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except that the liability is for "the unpaid amount required
to investigate, defend and effect the settlement of all
claims."
The third principle states that since there is inherent
uncertainty in the estimation process, a range of reserves
can be actuarially sound.
The final principle states that the "most appropriate
reserve within a range of actuarially sound estimates
depends on both the relative likelihood of estimates within
the range and the financial reporting context in which
the reserve will be presented."
114. Reserve Estimation Strategy
The overall approach to a reserve valuation problem
can be broken into four phases:
a. Exploratory analysis of the data to identify its key
characteristics and possible anomalies. Balancing
of data to other verified sources should be
undertaken at this point.
b. Application of appropriate reserve estimation
techniques.
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