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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
Michelle Bradley, ACAS, MAAA, ARM, CERA
Consulting Actuary
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