What is a Reserve Analysis?

An actuarial reserve analysis provides a professional opinion regarding the loss reserves required for unpaid claims incurred as of a specific date. A reserve analysis is typically prepared to meet regulatory or financial reporting criteria and is often required by external auditors as part of the audit process. The analysis is most frequently prepared for a self-insured trust, a captive insurance company, a corporation that uses a loss sensitive cash-flow plan or as part of the due diligence process for mergers/acquisitions or divestitures. A general list of uses includes the following:

 

* Actuarial reserve certification

* Satisfaction of self-insurance requirements

* Negotiation of security requirements and letters of credit

* Acquisition due diligence

* Evaluation of expected liabilities for financial statements