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M.aR. -l°' UI Id10N) l4 ti L.aWOFFICES P. OU° STATEMENT OF ACTUARIAL OPINION Annual Statement of the Frontier Insurance Company For the Year Ended December 31, 2000 Page Z of 5 ^ Discount included as a reduction to loss reserves and loss expense reserves as reported in Schedule P -Analysis of Losses and Loss Expenses, Underwriting and Investment Exhibit -Part 3A and on Page 3 -Liabilities, Surplus and Other Funds, Lines 1 and 2, nontabular discount 58,478,383 and tabular discount 50; ^ The net reserves for loss and expenses for FIC's share of voluntary and involuntary underwriting pools' and associations' unpaid losses and expenses which are included in reserves shown on Page 3 -Liabilities, Surplus and Other Funds, Lines 1 and Z: 53,015,000; and ^ The net reserves for losses and loss adjustment expenses that FIC carries for asbestos liabilities $0, and environmental liabilities $0 which are included in the reserves on Page 3 -Liabilities, Surplus and Other Funds, Lines 1 and Z, and disclosed in the Notes to Financial Statements. ^ The total reserves for losses and loss adjustment expenses that the Company carries for the extended loss and expense reserve is 51,450,000, [ha[ is reported in the Schedule P Interrogatories. My examination of the loss and loss adjustment expense reserves was based upon data and related information prepared by FIC. In this regard, I relied on Mark 5. Allaben, Vice President 13 Chief Actuary, Frontier Insurance Group, as to the accuracy and completeness of the data. I evaluated the data used directly in my analysis for reasonableness and consistency, My evaluation did not reveal any data points materially affecting my analysis that fell outside of the range of reasonable possibilities. In performing this evaluation, I have assumed that FIC (aj used its hest efforts to supply accurate and complete data and (b) did not knowingly provide any inaccurate data. I also reconciled the paid loss and loss adjustment expense amounts and case reserve amounts as of December 31, 2000 used in my analysis against Schedule P -Part 1 of the current Annual Statement. In other respects, my examination included the use of such actuarial assumptions and methods and such tests of calculations as I considered necessary. My review was limited to items A, B, C, D, and E above, and did not include an analysis of any income statement items or other balance sheet items. My opinion on the reserves is based upon the assumption that all reserves are backed by valid assets, which have suitably scheduled maturities and/or adequate liquidity to meet cash flow requirements. Trllinyhast- 2'owcrsT'tn-r'n