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									An Analysis of
“Falling Claims and Rising Premiums
in the Medical Malpractice Industry”
by Jay Angoff, July 2005

By
Todd H. Dashoff ACAS MAAA ARM
James A. Hall, III FCAS MAAA FCA
Rusty T. Kuehn FCAS MAAA CPCU ARM FCA
December 2005
Table of Contents


Section                                                                                                      Page
I.     Introduction .......................................................................................... 1
II.    Executive Summary ............................................................................. 2
III.   Distribution & Use ............................................................................... 4
IV.    Reliances and Limitations ................................................................... 5
V.     Analysis .................................................................................................. 6


Exhibits

Table 3- Reproduced from Angoff Report, July, 2005, Ratio of …………….Exhibit 1
Projected Losses to Earned Premiums, Largest Medical
Malpractice Insurers, 2000-2004

Table 3- Angoff Report, July, 2005- Revised to Include Loss………..………Exhibit 2
Adjustment Expense- Ratio of Projected Losses and LAE to
Earned Premiums, Largest Medical Malpractice Insurers, 2000-2004

Table 3- Angoff Report, July, 2005- Revised to Include Loss………………..Exhibit 3
Adjustment and Operating Expenses- Ratio of Projected Losses,
LAE and Operating Expenses to Earned Premiums, Largest Medical
Malpractice Insurers, 2000-2004

Table 4- Reproduced from Angoff Report, July, 2005, Earned……………...Exhibit 4
Premium vs.Incurred (Projected) Losses, 2003-2004

Table 4- Angoff Report, July, 2005, Revised to Include Loss………………..Exhibit 5
Adjustment Expense, Earned Premium vs. Incurred (Projected)
Loss and LAE, 2003-2004

Table 5-Reproduced from Angoff Report, July, 2005, Increase in…………..Exhibit 6
Surplus, 12 Monoline Insurers, 2000-2004

Table 5-Angoff Report, July, 2005, Revised to Include MIIX and…………..Exhibit 7
MLMIC, Increase in Surplus, 14 Monoline Insurers, 2000-2004

Table 6- Reproduced from Angoff Report, July, 2005, Excess Surplus……..Exhibit 8
12 Largest Monoline Medical Malpractice Insurers, 2004

Table 6- Angoff Report, July, 2005, Revised to Include MLMIC,…………..Exhibit 9
Excess Surplus, 13 Largest Monoline Medical Malpractice Insurers, 2004
I. Introduction
Huggins Actuarial Services, Inc. (herein referred to as Huggins) is a property-casualty
actuarial consulting firm that provides a wide range of services to our clients, who
include both commercial insurers and self-insureds. Huggins does a significant amount
of work in the field of medical professional liability and provides advice on medical
malpractice issues for medical malpractice insurers formed by healthcare providers and
medical malpractice insurers operating for profit, as well as for regulators and other
interested parties, such as self-insurers, risk retention groups, and captives. In the course
of our consulting work, we have addressed questions about why medical malpractice
insurance is difficult to obtain in today’s market as frequently as questions as to whether
a medical malpractice insurer can survive in today’s tort environment.

Recently we have become aware of a report claiming that medical malpractice insurers
are far more profitable than is generally believed by insurance experts. This report,
“Falling Claims and Rising Premiums in the Medical Malpractice Insurance Industry,”
dated July 2005 (herein referred to as the Angoff Report), by former Missouri insurance
commissioner Jay Angoff, commissioned by the Center for Justice & Democracy,
examines the annual statements of 15 top rated medical malpractice insurers and
concludes that these insurers are making huge profits by increasing medical malpractice
insurance rates while enjoying steady decreases in medical malpractice claims payments.

Because the picture presented by the Angoff report conflicts with views broadly held by
those knowledgeable about the medical malpractice insurance field, including many of
our clients who have questioned the report’s findings, Huggins has conducted a review of
the issues to respond to their questions. Huggins performed this analysis for the benefit of
our clients as well as legislators and regulators and has not received compensation from
any source.

Throughout our analysis we used various actuarial techniques and professional judgment
to reach our conclusions. Evaluation of those conclusions, assumptions and methods
should only be made after reviewing this report in its entirety. Huggins’ actuarial
professionals are available to explain any matters presented herein. Comments or
questions regarding this report should be directed to the actuaries listed on the cover of
this report at 610-892-1823.




Huggins Actuarial Services, Inc.             1
II.    Executive Summary

In the Angoff report, Angoff’s conclusions, that medical malpractice premiums are
unjustifiably high and medical malpractice insurers unreasonably profitable, are based
upon a flawed analysis. Our review identifies and adjusts for the flaws in this analysis,
while taking into account widely recognized industry trends that are ignored in the report.
The resulting picture shows an industry that is more viable than in the past (a good thing),
but one that continues to face many challenges going forward.

The selective use of invalid, misleading, or incomplete comparisons of financial data is at
the heart of the problems with Angoff’s analysis. Our summarized findings are as
follows:

       Angoff relies heavily on a comparison of written premiums to paid losses in a
       given year. None of the responsible regulatory, rating, or tax agencies that
       evaluate the performance of medical malpractice insurers use such a comparison.
       To do so would involve matching premiums with unrelated losses (losses paid
       under medical malpractice coverage in a given year are a function of premiums
       written in prior years.)
       Angoff makes a valid comparison of earned premiums to incurred losses for
       companies in his sample. His resulting conclusion, however, ignores major
       expense items (loss adjustment costs and underwriting expenses), which account
       for over 50% of the cost of medical malpractice insurance.
       Angoff ignores significant trends in the medical malpractice arena, such as the
       withdrawal or regulatory supervision of a number of insurers due to unprofitable
       results.
       Angoff selectively includes dissimilar data points, time periods, and subject
       companies that support his conclusions, then excludes the same when they do not.
       When we adjust for these inconsistencies, the analysis yields conclusions that are
       in sharp contrast to Angoff’s.
       Angoff places great emphasis on rate increases and the rapid rise of written
       premiums in the face of relatively flat claim payouts over the 2000-2004 periods.
       In so doing, he ignores the growth in written premiums attributable to new
       policyholders “inherited” from companies that withdrew from the market (e.g., St.
       Paul, MIIX and PHICO) due to poor returns or regulatory supervision. As to the
       flatness of losses during the same period, he fails to point out that the claims
       arising from these new policyholders will not show up as paid losses until
       subsequent years.
       Angoff’s profitability analysis does not take into account the large portion of
       medical malpractice risks covered by financial mechanisms other than
       commercial insurance. Nor does he include one of the nation’s largest medical
       malpractice insurers, MLMIC, which lost over $1 billion in net worth over the
       2000-2004 period.
       Angoff misuses and misrepresents certain industry standards, such as the widely
       accepted Risk Based Capital benchmark. His resulting conclusion, that the
       industry is excessively capitalized, is erroneous. By this very standard many of


Huggins Actuarial Services, Inc.             2
       the companies surveyed are only reaching acceptable levels of policyholder’s
       surplus.

In the pages that follow, we discuss these and additional points in greater detail. Overall,
we find Angoff’s methodology flawed and his subsequent conclusions invalid. In reality,
the medical malpractice industry is just now approaching a level of viability that is
characterized by merely appropriate returns, not excessive profitability. Acceptable
returns lead to stable coverage and pricing, which benefits policyholders.




Huggins Actuarial Services, Inc.             3
III.   Distribution & Use

This report has been prepared for use by our clients, insurance regulators and other
parties interested in the current state of profitability of the medical malpractice insurance
market. This report may be distributed as long as it is distributed in its entirety and the
recipient is advised that Huggins actuaries are available to answer any questions
concerning our analysis or the conclusions discussed within the report. Any other use or
distribution of this report without our express written consent is not authorized.

Huggins assumes no responsibility for any loss or damage that might arise from the use
of, or reliance on, this report for any purpose other than for a description of the analyses
underlying our review of the Angoff report.




Huggins Actuarial Services, Inc.             4
IV.    Reliances and Limitations

This report presents an actuarial analysis of data, conditions, and practices contained in
the report “Falling Claims and Rising Premiums in the Medical Malpractice Insurance
Industry,” dated July 2005, by Jay Angoff. The actuarial comments and calculations in
our report are responses to material contained in the Angoff report and are based on
appropriate assumptions and procedures described in the section of the report entitled
“Analysis”.

In preparing our analysis, we relied on data and qualitative information contained in the
Angoff report. We have not audited this data, but have relied on it as published in the
Angoff report. Any inaccuracies or inconsistencies in the data could have a significant
effect on our results. Should any inaccuracies be found in the data, either by the author
of the report or by the management of any of the companies discussed in the report, we
should be notified so that our analysis can be adjusted accordingly.

The projection of ultimate loss and loss adjustment expenses are estimates of future
events, the outcomes of which are unknown at this time. Considerable uncertainty and
variability are inherent in loss estimates. As a result, it is possible that actual experience
of the companies discussed in this report may be different than the estimates promulgated
in this report or in the Angoff report, and such difference may be material. As such, we
cannot guarantee that future experience will be as expected in this report or recorded by
any individual Company.




Huggins Actuarial Services, Inc.              5
V. Analysis
Mismatching of Statistics and Exclusion of Necessary Data
In the Angoff report, in Section II Methodology Part A (Written Premiums vs. Paid
Losses) and Section III Findings Part A (Written Premiums vs. Paid Losses), Angoff
compares losses paid under an older group of policies against premiums on policies from
the 2000-2004 era, although the premiums collected on the older policies were generally
smaller than the premiums from the more recent era. If proper matching of premiums and
losses had been made, the profitability of the business would have been shown to be less
than that claimed in the Angoff report. Industry analysts do not use calendar year
information for comparison purposes precisely for this reason. Instead they rely on the
comparison of earned premiums to accident year or report year statistics, depending upon
the type of medical malpractice coverage written.

In addition, in Section II Methodology Part B (Earned Premiums vs. Projected Losses)
and Section III Findings Part B (Earned Premiums vs. Projected Losses), Angoff
compares earned medical malpractice premiums and incurred loss amounts on medical
malpractice claims to demonstrate profitability, but omits two of the major cost
components of the coverage provided by the medical malpractice policy – loss
adjustment expenses, and policy underwriting expenses. For the typical medical
malpractice insurer, defense costs are such a large portion of premiums (over one-third)
that simply including them in Angoff’s methodology would have greatly altered the
report by showing that the selected insurers were far less profitable (or more
unprofitable) than the report claimed. As the medical malpractice insurance industry in
total suffered underwriting losses of at least 20% over the five-year period from 2000 to
2004, as reported in an industry study, the evidence does not support discussion of
profitability as found in the Angoff report.

A necessary correction to the Angoff report would be to present accident-year and/or
report year loss ratios to earned premium, so that the claim costs of policy coverage could
be matched against the premiums generated by the same group of policies as those from
which the claims arose. Such studies have been performed both by insurance industry
professional service firms such as statistical agents and actuarial consulting firms and by
external entities such as investment advisors and rating agencies; all credible analyses, in
our opinion, indicate that the medical malpractice insurance business was less profitable
during the era 2000-2004 than implied by Angoff in his report, and that premiums may
only now be approaching a reasonable level of profitability.

An additional correction to the Angoff report would be to include both the legal fees
traditionally reported as “Allocated Loss Adjustment Expenses” or “Defense and Cost
Containment Payments”, and the claims department costs traditionally reported as
“Unallocated Loss Adjustment Expenses” or “Adjusting and Other Payments.” (Both of
these expense categories represent a policy benefit of great importance to policyholders –
defense against claims.) Such a change would add 35 to 40 points in addition to the loss
ratios Angoff presents. The final correction would be to include underwriting expenses,
which would add another 10 to 15 points, and which would demonstrate the general


Huggins Actuarial Services, Inc.             6
unprofitability of the medical malpractice insurance business for the 2000 to 2004 era.
Without these corrections, Angoff is omitting roughly half of the costs of operating a
medical malpractice insurer.

Exhibits 1 through 3 of this report show Angoff’s faulty comparisons of premiums and
losses and our corrected comparisons including both Loss Adjustment Expense and Other
Operating Expenses. Even by only adding calendar year loss adjustment expenses and
underwriting expenses, as obtained from Best’s Insurance Reports, to the data in Table 3
in Angoff’s report demonstrates that the medical malpractice industry was nowhere near
as profitable as Angoff claims during the period 2000 through 2004. The impact of
making these corrections is to severely reduce Angoff’s alleged “excessive” profits,
reducing the values shown in the Angoff report by nearly 50%.

Exhibit 1 reproduces Angoff’s Table 3 from the Angoff report, and shows changes in the
ratio of projected losses to earned premiums of –24.9% for the period 2000 to 2004 and –
24.1% for the period 2003 to 2004. While we were unable to obtain the exact data used
by Angoff in the Angoff report, we have adjusted the projected losses shown in Angoff’s
Table 3 (Exhibit 1 in our report) to include a loading for loss adjustment expense in
Exhibit 2 of this report. For all monoline medical malpractice insurers, the adjustment is
exact, while for the multiline insurers (Lexington, Continental and Evanston), we have
multiplied the medical malpractice only loss ratios by the overall company ratio of
incurred loss and LAE to loss only. This does introduce an element of uncertainty into
the calculations, but the modifications produce a much more accurate result than merely
including projected losses without any recognition of loss adjustment expense. On
Exhibit 2, we have revised this table by including loss adjustment expenses, and show
that the changes in the average ratio of projected losses and loss adjustment expenses are
reduced to –13.3% for the period 2000 to 2004 and –14.9% for the period 2003 to 2004.
In addition, Exhibit 2 shows that the ratios from 2000 to 2004 increase substantially over
the corresponding ratios on Exhibit 1. For example, the average ratio for 2000 rises from
67.5% to 98.8%, while the average ratio for 2004 rises from 50.7% to 85.6%.

On Exhibit 3 we have added operating expenses to the ratios on Exhibit 2, which results
in a change of –17.9% for the period 2000 to 2004 and –13.5% for the period 2003 to
2004. The ratios including loss adjustment and operating expenses are now substantially
higher than those shown in the Angoff report, and range from 124.1% for 2000 to 101.9%
for 2004. In addition, the majority of the individual company ratios are in excess of
100%, indicating that the premiums charged by those companies were insufficient to
recoup all of the costs associated with the policy (excluding any affect of investment
income).

Exhibit 4 reproduces Table 4 from the Angoff report, and compares the 2003 and 2004
values and the growth between years of earned premiums and incurred losses for each
company in the table. We developed Exhibit 5 by adjusting Angoff’s Table 4 to include
loss adjustment expenses similar to the creation of Exhibit 2, which reduces the decline in
incurred loss and LAE between 2000 and 2004 to 9.7%, as compared with the 21.1%
decrease indicated in Angoff’s report and shown in Exhibit 4.



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Inclusion of Dissimilar Data
Two of the insurers included in the Angoff study are so large and so dissimilar to the
others that they skew the results of the study.

Lexington Insurance Company, in our opinion, underwrites primarily excess coverage in
its medical malpractice book, while the other insurers in the selected group underwrite
mostly primary coverage. The intrinsic nature of excess coverage is that paid loss
transactions occur only after the multi-year process of paying claims up to the “retention”
point at which the excess coverage attaches. By comparing Lexington against the group
totals for the paid-to-premium ratios presented in Table 1 on page 5 of the Angoff report,
it will be obvious that Lexington distorts the group totals by the sheer weight of its excess
business.

Healthcare Indemnity (HCI), a “captive insurer” of the hospital management company
HCA, is another example of inappropriate analysis of this group of 15 large medical
malpractice insurers. As a captive insurer, HCI exists solely to provide insurance for its
hospital-industry parent, HCA. The premium-setting process for a captive insurer
incorporates generally similar technical provisions to the premium-setting process for a
commercial insurer, except that profit tends to benefit the parent. As a major player in the
hospital medical malpractice field, HCA tends to have more hospital liability exposures
in its book of business than do the other members of the selected 15 insurers. Doctors’
exposures are the primary business of the other 14 insurers, and the two groups may
represent “apples and oranges” for that reason, as well as for the reason that captive
insurers behave differently from commercial insurers.

Misunderstanding of Industry Statistics
Angoff presents a finding that “the surplus of each of the twelve monoline medical
malpractice insurers now substantially exceeds the surplus the NAIC deems adequate for
the company.” (Angoff, page 18) This statement relies on a misinterpretation of the
NAIC minimum capital requirement, as the NAIC minimum Risk-Based Capital (RBC)
formula establishes a floor, not a recommended amount, for statutory surplus. Any
medical malpractice insurer operating near or at the minimum would suffer pressure from
rating agencies, regulators, and business partners concerned about the continued solvency
of such an insurer. Given the recent departures from the medical malpractice business of
companies such as St. Paul, MIIX, PHICO, Frontier, Farmers Insurance Group, PICO and
TIG, (and the sale by General Electric of its Medical Protective subsidiary) there is ample
evidence that the profits available in medical malpractice insurance are not adequate to
maintain capital at risk in this business, regardless of whether the RBC formula indication
is adequate.

Angoff shows surplus growth for his selected group of insurers on Table 5 of his report,
which we have reproduced on Exhibit 6 of this report. However, he omits MLMIC,
claiming in a footnote on Page 1 of his report that “MLMIC, which writes almost
exclusively in New York and does not disclose its surplus in its Annual Statement”. We
disagree with this statement; we found the MLMIC surplus for the period reviewed by
Angoff is published in the Best’s rating reports for the years in question as well as in the
company’s own Annual Statement in the Five-Year Historical Data section, and note that


Huggins Actuarial Services, Inc.             8
MLMIC lost slightly more than $1 billion from 2000 through 2004, which would offset
the gains by the group of 12 other insurers shown by Angoff and produce a much more
modest increase overall.

In Exhibit 7, by restating Table 5 in Angoff’s report by adding data on MLMIC as well as
MIIX, we show that the change in surplus for the largest medical malpractice carriers is
not an increase of 34.3% as Angoff claims and is shown on Exhibit 6, but rather a modest
9.9% growth over the period from 2002 to 2004. If the data in Table 5 is expanded to
include the years 2000 and 2001, group surplus actually declined by 14.1% over the
period 2000-2004.

Exhibit 8 reproduces Table 6 from the Angoff report, and purports to show that the
surplus of the twelve largest A.M. Best rated medical malpractice insurers in the United
States was 99.7% higher than the amount deemed adequate by the NAIC. We derived
Exhibit 9 by adding the appropriate values for MLMIC to Angoff’s Table 6 and revising
the calculations to show the actual adequate surplus values prescribed by the NAIC, as
opposed to those used by Angoff. Exhibit 9 shows that rather than exhibiting surplus
levels that substantially exceed the levels required by the NAIC, the companies reviewed
in the Angoff report actually have 85.1% of the necessary amount of surplus overall (as
shown in the “Totals” row, column (7)), when all companies in the report are included.

Angoff did not include MLMIC in his exhibit, claiming that that company’s surplus was
unavailable. We were able to easily determine MLMIC’s carried surplus from its Annual
Statement, as described above, and were able to obtain values for the company’s risk
based capital surplus amounts for the years that were not shown in the Annual Statement
directly from the company, and have included them in our revised depiction of Table 6 in
the Angoff report. This shows that when the significant surplus loss exhibited by
MLMIC is included, Angoff’s claim of excessive surplus amounts is refuted. Exhibit 9
also corrects for Angoff’s misinterpretation of the NAIC Risk Based Capital statistic, and
shows that on an overall basis, the companies in the report actually have approximately
15% less surplus than the amounts that the NAIC considers to be adequate, as shown in
column (7) of the “Totals” row of the exhibit .

Drawing Conclusion from an Incomplete Sample
The use of data from the 13 largest insurers represents a skewed sample, as a majority of
U S medical malpractice exposures are already outside of the commercial medical
malpractice insurance market, thanks to the use of captive insurers, risk retention groups,
and self-insurance. Healthcare providers who have adopted these alternatives to
commercial insurance in response to high medical malpractice premiums are arguably not
over-charged by paying their own liability costs. The commercial insurance market is
constrained from overcharging the remaining policyholders by the continuing trend
toward the alternative market. Those policyholders still commercially insured vote with
their premium dollars in favor of risk transfer, rather than risk retention, and show their
preference for the commercial market. When the alternative market stops growing, it may
be appropriate to examine whether the remaining commercial policyholders need special
consideration, or whether they represent some residual group of risks too volatile for self-
insurance.


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                            Table 3- Reproduced from Angoff Report, July 2005
                              Ratio of Projected Losses to Earned Premiums
                             Largest Medical Malpractice Insurers, 2000-2004


                              (1)      (2)     (3)           (4)     (5)         (6)          (7)
                                                                             =(5)/(1) - 1 =(5)/(4) - 1
                                                                              Change       Change
         Company             2000      2001    2002          2003    2004    2000-2004 2003-2004

      ISMIE                     83.6    72.4    100.7         73.2    60.8       -27.3%       -16.9%
      MAG Mutual                66.8    58.4     81.3         61.9    60.4        -9.6%        -2.4%
      TDC                       42.5    73.5     69.1         69.4    54.1        27.3%       -22.0%
      Med Pro                   41.1    50.4     78.9         63.0    50.7        23.4%       -19.5%
      Pro Mutual               128.9   117.6    101.4         96.5    59.7       -53.7%       -38.1%
      AP Capital                58.8    90.5     75.7         82.3    55.2        -6.1%       -32.9%
      State Volunteer           75.9    69.6     72.3         51.7    54.2       -28.6%         4.8%
      HCI                       74.4    97.2     88.1         89.1    47.6       -36.0%       -46.6%
      Norcal                    56.9    60.5     41.7         46.5    46.1       -19.0%        -0.9%
      FPIC                      70.6    72.9     64.1         55.8    42.2       -40.2%       -24.4%
      Med Assurance             21.7    45.9     45.9         45.3    34.4        58.5%       -24.1%
      Pro National              82.4    93.8     61.4         50.8    33.1       -59.8%       -34.8%
      CCC                       62.1   215.4     54.1         81.5    62.6         0.8%      -23.2%
      Evanston                  75.7    63.8     58.8         50.8    43.1      -43.1%       -15.2%
      Lexington                 71.8   153.8     56.9         85.3    57.0      -20.6%       -33.2%
      Average                   67.5    89.0     70.0         66.9    50.7       -24.9%       -24.1%

      Note:
      Values in italics are from underwriting exhibits of the applicable companies' Annual Statement




Huggins Actuarial Services, Inc.                 Exhibit 1
           Table 3- Angoff Report, July 2005- Revised to Include Loss Adjustment Expense
                      Ratio of Projected Losses and LAE to Earned Premiums
                          Largest Medical Malpractice Insurers, 2000-2004


                              (1)      (2)      (3)           (4)     (5)          (6)          (7)
                                                                               =(5)/(1) - 1 =(5)/(4) - 1
                                                                                Change       Change
         Company             2000      2001    2002           2003    2004     2000-2004 2003-2004

      ISMIE                    105.0   109.4     138.6        104.8    100.3        -4.5%        -4.3%
      MAG Mutual                99.9    96.1     109.8         99.2     89.8       -10.1%        -9.5%
      TDC                       78.2    98.4     105.0        109.6     82.5         5.5%       -24.7%
      Med Pro                   68.5    77.5     109.5         89.0     83.1        21.3%        -6.6%
      Pro Mutual               159.7   144.1     132.4        128.5     95.0       -40.5%       -26.1%
      AP Capital                85.1   132.8     103.3        120.7     82.3        -3.3%       -31.8%
      State Volunteer          110.4   110.2     116.3        101.0     97.4       -11.8%        -3.6%
      HCI                      107.3   110.1     112.1        111.2     95.1       -11.4%       -14.5%
      Norcal                    98.2    97.6      90.7         96.9     94.0        -4.3%        -3.0%
      FPIC                     105.2   101.5      91.4         92.2     81.8       -22.2%       -11.3%
      Med Assurance             86.8   105.7     109.7         92.5     92.9         7.0%         0.4%
      Pro National             126.1   141.6     103.4        103.2     83.6       -33.7%       -19.0%
      CCC                       74.4   255.7      68.6        114.0     84.6       13.7%       -25.8%
      Evanston                  83.9    76.5      73.8         64.9     56.9      -32.2%       -12.4%
      Lexington                 93.3   179.1      69.0         81.9     65.4      -29.9%       -20.1%
      Average                   98.8   122.4     102.2        100.6     85.6       -13.3%       -14.9%

      Note:
      Values in italics are based on loading the values for incurred loss by the ratio of loss & LAE
      to loss, based on data in Best's Insurance Reports, for those companies where the original
      data was taken from underwriting exhibits




Huggins Actuarial Services, Inc.                  Exhibit 2
                                 Table 3- Angoff Report July, 2005
                    Revised to Include Loss Adjustment and Operating Expenses
            Ratio of Projected Losses, LAE and Operating Expenses to Earned Premiums
                          Largest Medical Malpractice Insurers, 2000-2004


                              (1)     (2)       (3)          (4)     (5)         (6)          (7)
                                                                             =(5)/(1) - 1 =(5)/(4) - 1
                                                                              Change       Change
         Company             2000     2001    2002           2003    2004    2000-2004 2003-2004

      ISMIE                   120.1   124.5     155.8        118.6   114.3        -4.8%         -3.6%
      MAG Mutual              123.5   117.0     124.9        116.0   105.2       -14.8%         -9.3%
      TDC                     103.5   120.5     126.2        126.3   101.0        -2.4%       -20.0%
      Med Pro                  85.0    93.5     124.4        104.4    97.1        14.2%         -7.0%
      Pro Mutual              210.1   179.4     158.4        149.7   112.9       -46.3%       -24.6%
      AP Capital              110.7   156.8     124.4        154.6   104.6        -5.5%       -32.3%
      State Volunteer         144.7   131.3     126.4        113.0   108.8       -24.8%         -3.7%
      HCI                     112.5   112.4     117.8        112.6   100.1       -11.0%       -11.1%
      Norcal                  125.2   120.4     113.0        112.0   109.2       -12.8%         -2.5%
      FPIC                    124.0   125.6     108.0        107.5    95.8       -22.7%       -10.9%
      Med Assurance           110.7   129.2     125.0        105.6   105.3        -4.9%         -0.3%
      Pro National            141.4   160.3     118.9        118.1   100.8       -28.7%       -14.6%
      CCC                     107.2   329.0      94.7        144.9   114.6         6.9%      -20.9%
      Evanston                135.6   110.0     100.5         92.8    85.2      -37.2%         -8.2%
      Lexington               107.5   194.9      75.1         91.4    74.2      -31.0%       -18.8%
      Average                 124.1   147.0     119.6        117.8   101.9       -17.9%       -13.5%

      Note:
      Values in italics are based on loading the values for incurred loss and LAE by the ratio of
      underwriting expense, loss and LAE to loss & LAE, based on data in Best's Insurance
      Reports, for those companies where the original data was taken from underwriting exhibits




Huggins Actuarial Services, Inc.                 Exhibit 3
                            Table 4- Reproduced from Angoff Report, July, 2005
                             Earned Premium vs. Incurred (Projected) Losses,
                                                2003-2004
                                          (in millions of dollars)

                                                     (1)      (2)          (3)
                                                                      =(2) / (1) - 1
                                                                        Change
                         Company                    2003     2004      2003-2004
                         Med Pro         EP          701.8      555         -20.9%
                                         IL          441.9    281.2         -36.4%
                         Lexington       EP          364.5    446.3          22.4%
                                         IL            311    254.5         -18.2%
                         TDC             EP          331.3    444.4          34.1%
                                         IL            230    240.5           4.6%
                         HCI             EP          374.7    369.4          -1.4%
                                         IL            334    175.7         -47.4%
                         Med Assurance EP              274    317.9          16.0%
                                         IL          124.1    109.2         -12.0%
                         Continental     EP          227.3    293.3          29.0%
                                         IL          185.3    183.5          -1.0%
                         ISMIE           EP          257.7    247.8          -3.8%
                                         IL          188.6    150.7         -20.1%
                         Pro Mutual      EP          182.6    232.2          27.2%
                                         IL          176.2    138.7         -21.3%
                         MAG Mutual EP               131.4    201.3          53.2%
                                         IL          121.6     81.3         -33.1%
                         Norcal          EP          202.1    198.7          -1.7%
                                         IL             94     91.6          -2.6%
                         Pro National    EP          178.9    190.8           6.7%
                                         IL             91     63.2         -30.5%
                         AP Capital      EP          146.4    181.4          23.9%
                                         IL          120.5      100         -17.0%
                         State Volunteer EP          116.3    140.4          20.7%
                                         IL           60.1     76.1          26.6%
                         Evanston        EP          131.3    134.4           2.4%
                                         IL           66.7     57.9         -13.2%
                         FPIC            EP           95.1    106.1          11.6%
                                         IL           53.1     44.8         -15.6%
                         Totals          EP         3715.4   4059.4           9.3%
                                         IL         2598.1   2048.9         -21.1%



Huggins Actuarial Services, Inc.                 Exhibit 4
                                             Table 4 Angoff Report July, 2005
                                       Revised to Include Loss Adjustment Expense
                                   Earned Premium vs. Incurred (Projected) Loss & LAE,
                                                         2003-2004
                                                   (in millions of dollars)

                                                              (1)       (2)          (3)
                                                                                =(2) / (1) - 1
                                                                                  Change
                                Company                      2003      2004      2003-2004
                              Med Pro         EP              701.8     555.0         -20.9%
                                              IL & LAE        624.3     460.9         -26.2%
                              Lexington       EP              364.5     446.3          22.4%
                                              IL & LAE        298.6     292.1           -2.2%
                              TDC             EP              331.3     444.4          34.1%
                                              IL & LAE        363.2     366.8            1.0%
                              HCI             EP              374.7     369.4           -1.4%
                                              IL & LAE        416.8     351.0         -15.8%
                              Med Assurance EP                274.0     317.9          16.0%
                                              IL & LAE        253.4     294.9          16.4%
                              Continental     EP              227.3     293.3          29.0%
                                              IL & LAE        259.2     247.9           -4.4%
                              ISMIE           EP              257.7     247.8           -3.8%
                                              IL & LAE        270.0     248.6           -7.9%
                              Pro Mutual      EP              182.6     232.2          27.2%
                                              IL & LAE        234.6     220.7           -5.9%
                              MAG Mutual      EP              131.4     201.3          53.2%
                                              IL & LAE        194.9     120.9         -38.0%
                              Norcal          EP              202.1     198.7           -1.7%
                                              IL & LAE        195.9     186.8           -4.6%
                              Pro National    EP              178.9     190.8            6.7%
                                              IL & LAE        184.9     159.6         -13.7%
                              AP Capital      EP              146.4     181.4          23.9%
                                              IL & LAE        176.7     149.1         -15.6%
                              State Volunteer EP              116.3     140.4          20.7%
                                              IL & LAE        117.4     136.8          16.5%
                              Evanston        EP              131.3     134.4            2.4%
                                              IL & LAE         85.2      76.4         -10.4%
                              FPIC            EP               95.1      95.1            0.0%
                                              IL & LAE         87.7      86.8           -1.0%
                              Totals          EP             3715.4    4048.4            9.0%
                                              IL & LAE       3763.0    3399.3           -9.7%

                              Note:
                              Adjusted values on previous page by loading by ratio of loss
                              and LAE to loss from Table 3 for appropriate years




Huggins Actuarial Services, Inc.                         Exhibit 5
                            Table 5- Reproduced from Angoff Report, July, 2005
                                            Increase in Surplus,
                                           12 Monoline Insurers
                                                 2000-2004
                                          (in millions of dollars)


                                     (1)     (2)         (3)   (4)            (5)
                                                            =(3) - (1)   =(3) / (1) - 1
                                    2002    2003    2004 Dollar Change Perecent Change
              Company              Surplus Surplus Surplus 2002-2004      2002-2004

           HCI                       482.5    626.5       767.8    285.3          59.1%
           Med Pro                   401.7    442.9       510.8    109.1          27.2%
           TDC                       341.4    350.2       405.6     64.2          18.8%
           Pro Mutual                300.3    342.7       378.5     78.2          26.0%
           Norcal                    204.2    246.0       309.1    104.9          51.4%
           Med Assurance             193.3    238.7       276.9     83.6          43.2%
           Pro National              197.0    187.9       241.8     44.8          22.7%
           ISMIE                     170.5    201.7       212.5       42          24.6%
           AP Capital                163.5    113.3       200.1     36.6          22.4%
           MAG Mutual                142.9    177.2       194.9       52          36.4%
           State Volunteer           129.3    155.9       167.9     38.6          29.9%
           FPIC                      110.8    118.9       145.4     34.6          31.2%

           Totals                   2837.4   3201.9     3811.3     973.9          34.3%




Huggins Actuarial Services, Inc.                      Exhibit 6
                         Table 5- Angoff Report, July, 2005, Revised to Include MIIX and MLMIC
                                                    Increase in Surplus,
                                                   14 Monoline Insurers
                                                         2000-2004
                                                  (in millions of dollars)
                         (1)       (2)      (3)       (4)       (5)        (6)          (7)          (8)          (9)
                                                                        =(5) - (1) =(5) / (1) - 1 =(5) - (3) =(5) / (3) - 1
                                                                         Dollar      Percent       Dollar      Percent
                        2000      2001     2002      2003      2004     Change       Change       Change       Change
     Company           Surplus Surplus Surplus Surplus Surplus 2000-2004 2000-2004 2002-2004 2002-2004

 HCI                      542.9     583.8     482.5      626.5    767.8       224.9        41.4%        285.3        59.1%
 Med Pro                  372.8     408.2     401.7      442.9    510.8       138.0        37.0%        109.1        27.2%
 TDC                      381.1     384.0     341.4      350.2    405.6        24.5         6.4%         64.2        18.8%
 Pro Mutual               398.6     364.5     300.3      342.7    378.5       -20.1        -5.0%         78.2        26.0%
 Norcal                   272.3     268.0     204.2      246.0    309.1        36.8        13.5%        104.9        51.4%
 Med Assurance            208.8     172.8     193.3      238.7    276.9        68.1        32.6%         83.6        43.2%
 Pro National             253.5     175.9     197.0      187.9    241.8       -11.7        -4.6%         44.8        22.7%
 ISMIE                    225.7     241.4     170.5      201.7    212.5       -13.2        -5.8%         42.0        24.6%
 AP Capital               229.7     176.8     163.5      113.3    200.1       -29.6       -12.9%         36.6        22.4%
 MAG Mutual               150.1     158.6     142.9      177.2    194.9        44.8        29.8%         52.0        36.4%
 State Volunteer          138.2     137.2     129.3      155.9    167.9        29.7        21.5%         38.6        29.9%
 FPIC                      91.6      91.7     110.8      118.9    145.4        53.8        58.7%         34.6        31.2%
 MIIX                     225.5     122.0      72.3       21.3      0.0      -225.5      -100.0%        -72.3      -100.0%
 MLMIC                   1500.5    1428.7     993.0      842.8    478.1     -1022.4       -68.1%       -514.9       -51.9%

 Totals                  4991.3    4713.6    3902.7      4066    4289.4      -701.9       -14.1%        386.7         9.9%

 Note:
 MIIX was placed in rehabilitation by the New Jersey Department of Insurance on
 September 28, 2004. We have assumed that the company's surplus as of December
 31, 2004 was no higher than zero.




Huggins Actuarial Services, Inc.                            Exhibit 7
                           Table 6- Reproduced from Angoff Report, July, 2005
                                             Excess Surplus
                         12 Largest Monoline Medical Malpractice Insurers, 2004
                                         (in millions of dollars)




                                           (1)         (2)       (3)        (4)
                                                              =(1) - (2) =(1) / (2)
                                          Actual Adequate Angoff
                                         Adjusted Surplus      Excess Actual as %
                          Company        Surplus (per Angoff) Surplus of Adequate

                             HCI            767.8         418.5    349.3    183.5%
                          Med Pro           510.8         213.2    297.6    239.6%
                             TDC            405.6         162.0    243.6    250.4%
                           Norcal           309.1         120.0    189.1    257.6%
                       Med Assurance        276.9         149.1    127.8    185.7%
                        Pro National        241.8         126.6    115.2    191.0%
                         AP Capital         200.1          85.7    114.4    233.5%
                        MAG Mutual          194.9          90.2    104.7    216.1%
                            ISMIE           212.5         110.6    101.9    192.1%
                             FPIC           145.4          49.1     96.3    296.1%
                       State Volunteer      167.9          80.9     87.0    207.5%
                         Pro Mutual         378.5         302.4     76.1    125.2%
                            Totals         3811.3        1908.3   1903.0    199.7%




Huggins Actuarial Services, Inc.                    Exhibit 8
                       Table 6- Angoff Report, July, 2005, Revised to Include MLMIC
                                               Excess Surplus
                         13 Largest Monoline Medical Malpractice Insurers, 2004
                                          (in millions of dollars)

                         (1)       (2)       (3)       (4)               (5)        (6)          (7)
                                           =(2) x 2 =(2) - (3)        =(1) - (3) =(1) / (2)   =(1) / (3)
                      Actual  Adequate     Actual    Angoff            Actual               Surplus as %
                     Adjusted Surplus     Adequate Excess              Excess Actual as %     of Actual
    Company          Surplus (per Angoff) Surplus Surplus             Surplus of Adequate    Adequate

       HCI               767.8       418.5      837.0         349.3      -69.2     183.5%          91.7%
    Med Pro              510.8       213.2      426.4         297.6       84.4     239.6%         119.8%
       TDC               405.6       162.0      324.0         243.6       81.6     250.4%         125.2%
     Norcal              309.1       120.0      240.0         189.1       69.1     257.6%         128.8%
 Med Assurance           276.9       149.1      298.2         127.8      -21.3     185.7%          92.9%
  Pro National           241.8       126.6      253.2         115.2      -11.4     191.0%          95.5%
   AP Capital            200.1        85.7      171.4         114.4       28.7     233.5%         116.7%
  MAG Mutual             194.9        90.2      180.4         104.7       14.5     216.1%         108.0%
      ISMIE              212.5       110.6      221.2         101.9       -8.7     192.1%          96.1%
       FPIC              145.4        49.1       98.2          96.3       47.2     296.1%         148.1%
 State Volunteer         167.9        80.9      161.8          87.0        6.1     207.5%         103.8%
   Pro Mutual            378.5       302.4      604.8          76.1     -226.3     125.2%          62.6%
     MLMIC              -106.9       267.3      534.5        -374.2     -641.4     -40.0%         -20.0%
      Totals            3704.4      2175.6     4351.1        1528.9     -646.7     170.3%          85.1%

 Note:
 MLMIC's actual surplus as of December 31, 2004 was $478.1 million, but they also carried a
 negative liability of $585 million for future investment income, which must be deducted from
 surplus to derive the adjusted surplus for RBC purposes. The adjusted surplus is therefore ($106.9)
 million.




Huggins Actuarial Services, Inc.                 Exhibit 9
  111 Veterans Square
     Second Floor
    Media, PA 19063

   Phone: 610.892.1824
    Fax: 610.892.1827
info@hugginsactuarial.com

www.hugginsactuarial.com

								
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