples that follow involve environmental and asbestos liability, specific types of mass tort exposure. However, this discussion may aid an actuary dealing with other mass tort situations as well. In most cases, one of the following situations will present itself to the opining actuary: 1.
The company has not provided coverage that could reasonably be expected to produce material levels of asbestos and/or environmental liability claims activity.
2.
The company has provided coverage that can reasonably be expected to produce material levels of asbestos and/or environmental liability claims activity.
The actuary might make a determination that these exposures could result in either a scope limitation (which may be appropriate if the actuary does not consider this liability to be actuarially estimable), no limitation, or an adverse opinion (which may be appropriate if the actuary believes that a reasonable estimate of this liability can be made, but that the booked reserve for this liability is not reasonable, and this results in an inadequate overall reserve). The decision to issue an adverse opinion is typically based upon overall reserve adequacy, not just reserve adequacy for this or any other isolated reserve segment. (Note: The company is required to disclose asbestos and environmental reserves in the Notes to the Financial Statement, Line 32.) A scope limitation may not be required if the actuary reasonably believes that the potential amounts are not material. A scope limitation is usually a qualified opinion under ASOP No. 36.
PN08
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