new york healthcare facilities workers …...york healthcare facilities workers compensation trust...
TRANSCRIPT
NEW YORK HEALTHCARE FACILITIES WORKERS
COMPENSATION TRUST
ACTUARIAL REPORTEstimated Reserves as of 12/31/06
Suite 100 • 9055 Land Grant Place • Brentwood, TN 37027 • 615.369.0753 • 615.369.0754 fax [email protected] • www.bynac.com
April 20, 2009 Mr. Christopher J. Rosetti, CPA, CFE Partner BST Valuation & Litigation Advisors, LLC 26 Computer Drive West Albany, NY 12205 Dear Mr. Rosetti: Enclosed are one unbound and two bound copies of the actuarial report prepared for New York Healthcare Facilities Workers Compensation Trust (NYHCF) at your request. This report estimates the required reserves as of 12/31/06 for claims incurred prior to that date. The estimates contained in this report are based on data provided by NCA Comp, BST Valuation & Litigation Advisors, LLC (BST), and Milliman USA. These data and the associated assumptions should be reviewed for their consistency with the internal records of NYHCF. 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 BST. Sincerely,
Lisa Dennison, FCAS, FCA, MAAA President and Consulting Actuary
Mary Jean King, FCAS, FCA, MAAA Consulting Actuary enclosure
ii
NEW YORK HEALTHCARE FACILITIES WORKERS COMPENSATION TRUST
ACTUARIAL REPORT
TABLE OF CONTENTS
PURPOSE........................................................................................................................... 1
FINDINGS.......................................................................................................................... 2
ESTIMATED REQUIRED RESERVES........................................................................ 2 COMPARISON TO PRIOR REPORT........................................................................... 4
ASSUMPTIONS................................................................................................................. 7
DEFINITIONS................................................................................................................ 7 HISTORICAL INFORMATION.................................................................................... 7 RETENTIONS................................................................................................................ 8
RESERVE ANALYSIS.................................................................................................... 10
OVERVIEW ................................................................................................................. 10 INCURRED LOSS DEVELOPMENT ......................................................................... 11 PAID LOSS DEVELOPMENT .................................................................................... 16 SELECTED ESTIMATED ULTIMATE INCURRED LOSSES ................................. 16 ESTIMATED REQUIRED RESERVES ...................................................................... 16 DISCOUNTED ESTIMATED REQUIRED RESERVES............................................ 24
HISTORICAL PROFITABILITY ANALYSIS ............................................................... 27
QUALIFICATIONS AND LIMITATIONS..................................................................... 33
CONSULTATION............................................................................................................ 35
APPENDICES
INCURRED LOSSES $250,000 AND GREATER ......................................................... 36
AVERAGE SEVERITIES................................................................................................ 38
LOSSES IN EXCESS OF AGGREGATE RETENTION................................................ 40
ESTIMATED ULAE AND ASSESSMENT RESERVES............................................... 45
ESTIMATED REQUIRED RESERVES AS OF 7/31/06 ................................................ 50
ESTIMATED REQUIRED RESERVES AS OF 12/31/06 - HIGH................................. 59
iii
NEW YORK HEALTHCARE FACILITIES WORKERS COMPENSATION TRUST
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 New York Healthcare Facilities
Workers Compensation Trust (NYHCF) as of 12/31/06 for claims incurred from 1/1/97 through
12/31/06. The required reserves are estimated excluding and including the effects of anticipated
investment income earned on the reserves until they are paid.
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)
losses are defined throughout this report to include the additional development on known claims
in addition to claims incurred but not yet reported.
1
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 12/31/06 are closed, the actual reserve need remains an estimate. While the
experience of NYHCF 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 LOSS AND ALAE RESERVESINCLUDING IBNR FOR 7/1/97-12/31/06 AS OF 12/31/06
Low Expected High
Undiscounted forInvestment Income $16,700,000 $20,270,000 $23,800,000
Discounted at 3.0% perAnnum 15,350,000 18,630,000 21,890,000
2
ESTIMATED ULAE RESERVESFOR 7/1/97-12/31/06 AS OF 12/31/06
Low Expected High
Undiscounted forInvestment Income $2,140,000 $2,600,000 $2,870,000
Discounted at 3.0% perAnnum 1,970,000 2,390,000 2,640,000
ESTIMATED ASSESSMENT RESERVESFOR 7/1/97-12/31/06 AS OF 12/31/06
Low Expected High
Undiscounted forInvestment Income $7,370,000 $8,940,000 $9,850,000
Discounted at 3.0% perAnnum 6,770,000 8,220,000 9,050,000
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
reserves in this particular situation. Figure 1 contains a graphical representation of the estimated
retained loss experience as of 12/31/06 including the undiscounted expected loss reserves for
NYHCF.
As noted, the reserves are estimated on both undiscounted and discounted for investment income
bases. The discount rate of 3.0% per year is shown for illustrative purposes only. BYNAC has
not verified that this rate is appropriate for NYHCF. Establishing loss reserves on a discounted
basis requires that future investment income earned on the loss reserves be added to the reserves
to strengthen them rather than recognized as net income. It also assumes that assets equal to the
present value of the reserves are available for investment as of the 12/31/06 evaluation date. The
3
accuracy of discounted reserves depends upon the accuracy of the undiscounted estimates, the
estimated payout schedule, and the interest rate assumption used to discount the loss payout
schedule. If the discounted estimate is used, the management of NYHCF should carefully
review each of these assumptions to assure that they are in agreement with them.
COMPARISON TO PRIOR REPORT
The ultimate incurred losses estimated in this report are compared to Milliman USA’s
(Milliman’s) 4/11/06 actuarial report in the following table and Figure 2. As shown, the
estimates increased $4,517,654 or 11.4% from the prior report. The increase in the 1/1-12/31/99
through 1/1-12/31/01 and 1/1-12/31/03 periods is due to incurred losses as of 12/31/06 greater
than the prior estimate of ultimate incurred losses.
COMPARISON OF ESTIMATED ULTIMATE INCURREDLOSSES TO PRIOR REPORT
(Limited to Specific and Aggregate Retentions)
CurrentReport Milliman's
Policy (Section B of 4/11/06 PercentPeriod Table 6) Report Change Change
7/1-12/31/97 $ 361,786 $ 457,258 ($ 95,472) (20.9%)1/1-12/31/98 1,237,032 1,081,342 155,690 14.4%1/1-12/31/99 5,364,820 4,363,372 1,001,448 23.0%1/1-12/31/00 5,555,268 5,388,002 167,266 3.1%1/1-12/31/01 6,600,234 6,198,728 401,506 6.5%1/1-12/31/02 4,563,159 4,602,444 ( 39,285) ( 0.9%)1/1-12/31/03 8,007,299 6,437,986 1,569,313 24.4%1/1-12/31/04 5,318,355 5,242,777 75,578 1.4%1/1-12/31/05 7,111,241 5,829,631 1,281,610 22.0%
Total $44,119,194 $39,601,540 $4,517,654 11.4%
4
NEW YORK HEALTHCARE FACILITIESWORKERS COMPENSATION TRUST
Figure 1
ESTIMATED ULTIMATE RETAINED LOSSES(Limited to Specific and Aggregate Retentions)
0.4
1.2
5.45.6
6.6
4.6
8.0
5.3
7.1
3.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Policy Period Incepting January 1
0.0
2.0
4.0
6.0
8.0
10.0$ Millions
Paid Case Estimated IBNR
5
NEW YORK HEALTHCARE FACILITIESWORKERS COMPENSATION TRUST
Figure 2
COMPARISON OF ESTIMATED ULTIMATE INCURRED LOSSES TO PRIOR REPORT(Limited to Specific and Aggregate Retentions)
0.4
1.2
5.45.6
6.6
4.6
8.0
5.3
7.1
0.5
1.1
4.4
5.4
6.2
4.6
6.4
5.2
5.8
1997 1998 1999 2000 2001 2002 2003 2004 2005
Policy Period Incepting January 1
0.0
2.0
4.0
6.0
8.0
10.0$ Millions
Current Paid Current Case Current IBNRPrior Paid Prior Case Prior IBNR
6
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, NYHCF has assumed its members’ losses according to the New
York workers compensation statutes. NYHCF’s unique development patterns are used in
conjunction with industry experience to estimate the ultimate losses expected to be incurred by
NYHCF 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 2006 edition of 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 BST Valuation and Litigation Advisors, LLC
(BST), Milliman, and NCA Comp (NCA). The 12/31/06 loss run is used as the basis for the
current evaluation of loss. In addition, Milliman provided loss data for claims closed by a prior
third-party administrator that have not been transferred to subsequent administrators. Milliman
identified duplicate claims which have been excluded from the data. BYNAC compared the data
7
to NCA’s loss run. A minimal amount of duplicates were identified by BYNAC and removed.
It is difficult to ascertain the completeness of the data. These data are reviewed for
reasonableness and used without audit. It is assumed that all data provided is complete and
accurate.
Four different firms have adjusted NYHCF’s claims. Crawford adjusted the claims from
inception until the fall of 2001 when Network Adjusters was retained. Specialty Risk Services,
Inc. (SRS) replaced Network Adjusters in August, 2002. NCA has adjusted the claims since
August, 2006. Each third-party administrator (TPA) employed different philosophies with
respect to closing claims and case reserving. As a result of the TPA changes, NYHCF does not
have consistent historical incurred loss development data. Therefore, BYNAC has relied on
industry incurred loss development factors to estimated ultimate incurred losses for the incurred
method.
RETENTIONS
NYHCF’s specific retentions are summarized in the following table. As of 12/31/06, numerous
claims are reported in excess of the specific retention. The aggregate retention is expected to be
exceeded in each of the 7/1/98-99 through 7/1/01-7/31/04 periods. The limit is expected to be
exhausted or almost exhausted in each of these periods. As almost $11,000,000 is ultimately
expected to be recovered on losses exceeding the aggregate retention in the 7/1/98-99 through
7/1/02-7/31/04 policy periods, the retentions are a critical part of the analysis. BYNAC
understands that the aggregate retentions shown are audited and have been provided by the
carrier.
8
EXCESS INSURANCE SUMMARY
Policy Specific Specific Aggregate AggregatePeriod Retention Limit Retention Limit ALAE Carrier
7/1/97-98 $ 250,000 Statutory $ 2,500,000 $ 1,000,000 Prorata Zurich7/1/98-99 250,000 Statutory 2,500,000 1,000,000 Prorata Zurich
7/1/99-6/30/02 250,000 Statutory 16,228,000 5,000,000 Including Hartford7/1/02-7/31/04 350,000 Statutory 12,082,000 5,000,000 Including Hartford
8/1/04-05 5 00,000 Statutory None Including National Union8/1/05-06 5 00,000 Statutory None Including National Union
* Minimum.
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.
9
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. The historical payment pattern is analyzed and quantified to determine a unique
payout schedule for NYHCF. This schedule is used to predict when the required reserves will be
paid so that the losses may be discounted to their present value.
Two 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.
10
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 NYHCF’s unlimited losses including ALAE as of different evaluation
dates. For example, Section A of the table shows losses incurred during the 1/1-12/31/00 period
evaluated as of 36, 48, 60, 72, and 84 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.
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 1/1-12/31/02 period is 1.878. This is the 24
month incurred amount of $2,531,653 divided by the 12 month incurred amount of $1,347,746.
The age-to-age factor of 1.878 means that losses incurred during the 1/1-12/31/02 period
increased by 87.8% 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.
11
Table 1
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
INCURRED LOSS DEVELOPMENT FACTORS(Unlimited Losses Including ALAE)
A. INCURRED LOSSES
Age of Policy PeriodPolicy 12 24 36 48 60 72 84 96 108 120 132Period Months Months Months Months Months Months Months Months Months Months Months
7/1-12/31/97 368,671 402,971 403,574 402,099 361,7861/1-12/31/98 1,143,242 1,261,173 1,241,914 1,272,361 1,550,9831/1-12/31/99 3,544,306 4,286,520 4,560,793 4,676,756 6,710,9051/1-12/31/00 3,090,180 3,989,471 4,595,276 4,955,502 8,838,2431/1-12/31/01 2,615,692 4,230,748 5,171,805 5,728,892 10,539,8821/1-12/31/02 1,347,746 2,531,653 3,402,015 4,103,041 7,378,2261/1-12/31/03 2,302,762 3,808,620 4,945,366 8,881,3741/1-12/31/04 1,478,640 2,360,909 4,139,7871/1-12/31/05 1,319,938 3,647,5751/1-7/31/06 1,131,483
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 toPeriod Months Months Months Months Months Months Months Months Months Months Ultimate
7/1-12/31/97 1.093 1.001 0.996 0.9001/1-12/31/98 1.103 0.985 1.025 1.2191/1-12/31/99 1.209 1.064 1.025 1.4351/1-12/31/00 1.291 1.152 1.078 1.7841/1-12/31/01 1.617 1.222 1.108 1.8401/1-12/31/02 1.878 1.344 1.206 1.7981/1-12/31/03 1.654 1.298 1.7961/1-12/31/04 1.597 1.7531/1-12/31/05 2.763
Average 1.973 1.503 1.379 1.317 1.271 1.222 1.154 1.108 0.900Wtd Avg 1.915 1.477 1.413 1.308 1.353 1.360 1.327 1.165 0.9003 Yr Avg 2.005 1.465 1.408 1.353 1.327 1.265 1.154NY NCCI 1.552 1.245 1.136 1.076 1.052 1.030 1.021 1.016 1.014 1.011 1.134NY Groups 1.520 1.230 1.120 1.080 1.055 1.050 1.040 1.030 1.020 1.015 1.034Selected 1.540 1.240 1.130 1.080 1.050 1.040 1.030 1.020 1.020 1.010 1.080
C. INCURRED LOSS DEVELOPMENT FACTORS
12 to 24 to 36 to 48 to 60 to 72 to 84 to 96 to 108 to 120 to 132 toUltimate Ultimate Ultimate Ultimate Ultimate Ultimate Ultimate Ultimate Ult imate Ultimate Ultimate
2.975 1.932 1.558 1.379 1.277 1.216 1.169 1.135 1.113 1.091 1.080
12
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 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 averages are evaluated, and the factors selected as most representative
of NYHCF’s expected loss development are shown. The historical and expected loss
development patterns are graphically illustrated in Figure 3 by solid and dashed lines,
respectively.
Computation of the loss development factors in Section C is based on the selected age-to-age
factors. For instance, the 12 to ultimate factor is calculated by multiplying the 12 to 24 month
age-to-age factor by the 24 to ultimate loss development factor (2.975 = 1.540 x 1.932).
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 1/1-7/31/06 period evaluated at $1,131,483
on 12/31/06 are estimated to ultimately cost $2,958,828 ($1,131,483 x 2.615). The loss
development factor of 2.615 means that the losses are expected to ultimately cost 161.5% more
than incurred losses evaluated on 12/31/06.
13
NEW YORK HEALTHCARE FACILITIESWORKERS COMPENSATION TRUST
Figure 3
HISTORICAL AND EXPECTED DEVELOPMENT OF INCURRED LOSSES(Unlimited Losses Including ALAE)
12 24 36 48 60 72 84 96 108 120*
Age of Policy Period in Months
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0$ Millions
1/1-12/31/051/1-12/31/04
1/1-12/31/99
* Additional development of 9.1% is expected after 120 months.
1/1-12/31/00
1/1-12/31/06
1/1-12/31/01
1/1-12/31/02
1/1-12/31/03
14
Table 2
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
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 asPeriod of 12/31/06 Retention* Retention Retention of 12/31/06
7/1-12/31/97 $ 361,786 $ 250,000 0 $ 0 $ 361,7861/1-12/31/98 1,550,983 250,000 0 0 1,550,9831/1-12/31/99 6,710,905 250,000 6 636,072 6,074,8331/1-12/31/00 8,838,243 250,000 10 2,264,823 6,573,4201/1-12/31/01 10,539,882 250,000 14 2,989,009 7,550,8731/1-12/31/02 7,378,226 250,000 # 4 2,016,148 5,362,0781/1-12/31/03 8,881,374 350,000 3 703,324 8,178,0501/1-12/31/04 4,139,787 350,000 ## 0 0 4,139,7871/1-12/31/05 3,647,575 500,000 0 0 3,647,5751/1-7/31/06 1,131,483 500,000 0 0 1,131,483
Total $53,180,244 37 $8,609,376 $44,570,868
B. ESTIMATED ULTIMATE INCURRED LOSSES
Limited Age of Incurred EstimatedIncurred Policy Loss Ultimate
Policy Losses as Period in Development IncurredPeriod of 12/31/06 Months Factor Losses^
7/1-12/31/97 $ 361,786 117.0 1.096 $ 396,5171/1-12/31/98 1,550,983 108.0 1.113 1,726,2441/1-12/31/99 6,074,833 96.0 1.135 6,692,4351/1-12/31/00 6,573,420 84.0 1.169 7,261,8281/1-12/31/01 7,550,873 72.0 1.216 8,425,8621/1-12/31/02 5,362,078 60.0 1.277 6,542,6741/1-12/31/03 8,178,050 48.0 1.379 10,879,5811/1-12/31/04 4,139,787 36.0 1.558 6,449,7881/1-12/31/05 3,647,575 24.0 1.932 7,047,1151/1-7/31/06 1,131,483 14.5 2.615 2,958,828
Total $44,570,868 $58,380,872
# Changed to $350,000 7/1/02.## Changed to $500,000 7/1/04.
^ Did not develop excess claims.
15
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.
SELECTED ESTIMATED ULTIMATE INCURRED LOSSES
The results of the methods are compared in Table 5, and the ultimate incurred losses are selected
for each period. Incurred losses are selected for 1/1-12/31/97 since only one claim is open. The
incurred method is selected for 1/1-12/31/99 due to the period’s maturity. The incurred method
is selected for 1/1-7/31/06 due to its immaturity. An average is selected for the remaining
periods since neither method is deemed biased. The selection procedure is depicted in Figure 5.
ESTIMATED REQUIRED RESERVES
The aggregate retention is reflected in Table 6. Estimated ultimate incurred, incurred, and paid
losses in excess of the aggregate retentions are shown in Section A. Losses limited to the
aggregate retention are shown in Section B.
The required reserves are estimated in Table 7. The estimated ultimate incurred, incurred, and
paid losses retained by NYHCF are summarized in Section A. In Section B, the case reserves
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
16
Table 3
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
PAID LOSS DEVELOPMENT FACTORS(Unlimited Losses Including ALAE)
A. PAID LOSSES
Age of Policy PeriodPolicy 12 24 36 48 60 72 84 96 108 120 132Period Months Months Months Months Months Months Months Months Months Months Months
7/1-12/31/97 9,949 99,910 144,139 190,384 262,728 331,230 335,008 340,899 347,376 354,3861/1-12/31/98 148,414 512,334 694,619 804,206 914,318 1,033,623 1,107,178 1,142,026 1,262,8751/1-12/31/99 597,662 1,466,106 2,085,426 2,657,138 3,235,501 3,550,343 3,839,078 4,168,9191/1-12/31/00 776,185 1,595,177 2,345,706 3,046,720 3,453,957 3,875,152 4,693,1941/1-12/31/01 472,807 1,716,318 2,658,123 3,407,132 4,132,647 4,747,7411/1-12/31/02 562,293 1,457,585 2,309,174 2,975,525 3,496,3791/1-12/31/03 998,730 2,446,356 3,441,595 4,206,1881/1-12/31/04 611,502 1,569,401 2,328,9741/1-12/31/05 615,662 1,594,5261/1-7/31/06 453,277
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 toPeriod Months Months Months Months Months Months Months Months Months Months Ultimate
7/1-12/31/97 10.042 1.443 1.321 1.380 1.261 1.011 1.018 1.019 1.0201/1-12/31/98 3.452 1.356 1.158 1.137 1.130 1.071 1.031 1.1061/1-12/31/99 2.453 1.422 1.274 1.218 1.097 1.081 1.0861/1-12/31/00 2.055 1.470 1.299 1.134 1.122 1.2111/1-12/31/01 3.630 1.549 1.282 1.213 1.1491/1-12/31/02 2.592 1.584 1.289 1.1751/1-12/31/03 2.449 1.407 1.2221/1-12/31/04 2.566 1.4841/1-12/31/05 2.590
Average 3.537 1.464 1.264 1.210 1.152 1.094 1.045 1.063 1.020Wtd Avg 2.599 1.474 1.264 1.185 1.128 1.135 1.070 1.086 1.0203 Yr Avg 2.535 1.492 1.264 1.174 1.123 1.121 1.0455 Yr Mid Avg 2.583 1.501 1.282 1.175 1.134NY NCCI 2.524 1.550 1.274 1.177 1.118 1.078 1.057 1.046 1.039 1.032 1.305NY Groups 2.370 1.460 1.220 1.130 1.100 1.070 1.050 1.045 1.035 1.025 1.102Selected 2.560 1.500 1.270 1.200 1.130 1.120 1.060 1.060 1.030 1.030 1.305
C. PAID LOSS DEVELOPMENT FACTORS
12 to 24 to 36 to 48 to 60 to 72 to 84 to 96 to 108 to 120 to 132 toUltimate Ultimate Ultimate Ultimate Ultimate Ultimate Ultimate Ultimate Ult imate Ultimate Ultimate
11.520 4.500 3.000 2.362 1.968 1.742 1.555 1.467 1.384 1.344 1.305
17
NEW YORK HEALTHCARE FACILITIESWORKERS COMPENSATION TRUST
Figure 4
HISTORICAL AND EXPECTED DEVELOPMENT OF PAID LOSSES(Unlimited Losses Including ALAE)
12 24 36 48 60 72 84 96 108 120*
Age of Policy Period in Months
0.0
2.0
4.0
6.0
8.0$ Millions
1/1-12/31/05
1/1-12/31/04
1/1-12/31/99
* Additional development of 34.4% is expected after 120 months.
1/1-12/31/00
1/1-12/31/06
1/1-12/31/01
1/1-12/31/02
1/1-12/31/03
18
Table 4
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
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 12/31/06 Retention Retention Retention of 12/31/06
7/1-12/31/97 $ 354,386 $ 250,000 0 $ 0 $ 354,3861/1-12/31/98 1,262,875 250,000 0 0 1,262,8751/1-12/31/99 4,168,919 250,000 0 0 4,168,9191/1-12/31/00 4,815,177 250,000 1 121,983 4,693,1941/1-12/31/01 4,872,024 250,000 1 124,283 4,747,7411/1-12/31/02 3,776,807 250,000 # 1 280,428 3,496,3791/1-12/31/03 4,206,188 350,000 0 0 4,206,1881/1-12/31/04 2,328,974 350,000 ## 0 0 2,328,9741/1-12/31/05 1,594,526 500,000 0 0 1,594,5261/1-7/31/06 453,277 500,000 0 0 453,277
Total $27,833,153 3 $ 526,694 $27,306,459
B. ESTIMATED ULTIMATE INCURRED LOSSES
Limited Age of EstimatedPaid Policy Paid Loss Ultimate
Policy Losses as Period in Development IncurredPeriod of 12/31/06 Months Factor Losses^
7/1-12/31/97 $ 354,386 117.0 1.353 $ 479,4841/1-12/31/98 1,262,875 108.0 1.384 1,747,8191/1-12/31/99 4,168,919 96.0 1.467 6,115,8041/1-12/31/00 4,693,194 84.0 1.555 7,159,1671/1-12/31/01 4,747,741 72.0 1.742 8,085,0651/1-12/31/02 3,496,379 60.0 1.968 6,638,8741/1-12/31/03 4,206,188 48.0 2.362 9,935,0161/1-12/31/04 2,328,974 36.0 3.000 6,986,9221/1-12/31/05 1,594,526 24.0 4.500 7,175,3671/1-7/31/06 453,277 14.5 9.099 4,124,367
Total $27,306,459 $58,447,885
# Changed to $350,000 7/1/02.## Changed to $500,000 7/1/04.
^ Did not develop excess claims.
19
Table 5
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
SELECTED ESTIMATED ULTIMATE INCURRED LOSSES(Limited to Specif ic Retention)
SelectedEstimated
Incurred UltimatePolicy Loss Paid Loss IncurredPeriod Development Development Losses
7/1-12/31/97 $ 396,517 $ 479,484 $ 361,786 ^1/1-12/31/98 1,726,244 1,747,819 1,737,032 *1/1-12/31/99 6,692,435 6,115,804 6,692,435 #1/1-12/31/00 7,261,828 7,159,167 7,210,498 *1/1-12/31/01 8,425,862 8,085,065 8,255,464 *1/1-12/31/02 6,542,674 6,638,874 6,590,774 *1/1-12/31/03 10,879,581 9,935,016 10,407,299 *1/1-12/31/04 6,449,788 6,986,922 6,718,355 *1/1-12/31/05 7,047,115 7,175,367 7,111,241 *1/1-7/31/06 2,958,828 4,124,367 2,958,828 #
Total $58,380,872 $58,447,885 $58,043,712
^ Selected incurred losses since only one claim is open.* Selected the average.
@ Selected the incurred method due to the period's maturity.# Selected the incurred method due to the period's immaturity.
20
NEW YORK HEALTHCARE FACILITIESWORKERS COMPENSATION TRUST
Figure 5
SELECTED ESTIMATED ULTIMATE INCURRED LOSSES(Losses Limited to Specific Retentions)
0.4
1.7
6.77.2
8.3
6.6
10.4
6.77.1
3.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Policy Period Incepting January 1
0.0
2.0
4.0
6.0
8.0
10.0
12.0$ Millions
Incurred Development Paid Development Selected
21
Table 6
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
LOSSES LIMITED TO AGGREGATE RETENTION(Limited to Specific Retention)
A. LOSSES IN EXCESS OF AGGREGATE
EstimatedUltimate IncurredLosses Losses Paid Los ses
Policy in Excess in Excess of in ExcessPeriod of Aggregate# Aggregate# of Aggregate#
7/1-12/31/97 $ 0 $ 0 $ 01/1-12/31/98 500,000 500,000 248,6011/1-12/31/99 1,327,615 1,030,324 248,6011/1-12/31/00 1,655,230 1,060,647 01/1-12/31/01 1,655,230 1,060,647 01/1-12/31/02 2,027,615 931,752 01/1-12/31/03 2,400,000 802,857 01/1-12/31/04 1,400,000 468,333 01/1-12/31/05 0 0 01/1-7/31/06 0 0 0
Total $10,965,690 $ 5,854,560 $ 497,202
B. LOSSES LIMITED TO AGGREGATE RETENTION
EstimatedUltimate Incurred Paid
Policy Incurred Losses as Losses asPeriod Losses of 12/31/06 of 12/31/06
7/1-12/31/97 $ 361,786 $ 361,786 $ 354,3861/1-12/31/98 1,237,032 1,050,983 1,014,2741/1-12/31/99 5,364,820 5,044,509 3,920,3181/1-12/31/00 5,555,268 5,512,773 4,693,1941/1-12/31/01 6,600,234 6,490,226 4,747,7411/1-12/31/02 4,563,159 4,430,326 3,496,3791/1-12/31/03 8,007,299 7,375,193 4,206,1881/1-12/31/04 5,318,355 3,671,454 2,328,9741/1-12/31/05 7,111,241 3,647,575 1,594,5261/1-7/31/06 2,958,828 1,131,483 453,277
Total $47,078,022 $38,716,308 $26,809,257
# From Appendix C, Exhibit IV allocated to calendar accident year.
22
Table 7
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
ESTIMATED REQUIRED RESERVES AS OF 12/31/06(Limited to Specific and Aggregate Retentions)
A. LOSS SUMMARY
EstimatedUltimate Incurred Paid Losses
Policy Incurred Losses as as ofPeriod Losses of 12/31/06 12/31/06
7/1-12/31/97 $ 361,786 $ 361,786 $ 354,3861/1-12/31/98 1,237,032 1,050,983 1,014,2741/1-12/31/99 5,364,820 5,044,509 3,920,3181/1-12/31/00 5,555,268 5,512,773 4,693,1941/1-12/31/01 6,600,234 6,490,226 4,747,7411/1-12/31/02 4,563,159 4,430,326 3,496,3791/1-12/31/03 8,007,299 7,375,193 4,206,1881/1-12/31/04 5,318,355 3,671,454 2,328,9741/1-12/31/05 7,111,241 3,647,575 1,594,5261/1-7/31/06 2,958,828 1,131,483 453,277
Total $47,078,022 $38,716,308 $26,809,257
B. ESTIMATED REQUIRED RESERVES AS OF 12/31/06
EstimatedCase Estimated Required
Policy Reserves as IBNR as Reserves asPeriod of 12/31/06 of 12/31/06 of 12/31/06
7/1-12/31/97 $ 7,400 $ 0 $ 7,4001/1-12/31/98 36,709 186,049 222,7581/1-12/31/99 1,124,191 320,311 1,444,5021/1-12/31/00 819,579 42,495 862,0741/1-12/31/01 1,742,485 110,008 1,852,4931/1-12/31/02 933,947 132,833 1,066,7801/1-12/31/03 3,169,005 632,106 3,801,1111/1-12/31/04 1,342,480 1,646,901 2,989,3811/1-12/31/05 2,053,049 3,463,666 5,516,7151/1-7/31/06 678,206 1,827,345 2,505,551
Total $11,907,051 $ 8,361,714 $20,268,765
23
reserves as of 12/31/06 are then estimated by adding the case reserves and IBNR or by
subtracting paid losses from the estimated ultimate incurred losses.
DISCOUNTED ESTIMATED REQUIRED RESERVES
Two types of paid to incurred ratios that check the reasonableness of the estimates are calculated
in Table 8. 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 Section A of Table 9, the undiscounted reserves are assigned to the period in which they are
expected to be paid based on the selected schedule. In Section B, the payments expected during
the future periods are discounted at a rate of 3.0% per annum as requested by BST. The
payments are assumed to be in the middle of each period. The investment income expected to be
earned on the loss reserves is estimated in Section C.
24
Table 8
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
PAID TO INCURRED RATIOS(Unlimited Los ses Including ALAE)
A. PAID/INCURRED LOSSES
Age of Policy PeriodPolicy 12 24 36 48 60 72 84 96 108 120Period Months Months Months Months Months Months Months Months Months Months
7/1-12/31/97 0.898 0.831 0.845 0.864 0.9801/1-12/31/98 0.800 0.820 0.892 0.898 0.8141/1-12/31/99 0.750 0.755 0.778 0.821 0.6211/1-12/31/00 0.759 0.764 0.752 0.782 0.5311/1-12/31/01 0.656 0.628 0.659 0.721 0.4501/1-12/31/02 0.417 0.576 0.679 0.725 0.4741/1-12/31/03 0.434 0.642 0.696 0.4741/1-12/31/04 0.414 0.665 0.5631/1-12/31/05 0.466 0.4371/1-7/31/06 0.401
Average 0.426 0.595 0.665 0.674 0.700 0.746 0.769 0.788 0.839 0.9803 Yr Avg 0.427 0.581 0.646 0.619 0.649 0.670 0.748 0.788
B. PAID/ESTIMATED ULTIMATE INCURRED LOSSES
EstimatedPolicy 12 24 36 48 60 72 84 96 108 120 UltimatePeriod Months Months Months Months Months Months Months Months Months Months Losses*
7/1-12/31/97 0.027 0.276 0.398 0.526 0.726 0.916 0.926 0.942 0.960 0.980 $ 361,7861/1-12/31/98 0.085 0.295 0.400 0.463 0.526 0.595 0.637 0.657 0.727 1,737,0321/1-12/31/99 0.081 0.198 0.282 0.359 0.438 0.480 0.519 0.564 7,393,1741/1-12/31/00 0.080 0.165 0.242 0.314 0.356 0.400 0.484 9,694,8211/1-12/31/01 0.041 0.149 0.231 0.296 0.359 0.412 11,523,3851/1-12/31/02 0.062 0.161 0.255 0.328 0.386 9,068,9131/1-12/31/03 0.088 0.216 0.305 0.372 11,302,3421/1-12/31/04 0.091 0.234 0.347 6,718,3551/1-12/31/05 0.087 0.224 7,111,2411/1-7/31/06 0.153 2,958,828
$67,869,877Average 0.080 0.213 0.308 0.380 0.465 0.561 0.642 0.721 0.844 0.9803 Yr Avg 0.110 0.225 0.302 0.332 0.367 0.431 0.547 0.721NY Groups# 0.157 0.372 0.542 0.662 0.748 0.822 0.880 0.924 0.966 1.000Selected 0.090 0.290 0.430 0.520 0.610 0.690 0.770 0.850 0.930 1.000
* See Appendix D, Exhibit I.# Accelerated to a ten-year payout.
25
Table 9
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
DISCOUNTED ESTIMATED REQUIRED RESERVES AS OF 12/31/06(Limited to Specific and Aggregate Retentions)
A. ESTIMATED AMOUNT PAID IN INTERVAL
Policy 1/1/07- 1/1/08- 1/1/09- 1/1/10- 1/1/11- 1/1/12- 1/1/13- 1/1/14- 1/1/15-Period 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 Total
7/1-12/31/97 7,400 7,4001/1-12/31/98 222,758 222,7581/1-12/31/99 770,401 674,101 1,444,5021/1-12/31/00 299,852 299,852 262,370 862,0741/1-12/31/01 478,063 478,063 478,063 418,305 1,852,4931/1-12/31/02 218,827 218,827 218,827 218,827 191,473 1,066,7801/1-12/31/03 712,708 633,519 633,519 633,519 633,519 554,329 3,801,1111/1-12/31/04 472,008 472,008 419,562 419,562 419,562 419,562 367,117 2,989,3811/1-12/31/05 1,087,803 699,302 699,302 621,602 621,602 621,602 621,602 543,901 5,516,7151/1-7/31/06 539,790 375,255 259,792 254,019 230,926 230,926 230,926 225,153 158,762 2,505,551
Total 4,809,609 3,850,925 2,971,435 2,565,833 2,097,082 1,826,419 1,219,645 769,055 158,762 20,268,765
B. ESTIMATED AMOUNT PAID IN INTERVAL DISCOUNTED
Discount 1/1/07- 1/1/08- 1/1/09- 1/1/10- 1/1/11- 1/1/12- 1/1/13- 1/1/14- 1/1/15-Rate 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 Total
3.0% 4,739,049 3,683,912 2,759,771 2,313,652 1,835,895 1,552,372 1,006,448 616,138 123,489 18,630,726
C. ESTIMATED INVESTMENT INCOME EARNED ON THE LOSS RESERVES
Discount 1/1/07- 1/1/08- 1/1/09- 1/1/10- 1/1/11- 1/1/12- 1/1/13- 1/1/14- 1/1/15-Rate 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 Total
3.0% 70,560 167,013 211,664 252,181 261,187 274,047 213,197 152,917 35,273 1,638,039
26
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 10 and Figure 6
present a comparison of the funds available to pay claims to the estimated ultimate incurred
losses. In the 1/1-12/31/05 period, NYHCF’s estimated underwriting income is ($8,006,628).
In Section B, investment income is combined with the underwriting results to estimate net
income by policy period. As shown, the estimated net income for the 1/1-12/31/05 period is
($7,843,625). The estimated surplus as of 12/31/05, or cumulative net income, is ($20,336,242).
This estimate does not include investment income expected to be earned on the loss reserves
from Section C of Table 9.
The underwriting results per $100 payroll are shown in Section C and Figure 7. The
underwriting income is expected to decrease $1.92 ($2.80 - $0.88) from 1/1-12/31/04 to 1/1-
12/31/05 due to a $0.41 ($2.93 - $2.52) decrease in premium, a $0.88 ($2.83 - $1.95) increase in
expenses, and a $0.63 ($2.49 - $1.86) increase in estimated ultimate incurred losses.
Paid, incurred, estimated ultimate incurred, and permissible loss ratios are shown in Table 11 to
further illustrate NYHCF’s underwriting results. Also shown are combined ratios.
27
Table 10
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
HISTORICAL PROFITABILITY ANALYSIS
A. ESTIMATED UNDERWRITING INCOME
EstimatedFunds Ultimate Estimated
Policy Audited Operating NYS Available Incurred UnderwritingPeriod Premium* Expenses* Assessments* for Claims Losses Income
7/1-12/31/97 $ 297,324 $ 105,253 $ 0 $ 192,071 $ 361,786 ($ 169,715)1/1-12/31/98 1,126,547 354,017 0 772,530 1,237,032 ( 464,502)1/1-12/31/99 3,255,156 887,419 0 2,367,737 5,364,820 ( 2,997,083)1/1-12/31/00 4,418,870 1,394,097 0 3,024,773 5,555,268 ( 2,530,495)1/1-12/31/01 5,532,664 1,537,158 0 3,995,506 6,600,234 ( 2,604,728)1/1-12/31/02 5,715,582 1,768,441 901,132 3,046,009 4,563,159 ( 1,517,150)1/1-12/31/03 7,323,900 3,714,950 2,251,969 1,356,981 8,007,299 ( 6,650,318)1/1-12/31/04 8,392,026 3,738,568 1,836,231 2,817,227 5,318,355 ( 2,501,128)1/1-12/31/05 7,193,405 3,876,313 4,212,479 ( 895,387) 7,111,241 ( 8,006,628)
Total $43,255,474 $17,376,216 $ 9,201,811 $16,677,447 $44,119,194 ($27,441,747)
B. ESTIMATED FUND BALANCE
Estimated EstimatedEstimated Investment Net Income Net Income
Policy Underwriting and Other Before Assessments AfterPeriod Income Income* Dividends Revenue* Dividends
7/1-12/31/97 ($ 169,715) $ 2,774 ($ 166,941) $ 93,395 # ($ 73,546)1/1-12/31/98 ( 464,502) 14,290 ( 450,212) 251,910 # ( 198,302)1/1-12/31/99 ( 2,997,083) 40,035 ( 2,957,048) 956,961 # ( 2,000,087)1/1-12/31/00 ( 2,530,495) 144,214 ( 2,386,281) 1,245,375 # ( 1,140,906)1/1-12/31/01 ( 2,604,728) 133,068 ( 2,471,660) 1,233,831 # ( 1,237,829)1/1-12/31/02 ( 1,517,150) 204,723 ( 1,312,427) 997,694 # ( 314,733)1/1-12/31/03 ( 6,650,318) 130,469 ( 6,519,849) 1,224,055 # ( 5,295,794)1/1-12/31/04 ( 2,501,128) 269,708 ( 2,231,420) 0 ( 2,231,420)1/1-12/31/05 ( 8,006,628) 163,003 ( 7,843,625) 0 ( 7,843,625)
Total ($27,441,747) $ 1,102,284 ($26,339,463) $ 6,003,221 ($20,336,242)
* From the audited financial statements.# Allocated to policy periods based on the following percentages: 1.5557%, 4.1962%, 15.9408%,
20,7451%, 20.5528%, 16.6193%, and 20.39% for the 1997 through 2003 years, respectively.
28
Table 10 (Continued)
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
HISTORICAL PROFITABILITY ANALYSIS
C. ESTIMATED UNDERWRITING INCOME PER $100 PAYROLL
EstimatedFunds Ultimate Estimated
Policy Audited Operating NYS Available Incurred UnderwritingPeriod Premium Expenses Assessments for Claims Losses Income
7/1-12/31/97 $2.27 $0.80 $0.00 $1.47 $2.77 ($1.30)1/1-12/31/98 1.78 0.56 0.00 1.22 1.96 ( 0.74)1/1-12/31/99 1.40 0.38 0.00 1.02 2.30 ( 1.28)1/1-12/31/00 1.54 0.49 0.00 1.05 1.93 ( 0.88)1/1-12/31/01 1.88 0.52 0.00 1.36 2.25 ( 0.89)1/1-12/31/02 1.79 0.55 0.28 0.96 1.43 ( 0.47)1/1-12/31/03 2.21 1.12 0.68 0.41 2.42 ( 2.01)1/1-12/31/04 2.93 1.31 0.64 0.98 1.86 ( 0.88)1/1-12/31/05 2.52 1.36 1.47 ( 0.31) 2.49 ( 2.80)
D. PAYROLL
Policy AuditedPeriod Payroll (100)
7/1-12/31/97 $ 130,8181/1-12/31/98 631,6791/1-12/31/99 2,330,7021/1-12/31/00 2,872,3271/1-12/31/01 2,938,5831/1-12/31/02 3,191,8981/1-12/31/03 3,313,1261/1-12/31/04 2,859,6831/1-12/31/05 2,856,458
29
NEW YORK HEALTHCARE FACILITIESWORKERS COMPENSATION TRUST
Figure 6
HISTORICAL PROFITABILITY ANALYSIS(Excluding Investment Income)
0.5
1.6
6.36.9
8.1
7.2
14.0
10.9
15.2
0.3
1.1
3.3
4.4
5.5 5.7
7.3
8.4
7.2
1997 1998 1999 2000 2001 2002 2003 2004 2005
Policy Period Incepting January 1
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0$ Millions
Estimated Ultimate Losses Operating ExpensesNYS Assessments Premium
30
NEW YORK HEALTHCARE FACILITIESWORKERS COMPENSATION TRUST
Figure 7
HISTORICAL PROFITABILITY ANALYSIS(Excluding Investment Income)
3.57
2.522.68
2.42
2.77
2.26
4.22
3.81
5.32
2.27
1.78
1.401.54
1.88 1.79
2.21
2.93
2.52
1997 1998 1999 2000 2001 2002 2003 2004 2005
Policy Period Incepting January 1
0.00
1.00
2.00
3.00
4.00
5.00
6.00$ per $100 Payroll
Estimated Ultimate Losses Operating ExpensesNYS Assessments Premium
31
Table 11
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
LOSS RATIOS(Limited to Specific and A ggregate Retentions)
Permissible CombinedIncurred Estimated Loss Ratio Ratio
Paid Los s Loss Ratio Ultimate (Funds [(Losses+Policy Ratio as as of Incurred Available/ Expenses)/Period of 12/31/06 12/31/06 Loss Ratio Premium) Premium]
7/1-12/31/97 1.192 1.217 1.217 0.646 1.5711/1-12/31/98 0.900 0.933 1.098 0.686 1.4121/1-12/31/99 1.204 1.550 1.648 0.727 1.9211/1-12/31/00 1.062 1.248 1.257 0.685 1.5731/1-12/31/01 0.858 1.173 1.193 0.722 1.4711/1-12/31/02 0.612 0.775 0.798 0.533 1.1081/1-12/31/03 0.574 1.007 1.093 0.185 1.6011/1-12/31/04 0.278 0.437 0.634 0.336 1.0791/1-12/31/05 0.222 0.507 0.989 (0.124) 1.527
Total 1.020 0.386 1.422
32
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 BST.
• The completeness and accuracy of the discussion of NYHCF’s excess insurance expressed in this report.
• The appropriateness of the discount rate.
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 NYHCF. 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 NYHCF’s loss experience matures and new business is written, it is
33
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 NYHCF 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.
34
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.
35
NEW YORK HEALTHCARE FACILITIES WORKERS COMPENSATION TRUST
APPENDIX A
INCURRED LOSSES $250,000 AND GREATER
36
Appendix A
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
INCURRED LOSSES $250,000 AND GREATER
Incurred Paid Los sLoss and and ALAE
Policy Accident ALAE as asPeriod Claimant Date Status of 12/31/06 of 12/31/06
7/1/98-99 1/25/99 Open 353,435 146,9774/14/99 Open 439,256 181,828
792,691 328,805
7/1/99-00 8/8/99 Open 272,074 129,26510/29/99 Open 310,706 70,65512/1/99 Open 466,264 132,20012/31/99 Open 294,337 78,3662/28/00 Open 437,431 246,5883/1/00 Open 432,863 112,1023/17/00 Open 629,794 157,4324/14/00 Open 367,336 145,0844/20/00 Open 900,219 371,9834/20/00 Open 534,027 168,7335/29/00 Open 468,150 148,7326/26/00 Open 269,344 102,487
5,382,545 1,863,627
7/1/00-01 11/8/00 Open 395,421 166,22512/6/00 Open 330,237 154,6391/26/01 Open 415,154 100,0271/29/01 Open 363,862 60,0492/21/01 Open 619,512 200,8593/24/01 Open 260,923 129,8793/26/01 Open 293,766 122,3694/26/01 Open 386,745 165,8594/27/01 Open 729,403 374,2834/29/01 Open 266,033 113,792
4,061,056 1,587,981
7/1/01-02 7/4/01 Open 297,644 148,3697/20/01 Open 590,357 88,8429/11/01 Open 382,883 83,2349/19/01 Open 656,423 124,31410/4/01 Open 402,672 111,87210/20/01 Open 823,632 158,6622/26/02 Open 1,027,001 530,4283/22/02 Open 252,735 109,3344/9/02 Open 458,557 109,215
4,891,904 1,464,270
7/1/02-03 7/13/02 Open 1,377,855 158,8937/29/02 Open 349,385 134,2343/31/03 Open 795,802 126,6886/12/03 Open 293,233 121,228
2,816,275 541,043
7/1/03-04 7/25/03 Open 422,086 127,1948/28/03 Open 303,772 32,98610/22/03 Open 535,437 63,5362/17/04 Open 259,575 97,196
1,520,870 320,912
7/1/04-05 5/5/05 Open 297,804 112,487
37
NEW YORK HEALTHCARE FACILITIES WORKERS COMPENSATION TRUST
APPENDIX B
AVERAGE SEVERITIES
38
Appendix B
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
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 Ult imatePeriod of 12/31/06 Months Factor Claims
7/1-12/31/97 36 117.0 1.000 361/1-12/31/98 166 108.0 1.000 1661/1-12/31/99 528 96.0 1.000 5281/1-12/31/00 545 84.0 1.000 5451/1-12/31/01 545 72.0 1.000 5451/1-12/31/02 503 60.0 1.000 5031/1-12/31/03 539 48.0 1.001 5401/1-12/31/04 404 36.0 1.003 4051/1-12/31/05 340 24.0 1.010 3431/1-7/31/06 152 14.5 1.070 163
Total 3,758 3,774
B. ESTIMATED ULTIMATE AVERAGE SEVERITY
Estimated EstimatedUltimate Estimated Ultimate
Policy Incurred Ultimate AveragePeriod Losses Claims Severity
7/1-12/31/97 $ 361,786 36 $10,0501/1-12/31/98 1,737,032 166 10,4641/1-12/31/99 7,393,174 528 14,0021/1-12/31/00 9,694,821 545 17,7891/1-12/31/01 11,523,385 545 21,1441/1-12/31/02 9,068,913 503 18,0301/1-12/31/03 11,302,342 540 20,9301/1-12/31/04 6,718,355 405 16,5891/1-12/31/05 7,111,241 343 20,7321/1-7/31/06 2,958,828 163 18,152
Total $67,869,877 3,774
39
NEW YORK HEALTHCARE FACILITIES WORKERS COMPENSATION TRUST
APPENDIX C
LOSSES IN EXCESS OF AGGREGATE RETENTION
40
Appendix C, Exhibit I
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
ESTIMATED ULTIMATE INCURRED LOSSESINCURRED LOSS DEVELOPMENT
A. LOSSES LIMITED TO SPECIFIC RETENTION
Unlimited Number of LimitedIncurred Claims in Incurred in Incurred
Policy Losses as Specif ic Excess of Excess of Losses asPeriod of 12/31/06 Retention* Retention Retention of 12/31/06
7/1/97-98 $ 1,079,787 $ 250,000 0 $ 0 $ 1,079,7877/1/98-99 4,322,750 250,000 2 292,691 4,030,0597/1/99-00 9,886,291 250,000 12 2,382,546 7,503,7457/1/00-01 6,922,125 250,000 10 1,561,055 5,361,0707/1/01-02 9,187,031 250,000 9 2,641,905 6,545,1267/1/02-03 8,544,951 350,000 2 1,473,656 7,071,295
7/1/03-7/31/04 6,940,847 350,000 2 257,523 6,683,3248/1/04-6/30/05 3,848,744 500,000 0 0 3,848,744
8/1/05-06 2,447,719 500,000 0 0 2,447,719
Total $53,180,245 37 $8,609,376 $44,570,869
B. ESTIMATED ULTIMATE INCURRED LOSSES
Limited Age of Incurred EstimatedIncurred Policy Loss Ultimate
Policy Losses as Period in Development IncurredPeriod of 12/31/06 Months Factor Losses^
7/1/97-98 $ 1,079,787 114.0 1.101 $ 1,188,8457/1/98-99 4,030,059 102.0 1.123 4,464,2567/1/99-00 7,503,745 90.0 1.151 8,183,8107/1/00-01 5,361,070 78.0 1.191 5,907,5347/1/01-02 6,545,126 66.0 1.244 7,593,1377/1/02-03 7,071,295 54.0 1.322 9,122,852
7/1/03-7/31/04 6,683,324 41.5 1.463 9,453,6038/1/04-6/30/05 3,848,744 29.5 1.723 6,631,386
8/1/05-06 2,447,719 18.0 2.280 5,580,799
Total $44,570,869 $58,126,222
^ Did not develop excess claims.
41
Appendix C, Exhibit II
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
ESTIMATED ULTIMATE INCURRED LOSSESPAID LOSS DEVELOPMENT
A. LOSSES LIMITED TO SPECIFIC RETENTION
Unlimited Number of LimitedPaid Claims in Paid in Paid
Policy Losses as Specif ic Excess of Excess of Losses asPeriod of 12/31/06 Retention Retention Retention of 12/31/06
7/1/97-98 $ 907,402 $ 250,000 0 $ 0 $ 907,4027/1/98-99 2,997,202 250,000 0 0 2,997,2027/1/99-00 5,316,385 250,000 1 121,983 5,194,4027/1/00-01 3,874,375 250,000 1 124,283 3,750,0927/1/01-02 4,190,637 250,000 1 280,428 3,910,2097/1/02-03 4,150,715 350,000 0 0 4,150,715
7/1/03-7/31/04 3,478,470 350,000 0 0 3,478,4708/1/04-6/30/05 1,911,622 500,000 0 0 1,911,622
8/1/05-06 1,006,344 500,000 0 0 1,006,344
Total $27,833,152 3 $ 526,694 $27,306,458
B. ESTIMATED ULTIMATE INCURRED LOSSES
Limited Age of EstimatedPaid Policy Paid Los s Ultimate
Policy Losses as Period in Development IncurredPeriod of 12/31/06 Months Factor Losses^
7/1/97-98 $ 907,402 114.0 1.363 $ 1,236,7897/1/98-99 2,997,202 102.0 1.423 4,265,0187/1/99-00 5,194,402 90.0 1.508 7,706,1587/1/00-01 3,750,092 78.0 1.641 5,993,6517/1/01-02 3,910,209 66.0 1.845 7,003,0867/1/02-03 4,150,715 54.0 2.143 8,894,982
7/1/03-7/31/04 3,478,470 41.5 2.662 9,259,6878/1/04-6/30/05 1,911,622 29.5 3.661 6,998,448
8/1/05-06 1,006,344 18.0 6.840 6,883,393
Total $27,306,458 $58,241,212
^ Did not develop excess claims.
42
Appendix C, Exhibit I II
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
SELECTED ESTIMATED ULTIMATE INCURRED LOSSES(Limited to Specific Retention)
A. PRIOR TO AGGREGATE
SelectedEstimated
Incurred UltimatePolicy Loss Paid Loss IncurredPeriod Development Development Losses
7/1/97-98 $ 1,188,845 $ 1,236,789 $ 1,212,817 *7/1/98-99 4,464,256 4,265,018 4,364,637 *7/1/99-00 8,183,810 7,706,158 7,944,984 *7/1/00-01 5,907,534 5,993,651 5,950,593 *7/1/01-02 7,593,137 7,003,086 7,298,112 *7/1/02-03 9,122,852 8,894,982 9,008,917 *
7/1/03-7/31/04 9,453,603 9,259,687 9,356,645 *8/1/04-6/30/05 6,631,386 6,998,448 6,814,917 *
8/1/05-06 5,580,799 6,883,393 6,092,090 *
Total $58,126,222 $58,241,212 $58,043,712
B. LIMITED TO AGGREGATE
Estimated Estimated EstimatedUltimate Ult imate UltimateLosses Losses Losses
Policy Prior to Aggregate Aggregate Limited to in ExcessPeriod Aggregate Retention Limit Aggregate of Aggregate
7/1/97-98 $ 1,212,817 $ 2,500,000 $ 1,000,000 $ 1,212,817 $ 07/1/98-99 4,364,637 2,500,000 1,000,000 3,364,637 @# 1,000,000
7/1/99-6/30/02 21,193,689 16,228,000 5,000,000 16,228,000 @ 4,965,6897/1/02-7/31/04 18,365,562 12,082,000 5,000,000 13,365,562 @# 5,000,000
Total $45,136,705 $33,310,000 $12,000,000 $34,171,016 $10,965,689
* Selected the average.^ Selected the incurred method due to the period's immaturity.
@ Losses exceeded the aggregate.# The aggregate limit is expected to be exceeded.
43
Appendix C, Exhibit IV
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
INCURRED AND PAID LOSSES IN EXCESS OF AGGREGATE RETENTION(Limited to Specific Retention)
A. INCURRED IN EXCESS OF AGGREGATE
IncurredIncurred Losses Incurred in
Policy Losses as Aggregate Aggregate Limited to Excess of Period of 12/31/06 Retention Limit Aggregate Aggregate
7/1/97-98 $ 1,079,787 $ 2,500,000 $ 1,000,000 $ 1,079,787 $ 07/1/98-99 4,030,059 2,500,000 1,000,000 3,030,059 @# 1,000,000
7/1/99-6/30/02 19,409,941 16,228,000 5,000,000 16,228,000 @ 3,181,9417/1/02-7/31/04 13,754,619 12,082,000 5,000,000 12,082,000 @ 1,672,619
Total $38,274,406 $33,310,000 $12,000,000 $32,419,846 $ 5,854,560
B. PAID IN EXCESS OF AGGREGATE
Paid Paid LossesPolicy Losses as Aggregate Aggregate Limited to Paid in ExcessPeriod of 12/31/06 Retention Limit Aggregate of Aggregate
7/1/97-98 $ 907,402 $ 2,500,000 $ 1,000,000 $ 907,402 $ 07/1/98-99 2,997,202 2,500,000 1,000,000 2,500,000 @ 497,202
7/1/99-6/30/02 12,854,703 16,228,000 5,000,000 12,854,703 07/1/02-7/31/04 7,629,185 12,082,000 5,000,000 7,629,185 0
Total $24,388,492 $33,310,000 $12,000,000 $23,891,290 $ 497,202
* Selected the average. @ Losses exceeded the aggregate.
# The aggregate limit is expected to be exceeded.
44
NEW YORK HEALTHCARE FACILITIES WORKERS COMPENSATION TRUST
APPENDIX D
ESTIMATED ULAE AND ASSESSMENT RESERVES
45
Appendix D, Exhibit I
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
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 12/31/06 of 12/31/06 Losses*
7/1-12/31/97 $ 361,786 $ 361,786 $ 361,786 $ 361,7861/1-12/31/98 1,737,032 1,550,983 1,550,983 1,737,0321/1-12/31/99 6,692,435 6,074,833 6,710,905 7,393,1741/1-12/31/00 7,210,498 6,573,420 8,838,243 9,694,8211/1-12/31/01 8,255,464 7,550,873 10,539,882 11,523,3851/1-12/31/02 6,590,774 5,362,078 7,378,226 9,068,9131/1-12/31/03 10,407,299 8,178,050 8,881,374 11,302,3421/1-12/31/04 6,718,355 4,139,787 4,139,787 6,718,3551/1-12/31/05 7,111,241 3,647,575 3,647,575 7,111,2411/1-7/31/06 2,958,828 1,131,483 1,131,483 2,958,828
Total $ 58,043,712 $ 44,570,868 $ 53,180,244 $ 67,869,877
* Estimated to equal the limited estimated ult imate incurred losses divided by the limited incurredlosses multiplied by the unlimited incurred losses.
46
Appendix D, Exhibit II
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
ESTIMATED REQUIRED RESERVES AS OF 12/31/06(Unlimited Losses Including ALAE)
A. LOSS SUMMARY
EstimatedUltimate Incurred
Policy Incurred Losses as of Paid LossesPeriod Losses 12/31/06 as of 12/31/06
7/1-12/31/97 $ 361,786 $ 361,786 $ 354,3861/1-12/31/98 1,737,032 1,550,983 1,262,8751/1-12/31/99 7,393,174 6,710,905 4,168,9191/1-12/31/00 9,694,821 8,838,243 4,815,1771/1-12/31/01 11,523,385 10,539,882 4,872,0241/1-12/31/02 9,068,913 7,378,226 3,776,8071/1-12/31/03 11,302,342 8,881,374 4,206,1881/1-12/31/04 6,718,355 4,139,787 2,328,9741/1-12/31/05 7,111,241 3,647,575 1,594,5261/1-7/31/06 2,958,828 1,131,483 453,277
Total $ 67,869,877 $ 53,180,244 $27,833,153
B. ESTIMATED REQUIRED RESERVES AS OF 12/31/06
EstimatedCase Estimated Required
Policy Reserves as IBNR as of Reserves asPeriod of 12/3 1/06 12/31/06 of 12/31/06
7/1-12/31/97 $ 7,400 $ 0 $ 7,4001/1-12/31/98 288,108 186,049 474,1571/1-12/31/99 2,541,986 682,269 3,224,2551/1-12/31/00 4,023,066 856,578 4,879,6441/1-12/31/01 5,667,858 983,503 6,651,3611/1-12/31/02 3,601,419 1,690,687 5,292,1061/1-12/31/03 4,675,186 2,420,968 7,096,1541/1-12/31/04 1,810,813 2,578,568 4,389,3811/1-12/31/05 2,053,049 3,463,666 5,516,7151/1-7/31/06 678,206 1,827,345 2,505,551
Total $25,347,091 $14,689,633 $40,036,724
47
Appendix D, Exhibit III
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
ESTIMATED MEDICAL, INDEMNITY, ALAE, AND ULAE RESERVES
A. ESTIMATED MEDICAL, INDEMNITY, AND ALAE RESERVES
LimitedEstimated Estimated Estimated EstimatedRequired Medical Indemnity ALAE
Policy Reserves as Reserves# Reserves# Reserves#Period of 12/3 1/06 33% 58% 9%
7/1-12/31/97 $ 7,400 $ 2,442 $ 4,292 $ 6661/1-12/31/98 222,758 73,510 129,200 20,0481/1-12/31/99 1,444,502 476,686 837,811 130,0051/1-12/31/00 862,074 284,484 500,003 77,5871/1-12/31/01 1,852,493 611,323 1,074,446 166,7241/1-12/31/02 1,066,780 352,037 618,732 96,0101/1-12/31/03 3,801,111 1,254,367 2,204,644 342,1001/1-12/31/04 2,989,381 986,496 1,733,841 269,0441/1-12/31/05 5,516,715 1,820,516 3,199,695 496,5041/1-7/31/06 2,505,551 826,832 1,453,220 225,500
Total $20,268,765 $6,688,693 $11,755,884 $1,824,188
B. ESTIMATED ULAE RESERVE
EstimatedEstimated as Estimated ULAE
Reserve of 12/31/06* ULAE Ratio# Reserve
Case $25,347,091 0.065 $ 1,647,561Estimated IBNR 14,689,633 0.065 954,826
Total $40,036,724 $ 2,602,387
* Based on unlimited losses.# Selected judgmentally.
48
Appendix D, Exhibit IV
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
ESTIMATED RESERVE FOR ASSESSMENTS
EstimatedRate Applied Ratio Estimated
Claims through to Indemnity Indemnity AssessmentReserve 12/31/06 Losses* Losses Reserve
Case $25,347,091 0.385 0.580 $ 5,660,005Estimated IBNR 14,689,633 0.385 0.580 3,280,195
Total $40,036,724 $ 8,940,200
* Based on a five-year average of the assessments for 50-5, 151, IDP, 25A, and 15-8.
49
NEW YORK HEALTHCARE FACILITIES WORKERS COMPENSATION TRUST
APPENDIX E
ESTIMATED REQUIRED RESERVES AS OF 7/31/06
50
Appendix E, Exhibit I
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
INCURRED AND PAID LOSSES AS OF 7/31/06
A. INCURRED LOSSES LIMITED TO SPECIFIC RETENTION
Unlimited Number of LimitedIncurred Claims in Incurred in Incurred
Policy Losses as Specif ic Excess of Excess of Losses asPeriod of 7/31/06 Retention* Retention Retention of 7/31/06
7/1-12/31/97 $ 471,643 $ 250,000 0 $ 0 $ 471,6431/1-12/31/98 1,611,917 250,000 0 0 1,611,9171/1-12/31/99 6,530,188 250,000 6 485,781 6,044,4071/1-12/31/00 8,442,772 250,000 10 1,834,034 6,608,7381/1-12/31/01 8,744,114 250,000 9 1,293,008 7,451,1061/1-12/31/02 5,930,436 250,000 # 2 736,010 5,194,4261/1-12/31/03 7,454,598 350,000 0 0 7,454,5981/1-12/31/04 4,067,170 350,000 ## 0 0 4,067,1701/1-12/31/05 3,165,342 500,000 0 0 3,165,3421/1-7/31/06 732,794 500,000 0 0 732,794
Total $47,150,974 27 $4,348,833 $42,802,141
B. PAID LOSSES LIMITED TO SPECIFIC RETENTION
Unlimited Number of LimitedPaid Claims in Paid in Paid
Policy Losses as Specif ic Excess of Excess of Losses asPeriod of 7/31/06 Retention* Retention Retention of 7/31/06
7/1-12/31/97 $ 353,972 $ 250,000 0 $ 0 $ 353,9721/1-12/31/98 1,253,390 250,000 0 0 1,253,3901/1-12/31/99 4,030,744 250,000 0 0 4,030,7441/1-12/31/00 4,638,690 250,000 1 95,061 4,543,6291/1-12/31/01 4,632,159 250,000 1 109,262 4,522,8971/1-12/31/02 3,516,356 250,000 # 1 183,978 3,332,3781/1-12/31/03 4,013,812 350,000 0 0 4,013,8121/1-12/31/04 2,101,604 350,000 ## 0 0 2,101,6041/1-12/31/05 1,281,926 500,000 0 0 1,281,9261/1-7/31/06 236,701 500,000 0 0 236,701
Total $26,059,354 3 $ 388,301 $25,671,053
# Changed to $350,000 7/1/02.## Changed to $500,000 7/1/04.
51
Appendix E, Exhibit II
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
INCURRED AND PAID LOSSES AS OF 7/31/06
A. INCURRED LOSSES LIMITED TO SPECIFIC RETENTION
Unlimited Number of LimitedIncurred Claims in Incurred in Incurred
Policy Losses as Specif ic Excess of Excess of Losses asPeriod of 7/31/06 Retention* Retention Retention of 7/31/06
7/1/97-98 $ 1,188,644 $ 250,000 0 $ 0 $ 1,188,6447/1/98-99 4,595,725 250,000 3 297,838 4,297,8877/1/99-00 8,962,548 250,000 11 1,785,908 7,176,6407/1/00-01 6,578,086 250,000 8 1,133,425 5,444,6617/1/01-02 7,512,993 250,000 5 1,131,662 6,381,3317/1/02-03 6,829,809 350,000 0 0 6,829,809
7/1/03-7/31/04 6,078,274 350,000 0 0 6,078,2748/1/04-6/30/05 3,526,942 500,000 0 0 3,526,942
8/1/05-06 1,877,953 500,000 0 0 1,877,953
Total $47,150,974 27 $4,348,833 $42,802,141
B. PAID LOSSES LIMITED TO SPECIFIC RETENTION
Unlimited Number of LimitedPaid Claims in Paid in Paid
Policy Losses as Specif ic Excess of Excess of Losses asPeriod of 7/31/06 Retention* Retention Retention of 7/31/06
7/1/97-98 $ 900,947 $ 250,000 0 $ 0 $ 900,9477/1/98-99 2,902,665 250,000 0 0 2,902,6657/1/99-00 5,135,863 250,000 1 95,061 5,040,8027/1/00-01 3,759,237 250,000 1 109,262 3,649,9757/1/01-02 3,876,138 250,000 1 183,978 3,692,1607/1/02-03 3,953,289 350,000 # 0 0 3,953,289
7/1/03-7/31/04 3,257,139 350,000 0 0 3,257,1398/1/04-6/30/05 1,615,878 500,000 ## 0 0 1,615,878
8/1/05-06 658,198 500,000 0 0 658,198
Total $26,059,354 3 $ 388,301 $25,671,053
52
Appendix E, Exhibit III
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
INCURRED AND PAID LOSSES IN EXCESS OF AGGREGATE RETENTION(Limited to Specific Retention)
A. INCURRED IN EXCESS OF AGGREGATE
IncurredIncurred Losses Incurred in
Policy Losses as Aggregate Aggregate Limited to Excess of Period of 7/31/06 Retention Limit Aggregate Aggregate
7/1/97-98 $ 1,188,644 $ 2,500,000 $ 1,000,000 $ 1,188,644 $ 07/1/98-99 4,297,887 2,500,000 1,000,000 3,297,887 @# 1,000,000
7/1/99-6/30/02 19,002,632 16,228,000 5,000,000 16,228,000 @ 2,774,6327/1/02-7/31/04 12,908,083 12,082,000 5,000,000 12,082,000 @ 826,083
Total $37,397,246 $33,310,000 $12,000,000 $32,796,531 $ 4,600,715
B. PAID IN EXCESS OF AGGREGATE
Paid Paid LossesPolicy Losses as Aggregate Aggregate Limited to Paid in ExcessPeriod of 7/31/06 Retention Limit Aggregate of Aggregate
7/1/97-98 $ 900,947 $ 2,500,000 $ 1,000,000 $ 900,947 $ 07/1/98-99 2,902,665 2,500,000 1,000,000 2,500,000 @ 402,665
7/1/99-6/30/02 12,382,937 16,228,000 5,000,000 12,382,937 07/1/02-7/31/04 7,210,428 12,082,000 5,000,000 7,210,428 0
Total $23,396,977 $33,310,000 $12,000,000 $22,994,312 $ 402,665
@ Losses exceeded the aggregate.# The aggregate limit is expected to be exceeded.
53
Appendix E, Exhibit IV
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
LOSSES LIMITED TO AGGREGATE RETENTION(Limited to Specific Retention)
A. LOSSES IN EXCESS OF AGGREGATE
EstimatedUltimate IncurredLosses Losses Paid Los ses
Policy in Excess in Excess of in ExcessPeriod of Aggregate# Aggregate# of Aggregate#
7/1-12/31/97 $ 0 $ 0 $ 01/1-12/31/98 500,000 500,000 201,3331/1-12/31/99 1,327,615 962,439 201,3331/1-12/31/00 1,655,230 924,877 01/1-12/31/01 1,655,230 924,877 01/1-12/31/02 2,027,615 660,699 01/1-12/31/03 2,400,000 396,520 01/1-12/31/04 1,400,000 231,303 01/1-12/31/05 0 0 01/1-7/31/06 0 0 0
Total $10,965,690 $ 4,600,715 $ 402,666
B. LOSSES LIMITED TO AGGREGATE RETENTION
EstimatedUltimate Incurred Paid
Policy Incurred Losses as Losses asPeriod Losses of 7/31/06 of 7/31/06
7/1-12/31/97 $ 361,786 $ 471,643 $ 353,9721/1-12/31/98 1,237,032 1,111,917 1,052,0571/1-12/31/99 5,364,820 5,081,968 3,829,4111/1-12/31/00 5,555,268 5,683,861 4,543,6291/1-12/31/01 6,600,234 6,526,229 4,522,8971/1-12/31/02 4,563,159 4,533,727 3,332,3781/1-12/31/03 8,007,299 7,058,078 4,013,8121/1-12/31/04 5,318,355 3,835,867 2,101,6041/1-12/31/05 7,111,241 3,165,342 1,281,9261/1-7/31/06 2,958,828 732,794 236,701
Total $47,078,022 $38,201,426 $25,268,387
# From Appendix C, Exhibit IV allocated to calendar accident year.
54
Appendix E, Exhibit V
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
ESTIMATED REQUIRED RESERVES AS OF 7/31/06(Limited to Specific and Aggregate Retentions)
A. LOSS SUMMARY
EstimatedUltimate Incurred Paid
Policy Incurred Losses as Losses asPeriod Losses of 7/31/06 of 7/31/06
7/1-12/31/97 $ 361,786 $ 471,643 $ 353,9721/1-12/31/98 1,237,032 1,111,917 1,052,0571/1-12/31/99 5,364,820 5,081,968 3,829,4111/1-12/31/00 5,555,268 5,683,861 4,543,6291/1-12/31/01 6,600,234 6,526,229 4,522,8971/1-12/31/02 4,563,159 4,533,727 3,332,3781/1-12/31/03 8,007,299 7,058,078 4,013,8121/1-12/31/04 5,318,355 3,835,867 2,101,6041/1-12/31/05 7,111,241 3,165,342 1,281,9261/1-7/31/06 2,958,828 732,794 236,701
Total $47,078,022 $38,201,426 $25,268,387
B. ESTIMATED REQUIRED RESERVES AS OF 7/31/06
EstimatedCase Estimated Required
Policy Reserves as IBNR as Reserves asPeriod of 7/31/06 of 7/31/06 of 7/31/06
7/1-12/31/97 $ 117,671 ($ 109,857) $ 7,8141/1-12/31/98 59,860 125,115 184,9751/1-12/31/99 1,252,557 282,852 1,535,4091/1-12/31/00 1,140,232 ( 128,593) 1,011,6391/1-12/31/01 2,003,332 74,005 2,077,3371/1-12/31/02 1,201,349 29,432 1,230,7811/1-12/31/03 3,044,266 949,221 3,993,4871/1-12/31/04 1,734,263 1,482,488 3,216,7511/1-12/31/05 1,883,416 3,945,899 5,829,3151/1-7/31/06 496,093 2,226,034 2,722,127
Total $12,933,039 $8,876,596 $21,809,635
55
Appendix E, Ex hibit VI
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
ESTIMATED REQUIRED RESERVES AS OF 7/31/06(Unlimited Losses Including ALAE)
A. LOSS SUMMARY
EstimatedUltimate Incurred
Policy Incurred Losses as of Paid LossesPeriod Losses 7/31/06 as of 7/31/06
7/1-12/31/97 $ 361,786 $ 471,643 $ 353,9721/1-12/31/98 1,737,032 1,611,917 1,253,3901/1-12/31/99 7,393,174 6,530,188 4,030,7441/1-12/31/00 9,694,821 8,442,772 4,638,6901/1-12/31/01 11,523,385 8,744,114 4,632,1591/1-12/31/02 9,068,913 5,930,436 3,516,3561/1-12/31/03 11,302,342 7,454,598 4,013,8121/1-12/31/04 6,718,355 4,067,170 2,101,6041/1-12/31/05 7,111,241 3,165,342 1,281,9261/1-7/31/06 2,958,828 732,794 236,701
Total $ 67,869,877 $ 47,150,974 $26,059,354
B. ESTIMATED REQUIRED RESERVES AS OF 7/31/06
EstimatedCase Estimated Required
Policy Reserves as IBNR as of Reserves asPeriod of 7/31/06 7/31/06 of 7/31/06
7/1-12/31/97 $ 117,671 ($ 109,857) $ 7,8141/1-12/31/98 358,527 125,115 483,6421/1-12/31/99 2,499,444 862,986 3,362,4301/1-12/31/00 3,804,082 1,252,049 5,056,1311/1-12/31/01 4,111,955 2,779,271 6,891,2261/1-12/31/02 2,414,080 3,138,477 5,552,5571/1-12/31/03 3,440,786 3,847,744 7,288,5301/1-12/31/04 1,965,566 2,651,185 4,616,7511/1-12/31/05 1,883,416 3,945,899 5,829,3151/1-7/31/06 496,093 2,226,034 2,722,127
Total $21,091,620 $20,718,903 $41,810,523
56
Appendix E, Exhibit VII
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
ESTIMATED MEDICAL, INDEMNITY, ALAE, AND ULAE RESERVES
A. ESTIMATED MEDICAL, INDEMNITY, AND ALAE RESERVES
LimitedEstimated Estimated Estimated EstimatedRequired Medical Indemnity ALAE
Policy Reserves as Reserves# Reserves# Reserves#Period of 7/31/06 33% 58% 9%
7/1-12/31/97 $ 7,814 $ 2,579 $ 4,532 $ 7031/1-12/31/98 184,975 61,042 107,286 16,6481/1-12/31/99 1,535,409 506,685 890,537 138,1871/1-12/31/00 1,011,639 333,841 586,751 91,0481/1-12/31/01 2,077,337 685,521 1,204,855 186,9601/1-12/31/02 1,230,781 406,158 713,853 110,7701/1-12/31/03 3,993,487 1,317,851 2,316,222 359,4141/1-12/31/04 3,216,751 1,061,528 1,865,716 289,5081/1-12/31/05 5,829,315 1,923,674 3,381,003 524,6381/1-7/31/06 2,722,127 898,302 1,578,834 244,991
Total $21,809,635 $7,197,181 $12,649,589 $1,962,867
B. ESTIMATED ULAE RESERVE
EstimatedEstimated as Estimated ULAE
Reserve of 7/31/06* ULAE Ratio# Reserve
Case $21,091,620 0.065 $ 1,370,955Estimated IBNR 20,718,903 0.065 1,346,729
Total $41,810,523 $ 2,717,684
* Based on unlimited losses.# Selected judgmentally.
57
Appendix E, Exhibit VIII
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
ESTIMATED RESERVE FOR ASSESSMENTS
EstimatedRate Applied Ratio Estimated
Claims through to Indemnity Indemnity AssessmentReserve 7/31/06 Losses* Losses Reserve
Case $21,091,620 0.385 0.580 $ 4,709,759Estimated IBNR 20,718,903 0.385 0.580 4,626,531
Total $41,810,523 $ 9,336,290
* Based on a five-year average of the assessments for 50-5, 151, IDP, 25A, and 15-8.
58
NEW YORK HEALTHCARE FACILITIES WORKERS COMPENSATION TRUST
APPENDIX F
ESTIMATED REQUIRED RESERVES AS OF 12/31/06 - HIGH
59
Appendix F, Exhibit I
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
SELECTED ESTIMATED ULTIMATE INCURRED LOSSES - HIGH(Limited to Specific Retention)
Selected Estimated SelectedEstimated Ult imate Estimated
Incurred Ultimate Losses UltimatePolicy Loss Paid Loss Incurred in Excess IncurredPeriod Development Development Losses* of Aggregate Losses
7/1-12/31/97 $ 396,517 $ 479,484 $ 365,404 $ 0 $ 365,4041/1-12/31/98 1,726,244 1,747,819 1,771,773 500,000 1,271,7731/1-12/31/99 6,692,435 6,115,804 6,893,208 1,333,333 5,559,8751/1-12/31/00 7,261,828 7,159,167 7,498,918 1,666,667 5,832,2511/1-12/31/01 8,425,862 8,085,065 8,668,237 1,666,667 7,001,5701/1-12/31/02 6,542,674 6,638,874 6,986,220 2,033,333 4,952,8871/1-12/31/03 10,879,581 9,935,016 11,135,810 2,400,000 8,735,8101/1-12/31/04 6,449,788 6,986,922 7,255,823 1,400,000 5,855,8231/1-12/31/05 7,047,115 7,175,367 7,751,253 0 7,751,2531/1-7/31/06 2,958,828 4,124,367 3,284,299 0 3,284,299
Total $58,380,872 $58,447,885 $61,610,945 $11,000,000 $50,610,945
* Selected ranges of 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9%, and 11% for 7/1-12/31/97 through1/1-7/31/06, respectively.
60
Appendix F, Exhibit I I
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
ESTIMATED REQUIRED RESERVES AS OF 12/31/06 - HIGH(Limited to Specific and Aggregate Retentions)
A. LOSS SUMMARY
EstimatedUltimate Incurred Paid Losses
Policy Incurred Losses as as ofPeriod Losses of 12/31/06 12/31/06
7/1-12/31/97 $ 365,404 $ 361,786 $ 354,3861/1-12/31/98 1,271,773 1,050,983 1,014,2741/1-12/31/99 5,559,875 5,044,509 3,920,3181/1-12/31/00 5,832,251 5,512,773 4,693,1941/1-12/31/01 7,001,570 6,490,226 4,747,7411/1-12/31/02 4,952,887 4,430,326 3,496,3791/1-12/31/03 8,735,810 7,375,193 4,206,1881/1-12/31/04 5,855,823 3,671,454 2,328,9741/1-12/31/05 7,751,253 3,647,575 1,594,5261/1-7/31/06 3,284,299 1,131,483 453,277
Total $50,610,945 $38,716,308 $26,809,257
B. ESTIMATED REQUIRED RESERVES AS OF 12/31/06 - HIGH
EstimatedCase Estimated Required
Policy Reserves as IBNR as Reserves asPeriod of 12/3 1/06 of 12/31/06 of 12/31/06
7/1-12/31/97 $ 7,400 $ 3,618 $ 11,0181/1-12/31/98 36,709 220,790 257,4991/1-12/31/99 1,124,191 515,366 1,639,5571/1-12/31/00 819,579 319,478 1,139,0571/1-12/31/01 1,742,485 511,344 2,253,8291/1-12/31/02 933,947 522,561 1,456,5081/1-12/31/03 3,169,005 1,360,617 4,529,6221/1-12/31/04 1,342,480 2,184,369 3,526,8491/1-12/31/05 2,053,049 4,103,678 6,156,7271/1-7/31/06 678,206 2,152,816 2,831,022
Total $11,907,051 $11,894,637 $23,801,688
61
Appendix F , Exhibit III
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
DISCOUNTED ESTIMATED REQUIRED RESERVES AS OF 12/31/06 - HIGH(Limited to Specific and Aggregate Retentions)
A. ESTIMATED AMOUNT PAID IN INTERVAL
Policy 1/1/07- 1/1/08- 1/1/09- 1/1/10- 1/1/11- 1/1/12- 1/1/13- 1/1/14- 1/1/15-Period 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 Total
7/1-12/31/97 11,018 11,0181/1-12/31/98 257,499 257,4991/1-12/31/99 874,430 765,127 1,639,5571/1-12/31/00 396,194 396,194 346,670 1,139,0571/1-12/31/01 581,633 581,633 581,633 508,929 2,253,8291/1-12/31/02 298,771 298,771 298,771 298,771 261,425 1,456,5081/1-12/31/03 849,304 754,937 754,937 754,937 754,937 660,570 4,529,6221/1-12/31/04 556,871 556,871 494,996 494,996 494,996 494,996 433,122 3,526,8491/1-12/31/05 1,214,003 780,430 780,430 693,716 693,716 693,716 693,716 607,001 6,156,7271/1-7/31/06 609,909 424,001 293,539 287,016 260,924 260,924 260,924 254,401 179,385 2,831,022
Total 5,649,632 4,557,964 3,550,976 3,038,365 2,465,997 2,110,206 1,387,761 861,402 179,385 23,801,688
B. ESTIMATED AMOUNT PAID IN INTERVAL DISCOUNTED
Discount 1/1/07- 1/1/08- 1/1/09- 1/1/10- 1/1/11- 1/1/12- 1/1/13- 1/1/14- 1/1/15-Rate 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 Total
3.0% 5,566,748 4,360,286 3,298,031 2,739,742 2,158,863 1,793,577 1,145,177 690,123 139,531 21,892,078
C. ESTIMATED INVESTMENT INCOME EARNED ON THE LOSS RESERVES
Discount 1/1/07- 1/1/08- 1/1/09- 1/1/10- 1/1/11- 1/1/12- 1/1/13- 1/1/14- 1/1/15-Rate 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 Total
3.0% 82,884 197,678 252,945 298,623 307,134 316,629 242,584 171,279 39,854 1,909,610
62
Appendix F, Exhibit IV
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
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 12/31/06 of 12/31/06 Losses*
7/1-12/31/97 $ 365,404 $ 361,786 $ 361,786 $ 365,4041/1-12/31/98 1,771,773 1,550,983 1,550,983 1,771,7731/1-12/31/99 6,893,208 6,074,833 6,710,905 7,614,9691/1-12/31/00 7,498,918 6,573,420 8,838,243 10,082,6141/1-12/31/01 8,668,237 7,550,873 10,539,882 12,099,5541/1-12/31/02 6,986,220 5,362,078 7,378,226 9,613,0471/1-12/31/03 11,135,810 8,178,050 8,881,374 12,093,5061/1-12/31/04 7,255,823 4,139,787 4,139,787 7,255,8231/1-12/31/05 7,751,253 3,647,575 3,647,575 7,751,2531/1-7/31/06 3,284,299 1,131,483 1,131,483 3,284,299
Total $ 61,610,945 $ 44,570,868 $ 53,180,244 $ 71,932,242
* Estimated to equal the limited estimated ult imate incurred losses divided by the limited incurredlosses multiplied by the unlimited incurred losses.
63
Appendix F, Exhibit V
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
ESTIMATED REQUIRED RESERVES AS OF 12/31/06(Unlimited Losses Including ALAE)
A. LOSS SUMMARY
EstimatedUltimate Incurred
Policy Incurred Losses as of Paid LossesPeriod Losses 12/31/06 as of 12/31/06
7/1-12/31/97 $ 365,404 $ 361,786 $ 354,3861/1-12/31/98 1,771,773 1,550,983 1,262,8751/1-12/31/99 7,614,969 6,710,905 4,168,9191/1-12/31/00 10,082,614 8,838,243 4,815,1771/1-12/31/01 12,099,554 10,539,882 4,872,0241/1-12/31/02 9,613,047 7,378,226 3,776,8071/1-12/31/03 12,093,506 8,881,374 4,206,1881/1-12/31/04 7,255,823 4,139,787 2,328,9741/1-12/31/05 7,751,253 3,647,575 1,594,5261/1-7/31/06 3,284,299 1,131,483 453,277
Total $ 71,932,242 $ 53,180,244 $27,833,153
B. ESTIMATED REQUIRED RESERVES AS OF 12/31/06
EstimatedCase Estimated Required
Policy Reserves as IBNR as of Reserves asPeriod of 12/3 1/06 12/31/06 of 12/31/06
7/1-12/31/97 $ 7,400 $ 3,618 $ 11,0181/1-12/31/98 288,108 220,790 508,8981/1-12/31/99 2,541,986 904,064 3,446,0501/1-12/31/00 4,023,066 1,244,371 5,267,4371/1-12/31/01 5,667,858 1,559,672 7,227,5301/1-12/31/02 3,601,419 2,234,821 5,836,2401/1-12/31/03 4,675,186 3,212,132 7,887,3181/1-12/31/04 1,810,813 3,116,036 4,926,8491/1-12/31/05 2,053,049 4,103,678 6,156,7271/1-7/31/06 678,206 2,152,816 2,831,022
Total $25,347,091 $18,751,998 $44,099,089
64
Appendix F, Exhibit VI
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
ESTIMATED MEDICAL, INDEMNITY, ALAE, AND ULAE RESERVES - HIGH
A. ESTIMATED MEDICAL, INDEMNITY, AND ALAE RESERVES
LimitedEstimated Estimated Estimated EstimatedRequired Medical Indemnity ALAE
Policy Reserves as Reserves# Reserves# Reserves#Period of 12/3 1/06 33% 58% 9%
7/1-12/31/97 $ 11,018 $ 3,636 $ 6,390 $ 9921/1-12/31/98 257,499 84,975 149,349 23,1751/1-12/31/99 1,639,557 541,054 950,943 147,5601/1-12/31/00 1,139,057 375,889 660,653 102,5151/1-12/31/01 2,253,829 743,764 1,307,221 202,8451/1-12/31/02 1,456,508 480,648 844,775 131,0861/1-12/31/03 4,529,622 1,494,775 2,627,181 407,6661/1-12/31/04 3,526,849 1,163,860 2,045,572 317,4161/1-12/31/05 6,156,727 2,031,720 3,570,902 554,1051/1-7/31/06 2,831,022 934,237 1,641,993 254,792
Total $23,801,688 $7,854,558 $13,804,979 $2,142,152
B. ESTIMATED ULAE RESERVE
EstimatedEstimated as Estimated ULAE
Reserve of 12/31/06* ULAE Ratio# Reserve
Case $25,347,091 0.065 $ 1,647,561Estimated IBNR 18,751,998 0.065 1,218,880
Total $44,099,089 $ 2,866,441
* Based on unlimited losses.# Selected judgmentally.
65
Appendix F, Exhibit VII
NEW YORK HEALTH CARE FACILITIESWORKERS COMPENSATION TRUST
ESTIMATED RESERVE FOR ASSESSMENTS
EstimatedRate Applied Ratio Estimated
Claims through to Indemnity Indemnity AssessmentReserve 12/31/06 Losses* Losses Reserve
Case $25,347,091 0.385 0.580 $ 5,660,005Estimated IBNR 18,751,998 0.385 0.580 4,187,321
Total $44,099,089 $ 9,847,326
* Based on a five-year average of the as sessments for 50-5, 151, IDP, 25A, and 15-8.
66