Reconciliation and the Actuarial Opinion

The opining actuary is required by ASOP 36 and the NAIC Property/Casualty Annual Statement Instructions to reconcile the data used in his or her analysis of the loss and loss adjustment reserves with Schedule P Part 1 in the Annual Statement. This paper reviews the importance of a reconciliation, what data to include in a reconciliation, a description of the reconciliation process (including illustrative examples), and discussions of applicable Actuarial Standards of Practice. While the emphasis here is on Schedule P, it is no less true for GAAP or for ratemaking exercises.