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My Captive’s Actuarial Reserve Estimate Changed,
What Should I Review?

One of the most efficient ways of reviewing the impact of a captive’s losses is through an actuarial exhibit referred to as a “reconciliation of required reserves”.
Table 1: Reconciliation of Estimated Required Reserves
1. Prior estimated required reserves
$1,000,000
2. Plus change in ultimate losses for historical periods
$300,000
3. Plus ultimate losses for current period
$150,000
4. Minus losses paid since prior evaluation
$150,000
5. Current estimated required reserves
$1,300,000
Table 2: Expanded Reconciliation of Estimated Required Reserves
1. Prior estimated required reserves
$1,000,000
2A. Plus change in ultimate losses for periods prior to 2010
$250,000
2B. Plus change in ultimate losses for periods 2010 and forward
$50,000
3. Plus ultimate losses for current period
$150,000
4. Minus losses paid since prior evaluation
$150,000
5. Current estimated required reserves
$1,300,000
Enoch Starnes, ACI

Actuarial Consultant
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Michelle Bradley, ACAS, MAAA, ARM, CERA

Consulting Actuary
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