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Random Sampler
Random Sampler
Charles L. McClenahan 

I mean, what's a Fellow (or an Associate) to think? Massive reserve    increases. Insolvencies. Litigation. Corporate scandals. Even some holdovers from the 90's (asbestos) and the 70's (medical malpractice.) One might almost get the impression that our profession hasn't been doing such a great job.

Fortunately, we know the truth. Our best estimate reserves have been appropriately conservative reflecting the proper provisions for uncertainty as required by our Statement of Principles. The industry has consistently booked reserves according to our recommendations, which are at or above our best estimates. We have been in the forefront of the battle for full disclosure and accurate accounting.

In our dealings with our clients, our managers, and our regulators we have not allowed our actuarial indications to be negotiated downward in either loss reserving or ratemaking. We have neither sought nor offered reinsurance at rates we believed to be inadequate. Nor have we made or approved optimistic assumptions regarding frequency or severity trends, claim closure rates, Bornhuetter-Ferguson a priori loss ratios, or the hunger of the plaintiff's bar.

Like Scrooge, the spirits of the past, present, and future of our profession have lived within us and we have done nothing to dishonor those who came before, embarrass our contemporaries, or disable those who will follow. We have handled our professional lives in strict accordance with our Code of Professional Conduct—without benefit of liberal interpretation, even   including Precept 13.

Policyholders, shareholders, claimants, and regulators—all have had their lives improved through the application of our mathematical skills and our understanding of risk. Their reliance upon us to properly apply that which they do not comprehend has not been misplaced.

Secure in this knowledge, we can assure all who ask that the recent rate and reserve inadequacies are simply the result of normal, unpredictable uncertainties that might just have easily turned out to be redundancies. Perhaps next time it will be redundancies that actually emerge.

It had better be.

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