Source: http://www.state.me.us/pfr/insurance/company/exam_reports/2009/2009MEMICReport.htm
Timestamp: 2014-04-23 21:47:17
Document Index: 629803753

Matched Legal Cases: ['§221', '§3710', '§410', '§3413', '§412', 'art 1', 'art 2', 'art 1', 'art 1']

> Company Services
> Maine Domestic Companies
> 2009 Exam Report of Maine Employers' Mutual Insurance Company
Augusta, ME 04333-0034 Madam Superintendent:
Pursuant to the provisions of 24-A M.R.S.A. §221 and in conformity with your instructions, a financial examination has been made of the
at its home office in Portland, Maine. The following report is respectfully submitted.
I hereby certify that the attached report of examination dated July 14, 2010 shows the condition and affairs of the Maine Employers’ Mutual Insurance Company located in Portland, Maine as of December 31, 2009 and has been filed in the Bureau of Insurance as a public document.
This report has been reviewed.
Dated the _____ day of _________, 2011
SCOPE OF EXAMINATION ......................................................................................................................................... 1
SUMMARY OF SIGNIFICANT FINDINGS ................................................................................................................... 1
SUBSEQUENT EVENTS ............................................................................................................................................... 1
THE COMPANY ........................................................................................................................................................... 2
HISTORY ........................................................................................................................................................... 2
CONTRIBUTED CAPITAL .................................................................................................................................... 2
CORPORATE RECORDS ..................................................................................................................................... 3
CORPORATE OWNERSHIP ................................................................................................................................. 3 CORPORATE GOVERNANCE ............................................................................................................................... 3 CODE OF CONDUCT AND CONFLICT OF INTEREST ............................................................................................ 3 FIDELITY BOND AND OTHER INSURANCE .......................................................................................................... 5 EMPLOYEE BENEFITS ........................................................................................................................................ 5 TERRITORY & PLAN OF OPERATION ................................................................................................................... 5
TRANSACTIONS WITH AFFILIATES ..................................................................................................................... 5 GROWTH OF COMPANY ...................................................................................................................................... 6 REINSURANCE ................................................................................................................................................... 6 ACCOUNTS AND RECORDS ................................................................................................................................. 6 STATUTORY DEPOSITS ....................................................................................................................................... 6 LITIGATION ................................................................................................................................................................ 6
FINANCIAL STATEMENTS ........................................................................................................................................... 7
COMMENTS ON FINANCIAL STATEMENT ITEMS ..................................................................................................... 11
CONCLUSION ........................................................................................................................................................... 11
APPENDIX A - STATEMENT OF ACTUARIAL OPINION ............................................................................................ 13 SCOPE OF EXAMINATION
Maine Employers’ Mutual Insurance Company (hereinafter, “Company”) was last examined as of December 31, 2005 by the State of Maine Bureau of Insurance (hereinafter, “Bureau”). This examination covers the period from January 1, 2006 to the close of business on December 31, 2009.
This examination was performed pursuant to the risk-focused approach promulgated by the National Association of Insurance Commissioners (hereinafter, “NAIC”), and consisted of a review of the Company’s operations, administrative practices, valuation of assets, and determination of liabilities at December 31, 2009 in conformity with statutory accounting practices, NAIC guidelines including the 2009 Financial Condition Examiners Handbook, (hereinafter “FCEH”), and the laws, rules, and regulations prescribed or permitted by the State of Maine. To the extent deemed appropriate, we utilized the work-papers of the Company’s independent accountants for the year ending December 31, 2008.
Areas reviewed in this examination included: aggregate reserves for workers’ compensation policies, policy and contract claims, reinsurance contracts, investments, risk-based-capital requirements and cash flow adequacy. To the extent deemed necessary, transactions occurring subsequent to the examination date were reviewed.
The results of this examination present the financial condition of the Company as of December 31, 2009. Comments on various balance sheet items, for purposes of this report, may be limited to matters involving clarification, departures from laws, rules and regulations and/or significant changes in amounts.
There were no report comments in the prior Examination Report for the period ending December 31, 2005.
Current Examination
The Company appears to be in substantial compliance with 24-A M.R.S.A. and the Company’s by-laws.
The Company established another subsidiary in January 2010, Casco View Holdings, LLC, and transferred the investment in real estate into that entity. This entity was created pursuant to Board of Directors’ authorization in October 2009.
No other significant material subsequent events were noted. See section “Litigation” for additional information.
The Company was established through legislative action as an assessable mutual by the State of Maine on November 13, 1992 and commenced business effective January 1, 1993. The Company was established to replace the State of Maine Workers' Compensation Residual Market Pool and to add stability to the Maine worker’s compensation insurance market. The Company writes workers' compensation insurance, and employers’ liability insurance and employment practices liability insurance incidental to and written in connection with workers' compensation coverage for employers in the State of Maine.
In 1996, the Company established a wholly owned, non-insurance subsidiary, MEMIC Services, Inc. (hereinafter, “Services”). Presently, Services sells loss control services to the Company, and to the Company’s insurance subsidiary, MEMIC Indemnity Company (hereinafter, “MIC”).
In 1998, the Company was given authority by the Bureau to apply for licensure in Massachusetts to write coverage for Maine employers with risks in Massachusetts. On August 12, 1999, the Company became licensed in Massachusetts.
In 1999, the Company obtained approval from the New Hampshire Insurance Department to form a New Hampshire domestic subsidiary, MIC, to write workers' compensation insurance in New Hampshire. On May 1, 2000, the State of New Hampshire authorized the MIC to write workers' compensation insurance. To date, the Company has provided capital amounting to $46,000,000 through an equity investment. The Company’s strategy is to use MIC as a vehicle to provide workers’ compensation coverage to entities with principal operations in MIC’s target markets of New Hampshire, Vermont, New York, Massachusetts and Connecticut and to provide workers’ compensation coverage to those entities ancillary operations located in other states including the District of Columbia.
As authorized by specific provisions of state law, the Company was formed as a special purpose mono-line workers' compensation insurer without any initial capital or surplus. To provide capital, each of the Company's policyholders were required to make a capital contribution equal to a percentage of final audited premium; 15% for policies issued in 1993 and 10% for policies issued in 1994 and 1995. Capital contributions were suspended for policies effective January 1, 1996 and later.
In 1998, the Company requested, in accordance with 24-A M.R.S.A. §3710 (3)(E) (repealed in 2001), that the superintendent of insurance review and certify that their surplus has reached the levels required by 24-A M.R.S.A. §410. Upon review of the Company’s surplus levels, the superintendent certified that the Company possessed an adequate level of surplus for a domestic insurance company writing workers' compensation. Presently, the Company is subject to all regulations applicable to a mutual casualty insurer that writes workers' compensation insurance in Maine.
From 1998 through the present, the Company requested and received approval from the superintendent to return capital contributions to the extent authorized by the board of directors and the Bureau of Insurance. By December 31, 2005, the Company had returned all but an immaterial amount of the contributed capital.
The Company’s articles of incorporation, by-laws and minutes of the board of directors’ meetings held during the period under examination were reviewed. Based upon our review, the Company is conducting its affairs in substantial compliance with the statutes of the State of Maine and in accordance with its own charter and by-laws.
The Company is a 100% owner of its insurance company subsidiary, MIC, and is a 100% owner of its non-insurance subsidiary, Services.
The Company is governed and overseen by its board of directors and the management team of the Company.
At December 31, 2009 the Company’s board of directors consisted of nine individuals. Other than John Leonard, President and Chief Executive Officer, all directors were outside directors. The Company’s board of directors approves the strategic direction of the Company’s business and financial objectives, monitors the effectiveness of managements’ implementation of policies and plans and provides oversight and support in achieving corporate objectives. Review of the board of directors’ meeting minutes provided acceptable evidence that the board of directors acted in substantial compliance with the Company’s articles of incorporation, its by-laws and provided management oversight.
The board of directors has five standing committees. These committees include executive, audit, investment, compensation, and governance and nominating. Each committee consists of three or more members, and all report to the board of directors. In December 2008, the board of directors developed written charters for all its committees. Review of the minutes indicated that all of the board committee meetings during the period under examination were conducted in substantial compliance with the written committee charters.
Title 24-A M.R.S.A. §3413 identifies potential conflict of interest areas. As such the Company requires that each director and officer of the Company complete a conflict of interest statement, annually, to disclose any material interest or affiliations which are likely to be in conflict with his/her official duties and responsibilities to the Company.
The conflict of interest guidelines are included in the Company’s code of business conduct and ethics. All directors, officers and employees are required to sign a compliance certificate when hired/appointed that certifies that they have read, understand, and will adhere to the code of business conduct and ethics, and the conflict of interest policy. All directors and officers are required to also sign a compliance certificate annually. Our examination included a review of these compliance certificates and found the Company to be in substantial compliance with its code of conduct and conflict of interest policies. The Company is also in substantial compliance with the Maine statute.
Officers of the Company, as listed in the 2009 statutory annual statements, are:
John Thomas Leonard
Daniel Joseph McGarvey
Michael Peter Bourque
Secretary, Vice President, Corporate Communications
Gary Richard Baxter
Donald Vernon Hale
John Francis Marr
Catherine Flaherty Lamson
Senior Vice-President & Chief Administrative Officer
Gregory Grant Jamison
The examiner-in-charge and the director of examination interviewed most of the aforementioned officers. All officers appeared to be qualified in terms of experience and knowledge. It is apparent from the interview process that knowledge of business processes, plans, results and risk areas are shared amongst senior management of the Company.
In addition to the officers, the chairman of the audit committee was also interviewed. The professional experience of audit committee chairperson, Ms. Mann, appeared appropriate for this position and she indicated that the audit committee met regularly with the independent auditors and internal auditors.
As of December 31, 2009, the board of directors of the Company consisted of the following members:
Mary Jane Sheehan
Vicki Jean Mann
Jolan Force Ippolito
Robert Dale Umphrey
Ward Irving Graffam
Katherine Maxim Greenleaf
Sara Catherine Longley
David Mark Labbe
Fidelity Bond and Other Insurance
The Company is protected by a fidelity bond, and the bond amount was reviewed and was determined to be substantially in compliance with the NAIC recommended levels of coverage. The Company maintains other insurance policies including property and equipment, automobiles, general liability, and directors and officers' liability.
The Company and each of its subsidiaries have employees and offer benefits under medical and other standard benefit programs. The Companies also offer the employees a qualified defined contribution pension plan as well as a 401k plan with both a matching and profit sharing component. The Company also offers non-qualified pension and incentive plans for its executives.
Territory & Plan of Operation
The Company is licensed to transact business as a workers’ compensation insurer, and is currently writing in Maine, New Hampshire, Vermont, Massachusetts, and Connecticut.
The Company primarily writes workers compensation insurance to mid-sized businesses located in Maine as well as businesses located in Maine with operations in the New England states. In 2008, the Company began writing employment practices liability insurance as an endorsement to its workers compensation policies. Products are marketed using the brand name “MEMIC”. Distribution is primarily through a network of independent brokers.
The Company is a party to a written tax sharing agreement with its subsidiaries. The agreement provides that the portion of the consolidated tax liability allocated to the Company is based on its separate tax return liability.
The Company provides certain administrative, technical and managerial support pursuant to its subsidiaries under the terms of a written management service agreement.
The Company receives some claims handling services from its insurance subsidiary, MIC, under the terms of a written services agreement.
The Company and its insurance subsidiary receive loss control services from its non-insurance subsidiary, Services, under written service agreements.
The Company’s direct written premiums have steadily declined each year from 2006 through 2009 due to “soft” market conditions, overall economic conditions, and a NCCI proposed 7.6% rate decrease effective January 1, 2009. A rate decrease of 7% has also been announced by the Company for 2010. Based upon the 3 year projection provided to the Bureau, the Company expects premiums to be stable for the next 3 years. The Company has paid dividends to its policyholders in 2006, 2007, 2008 and 2009.
The Company assumes some minimal reinsurance from various state run and national workers’ compensation pools.
In 2009 the Company ceded reinsurance on its workers’ compensation in excess of loss layers up to $75,000,000, above a $5,000,000 retention, to various authorized reinsurance companies.
The employment practices liability insurance business is 100% ceded to an outside authorized group of reinsurance companies.
As part of the information systems review, reliance was placed on review of the Company’s response to the NAIC prescribed Information Systems Questionnaire. Interviews with Company staff were conducted to gather supplemental information and corroborate the Company’s responses to the questionnaire. Included in the scope of this review were management and organization controls, logical and physical security controls, changes to applications, system and program development, contingency planning, operations and processing controls.
As required by 24-A M.R.S.A. §412, the Company has maintained the required security deposit with the Treasurer of Maine.
In the normal course of its business operations, the Company is involved in litigation from time to time with its claimants, beneficiaries and others. The Company believes that it has valid defenses in all material suits and is in the process of defending its position. The Company’s representations in this regard were confirmed through direct correspondence with the Company’s outside legal counsel. In the opinion of management, the ultimate liability, if any, arising from this litigation is not expected to have a material effect on the financial position of the Company.
The accompanying financial statements fairly present, in all material respects, the Company’s statutory financial position as of December 31, 2009 and statutory results of operations for the period then ended. The financial statements as of December 31, 2008, 2007, and 2006 are unexamined and are presented for comparative purposes only.
STATEMENT OF ADMITTED ASSETS, LIABILITIES AND SURPLUS
as of December 31, 2009, 2008, 2007 and 2006
(unexamined)
$ 487,210,027
$ 464,184,517
$ 449,490,816
$ 414,995,027 Preferred Stock
787,420 Common stocks
101,172,130
91,744,666
115,544,439
109,085,451 Real estate
5,294,269
4,511,008
16,431,801
19,456,583
14,078,973
8,836,031 Other invested assets
174,697 Aggregate write-ins for invested assets
5,097,664
4,543,385
4,443,441
3,771,426 Investment income due and accrued
5,673,632
5,447,225
5,119,792
4,573,452 Premiums in the course of collection
7,226,179
8,609,750
8,519,080
8,760,438 Premiums deferred
31,350,137
33,942,025
35,303,304
35,816,809
Accrued retrospective premiums
661,788
1,629,475
2,134,163
Current federal income tax recoverable
947,600
3,572,431 Net deferred tax asset
9,678,819
9,887,198
10,599,218
9,012,076 Electronic data processing equipment/software
468,606
617,329
542,907 Receivables from subsidiaries and affiliates
937,666
925,468
380,473 Aggregate write-ins for other than invested assets
$ 671,568,258
$ 644,357,850
$ 648,184,762
$ 602,552,596 Liabilities, Surplus and Other Funds
309,752,661
300,922,066
300,281,527
279,534,149 Loss Adjustment expenses
38,486,960
38,855,011
34,554,397
33,334,292 Commissions payable
3,819,844
4,011,977
4,445,578
4,197,590 Other expenses
11,881,581
10,188,171
11,974,083
9,921,870 Taxes, Licenses and fees
465,243
422,097 Current federal income taxes
1,330,949
60,343,419
65,324,885
69,846,978
71,256,135 Advance premiums
981,520
1,678,383
686,761
1,464,072 Declared policyholder dividends
68,752 Ceded reinsurance premiums payable
770,903
879,203
932,001 Amounts withheld for the account of others
2,568,888
2,876,730
2,875,957
2,808,172 Provision for Reinsurance
43,000 Aggregate write-ins for liabilities
1,123,567
1,057,280
1,373,254
1,405,029 Total Liabilities
430,450,342
427,481,598
427,405,065
405,387,159 Surplus
Gross paid in and contributed surplus
3,222,136
3,222,875
3,220,336
3,226,708 Unassigned funds
237,895,780
213,653,377
217,559,361
193,938,729 Surplus as regards policyholders
241,117,916
216,876,252
220,779,697
197,165,437 Liabilities and Surplus
$ 602,552,596 STATEMENT OF OPERATIONS
Years Ended December 31, 2009, 2008, 2007 and 2006
$ 130,036,980
$ 139,884,756
$ 147,286,652
$ 153,163,226 Deductions:
86,080,302
72,361,371
89,925,578
101,396,725 Loss adjustment expenses
10,989,392
15,174,892
12,366,832
12,314,532 Other underwriting expenses
28,246,650
28,046,263
30,115,938
29,315,564 Total underwriting deductions
125,316,344
115,582,526
132,408,348
143,026,821 Total underwritng gain
4,720,636
24,302,230
14,878,304
10,136,405 Investment Income
Net investment income earned 21,027,187
21,429,977
20,586,501
18,684,784 Net realized capital gains (losses); net of taxes
2,519,377
(13,447,677)
(448,141)
89,225 Net Investment Income
23,546,564
7,982,300
20,138,360
18,774,009 Other Income
Net loss from premiums charged off
(467,719)
(315,214)
(439,818)
(437,662)
Finance and service charges
88,651 Aggregate write-ins for miscellaneous income (charges)
(142,290)
11,870 Total Other Loss
(533,420)
(249,178)
(345,574)
(337,141)
Net income before dividends and federal income taxes
27,733,780
32,035,352
34,671,090
28,573,273 Dividends to policyholders
15,000,110
14,006,432
12,002,327 Net income before federal income taxes
17,733,780
17,035,242
20,664,658
16,570,946
3,065,319
6,117,053
6,212,186
2,823,671 Net Income
$ 14,668,461
$ 10,918,189
$ 14,452,472
$ 13,747,275 STATEMENT OF CAPITAL AND SURPLUS
Policyholder Surplus December 31 Prior Year
$ 216,876,252
$ 220,779,697
$ 197,165,438
$ 173,503,825 Net Income
14,668,461
10,918,189
14,452,472
13,747,275 Change in unrealized capital gain/(loss) net of tax
5,992,122
(8,261,710)
6,407,099
7,782,074 Change in deferred income tax
3,514,590
2,193,261
788,334 Change in nonadmitted assets
3,609,620
(10,077,053)
1,566,763
Change in provision for reinsurance
Change in paid in surplus
(222,833) Change in surplus
24,241,664
(3,903,445)
23,614,259
23,661,613 Policyholder Surplus December 31 Current Year
$ 241,117,916
$ 197,165,438 COMMENTS ON FINANCIAL STATEMENTS ITEMS
The Maine Bureau of Insurance’s employed actuary, a PhD, ACAS, and MAAA, was assigned to perform an actuarial review and to perform certain actuarial analyses on the reserves reported by the Company at December 31, 2009. That actuarial report and opinion is included in this report in Appendix A.
The Company’s financial condition, as disclosed by this examination, is reflected in the statements and the supporting exhibits contained in this report. The basis of preparation of such statements conforms to laws, rules and regulations prescribed and/or permitted by the Maine Bureau of Insurance.
Acknowledgment of cooperation and assistance extended to the examiners by all Company personnel is hereby expressed.
Stuart E. Turney, Director of Examination, being duly sworn according to law deposes and says that, in accordance with authority vested in him by Eric Cioppa, Deputy Superintendent of Insurance, pursuant to the Insurance Laws of the State of Maine, he has made an examination of the condition and affairs of the
of Portland, Maine as of December 31, 2009, and that the foregoing report of examination subscribed to by him is true to the best of his knowledge and belief. The following examiners from the Bureau of Insurance assisted:
Graham S. Payne
Michael R. Nadeau, CPA, CFE, CISA, AES
Margaret S. Boghosian, CPA, CFE
Vanessa J. Leon
Arias Wan
Stuart E. Turney, CPA, AFE
This _____day of _________, 2011
APPENDIX A – STATEMENT OF ACTUARIAL OPINION
MAINE EMPLOYER'S MUTUAL INSURANCE COMPANY FOR THE YEAR ENDING DECEMBER 31, 2009
Identification I, Michael G. Blake, am the P&C actuary at the Maine Bureau of Insurance. I am a Member of the American Academy of Actuaries and meet its qualification standards to render this Statement of Actuarial Opinion. I am also an Associate of the Casualty Actuarial Society. I was requested by the Maine Bureau of Insurance on May 4, 2010 to render this opinion.
I have examined the reserves shown in the Annual Statement of the company as prepared for filing with state regulatory officials, as of December 31, 2009. This opinion relates to items in Exhibit A.
The loss and loss adjustment reserves specified above, on which I am expressing an opinion, reflects the items 3 through 8 in Exhibit B.
In forming my opinion on the loss and loss adjustment expense reserves, I relied upon data prepared by responsible officers and employees of the Company. In this regard, I relied primarily upon the data gathered and audited by Graham Payne. I evaluated the data for reasonableness and consistency. I also reconciled the data to Schedule P - Part 1 of the company's 2009 annual statement. In other respects, my examination included the use of such actuarial assumptions and methods used and such tests of the calculations as I considered necessary.
My review was limited to items in Exhibit A and did not include an analysis of any other balance sheet items. I have not examined the assets of the Company and I have formed no opinion as to the validity or values of these assets. My opinion on the reserves is based upon the assumption that all reserves are backed by valid assets, which have suitably scheduled maturities and/or adequate liquidity to meet the cash flow requirements.
This is a Reasonable Opinion.
In my opinion, the amounts carried in Exhibit A on account of the items identified:
Meet the requirement of the insurance laws of Maine;
Are consistent with reserves computed in accordance with accepted loss reserving standards and principles; and Make a reasonable provision for all unpaid loss and loss expense obligations of the Company under the terms of its contracts and agreements.
This opinion applies to loss and loss expenses on a combined basis.
a. Risk of Material Adverse Deviation
There is a significant risk of material adverse deviation for the Company.
The Company has booked reserves within a reasonable range of our best actuarial estimates. The potential for material adverse deviation relates to the nature of the coverage provided. The chief factors which bear the risk of material adverse deviation for reserves are the concentration of writings in one line of business and one state, legal, regulatory, economic conditions that impact workers compensation insurance, and the lack of fully developed payment patterns. MEMIC has only been writing workers compensation insurance since 1993. As such, none of their policy periods have become fully mature. Because of the long tail nature of this coverage, many unanticipated changes could occur to the future payout patterns. These changes could result from changing economic conditions, changing societal behavior, and changes in the legal and regulatory climate.
The above risk factors are compounded by the potential variability inherent in the underlying data. Therefore, there is a risk of material adverse development. I have used 10% of MEMIC's statutory surplus, $24.1 million, as a benchmark in determining the risk of material adverse deviation. The selection of this materiality standard was based on the fact that this opinion is prepared for the regulatory solvency of the Company and the amount of adverse deviation that would be expected to result in a decline in MEMIC's financial rating. Other measures of materiality might be used for reserves that are being evaluated in a different context.
b. Other Disclosure in Exhibit B
The data underlying my review, and resulting estimates, are net of salvage and subrogation. The Company reduces its loss reserves for anticipated salvage and subrogation recoverables as of December 31, 2009. The Company does not discount its loss and loss adjustment expenses reserves. I have reviewed the Company's exposure to asbestos and environmental claims. In my opinion, there is a remote change of material liability since the Company writes only workers compensation insurance. The Company does not write any policies which would result in the need for extended reporting reserves. The Company has immaterial exposure to voluntary and involuntary pool arrangement. Reserve exposure with respect to pools is considered to be immaterial.
The Company writes no policies or contract related to single or fixed premium policies with coverage periods of thirteen months or greater which are non-cancelable and not subject to premium increase (excluding financial guaranty contracts, mortgage guaranty policies, and surety contracts).
c. Reinsurance
Based on a review of the reinsurance contracts provided by the Company, I am not aware of any reinsurance contract that either has been or should have been accounted for as loss portfolio transfer, retroactive reinsurance, or financial reinsurance. I have reviewed the Part 2 - Property and Casualty Interrogatory # 9 regarding the risk transfer elements of the Company's reinsurance contracts.
The treaties have been reviewed for any terms or conditions that would limit risk transfer, whether the limitation included limits on underwriting and timing or risk. These contracts have no such limitations.
My opinion on the loss and loss adjustment expense reserves net of ceded reinsurance assumes that all ceded reinsurance is valid and collectible.
d. IRIS Ratios
I reviewed the results of the three NAIC IRIS tests, which are relevant to loss reserves.
These tests are listed as follows:
One-Year Reserve Development to Policyholders' Surplus
Two-Year Reserve Development to Policyholders' Surplus
Estimated Current Reserve Deficiency to Policyholders' Surplus
No exceptional values resulted for tests, a, b, or c.
In evaluating whether the reserves make a reasonable provision for unpaid losses and loss adjustment expense, it is necessary to project future loss and loss adjustment expense payments. It is certain that actual future losses and loss adjustment expenses will not develop exactly as projected and may, in fact, vary significantly from the projections. Further, my projections make no provision for extraordinary future emergence of new classes of losses or types of losses not sufficiently represented in the Company's historical data base or which are not yet quantifiable.
An actuarial report and any underlying actuarial papers supporting the findings expressed in this Statement of Actuarial Opinion has been provided to the Maine Bureau of Insurance ("MBI") in conjunction with its regulatory examination of the Company.
This statement of opinion is solely for the use of, and only to be relied upon by, the MBI and the various state departments with which the company files its Annual Statement.
Michael G Blake, Ph.D., ACAS, MAAA P&C Actuary Maine Bureau of Insurance 76 Northern Ave. Gardiner, ME 04345 (207)-624-8427 July 12, 2010
Exhibit A: SCOPE
Loss Reserves:
A. Reserve for Unpaid Losses (Liabilities, Surplus, and Other Funds page, Line 1)
$309,752,661
B. Reserve for Unpaid Loss Adjustment Expense (Liabilities, Surplus and Other Funds page, Line 3)
$ 38,486,960
C. Reserves of Unpaid Losses - Direct and Assumed (Schedule P, Part 1, Total from columns 13 and 15)
$336,729,000
D. Reserve for Unpaid Loss Adjustment - Direct and Assumed (Schedule P, Part 1, Total from columns 17, 19, and 21) $ 38,812,000
E. Page 3, write-in item reserve, “Retroactive Reinsurance Reserve Assumed.”
F. Other Loss Reserve items on which the Appointed Actuary is Expressing on Opinion (Extended Reporting Loss Reserves)
Premium Reserves:
G. Reserve for Direct and Assumed Unearned Premiums for Long Duration Contracts
H. Reserve for Net Unearned Premiums for Long Duration Contracts
I. Other Premium Reserve items on which the Appointed Actuary is Expressing on Opinion (list separately)
Exhibit B: Disclosures
1. Materiality Standard (expressed in $US)
$ 24,111,792
2. Statutory Surplus
$241,117,916
3. Anticipated net salvage and subrogation included as a reduction to loss reserves as reported in Schedule P
$ 7,837,000
4. Discount included as a reduction to loss reserves and loss expense reserves as reported in Schedule P (a) Nontabular Discount
(b) Tabular Discount
5. The net reserves for losses and expenses for the Company’s share of voluntary and involuntary underwriting pools’ and associations’ unpaid losses and expenses that are included in reserves shown on the Liabilities, Surplus and Other Funds page, Losses and Loss Adjustment Expenses lines.
6. The net reserves for losses and loss adjustment expenses that the Company carries for the following liability included on the Liabilities, Surplus and Other Funds page, Losses and Loss Adjustment Expense lines, as disclosed in the Notes to Financial Statements 0
7. The total claims made extended loss and expense reserve (Schedule P Interrogatories)
(a) Amount reported as loss reserves
(b) Amount reported as unearned premium reserves
8. Other items on which the Appointed Actuary is providing Relevant Comment (list separately) 0