Casualty Actuarial (C) Task Force
December 4, 2007

The Task Force adopted interim conference call minutes. This included the adoption of the Regulatory Guidance for 2007 Statements of Actuarial Opinion and Actuarial Opinion Summaries and adoption of a comment letter to the Principles Based Reserving (EX) Working Group regarding clarification of the inclusion or exclusion of property/casualty insurance within the scope of their current work.

The Task Force continued to discuss the use of catastrophe models for pricing and in determining reinsurance cost allocation. The Task Force is considering developing some guidance about the use of models.

Other Subgroups and Working Groups reported the following to the Task Force:

• The Profitability (C) Working Group is nearing publication of the Profitability Report using 2006 data.

• The Workers’ Compensation Large Deductible Subgroup expects a proposal from the American Academy of Actuaries (AAA) Workers’ Compensation Committee in December 2007. Once the AAA responds, the Subgroup will discuss that proposal and submit a plan of action to the Task Force.

• The International Subgroup continues to monitor the accounting and solvency work of the International Actuarial Association and will evaluate the need for comments in 2008. Focus is on issues such as internal models, enterprise risk management, current estimates, and risk margins.

The Task Force discussed its proposal to modify Schedule P instructions to the Blanks (E) Working Group regarding discounting.  The Task Force adopted a motion to ask the Statutory Accounting Principles (E) Working Group to modify SSAP 65 by clarifying that loss adjustment expenses can only be discounted if expressly prescribed or permitted by the domiciliary state insurance department.

The American Academy of Actuaries (AAA) reported on activities at their Committee on Property/Liability Financial Reporting. The AAA updated the NAIC’s 2005 risk transfer survey and presented the draft to the Task Force. On the next call, the Task Force will consider a revised survey, with expectations of surveying companies in early 2008. The AAA also continues work on risk transfer training and will plan one or more webinars to present the material to financial analysts, examiners, and actuaries.

Action Items:

1. Adoption of conference call minutes which included adoption of the Regulatory Guidance for 2007 Statements of Actuarial Opinion and Actuarial Opinion Summaries and adoption of a comment letter to the Principles Based Reserving (EX) Working Group.

2. Adopted a motion to ask the Statutory Accounting Principles (E) Working Group to modify SSAP 65 by clarifying that loss adjustment expenses can only be discounted if expressly prescribed or permitted by the domiciliary state insurance department.