Elizabeth Long, ACAS, FCA, MAAA 9 Forrest Blend …...Elizabeth Long, ACAS, FCA, MAAA SVVVVVVVP and...

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Elizabeth Long, ACAS, FCA, MAAA C SVP and onsulting Actuary 9 Forrest Blend Drive Titusville, NJ 08560 P:609.474.0508 [email protected]

Transcript of Elizabeth Long, ACAS, FCA, MAAA 9 Forrest Blend …...Elizabeth Long, ACAS, FCA, MAAA SVVVVVVVP and...

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Elizabeth Long, ACAS, FCA, MAAACSVVVVVVVP and onsulting Actuary

9 Forrest Blend DriveTitusville, NJ 08560P:[email protected]

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9 Forrest Blend Drive . Titusville, NJ 08560 . [email protected] . www.bynac.com

May 29, 2014 Mr. Steven B. Gidwitz President NCAComp, Inc. 14 Lafayette Square, Suite 700 Buffalo, NY 14203 Dear Mr. Gidwitz: Enclosed is the actuarial report prepared for Long Term Care Risk Management Group (LTCRMG) at your request. This report estimates the required reserves as of 12/31/13 for claims incurred prior to that date. The estimates contained in this report are based on data provided by NCAComp, Inc (NCAComp). These data and the associated assumptions should be reviewed for their consistency with the internal records of LTCRMG. Any discrepancy in the completeness, interpretation, or accuracy of the information used may require a revision to this report. If you have any questions, please call or write. It is a pleasure to be of service to NCAComp. Sincerely,

Elizabeth Long, ACAS, FCA, MAAA Senior Vice President and Consulting Actuary

Lisa Dennison, FCAS, FCA, MAAA President and Consulting Actuary

enclosure

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LONG TERM CARE RISK MANAGEMENT GROUP

ACTUARIAL REPORT

TABLE OF CONTENTS

PURPOSE ........................................................................................................................... 1 

FINDINGS .......................................................................................................................... 3 

ESTIMATED REQUIRED RESERVES ........................................................................ 3 COMPARISON TO PRIOR REPORT ........................................................................... 4 

ASSUMPTIONS ................................................................................................................. 7 

DEFINITIONS ................................................................................................................ 7 HISTORICAL INFORMATION .................................................................................... 7 RETENTIONS ................................................................................................................ 8 

RESERVE ANALYSIS ...................................................................................................... 9 

OVERVIEW ................................................................................................................... 9 INCURRED LOSS DEVELOPMENT ......................................................................... 10 PAID LOSS DEVELOPMENT .................................................................................... 14 INCURRED BORNHUETTER-FERGUSON .............................................................. 14 PAID BORNHUETTER-FERGUSON ......................................................................... 19 SELECTED ESTIMATED ULTIMATE INCURRED LOSSES ................................. 19 ESTIMATED REQUIRED RESERVES ...................................................................... 19 ESTIMATED PAYOUT SCHEDULE ......................................................................... 25 

HISTORICAL PROFITABILITY ANALYSIS ............................................................... 28 

QUALIFICATIONS AND LIMITATIONS ..................................................................... 34 

CONSULTATION ............................................................................................................ 36

APPENDICES

INCURRED LOSSES $250,000 AND GREATER .......................................................... 37 

SUPPORT EXHIBITS ...................................................................................................... 40 

ESTIMATED UNLIMITED AND ALAE RESERVES................................................... 43 

ESTIMATED REQUIRED RESERVES AS OF 12/31/13 - HIGH ................................. 50 

COMPARISON TO PRIOR REPORTS ........................................................................... 59 

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LONG TERM CARE RISK MANAGEMENT GROUP

ACTUARIAL REPORT

PURPOSE

By the Numbers Actuarial Consulting, Inc. (BYNAC) prepared this actuarial report to present a

professional analysis of the required reserves retained by Long Term Care Risk Management

Group (LTCRMG) as of 12/31/13 for claims incurred from 10/1/92 through 12/31/09.

LTCRMG is a self-insurance group trust established in 1992 to provide workers compensation

insurance for employees of long-term care organizations in the state of New York. The trust

ceased writing business on 12/31/09. The required reserves are estimated excluding the effects

of anticipated investment income earned on the reserves until they are paid.

BYNAC is an independent consultant to LTCRMG and provides this report as input to

management in its reserve setting process. During the course of the preparation of this report, a

draft has been provided to Steven B. Gidwitz, President, NCAComp, Inc. BYNAC is available

to present the report at LTCRMG’s convenience.

The required reserves estimated in this report represent the unpaid claim estimate. The unpaid

claim estimate is an estimate of the obligation for future payment from claims due to past events.

The estimated required reserves are based on estimates of ultimate incurred losses. Ultimate

incurred losses are defined to be the amounts that will be paid to settle all claims occurring

during a policy period. These estimates include a provision for the subsequent development of

known claims and for claims incurred but not yet reported. Incurred but not reported (IBNR)

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losses are defined throughout this report to include the additional development on known claims

in addition to claims incurred but not yet reported.

The estimated required reserves at the expected level represent the actuarial central estimate.

The actuarial central estimate is an expected value over the range of reasonably possible

outcomes. The range around the actuarial central estimate which reflects the low and high

expected values is noted in the report.

The information contained in this report has been prepared by Liz Long, ACAS, FCA, MAAA,

in accordance with applicable Actuarial Standards of Practice as promulgated by the Actuarial

Standards Board. Ms. Long meets the Qualification Standards of the American Academy of

Actuaries.

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FINDINGS

The findings are the product of loss experience, actuarial assumptions, quantitative analysis, and

professional judgment. The estimated required reserves are expressed in terms of ranges that

indicate the reliance on assumptions believed to be reasonable and are subject to all the

limitations expressed herein.

ESTIMATED REQUIRED RESERVES

The required reserves shown in the following table should be used for financial statement

reporting as of that date. These estimates reflect the terms of the specific and aggregate excess

insurance purchased for the policy periods reviewed. However, until all the claims that occurred

on or before 12/31/09 are closed, the actual reserve need remains an estimate. While the

experience of LTCRMG indicates that the required reserves will fall within the range established

in this report, the possibility exists that extraordinary or unexpected circumstances could cause

the actual reserve need to be less than or greater than the range. Therefore, the findings cannot

be warranted or guaranteed.

ESTIMATED UNDISCOUNTED RESERVESINCLUDING IBNR FOR 10/1/92-12/31/09 AS OF 12/31/13

(Losses Including ALAE Limited to Specific and Aggregate Retentions)

Low Expected High

Loss and ALAE $11,650,000 $13,080,000 $15,110,000

The low and high figures are judgmental and not intended to establish absolute minimums or

maximums on the estimates, but rather to depict a reasonable range for the establishment of loss

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reserves in this particular situation. Figure 1 contains a graphical representation of the estimated

retained loss experience as of 12/31/13 including the undiscounted expected loss reserves for

LTCRMG.

COMPARISON TO PRIOR REPORT

The ultimate incurred losses estimated in this report are compared to the 7/11/13 actuarial report

in the following table and Figure 2. As shown, the estimates decreased $898,035 or 1.4% from

12/31/12 to 12/31/13.

COMPARISON OF ESTIMATED ULTIMATE INCURREDLOSSES TO PRIOR REPORT

(Losses Including ALAE Limited to Specific and Aggregate Retentions)

Current 7/11/13Policy Report Report PercentPeriod (Table 7) (Table 7) Change Change

10/1/92-12/31/92 $ 190,898 $ 190,898 $ 0 0.0%1/1-12/31/93 1,378,511 1,377,939 572 0.0%1/1-12/31/94 2,752,128 2,762,705 ( 10,577) ( 0.4%)1/1-12/31/95 3,116,036 3,107,732 8,304 0.3%1/1-12/31/96 2,586,226 2,546,319 39,907 1.6%1/1-12/31/97 3,342,404 3,413,001 ( 70,597) ( 2.1%)1/1-12/31/98 2,986,180 2,998,746 ( 12,566) ( 0.4%)1/1-12/31/99 2,494,409 2,492,691 1,718 0.1%1/1-12/31/00 3,924,884 4,043,356 ( 118,472) ( 2.9%)1/1-12/31/01 4,647,245 4,670,273 ( 23,028) ( 0.5%)1/1-12/31/02 4,429,534 4,414,760 14,774 0.3%1/1-12/31/03 6,176,472 6,205,899 ( 29,427) ( 0.5%)1/1-12/31/04 4,734,029 4,854,443 ( 120,414) ( 2.5%)1/1-12/31/05 5,780,929 6,260,156 ( 479,227) ( 7.7%)1/1-12/31/06 4,931,874 4,952,812 ( 20,938) ( 0.4%)1/1-12/31/07 3,519,740 3,767,174 ( 247,434) ( 6.6%)1/1-12/31/08 3,344,977 3,330,896 14,081 0.4%1/1-12/31/09 3,708,035 3,552,746 155,289 4.4%

Period $64,044,511 $64,942,546 ($ 898,035) ( 1.4%)

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Figure 1

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED ULTIMATE INCURRED LOSSES AS OF 12/31/13(Losses Including ALAE Limited to Specific and Aggregate Retentions)

0.2

1.4

2.8

3.1

2.6

3.3

3.0

2.5

3.9

4.64.4

6.2

4.7

5.8

4.9

3.53.3

3.7

1.0

2.0

3.0

4.0

5.0

6.0

7.0

$ M

illio

ns

Policy Period

Paid Case IBNR

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Figure 2

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

COMPARISON TO PRIOR ACTUARIAL REPORT(Losses Including ALAE Limited to Specific and Aggregate Retentions)

0.2

1.4

2.8

3.1

2.6

3.3

3.0

2.5

3.9

4.6

4.4

6.2

4.7

5.8

4.9

3.5

3.3

3.7

0.2

1.4

2.8

3.1

2.5

3.4

3.0

2.5

4.0

4.7

4.4

6.2

4.9

6.3

5.0

3.8

3.3 3.

6

1.0

2.0

3.0

4.0

5.0

6.0

7.0

$ M

illio

ns

Policy Period

Current Paid Current Case Current IBNRPrior Paid Prior Case Prior IBNR

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ASSUMPTIONS

DEFINITIONS

Losses in this report include ALAE. ALAE are those expenses that can be directly attributed to a

specific claim, such as litigation costs. Loss adjustment expenses that cannot be directly

associated with an individual claim are known as ULAE. Reserves for unearned premiums,

unpaid administrative expenses, contingencies, catastrophes, or future premium deficiencies are

not included in the estimates.

HISTORICAL INFORMATION

For the periods under review, LTCRMG has assumed its members’ losses according to the New

York workers compensation statutes. LTCRMG’s unique development patterns are used in

conjunction with industry experience to estimate the ultimate losses expected to be incurred by

LTCRMG for the periods analyzed in this report. The industry data includes experience of other

New York self-insured workers compensation groups and information published by the National

Council on Compensation Insurance, Inc. (NCCI) in the 2013 edition of the Annual Statistical

Bulletin. This methodology assumes that the historical and industry development patterns are

indicative of the future development expected for the periods considered.

All data are based on information provided by NCAComp, Inc (NCAComp). The unpaid claim

estimate as of 12/31/13 is based on data evaluated as of 12/31/13 and additional information

provided through 2/13/14. These data were reviewed for reasonableness and used without audit.

It is assumed that all data provided is complete and accurate.

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First Niagara Risk Management handled the claims for LTCRMG until 12/31/09. As of 1/1/10,

FCS Administrators, Inc. took over the claims handling. Effective 4/14/11, NCAComp became

the claims administrator.

RETENTIONS

LTCRMG’s specific and aggregate retentions are summarized in the following table. As of

12/31/13, there are numerous claims reported in excess of the specific retention. The aggregate

retentions are not expected to be exceeded at the expected level in any period.

EXCESS INSURANCE SUMMARY

Policy Specific Aggregate AggregatePeriod Retention Retention Limit

10/1/92-12/31/92 $ 500,0001/1-12/31/93 500,0001/1-12/31/94 500,0001/1-12/31/95 500,0001/1-12/31/96 500,0001/1-12/31/97 500,0001/1-12/31/98 300,0001/1-12/31/99 300,0001/1-12/31/00 300,000 $4,721,901 $1,000,0001/1-12/31/01 300,000 5,132,689 1,000,0001/1-12/31/02 300,000 5,855,870 1,000,0001/1-12/31/03 300,000 6,205,899 1,000,0001/1-12/31/04 400,000 5,605,343 1,000,0001/1-12/31/05 400,000 6,260,156 1,000,0001/1-12/31/06 400,000 6,192,337 1,000,0001/1-12/31/07 400,000 6,088,601 1,000,0001/1-12/31/08 400,000 5,795,034 1,000,0001/1-12/31/09 400,000 4,488,193 1,000,000

The retentions are a critical part of this analysis. It is assumed that the excess insurance will be

collectible on all claims that ultimately develop beyond the retentions. An analysis of the

collectibility of the excess insurance is beyond the scope of this report.

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RESERVE ANALYSIS

OVERVIEW

To estimate the required reserves, it is first necessary to estimate the ultimate value of the prior

periods based on the current evaluation of loss after limiting the losses to the appropriate

retention. Required reserves are estimated as the difference between the ultimate incurred and

paid losses.

Four procedures are used to estimate the ultimate incurred losses to provide a check for

reasonableness and consistency. Following is a brief description of each method and the

circumstances under which each works best.

Incurred loss development is the most widely used method of estimating ultimate incurred losses.

By using the reserves on a claim-by-claim basis, the most recent claims adjusters’ estimates are

included in the analysis in addition to the cumulative paid losses. Inherent in the incurred loss

development technique is the assumption that there are no changes in reserving practices.

A paid loss approach attempts to eliminate distortions that can occur in incurred methods when

there is a suspected change in reserving procedures. Inherent in paid loss development

techniques is the assumption that there are no changes in claims settlement practices.

The incurred Bornhuetter-Ferguson technique estimates ultimate incurred losses based on the

expected losses and reporting pattern of incurred losses. This method is dependent on the

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accuracy of these two parameters in addition to the considerations discussed for the incurred

method.

The last method, the paid Bornhuetter-Ferguson approach, estimates ultimate incurred losses

based on the expected losses and payment pattern. Similar to the incurred Bornhuetter-Ferguson

method, this approach is dependent on the accuracy of these two parameters in addition to the

considerations for the paid method.

INCURRED LOSS DEVELOPMENT

The ultimate cost of claims incurred for a specific time period is usually not known until several

years after the close of that period. Loss development factors project the additional cost

expected on claims. These factors quantify the late developing aspects of certain losses, such as

claims involving medical complications not recognized in the early stages of treatment or verdict

values for litigated claims that are different than the amount previously reserved to pay the

claims. They also account for losses that occurred during the policy period but are not reported

until a later date.

The calculation and selection of development factors to be applied to incurred losses are shown

in Table 1, beginning with LTCRMG’s losses including ALAE limited to the specific retentions

as of different evaluation dates. For example, Section A of the table shows losses incurred

during the 1/1-12/31/09 period evaluated as of 12, 24, 36, 48, and 60 months after the inception

of that period. In general, the value of incurred losses increases from one evaluation to the next

as a result of IBNR.

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Table 1

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

INCURRED LOSS DEVELOPMENT FACTORS(Losses Including ALAE Limited to Specific Retentions)

A. INCURRED LOSSES

Age of Policy PeriodPolicy 12 24 36 48 60 72 84 96 108 120 132 144 156 168Period Months Months Months Months Months Months Months Months Months Months Months Months Months Months

10/1/92-12/31/92 200,000 201,000 238,000 239,000 243,000 201,000 227,000 219,000 191,000 191,000 191,0001/1-12/31/93 1,307,000 1,574,000 1,734,000 1,685,000 1,614,000 1,575,000 1,570,000 1,511,000 1,494,000 1,437,000 1,450,000 1,391,0001/1-12/31/94 1,520,000 1,819,000 2,535,000 2,889,000 2,720,000 2,605,000 2,762,000 2,724,000 2,511,000 2,453,000 2,434,000 2,437,000 2,481,0001/1-12/31/95 1,472,000 1,727,000 2,170,000 2,679,000 2,850,000 2,852,000 2,727,000 2,839,000 2,855,000 2,813,000 2,884,000 2,886,000 2,815,000 2,843,0001/1-12/31/96 835,000 1,451,000 2,162,000 2,100,000 2,280,000 2,212,000 2,171,000 2,271,000 2,266,000 2,378,000 2,371,000 2,377,000 2,362,000 2,326,0001/1-12/31/97 987,000 1,777,000 2,088,000 2,079,000 2,317,000 2,537,000 2,639,000 2,777,000 2,899,000 2,865,000 2,770,000 2,800,000 2,783,000 2,830,0101/1-12/31/98 991,000 2,039,000 1,944,000 1,926,000 1,962,000 1,985,000 2,265,000 2,367,000 2,400,000 2,491,000 2,542,000 2,667,000 2,818,489 3,000,2191/1-12/31/99 1,239,000 1,583,000 1,444,000 1,527,000 1,603,000 1,719,000 2,031,000 2,131,000 2,155,000 2,317,000 2,321,000 2,319,480 2,487,684 2,477,4281/1-12/31/00 1,223,000 1,898,000 2,805,000 3,194,000 3,509,000 3,584,000 3,724,000 3,918,000 3,981,000 4,086,018 3,544,562 3,724,161 3,734,762 3,755,7661/1-12/31/01 1,030,000 1,794,000 2,152,000 2,680,000 3,012,000 3,235,000 3,400,000 3,708,000 3,804,373 4,271,583 4,376,078 4,399,020 4,433,5881/1-12/31/02 1,356,000 2,023,000 2,544,000 2,887,000 3,210,000 3,280,000 3,395,000 3,764,942 3,803,939 4,134,131 4,101,425 4,235,0991/1-12/31/03 1,269,000 2,132,000 2,894,000 3,319,000 3,695,000 4,011,000 4,656,971 4,940,498 5,931,712 5,696,751 5,794,567

1/1-12/31/04 1,226,000 2,249,000 2,487,000 2,832,000 3,237,000 3,531,225 3,944,608 4,444,534 4,230,035 4,154,5351/1-12/31/05 1,205,000 1,795,000 2,111,000 2,566,000 3,351,494 3,802,425 5,834,451 6,002,841 5,442,9211/1-12/31/06 959,000 1,651,000 2,197,000 2,821,966 2,898,865 3,827,686 4,409,639 4,462,1021/1-12/31/07 777,000 1,439,000 1,980,991 2,353,193 3,022,354 3,235,711 2,787,2061/1-12/31/08 1,089,000 1,532,225 1,717,479 2,327,595 2,756,041 3,029,3571/1-12/31/09 651,706 1,403,238 2,618,007 2,937,480 3,089,721

B. AGE-TO-AGE FACTORS

Policy 12 to 24 24 to 36 36 to 48 48 to 60 60 to 72 72 to 84 84 to 96 96 to 108 108 to 120 120 to 132 132 to 144 144 to 156 156 to 168 168 toPeriod Months Months Months Months Months Months Months Months Months Months Months Months Months Ultimate

10/1/92-12/31/92 1.005 1.184 1.004 1.017 0.827 1.129 0.965 0.872 1.000 1.0001/1-12/31/93 1.204 1.102 0.972 0.958 0.976 0.997 0.962 0.989 0.962 1.009 0.9591/1-12/31/94 1.197 1.394 1.140 0.942 0.958 1.060 0.986 0.922 0.977 0.992 1.001 1.0181/1-12/31/95 1.173 1.257 1.235 1.064 1.001 0.956 1.041 1.006 0.985 1.025 1.001 0.975 1.0101/1-12/31/96 1.738 1.490 0.971 1.086 0.970 0.981 1.046 0.998 1.049 0.997 1.003 0.994 0.9851/1-12/31/97 1.800 1.175 0.996 1.114 1.095 1.040 1.052 1.044 0.988 0.967 1.011 0.994 1.0171/1-12/31/98 2.058 0.953 0.991 1.019 1.012 1.141 1.045 1.014 1.038 1.020 1.049 1.057 1.0641/1-12/31/99 1.278 0.912 1.057 1.050 1.072 1.182 1.049 1.011 1.075 1.002 0.999 1.073 0.9961/1-12/31/00 1.552 1.478 1.139 1.099 1.021 1.039 1.052 1.016 1.026 0.867 1.051 1.003 1.0061/1-12/31/01 1.742 1.200 1.245 1.124 1.074 1.051 1.091 1.026 1.123 1.024 1.005 1.0081/1-12/31/02 1.492 1.258 1.135 1.112 1.022 1.035 1.109 1.010 1.087 0.992 1.0331/1-12/31/03 1.680 1.357 1.147 1.113 1.086 1.161 1.061 1.201 0.960 1.0171/1-12/31/04 1.834 1.106 1.139 1.143 1.091 1.117 1.127 0.952 0.9821/1-12/31/05 1.490 1.176 1.216 1.306 1.135 1.534 1.029 0.9071/1-12/31/06 1.722 1.331 1.284 1.027 1.320 1.152 1.0121/1-12/31/07 1.852 1.377 1.188 1.284 1.071 0.8611/1-12/31/08 1.407 1.121 1.355 1.184 1.0991/1-12/31/09 2.153 1.866 1.122 1.052

Average 1.665 1.266 1.166 1.112 1.069 1.073 1.051 1.000 1.025 0.987 0.998 1.011 1.006Wtd Avg 1.624 1.254 1.162 1.119 1.066 1.090 1.056 1.012 1.016 0.988 1.014 1.011 1.0103 Yr Avg 1.804 1.455 1.222 1.173 1.163 1.182 1.056 1.020 1.010 1.011 1.030 1.028 1.0225 Yr Mid Avg 1.688 1.295 1.229 1.173 1.108 1.143 1.066 0.996 1.032 1.004 1.029 1.023 1.006NY NCCI 1.623 1.267 1.137 1.081 1.057 1.046 1.036 1.042 1.036 1.029 1.025 1.022 1.019 1.017NY Groups 1.540 1.220 1.120 1.070 1.045 1.040 1.035 1.030 1.025 1.014 1.011 1.010 1.008 1.007Prior 1.045 1.040 1.035 1.030 1.025 1.014 1.011 1.010 1.008 1.007Selected 1.045 1.040 1.035 1.030 1.025 1.014 1.011 1.010 1.008 1.007

C. INCURRED LOSS DEVELOPMENT FACTORS

60 to 72 to 84 to 96 to 108 to 120 to 132 to 144 to 156 to 168 toUltimate Ultimate Ultimate Ultimate Ultimate Ultimate Ultimate Ultimate Ultimate Ultimate

1.248 1.194 1.148 1.109 1.077 1.051 1.036 1.025 1.015 1.007

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Section B displays age-to-age factors, the rates by which losses develop from year to year. For

example, the 12 to 24 age-to-age factor for the 1/1-12/31/09 period is 2.153. This is the 24

month incurred amount of $1,403,238 divided by the 12 month incurred amount of $651,706.

The age-to-age factor of 2.153 means that losses incurred during the 1/1-12/31/09 period

increased by 115.3% during the 12 to 24 month interval. A loss development factor less than

1.000 indicates that the value of incurred losses declined, possibly due to claims settling for

amounts less than previously reserved.

Averages of the age-to-age factors are shown at the bottom of Section B. The average is the

mean of all the age-to-age factors. The weighted average weights the factors for individual years

by the magnitude of losses for that given year, giving more weight to periods with higher losses.

The weighted average is the sum of the losses from one age divided by the sum of the losses

from the previous age for corresponding periods. The three-year average is the average of the

three most recent factors. The five-year mid average is the average of the five most recent

factors excluding the high and low values. The NY NCCI factor is the factor for New York

published by the NCCI. The NY Groups factor is based on experience of other New York

workers compensation self-insured groups. The prior factor is from the 7/11/13 actuarial report.

The averages are evaluated, and the factors selected as most representative of LTCRMG’s

expected loss development are shown. The historical and expected loss development patterns are

graphically illustrated in Figure 3 by thick and thin lines, respectively.

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13

Figure 3

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

HISTORICAL AND EXPECTED DEVELOPMENT OF INCURRED LOSSES(Losses Including ALAE Limited to Specific Retentions)

* Additional development of 2.5% expected after 144 months.

1/1-12/31/02

1/1-12/31/03

1/1-12/31/04

1/1-12/31/05

1/1-12/31/06

1/1-12/31/07

1/1-12/31/08

1/1-12/31/09

1.0

2.0

3.0

4.0

5.0

6.0

7.0

12 24 36 48 60 72 84 96 108 120 132 144*

$ M

illio

ns

Age of Policy Period in Months

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14

Computation of the loss development factors in Section C is based on the selected age-to-age

factors. For instance, the 60 to ultimate factor is calculated by multiplying the 60 to 72 month

age-to-age factor by the 72 to ultimate loss development factor (1.248 = 1.045 x 1.194).

In Section A of Table 2, incurred losses are limited to the specific retentions. As shown,

numerous claims are currently reported excess of the retention. Ultimate incurred losses are

estimated in Section B by multiplying the limited incurred losses by the loss development

factors. For example, limited incurred losses for the 1/1-12/31/07 period evaluated at $2,787,206

on 12/31/13 are estimated to ultimately cost $3,199,712 ($2,787,206 x 1.148). The loss

development factor of 1.148 means that the losses are expected to ultimately cost 14.8% more

than incurred losses evaluated on 12/31/13.

PAID LOSS DEVELOPMENT

The paid loss procedure employs an analysis similar to the previous method, but based on paid

loss data. This estimation technique is not influenced by changes in the loss reserve estimates of

the adjusters. However, larger development factors are required at a given age than the incurred

method. This analysis is shown in Table 3, Figure 4, and Table 4.

INCURRED BORNHUETTER-FERGUSON

The incurred Bornhuetter-Ferguson method for developing an estimate of ultimate incurred

losses requires two parameters, the expected losses and reporting pattern. The accuracy of this

method depends on these parameters.

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Table 2

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED ULTIMATE INCURRED LOSSESINCURRED LOSS DEVELOPMENT

A. LOSSES LIMITED TO SPECIFIC RETENTION

Unlimited Number of LimitedIncurred Claims in Incurred in Incurred

Policy Losses as Specific Excess of Excess of Losses as

Period of 12/31/13 Retention Retention Retention of 12/31/13

10/1/92-12/31/92 $ 190,898 $ 500,000 0 $ 0 $ 190,8981/1-12/31/93 1,378,511 500,000 0 0 1,378,5111/1-12/31/94 2,752,128 500,000 0 0 2,752,1281/1-12/31/95 3,116,036 500,000 0 0 3,116,0361/1-12/31/96 2,586,226 500,000 0 0 2,586,2261/1-12/31/97 3,342,404 500,000 0 0 3,342,4041/1-12/31/98 3,382,133 300,000 2 447,837 2,934,2961/1-12/31/99 3,081,486 300,000 2 611,554 2,469,9321/1-12/31/00 4,251,273 300,000 1 495,507 3,755,7661/1-12/31/01 6,945,599 300,000 4 2,512,011 4,433,5881/1-12/31/02 4,744,114 300,000 3 509,015 4,235,099

1/1-12/31/03 10,494,518 300,000 6 4,699,951 5,794,5671/1-12/31/04 4,998,409 400,000 2 843,874 4,154,5351/1-12/31/05 7,315,200 400,000 5 1,872,279 5,442,9211/1-12/31/06 5,189,058 400,000 2 726,956 4,462,1021/1-12/31/07 2,787,206 400,000 0 0 2,787,2061/1-12/31/08 3,178,459 400,000 3 149,102 3,029,3571/1-12/31/09 3,134,101 400,000 1 44,380 3,089,721

Total $72,867,759 31 $12,912,466 $59,955,293

B. ESTIMATED ULTIMATE INCURRED LOSSES

Limited Age of Incurred EstimatedIncurred Policy Loss Ultimate

Policy Losses as Period in Development IncurredPeriod of 12/31/13 Months Factor Losses^

10/1/92-12/31/92 $ 190,898 259.5 1.000 $ 190,8981/1-12/31/93 1,378,511 252.0 1.000 1,378,5111/1-12/31/94 2,752,128 240.0 1.000 2,752,1281/1-12/31/95 3,116,036 228.0 1.000 3,116,0361/1-12/31/96 2,586,226 216.0 1.000 2,586,2261/1-12/31/97 3,342,404 204.0 1.000 3,342,4041/1-12/31/98 2,934,296 192.0 1.000 2,934,2961/1-12/31/99 2,469,932 180.0 1.000 2,469,9321/1-12/31/00 3,755,766 168.0 1.007 3,779,9561/1-12/31/01 4,433,588 156.0 1.015 4,482,0921/1-12/31/02 4,235,099 144.0 1.025 4,318,4771/1-12/31/03 5,794,567 132.0 1.036 5,938,3711/1-12/31/04 4,154,535 120.0 1.051 4,325,6161/1-12/31/05 5,442,921 108.0 1.077 5,708,0261/1-12/31/06 4,462,102 96.0 1.109 4,861,2711/1-12/31/07 2,787,206 84.0 1.148 3,199,7121/1-12/31/08 3,029,357 72.0 1.194 3,384,2521/1-12/31/09 3,089,721 60.0 1.248 3,756,771

Total $59,955,293 $62,524,975`

^ Limited losses are not developed above the retention.

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Table 3

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

PAID LOSS DEVELOPMENT FACTORS(Losses Including ALAE Limited to Specific Retentions)

A. PAID LOSSES

Age of Policy PeriodPolicy 12 24 36 48 60 72 84 96 108 120 132 144 156 168Period Months Months Months Months Months Months Months Months Months Months Months Months Months Months

10/1/92-12/31/92 156,000 171,000 186,000 191,000 196,000 199,000 219,000 219,000 191,000 191,000 191,0001/1-12/31/93 986,000 1,172,000 1,335,000 1,405,000 1,454,000 1,446,000 1,481,000 1,481,000 1,494,000 1,437,000 1,450,000 1,391,0001/1-12/31/94 1,081,000 1,498,000 1,772,000 2,032,000 2,177,000 2,291,000 2,512,000 2,513,000 2,250,000 2,453,000 2,434,000 2,437,000 2,481,0001/1-12/31/95 602,000 1,093,000 1,454,000 1,703,000 1,943,000 2,194,000 2,346,000 2,556,000 2,512,000 2,605,000 2,884,000 2,886,000 2,815,000 2,843,0001/1-12/31/96 348,000 871,000 1,221,000 1,444,000 1,635,000 1,755,000 1,854,000 1,966,000 2,031,000 2,069,000 2,371,000 2,377,000 2,362,000 2,326,0001/1-12/31/97 372,000 989,000 1,300,000 1,600,000 1,860,000 2,082,000 2,216,000 2,338,000 2,461,000 2,631,000 2,770,000 2,800,000 2,783,000 2,578,6241/1-12/31/98 417,000 903,000 1,228,000 1,460,000 1,623,000 1,717,000 1,903,000 2,054,000 2,139,000 2,249,000 2,542,000 2,667,000 2,511,217 2,596,7281/1-12/31/99 467,000 923,000 1,160,000 1,341,000 1,418,000 1,549,000 1,755,000 1,922,000 1,961,000 1,983,000 2,321,000 2,052,995 2,105,941 2,164,6251/1-12/31/00 486,000 1,399,000 2,173,000 2,659,000 3,085,000 3,320,000 3,472,000 3,636,000 3,844,000 3,948,243 3,505,873 3,521,436 3,628,162 3,539,4761/1-12/31/01 412,000 1,204,000 1,733,000 2,147,000 2,475,000 2,889,000 3,165,000 3,302,000 3,549,277 3,803,872 3,863,276 3,937,159 4,043,8371/1-12/31/02 623,000 1,404,000 2,020,000 2,408,000 2,723,000 2,958,000 3,164,000 3,406,375 3,520,736 3,502,810 3,564,350 3,686,6621/1-12/31/03 637,000 1,464,000 2,120,000 2,599,000 3,112,000 3,529,000 3,982,223 4,189,794 4,533,115 4,865,407 4,992,1501/1-12/31/04 609,000 1,394,000 1,970,000 2,350,000 2,873,000 3,187,641 3,534,618 3,655,115 3,728,610 3,863,3541/1-12/31/05 523,000 1,213,000 1,680,000 2,102,000 2,566,307 2,941,098 3,222,227 3,616,057 4,111,8041/1-12/31/06 499,000 1,135,000 1,574,000 2,209,720 2,481,364 2,834,433 3,214,975 3,442,5191/1-12/31/07 407,000 944,000 1,438,058 1,741,696 1,923,921 2,249,820 2,495,6081/1-12/31/08 395,000 945,454 1,315,641 1,505,946 1,801,116 1,913,5391/1-12/31/09 283,083 823,411 1,185,578 1,532,248 1,983,822

B. AGE-TO-AGE FACTORS

Policy 12 to 24 24 to 36 36 to 48 48 to 60 60 to 72 72 to 84 84 to 96 96 to 108 108 to 120 120 to 132 132 to 144 144 to 156 156 to 168 168 toPeriod Months Months Months Months Months Months Months Months Months Months Months Months Months Ultimate

10/1/92-12/31/92 1.096 1.088 1.027 1.026 1.015 1.101 1.000 0.872 1.000 1.0001/1-12/31/93 1.189 1.139 1.052 1.035 0.994 1.024 1.000 1.009 0.962 1.009 0.9591/1-12/31/94 1.386 1.183 1.147 1.071 1.052 1.096 1.000 0.895 1.090 0.992 1.001 1.0181/1-12/31/95 1.816 1.330 1.171 1.141 1.129 1.069 1.090 0.983 1.037 1.107 1.001 0.975 1.0101/1-12/31/96 2.503 1.402 1.183 1.132 1.073 1.056 1.060 1.033 1.019 1.146 1.003 0.994 0.9851/1-12/31/97 2.659 1.314 1.231 1.163 1.119 1.064 1.055 1.053 1.069 1.053 1.011 0.994 0.9271/1-12/31/98 2.165 1.360 1.189 1.112 1.058 1.108 1.079 1.041 1.051 1.130 1.049 0.942 1.0341/1-12/31/99 1.976 1.257 1.156 1.057 1.092 1.133 1.095 1.020 1.011 1.170 0.885 1.026 1.0281/1-12/31/00 2.879 1.553 1.224 1.160 1.076 1.046 1.047 1.057 1.027 0.888 1.004 1.030 0.9761/1-12/31/01 2.922 1.439 1.239 1.153 1.167 1.096 1.043 1.075 1.072 1.016 1.019 1.0271/1-12/31/02 2.254 1.439 1.192 1.131 1.086 1.070 1.077 1.034 0.995 1.018 1.0341/1-12/31/03 2.298 1.448 1.226 1.197 1.134 1.128 1.052 1.082 1.073 1.0261/1-12/31/04 2.289 1.413 1.193 1.223 1.110 1.109 1.034 1.020 1.0361/1-12/31/05 2.319 1.385 1.251 1.221 1.146 1.096 1.122 1.1371/1-12/31/06 2.275 1.387 1.404 1.123 1.142 1.134 1.0711/1-12/31/07 2.319 1.523 1.211 1.105 1.169 1.1091/1-12/31/08 2.394 1.392 1.145 1.196 1.0621/1-12/31/09 2.909 1.440 1.292 1.295

Average 2.398 1.404 1.216 1.155 1.104 1.083 1.063 1.041 1.030 1.054 0.985 1.000 0.993Wtd Avg 2.359 1.410 1.218 1.161 1.109 1.089 1.065 1.049 1.029 1.043 1.000 1.001 0.9923 Yr Avg 2.541 1.452 1.216 1.199 1.124 1.113 1.076 1.080 1.035 1.020 1.019 1.028 1.0135 Yr Mid Avg 2.344 1.406 1.251 1.180 1.133 1.115 1.067 1.064 1.045 1.020 1.019 1.016 0.996NY NCCI 2.576 1.511 1.252 1.155 1.110 1.078 1.058 1.068 1.057 1.049 1.042 1.037 1.033 1.147NY Groups 2.460 1.450 1.250 1.130 1.090 1.060 1.050 1.040 1.030 1.024 1.021 1.018 1.016 1.064Prior 1.120 1.090 1.060 1.040 1.030 1.050 1.044 1.038 1.034 1.151Selected 1.110 1.090 1.060 1.050 1.030 1.040 1.040 1.035 1.035 1.150

C. PAID LOSS DEVELOPMENT FACTORS

60 to 72 to 84 to 96 to 108 to 120 to 132 to 144 to 156 to 168 toUltimate Ultimate Ultimate Ultimate Ultimate Ultimate Ultimate Ultimate Ultimate Ultimate

1.847 1.664 1.527 1.441 1.372 1.332 1.281 1.232 1.190 1.150

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Figure 4

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

HISTORICAL AND EXPECTED DEVELOPMENT OF PAID LOSSES(Losses Including ALAE Limited to Specific Retentions)

* Additional development of 23.2% expected after 144 months.

1/1-12/31/02

1/1-12/31/03

1/1-12/31/04

1/1-12/31/05

1/1-12/31/06

1/1-12/31/07

1/1-12/31/08

1/1-12/31/09

1.0

2.0

3.0

4.0

5.0

6.0

12 24 36 48 60 72 84 96 108 120 132 144*

$ M

illio

ns

Age of Policy Period in Months

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Table 4

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED ULTIMATE INCURRED LOSSESPAID LOSS DEVELOPMENT

A. LOSSES LIMITED TO SPECIFIC RETENTION

Unlimited Number of LimitedPaid Claims in Paid in Paid

Policy Losses as Specific Excess of Excess of Losses asPeriod of 12/31/13 Retention Retention Retention of 12/31/13

10/1/92-12/31/92 $ 190,898 $ 500,000 0 $ 0 $ 190,8981/1-12/31/93 1,378,511 500,000 0 0 1,378,5111/1-12/31/94 2,530,362 500,000 0 0 2,530,3621/1-12/31/95 2,721,999 500,000 0 0 2,721,9991/1-12/31/96 2,283,416 500,000 0 0 2,283,4161/1-12/31/97 2,732,417 500,000 0 0 2,732,4171/1-12/31/98 2,933,382 300,000 2 139,689 2,793,6931/1-12/31/99 2,256,041 300,000 0 0 2,256,0411/1-12/31/00 3,714,459 300,000 1 174,983 3,539,4761/1-12/31/01 4,347,369 300,000 2 303,532 4,043,8371/1-12/31/02 3,817,846 300,000 1 131,184 3,686,6621/1-12/31/03 5,048,739 300,000 1 56,589 4,992,1501/1-12/31/04 3,863,354 400,000 0 0 3,863,3541/1-12/31/05 4,140,543 400,000 1 28,739 4,111,8041/1-12/31/06 3,442,519 400,000 0 0 3,442,5191/1-12/31/07 2,495,608 400,000 0 0 2,495,6081/1-12/31/08 1,913,539 400,000 0 0 1,913,5391/1-12/31/09 1,983,822 400,000 0 0 1,983,822

Total $51,794,824 8 $ 834,716 $50,960,108

B. ESTIMATED ULTIMATE INCURRED LOSSES

Limited Age of EstimatedPaid Policy Paid Loss Ultimate

Policy Losses as Period in Development IncurredPeriod of 12/31/13 Months Factor Losses

10/1/92-12/31/92 $ 190,898 259.5 1.000 $ 190,8981/1-12/31/93 1,378,511 252.0 1.000 1,378,5111/1-12/31/94 2,530,362 240.0 1.000 2,530,3621/1-12/31/95 2,721,999 228.0 1.018 2,770,9951/1-12/31/96 2,283,416 216.0 1.039 2,372,4691/1-12/31/97 2,732,417 204.0 1.062 2,901,8271/1-12/31/98 2,793,693 192.0 1.088 3,039,5371/1-12/31/99 2,256,041 180.0 1.117 2,519,9981/1-12/31/00 3,539,476 168.0 1.150 4,070,3981/1-12/31/01 4,043,837 156.0 1.190 4,812,1661/1-12/31/02 3,686,662 144.0 1.232 4,541,9681/1-12/31/03 4,992,150 132.0 1.281 6,394,9441/1-12/31/04 3,863,354 120.0 1.332 5,145,9881/1-12/31/05 4,111,804 108.0 1.372 5,641,3951/1-12/31/06 3,442,519 96.0 1.441 4,960,6701/1-12/31/07 2,495,608 84.0 1.527 3,810,7931/1-12/31/08 1,913,539 72.0 1.664 3,184,1291/1-12/31/09 1,983,822 60.0 1.847 3,664,119

Total $50,960,108 $63,931,167

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19

The incurred Bornhuetter-Ferguson method involves two calculation steps. In Section A of

Table 5, unreported losses are estimated by multiplying the expected losses by the expected

percent of unreported losses implied by the incurred loss development factor. Ultimate incurred

losses are estimated in Section B by adding the estimated unreported losses to the incurred losses

as of 12/31/13.

PAID BORNHUETTER-FERGUSON

The paid Bornhuetter-Ferguson method also uses two parameters to estimate ultimate incurred

losses. These parameters are the expected losses and payment pattern. In Section A of Table 6,

outstanding losses are estimated by multiplying the expected losses by the expected ratio of

outstanding losses implied by the paid loss development factor. Ultimate incurred losses are

estimated in Section B by adding paid losses and the estimate of outstanding losses.

SELECTED ESTIMATED ULTIMATE INCURRED LOSSES

The results of the methods are compared in Table 7, and the ultimate incurred losses are selected

for each period. An average is selected for each period unless otherwise noted. The

corresponding incurred method is substituted for the paid method in the average for periods

when the paid method is less than incurred losses. The selection procedure is depicted in Figure

5. The selected estimated ultimate incurred losses are then compared to the aggregate retention.

The aggregate retention is not expected to be exceeded in any period.

ESTIMATED REQUIRED RESERVES

The required reserves are estimated in Table 8. The estimated ultimate incurred, incurred, and

paid losses retained by LTCRMG are summarized in Section A. In Section B, the case reserves

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Table 5

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED ULTIMATE INCURRED LOSSESINCURRED BORNHUETTER-FERGUSON

(Losses Including ALAE Limited to Specific Retentions)

A. ESTIMATED UNREPORTED LOSSES

IncurredLoss Expected Estimated

Policy Expected Development Ratio UnreportedPeriod Losses* Factor Unreported Losses

10/1/92-12/31/92 $ 190,898 1.000 0.000 $ 01/1-12/31/93 1,377,939 1.000 0.000 01/1-12/31/94 2,762,705 1.000 0.000 01/1-12/31/95 3,107,732 1.000 0.000 01/1-12/31/96 2,546,319 1.000 0.000 01/1-12/31/97 3,413,001 1.000 0.000 01/1-12/31/98 2,998,746 1.000 0.000 01/1-12/31/99 2,492,691 1.000 0.000 01/1-12/31/00 4,043,356 1.007 0.007 28,3031/1-12/31/01 4,670,273 1.015 0.015 70,054

1/1-12/31/02 4,414,760 1.025 0.024 105,9541/1-12/31/03 6,243,535 1.036 0.035 218,5241/1-12/31/04 4,854,443 1.051 0.049 237,8681/1-12/31/05 6,489,976 1.077 0.071 460,7881/1-12/31/06 4,952,812 1.109 0.098 485,3761/1-12/31/07 3,767,174 1.148 0.129 485,9651/1-12/31/08 3,330,896 1.194 0.162 539,6051/1-12/31/09 3,552,746 1.248 0.199 706,996

Total $65,210,002 $3,339,433

B. ESTIMATED ULTIMATE INCURRED LOSSES

EstimatedIncurred Estimated Ultimate

Policy Losses as Unreported IncurredPeriod of 12/31/13 Losses Losses

10/1/92-12/31/92 $ 190,898 $ 0 $ 190,8981/1-12/31/93 1,378,511 0 1,378,5111/1-12/31/94 2,752,128 0 2,752,1281/1-12/31/95 3,116,036 0 3,116,0361/1-12/31/96 2,586,226 0 2,586,2261/1-12/31/97 3,342,404 0 3,342,4041/1-12/31/98 2,934,296 0 2,934,2961/1-12/31/99 2,469,932 0 2,469,9321/1-12/31/00 3,755,766 28,303 3,784,0691/1-12/31/01 4,433,588 70,054 4,503,6421/1-12/31/02 4,235,099 105,954 4,341,0531/1-12/31/03 5,794,567 218,524 6,013,0911/1-12/31/04 4,154,535 237,868 4,392,4031/1-12/31/05 5,442,921 460,788 5,903,7091/1-12/31/06 4,462,102 485,376 4,947,4781/1-12/31/07 2,787,206 485,965 3,273,1711/1-12/31/08 3,029,357 539,605 3,568,9621/1-12/31/09 3,089,721 706,996 3,796,717

Total $59,955,293 $3,339,433 $63,294,726

* From Table 7 of the 7/11/13 actuarial report.

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Table 6

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED ULTIMATE INCURRED LOSSESPAID BORNHUETTER-FERGUSON

(Losses Including ALAE Limited to Specific Retentions)

A. ESTIMATED OUTSTANDING LOSSES

ExpectedPaid Loss Ratio Estimated

Policy Expected Development Amount OutstandingPeriod Losses Factor Outstanding Losses

10/1/92-12/31/92 $ 190,898 1.000 0.000 $ 01/1-12/31/93 1,377,939 1.000 0.000 01/1-12/31/94 2,762,705 1.000 0.000 01/1-12/31/95 3,107,732 1.018 0.018 55,9391/1-12/31/96 2,546,319 1.039 0.038 96,7601/1-12/31/97 3,413,001 1.062 0.058 197,9541/1-12/31/98 2,998,746 1.088 0.081 242,8981/1-12/31/99 2,492,691 1.117 0.105 261,7331/1-12/31/00 4,043,356 1.150 0.130 525,6361/1-12/31/01 4,670,273 1.190 0.160 747,2441/1-12/31/02 4,414,760 1.232 0.188 829,9751/1-12/31/03 6,243,535 1.281 0.219 1,367,3341/1-12/31/04 4,854,443 1.332 0.249 1,208,7561/1-12/31/05 6,489,976 1.372 0.271 1,758,7831/1-12/31/06 4,952,812 1.441 0.306 1,515,5601/1-12/31/07 3,767,174 1.527 0.345 1,299,6751/1-12/31/08 3,330,896 1.664 0.399 1,329,0281/1-12/31/09 3,552,746 1.847 0.459 1,630,710

Total $65,210,002 $13,067,985

B. ESTIMATED ULTIMATE INCURRED LOSSES

EstimatedPaid Estimated Ultimate

Policy Losses as Outstanding IncurredPeriod of 12/31/13 Losses Losses

10/1/92-12/31/92 $ 190,898 $ 0 $ 190,8981/1-12/31/93 1,378,511 0 1,378,5111/1-12/31/94 2,530,362 0 2,530,3621/1-12/31/95 2,721,999 55,939 2,777,9381/1-12/31/96 2,283,416 96,760 2,380,1761/1-12/31/97 2,732,417 197,954 2,930,3711/1-12/31/98 2,793,693 242,898 3,036,5911/1-12/31/99 2,256,041 261,733 2,517,7741/1-12/31/00 3,539,476 525,636 4,065,1121/1-12/31/01 4,043,837 747,244 4,791,0811/1-12/31/02 3,686,662 829,975 4,516,6371/1-12/31/03 4,992,150 1,367,334 6,359,4841/1-12/31/04 3,863,354 1,208,756 5,072,1101/1-12/31/05 4,111,804 1,758,783 5,870,5871/1-12/31/06 3,442,519 1,515,560 4,958,0791/1-12/31/07 2,495,608 1,299,675 3,795,2831/1-12/31/08 1,913,539 1,329,028 3,242,5671/1-12/31/09 1,983,822 1,630,710 3,614,532

Total $50,960,108 $13,067,985 $64,028,093

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Table 7

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

SELECTED ESTIMATED ULTIMATE INCURRED LOSSES(Losses Including ALAE Limited to Specific Retentions)

Selected SelectedEstimated Estimated

Incurred Paid Incurred Paid Ultimate UltimatePolicy Loss Loss Bornhuettter- Bornhuettter- Incurred Aggregate Limited toPeriod Development Development Ferguson Ferguson Losses^ Retention Aggregate

10/1/92-12/31/92 $ 190,898 $ 190,898 $ 190,898 $ 190,898 $ 190,898 $ 190,8981/1-12/31/93 1,378,511 1,378,511 1,378,511 1,378,511 1,378,511 1,378,5111/1-12/31/94 2,752,128 2,530,362 # 2,752,128 2,530,362 # 2,752,128 2,752,1281/1-12/31/95 3,116,036 2,770,995 # 3,116,036 2,777,938 # 3,116,036 3,116,0361/1-12/31/96 2,586,226 2,372,469 # 2,586,226 2,380,176 # 2,586,226 2,586,2261/1-12/31/97 3,342,404 2,901,827 # 3,342,404 2,930,371 # 3,342,404 3,342,4041/1-12/31/98 2,934,296 3,039,537 2,934,296 3,036,591 2,986,180 2,986,1801/1-12/31/99 2,469,932 2,519,998 2,469,932 2,517,774 2,494,409 2,494,4091/1-12/31/00 3,779,956 4,070,398 3,784,069 4,065,112 3,924,884 $ 4,721,901 3,924,8841/1-12/31/01 4,482,092 4,812,166 4,503,642 4,791,081 4,647,245 5,132,689 4,647,2451/1-12/31/02 4,318,477 4,541,968 4,341,053 4,516,637 4,429,534 5,855,870 4,429,5341/1-12/31/03 5,938,371 6,394,944 6,013,091 6,359,484 6,176,472 6,205,899 6,176,472

1/1-12/31/04 4,325,616 5,145,988 4,392,403 5,072,110 4,734,029 5,605,343 4,734,0291/1-12/31/05 5,708,026 5,641,395 5,903,709 5,870,587 5,780,929 6,260,156 5,780,929 1/1-12/31/06 4,861,271 4,960,670 4,947,478 4,958,079 4,931,874 6,192,337 4,931,8741/1-12/31/07 3,199,712 3,810,793 3,273,171 3,795,283 3,519,740 6,088,601 3,519,7401/1-12/31/08 3,384,252 3,184,129 3,568,962 3,242,567 3,344,977 5,795,034 3,344,9771/1-12/31/09 3,756,771 3,664,119 3,796,717 3,614,532 3,708,035 4,488,193 3,708,035

Total $62,524,975 $63,931,167 $63,294,726 $64,028,093 $64,044,511 $56,346,023 $64,044,511

^ Selected the average unless otherwise noted.# Since paid method is less than incurred losses, the corresponding incurred

method is substituted in the average.

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23

Figure 5

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

SELECTED ESTIMATED ULTIMATE INCURRED LOSSES(Losses Including ALAE Limited to Specific Retentions)

0.2

1.4

2.8

3.1

2.6

3.3

3.0

2.5

3.9

4.64.4

6.2

4.7

5.8

4.9

3.53.3

3.7

1.0

2.0

3.0

4.0

5.0

6.0

7.0

$ M

illio

ns

Policy Period

Inc Dev Paid Dev Inc B-F Paid B-F Selected

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Table 8

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED REQUIRED RESERVES AS OF 12/31/13(Losses Including ALAE Limited to Specific and Aggregate Retentions)

A. LOSS SUMMARY

EstimatedUltimate Incurred Paid

Policy Incurred Losses as Losses as

Period Losses of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 190,898 $ 190,898 $ 190,8981/1-12/31/93 1,378,511 1,378,511 1,378,5111/1-12/31/94 2,752,128 2,752,128 2,530,3621/1-12/31/95 3,116,036 3,116,036 2,721,9991/1-12/31/96 2,586,226 2,586,226 2,283,4161/1-12/31/97 3,342,404 3,342,404 2,732,4171/1-12/31/98 2,986,180 2,934,296 2,793,6931/1-12/31/99 2,494,409 2,469,932 2,256,0411/1-12/31/00 3,924,884 3,755,766 3,539,4761/1-12/31/01 4,647,245 4,433,588 4,043,8371/1-12/31/02 4,429,534 4,235,099 3,686,662

1/1-12/31/03 6,176,472 5,794,567 4,992,1501/1-12/31/04 4,734,029 4,154,535 3,863,3541/1-12/31/05 5,780,929 5,442,921 4,111,8041/1-12/31/06 4,931,874 4,462,102 3,442,5191/1-12/31/07 3,519,740 2,787,206 2,495,6081/1-12/31/08 3,344,977 3,029,357 1,913,5391/1-12/31/09 3,708,035 3,089,721 1,983,822

Total $64,044,511 $59,955,293 $50,960,108

B. ESTIMATED REQUIRED RESERVES AS OF 12/31/13

EstimatedCase Estimated Required

Policy Reserves as IBNR as Reserves asPeriod of 12/31/13 of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 0 $ 0 $ 01/1-12/31/93 0 0 01/1-12/31/94 221,766 0 221,7661/1-12/31/95 394,037 0 394,0371/1-12/31/96 302,810 0 302,8101/1-12/31/97 609,987 0 609,9871/1-12/31/98 140,604 51,884 192,4871/1-12/31/99 213,891 24,477 238,3681/1-12/31/00 216,290 169,118 385,4081/1-12/31/01 389,751 213,657 603,4081/1-12/31/02 548,437 194,435 742,8721/1-12/31/03 802,417 381,905 1,184,3221/1-12/31/04 291,181 579,494 870,6751/1-12/31/05 1,331,117 338,008 1,669,1251/1-12/31/06 1,019,583 469,772 1,489,3551/1-12/31/07 291,598 732,534 1,024,1321/1-12/31/08 1,115,818 315,620 1,431,4381/1-12/31/09 1,105,899 618,314 1,724,213

Total $ 8,995,185 $ 4,089,218 $13,084,403

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25

are shown as the difference between the incurred and paid losses. IBNR is estimated as the

difference between the estimated ultimate incurred losses and incurred losses. The total required

reserves as of 12/31/13 are then estimated by adding the case reserves and IBNR or by

subtracting paid losses from the estimated ultimate incurred losses.

ESTIMATED PAYOUT SCHEDULE

Two types of paid to incurred ratios that check the reasonableness of the estimates are calculated

in Table 9. Section A shows paid losses divided by incurred losses as of different ages. This

analysis assists in detecting changes in reserving and settlement practices. If payment and

reserving procedures are consistent between periods, the numbers within each column should be

relatively consistent.

Section B compares paid losses with the estimates of ultimate incurred losses. These ratios serve

two purposes. First, they test the reasonableness of the selected estimated ultimate incurred

losses. If losses are paid at a consistent rate, there is a sufficient volume of losses, and there are

no distorting effects from large claims, the ratios of paid losses to estimated ultimate incurred

losses are expected to be relatively consistent within each column. The second purpose of

Section B is to provide an estimate of the payout schedule to allocate the reserves to the period in

which they are expected to be paid. The selected payout schedule is shown at the bottom of

Section B.

In Table 10, the undiscounted reserves are assigned to the period in which they are expected to

be paid based on the selected schedule.

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Table 9

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

PAID TO INCURRED RATIOS(Losses Including ALAE Limited to Specific Retentions)

A. PAID/INCURRED LOSSES

Age of Policy PeriodPolicy 12 24 36 48 60 72 84 96 108 120 132 144 156 168Period Months Months Months Months Months Months Months Months Months Months Months Months Months Months

10/1/92-12/31/92 0.780 0.851 0.782 0.799 0.807 0.990 0.965 1.000 1.000 1.000 1.0001/1-12/31/93 0.754 0.745 0.770 0.834 0.901 0.918 0.943 0.980 1.000 1.000 1.000 1.0001/1-12/31/94 0.711 0.824 0.699 0.703 0.800 0.879 0.909 0.923 0.896 1.000 1.000 1.000 1.0001/1-12/31/95 0.409 0.633 0.670 0.636 0.682 0.769 0.860 0.900 0.880 0.926 1.000 1.000 1.000 1.0001/1-12/31/96 0.417 0.600 0.565 0.688 0.717 0.793 0.854 0.866 0.896 0.870 1.000 1.000 1.000 1.0001/1-12/31/97 0.377 0.557 0.623 0.770 0.803 0.821 0.840 0.842 0.849 0.918 1.000 1.000 1.000 0.9111/1-12/31/98 0.421 0.443 0.632 0.758 0.827 0.865 0.840 0.868 0.891 0.903 1.000 1.000 0.891 0.8661/1-12/31/99 0.377 0.583 0.803 0.878 0.885 0.901 0.864 0.902 0.910 0.856 1.000 0.885 0.847 0.8741/1-12/31/00 0.397 0.737 0.775 0.832 0.879 0.926 0.932 0.928 0.966 0.966 0.989 0.946 0.971 0.9421/1-12/31/01 0.400 0.671 0.805 0.801 0.822 0.893 0.931 0.891 0.933 0.891 0.883 0.895 0.9121/1-12/31/02 0.459 0.694 0.794 0.834 0.848 0.902 0.932 0.905 0.926 0.847 0.869 0.8711/1-12/31/03 0.502 0.687 0.733 0.783 0.842 0.880 0.855 0.848 0.764 0.854 0.862

1/1-12/31/04 0.497 0.620 0.792 0.830 0.888 0.903 0.896 0.822 0.881 0.9301/1-12/31/05 0.434 0.676 0.796 0.819 0.766 0.773 0.552 0.602 0.7551/1-12/31/06 0.520 0.687 0.716 0.783 0.856 0.741 0.729 0.7721/1-12/31/07 0.524 0.656 0.726 0.740 0.637 0.695 0.8951/1-12/31/08 0.363 0.617 0.766 0.647 0.654 0.6321/1-12/31/09 0.434 0.587 0.453 0.522 0.642

Average 0.435 0.635 0.719 0.753 0.782 0.818 0.847 0.852 0.893 0.908 0.967 0.963 0.962 0.9553 Yr Avg 0.440 0.620 0.648 0.636 0.644 0.689 0.725 0.732 0.800 0.877 0.871 0.904 0.910 0.894

B. PAID/ESTIMATED ULTIMATE INCURRED LOSSES

EstimatedPolicy 12 24 36 48 60 72 84 96 108 120 132 144 156 168 UltimatePeriod Months Months Months Months Months Months Months Months Months Months Months Months Months Months Losses

10/1/92-12/31/92 0.817 0.896 0.974 1.001 1.027 1.042 1.147 1.147 1.001 1.001 1.001 $ 190,8981/1-12/31/93 0.715 0.850 0.968 1.019 1.055 1.049 1.074 1.074 1.084 1.042 1.052 1.009 1,378,5111/1-12/31/94 0.393 0.544 0.644 0.738 0.791 0.832 0.913 0.913 0.818 0.891 0.884 0.885 0.901 2,752,1281/1-12/31/95 0.193 0.351 0.467 0.547 0.624 0.704 0.753 0.820 0.806 0.836 0.926 0.926 0.903 0.912 3,116,0361/1-12/31/96 0.135 0.337 0.472 0.558 0.632 0.679 0.717 0.760 0.785 0.800 0.917 0.919 0.913 0.899 2,586,2261/1-12/31/97 0.111 0.296 0.389 0.479 0.556 0.623 0.663 0.699 0.736 0.787 0.829 0.838 0.833 0.771 3,342,4041/1-12/31/98 0.140 0.302 0.411 0.489 0.544 0.575 0.637 0.688 0.716 0.753 0.851 0.893 0.841 0.870 2,986,1801/1-12/31/99 0.187 0.370 0.465 0.538 0.568 0.621 0.704 0.771 0.786 0.795 0.930 0.823 0.844 0.868 2,494,4091/1-12/31/00 0.124 0.356 0.554 0.677 0.786 0.846 0.885 0.926 0.979 1.006 0.893 0.897 0.924 0.902 3,924,8841/1-12/31/01 0.089 0.259 0.373 0.462 0.533 0.622 0.681 0.711 0.764 0.819 0.831 0.847 0.870 4,647,2451/1-12/31/02 0.141 0.317 0.456 0.544 0.615 0.668 0.714 0.769 0.795 0.791 0.805 0.832 4,429,5341/1-12/31/03 0.103 0.237 0.343 0.421 0.504 0.571 0.645 0.678 0.734 0.788 0.808 6,176,4721/1-12/31/04 0.129 0.294 0.416 0.496 0.607 0.673 0.747 0.772 0.788 0.816 4,734,0291/1-12/31/05 0.090 0.210 0.291 0.364 0.444 0.509 0.557 0.626 0.711 5,780,9291/1-12/31/06 0.101 0.230 0.319 0.448 0.503 0.575 0.652 0.698 4,931,8741/1-12/31/07 0.116 0.268 0.409 0.495 0.547 0.639 0.709 3,519,7401/1-12/31/08 0.118 0.283 0.393 0.450 0.538 0.572 3,344,9771/1-12/31/09 0.076 0.222 0.320 0.413 0.535 3,708,035

$64,044,511Average 0.124 0.295 0.432 0.538 0.619 0.686 0.747 0.794 0.831 0.864 0.909 0.900 0.907 0.9043 Yr Avg 0.103 0.258 0.374 0.453 0.540 0.595 0.639 0.699 0.744 0.798 0.815 0.859 0.879 0.880NY Groups 0.133 0.327 0.474 0.592 0.669 0.729 0.773 0.812 0.844 0.870 0.890 0.909 0.925 0.940Prior 0.590 0.650 0.710 0.770 0.820 0.850 0.880 0.910 0.930 0.940Selected# 0.580 0.640 0.700 0.750 0.790 0.830 0.860 0.890 0.910 0.930

# Factors of 0.950, 0.960, 0.970, 0.980, 0.990, and 1.000 areselected for 180, 192, 204, 216, 228, and 240 months, respectively.

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Table 10

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED PAYOUT SCHEDULE(Losses Including ALAE Limited to Specific and Aggregate Retentions)

Policy 1/1/14- 1/1/15- 1/1/16- 1/1/17- 1/1/18- 1/1/19- 1/1/20- 1/1/21- 1/1/22- 1/1/23- 1/1/24- 1/1/25- 1/1/26- 1/1/27- 1/1/28- Period 12/31/14 12/31/15 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 12/31/26 12/31/27 12/31/28 Total

10/1/92-12/31/92 0 01/1-12/31/93 0 0

1/1-12/31/94 221,766 221,7661/1-12/31/95 394,037 394,0371/1-12/31/96 151,405 151,405 302,8101/1-12/31/97 203,329 203,329 203,329 609,9871/1-12/31/98 48,122 48,122 48,122 48,122 192,4871/1-12/31/99 47,674 47,674 47,674 47,674 47,674 238,3681/1-12/31/00 110,117 55,058 55,058 55,058 55,058 55,058 385,4081/1-12/31/01 134,091 134,091 67,045 67,045 67,045 67,045 67,045 603,4081/1-12/31/02 135,068 135,068 135,068 67,534 67,534 67,534 67,534 67,534 742,8721/1-12/31/03 253,783 169,189 169,189 169,189 84,594 84,594 84,594 84,594 84,594 1,184,3221/1-12/31/04 153,649 153,649 102,432 102,432 102,432 51,216 51,216 51,216 51,216 51,216 870,6751/1-12/31/05 317,929 238,446 238,446 158,964 158,964 158,964 79,482 79,482 79,482 79,482 79,482 1,669,1251/1-12/31/06 238,297 238,297 178,723 178,723 119,148 119,148 119,148 59,574 59,574 59,574 59,574 59,574 1,489,355

1/1-12/31/07 170,689 136,551 136,551 102,413 102,413 68,275 68,275 68,275 34,138 34,138 34,138 34,138 34,138 1,024,1321/1-12/31/08 238,573 198,811 159,049 159,049 119,287 119,287 79,524 79,524 79,524 39,762 39,762 39,762 39,762 39,762 1,431,4381/1-12/31/09 246,316 246,316 205,263 164,211 164,211 123,158 123,158 82,105 82,105 82,105 41,053 41,053 41,053 41,053 41,053 1,724,213

Total 3,064,842 2,156,005 1,745,949 1,320,414 1,088,361 914,281 739,978 572,306 470,634 346,278 254,009 174,527 114,953 80,815 41,053 13,084,403

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HISTORICAL PROFITABILITY ANALYSIS

When evaluating the estimates contained in this report, it is important to review the underwriting

results of each period to evaluate the program’s direction. Section A of Table 11 and Figure 6

present a comparison of the funds available to pay claims to the estimated ultimate incurred

losses. In the 1/1-12/31/09 period, it is estimated that LTCRMG will show underwriting loss of

$4,626,302.

In Section B, investment income is combined with the underwriting results to estimate net

income by policy period. As shown, the estimated net income after assessments for the 1/1-

12/31/09 period is $1,462,896. The estimated surplus, or cumulative net income after

assessments, is ($7,582,744).

The underwriting results per $100 payroll are shown in Section C and Figure 7. The estimated

underwriting income decreased $3.06 (($2.09) – $0.97) from 1/1-12/31/07 to 1/1-12/31/08 due to

a decrease in premium of $1.34 ($2.93 - $4.27), an increase in estimated ultimate incurred losses

of $0.17 ($3.05 – $2.88), and an increase in expenses of $1.55 ($1.97 - $0.42).

Paid, incurred, estimated ultimate incurred, and permissible loss ratios are shown in Table 12 to

further illustrate LTCRMG’s underwriting results. Also shown are combined ratios.

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Table 11

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

HISTORICAL PROFITABILITY ANALYSIS

A. ESTIMATED UNDERWRITING INCOME

Estimated

Funds Ultimate Estimated

Policy Audited Operating Available Incurred Underwriting

Period Premium* Expenses*^ for Claims Losses Income

10/1/92-12/31/92 $ 401,306 $ 123,035 $ 278,271 $ 190,898 $ 87,373

1/1-12/31/93 1,909,243 637,289 1,271,954 1,378,511 ( 106,557)

1/1-12/31/94 2,721,968 905,544 1,816,424 2,752,128 ( 935,704)

1/1-12/31/95 3,866,532 1,064,420 2,802,112 3,116,036 ( 313,924)

1/1-12/31/96 2,646,035 1,113,663 1,532,372 2,586,226 ( 1,053,854)

1/1-12/31/97 3,537,019 1,473,872 2,063,147 3,342,404 ( 1,279,257)

1/1-12/31/98 3,630,091 1,602,503 2,027,588 2,986,180 ( 958,592)

1/1-12/31/99 3,777,347 2,005,943 1,771,404 2,494,409 ( 723,005)

1/1-12/31/00 4,382,495 1,226,771 3,155,724 3,924,884 ( 769,160)

1/1-12/31/01 4,752,053 1,335,285 3,416,768 4,647,245 ( 1,230,477)

1/1-12/31/02 4,040,173 1,275,358 2,764,815 4,429,534 ( 1,664,719)

1/1-12/31/03 4,135,390 2,022,883 2,112,507 6,176,472 ( 4,063,965)

1/1-12/31/04 5,228,465 3,246,052 1,982,413 4,734,029 ( 2,751,616)

1/1-12/31/05 4,859,714 2,911,964 1,947,750 5,780,929 ( 3,833,179)

1/1-12/31/06 5,520,987 2,321,672 3,199,315 4,931,874 ( 1,732,559)

1/1-12/31/07 5,208,035 515,485 # 4,692,550 3,519,740 1,172,810

1/1-12/31/08 3,214,718 2,160,803 1,053,915 3,344,977 ( 2,291,062)

1/1-12/31/09 2,456,780 3,375,047 # ( 918,267) 3,708,035 ( 4,626,302)

Total $66,288,351 $29,317,589 $36,970,762 $64,044,511 ($27,073,749)

B. ESTIMATED FUND BALANCE

Investment Estimated Retrospective Estimated

Estimated and Other Net Income Rate Charge Net Income

Policy Underwriting Income Including Before (Credit) and After

Period Income Unrealized CGs* Assessments Assessents Assessments

10/1/92-12/31/92 $ 87,373 $ 6,909 $ 94,282 $ 95,235 $ 189,517

1/1-12/31/93 ( 106,557) 29,040 ( 77,517) 205,451 127,934

1/1-12/31/94 ( 935,704) 130,042 ( 805,662) 210,664 ( 594,998)

1/1-12/31/95 ( 313,924) 220,600 ( 93,324) ( 426,071) ( 519,395)

1/1-12/31/96 ( 1,053,854) 486,608 ( 567,246) ( 31,739) ( 598,985)

1/1-12/31/97 ( 1,279,257) 719,969 ( 559,288) 830,314 271,026

1/1-12/31/98 ( 958,592) 685,410 ( 273,182) 1,411,998 1,138,816

1/1-12/31/99 ( 723,005) 791,911 68,906 850,505 919,411

1/1-12/31/00 ( 769,160) 182,845 ( 586,315) ( 2,419,489) ( 3,005,804)

1/1-12/31/01 ( 1,230,477) 95,663 ( 1,134,814) ( 2,359,287) ( 3,494,101)

1/1-12/31/02 ( 1,664,719) ( 296,483) ( 1,961,202) 1,729,264 ( 231,938)

1/1-12/31/03 ( 4,063,965) 796,498 ( 3,267,467) 526,140 ( 2,741,327)

1/1-12/31/04 ( 2,751,616) 494,618 ( 2,256,998) 2,562,143 305,145

1/1-12/31/05 ( 3,833,179) 271,720 ( 3,561,459) 3,548,454 ( 13,005)

1/1-12/31/06 ( 1,732,559) 574,518 ( 1,158,041) 255,134 ( 902,907)

1/1-12/31/07 1,172,810 632,060 1,804,870 ( 1,645,821) 159,049

1/1-12/31/08 ( 2,291,062) ( 265,924) ( 2,556,986) 2,502,908 ( 54,078)

1/1-12/31/09 ( 4,626,302) 495,866 ( 4,130,436) 5,593,332 1,462,896

Total ($27,073,749) $6,051,870 ($21,021,879) $13,439,135 ($7,582,744)

* From the 12/31/09 audited financial statements.

^ Includes reinsurance premiums and taxes.

# Includes assessment accounting changes.

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30

Table 11 (Continued)

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

HISTORICAL PROFITABILITY ANALYSIS

C. ESTIMATED UNDERWRITING INCOME PER $100 PAYROLL

Estimated

Funds Ultimate Estimated

Policy Audited Operating Available Incurred Underwriting

Period Premium Expenses for Claims Losses Income

10/1/92-12/31/92 $4.86 $1.49 $3.37 $2.31 $1.06

1/1-12/31/93 4.96 1.66 3.30 3.58 ( 0.28)

1/1-12/31/94 5.42 1.80 3.62 5.48 ( 1.86)

1/1-12/31/95 5.86 1.61 4.25 4.72 ( 0.47)

1/1-12/31/96 3.82 1.61 2.21 3.74 ( 1.53)

1/1-12/31/97 4.71 1.96 2.75 4.45 ( 1.70)

1/1-12/31/98 4.29 1.89 2.40 3.53 ( 1.13)

1/1-12/31/99 4.14 2.20 1.94 2.73 ( 0.79)

1/1-12/31/00 4.12 1.15 2.97 3.69 ( 0.72)

1/1-12/31/01 4.11 1.16 2.95 4.02 ( 1.07)

1/1-12/31/02 3.06 0.97 2.09 3.36 ( 1.27)

1/1-12/31/03 2.96 1.45 1.51 4.42 ( 2.91)

1/1-12/31/04 4.22 2.62 1.60 3.82 ( 2.22)

1/1-12/31/05 3.84 2.30 1.54 4.57 ( 3.03)

1/1-12/31/06 4.45 1.87 2.58 3.97 ( 1.39)

1/1-12/31/07 4.27 0.42 3.85 2.88 0.97

1/1-12/31/08 2.93 1.97 0.96 3.05 ( 2.09)

1/1-12/31/09 2.75 3.77 ( 1.02) 4.14 ( 5.16)

D. PAYROLL

Policy Audited

Period Payroll (100)

10/1/92-12/31/92 $ 82,491

1/1-12/31/93 384,998

1/1-12/31/94 501,797

1/1-12/31/95 660,003

1/1-12/31/96 692,337

1/1-12/31/97 751,062

1/1-12/31/98 846,717

1/1-12/31/99 912,311

1/1-12/31/00 1,063,491

1/1-12/31/01 1,156,011

1/1-12/31/02 1,318,890

1/1-12/31/03 1,397,725

1/1-12/31/04 1,240,049

1/1-12/31/05 1,265,487

1/1-12/31/06 1,240,949

1/1-12/31/07 1,220,161

1/1-12/31/08 1,097,655

1/1-12/31/09 894,852

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31

Figure 6

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

HISTORICAL PROFITABILITY ANALYSIS(Excluding Investment Income)

0.3

2.0

3.7

4.2

3.7

4.84.6 4.5

5.2

6.05.7

8.28.0

8.7

7.3

4.0

5.5

7.1

0.4

1.9

2.7

3.9

2.6

3.5 3.63.8

4.4

4.8

4.0 4.1

5.2

4.9

5.55.2

3.2

2.5

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

$ M

illio

ns

Policy Period

Estimated Ultimate Losses Operating Expenses Premium

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32

Figure 7

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

HISTORICAL PROFITABILITY ANALYSIS(Excluding Investment Income)

3.80

5.24

7.28

6.33

5.35

6.41

5.42

4.93 4.84

5.18

4.33

5.87

6.44

6.87

5.84

3.30

5.02

7.91

4.86 4.96

5.42

5.86

3.82

4.71

4.294.14 4.12 4.11

3.06 2.96

4.22

3.84

4.454.27

2.932.75

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

$ p

er

$100

Pay

roll

Policy Period

Estimated Ultimate Losses Operating Expenses Premium

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33

Table 12

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

LOSS RATIOS

(Losses Including ALAE Limited to Specific and Aggregate Retentions)

Permissible Combined

Incurred Estimated Loss Ratio Ratio

Paid Loss Loss Ratio Ultimate (Funds [(Losses+

Policy Ratio as as of Incurred Available/ Expenses)/

Period of 12/31/13 of 12/31/13 Loss Ratio Premium) Premium]

10/1/92-12/31/92 0.476 0.476 0.476 0.693 0.782

1/1-12/31/93 0.722 0.722 0.722 0.666 1.056

1/1-12/31/94 0.930 1.011 1.011 0.667 1.344

1/1-12/31/95 0.704 0.806 0.806 0.725 1.081

1/1-12/31/96 0.863 0.977 0.977 0.579 1.398

1/1-12/31/97 0.773 0.945 0.945 0.583 1.362

1/1-12/31/98 0.770 0.808 0.823 0.559 1.264

1/1-12/31/99 0.597 0.654 0.660 0.469 1.191

1/1-12/31/00 0.808 0.857 0.896 0.720 1.176

1/1-12/31/01 0.851 0.933 0.978 0.719 1.259

1/1-12/31/02 0.913 1.048 1.096 0.684 1.412

1/1-12/31/03 1.207 1.401 1.494 0.511 1.983

1/1-12/31/04 0.739 0.795 0.905 0.379 1.526

1/1-12/31/05 0.846 1.120 1.190 0.401 1.789

1/1-12/31/06 0.624 0.808 0.893 0.579 1.314

1/1-12/31/07 0.479 0.535 0.676 0.901 0.775

1/1-12/31/08 0.595 0.942 1.041 0.328 1.713

1/1-12/31/09 0.807 1.258 1.509 ( 0.374) 2.883

Total 0.966 0.558 1.408

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34

QUALIFICATIONS AND LIMITATIONS

The estimates contained in this report depend upon the following:

The actuarial assumptions, quantitative analysis, and professional judgment expressed in this report.

The reliability of loss experience to serve as an indicator of future losses.

The completeness and accuracy of data provided by NCAComp.

The completeness and accuracy of the discussion of LTCRMG’s excess insurance expressed in this report.

While estimates are shown for each year, the actual losses incurred for a particular year may be

lower or higher than the amounts shown. However, the amount shown for the total of all years is

expected to be reasonable.

The information used in this report should be reviewed for its consistency and accuracy with the

internal records of LTCRMG. Material changes in any of the assumptions or information upon

which the findings are based will require a re-evaluation of the results of this report and a

possible revision of those findings.

The quantitative methodologies and actuarial factors used in this report are specifically

developed for the losses and time periods described above and may not be appropriate for any

other losses or periods. As LTCRMG’s loss experience matures and new business is written, it is

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35

important to update this analysis at least annually. Such a report should review changes in the

prior periods’ losses as well as any new information that might become available.

This report is intended for the use of LTCRMG and its auditors, service providers, and

regulators. If the report is released to any third party, it should be released in its entirety. Please

advise BYNAC if this report is distributed to any other third party.

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36

CONSULTATION

The professional opinion given in this report is based on the judgment and experience of

BYNAC. An analysis by another actuary may not arrive at the same conclusion. In the event

that another actuary is consulted regarding the findings of this report, both actuaries should make

themselves available for supplemental advice and consultation.

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37

LONG TERM CARE RISK MANAGEMENT GROUP

APPENDIX A

INCURRED LOSSES $250,000 AND GREATER

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38

Appendix A

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

INCURRED LOSSES $250,000 AND GREATER

Paid Loss Amount and ALAE Not

Policy Accident Incurred Loss and ALAE as of as of Subject toPeriod Date Status 12/31/10 7/31/11 9/30/11 10/31/11 12/31/11 12/31/12 12/31/13 12/31/13 Excess^

1/1-12/31/94 1/17/94 Open < 250,620 250,620 258,489 258,489 258,418 258,441 163,476

1/1-12/31/95 7/7/95 Open < < < < < 323,140 323,278 176,967

1/1-12/31/96 11/10/96 Open < 393,914 393,914 395,589 327,722 328,121 327,867 177,211

1/1-12/31/97 2/25/97 Open < 260,422 260,422 260,422 260,422 262,771 262,771 154,9553/25/97 Open < 409,002 409,002 409,002 409,002 409,001 409,001 140,9724/4/97 Open 277,103 552,273 552,273 552,273 552,273 555,879 426,839 279,473

277,103 1,221,697 1,221,697 1,221,697 1,221,697 1,227,651 1,098,611 575,400

1/1-12/31/98 2/6/98 N/A < 335,012 335,013 335,013 336,263 < < <

7/18/98 Open 300,000 * 978,997 983,938 983,938 983,938 985,185 746,789 438,642 4,830

8/17/98 Closed 300,000 * 436,315 436,315 436,315 436,315 346,837 309,291 309,291 3,413

600,000 1,750,324 1,755,266 1,755,266 1,756,516 1,332,022 1,056,080 747,932 8,243

1/1-12/31/99 1/5/99 Open < 423,300 423,300 423,300 425,935 425,935 566,401 242,086

10/10/99 Open 300,000 * 300,000 645,153 645,153 645,153 645,153 645,153 270,829

300,000 723,300 1,068,453 1,068,453 1,071,088 1,071,088 1,211,554 512,915

1/1-12/31/00 1/24/00 Open 301,689 371,494 427,519 614,702 619,820 802,758 802,758 482,234 7,251

1/1-12/31/01 3/7/01 Open 317,139 573,512 626,269 625,990 626,888 643,192 620,421 390,158 6,615

4/4/01 Open 345,532 1,845,398 1,957,816 1,957,330 1,957,331 1,964,658 1,966,116 522,377 2,3888/2/01 # Open 300,000 300,000 300,000 300,000 300,000 300,000 300,000 300,000

9/8/01 Open 300,000 * 532,020 538,885 538,885 538,885 545,315 545,315 198,377

11/14/01 Open 290,320 466,927 585,944 585,944 585,944 589,163 589,163 193,951

11/17/01 Open < 278,834 278,834 278,834 278,834 280,529 291,495 134,003

1,552,991 3,996,691 4,287,748 4,286,983 4,287,882 4,322,857 4,312,509 1,738,865 9,003

1/1-12/31/02 7/27/02 Open < < < < < 279,822 279,822 72,627

9/21/02 Open < < < < < < 553,637 252,520

10/9/02 N/A 284,822 < < < < < < <

10/10/02 Closed 300,442 877,250 883,250 883,250 883,250 682,303 432,372 432,372 1,189

11/8/02 Open < 353,221 353,221 353,221 353,221 < 424,194 159,681

585,264 1,230,471 1,236,471 1,236,471 1,236,471 962,125 1,690,025 917,200 1,189

^ Provided by NCAComp.

< Less than $250,000.

# Claim is 100% 15-8 as of November 2012.

* Loss is capped at $300,000 by prior TPA.

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39

Appendix A (Continued)

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

INCURRED LOSSES $250,000 AND GREATER

Paid Loss

and ALAE

Policy Accident Incurred Loss and ALAE as of as of

Period Date Status 12/31/10 7/31/11 9/30/11 10/31/11 12/31/11 12/31/12 12/31/13 12/31/13

1/1-12/31/03 1/15/03 Open < 254,555 254,555 254,555 254,555 257,785 261,958 112,576

3/2/03 N/A < 399,466 399,466 399,466 399,466 < < <

3/13/03 Open < 502,939 502,939 502,939 502,939 502,939 507,518 182,878

4/9/03 Open 300,000 * 300,000 * 303,062 1,070,828 2,792,608 2,792,455 2,801,866 359,725

5/2/03 Open < < < < < < 685,679 80,724

5/16/03 N/A < < < 340,116 309,247 309,247 < <

6/5/03 Open < 300,000 * 632,647 632,647 632,647 636,647 642,330 195,119

9/11/03 N/A 263,099 263,099 534,350 534,350 534,350 < < <

10/26/03 Open < 1,398,305 1,398,305 1,398,305 1,400,321 1,404,328 1,090,377 260,257

11/18/03 Open < < < < < < 262,064 156,549

12/18/03 Open 300,000 * 768,945 771,945 771,945 771,945 775,317 775,317 269,653

12/29/03 N/A < < < < < 300,000 < <

863,099 4,187,309 4,797,269 5,905,151 7,598,078 6,978,718 7,027,109 1,617,482

1/1-12/31/04 3/29/04 N/A < 582,874 582,874 582,874 582,874 < < <

8/13/04 Open 316,374 1,268,691 1,268,691 1,268,691 1,268,691 1,009,730 1,009,730 239,805

12/18/04 Open < < < 401,008 677,033 676,933 634,144 281,546

316,374 1,851,565 1,851,565 2,252,573 2,528,598 1,686,663 1,643,874 521,351

1/1-12/31/05 1/19/05 Open < < < 354,066 427,040 430,730 441,893 88,9053/14/05 Open < 539,777 539,777 539,777 595,541 598,127 312,717 224,1503/24/05 N/A < < 359,269 < < < < <5/11/05 N/A < < < < < 350,055 < <5/14/05 N/A < 572,590 592,944 592,944 592,944 < < <5/29/05 Open < < < < < 754,808 1,202,104 131,4636/12/05 Open < < 378,087 378,087 382,287 382,287 382,287 47,0207/28/05 Open < 723,862 723,862 723,862 723,862 850,926 433,058 429,4489/13/05 Open 267,854 500,533 480,415 480,415 480,415 480,415 480,415 131,55910/1/05 Open 290,719 400,000 1,306,893 1,306,893 1,306,893 1,311,224 1,315,519 376,378

12/19/05 N/A < 529,217 529,217 529,217 529,217 422,484 < <

558,573 3,265,979 4,910,464 4,905,261 5,038,199 5,581,056 4,567,992 1,428,924

1/1-12/31/06 2/24/06 Open < < < < < 373,534 377,238 173,947

6/12/06 Open < < < < < < 275,423 220,336

7/18/06 Open < < < < < 303,356 303,356 259,693

7/28/06 Open < 343,330 343,330 343,330 343,330 372,517 678,297 232,555

8/10/06 Open < < < < < 390,727 395,586 164,600

9/5/06 N/A < 329,124 329,124 329,124 329,124 381,253 < <

12/4/06 Open < < < < < 252,319 848,660 241,535

672,454 672,454 672,454 672,454 2,073,706 2,878,560 1,292,665

1/1-12/31/07 1/19/07 N/A < < < 383,918 426,656 439,339 < <

6/15/07 N/A < < < < < 322,165 < <

7/29/07 N/A 285,881 285,881 285,881 < < < < <

8/27/07 N/A < < 258,616 258,616 258,616 < < <

9/2/07 N/A < < < < 294,023 294,023 < <

285,881 285,881 544,497 642,534 979,295 1,055,527

1/1-12/31/08 2/12/08 Open < < 544,564 544,564 544,564 527,367 527,367 199,664

7/4/08 Open < < < 258,465 278,881 278,881 411,727 184,911

10/3/08 Open < < < < < 357,444 410,009 104,947

10/13/08 Open < < < < 269,317 277,699 339,650 133,411

544,564 803,029 1,092,762 1,441,391 1,688,753 622,932

1/1-12/31/09 2/1/09 Open < < < < < < 337,224 246,181

2/19/09 Open < < 258,709 288,521 338,059 338,059 399,839 253,643

4/7/09 Open < < < < 326,821 431,721 444,380 120,279

12/21/09 Open < < < < 522,548 374,888 344,876 91,995

258,709 288,521 1,187,428 1,144,668 1,526,320 712,098

^ Provided by NCAComp.

< Less than $250,000.

* Loss is capped at $300,000 by prior TPA.

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40

LONG TERM CARE RISK MANAGEMENT GROUP

APPENDIX B

SUPPORT EXHIBITS

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41

Appendix B, Exhibit I

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED ULTIMATE CLAIM COUNT AND AVERAGE SEVERITY(Unlimited Losses Including ALAE)

(Including Claims Closed without Payment)

A. ESTIMATED ULTIMATE CLAIMS

Age of IndustryReported Policy Claim Count Estimated

Policy Claims as of Period in Development UltimatePeriod of 12/31/13 Months Factor Claims

10/1/92-12/31/92 17 259.5 1.000 171/1-12/31/93 39 252.0 1.000 391/1-12/31/94 54 240.0 1.000 541/1-12/31/95 61 228.0 1.000 611/1-12/31/96 69 216.0 1.000 691/1-12/31/97 80 204.0 1.000 801/1-12/31/98 105 192.0 1.000 1051/1-12/31/99 141 180.0 1.000 1411/1-12/31/00 418 168.0 1.000 4181/1-12/31/01 467 156.0 1.000 467

1/1-12/31/02 563 144.0 1.000 5631/1-12/31/03 529 132.0 1.000 5291/1-12/31/04 491 120.0 1.000 4911/1-12/31/05 401 108.0 1.000 4011/1-12/31/06 401 96.0 1.000 4011/1-12/31/07 292 84.0 1.001 2921/1-12/31/08 203 72.0 1.002 2031/1-12/31/09 158 60.0 1.003 158

Total 4,489 4,489

B. ESTIMATED ULTIMATE AVERAGE SEVERITY

Estimated EstimatedUltimate Estimated Ultimate

Policy Incurred Ultimate AveragePeriod Losses Claims Severity

10/1/92-12/31/92 $ 190,898 17 $ 11,2291/1-12/31/93 1,378,511 39 35,3461/1-12/31/94 2,752,128 54 50,9651/1-12/31/95 3,116,036 61 51,0831/1-12/31/96 2,586,226 69 37,4821/1-12/31/97 3,342,404 80 41,7801/1-12/31/98 3,441,935 105 32,7801/1-12/31/99 3,112,023 141 22,0711/1-12/31/00 4,442,703 418 10,6281/1-12/31/01 7,280,311 467 15,5901/1-12/31/02 4,961,918 563 8,8131/1-12/31/03 11,186,185 529 21,1461/1-12/31/04 5,695,610 491 11,6001/1-12/31/05 7,769,477 401 19,3751/1-12/31/06 5,735,365 401 14,3031/1-12/31/07 3,519,740 292 12,0541/1-12/31/08 3,509,614 203 17,2891/1-12/31/09 3,761,297 158 23,806

Total $77,782,381 4,489

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42

Appendix B, Exhibit II

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

CLAIM COUNT SUMMARY(Including Claims Closed without Payment)

Estimated Ultimate Reported Closed Open IBNR

Policy Claim Claims as Claims as Claims as Claims asPeriod Count of 12/31/13 of 12/31/13 of 12/31/13 of 12/31/13

10/1/92-12/31/92 17 17 17 0 01/1-12/31/93 39 39 36 3 01/1-12/31/94 54 54 48 6 01/1-12/31/95 61 61 56 5 01/1-12/31/96 69 69 62 7 01/1-12/31/97 80 80 73 7 01/1-12/31/98 105 105 99 6 01/1-12/31/99 141 141 134 7 01/1-12/31/00 418 418 404 14 01/1-12/31/01 467 467 452 15 0

1/1-12/31/02 563 563 548 15 01/1-12/31/03 529 529 511 18 01/1-12/31/04 491 491 478 13 01/1-12/31/05 401 401 381 20 01/1-12/31/06 401 401 381 20 01/1-12/31/07 292 292 282 10 01/1-12/31/08 203 203 193 10 01/1-12/31/09 158 158 144 14 0

Total 4,489 4,489 4,299 190 0

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43

LONG TERM CARE RISK MANAGEMENT GROUP

APPENDIX C

ESTIMATED UNLIMITED AND ALAE RESERVES

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44

Appendix C, Exhibit I

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

SELECTED ESTIMATED ULTIMATE INCURRED LOSSES(Unlimited Losses Including ALAE)

Limited SelectedEstimated Limited Unlimited EstimatedUltimate Incurred Incurred Ultimate

Policy Incurred Losses as Losses as IncurredPeriod Losses of 12/31/13 of 12/31/13 Losses*

10/1/92-12/31/92 $ 190,898 $ 190,898 $ 190,898 $ 190,8981/1-12/31/93 1,378,511 1,378,511 1,378,511 1,378,5111/1-12/31/94 2,752,128 2,752,128 2,752,128 2,752,1281/1-12/31/95 3,116,036 3,116,036 3,116,036 3,116,0361/1-12/31/96 2,586,226 2,586,226 2,586,226 2,586,2261/1-12/31/97 3,342,404 3,342,404 3,342,404 3,342,4041/1-12/31/98 2,986,180 2,934,296 3,382,133 3,441,9351/1-12/31/99 2,494,409 2,469,932 3,081,486 3,112,0231/1-12/31/00 3,924,884 3,755,766 4,251,273 4,442,7031/1-12/31/01 4,647,245 4,433,588 6,945,599 7,280,3111/1-12/31/02 4,429,534 4,235,099 4,744,114 4,961,9181/1-12/31/03 6,176,472 5,794,567 10,494,518 11,186,1851/1-12/31/04 4,734,029 4,154,535 4,998,409 5,695,6101/1-12/31/05 5,780,929 5,442,921 7,315,200 7,769,4771/1-12/31/06 4,931,874 4,462,102 5,189,058 5,735,3651/1-12/31/07 3,519,740 2,787,206 2,787,206 3,519,7401/1-12/31/08 3,344,977 3,029,357 3,178,459 3,509,6141/1-12/31/09 3,708,035 3,089,721 3,134,101 3,761,297

Total $ 64,044,511 $ 59,955,293 $ 72,867,759 $ 77,782,381

* Estimated to equal the limited estimated ultimate incurred losses dividedby the limited incurred losses multiplied by the unlimited incurred losses.

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45

Appendix C, Exhibit II

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED REQUIRED RESERVES AS OF 12/31/13(Unlimited Losses Including ALAE)

A. LOSS SUMMARY

EstimatedUltimate Incurred Paid

Policy Incurred Losses as Losses asPeriod Losses of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 190,898 $ 190,898 $ 190,8981/1-12/31/93 1,378,511 1,378,511 1,378,5111/1-12/31/94 2,752,128 2,752,128 2,530,3621/1-12/31/95 3,116,036 3,116,036 2,721,9991/1-12/31/96 2,586,226 2,586,226 2,283,4161/1-12/31/97 3,342,404 3,342,404 2,732,4171/1-12/31/98 3,441,935 3,382,133 2,933,3821/1-12/31/99 3,112,023 3,081,486 2,256,0411/1-12/31/00 4,442,703 4,251,273 3,714,4591/1-12/31/01 7,280,311 6,945,599 4,347,3691/1-12/31/02 4,961,918 4,744,114 3,817,8461/1-12/31/03 11,186,185 10,494,518 5,048,7391/1-12/31/04 5,695,610 4,998,409 3,863,3541/1-12/31/05 7,769,477 7,315,200 4,140,5431/1-12/31/06 5,735,365 5,189,058 3,442,5191/1-12/31/07 3,519,740 2,787,206 2,495,6081/1-12/31/08 3,509,614 3,178,459 1,913,5391/1-12/31/09 3,761,297 3,134,101 1,983,822

Total $ 77,782,381 $ 72,867,759 $51,794,824

B. ESTIMATED REQUIRED RESERVES AS OF 12/31/13

EstimatedCase Estimated Required

Policy Reserves as IBNR as of Reserves asPeriod of 12/31/13 of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 0 $ 0 $ 01/1-12/31/93 0 0 01/1-12/31/94 221,766 0 221,7661/1-12/31/95 394,037 0 394,0371/1-12/31/96 302,810 0 302,8101/1-12/31/97 609,987 0 609,9871/1-12/31/98 448,751 59,802 508,5531/1-12/31/99 825,445 30,537 855,9821/1-12/31/00 536,814 191,430 728,2441/1-12/31/01 2,598,230 334,712 2,932,9421/1-12/31/02 926,268 217,804 1,144,0721/1-12/31/03 5,445,779 691,667 6,137,4461/1-12/31/04 1,135,055 697,201 1,832,2561/1-12/31/05 3,174,657 454,277 3,628,9341/1-12/31/06 1,746,539 546,307 2,292,8461/1-12/31/07 291,598 732,534 1,024,1321/1-12/31/08 1,264,920 331,155 1,596,0751/1-12/31/09 1,150,279 627,196 1,777,475

Total $21,072,935 $4,914,622 $25,987,557

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46

Appendix C, Exhibit III

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED RECOVERABLE REQUIRED RESERVES AS OF 12/31/13

A. LOSS SUMMARY

EstimatedUltimate Incurred Paid

Policy Incurred Losses as Losses asPeriod Losses of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 0 $ 0 $ 01/1-12/31/93 0 0 01/1-12/31/94 0 0 01/1-12/31/95 0 0 01/1-12/31/96 0 0 01/1-12/31/97 0 0 01/1-12/31/98 455,755 447,837 139,6891/1-12/31/99 617,614 611,554 01/1-12/31/00 517,819 495,507 174,9831/1-12/31/01 2,633,066 2,512,011 303,5321/1-12/31/02 532,384 509,015 131,1841/1-12/31/03 5,009,713 4,699,951 56,5891/1-12/31/04 961,581 843,874 01/1-12/31/05 1,988,548 1,872,279 28,7391/1-12/31/06 803,491 726,956 01/1-12/31/07 0 0 01/1-12/31/08 164,637 149,102 01/1-12/31/09 53,262 44,380 0

Total $ 13,737,870 $ 12,912,466 $ 834,716

B. ESTIMATED RECOVERABLE REQUIRED RESERVES AS OF 12/31/13

EstimatedCase Estimated Required

Policy Reserves as IBNR as of Reserves asPeriod of 12/31/13 of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 0 $ 0 $ 01/1-12/31/93 0 0 01/1-12/31/94 0 0 01/1-12/31/95 0 0 01/1-12/31/96 0 0 01/1-12/31/97 0 0 01/1-12/31/98 308,147 7,918 316,0661/1-12/31/99 611,554 6,060 617,6141/1-12/31/00 320,524 22,312 342,8361/1-12/31/01 2,208,479 121,055 2,329,5341/1-12/31/02 377,831 23,369 401,2001/1-12/31/03 4,643,362 309,762 4,953,1241/1-12/31/04 843,874 117,707 961,5811/1-12/31/05 1,843,540 116,269 1,959,8091/1-12/31/06 726,956 76,535 803,4911/1-12/31/07 0 0 01/1-12/31/08 149,102 15,535 164,6371/1-12/31/09 44,380 8,882 53,262

Total $12,077,750 $ 825,404 $12,903,154

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47

Appendix C, Exhibit IV

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED SPECIFIC RECOVERABLE REQUIRED RESERVES AS OF 12/31/13

A. LOSS SUMMARY

EstimatedUltimate Incurred Paid

Policy Incurred Losses as Losses asPeriod Losses of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 0 $ 0 $ 01/1-12/31/93 0 0 01/1-12/31/94 0 0 01/1-12/31/95 0 0 01/1-12/31/96 0 0 01/1-12/31/97 0 0 01/1-12/31/98 455,755 447,837 139,6891/1-12/31/99 617,614 611,554 01/1-12/31/00 517,819 495,507 174,9831/1-12/31/01 2,633,066 2,512,011 303,5321/1-12/31/02 532,384 509,015 131,1841/1-12/31/03 5,009,713 4,699,951 56,5891/1-12/31/04 961,581 843,874 01/1-12/31/05 1,988,548 1,872,279 28,7391/1-12/31/06 803,491 726,956 01/1-12/31/07 0 0 01/1-12/31/08 164,637 149,102 01/1-12/31/09 53,262 44,380 0

Total $ 13,737,870 $ 12,912,466 $ 834,716

B. ESTIMATED SPECIFIC RECOVERABLE REQUIRED RESERVES AS OF 12/31/13

EstimatedCase Estimated Required

Policy Reserves as IBNR as of Reserves asPeriod of 12/31/13 of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 0 $ 0 $ 01/1-12/31/93 0 0 01/1-12/31/94 0 0 01/1-12/31/95 0 0 01/1-12/31/96 0 0 01/1-12/31/97 0 0 01/1-12/31/98 308,147 7,918 316,0661/1-12/31/99 611,554 6,060 617,6141/1-12/31/00 320,524 22,312 342,8361/1-12/31/01 2,208,479 121,055 2,329,5341/1-12/31/02 377,831 23,369 401,2001/1-12/31/03 4,643,362 309,762 4,953,1241/1-12/31/04 843,874 117,707 961,5811/1-12/31/05 1,843,540 116,269 1,959,8091/1-12/31/06 726,956 76,535 803,4911/1-12/31/07 0 0 01/1-12/31/08 149,102 15,535 164,6371/1-12/31/09 44,380 8,882 53,262

Total $12,077,750 $ 825,404 $12,903,154

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48

Appendix C, Exhibit V

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED AGGREGATE RECOVERABLE REQUIRED RESERVES AS OF 12/31/13

A. LOSS SUMMARY

EstimatedUltimate Incurred Paid

Policy Incurred Losses as Losses asPeriod Losses of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 0 $ 0 $ 01/1-12/31/93 0 0 01/1-12/31/94 0 0 01/1-12/31/95 0 0 01/1-12/31/96 0 0 01/1-12/31/97 0 0 01/1-12/31/98 0 0 01/1-12/31/99 0 0 01/1-12/31/00 0 0 01/1-12/31/01 0 0 01/1-12/31/02 0 0 01/1-12/31/03 0 0 01/1-12/31/04 0 0 01/1-12/31/05 0 0 01/1-12/31/06 0 0 01/1-12/31/07 0 0 01/1-12/31/08 0 0 01/1-12/31/09 0 0 0

Total $ 0 $ 0 $ 0

B. ESTIMATED AGGREGATE RECOVERABLE REQUIRED RESERVES AS OF 12/31/13

EstimatedCase Estimated Required

Policy Reserves as IBNR as of Reserves asPeriod of 12/31/13 of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 0 $ 0 $ 01/1-12/31/93 0 0 01/1-12/31/94 0 0 01/1-12/31/95 0 0 01/1-12/31/96 0 0 01/1-12/31/97 0 0 01/1-12/31/98 0 0 01/1-12/31/99 0 0 01/1-12/31/00 0 0 01/1-12/31/01 0 0 01/1-12/31/02 0 0 01/1-12/31/03 0 0 01/1-12/31/04 0 0 01/1-12/31/05 0 0 01/1-12/31/06 0 0 01/1-12/31/07 0 0 01/1-12/31/08 0 0 01/1-12/31/09 0 0 0

Total $ 0 $ 0 $ 0

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49

Appendix C, Exhibit VI

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED MEDICAL, INDEMNITY, AND ALAE RESERVES(Losses Including ALAE Limited to Specific and Aggregate Retentions)

LimitedEstimated Estimated Estimated EstimatedRequired Medical Indemnity ALAE

Policy Reserves as Reserves# Reserves# Reserves#Period of 12/31/13 41% 52% 7%

10/1/92-12/31/92 $ 0 $ 0 $ 0 $ 01/1-12/31/93 0 0 0 01/1-12/31/94 221,766 90,924 115,318 15,5241/1-12/31/95 394,037 161,555 204,899 27,5831/1-12/31/96 302,810 124,152 157,461 21,1971/1-12/31/97 609,987 250,095 317,193 42,6991/1-12/31/98 192,487 78,920 100,093 13,4741/1-12/31/99 238,368 97,731 123,951 16,6861/1-12/31/00 385,408 158,017 200,412 26,9791/1-12/31/01 603,408 247,397 313,772 42,2391/1-12/31/02 742,872 304,577 386,293 52,0011/1-12/31/03 1,184,322 485,572 615,848 82,9031/1-12/31/04 870,675 356,977 452,751 60,9471/1-12/31/05 1,669,125 684,341 867,945 116,8391/1-12/31/06 1,489,355 610,636 774,465 104,2551/1-12/31/07 1,024,132 419,894 532,549 71,6891/1-12/31/08 1,431,438 586,890 744,348 100,2011/1-12/31/09 1,724,213 706,927 896,591 120,695

Total $13,084,403 $5,364,605 $ 6,803,889 $ 915,911

# Selected judgmentally.

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50

LONG TERM CARE RISK MANAGEMENT GROUP

APPENDIX D

ESTIMATED REQUIRED RESERVES AS OF 12/31/13 - HIGH

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51

Appendix D, Exhibit I

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

SELECTED ESTIMATED ULTIMATE INCURRED LOSSES - HIGH(Losses Including ALAE Limited to Specific Retentions)

Selected SelectedEstimated Estimated

Incurred Incurred Paid Ultimate UltimatePolicy Loss Paid Loss Bornhuettter- Bornhuettter- Incurred Aggregate Limited toPeriod Development Development Ferguson Ferguson Losses* Retention Aggregate

10/1/92-12/31/92 $ 190,898 $ 190,898 $ 190,898 $ 190,898 $ 190,898 $ 190,8981/1-12/31/93 1,378,511 1,378,511 1,378,511 1,378,511 1,378,511 1,378,5111/1-12/31/94 2,752,128 2,530,362 2,752,128 2,530,362 2,752,128 2,752,1281/1-12/31/95 3,116,036 2,770,995 3,116,036 2,777,938 3,116,036 3,116,0361/1-12/31/96 2,586,226 2,372,469 2,586,226 2,380,176 2,599,157 2,599,1571/1-12/31/97 3,342,404 2,901,827 3,342,404 2,930,371 3,375,828 3,375,8281/1-12/31/98 2,934,296 3,039,537 2,934,296 3,036,591 3,030,973 3,030,9731/1-12/31/99 2,469,932 2,519,998 2,469,932 2,517,774 2,544,297 2,544,2971/1-12/31/00 3,779,956 4,070,398 3,784,069 4,065,112 4,023,006 $ 4,721,901 4,023,0061/1-12/31/01 4,482,092 4,812,166 4,503,642 4,791,081 4,786,662 5,132,689 4,786,6621/1-12/31/02 4,318,477 4,541,968 4,341,053 4,516,637 4,584,568 5,855,870 4,584,5681/1-12/31/03 5,938,371 6,394,944 6,013,091 6,359,484 6,423,531 6,205,899 6,205,899 ^1/1-12/31/04 4,325,616 5,145,988 4,392,403 5,072,110 4,947,060 5,605,343 4,947,0601/1-12/31/05 5,708,026 5,641,395 5,903,709 5,870,587 6,069,975 6,260,156 6,069,9751/1-12/31/06 4,861,271 4,960,670 4,947,478 4,958,079 5,203,127 6,192,337 5,203,1271/1-12/31/07 3,199,712 3,810,793 3,273,171 3,795,283 3,730,924 6,088,601 3,730,9241/1-12/31/08 3,384,252 3,184,129 3,568,962 3,242,567 3,562,401 5,795,034 3,562,4011/1-12/31/09 3,756,771 3,664,119 3,796,717 3,614,532 3,967,597 4,488,193 3,967,597

Total $62,524,975 $63,931,167 $63,294,726 $64,028,093 $66,286,679 $56,346,023 $66,069,047

* Selected ranges of 0.5% through 7.0% increasing 0.5%each year for 1/1-12/31/96 through 1/1-12/31/09, respectively.

^ Limited by the aggregate retention.

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52

Appendix D, Exhibit II

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED REQUIRED RESERVES AS OF 12/31/13 - HIGH(Losses Including ALAE Limited to Specific and Aggregate Retentions)

A. LOSS SUMMARY

EstimatedUltimate Incurred Paid

Policy Incurred Losses as Losses asPeriod Losses of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 190,898 $ 190,898 $ 190,8981/1-12/31/93 1,378,511 1,378,511 1,378,5111/1-12/31/94 2,752,128 2,752,128 2,530,3621/1-12/31/95 3,116,036 3,116,036 2,721,9991/1-12/31/96 2,599,157 2,586,226 2,283,4161/1-12/31/97 3,375,828 3,342,404 2,732,4171/1-12/31/98 3,030,973 2,934,296 2,793,6931/1-12/31/99 2,544,297 2,469,932 2,256,0411/1-12/31/00 4,023,006 3,755,766 3,539,4761/1-12/31/01 4,786,662 4,433,588 4,043,8371/1-12/31/02 4,584,568 4,235,099 3,686,6621/1-12/31/03 6,205,899 5,794,567 4,992,1501/1-12/31/04 4,947,060 4,154,535 3,863,3541/1-12/31/05 6,069,975 5,442,921 4,111,8041/1-12/31/06 5,203,127 4,462,102 3,442,5191/1-12/31/07 3,730,924 2,787,206 2,495,6081/1-12/31/08 3,562,401 3,029,357 1,913,5391/1-12/31/09 3,967,597 3,089,721 1,983,822

Total $66,069,047 $59,955,293 $50,960,108

B. ESTIMATED REQUIRED RESERVES AS OF 12/31/13 - HIGH

EstimatedCase Estimated Required

Policy Reserves as IBNR as Reserves asPeriod of 12/31/13 of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 0 $ 0 $ 01/1-12/31/93 0 0 01/1-12/31/94 221,766 0 221,7661/1-12/31/95 394,037 0 394,0371/1-12/31/96 302,810 12,931 315,7411/1-12/31/97 609,987 33,424 643,4111/1-12/31/98 140,604 96,677 237,2801/1-12/31/99 213,891 74,365 288,2561/1-12/31/00 216,290 267,240 483,5301/1-12/31/01 389,751 353,074 742,8251/1-12/31/02 548,437 349,469 897,9061/1-12/31/03 802,417 411,332 1,213,7491/1-12/31/04 291,181 792,525 1,083,7061/1-12/31/05 1,331,117 627,054 1,958,1711/1-12/31/06 1,019,583 741,025 1,760,6081/1-12/31/07 291,598 943,718 1,235,3161/1-12/31/08 1,115,818 533,044 1,648,8621/1-12/31/09 1,105,899 877,876 1,983,775

Total $ 8,995,185 $ 6,113,754 $15,108,939

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53

Appendix D, Exhibit III

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

SELECTED ESTIMATED ULTIMATE INCURRED LOSSES - HIGH(Unlimited Losses Including ALAE)

Limited SelectedEstimated Limited Unlimited EstimatedUltimate Incurred Incurred Ultimate

Policy Incurred Losses as Losses as IncurredPeriod Losses of 12/31/13 of 12/31/13 Losses*

10/1/92-12/31/92 $ 190,898 $ 190,898 $ 190,898 $ 190,8981/1-12/31/93 1,378,511 1,378,511 1,378,511 1,378,5111/1-12/31/94 2,752,128 2,752,128 2,752,128 2,752,1281/1-12/31/95 3,116,036 3,116,036 3,116,036 3,116,0361/1-12/31/96 2,599,157 2,586,226 2,586,226 2,599,1571/1-12/31/97 3,375,828 3,342,404 3,342,404 3,375,8281/1-12/31/98 3,030,973 2,934,296 3,382,133 3,493,5651/1-12/31/99 2,544,297 2,469,932 3,081,486 3,174,2641/1-12/31/00 4,023,006 3,755,766 4,251,273 4,553,7701/1-12/31/01 4,786,662 4,433,588 6,945,599 7,498,7201/1-12/31/02 4,584,568 4,235,099 4,744,114 5,135,5851/1-12/31/03 6,423,531 5,794,567 10,494,518 11,633,6331/1-12/31/04 4,947,060 4,154,535 4,998,409 5,951,9121/1-12/31/05 6,069,975 5,442,921 7,315,200 8,157,9501/1-12/31/06 5,203,127 4,462,102 5,189,058 6,050,8101/1-12/31/07 3,730,924 2,787,206 2,787,206 3,730,9241/1-12/31/08 3,562,401 3,029,357 3,178,459 3,737,7391/1-12/31/09 3,967,597 3,089,721 3,134,101 4,024,587

Total $ 66,286,679 $ 59,955,293 $ 72,867,759 $ 80,556,017

* Estimated to equal the limited estimated ultimate incurred losses dividedby the limited incurred losses multiplied by the unlimited incurred losses.

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54

Appendix D, Exhibit IV

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED REQUIRED RESERVES AS OF 12/31/12 - HIGH(Unlimited Losses Including ALAE)

A. LOSS SUMMARY

EstimatedUltimate Incurred Paid

Policy Incurred Losses as Losses asPeriod Losses of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 190,898 $ 190,898 $ 190,8981/1-12/31/93 1,378,511 1,378,511 1,378,5111/1-12/31/94 2,752,128 2,752,128 2,530,3621/1-12/31/95 3,116,036 3,116,036 2,721,9991/1-12/31/96 2,599,157 2,586,226 2,283,4161/1-12/31/97 3,375,828 3,342,404 2,732,4171/1-12/31/98 3,493,565 3,382,133 2,933,3821/1-12/31/99 3,174,264 3,081,486 2,256,0411/1-12/31/00 4,553,770 4,251,273 3,714,4591/1-12/31/01 7,498,720 6,945,599 4,347,3691/1-12/31/02 5,135,585 4,744,114 3,817,8461/1-12/31/03 11,633,633 10,494,518 5,048,7391/1-12/31/04 5,951,912 4,998,409 3,863,3541/1-12/31/05 8,157,950 7,315,200 4,140,5431/1-12/31/06 6,050,810 5,189,058 3,442,5191/1-12/31/07 3,730,924 2,787,206 2,495,6081/1-12/31/08 3,737,739 3,178,459 1,913,5391/1-12/31/09 4,024,587 3,134,101 1,983,822

Total $ 80,556,017 $ 72,867,759 $51,794,824

B. ESTIMATED REQUIRED RESERVES AS OF 12/31/12 - HIGH

EstimatedCase Estimated Required

Policy Reserves as IBNR as of Reserves asPeriod of 12/31/13 of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 0 $ 0 $ 01/1-12/31/93 0 0 01/1-12/31/94 221,766 0 221,7661/1-12/31/95 394,037 0 394,0371/1-12/31/96 302,810 12,931 315,7411/1-12/31/97 609,987 33,424 643,4111/1-12/31/98 448,751 111,432 560,1831/1-12/31/99 825,445 92,778 918,2231/1-12/31/00 536,814 302,497 839,3111/1-12/31/01 2,598,230 553,121 3,151,3511/1-12/31/02 926,268 391,471 1,317,7391/1-12/31/03 5,445,779 1,139,115 6,584,8941/1-12/31/04 1,135,055 953,503 2,088,5581/1-12/31/05 3,174,657 842,750 4,017,4071/1-12/31/06 1,746,539 861,752 2,608,2911/1-12/31/07 291,598 943,718 1,235,3161/1-12/31/08 1,264,920 559,280 1,824,2001/1-12/31/09 1,150,279 890,486 2,040,765

Total $21,072,935 $7,688,258 $28,761,193

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55

Appendix D, Exhibit V

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED RECOVERABLE REQUIRED RESERVES AS OF 12/31/13 - HIGH

A. LOSS SUMMARY

EstimatedUltimate Incurred Paid

Policy Incurred Losses as Losses asPeriod Losses of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 0 $ 0 $ 01/1-12/31/93 0 0 01/1-12/31/94 0 0 01/1-12/31/95 0 0 01/1-12/31/96 0 0 01/1-12/31/97 0 0 01/1-12/31/98 462,592 447,837 139,6891/1-12/31/99 629,967 611,554 01/1-12/31/00 530,764 495,507 174,9831/1-12/31/01 2,712,058 2,512,011 303,5321/1-12/31/02 551,017 509,015 131,1841/1-12/31/03 5,427,734 4,699,951 56,5891/1-12/31/04 1,004,852 843,874 01/1-12/31/05 2,087,975 1,872,279 28,7391/1-12/31/06 847,683 726,956 01/1-12/31/07 0 0 01/1-12/31/08 175,338 149,102 01/1-12/31/09 56,990 44,380 0

Total $ 14,486,970 $ 12,912,466 $ 834,716

B. ESTIMATED RECOVERABLE REQUIRED RESERVES AS OF 12/31/13 - HIGH

EstimatedCase Estimated Required

Policy Reserves as IBNR as of Reserves asPeriod of 12/31/13 of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 0 $ 0 $ 01/1-12/31/93 0 0 01/1-12/31/94 0 0 01/1-12/31/95 0 0 01/1-12/31/96 0 0 01/1-12/31/97 0 0 01/1-12/31/98 308,147 14,755 322,9031/1-12/31/99 611,554 18,413 629,9671/1-12/31/00 320,524 35,257 355,7811/1-12/31/01 2,208,479 200,047 2,408,5261/1-12/31/02 377,831 42,002 419,8331/1-12/31/03 4,643,362 727,783 5,371,1451/1-12/31/04 843,874 160,978 1,004,8521/1-12/31/05 1,843,540 215,696 2,059,2361/1-12/31/06 726,956 120,727 847,6831/1-12/31/07 0 0 01/1-12/31/08 149,102 26,236 175,3381/1-12/31/09 44,380 12,610 56,990

Total $12,077,750 $1,574,504 $13,652,254

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56

Appendix D, Exhibit VI

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED SPECIFIC RECOVERABLE REQUIRED RESERVES AS OF 12/31/13 - HIGH

A. LOSS SUMMARY

EstimatedUltimate Incurred Paid

Policy Incurred Losses as Losses asPeriod Losses of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 0 $ 0 $ 01/1-12/31/93 0 0 01/1-12/31/94 0 0 01/1-12/31/95 0 0 01/1-12/31/96 0 0 01/1-12/31/97 0 0 01/1-12/31/98 462,592 447,837 139,6891/1-12/31/99 629,967 611,554 01/1-12/31/00 530,764 495,507 174,9831/1-12/31/01 2,712,058 2,512,011 303,5321/1-12/31/02 551,017 509,015 131,1841/1-12/31/03 5,210,102 4,699,951 56,5891/1-12/31/04 1,004,852 843,874 01/1-12/31/05 2,087,975 1,872,279 28,7391/1-12/31/06 847,683 726,956 01/1-12/31/07 0 0 01/1-12/31/08 175,338 149,102 01/1-12/31/09 56,990 44,380 0

Total $ 14,269,338 $ 12,912,466 $ 834,716

B. ESTIMATED SPECIFIC RECOVERABLE REQUIRED RESERVES AS OF 12/31/13 - HIGH

EstimatedCase Estimated Required

Policy Reserves as IBNR as of Reserves asPeriod of 12/31/13 of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 0 $ 0 $ 01/1-12/31/93 0 0 01/1-12/31/94 0 0 01/1-12/31/95 0 0 01/1-12/31/96 0 0 01/1-12/31/97 0 0 01/1-12/31/98 308,147 14,755 322,9031/1-12/31/99 611,554 18,413 629,9671/1-12/31/00 320,524 35,257 355,7811/1-12/31/01 2,208,479 200,047 2,408,5261/1-12/31/02 377,831 42,002 419,8331/1-12/31/03 4,643,362 510,151 5,153,5131/1-12/31/04 843,874 160,978 1,004,8521/1-12/31/05 1,843,540 215,696 2,059,2361/1-12/31/06 726,956 120,727 847,6831/1-12/31/07 0 0 01/1-12/31/08 149,102 26,236 175,3381/1-12/31/09 44,380 12,610 56,990

Total $12,077,750 $1,356,872 $13,434,622

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57

Appendix D, Exhibit VII

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED AGGREGATE RECOVERABLE REQUIRED RESERVES AS OF 12/31/13 - HIGH

A. LOSS SUMMARY

EstimatedUltimate Incurred Paid

Policy Incurred Losses as Losses asPeriod Losses of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 0 $ 0 $ 01/1-12/31/93 0 0 01/1-12/31/94 0 0 01/1-12/31/95 0 0 01/1-12/31/96 0 0 01/1-12/31/97 0 0 01/1-12/31/98 0 0 01/1-12/31/99 0 0 01/1-12/31/00 0 0 01/1-12/31/01 0 0 01/1-12/31/02 0 0 01/1-12/31/03 217,632 0 01/1-12/31/04 0 0 01/1-12/31/05 0 0 01/1-12/31/06 0 0 01/1-12/31/07 0 0 01/1-12/31/08 0 0 01/1-12/31/09 0 0 0

Total $ 217,632 $ 0 $ 0

B. ESTIMATED AGGREGATE RECOVERABLE REQUIRED RESERVES AS OF 12/31/13 - HIGH

EstimatedCase Estimated Required

Policy Reserves as IBNR as of Reserves asPeriod of 12/31/13 of 12/31/13 of 12/31/13

10/1/92-12/31/92 $ 0 $ 0 $ 01/1-12/31/93 0 0 01/1-12/31/94 0 0 01/1-12/31/95 0 0 01/1-12/31/96 0 0 01/1-12/31/97 0 0 01/1-12/31/98 0 0 01/1-12/31/99 0 0 01/1-12/31/00 0 0 01/1-12/31/01 0 0 01/1-12/31/02 0 0 01/1-12/31/03 0 217,632 217,6321/1-12/31/04 0 0 01/1-12/31/05 0 0 01/1-12/31/06 0 0 01/1-12/31/07 0 0 01/1-12/31/08 0 0 01/1-12/31/09 0 0 0

Total $ 0 $ 217,632 $ 217,632

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58

Appendix D, Exhibit VIII

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

ESTIMATED MEDICAL, INDEMNITY, AND ALAE RESERVES - HIGH(Losses Including ALAE Limited to Specific and Aggregate Retentions)

LimitedEstimated Estimated Estimated EstimatedRequired Medical Indemnity ALAE

Policy Reserves as Reserves# Reserves# Reserves#Period of 12/31/13 41% 52% 7%

10/1/92-12/31/92 $ 0 $ 0 $ 0 $ 01/1-12/31/93 0 0 0 01/1-12/31/94 221,766 90,924 115,318 15,5241/1-12/31/95 394,037 161,555 204,899 27,5831/1-12/31/96 315,741 129,454 164,185 22,1021/1-12/31/97 643,411 263,799 334,574 45,0391/1-12/31/98 237,280 97,285 123,386 16,6101/1-12/31/99 288,256 118,185 149,893 20,1781/1-12/31/00 483,530 198,247 251,436 33,8471/1-12/31/01 742,825 304,558 386,269 51,9981/1-12/31/02 897,906 368,141 466,911 62,8531/1-12/31/03 1,213,749 497,637 631,150 84,9621/1-12/31/04 1,083,706 444,319 563,527 75,8591/1-12/31/05 1,958,171 802,850 1,018,249 137,0721/1-12/31/06 1,760,608 721,849 915,516 123,2431/1-12/31/07 1,235,316 506,480 642,364 86,4721/1-12/31/08 1,648,862 676,033 857,408 115,4201/1-12/31/09 1,983,775 813,348 1,031,563 138,864

Total $15,108,939 $6,194,664 $ 7,856,648 $1,057,626

# Selected judgmentally.

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LONG TERM CARE RISK MANAGEMENT GROUP

APPENDIX E

COMPARISON TO PRIOR REPORTS

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Appendix E

LONG TERM CARE RISK MANAGEMENT GROUP

WORKERS COMPENSATION

COMPARISON OF ESTIMATED ULTIMATE INCURRED LOSSES TO PRIOR REPORTS

(Losses Including ALAE Limited to Specific and Aggregate Retentions)

A. ESTIMATED ULTIMATE INCURRED LOSSES BASED ON LOSSES VALUED AS OF

Policy

Period 12/31/98^ 12/31/99^ 12/31/00^ 12/31/01^ 12/31/02* 12/31/03* 12/31/04* 12/31/05* 12/31/06* 12/31/07* 12/31/08* 12/31/09* 12/31/10 12/31/11 12/31/12 12/31/13

10/1/92-12/31/92 278,714 282,000 231,996 237,000 219,000 191,000 191,000 191,000 191,000 191,000 191,000 190,898 190,898 190,898 190,898 190,898

1/1-12/31/93 1,937,564 1,887,000 1,793,054 1,621,500 1,600,000 1,565,000 1,440,000 1,452,000 1,392,000 1,400,000 1,393,000 1,398,500 1,386,209 1,386,460 1,377,939 1,378,511

1/1-12/31/94 3,297,323 3,121,000 2,917,637 2,838,000 2,825,000 2,575,000 2,538,000 2,475,000 2,450,000 2,500,000 2,515,000 2,540,000 2,737,942 2,761,369 2,762,705 2,752,128

1/1-12/31/95 3,254,426 3,281,500 3,070,909 2,828,000 2,900,000 2,900,000 2,836,000 2,950,000 2,900,000 2,850,000 2,850,000 2,915,000 2,995,718 3,002,961 3,107,732 3,116,036

1/1-12/31/96 3,167,464 2,745,500 2,513,796 2,268,000 2,300,000 2,350,000 2,356,000 2,450,000 2,425,000 2,425,000 2,375,000 2,340,000 2,607,004 2,530,814 2,546,319 2,586,226

1/1-12/31/97 3,397,870 3,113,000 2,663,903 2,481,000 2,600,000 2,700,000 2,835,000 2,975,000 2,900,000 2,800,000 2,800,000 2,800,000 3,390,931 3,402,702 3,413,001 3,342,404

1/1-12/31/98 3,043,303 3,697,000 2,751,871 2,268,000 2,300,000 2,200,000 2,280,000 2,450,000 2,475,000 2,525,000 2,550,000 2,680,000 3,095,007 3,018,054 2,998,746 2,986,180

1/1-12/31/99 3,624,000 2,877,698 2,008,000 1,900,000 1,900,000 1,915,000 2,100,000 2,200,000 2,200,000 2,350,000 2,335,000 2,486,475 2,512,014 2,492,691 2,494,409

1/1-12/31/00 3,185,774 3,033,500 3,400,000 3,750,000 3,987,000 3,900,000 3,950,000 4,000,000 4,050,000 4,125,000 3,826,051 4,038,311 4,043,356 3,924,884

1/1-12/31/01 2,681,000 2,800,000 2,800,000 3,300,000 3,400,000 3,650,000 3,600,000 3,750,000 3,850,000 4,646,621 4,689,363 4,670,273 4,647,245

1/1-12/31/02 3,500,000 3,200,000 3,400,000 3,500,000 3,700,000 3,650,000 3,600,000 3,825,000 4,229,304 4,480,855 4,414,760 4,429,534

1/1-12/31/03 3,400,000 3,500,000 4,000,000 4,000,000 4,200,000 4,350,000 4,750,000 6,189,965 6,270,211 6,205,899 6,176,472

1/1-12/31/04 4,000,000 4,500,000 4,400,000 4,475,000 3,800,000 3,800,000 4,729,587 5,002,052 4,854,443 4,734,029

1/1-12/31/05 3,800,000 3,500,000 3,400,000 3,400,000 3,650,000 5,811,951 6,477,964 6,260,156 5,780,929

1/1-12/31/06 3,700,000 3,600,000 3,600,000 3,750,000 4,459,812 4,585,663 4,952,812 4,931,874

1/1-12/31/07 3,700,000 3,500,000 3,150,000 3,396,152 3,595,952 3,767,174 3,519,740

1/1-12/31/08 3,400,000 2,900,000 3,164,688 3,082,031 3,330,896 3,344,977

1/1-12/31/09 2,500,000 2,999,444 3,373,025 3,552,746 3,708,035

Total 18,376,664 21,751,000 22,006,638 22,264,000 26,344,000 29,531,000 34,578,000 40,143,000 43,833,000 47,516,000 50,474,000 53,499,398 62,343,759 64,400,699 64,942,546 64,044,511

B. CHANGE IN ESTIMATED ULTIMATE INCURRED LOSSES

12/31/98^ 12/31/99^ 12/31/00^ 12/31/01^ 12/31/02* 12/31/03* 12/31/04* 12/31/05* 12/31/06* 12/31/07* 12/31/08* 12/31/09* 12/31/10 12/31/11 12/31/12 12/31/98

Policy to to to to to to to to to to to to to to to to

Period 12/31/99^ 12/31/00^ 12/31/01^ 12/31/02* 12/31/03* 12/31/04* 12/31/05* 12/31/06* 12/31/07* 12/31/08* 12/31/09* 12/31/10 12/31/11 12/31/12 12/31/13 12/31/13

10/1/92-12/31/92 3,286 ( 50,004) 5,004 ( 18,000) ( 28,000) 0 0 0 0 0 ( 102) 0 0 0 0 ( 87,816)

1/1-12/31/93 ( 50,564) ( 93,946) ( 171,554) ( 21,500) ( 35,000) ( 125,000) 12,000 ( 60,000) 8,000 ( 7,000) 5,500 ( 12,291) 251 ( 8,521) 572 ( 559,053)

1/1-12/31/94 ( 176,323) ( 203,363) ( 79,637) ( 13,000) ( 250,000) ( 37,000) ( 63,000) ( 25,000) 50,000 15,000 25,000 197,942 23,427 1,336 ( 10,577) ( 545,195)

1/1-12/31/95 27,074 ( 210,591) ( 242,909) 72,000 0 ( 64,000) 114,000 ( 50,000) ( 50,000) 0 65,000 80,718 7,243 104,771 8,304 ( 138,390)

1/1-12/31/96 ( 421,964) ( 231,704) ( 245,796) 32,000 50,000 6,000 94,000 ( 25,000) 0 ( 50,000) ( 35,000) 267,004 ( 76,190) 15,505 39,907 ( 581,238)

1/1-12/31/97 ( 284,870) ( 449,097) ( 182,903) 119,000 100,000 135,000 140,000 ( 75,000) ( 100,000) 0 0 590,931 11,771 10,299 ( 70,597) ( 55,466)

1/1-12/31/98 653,697 ( 945,129) ( 483,871) 32,000 ( 100,000) 80,000 170,000 25,000 50,000 25,000 130,000 415,007 ( 76,953) ( 19,308) ( 12,566) ( 57,123)

1/1-12/31/99 ( 746,302) ( 869,698) ( 108,000) 0 15,000 185,000 100,000 0 150,000 ( 15,000) 151,475 25,539 ( 19,323) 1,718 (1,129,591)

1/1-12/31/00 ( 152,274) 366,500 350,000 237,000 ( 87,000) 50,000 50,000 50,000 75,000 ( 298,949) 212,260 5,045 ( 118,472) 739,110

1/1-12/31/01 119,000 0 500,000 100,000 250,000 ( 50,000) 150,000 100,000 796,621 42,742 ( 19,090) ( 23,028) 1,966,245

1/1-12/31/02 ( 300,000) 200,000 100,000 200,000 ( 50,000) ( 50,000) 225,000 404,304 251,551 ( 66,095) 14,774 929,534

1/1-12/31/03 100,000 500,000 0 200,000 150,000 400,000 1,439,965 80,246 ( 64,312) ( 29,427) 2,776,472

1/1-12/31/04 500,000 ( 100,000) 75,000 ( 675,000) 0 929,587 272,465 ( 147,609) ( 120,414) 734,029

1/1-12/31/05 ( 300,000) ( 100,000) 0 250,000 2,161,951 666,013 ( 217,808) ( 479,227) 1,980,929

1/1-12/31/06 ( 100,000) 0 150,000 709,812 125,851 367,149 ( 20,938) 1,231,874

1/1-12/31/07 ( 200,000) ( 350,000) 246,152 199,800 171,222 ( 247,434) ( 180,260)

1/1-12/31/08 ( 500,000) 264,688 ( 82,657) 248,865 14,081 ( 55,023)

1/1-12/31/09 499,444 373,581 179,721 155,289 1,208,035

Total ( 249,664) (2,930,136) (2,423,638) 580,000 ( 213,000) 1,047,000 1,765,000 ( 10,000) ( 17,000) ( 442,000) 525,398 8,844,361 2,056,940 541,847 ( 898,035) 8,177,073

^ Ernst & Young actuarial report. Average of low and high estimates.

* Madison Consulting Group actuarial report.