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CASCO INDEMNITY COMPANY
REPORT OF EXAMINATION
AS OF
DECEMBER 31, 2004
TABLE OF CONTENTS
SCOPE OF EXAMINATION
DESCRIPTION OF THE COMPANY
HISTORY
MANAGEMENT AND CONTROL
CONFLICT OF INTEREST
PLAN OF OPERATION
CORPORATE RECORDS
INSURANCE COVERAGES
HOLDING COMPANY STRUCTURE
REINSURANCE
INTERNAL CONTROL REVIEW
LITIGATION
FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
COMMENTS AND RECOMMENDATIONS
CONCLUSION
ACTUARIAL OPINION - APPENDIX A
I hereby certify that the attached report of examination dated January
20, 2006 shows the condition and affairs of the CASCO INDEMNITY COMPANY,
Saco, Maine as of December 31, 2004 and has been filed with the Bureau
of Insurance as a public document.
This report has been reviewed.
________________________
Eric A. Cioppa
Deputy Superintendent
Dated this _____ day of ________, 2006
January 20, 2006
Honorable Alessandro A. Iuppa
Superintendent
State of Maine
Bureau of Insurance
34 State House Station
Augusta, ME 04333-0034
Dear Sir:
Pursuant to the provisions of Title 24-A M.R.S.A. § 221 and in
conformity with your instructions, a financial examination has been made
of the
CASCO INDEMNITY COMPANY
at its home office in Saco, Maine. The following report is respectfully
submitted.
SCOPE OF EXAMINATION
Casco Indemnity Company (hereinafter referred to as the “Company”)
was last examined as of December 31, 2000 by the Bureau of Insurance of
the State of Maine. This examination covers the period from January 1,
2001 to the close of business December 31, 2004.
The examination consisted of a survey of the Company’s business
policies and underwriting practices; a review of corporate minutes; a
verification of assets and a determination of liabilities at December
31, 2004 in conformity with statutory accounting practices, National Association
of Insurance Commissioners (NAIC) guidelines and the laws, rules and regulations
prescribed or permitted by the Maine Bureau of Insurance.
The Company’s loss and loss adjustment expense reserves were
evaluated by line of business for the period under examination. Loss payments,
case reserves, accident dates, report dates and reinsurance credits taken
from claim files to statistical data files and reports were verified.
Incurred but not reported (IBNR) reserves were also reviewed as to the
reasonability of current IBNR reserves.
To the extent deemed necessary, we also reviewed transactions occurring
subsequent to our examination date. The results of this examination present
the financial condition of the Company at December 31, 2004 as determined
by the examiners. For purposes of this report, comments on various balance
sheet items may be limited to matters involving departure from laws, rules
or regulations; a significant change in the amount of the item; or where
an explanation, comment and/or recommendation is warranted.
DESCRIPTION
OF THE COMPANY
History
The Company was incorporated on June 27, 1985 under the laws of the
State of Maine and received its authority to transact insurance business
effective December 6, 1985.
The Company was founded by several New England based mutual property
insurers to write private passenger automobile liability and physical
damage in all New England states. The Company started writing commercial
auto liability and some personal umbrella in 1997. The personal umbrella
coverage is only offered in conjunction with the underlying coverage of
a Casco Indemnity Company personal auto policy and a member company homeowners
policy.
Management and Control
Management of the Company is vested in not less than three (3) or more
than seven (7) member Board of Directors. Title 24-A M.R.S.A § 3411
specifies that “the affairs of every domestic insurer shall be managed
by a Board of Directors consisting of not less than 7 or more than 21
members”. (See Comment and Recommendation #1) The following are
the duly elected members of the Board of Directors and Officers serving
as of December 31, 2004.
Directors
| George Albert Cole, III |
Charles Jackman Gesen |
| Brian Ralph Wilkin |
Rolf Hartford Gesen |
| William Delbert Swetland, III |
|
Officers
| William Delbert Swetland, III |
President & CEO |
| David William Hardy |
Secretary |
| John Francis Donilon |
Sr. Vice President & Treasurer |
Conflict of Interest
Title 24-A M.R.S.A. § 3413 identifies prohibited pecuniary interest
and use of confidential information by directors and officers. The Company
requires all directors and officers to complete and sign a “Conflict
of Interest Statement” annually. Review of the statements on file
demonstrates compliance with the Company policy and the Maine Statutes.
Plan of Operation
The Company is licensed in the states of Maine, Massachusetts, New Hampshire,
Rhode Island, Vermont and Connecticut and operates through an established
agency plan.
Corporate Records
The Articles of Incorporation, Bylaws and Minutes of the Board of Directors’
meetings held during the period under examination were reviewed. Review
of these records indicate that the Company is operating in accordance
with its Articles and Bylaws. As noted in Management and Control, the
Company is not in compliance with Title 24-A M.R.S.A. § 3411. (See
Comment and Recommendation #1)
INSURANCE
COVERAGES
The Company is a protected and named insured under a blanket fidelity
bond in the amount of $1,000,000. The bond amount was tested with regards
to the NAIC standards and was determined to be adequate. All other insurance
coverages were reviewed and deemed to be adequate. The Company maintains
the following insurance coverages:
| Umbrella |
Workers Compensation |
| Inland Marine |
Pension and Welfare Fund |
| Commercial Liability |
Employment Practices Liability |
| Professional Liability |
Fidelity Bond |
HOLDING
COMPANY STRUCTURE
The capital stock of the Company consists of 50,000 shares authorized
common stock at a par value of $100 per share. At December 31, 2004, there
were 25,000 shares issued and outstanding. The Company is a wholly owned
subsidiary of NE Corporation, an insurance holding company domiciled in
the State of Maine. The Company has capital of $2,500,000 and paid-in
surplus of $2,900,000. The Company has various leases with NE Corporation
for home office space, two vehicles, and furniture and equipment. It was
noted in Note 15 to the Financial Statements, "The Company does not
have any material lease obligations". Nor did the Company disclose
any related party transactions in their Notes. (See Comment and Recommendation
#2)
The shareholders of NE Corporation and the ownership percentages as
of December 31, 2004 are as follows:
| Danbury Insurance Company |
13.8 |
| Hingham Mutual Fire Insurance Company |
41.4 |
| Phenix Mutual Fire Insurance Company |
44.8 |
| Total |
100% |
REINSURANCE
The Company had several reinsurance contracts in effect during the period
of examination. The various reinsurers are authorized to transact reinsurance
in Maine, except where otherwise noted. The following is a brief summary
of the major agreements in effect at December 31, 2004.
Automobile Liability Excess of Loss
The Company has three layers of casualty coverage with a retention
of $150,000 and an aggregate limit to the reinsurer of $1,850,000. The
three layers of coverage are as follows:
| First Excess: |
$50,000 in excess of $150,000 |
| Second Excess: |
$300,000 in excess of $200,000 |
| Third Excess: |
$1,500,000 in excess of $500,000 |
Quota Share
The Company has a quota share reinsurance contract with its affiliated
companies wherein the reinsurers are liable for 25% of the first $150,000
of the loss as respects to each occurrence on personal automobile business.
The reinsurers are licensed in Maine and are authorized reinsurers
with the exception of Danbury Insurance Company. Danbury Insurance Company
is not licensed in Maine and has not filed under Rule 740 "Credit
for Reinsurance" and thus, is not an "authorized" reinsurer.
The Company is responsible to determine whether the reinsurer is in compliance
with Maine statutes and is thus "authorized". (See Credit for
Reinsurance)
Personal Umbrella Excess of Loss
This contract was executed through an intermediary, Balis & Co.,
Inc. The reinsurers are liable for the net loss on each personal umbrella
liability policy or contract in accordance with the following schedule:
95% of the first $1,000,000
100% of the next $4,000,000 ($4M xs $1M)
The participating reinsurers are listed in the following schedule. All
reinsurers are either licensed in Maine or have filed under Rule 740 "Credit
for Reinsurance" and are considered “authorized”.
Review of the participating reinsurers to the Company's Personal Umbrella
indicates the following list of parties:
| Berkley Insurance Company |
20.0% |
| GE Reinsurance Corp. |
50.0% |
| The TOA-Reinsurance Company of America |
30.0% |
Catastrophe Excess of Loss
The Catastrophe contract covers the Company’s property business.
The Company’s retention is the first $250,000 of each occurrence
plus 5% of each subsequent layer. The two reinsurance layers provide coverage
for 95% of the next $2,000,000 ultimate net loss in excess of the Company
retention.
Credit for Reinsurance
The Company reported that it had a letter of credit from Danbury Insurance
Company in the amount of $750,000. This letter of credit did not exist
as of the balance sheet date but was in the process of being negotiated.
Since Danbury Insurance Company is not an authorized reinsurer and the
letter of credit was not in effect, the Company should have recorded a
liability “Provision for Reinsurance” in the amount of $591,929.
This is an examination adjustment. (See Comment and Recommendation #3)
INTERNAL
CONTROL REVIEW
Information Systems
Examiners performed a general control review and a software security
review of the Company’s computer systems, in accordance with Exhibit
C in the NAIC Financial Conditions Examiners Handbook, for the purpose
of assessing controls and identifying exception conditions. The review
indicated that the Company does not have a comprehensive or tested Business
Continuity/Disaster Recovery plan. (See Comment and Recommendation #4)
LITIGATION
A review of legal confirmations furnished by outside legal counsel disclosed
that the Company is not involved in any actual, pending or threatened
litigation that would result in a material judgment against the Company.
FINANCIAL
STATEMENTS
The following Financial Statements show the results of the Company’s
operation for the year ended December 31, 2004 as determined by this examination.
BALANCE SHEET
December 31, 2004
| Bonds (Note 1) |
$ 16,108,288 |
| Common stocks (Note 2) |
3,900,450 |
| Cash and short-term investments (Note 3) |
(143,580) |
| Receivable from securities |
18,383 |
| Investment income due and accrued |
148,608 |
| Agents balances- in collection (Note 4) |
537,374 |
| Agents balances - not yet due (Note 4) |
4,031,635 |
| Amounts recoverable from reinsurers (Note 5) |
747,491 |
| Current federal and foreign income tax recoverable |
50,000 |
| Net deferred tax asset |
229,724 |
| Electronic data processing equipment and software |
11,130 |
| Aggregate write-ins for other than invested assets |
19,009 |
| Total Assets |
$ 25,658,512 |
| |
|
| Losses (Note 6) |
$ 7,391,918 |
| Loss adjustment expenses (Note 6) |
797,025 |
| Commissions payable |
82,811 |
| Other expenses |
331,924 |
| Taxes, licenses and fees |
1,955 |
| Unearned premiums (Note 7) |
5,834,601 |
| Advance premiums |
167,946 |
| Ceded reinsurance premiums payable (Note 8) |
749,226 |
| Amounts withheld or retained by Company for account of others |
40,008 |
| Provision for reinsurance (Note 9) |
591,929 |
| Drafts outstanding (Note 10) |
1,751 |
| Aggregate write-ins for liabilities |
823 |
| Total Liabilities |
$ 15,991,917 |
| |
|
| Common capital stock |
2,500,000 |
| Gross paid-in and contributed surplus |
2,900,000 |
| Unassigned funds (surplus) |
4,266,595 |
| Total Surplus |
$ 9,666,595 |
| |
|
| Total Liabilities and Surplus |
$ 25,658,512 |
INCOME STATEMENT
December 31, 2004
| Earned premiums |
$ 14,145,928 |
| Losses incurred |
8,162,470 |
| Loss adjustment expenses |
1,412,181 |
| Other underwriting expenses incurred |
4,028,595 |
| Aggregate write-ins for underwriting expenses |
7,525 |
| Net underwriting gain/(loss) |
$ 535,157 |
| |
|
| Net investment income |
$ 522,698 |
| Net realized capital gain/(loss) |
190,243 |
| Net investment gain/(loss) |
$ 712,941 |
| |
|
| Net gain/(loss) from agent or premium balance charged off |
$ (68,138) |
| Finance and service charges not included in premiums |
352,538 |
| Aggregate write-ins for miscellaneous income |
0 |
| Total other income |
$ 284,400 |
| |
|
| Net income before taxes |
$ 1,532,498 |
| Federal and foreign income taxes incurred |
330,610 |
| |
|
| Net income |
$ 1,201,888 |
| |
|
| CAPITAL & SURPLUS ACCOUNT |
|
| Surplus as regards to policyholders, 12/31/03 |
$ 9,203,413 |
| |
|
| Net income |
1,201,888 |
| Unrealized capital gain/(loss) |
(8,965) |
| Change in net deferred income tax |
(161,664) |
| Change in nonadmitted assets |
23,852 |
| Change in provision for reinsurance |
(591,929) |
| Change in surplus as regards to policyholders |
463,182 |
| Surplus as regards to policyholders, 12/31/04 |
$ 9,666,595 |
NOTES TO
FINANCIAL STATEMENTS
| Note 1 - Bonds |
$ 16,108,288 |
| BOND CLASSIFICATION AND VALUE SUMMARY-
2004 |
|
Cost |
Par
Value |
Market
Value |
Statement
or Amortized
Value |
| Government: |
|
|
|
|
| United States |
$1,997,246 |
$1,987,903 |
$1,979,000 |
$1,992,080 |
| All Other |
99,166 |
100,000 |
107,228 |
99,776 |
| Total Government |
2,096,412 |
2,087,903 |
2,086,228 |
2,091,856 |
| |
|
|
|
|
| States, Territories &
Possessions |
216,706 |
200,000 |
201,269 |
201,212 |
| Political Subdivisions |
1,437,487 |
1,375,000 |
1,452,014 |
1,431,216 |
| Special Revenue |
6,763,397 |
6,599,564 |
6,851,495 |
6,702,409 |
| Public Utilities |
345,424 |
335,000 |
341,612 |
338,581 |
| Industrial and Miscellaneous |
5,440,099 |
5,416,156 |
5,480,476 |
5,343,014 |
| Total |
$16,299,525 |
$16,013,623 |
$16,413,094 |
$16,108,288 |
As required by Title 24-A M.R.S.A. § 412, the Company has maintained
the required security deposit with the Treasurer of Maine. In addition,
the Company maintains security deposits for Massachusetts and New Hampshire.
The Company’s ownership of the bonds was confirmed by obtaining
confirmations from depositories for those securities held under arrangements.
Amortized values were tested and no material exceptions were noted. Purchases
and sales of securities were verified to appropriate supporting documents
and corporate authorization. Interest income was tested and verified with
no material exceptions.
| Note 2 - Common Stocks |
$3,900,450 |
| COMMON STOCK CLASSIFICATION AND
VALUE SUMMARY - 2004
|
| |
Actual Cost |
Market Value |
| Public Utilities |
$ 96,154 |
$ 129,849 |
| Bank, Trust & Insurance
Co. |
269,134 |
499,748 |
| Industrial & Miscellaneous |
2,113,245 |
3,240,193 |
| Mutual Funds |
30,817 |
30,660 |
| Total Common Stocks |
$ 2,509,350 |
$ 3,900,450 |
The Company’s ownership of stocks was confirmed by obtaining confirmations
from depositories for those securities held under custodial or book entry
arrangements. Market or admitted values were established in accordance
with the National Association of Insurance Commissioners Securities Valuation
Office. Dividends declared and paid were tested and verified without exception.
Purchases and sales were tested and found to be supported by adequate
source documents and corporate authorizations. Dividend income was tested
and verified with no material exceptions.
| Note 3 - Cash and Short-Term Investments |
$(143,580) |
| Petty Cash |
$ 150 |
| Cash in Banks |
(217,665) |
| Short-term investments |
73,935 |
| Total Cash and Short-term investments |
$ (143,580) |
Certifications confirming bank balances were received through correspondence
with the various depositories and reconciled to the Company’s book
balances without exception. Cash and short-term investments as reported
herein is $516,238 lower than the amount reported by the Company due to
the reclassification of a liability for outstanding checks. (See Comment
and Recommendation #5)
| Note 4 - Agents' Balances |
$4,569,009 |
| In course of collection |
$ 537,374 |
| Deferred and not yet due |
4,031,635 |
| |
$ 4,569,009 |
Agents’ balances due the Company at December 31, 2004 were verified
during the examination. Agents’ balances appear to be reasonably
stated. No material exceptions noted.
| Note 5 - Amounts Recoverable from Reinsurers |
$ 747,491 |
Amounts recoverable from reinsurers at December 31, 2004 were verified
during the examination. Amounts Recoverable from Reinsurers appear to
be reasonably stated. No material exceptions noted.
| Note 6 - Loss Reserves |
Loss Reserves $7,391,918
LAE Reserves $ 797,025 |
Examiners reviewed the Company's claim files for the period under examination.
The Bureau of Insurance contracted with AMI Risk Consultants, Inc. to
perform an actuarial analysis of the Company's loss and loss adjustment
expense reserves on both a net basis and a gross basis. Based on this
analysis, the Company's estimates for gross and net unpaid loss and loss
adjustment expenses appear to be reasonably stated in all material respects.
(See Appendix A for Actuarial Opinion)
| Note 7 - Unearned Premiums |
$5,834,601 |
The Company calculates its reserve for unearned premiums based on the
daily pro-rata method. The examiner tested the Company’s calculation
with no material exceptions noted.
| Note 8 - Ceded Reinsurance Premiums Payable |
$ 749,226 |
Ceded reinsurance premiums payable at December 31, 2004 was verified
during the examination. Ceded reinsurance premiums payable appears to
be reasonably stated. No material exceptions noted.
| Note 9 - Provision for Reinsurance |
$ 591,929 |
As noted in credit for reinsurance, the Company did not report a provision
for reinsurance. The Company should have recorded a liability “Provision
for Reinsurance” in the amount of $591,929. This is an examination
adjustment. (See Comment and Recommendation #3)
| Note 10 - Drafts Outstanding |
$ 1,751 |
Drafts outstanding as reported herein are $516,238 lower than the amount
reported by the Company due to the reclassification of a liability for
outstanding checks. (See Comment and Recommendation #5)
- Comment: The Company is not in compliance with Title
24-A M.R.S.A § 3411 in regards to the number of directors required
to sit on the Board. Paragraph 1 of the statute states: "The affairs
of the domestic insurer shall be managed by a board of directors consisting
of not less than 7 directors or more than 21 directors". On January
31, 2003, the Company amended Article Six of the Articles of Incorporation
and Section 4.2 of the Bylaws to decrease the number of directors to
"not less than 3 nor more than 7”. As of December 31, 2004,
there are only five directors. The Company also failed to submit these
amendments with the superintendent as required by Title 24-A M.R.S.A
§ 3310 and § 3359.
Recommendation: The Company is required to adhere
to State Statute and amend Article Six of the Articles of Incorporation
and Section 4.2 of the Bylaws of Casco Indemnity Company to ensure
compliance with Title 24-A M.R.S.A § 3411. The Company must bring
the number of directors to at least seven. Further, the Company must
promptly file with the Superintendent a copy, certified by the Company's
secretary, of every modification thereof in accordance with Title
24-A M.R.S.A § 3310 and § 3359.
- Comment: It was noted that the Company has various
leases with NE Corporation for home office space, two vehicles, and
furniture and equipment. It was also noted that in Note #15 of the Notes
to the Financial Statements the Company stated "The Company does
not have any material lease obligations". Additionally, the Company
did not disclose any related party transactions in their Notes to Financial
Statements.
Recommendation: According to SSAP No. 22, paragraph
23, specific disclosure with regard to lease information should be
made in the Notes to the Annual Statements regardless of materiality.
Also according to SSAP No. 25, paragraph 17, the financial statements
shall include disclosures of all material related party transactions.
- Comment: The Company reported that it had a letter
of credit (LOC) from Danbury Insurance Company in the amount of $750,000.
This LOC did not exist but was in the process of being negotiated. Since
Danbury Insurance Company is not licensed in Maine nor does it qualify
as an approved reinsurer under Rule 740 and the LOC was not in effect
at December 31, 2004, the Company should have recorded a liability "Provision
for reinsurance (Schedule F, Part 7)" of $591,929. This is an examination
adjustment.
Recommendation: The Company should not take credit
for an LOC which is not in effect as of the balance sheet date and
record a provision for unauthorized reinsurers in accordance with
SSAP No. 62, paragraphs 52 & 53. In addition, the Company should
have disclosed this unsecured reinsurance recoverable in accordance
with SSAP No. 62, paragraph 65.
- Comment: The following items were noted during the
review of the disaster recovery plan: The Company's alternative work
site is at an affiliate’s company office; however, the Company
has no formal agreement with the affiliate; the Company has not tested
their disaster recovery plan.
Recommendation: The Company should consider obtaining
a formal agreement with the affiliate and consider testing their disaster
recovery plan.
- Comment: It was noted that the Company is reporting
outstanding loss checks that do not meet the definition of "drafts"
as defined in SSAP No. 2, paragraph 6 as a draft outstanding liability.
SSAP No. 2, paragraph 5 states all negative cash balances shall be
reported as a negative asset and shall not be reported as a liability.
Consequently, assets and liabilities are overstated by $516,238.
Recommendation: The Company should report cash
in compliance with SSAP No. 2, paragraph 5.
CONCLUSION
The Company’s financial condition, as disclosed by this examination,
is reflected in statements and 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.
Acknowledgement of cooperation and assistance extended to the examiners
by all Company personnel is hereby expressed.
STATE OF MAINE
COUNTY OF KENNEBEC, SS
James C. Williams, CPA, CFE being duly sworn according to law, deposes
and says that, in accordance with the authority vested in him by Alessandro
A. Iuppa, Superintendent of Insurance, pursuant to the Insurance Laws
of the State of Maine, they have made an examination of the condition
and affairs of the
CASCO INDEMNITY COMPANY
of Saco, Maine as of December 31, 2004, 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
Jill C. Toby,CPA, CFE
Faith A. Talbot
Heather E. Warren
__________________________
James C. Williams, CPA, CFE
Director of Financial Affairs and Solvency
Subscribed and sworn before me
This ______ day of ____________, 2006
_________________________
Notary Public |
My Commission Expires: |
APPENDIX A
ACTUARIAL
OPINION
AMI
STATEMENT OF ACTUARIAL OPINION
For the Year Ended December 31, 2004
IDENTIFICATION
I, Aguedo M. Ingco, am an employee of the firm AMI Risk Consultants,
Inc. (AMI), and have been retained by the Maine Bureau of Insurance (“the
Bureau”) to express an opinion on the loss and loss adjustment expense
(LAE) reserves of Casco Indemnity Company (“Casco”).
I am a Fellow of the Casualty Actuarial Society and a Member of the
American Academy of
Actuaries. I meet the Academy’s qualification standards for issuing
actuarial opinions on loss and
LAE reserves.
SCOPE
I have examined the reserves listed in Exhibit A, as shown in the Annual
Statement of Casco, as prepared for filing with state regulatory officials,
as of December 31, 2004. The reserves listed in Exhibit A reflect the
Disclosure Items (3-8) listed in Exhibit B.
In forming my opinion on the loss and loss adjustment expense reserves,
I relied upon data in Casco’s 2004 Annual Statement. I evaluated
the data for reasonableness and consistency. The data used reconciles
to Schedule P - Part 1 of Casco’s 2004 Annual Statement.
OPINION
In my opinion, the amounts carried in Exhibit A on account of the items
identified:
- Meet the requirements of the insurance laws of the State of Maine;
- Are consistent with reserves computed in accordance with accepted
loss reserving standards and principles;
- Make a reasonable provision for all unpaid loss and loss adjustment
expense obligations of Casco under the terms of its contracts and agreements;
Statement of Actuarial Opinion
Casco Indemnity Company
Year Ended December 31, 2004
Page 2 of 4
RELEVANT COMMENTS
A. Risk of Material Adverse Deviation
In my opinion, there are no significant risks and uncertainties that
I believe could result in material adverse deviation of net reserves.
CONCLUSION
An actuarial report and underlying workpapers supporting the findings
expressed in this statement of actuarial opinion have been provided to
the Bureau. I disclaim their use for any other purpose.
The required Exhibits A and B are attached to this statement.
____________________________________
Aguedo M. Ingco, FCAS, MAAA, CPCU, ARM
AMI Risk Consultants, Inc.
11410 N. Kendall Drive Suite 208
Miami, FL 33176
(305) 273-1589
______February 22, 2006______
Date
Statement of Actuarial Opinion
Casco Indemnity Company
Year Ended December 31, 2004
Page 3 of 4
Exhibit A: SCOPE
| Loss Reserves |
Amount (in whole dollars) |
| A. Reserve for Unpaid Losses (net) |
$7,391,918 |
| B. Reserve for Unpaid Loss Adjustment Expenses (net) |
$797,025 |
| C. Reserve for Unpaid Losses - Direct and Assumed (Sch. P, Part
1, Col. 13 & 15) |
$10,475,000 |
| D. Reserve for Unpaid Loss Adjustment Expenses - Direct & Assumed
(Sch. P., Part 1, Col. 17, 19 & 21) |
$1,047,000 |
| E. The Page 3 write-in item reserve, “Retroactive Reinsurance
Reserve Assumed” |
$0 |
| F. Other Loss Reserve items on which the Appointed Actuary is expressing
an Opinion (list separately) |
$0 |
| Premium Reserves |
Amount (in whole
dollars) |
| G. Reserve for Direct and Assumed Unearned Premiums for Long Duration
Contracts |
$0 |
| H. Reserve for Net Unearned Premiums for Long Duration Contracts |
$0 |
| I. Other Premium Reserve items on which the Appointed Actuary is
expressing an Opinion (list separately) |
$0 |
Statement of Actuarial Opinion
Casco Indemnity Company
Year Ended December 31, 2004
Page 4 of 4
Exhibit B: DISCLOSURES
| |
Amount (in whole dollars) |
| 1. Materiality Standard expressed in $US |
$1,600,000 |
| 2. Surplus |
$10,258,524 |
3. Anticipated net salvage and
subrogation included as a reduction to loss reserves as reported |
$0 |
4. Discount included as a reduction to loss reserves and loss expense
reserves as reported
4 (a) Nontabular Discount
4 (b) Tabular Discount |
$0
$0 |
| 5. The net reserves for losses and expenses for Casco’s share
of voluntary and involuntary underwriting pools’ and associations’
unpaid losses and expenses |
$0 |
6. The net reserves for losses and loss adjustment expenses that
Casco carries for the following
6 (a) Asbestos
6 (b) Environmental |
$0
$0 |
7. The total claims made extended loss and expense reserve
7 (a) amount reported as loss reserves
7 (b) amount
reported as unearned premium reserves |
$0
$0 |
| 8. Other items on which the Appointed Actuary is providing Relevant
Comment (list separately) |
$0 |
*The reserves disclosed in item 6 above, should exclude amounts relating
to contracts specifically written to cover asbestos and environmental
exposures. Contracts specifically written to cover these exposures include
Environmental Impairment Liability (post 1986), Asbestos Abatement, Pollution
Legal Liability, Contractor’s Pollution Liability, Consultant’s
Environmental Liability, and Pollution and Remediation Legal Liability.
AMI Risk Consultants,
Inc. 11410 N. Kendall Drive, Suite 208, Miami, Florida 33176
Tel: (305) 273-1589 • Fax: (305) 274-4706 • Web Site: http://www.amirisk.com
• E-mail: info@amirisk.com
Actuaries • Risk Management Consultants
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